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Income Taxes (Tables) | 12 Months Ended
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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 |

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