Income Taxes (Tables)

12 Months Ended

May 31, 2022

Income Tax Disclosure [Abstract]

Components of Income Before Income Taxes

Income before income taxes for continuing operations consists of the following components for the fiscal years ended May 31:

(In thousands)	2022		2021		2020
U.S. operations	$	1,445,719	$	1,221,690	$	1,035,902
Foreign operations	53,049		66,059		22,389
	$	1,498,768	$	1,287,749	$	1,058,291

Components of Income Taxes

Income tax expense (benefit) for continuing operations consists of the following components for the fiscal years ended May 31:

(In thousands)	2022		2021		2020
Current:
Federal	$	162,269	$	164,104	$	153,736
State and local	32,431		42,340		34,502
Foreign	16,676		12,417		6,985
	211,376		218,861		195,223
Deferred	51,635		(42,080)		(13,292)
	$	263,011	$	176,781	$	181,931

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 for the fiscal years ended May 31:

(In thousands)	2022		2021		2020
Income taxes at the U.S. federal statutory rate	$	314,741	$	270,427	$	222,258
Permanent differences (1)	(85,413)		(101,870)		(67,075)
State and local income taxes, net of federal benefit	33,547		27,304		25,294
Capital loss carryback	—		(14,072)		—
Other	136		(5,008)		1,454
	$	263,011	$	176,781	$	181,931

(1)    Primarily consists of the excess tax benefits related to stock-based compensation.

Components of Deferred Income Taxes

The components of deferred income taxes included on the consolidated balance sheets are as follows at May 31:

(In thousands)	2022		2021
Deferred tax assets:
Reserves related to accounts receivable	$	10,928	$	10,292
Inventory obsolescence	28,020		30,617
Insurance reserves	45,237		45,802
Stock-based compensation	62,522		74,898
Operating lease liabilities	43,745		44,530
Deferred compensation and other	92,250		114,553
	282,702		320,692
Valuation allowance	—		(2,037)
	282,702		318,655
Deferred tax liabilities:
Uniform and other rental items in service	226,510		202,846
Property and equipment	171,819		167,622
Service contracts and other intangible assets	199,256		207,834
Treasury locks	31,566		—
Capitalized contract costs	81,314		79,356
Operating lease right-of-use assets	43,745		44,530
State taxes and other	2,269		3,114
	756,479		705,302
Net deferred tax liability	$	473,777	$	386,647

Summary of Valuation Allowance

The progression of the valuation allowance is as follows at May 31:

(In thousands)	2022		2021
Balance at beginning of year	$	(2,037)	$	(6,411)
Subtractions	2,037		4,374
Balance at end of year	$	—	$	(2,037)

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, 2020	$	44,670
Additions for tax positions of the current year	4,728
Additions for tax positions of prior years	2,726
Settlements	(5,593)
Statute expirations	(4,074)
Balance at May 31, 2021	42,457
Additions for tax positions of the current year	5,558
Additions for tax positions of prior years	3,093
Settlements	(7,352)
Statute expirations	(6,182)
Balance at May 31, 2022	$	37,574