Income Taxes (Tables)

12 Months Ended

May 31, 2021

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)	2021		2020		2019
U.S. operations	$	1,221,690	$	1,035,902	$	1,061,505
Foreign operations	66,059		22,389		40,894
	$	1,287,749	$	1,058,291	$	1,102,399

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)	2021		2020		2019
Current:
Federal	$	164,104	$	153,736	$	134,174
State and local	42,340		34,502		40,949
Foreign	12,417		6,985		9,882
	218,861		195,223		185,005
Deferred	(42,080)		(13,292)		34,759
	$	176,781	$	181,931	$	219,764

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

Reconciliation of income tax expense (benefit) for continuing operations using the statutory rate and actual income tax expense is as follows for the fiscal years ended May 31:

(In thousands)	2021		2020		2019
Income taxes at the U.S. federal statutory rate	$	270,427	$	222,258	$	231,503
Permanent differences (1)	(101,870)		(67,075)		(51,201)
State and local income taxes, net of federal benefit	27,304		25,294		31,687
Capital loss carryback	(14,072)		—		—
Other (2)	(5,008)		1,454		6,506
Impact of the Tax Cuts and Jobs Act (the Tax Act):
Deemed repatriation of non-U.S. earnings, net of foreign     tax credits and other (collectively, transition tax)	—		—		153
Non-U.S. withholding taxes related to certain non-U.S.     earnings subject to repatriation	—		—		690
Remeasurement of U.S. net deferred tax liabilities from     35% to 21%	—		—		426
	$	176,781	$	181,931	$	219,764

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

(2)    Primarily consists of adjustments for uncertain tax positions and tax credits.

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)	2021		2020
Deferred tax assets:
Reserves related to accounts receivable	$	10,292	$	14,718
Inventory obsolescence	30,617		13,744
Insurance reserves	45,802		45,197
Stock-based compensation	74,898		78,802
Net operating loss and foreign related carry-forwards	3,885		7,657
Treasury locks	3,140		39,046
Operating lease liabilities	44,530		42,191
Deferred compensation and other	107,528		73,562
	320,692		314,917
Valuation allowance	(2,037)		(6,411)
	318,655		308,506
Deferred tax liabilities:
Uniform and other rental items in service	202,846		189,787
Property and equipment	167,622		177,664
Service contracts and other intangible assets	207,834		207,610
Capitalized contract costs	79,356		77,741
Operating lease right-of-use assets	44,530		42,191
State taxes and other	3,114		2,092
	705,302		697,085
Net deferred tax liability	$	386,647	$	388,579

Summary of Valuation Allowance

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

(In thousands)	2021		2020
Balance at beginning of year	$	(6,411)	$	(7,308)
Subtractions	4,374		897
Balance at end of year	$	(2,037)	$	(6,411)

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, 2019	$	48,715
Additions for tax positions of the current year	3,976
Additions for tax positions of prior years	4,325
Settlements	(5,473)
Statute expirations	(6,873)
Balance at May 31, 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