XML 83 R15.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
May 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes
(In thousands) | 2014 |  | 2013 |  | 2012
Income before income taxes consist of the following components: |  |  |  |  |
U.S. operations | $ | 595,221 |  |  | $ | 485,046 |  |  | $ | 454,811 |
Foreign operations | 12,637 |  |  | 14,862 |  |  | 16,133 |
| $ | 607,858 |  |  | $ | 499,908 |  |  | $ | 470,944 |
(In thousands) | 2014 |  | 2013 |  | 2012
Income tax expense consists of the following components: |  |  |  |  |
Current: |  |  |  |  |
Federal | $ | 163,140 |  |  | $ | 109,964 |  |  | $ | 139,251 |
State and local | 21,328 |  |  | 12,478 |  |  | 17,780 |
| 184,468 |  |  | 122,442 |  |  | 157,031 |
Deferred | 48,948 |  |  | 62,024 |  |  | 16,276 |
| $ | 233,416 |  |  | $ | 184,466 |  |  | $ | 173,307 |
(In thousands) | 2014 |  | 2013 |  | 2012
Reconciliation of income tax expense using the statutory rate and actual income tax expense is as follows: |  |  |  |  |
Income taxes at the U.S. federal statutory rate | $ | 212,750 |  |  | $ | 174,968 |  |  | $ | 164,830 |
State and local income taxes, net of federal benefit | 20,279 |  |  | 12,192 |  |  | 11,876 |
Other | 387 |  |  | (2,694 | ) |  | (3,399 | )
| $ | 233,416 |  |  | $ | 184,466 |  |  | $ | 173,307 |
The components of deferred income taxes included on the consolidated balance sheets are as follows:
(In thousands) | 2014 |  | 2013
Deferred tax assets: |  |  |
Allowance for doubtful accounts | $ | 4,835 |  |  | $ | 5,322 |
Inventory obsolescence | 11,682 |  |  | 12,220 |
Insurance and contingencies | 36,032 |  |  | 33,984 |
Stock-based compensation | 23,890 |  |  | 17,513 |
Foreign tax credit carry-forward | 4,266 |  |  | 5,397 |
Treasury locks | 6,924 |  |  | 8,020 |
Other | 30,526 |  |  | 20,030 |
| 118,155 |  |  | 102,486 |
Valuation allowance | (13,358 | ) |  | (12,789 | )
| 104,797 |  |  | 89,697 |
Deferred tax liabilities: |  |  |
In service inventory | 150,439 |  |  | 131,334 |
Property | 90,155 |  |  | 123,904 |
Intangibles | 81,215 |  |  | 99,267 |
Investment in partnerships | 93,227 |  |  | 4,025 |
State taxes and other | 24,650 |  |  | 18,819 |
| 439,686 |  |  | 377,349 |
Net deferred tax liability | $ | 334,889 |  |  | $ | 287,652 |
On April 30, 2014, Cintas completed its previously announced partnership transaction with the shareholders of Shred-it to combine Cintas' document destruction business with Shred-it's document destruction business. Due to differences in accounting for the book and tax basis in this and other partnerships, a deferred tax liability was recorded. Additionally, Cintas re-characterized the existing deferred tax liabilities associated with the document destruction business assets contributed to the partnership from "Property" and "Intangibles" to "Investment in Partnerships." Although realization is not assured, management believes it is more likely than not that the recorded deferred tax assets, net of valuation allowances, will be realized. The progression of the valuation allowance is as follows:
(In thousands) | 2014 |  | 2013
Balance at beginning of year | $ | (12,789 | ) |  | $ | (9,054 | )
Additions | (1,701 | ) |  | (7,391 | )
Subtractions | 1,132 |  |  | 3,656 |
Balance at end of year | $ | (13,358 | ) |  | $ | (12,789 | )
Income taxes paid were $172.5 million, $122.2 million and $160.8 million for the fiscal years ended May 31, 2014, 2013 and 2012, respectively. In the fourth quarter of fiscal 2012, Cintas repatriated approximately $110 million of cash from foreign subsidiaries on which no U.S. federal income taxes were previously provided, since Cintas had previously intended to permanently reinvest cumulative undistributed earnings of its foreign subsidiaries in foreign operations. Cintas recognized an income tax expense of $8.9 million, net of foreign tax credits in fiscal 2012 as a result of the repatriation described above. Undistributed earnings of foreign subsidiaries were approximately $172.7 million, $194.0 million and $140.7 million as of May 31, 2014, 2013 and 2012, respectively, for which deferred taxes have not been provided. Such earnings are considered to be permanently reinvested in Cintas' foreign subsidiaries. If such earnings were repatriated, additional tax expense may result. The current calculation of such additional taxes is not practicable. Accounting for uncertain tax positions requires the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Companies may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of May 31, 2014 and 2013, there was $9.7 million and $10.9 million, respectively, in total unrecognized tax benefits, which, if recognized, would favorably impact Cintas' effective tax rate. Cintas recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the consolidated statements of income, which is consistent with the recognition of these items in prior reporting periods. The total amount accrued for interest and penalties as of May 31, 2014 and 2013, was $0.7 million and $1.1 million, respectively. Cintas records this tax liability as current and long-term accrued liabilities on the consolidated balance sheets, as appropriate. In the normal course of business, Cintas provides for uncertain tax positions and the related interest, and adjusts its unrecognized tax benefits and accrued interest accordingly. Unrecognized tax benefits related to continuing operations decreased by $0.2 million, $29.2 million and $55.0 million in fiscal 2014, 2013 and 2012, respectively. Accrued interest decreased by $0.4 million, $0.9 million and $7.1 million in fiscal 2014, 2013 and 2012, respectively. 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, 2011 | $ | 103,099 |
Additions for tax positions pf prior years | 5,660 |
Settlements | (5,048 | )
Change in tax regulations | (57,182 | )
Statute expirations | (1,998 | )
Balance at May 31, 2012 | $ | 44,531 |
Additions based on tax positions related to the current year | 1,843 |
Additions for tax positions of prior years | 2,960 |
Change in tax regulations | (33,600 | )
Statute expirations | (2,025 | )
Balance at May 31, 2013 | $ | 13,709 |
Additions for tax positions of prior years | 2,586 |
Statute expirations | (1,963 | )
Settlements | (1,270 | )
Balance at May 31, 2014 | $ | 13,062 |
On September 13, 2013, the U.S. Department of the Treasury and the Internal Revenue Service released final tangible property regulations under Sections 162(a) and 263(a) regarding amounts paid to improve tangible property and acquire or produce tangible property, as well as proposed regulations regarding the disposition of property. The effective date of the final regulations was extended and will be effective for Cintas' fiscal year ending May 31, 2015. Early adoption is available, and as such, Cintas elected early adoption of the regulations on specific assets (material and supplies) resulting in gross decreases in unrecognized tax benefits of $33.6 million and $57.2 million in fiscal 2013 and 2012, respectively. Cintas continues to review these regulations as they relate to other tangible property but does not believe there will be a material impact on the consolidated financial statements when they are fully adopted. The majority of Cintas' operations are in North America. Cintas is required to file federal income tax returns, as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operation in any given period. All U.S. federal income tax returns are closed to audit through fiscal 2010. Cintas is currently in advanced stages of various audits in certain foreign jurisdictions and certain domestic states. The years under foreign and domestic state audits cover fiscal years back to 2008. Based on the resolution of the various audits and other potential regulatory developments, it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $0.7 million for the fiscal year ended May 31, 2015.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration