Income Taxes (Tables)

12 Months Ended

Jul. 31, 2018

Schedule of income from continuing operations before taxes

Income before taxes consisted of the following:



	Year Ended July 31,
(In thousands)	2018		2017		2016
U.S.	$	501,961	$	385,526	$	339,013
International	60,550		54,574		56,852
Total income before taxes	$	562,511	$	440,100	$	395,865

Schedule of income tax expense (benefit) from continuing operations

Income tax expense (benefit) from continuing operations consisted of the following:



	Year Ended July 31,
(In thousands)	2018			2017			2016
Federal:
Current	$	109,804		$	12,752		$	103,127
Deferred	17,094			20,094			7,019
	126,898			32,846			110,146
State:
Current	9,100			1,659			5,347
Deferred	(111		)	499			151
	8,989			2,158			5,498
International:
Current	8,820			11,468			10,855
Deferred	(203		)	(633		)	(994		)
	8,617			10,835			9,861
Income tax expense	$	144,504		$	45,839		$	125,505

Schedule of reconciliation of Income tax

A reconciliation of the expected U.S. statutory tax rate to the actual effective income tax rate is as follows:



	Year Ended July 31,
(In thousands)	2018		2017		2016
Federal statutory rate	26.9	%	35.0	%	35.0	%
State income taxes, net of federal income tax benefit	1.3	%	1.3	%	0.9	%
International rate differential	(0.8	)%	(1.8	)%	(1.8	)%
Compensation and fringe benefits ⁽¹⁾	(3.5	)%	(24.3	)%	(3.6	)%
Provisional transition tax	2.2	%	—	%	—	%
Deferred tax remeasurement	(0.8	)%	—	%	—	%
Other differences	0.4	%	0.2	%	1.2	%
Effective tax rate	25.7	%	10.4	%	31.7	%

(1)

Included in the compensation and fringe benefits rate reconciliation is the impact of the Company’s adoption of ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. Under this standard, all excess tax benefits and tax deficiencies related to exercises of stock options are recognized as income tax expense or benefit in the income statement as discrete items in the reporting period in which they occur.

Schedule of tax effects on deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) are presented below:



	July 31,
(In thousands)	2018			2017
Deferred tax assets:
Allowance for doubtful accounts	$	1,068		$	1,177
Accrued compensation and benefits	17,704			26,621
State taxes	580			215
Accrued other	1,930			2,684
Deferred revenue	929			(371		)
Property and equipment	—			9,405
Losses carried forward	3,065			3,688
Federal tax benefit	6,441			10,542
Total gross deferred tax assets	31,717			53,961
Less: Valuation allowance	(4,592		)	(6,455		)
Net deferred tax assets	27,125			47,506
Deferred tax liabilities:
Vehicle pooling costs	(6,523		)	(9,590		)
Property and equipment	(14,147		)	—
Prepaid insurance	(708		)	(1,333		)
Intangibles and goodwill	(25,010		)	(38,580		)
Total gross deferred tax liabilities	(46,388		)	(49,503		)
Net deferred tax liabilities	$	(19,263	)	$	(1,997	)

Schedule of net deferred tax liability

The above net deferred tax assets and liabilities have been reflected in the accompanying consolidated balance sheets as follows:



	July 31,
(In thousands)	2018			2017
U.S. current liabilities	$	—		$	(92	)
U.S. non-current (liabilities) assets	(16,018		)	1,054
International non-current liabilities	(3,245		)	(2,959		)
Net deferred tax liabilities	$	(19,263	)	$	(1,997	)

Schedule of unrecognized tax benefits

The following table summarizes the activities related to the Company’s unrecognized tax benefits:



	July 31,
(In thousands)	2018			2017			2016
Beginning balance	$	19,269		$	20,715		$	17,428
Increases related to current year tax position	5,169			2,807			4,311
Prior year tax positions:
Prior year increase	554			2,694			1,120
Prior year decrease	(2,079		)	(3,605		)	—
Cash settlement	(519		)	(1,123		)	(412		)
Lapse of statute of limitations	(1,072		)	(2,219		)	(1,732		)
Ending balance	$	21,322		$	19,269		$	20,715