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INCOME TAXES | 3 Months Ended
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Aug. 27, 2017
Income Tax Disclosure [Abstract] |
INCOME TAXES | INCOME TAXES Income tax expense from continuing operations for the first quarter of fiscal 2018 and 2017 was $120.0 million and $169.2 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) from continuing operations was 43.9% and 63.2% for the first quarter of fiscal 2018 and 2017, respectively. The effective tax rate in the first quarter of fiscal 2018 reflects additional tax expense related to the planned repatriation of cash from foreign subsidiaries and the tax expense related to undistributed foreign earnings for which the indefinite reinvestment assertion is no longer made. The effective tax rate in the first quarter of fiscal 2017 reflects the following:
• | an income tax benefit allowed upon the vesting/exercise of employee stock compensation awards by our employees, beyond that which is attributable to the original fair value of the awards upon the date of grant,
• | additional tax expense in the first quarter of fiscal 2017 associated with non-deductible goodwill sold in connection with the dispositions of the Spicetec and JM Swank businesses, and
• | additional tax expense in the first quarter of fiscal 2017 associated with non-deductible goodwill, for which an impairment charge was recognized.
The amount of gross unrecognized tax benefits for uncertain tax positions, including positions impacting only the timing of tax benefits, was $37.7 million as of August 27, 2017 and $39.3 million as of May 28, 2017. There were no balances included as of either August 27, 2017 or May 28, 2017, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The gross unrecognized tax benefits excluded related liabilities for gross interest and penalties of $5.8 million and $6.0 million as of August 27, 2017 and May 28, 2017, respectively. The net amount of unrecognized tax benefits at August 27, 2017 and May 28, 2017 that, if recognized, would impact the Company's effective tax rate was $30.7 million and $31.6 million, respectively. Recognition of these tax benefits would have a favorable impact on the Company's effective tax rate. We estimate that it is reasonably possible that the amount of gross unrecognized tax benefits will decrease by up to $16.7 million over the next twelve months due to various federal, state, and foreign audit settlements and the expiration of statutes of limitations. As of August 27, 2017 and May 28, 2017, we had a deferred tax asset of $1.09 billion and $1.08 billion, respectively, that was generated from the capital loss realized on the sale of the Private Brands operations with corresponding valuation allowances of $994.3 million and $990.9 million, respectively, to reflect the uncertainty regarding the ultimate realization of the tax asset. During the first quarter of fiscal 2018, the balance of the deferred tax asset was adjusted for the impact of state law changes, realization of certain tax attributes, and the settlement of certain tax indemnity claims under the contract terms of the Private Brands sale. Historically, we have not provided U.S. deferred taxes on the cumulative undistributed earnings of our foreign subsidiaries. During the first quarter of fiscal 2018, we decided to repatriate certain cash balances currently held in Italy, Canada, Mexico, the Netherlands, and Luxembourg due to the timing of cash flows in connection with certain business acquisition and divestiture activity, as well as forecasted levels of short-term borrowings. We expect to repatriate approximately $154.8 million during the second quarter of fiscal 2018. The planned cash repatriation will result in the repatriation of approximately $115.0 million in previously undistributed earnings of our foreign subsidiaries. As a result of this decision, we have recognized $12.2 million of income tax expense in the first quarter of fiscal 2018. In conjunction with this planned repatriation, we have determined that additional previously undistributed earnings of foreign subsidiaries no longer meets the requirements for indefinite reinvestment under applicable accounting guidance and, therefore, recognized an additional $11.3 million of income tax expense in the first quarter of fiscal 2018. An additional $4.3 million of income tax expense was recognized in the first quarter of fiscal 2018, primarily related to a valuation allowance on foreign tax credits generated in prior periods. We continue to believe the remaining undistributed earnings of our foreign subsidiaries, after taking into account the above transactions, are indefinitely reinvested and therefore have not provided any additional U.S. deferred taxes.

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- 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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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