Income Taxes (Tables)

12 Months Ended

May 31, 2020

Income before income taxes as shown in the Consolidated Statements of Income is summarized below for the periods indicated.

Year Ended May 31,	2020		2019		2018
(In thousands)
United States	$	317,290	$	215,201	$	228,976
Foreign		90,474		124,644		188,072
Income Before Income Taxes	$	407,764	$	339,845	$	417,048

Provision (Benefit) for Income Tax

Provision (benefit) for income taxes consists of the following for the periods indicated:

Year Ended May 31,	2020			2019			2018
(In thousands)
Current:
U.S. federal	$	65,195		$	20,388		$	27,206
State and local		17,743			8,623			8,617
Foreign		31,894			37,713			52,658
Total Current		114,832			66,724			88,481
Deferred:
U.S. federal		(19,212	)		15,298			(8,054	)
State and local		(3,031	)		1,414			4,832
Foreign		10,093			(11,278	)		(7,468	)
Total Deferred		(12,150	)		5,434			(10,690	)
Provision for Income Taxes	$	102,682		$	72,158		$	77,791

Significant Components of Deferred Income Tax Assets and Liabilities

The significant components of deferred income tax assets and liabilities as of May 31, 2020 and 2019 were as follows:

	2020			2019
(In thousands)
Deferred income tax assets related to:
Inventories	$	12,341		$	8,970
Allowance for losses		4,294			7,524
Accrued compensation and benefits		14,686			14,364
Accrued other expenses		15,107			17,036
Other long-term liabilities		22,030			15,947
Credit and net operating and capital loss carryforwards		65,994			63,395
Net unrealized loss on securities		16,892			12,391
Pension and other postretirement benefits		76,147			42,991
Total Deferred Income Tax Assets		227,491			182,618
Less: valuation allowances		(66,855	)		(55,274	)
Net Deferred Income Tax Assets		160,636			127,344
Deferred income tax (liabilities) related to:
Depreciation		(70,588	)		(72,387	)
Amortization of intangibles		(109,926	)		(116,097	)
Unremitted foreign earnings		(8,781	)		(18,795	)
Total Deferred Income Tax (Liabilities)		(189,295	)		(207,279	)
Deferred Income Tax Assets (Liabilities), Net	$	(28,659	)	$	(79,935	)

Reconciliation of Income Tax Expense (Benefit) Computed by Applying U.S. Statutory Federal Income Tax Rate against Income (Loss) before Income Taxes to Provision (Benefit) for Income Taxes

The following table reconciles income tax expense (benefit) computed by applying the U.S. statutory federal income tax rate against income (loss) before income taxes to the provision (benefit) for income taxes:

Year Ended May 31,	2020			2019			2018
(In thousands, except percentages)
Income tax expense at the U.S. statutory federal income tax rate	$	85,630		$	71,367		$	121,812
Impact of foreign operations		3,433			(1,571	)		(16,276	)
State and local income taxes, net		11,651			7,224			9,520
Impact of GILTI provisions		3,051			5,772
Domestic manufacturing deduction					-			(4,839	)
Nondeductible business expense		2,005			2,259			2,473
Valuation allowance		14,008			7,021			(5,235	)
Deferred tax liability for unremitted foreign earnings		(5,527	)		-			(77,970	)
Changes in unrecognized tax benefits		1,292			(8,480	)
Other		(3,351	)		1,195			737
FY19 GILTI impact of issued regulations		(4,348	)
Equity-based compensation		(5,162	)		(4,496	)		(4,652	)
Transition tax liability					(1,868	)		67,899
Remeasurement of U.S. deferred income taxes					(6,265	)		(15,678	)
Provision for Income Tax Expense	$	102,682		$	72,158		$	77,791
Effective Income Tax Rate		25.2	%		21.2	%		18.7	%

Uncertain income tax positions are accounted for in accordance with ASC 740. The following table summarizes the activity related to unrecognized tax benefits:

(In millions)	2020			2019			2018
Balance at June 1	$	8.1		$	14.1		$	13.2
Additions based on tax positions related to current year		-			0.1			5.1
Additions for tax positions of prior years		2.0			2.0			-
Reductions for tax positions of prior years		(0.9	)		(7.9	)		(4.5	)
Foreign currency translation		(0.2	)		(0.2	)		0.3
Balance at May 31	$	9.0		$	8.1		$	14.1