Income Taxes (Tables)

12 Months Ended

May 31, 2017

Income Tax Disclosure [Abstract]

Components of Income Before Income Taxes

Income before income taxes for continuing operations consists of the following components:

(In thousands)	2017		2016		2015
U.S. operations	$	673,055	$	685,167	$	622,502
Foreign operations	14,349		20,148		18,054
	$	687,404	$	705,315	$	640,556

Components of Income Taxes

Income tax expense for continuing operations consists of the following components:

(In thousands)	2017		2016			2015
Current:
Federal	$	194,130	$	279,134		$	199,360
State and local	27,197		25,428			24,733
	221,327		304,562			224,093
Deferred	8,791		(47,852		)	13,910
	$	230,118	$	256,710		$	238,003

Reconciliation of Income Tax Expense Using the Statutory Rate and Actual Income Tax Expense

Reconciliation of income tax expense for continuing operations using the statutory rate and actual income tax expense is as follows:

(In thousands)	2017			2016			2015
Income taxes at the U.S. federal statutory rate	$	240,677		$	246,881		$	224,360
State and local income taxes, net of federal benefit	19,210			16,339			16,308
Other (1)	(29,769		)	(6,510		)	(2,665		)
	$	230,118		$	256,710		$	238,003

⁽¹⁾ The Other category in fiscal 2017 is primarily associated with $29.4 million excess tax benefit for share based compensation under the adoption of ASU 2016-09.

Components of Deferred Income Taxes

The components of deferred income taxes included on the consolidated balance sheets are as follows:

(In thousands)	2017			2016
Deferred tax assets:
Allowance for doubtful accounts	$	7,707		$	7,416
Inventory obsolescence	16,096			13,702
Insurance and contingencies	54,489			42,717
Stock-based compensation	73,027			45,720
Net operating loss and foreign related carry-forwards (1)	37,814			17,883
Treasury locks	—			12,055
Other	25,891			8,100
	215,024			147,593
Valuation allowance	(18,088		)	(17,047		)
	196,936			130,546
Deferred tax liabilities:
In service inventory	210,766			172,704
Property	126,872			93,784
Intangibles	290,049			104,585
Treasury locks	6,435			—
State taxes and other	32,142			18,948
	666,264			390,021
Net deferred tax liability	$	469,328		$	259,475

⁽¹⁾ During fiscal 2017, the net operating loss increased primarily due to the G&K acquisition. The net operating loss related to the G&K acquisition is expected to be utilized by fiscal 2018 and w

Summary of Valuation Allowance

The progression of the valuation allowance is as follows:

(In thousands)	2017			2016
Balance at beginning of year	$	(17,047	)	$	(14,690	)
Additions	(1,667		)	(3,437		)
Subtractions	626			1,080
Balance at end of year	$	(18,088	)	$	(17,047	)

Reconciliation of Beginning and Ending Amount of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits (exclusive of interest and penalties) is as follows:

(In thousands)
Balance at June 1, 2014	$	13,062
Additions for tax positions of prior years	4,001
Settlements	(48		)
Statute expirations	(1,603		)
Balance at May 31, 2015	$	15,412
Additions for tax positions of prior years	3,259
Settlements	(48		)
Statute expirations	(2,092		)
Balance at May 31, 2016	$	16,531
Additions from G&K acquisition (1)	2,084
Additions for tax positions of prior years	2,520
Settlements (2)	(1,044		)
Statute expirations	(2,734		)
Balance at May 31, 2017	$	17,357

⁽¹⁾ Increase in unrecognized tax benefit associated with unrecognized benefits assumed in the G&K acquisition.

⁽²⁾ Decrease in unrecognized tax benefit associated with the settlement of a fiscal 2012 Internal Revenue Service audit.