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Taxes | 12 Months Ended
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May 31, 2020
Income Tax And Non Income Tax Disclosure [Abstract] |
Taxes | TAXES The components of Earnings (loss) before income taxes for the fiscal years ended May 31 were:
| 2020 |  | 2019 |  | 2018
United States | $ | (92.5 | ) |  | $ | 8.7 |  |  | $ | (18.4 | )
Non-United States |  | 2.8 |  |  |  | 17.3 |  |  |  | 16.9 |
Total | $ | (89.7 | ) |  | $ | 26.0 |  |  | $ | (1.5 | )
The provision for income taxes for the fiscal years ended May 31 consisted of the following components:
| 2020 |  | 2019 |  | 2018
Current |  |  |  |  |  |  |  |  |  |  |
Federal | $ | (72.2 | ) |  | $ | (0.2 | ) |  | $ | (3.6 | )
State and local |  | (1.2 | ) |  |  | 4.8 |  |  |  | 0.7 |
Non-United States |  | 2.1 |  |  |  | 2.8 |  |  |  | 4.9 |
Total Current | $ | (71.3 | ) |  | $ | 7.4 |  |  | $ | 2.0 |
Deferred |  |  |  |  |  |  |  |  |  |  |
Federal | $ | 27.3 |  |  | $ | 1.1 |  |  | $ | 5.0 |
State and local |  | (0.9 | ) |  |  | 3.1 |  |  |  | (3.5 | )
Non-United States |  | (1.1 | ) |  |  | (1.2 | ) |  |  | — |
Total Deferred | $ | 25.3 |  |  | $ | 3.0 |  |  | $ | 1.5 |
Total Current and Deferred | $ | (46.0 | ) |  | $ | 10.4 |  |  | $ | 3.5 |
Effective Tax Rate Reconciliation A reconciliation of the significant differences between the effective income tax rate and the federal statutory rate on Earnings (loss) before income taxes for the fiscal years ended May 31 was as follows:
| 2020 |  | 2019 |  | 2018
Computed federal statutory provision |  | 21.0 | % |  |  | 21.0 | % |  |  | 29.2 | %
State income tax provision, net of federal income tax benefit |  | 2.0 |  |  |  | 25.7 |  |  |  | 37.1 |
Difference in effective tax rates on earnings of foreign subsidiaries |  | 1.8 |  |  |  | 2.3 |  |  |  | (1.3 | )
Rate differential on net operating loss carrybacks |  | 34.2 |  |  |  | — |  |  |  | — |
GILTI inclusion |  | (2.4 | ) |  |  | 3.4 |  |  |  | — |
Charitable contributions |  | 0.1 |  |  |  | (0.6 | ) |  |  | 28.6 |
Tax credits |  | 0.8 |  |  |  | (3.1 | ) |  |  | 42.8 |
Valuation allowances |  | (1.1 | ) |  |  | 2.3 |  |  |  | 68.1 |
Uncertain positions |  | (2.3 | ) |  |  | (6.3 | ) |  |  | 110.3 |
Remeasurement of deferred tax balances |  | — |  |  |  | — |  |  |  | (371.3 | )
Permanent differences |  | (1.1 | ) |  |  | 0.1 |  |  |  | (177.6 | )
Other |  | (1.7 | ) |  |  | (4.8 | ) |  |  | 0.8 |
Effective tax rates |  | 51.3 | % |  |  | 40.0 | % |  |  | (233.3 | )%
Total provision (benefit) for income taxes | $ | (46.0 | ) |  | $ | 10.4 |  |  | $ | 3.5 |
Tax Legislation Updates In response to the COVID-19 pandemic, many governments have enacted or are contemplating measures to provide aid and economic stimulus. These measures may include deferring the due dates of tax payments or other changes to their income and non-income-based tax laws as well as providing direct government assistance through grants and forgivable loans. On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The Tax Cuts and Jobs Act, among other things, reduced the U.S. federal corporate tax rate from 35% to 21% and imposed a new minimum tax on Global Intangible Low-Taxed Income ("GILTI") earned by foreign subsidiaries. Effective Tax Rate The effective tax rate for the fiscal year ended May 31, 2020 was impacted by the loss before income taxes of $89.7, which reflected lower operating results as a result of the COVID-19 pandemic. In addition, the Company expects to carry back net operating losses generated in the U.S. to previous periods which were taxed at the higher 35% federal corporate tax rate. The effective tax rate for the fiscal year ended May 31, 2019 was impacted by a reduction in the federal statutory rate under the Tax Cuts and Jobs Act, as the new rate was applicable to the entire current fiscal year period. The Company's income tax expense for the fiscal period included $0.9 of expense related to GILTI, partially offset by applicable deductions and foreign tax credits. The Company's state income tax expense was primarily impacted by variations in state earnings and corresponding state net operating carryforwards. The effective tax rate for the fiscal year ended May 31, 2018 was impacted by the loss before income taxes of $1.5, which included a pre-tax change of $57.3 related to the settlement of the Company's domestic defined benefit pension plan. The effective tax rate was also impacted by a reduction in the federal statutory rate under the Tax Cuts and Jobs Act, for a portion of the prior fiscal year period, and the re-measurement of the Company's U.S. deferred tax balances, resulting in $5.7 of additional tax provision. Unremitted Earnings 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. The Company is permanently reinvested in certain foreign subsidiaries representing a portion of the Company's investments in foreign subsidiaries. Any required adjustment to the income tax provision would be reflected in the period that the Company changes this assessment. As of May 31, 2020, there have been no adjustments to the income tax provision related to unremitted earnings. Deferred Taxes The significant components for deferred income taxes for the fiscal years ended May 31 were as follows:
| 2020 |  | 2019
Deferred tax assets: |  |  |  |  |  |  |
Tax uniform capitalization | $ | 10.4 |  |  | $ | 12.8 |
Prepublication expenses |  | 0.8 |  |  |  | 1.2 |
Inventory reserves |  | 10.3 |  |  |  | 15.1 |
Allowance for doubtful accounts |  | 2.9 |  |  |  | 1.9 |
Deferred revenue |  | — |  |  |  | 23.5 |
Other reserves |  | 18.0 |  |  |  | 17.2 |
Postretirement, post employment and pension obligations |  | 5.3 |  |  |  | 6.0 |
Tax carryforwards |  | 51.1 |  |  |  | 31.8 |
Lease Liabilities |  | 25.2 |  |  |  | — |
Other |  | 11.9 |  |  |  | 13.7 |
Gross deferred tax assets | $ | 135.9 |  |  | $ | 123.2 |
Valuation allowance |  | (31.3 | ) |  |  | (25.7 | )
Total deferred tax assets | $ | 104.6 |  |  | $ | 97.5 |
Deferred tax liabilities: |  |  |  |  |  |  |
Depreciation and amortization |  | (65.8 | ) |  |  | (60.3 | )
Lease Right of Use Assets |  | (24.4 | ) |  |  | — |
Prepaid expenses |  | (0.2 | ) |  |  | (0.2 | )
Other |  | (1.9 | ) |  |  | — |
Total deferred tax liability | $ | (92.3 | ) |  | $ | (60.5 | )
Total net deferred tax assets | $ | 12.3 |  |  | $ | 37.0 |
The total net deferred tax assets include deferred tax liabilities of $6.3 which are included in Other noncurrent liabilities on the Company's Consolidated Balance Sheet and deferred tax assets of $18.6 as of May 31, 2020. The Company regularly assesses the realizability of deferred tax assets considering all available evidence including, to the extent applicable, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, tax filing status, duration of statutory carryforward periods, tax planning strategies and historical experience. For the fiscal year ended May 31, 2020, the valuation allowance increased by $5.6 and there were no valuation allowance releases. For the fiscal year ended May 31, 2019, the valuation allowance increased by $0.6, driven by increases to the valuation allowance of $3.9, partially offset by $3.3 of valuation allowance releases and other items. For the fiscal year ended May 31, 2020, the Company has tax effected state and foreign net operating loss carryforwards of $15.4 and $28.1, respectively. Certain state net operating loss carryforwards, if not utilized, expire at various times, primarily between fiscal year 2021 and fiscal year 2040. Certain foreign net operating loss carryforwards, if not utilized, also expire at various times. Approximately half of the foreign net operating loss carryforwards expire between fiscal year 2021 and fiscal year 2040 and the remaining carryforwards do not have an expiration date. Unrecognized tax benefits 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 and reduced by the associated federal deduction for state taxes and non-U.S. tax credits. 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, 2020, 2019, and 2018 were $10.2, excluding $2.2 accrued for interest and penalties, $9.0, excluding $1.4 accrued for interest and penalties, and $10.1, excluding $1.8 accrued for interest and penalties, respectively. Of the total amount of unrecognized tax benefits at May 31, 2020, 2019, and 2018, $10.2, $9.0 and $10.1, 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 an expense of $0.8, a benefit of $0.4, and an expense of $0.1 for the years ended May 31, 2020, 2019, and 2018, respectively. The table below presents a reconciliation of the unrecognized tax benefits for the fiscal years indicated:
Gross unrecognized benefits at May 31, 2017 | $ | 14.1 |
Decreases related to prior year tax positions |  | (2.6 | )
Increase related to prior year tax positions |  | 0.4 |
Increases related to current year tax positions |  | 0.5 |
Settlements during the period |  | (1.9 | )
Lapse of statute of limitation |  | (0.4 | )
Gross unrecognized benefits at May 31, 2018 | $ | 10.1 |
Decreases related to prior year tax positions |  | (1.1 | )
Increase related to prior year tax positions |  | 0.2 |
Increases related to current year tax positions |  | 0.7 |
Settlements during the period |  | (0.2 | )
Lapse of statute of limitation |  | (0.7 | )
Gross unrecognized benefits at May 31, 2019 | $ | 9.0 |
Decreases related to prior year tax positions |  | (0.2 | )
Increase related to prior year tax positions |  | 1.8 |
Increases related to current year tax positions |  | 0.1 |
Settlements during the period |  | (0.2 | )
Lapse of statute of limitation |  | (0.3 | )
Gross unrecognized benefits at May 31, 2020 | $ | 10.2 |
Unrecognized tax benefits for the Company increased by $1.2 for the year ended May 31, 2020 and decreased by $1.1 for the year ended May 31, 2019. Although the timing of the resolution and/or closure of audits is 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. Income Tax Returns 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 and the fiscal 2015 through fiscal 2019 tax years remain open. The Company has been notified by the IRS that there will be an examination of the income tax return for fiscal 2015, however the audit has not yet started as of May 31, 2020. In fiscal 2020, there were settlements of audits with taxing authorities, none of which were considered material to the provision for income taxes. 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.

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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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