Income Taxes

12 Months Ended

May 31, 2012

Income Taxes

Income Taxes

5. Income Taxes

        The provision for income taxes on pre-tax income includes the following components:

	For the Year Ended May 31,
	2012			2011			2010
Current:
Federal	$	(9,777	)	$	(8,580	)	$	21,649
State		(450	)		1,500			1,800
Foreign		2,952			1,800			1,400
		(7,275	)		(5,280	)		24,849
Deferred		32,755			38,861			(3,863	)
	$	25,480		$	33,581		$	20,986

        The deferred tax provision results primarily from differences between financial reporting and taxable income arising from depreciation, post-retirement benefits and capitalized program development costs.

        Income tax receivable at May 31, 2012 and 2011 was $22,823 and $9,054, respectively, and is included in deposits, prepaids and other on the consolidated balance sheet.

        The provision for income taxes on pre-tax income differs from the amount computed by applying the U.S. federal statutory income tax rate of 35% for fiscal 2012, 2011 and 2010 to income before taxes, for the following reasons:

	For the Year Ended May 31,
	2012			2011			2010
Provision for income taxes at the federal statutory rate	$	32,728		$	36,193		$	22,466
Tax benefits on domestic production activities		—			—			(1,673	)
State income taxes, net of federal benefit and refunds		(3,465	)		910			1,056
Research and development credit		(850	)		(350	)		(418	)
Leveraged lease		—			—			(1,517	)
Noncontrolling interest		(107	)		—			499
Settlement of tax examinations		—			(3,531	)		—
Federal adjustments		(3,300	)		—			—
Other		474			359			573
Provision for income taxes	$	25,480		$	33,581		$	20,986

        Deferred tax liabilities and assets result primarily from the differences in the timing of the recognition of transactions for financial reporting and income tax purposes and consist of the following components:

	May 31,
	2012			2011
Deferred tax assets-current attributable to:
Inventory costs	$	11,268		$	17,145
Employee benefits		6,036			5,793
Allowance for doubtful accounts		2,114			2,109
AMT, NOL and FTC carrybacks		7,332			8,400
Advanced billings and other		(4,112	)		(9,864	)
Total net deferred tax assets-current	$	22,638		$	23,583
Deferred tax assets-noncurrent attributable to:
Postretirement benefits	$	19,585		$	12,847
Bond hedge		3,086			6,733
Foreign intangible assets		39,551			—
Other		4,765			—
Total deferred tax assets-noncurrent	$	66,987		$	19,580
Total deferred tax assets	$	89,625		$	43,163
Deferred tax liabilities attributable to:
Depreciation	$	(119,049	)	$	(104,202	)
Convertible notes		(7,039	)		(13,700	)
Capitalized program development costs		(17,256	)
Foreign intangible assets		(39,551	)		—
Total deferred tax liabilities	$	(182,895	)	$	(117,902	)
Net deferred tax liabilities	$	(93,270	)	$	(74,739	)

        As of May 31, 2012, we have determined that the realization of our deferred tax assets is more likely than not, and that a valuation allowance is not required based upon our history of operating earnings, our expectations for continued future earnings, the nature of certain of our deferred tax assets and the scheduled reversal of deferred tax liabilities, primarily related to depreciation.

        Our effective income tax rate was 27.2% in fiscal 2012 compared to 32.5% in fiscal 2011. During the fourth quarter of fiscal 2012, we recorded a $3,300 reduction in income tax expense primarily relating to revisions in book versus tax differences. During the third quarter of fiscal 2012, we recorded a $3,976 reduction in income tax expense primarily relating to a reduction in our state income tax rate due to the implementation of state income tax planning strategies related to our corporate structure and the relocation of one of our significant businesses.

        During the fourth quarter of fiscal 2011, an examination of our fiscal years 2007 through 2009 tax returns was completed, which resulted in a reduction of income tax expense in the amount of $3,531, primarily due to the allowance of foreign tax credits which had not previously been benefited. Fiscal years' 2010 and subsequent are open for examination. Various states and foreign jurisdictions also remain open subject to their applicable statute of limitations. We have no unrecognized tax benefits as of May 31, 2012.