Income Taxes

6 Months Ended

Nov. 28, 2020

The Company's process for determining the provision for income taxes for the three and six months ended November 28, 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 23.5% and 14.3%, respectively, for the three month periods ended November 28, 2020 and November 30, 2019. The same period in the prior year included a non-taxable gain on consolidation of an equity method investment which is the primary driver of the year over year increase in the effective tax rate. For the three months ended November 28, 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 November 30, 2019, the effective tax rate was lower than the United States federal statutory rate mainly as a result from the impact of a non-taxable gain on consolidation of an equity method investment.

The effective tax rates were 22.6% and 16.9%, respectively, for the six month periods ended November 28, 2020 and November 30, 2019. The same period in the prior year included a non-taxable gain on consolidation of an equity method investment which is the primary driver of the year over year increase in the effective tax rate. For the six months ended November 28, 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 six months ended November 30, 2019, the effective tax rate was lower than the United States federal statutory rate mainly due to the non-taxed nature of the gain on consolidation of an equity method investment.

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 six months ended November 28, 2020 and November 30, 2019.

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


(In millions)	November 28, 2020		May 30, 2020
Liability for interest and penalties	$	1.0	$	0.8
Liability for uncertain tax positions, current	$	2.3	$	1.9

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.

- 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.

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