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Income Taxes | 12 Months Ended
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May 31, 2014
Income Tax Disclosure [Abstract] |
Income Tax Disclosure | Income Taxes The components of earnings (loss) before income taxes are as follows:
(In millions) | 2014 |  | 2013 |  | 2012
Domestic | $ | (45.1 | ) |  | $ | 89.9 |  |  | $ | 107.6 |
Foreign | 1.7 |  |  | 7.3 |  |  | 11.9 |
Total | $ | (43.4 | ) |  | $ | 97.2 |  |  | $ | 119.5 |
The provision (benefit) for income taxes consists of the following:
(In millions) | 2014 |  | 2013 |  | 2012
Current: Domestic - Federal | $ | 22.2 |  |  | $ | 36.4 |  |  | $ | 21.8 |
Domestic - State | 4.6 |  |  | 5.2 |  |  | 2.0 |
Foreign | 4.8 |  |  | 3.9 |  |  | 6.0 |
| 31.6 |  |  | 45.5 |  |  | 29.8 |
Deferred: Domestic - Federal | (43.6 | ) |  | (14.9 | ) |  | 11.2 |
Domestic - State | (5.6 | ) |  | (1.4 | ) |  | 1.4 |
Foreign | (3.6 | ) |  | (0.3 | ) |  | 1.9 |
| (52.8 | ) |  | (16.6 | ) |  | 14.5 |
Total income tax provision | $ | (21.2 | ) |  | $ | 28.9 |  |  | $ | 44.3 |
The following table represents a reconciliation of income taxes at the United States statutory rate with the effective tax rate as follows:
(In millions) |  | 2014 |  | 2013 |  | 2012
Income taxes computed at the United States Statutory rate of 35% |  | $ | (15.2 | ) |  | $ | 34.0 |  |  | $ | 41.8 |
Increase (decrease) in taxes resulting from: |  |  |  |  |  |
Change in unrecognized tax benefits |  | 0.4 |  |  | 0.1 |  |  | (0.3 | )
Foreign statutory rate differences |  | (0.9 | ) |  | (1.9 | ) |  | (1.2 | )
Meals and entertainment |  | 1.0 |  |  | 0.8 |  |  | 0.8 |
Manufacturing deduction under the American Jobs Creation Act of 2004 |  | (3.9 | ) |  | (4.0 | ) |  | (2.9 | )
State taxes |  | (0.9 | ) |  | 2.5 |  |  | 3.0 |
Repatriated earnings and related foreign tax credits |  | (0.3 | ) |  | (0.6 | ) |  | (0.2 | )
Other, net |  | (1.4 | ) |  | (2.0 | ) |  | 3.3 |
Income tax expense (benefit) |  | $ | (21.2 | ) |  | $ | 28.9 |  |  | $ | 44.3 |
Effective tax rate |  | 48.9 | % |  | 29.8 | % |  | 37.1 | %
The tax effects and types of temporary differences that give rise to significant components of the deferred tax assets and liabilities at May 31, 2014 and June 1, 2013, are as follows:
(In millions) |  | 2014 |  | 2013
Deferred tax assets: |  |  |  |
Compensation-related accruals |  | $ | 19.5 |  |  | $ | 17.7 |
Accrued pension and post-retirement benefit obligations |  | 9.7 |  |  | 19.4 |
Inventory related |  | 3.7 |  |  | 2.7 |
Reserves for uncollectible accounts and notes receivable |  | 1.5 |  |  | 1.8 |
Other reserves and accruals |  | 4.6 |  |  | 3.9 |
Warranty |  | 8.5 |  |  | 8.2 |
State and local tax net operating loss carryforwards |  | 3.2 |  |  | 3.0 |
Federal net operating loss carryforward |  | 0.1 |  |  | 0.2 |
State credits |  | 0.2 |  |  | 0.6 |
Foreign tax net operating loss carryforwards |  | 9.9 |  |  | 9.2 |
Foreign tax credits |  | 0.1 |  |  | 0.1 |
Foreign capital loss carryforward |  | 0.1 |  |  | 0.1 |
Financing costs |  | 1.2 |  |  | 2.1 |
Other |  | 3.4 |  |  | 3.6 |
Subtotal |  | 65.7 |  |  | 72.6 |
Valuation allowance |  | (8.5 | ) |  | (9.9 | )
Total |  | $ | 57.2 |  |  | $ | 62.7 |
Deferred tax liabilities: |  |  |  |
Book basis in property in excess of tax basis |  | $ | (14.7 | ) |  | $ | (16.5 | )
Intangible assets |  | (18.1 | ) |  | (20.5 | )
Other |  | (2.4 | ) |  | (2.9 | )
Total |  | $ | (35.2 | ) |  | $ | (39.9 | )
The future tax benefits of net operating loss (NOL) carry-forwards and foreign tax credits are recognized to the extent that realization of these benefits is considered more likely than not. The company bases this determination on the expectation that related operations will be sufficiently profitable or various tax planning strategies will enable the company to utilize the NOL carry-forwards and/or foreign tax credits. To the extent that available evidence about the future raises doubt about the realization of these tax benefits, a valuation allowance is established. At May 31, 2014, the company had state and local tax NOL carry-forwards of $49.0 million, the tax benefit of which is $3.2 million, which have various expiration periods from one to twenty-one years. The company also had state credits with a tax benefit of $0.2 million which expire in one to two years. For financial statement purposes, the NOL carry-forwards and state tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $1.7 million. At May 31, 2014, the company had a federal NOL carry-forward of $0.3 million, the tax benefit of which is $0.1 million, which expires in fourteen years. For financial statement purposes, the NOL carry-forward has been recognized as a deferred tax asset. At May 31, 2014, the company had a foreign capital loss carry-forward of $0.3 million, the tax benefit of which is $0.1 million, which has an expiration period of an unlimited term. For financial statement purposes, the capital loss carry-forward has been recognized as a deferred tax asset, subject to a valuation allowance of $0.1 million. At May 31, 2014, the company had foreign net operating loss carry-forwards of $41.1 million, the tax benefit of which is $9.9 million, which have expiration periods from five years to an unlimited term. The company also had foreign tax credits with a tax benefit of $0.1 million which expire in two to six years. For financial statement purposes, NOL carry-forwards and foreign tax credits have been recognized as deferred tax assets, subject to a valuation allowance of $5.4 million. At May 31, 2014, the company had foreign deferred assets of $6.5 million, the tax benefit of which is $1.3 million, which is primarily related to financing costs. For financial statement purposes, the assets have been recognized as deferred tax assets, subject to a valuation allowance of $1.3 million. The company has not provided for United States income taxes on undistributed earnings of foreign subsidiaries totaling approximately $67.5 million. Recording deferred income taxes on these undistributed earnings is not required, because these earnings have been deemed to be permanently reinvested. These amounts would be subject to possible U.S. taxation only if remitted as dividends. The determination of the hypothetical amount of unrecognized deferred U.S. taxes on undistributed earnings of foreign entities is not practicable. The components of the company's unrecognized tax benefits are as follows:
(In millions) |  |
Balance at June 2, 2012 |  | $ | 1.3 |
Increases related to current year income tax positions |  | 0.4 |
Increases related to prior year income tax positions |  | — |
Decreases related to prior year income tax positions |  | (0.1 | )
Decreases related to lapse of applicable statute of limitations |  | (0.2 | )
Decreases related to settlements |  | — |
Balance at June 1, 2013 |  | 1.4 |
Increases related to current year income tax positions |  | 0.5 |
Increases related to prior year income tax positions |  | — |
Decreases related to prior year income tax positions |  | — |
Decreases related to lapse of applicable statute of limitations |  | (0.1 | )
Decreases related to settlements |  | — |
Balance at May 31, 2014 |  | $ | 1.8 |
The company's effective tax rate would have been affected by the total amount of unrecognized tax benefits had this amount been recognized as a reduction to income tax expense. The company recognizes interest and penalties related to unrecognized tax benefits through "Income tax expense (benefit)" in its Consolidated Statements of Comprehensive Income. Interest and penalties and the related liability were as follows for the periods indicated:
(In millions) | May 31, 2014 |  | June 1, 2013 |  | June 2, 2012
Interest and penalty expense | $ | 0.2 |  |  | $ | — |  |  | $ | — |
Liability for interest and penalties | $ | 0.6 |  |  | $ | 0.4 |  |  |
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 12 months as a result of new positions that may be taken on income tax returns, settlement of tax positions and the closing of statutes of limitation. It is not expected that any of the changes will be material to the company's Consolidated Statements of Comprehensive Income. During the year, the company has closed the audit of fiscal year 2013 with the Internal Revenue Service under the Compliance Assurance Process (CAP). For the majority of the remaining tax jurisdictions, the company is no longer subject to state and local, or non-U.S. income tax examinations by tax authorities for fiscal years before 2011.

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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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