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Income Taxes | 9 Months Ended
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Feb. 28, 2015
Income Taxes | NOTE 7 — INCOME TAXES The income tax provision was $99.4 million for the three months ended February 28, 2015 compared to an income tax provision of $8.3 million for the three months ended February 28, 2014. The income tax provision was $174.5 million for the nine months ended February 28, 2015 compared to an income tax provision of $77.8 million for the same period a year ago. The income tax provision for the three and nine month periods ended February 28, 2015 reflects variances from the 35% federal statutory rate primarily due to the lower effective income tax rate of certain of our foreign subsidiaries and foreign tax credits generated during the period. These favorable variances from the statutory rate were offset by state local income taxes and the impact of non-deductible business expenses. Additionally, during the three month period we recorded net discrete tax benefits of $13.1 million that are primarily comprised of the reversal of deferred tax asset valuation allowances and adjustments to tax contingency reserves, partially offset by the impact of certain foreign losses not benefitted and the effect of changes year to date in the forecasted annual effective tax rate. Further, during the quarter ended February 28, 2015, we reviewed our permanent investment assertion under ASC 740-30 regarding a portion of our undistributed foreign earnings, which were previously considered to be indefinitely reinvested outside the U.S. More specifically, during the quarter, we concluded that it is possible that $347.5 million of unremitted foreign earnings could be repatriated to the U.S. in the foreseeable future to fund the aforementioned SPHC Trust contributions. Consistent with ASC 740-30, a provision for deferred income taxes of $106.2 million was recorded which represents our estimate of the future tax cost, net of related foreign tax credits, associated with remitting these earnings back to the U.S. The income tax provision for three and nine month periods ended February 28, 2014 reflects variances from the 35% federal statutory rate primarily due to the lower effective tax rate of certain of our foreign subsidiaries and the benefit of the domestic manufacturing deduction. These favorable variances were partially offset by the impact of state and local income taxes, the net impact of valuation allowances associated with certain foreign net operating losses and during the three month period, a reduction to our reserves for income tax contingencies. Additionally, the income tax provision for the nine month period includes a discrete benefit related to the recognition of a foreign deferred income tax asset resulting from the merger of certain foreign subsidiaries. This one-time benefit was partially offset by the discrete impact of the enactment of a Canadian tax law change, Canada Bill C-48, Technical Tax Amendments Act, 2012, which was enacted on June 26, 2013. As of February 28, 2015 we had unrecognized tax benefits of $12.9 million, of which $5.4 million would impact the effective tax rate, if recognized. We recognize interest and penalties related to unrecognized benefits in income tax expense. As of February 28, 2015 the net accrual for interest and penalties was $3.8 million. Unrecognized tax benefits, including interest and penalties, have been classified as other long-term liabilities unless expected to be paid in one year. We do not anticipate changes to the total unrecognized tax benefits within the next 12 months. We, or our subsidiaries, file income tax returns in the U.S. and in various states, local and foreign jurisdictions. The Internal Revenue Service completed a limited scope examination of fiscal year 2012 and no adjustments were proposed. The Internal Revenue Service informed us that they may also perform a limited scope examination of fiscal year 2013. In addition, with limited exceptions, we, or our subsidiaries, are generally subject to state, local and non-U.S. income tax examinations by tax authorities for the fiscal years 2008 through 2014. We are currently under examination, or have been notified of a planned income tax examination, for various state, local and non-U.S. jurisdictions. Although it is possible that certain income tax examinations could be resolved during the next twelve months, the timing and outcomes are uncertain. As of February 28, 2015, we have determined, based on the available evidence, that it is uncertain whether we will be able to recognize certain deferred tax assets. Therefore, we intend to maintain the valuation allowances recorded at February 28, 2015 for those deferred tax assets until sufficient positive evidence (for example, cumulative positive foreign earnings) exists to support their reversal. These valuation allowances relate to, capital loss carryforwards, unrealized losses on securities, certain foreign net operating losses and net foreign deferred tax assets.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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