Income Taxes (Tables)

12 Months Ended

May 31, 2013

Earnings before Income Taxes

Earnings before income taxes for the years ended May 31 include the following components:

(in thousands)	2013		2012		2011
United States based operations	$	190,942	$	162,285	$	166,137
Non – United States based operations		10,358		14,972		16,393
Earnings before income taxes		201,300		177,257		182,530
Less: Net earnings attributable to non-controlling interests*		393		9,758		8,968
Earnings before income taxes attributable to controlling interest	$	200,907	$	167,499	$	173,562

* Net earnings attributable to non-controlling interest are not taxable to Worthington.

Components of Income Tax Expense (Benefit)

Significant components of income tax expense (benefit) for the years ended May 31 were as follows:

(in thousands)	2013			2012			2011
Current
Federal	$	54,427		$	47,543		$	47,698
State and local		4,109			2,756			1,246
Foreign		4,131			830			2,070
		62,667			51,129			51,014
Deferred
Federal		4,698			67			3,950
State and local		(2,170	)		(69	)		3,599
Foreign		(730	)		777			(67	)
		1,798			775			7,482
	$	64,465		$	51,904		$	58,496

Reconciliation of 35% Federal Statutory Tax Rate to Total Tax Provision

A reconciliation of the 35% federal statutory tax rate to total tax provision follows:

	2013			2012			2011
Federal statutory rate		35.0	%		35.0	%		35.0	%
State and local income taxes, net of federal tax benefit		2.3			1.7			1.8
Change in state and local valuation allowances		(1.3	)		(0.1	)		1.0
Non-U.S. income taxes at other than 35%		(1.7	)		(2.4	)		(2.5	)
Change in Non-U.S. valuation allowances		1.1			0.2			0.3
Qualified production activities deduction		(3.0	)		(2.8	)		(1.9	)
Other		(0.3	)		(0.6	)		(0.0	)
Effective tax rate attributable to controlling interest		32.1	%		31.0	%		33.7	%

Reconciliation of Unrecognized Tax Benefits

A tabular reconciliation of unrecognized tax benefits follows:

(In thousands)
Balance at June 1, 2012	$	4,410
Increases - tax positions taken in prior years		452
Decreases - tax positions taken in prior years		(486	)
Increases (decreases) - current tax positions		121
Settlements		(322	)
Lapse of statutes of limitations		(470	)
Balance at May 31, 2013	$	3,705

Summary of Tax Years Open to Examination by Major Tax Jurisdiction

The following is a summary of the tax years open to examination by major tax jurisdiction:

U.S. Federal – 2009 and forward

U.S. State and Local – 2005 and forward

Austria – 2007 and forward

Canada – 2009 and forward

Deferred Tax Assets and Liabilities

The components of our deferred tax assets and liabilities as of May 31 were as follows:

(in thousands)	2013			2012
Deferred tax assets
Accounts receivable	$	1,602		$	1,640
Inventories		4,840			5,323
Accrued expenses		36,547			30,403
Net operating and capital loss carry forwards		20,369			21,664
Tax credit carry forwards		1,595			1,044
Stock-based compensation		10,405			10,771
Derivative contracts		3,047			5,134
Other		7			12
Total deferred tax assets		78,412			75,991
Valuation allowance for deferred tax assets		(21,863	)		(22,025	)
Net deferred tax assets		56,549			53,966
Deferred tax liabilities
Property, plant and equipment		(76,079	)		(60,373	)
Undistributed earnings of unconsolidated affiliates		(47,606	)		(45,159	)
Other		(61	)		(666	)
Total deferred tax liabilities		(123,746	)		(106,198	)
Net deferred tax liabilities	$	(67,197	)	$	(52,232	)

Deferred Tax Assets and Liabilities Classified in Consolidated Balance Sheet

The above amounts are classified in the consolidated balance sheets as of May 31 as follows:

(in thousands)	2013			2012
Current assets:
Deferred income taxes	$	21,928		$	20,906
Noncurrent assets:
Other assets		276			-
Current liabilities:
Other accrued items		-			(39	)
Noncurrent liabilities:
Deferred income taxes		(89,401	)		(73,099	)
Net deferred tax liabilities	$	(67,197	)	$	(52,232	)