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Taxes | 12 Months Ended
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May 31, 2017
Income Tax And Non Income Tax Disclosure [Abstract] |
Taxes | TAXES The components of earnings from continuing operations before income taxes for the fiscal years ended May 31 are:
| 2017 |  | 2016 |  | 2015
United States | $ | 78.7 |  |  | $ | 62.1 |  |  | $ | 27.4 |
Non-United States | 9.2 |  |  | 6.6 |  |  | 2.5 |
Total | $ | 87.9 |  |  | $ | 68.7 |  |  | $ | 29.9 |
The provision for income taxes from continuing operations for the fiscal years ended May 31 consists of the following components:
| 2017 |  | 2016 |  | 2015
Federal |  |  |  |  |  |  |  |
Current | $ | 8.3 |  |  | $ | (4.0 | ) |  | $ | 3.3 |
Deferred | 17.7 |  |  | 19.2 |  |  | 5.3 |
Total federal | $ | 26.0 |  |  | $ | 15.2 |  |  | $ | 8.6 |
State and local |  |  |  |  |  |  |  |
Current | $ | 1.8 |  |  | $ | 4.1 |  |  | $ | 1.2 |
Deferred | 2.2 |  |  | 1.8 |  |  | 0.9 |
Total state and local | $ | 4.0 |  |  | $ | 5.9 |  |  | $ | 2.1 |
Non-United States |  |  |  |  |  |  |  |
Current | $ | 5.4 |  |  | $ | 4.1 |  |  | $ | 4.7 |
Deferred | — |  |  | (0.5 | ) |  | (1.0 | )
Total non-United States | $ | 5.4 |  |  | $ | 3.6 |  |  | $ | 3.7 |
Total |  |  |  |  |  |  |  |
Current | $ | 15.5 |  |  | $ | 4.2 |  |  | $ | 9.2 |
Deferred | 19.9 |  |  | 20.5 |  |  | 5.2 |
Total current and deferred | $ | 35.4 |  |  | $ | 24.7 |  |  | $ | 14.4 |
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:
| 2017 |  | 2016 |  | 2015
Computed federal statutory provision | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State income tax provision, net of federal income tax benefit | 3.3 |  |  | 3.7 |  |  | 4.2 |
Difference in effective tax rates on earnings of foreign subsidiaries | 0.0 |  |  | 1.2 |  |  | 3.7 |
Charitable contributions | (0.3 | ) |  | (0.4 | ) |  | (1.1 | )
Tax credits | (0.5 | ) |  | (0.3 | ) |  | (0.5 | )
Valuation allowances | 0.1 |  |  | (0.7 | ) |  | 2.4 |
Uncertain Positions | 2.9 |  |  | 3.9 |  |  | 11.5 |
Other - net | (0.2 | ) |  | (6.4 | ) |  | (7.0 | )
Effective tax rates | 40.3 | % |  | 36.0 | % |  | 48.2 | %
Total provision for income taxes | $ | 35.4 |  |  | $ | 24.7 |  |  | $ | 14.4 |
The tax provision for the fiscal year ended May 31, 2016 was favorably impacted by settlement with the Internal Revenue Service ( the "IRS"). During the third quarter of fiscal 2016, the Company reached a settlement with the IRS for fiscal years ended May 31, 2011, 2012 and 2013, and the Company recognized previously unrecognized tax benefits of $4.9, inclusive of interest, as a result of this settlement. Subsequent periods remain open. Unremitted Earnings At May 31, 2017, the Company had not provided U.S. income taxes on accumulated but undistributed earnings of its non-U.S. subsidiaries of approximately $63.2 to the extent that such earnings are expected to be indefinitely 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:
| 2017 |  | 2016
Deferred tax assets |  |  |  |  |
Tax uniform capitalization | $ | 9.5 |  |  | $ | 6.2 |
Prepublication expenses | 14.8 |  |  | 26.4 |
Inventory reserves | 24.6 |  |  | 25.1 |
Allowance for doubtful accounts | 3.3 |  |  | 4.2 |
Other reserves | 26.0 |  |  | 26.3 |
Post-retirement, post-employment and pension obligations | 12.5 |  |  | 15.9 |
Tax carryforwards | 31.1 |  |  | 32.2 |
Lease accounting | (0.4 | ) |  | (0.4 | )
Other - net | 10.2 |  |  | 12.0 |
Gross deferred tax assets | 131.6 |  |  | 147.9 |
Valuation allowance | (26.8 | ) |  | (28.4 | )
Total deferred tax assets | $ | 104.8 |  |  | $ | 119.5 |
Deferred tax liabilities |  |  |  |  |
Prepaid expenses | (0.4 | ) |  | (0.6 | )
Depreciation and amortization | (50.7 | ) |  | (50.4 | )
Total deferred tax liability | $ | (51.1 | ) |  | $ | (51.0 | )
Total net deferred tax assets | $ | 53.7 |  |  | $ | 68.5 |
Total net deferred tax assets of $53.7 at May 31, 2017 and $68.5 at May 31, 2016, respectively, are reported in noncurrent assets. For the year ended May 31, 2017, the valuation allowance decreased by $1.6 and for the year ended May 31, 2016, the valuation allowance increased by $0.1. 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, 2017 relates to the Company's total foreign operating loss carryforwards of $112.3 principally in the UK, which do not expire and other operating loss carryforwards in Asia and Canada. 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, in which case such benefits 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 constitute part of Other noncurrent liabilities on the Company’s Consolidated Balance Sheets. The total amount of unrecognized tax benefits at May 31, 2017, 2016 and 2015 were $14.1, excluding $1.7 accrued for interest and penalties, $17.9, excluding $2.3 accrued for interest and penalties, and $17.3, excluding $1.6 accrued for interest and penalties, respectively. Of the total amount of unrecognized tax benefits at May 31, 2017, 2016 and 2015, $14.1, $17.0 and $14.6, respectively, would impact the Company’s effective tax rate. During the years presented, the Company recognized interest and penalties related to unrecognized tax benefits in the provision for taxes in the Consolidated Financial Statements. The Company recognized a benefit of $0.6, an expense of $0.7, and an expense of $0.5 for the years ended May 31, 2017, 2016 and 2015, respectively. A reconciliation of the unrecognized tax benefits for the fiscal years ended May 31 is as follows:
Gross unrecognized benefits at May 31, 2014 | $ | 14.4 |
Decreases related to prior year tax positions | (0.7 | )
Increase related to prior year tax positions | — |
Increases related to current year tax positions | 3.6 |
Settlements during the period | — |
Lapse of statute of limitation | — |
Gross unrecognized benefits at May 31, 2015 | $ | 17.3 |
Decreases related to prior year tax positions | (6.2 | )
Increase related to prior year tax positions | 4.3 |
Increases related to current year tax positions | 5.4 |
Settlements during the period | (2.9 | )
Lapse of statute of limitation | — |
Gross unrecognized benefits at May 31, 2016 | $ | 17.9 |
Decreases related to prior year tax positions | (6.3 | )
Increase related to prior year tax positions | 0.1 |
Increases related to current year tax positions | 3.0 |
Settlements during the period | (0.6 | )
Lapse of statute of limitation | — |
Gross unrecognized benefits at May 31, 2017 | $ | 14.1 |
Unrecognized tax benefits for the Company decreased by $3.8 for the year ended May 31, 2017 and increased by $0.6 for the year ended May 31, 2016. 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 its domestic subsidiaries, files a consolidated U.S. income tax return, and also files tax returns in various states and other local jurisdictions. Also, certain subsidiaries of the Company file income tax returns in foreign jurisdictions. The Company is routinely audited by various tax authorities. 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. The Company assesses sales tax contingencies for each jurisdiction in which it operates, considering all relevant facts including statutes, regulations, case law and experience. Where a sales tax liability in respect to a jurisdiction is probable and can be reliably estimated for such jurisdiction, the Company has made accruals for these matters which are reflected in the Company’s Consolidated Financial Statements. 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. The State of Wisconsin has assessed Scholastic Book Fairs, Inc. (“SBF”), a wholly owned subsidiary of the Company, $5.4, exclusive of penalties and interest, for sales tax in fiscal years 2004 through 2014. Based upon the facts and circumstances and the relevant laws in the State of Wisconsin, the Company does not believe these assessments are merited and has elected to litigate these assessments. While the Company believes it will prevail in this litigation and accordingly has not recognized a liability for these assessments, the results of litigation cannot be assured and it is reasonably possible that SBF could be found liable for all or a portion of the amounts assessed.

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- Definition Description containing the entire income tax and non-income tax disclosure. Examples 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 carry forward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carry back, and tax uncertainties information. Also, includes disclosure relating to non-income taxes such as sales based taxes etc. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables. + References No definition available. + Details
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- Definition -- None. No documentation exists for this element. -- + References No definition available. + Details
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