Income Taxes

9 Months Ended

Feb. 29, 2020

The Company recognizes interest and penalties related to uncertain tax benefits through income tax expense in its Condensed Consolidated Statements of Comprehensive Income. Interest and penalties recognized in the Company's Condensed Consolidated Statements of Comprehensive Income were negligible for the three and nine months ended February 29, 2020 and March 2, 2019.

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



(In millions)	February 29, 2020		June 1, 2019
Liability for interest and penalties	$	0.9	$	0.7
Liability for uncertain tax positions, current	$	2.2	$	1.9

The Company's process for determining the provision for income taxes for the three and nine months ended February 29, 2020 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 22.4% and 16.0%, respectively, for the three month periods ended February 29, 2020 and March 2, 2019. For the three months ended February 29, 2020, the effective tax rate 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. For the three months ended March 2, 2019, the effective tax rate was lower than the United States federal statutory rate mainly due to the impact of SAB 118 resulting from United States tax reform.

The effective tax rates were 18.3% and 19.6%, respectively, for the nine month periods ended February 29, 2020 and March 2, 2019. The year over year decrease in the effective tax rate for the nine months ended February 29, 2020 was mainly the result of a non-taxable gain recorded in the current year related to the recent acquisition of naughtone shares. For the nine months ended February 29, 2020, the effective tax rate was lower than the United States federal statutory rate mainly due to the non-taxed nature of the naughtone gain. For the nine months ended March 2, 2019, the effective tax rate was lower than the United States federal statutory rate mainly due to the impact of SAB 118 resulting from United States tax reform.

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.