XML 26 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Income Taxes
9 Months Ended
Feb. 25, 2018
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
The Tax Act was enacted on December 22, 2017, and includes, among other items, a reduction in the federal corporate income tax rate from 35.0 percent to 21.0 percent effective January 1, 2018. Our federal corporate income tax rate for fiscal 2018 is now 29.4 percent, representing a blended income tax rate for the current fiscal year. For fiscal 2019, our federal statutory rate will be 21.0 percent. Additionally, for the quarter ended February 25, 2018, in accordance with FASB Accounting Standards Codification (ASC) 740, we remeasured our deferred tax balances to reflect the reduced rate that will apply when these deferred taxes are settled or realized in future periods. The remeasurement resulted in a $77.3 million one-time adjustment of our net deferred tax liabilities reflected in our consolidated balance sheet as of February 25, 2018 and a corresponding income tax benefit reflected in our consolidated statements of earnings for the quarter and nine months ended February 25, 2018. The SEC staff issued Staff Accounting Bulletin 118 which allows companies to record provisional amounts during a measurement period that is similar to the measurement period used when accounting for business combinations. While we are able to make a reasonable estimate of the impacts of the Tax Act, adjustments may occur and may be affected by other factors, including, but not limited to, changes to the current year deferred tax balance estimates.
The effective income tax rate for continuing operations for the quarter ended February 25, 2018 was an 88.4 percent benefit compared to an effective income tax rate of 24.5 percent expense for the quarter ended February 26, 2017. The effective income tax rate for continuing operations for the nine months ended February 25, 2018 was a 10.2 percent benefit compared to an effective income tax rate of 25.4 percent expense for the nine months ended February 26, 2017. The decrease in the effective income tax rate for the quarter and nine months ended February 25, 2018 was primarily due to the Tax Act and lower earnings before income taxes for fiscal 2018 driven primarily by debt retirement costs recorded during the quarter ended February 25, 2018.
Included in our remaining balance of unrecognized tax benefits is $1.4 million related to tax positions for which it is reasonably possible that the total amounts could change within the next twelve months based on the outcome of examinations or as a result of the expiration of the statute of limitations for specific jurisdictions.