Income Taxes

6 Months Ended

Nov. 30, 2019

The Company recognizes interest and penalties related to uncertain tax benefits through income tax expense in its Condensed Consolidated Statement of Comprehensive Income. Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and six months ended November 30, 2019 and December 1, 2018.

The Company's recorded liability for potential interest and penalties related to uncertain tax benefits was:



(In millions)	November 30, 2019		June 1, 2019
Liability for interest and penalties	$	0.8	$	0.7
Liability for uncertain tax positions, current	$	2.1	$	1.9

The Company intends to repatriate $23 million in cash held in certain foreign jurisdictions and as such has recorded a deferred tax liability related to foreign withholding taxes on these future dividends received in the U.S. from foreign subsidiaries of $0.5 million. A significant portion of this cash was previously taxed under the U.S. Tax Cut and Jobs Act (TCJA) one-time U.S. tax liability on undistributed foreign earnings. The Company intends to remain indefinitely reinvested in the remaining undistributed earnings outside the U.S.

The Company's process for determining the provision for income taxes for the three and six months ended November 30, 2019 involved using an estimated annual effective tax rate which was based on expected annual income and statutory tax rates across the various jurisdictions in which it operates. The effective tax rates were 14.3% and 22.6%, respectively, for the three month periods ended November 30, 2019 and December 1, 2018. The effective tax rates were 16.9% and 21.4%, respectively, for the six month periods ended November 30, 2019 and December 1, 2018. The effective tax rate is lower in the current year and lower than the United States federal statutory rate for the three and six months ended November 30, 2019 mainly as a result from the impact of the gain from purchase accounting on the recent naughtone acquisition. The effective tax rate for the three and six months ended December 1, 2018 is higher than the United States federal statutory rate due to United States state income taxes and the mix of earnings in tax jurisdictions that had rates that were higher than the United States federal statutory rate.

The Company is subject to periodic audits by domestic and foreign tax authorities. Currently, the Company is undergoing routine periodic audits in both domestic and foreign tax jurisdictions. It is reasonably possible that the amounts of unrecognized tax benefits could change in the next twelve months because of the audits. Tax payments related to these audits, if any, are not expected to be material to the Company's Condensed Consolidated Statements of Comprehensive Income.

For the majority of tax jurisdictions, the Company is no longer subject to state, local, or non-United States income tax examinations by tax authorities for fiscal years before 2016.