TAXES

12 Months Ended

May 31, 2012

Income Tax And Non Income Tax Disclosure [Text Block]

9. TAXES

The components of earnings from continuing operations before income taxes for the fiscal years ended May 31 are:

	2012		2011		2010
United States	$	146.3	$	77.2	$	113.4
Non-United States	$	24.4	$	7.2	$	2.0
Total	$	170.7	$	84.4	$	115.4

The provision for income taxes for the fiscal years ended May 31 consists of the following components:

	2012			2011		2010
Federal
Current	$	49.4		$	10.3	$	11.5
Deferred		(8.2	)		9.1		29.8
	$	41.2		$	19.4	$	41.3
State and local
Current	$	12.1		$	3.8	$	2.0
Deferred		(0.7	)		2.2		1.1
	$	11.4		$	6.0	$	3.1
International
Current	$	12.8		$	12.5	$	8.6
Deferred		(3.4	)		1.0		1.4
	$	9.4		$	13.5	$	10.0
Total
Current	$	74.3		$	26.6	$	22.1
Deferred		(12.3	)		12.3		32.3
	$	62.0		$	38.9	$	54.4

Effective Tax Rate Reconciliation

A reconciliation of the significant differences between the effective income tax rate and the federal statutory rate on earnings from continuing operations before income taxes for the fiscal years ended May 31 is as follows:

	2012			2011			2010
Computed federal statutory provision		35.0	%		35.0	%		35.0	%
State income tax provision, net of federal income tax benefit		4.3	%		5.2	%		5.2	%
Difference in effective tax rates on earnings of foreign subsidiaries		0.2	%		-0.8	%		-0.4	%
Charitable contributions		-0.7	%		-1.5	%		-1.1	%
Tax credits		-0.1	%		-0.2	%		-0.2	%
Valuation allowances		-1.4	%		5.9	%		5.3	%
Other - net		-1.0	%		2.5	%		3.4	%
Effective tax rates		36.3	%		46.1	%		47.2	%
Total provision for income taxes	$	62.0		$	38.9		$	54.4

Unremitted Earnings

At May 31, 2012, the Company had not provided U.S. income taxes on accumulated but undistributed earnings of its non-U.S. subsidiaries of approximately $78.6, as substantially all of these undistributed earnings are expected to be permanently reinvested. However, if any portion were to be distributed, the related U.S. tax liability may be reduced by foreign income taxes paid on those earnings. Determining the unrecognized deferred tax liability related to those investments in these non-U.S. subsidiaries is not practicable. The Company assesses foreign investment levels periodically to determine if all or a portion of the Company’s investments in foreign subsidiaries are indefinitely invested.

Deferred Taxes

The significant components for deferred income taxes for the fiscal years ended May 31, including deferred income taxes related to discontinued operations, are as follows:

	2012			2011
Deferred tax assets
Tax uniform capitalization	$	16.8		$	17.1
Inventory reserves		29.8			25.8
Allowance for doubtful accounts		7.8			6.5
Other reserves		41.2			23.2
Post-retirement, post-employment and pension obligations		23.1			21.3
Tax carryforwards		40.3			41.0
Lease accounting		10.1			9.4
Other - net		34.2			29.1
Gross deferred tax assets		203.3			173.4
Valuation allowance		(34.4	)		(36.8	)
Total deferred tax assets	$	168.9		$	136.6
Deferred tax liabilities
Prepaid expenses		(0.6	)		(0.8	)
Depreciation and amortization		(54.6	)		(59.4	)
Total deferred tax liability	$	(55.2	)	$	(60.2	)
Total net deferred tax assets	$	113.7		$	76.4

Total net deferred tax assets of $113.7 at May 31, 2012 and $76.4 at May 31, 2011 include $71.4 and $56.2, respectively, in current assets. Total noncurrent deferred tax assets of $42.3 and $20.2 are reflected in noncurrent assets at May 31, 2012 and 2011, respectively.

For the year ended May 31, 2012, the valuation allowance decreased by $2.4 and for the year ended May 31, 2011, the valuation allowance increased by $0.8. The valuation allowance is based on the Company’s assessment that it is more likely than not that certain deferred tax assets will not be realized in the foreseeable future. The valuation allowance at May 31, 2012 primarily relates to foreign operating loss carryforwards of $125.0, principally in the UK, which do not expire.

The benefits of uncertain tax positions are recorded in the financial statements only after determining a more likely-than-not probability that the uncertain tax positions will withstand challenge, if any, from taxing authorities. These uncertain tax positions are included in long-term income taxes payable, reduced by the associated federal deduction for state taxes and non-U.S. tax credits, and may also include other long-term tax liabilities that are not uncertain but have not yet been paid. The interest and penalties related to these uncertain tax positions are recorded as part of the Company’s income tax expense and part of the income tax liability on the Company’s Consolidated Balance Sheets.

The total amount of unrecognized tax benefits at May 31, 2012, 2011 and 2010 were $38.7, excluding $7.1 accrued for interest and penalties, $30.8, excluding $5.9 accrued for interest and penalties, and $30.6, excluding $5.7 for accrued interest and penalties, respectively. Of the total amount of unrecognized tax benefits at May 31, 2012, 2011 and 2010, $18.1, $19.2 and $19.5, respectively, would impact the Company’s effective tax rate.

During the years presented, the Company recognized interest and penalties related to unrecognized tax benefits with the provision for taxes on the consolidated financial statements. The Company recognized an expense of $2.4, $1.0, and $1.9 at May 31, 2012, 2011, and 2010, respectively.

A reconciliation of the unrecognized tax benefits for the fiscal years ended May 31 is as follows:

Gross unrecognized benefits at May 31, 2009	$	33.6
Decreases related to prior year tax positions		(17.6	)
Increase related to prior year tax positions		15.1
Increases related to current year tax positions		4.0
Settlements during the period		(1.3	)
Lapse of statute of limitation		(3.2	)
Gross unrecognized benefits at May 31, 2010	$	30.6
Decreases related to prior year tax positions		(2.9	)
Increase related to prior year tax positions		2.5
Increases related to current year tax positions		2.8
Settlements during the period		(2.2	)
Lapse of statute of limitation		—
Gross unrecognized benefits at May 31, 2011	$	30.8
Decreases related to prior year tax positions		(0.8	)
Increase related to prior year tax positions		9.5
Increases related to current year tax positions		1.7
Settlements during the period		(2.4	)
Lapse of statute of limitation		(0.1	)
Gross unrecognized benefits at May 31, 2012	$	38.7

Unrecognized tax benefits for the Company increased by $7.9 and increased by $0.2 for the years ended May 31, 2012 and 2011, respectively. Although the timing of the resolution and/or closure on audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next twelve months. However, given the number of years remaining subject to examination and the number of matters being examined, the Company is unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.

The Company, including subsidiaries, files income tax returns in the U.S., various states and various foreign jurisdictions. The Company is routinely audited by various tax authorities. At May 31, 2012, the Company is currently under audit by the Internal Revenue Service for its fiscal years ended May 31, 2007, 2008 and 2009. The Company is also contesting the disallowance of certain deductions in the fiscal year ended May 31, 2006. During fiscal 2012, New York State completed the audit for fiscal years ended May 31, 2002, 2003, 2004, and 2005. The Company is currently under audit by New York State for its fiscal years ended May 31, 2006, 2007 and 2008 and New York City for its fiscal years ended May 31, 2005, 2006 and 2007. If any of these tax examinations are concluded within the next twelve months, the Company will make any necessary adjustments to its unrecognized tax benefits.

Non-income Taxes

The Company is subject to tax examinations for sales-based taxes. A number of these examinations are ongoing and, in certain cases, have resulted in assessments from taxing authorities. Where a liability associated with these examinations and assessments is probable and can be reliably estimable, the Company has made accruals for these matters which are reflected in the Company’s Consolidated Financial Statements. In the third quarter of fiscal 2012, the Company recorded accruals of $19.7 based on the current status of sales tax assessments in two jurisdictions. These amounts are included in the Consolidated Financial Statements in Selling, general and administrative expenses. Future developments relating to the foregoing could result in adjustments being made to these accruals.