XML 25 R11.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Aug. 25, 2018
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes The provision for income taxes consists of the following (in thousands):
Fiscal year | 2018 |  | 2017 |  | 2016
Current: |  |  |  |  |
Federal | $ | 23,815 |  |  | $ | 37,027 |  |  | $ | 54,654 |
Foreign | 527 |  |  | 1,995 |  |  | 1,672 |
State | 8,012 |  |  | 6,642 |  |  | 9,996 |
Total current | $ | 32,354 |  |  | $ | 45,664 |  |  | $ | 66,322 |
Deferred: |  |  |  |  |
Federal | $ | (11,517 | ) |  | $ | (520 | ) |  | $ | 10,803 |
Foreign | 363 |  |  | 123 |  |  | (217 | )
State | 2,151 |  |  | (340 | ) |  | 1,437 |
Total deferred | $ | (9,003 | ) |  | $ | (737 | ) |  | $ | 12,023 |
Total | $ | 23,351 |  |  | $ | 44,927 |  |  | $ | 78,345 |
The following table reconciles the provision for income taxes using the statutory federal income tax rate to the actual provision for income taxes:
Fiscal year | 2018 |  | 2017 |  | 2016
Income taxes at the statutory federal income tax rate | 25.9 | % |  | 35.0 | % |  | 35.0 | %
State income taxes | 4.1 |  |  | 3.5 |  |  | 3.5 |
Other (1) | (2.8 | ) |  | 0.5 |  |  | — |
Deemed Repatriation of Non - U.S. Earnings, net foreign tax credits and other (collectively, Transition Tax) | 1.4 |  |  | — |  |  | — |
Impact of U.S. tax reform federal tax rate reduction | (16.1 | ) |  | — |  |  | — |
Total | 12.5 | % |  | 39.0 | % |  | 38.5 | %
(1) Fiscal 2018 includes the impact of ASU 2016-09. The tax effect of items giving rise to the Company’s deferred tax assets and liabilities is as follows (in thousands):
| August 25, 2018 |  | August 26, 2017
Deferred Tax Assets |  |  |
Payroll and benefit related | $ | 14,718 |  |  | $ | 26,391 |
Insurance related | 10,880 |  |  | 17,691 |
Environmental | 6,593 |  |  | 9,945 |
Accrued expenses | 3,513 |  |  | 4,542 |
Other | 7,440 |  |  | 9,725 |
Total deferred tax assets | $ | 43,144 |  |  | $ | 68,294 |
Deferred Tax Liabilities |  |  |
Tax in excess of book depreciation | $ | 39,877 |  |  | $ | 48,969 |
Purchased intangible assets | 27,206 |  |  | 39,179 |
Rental merchandise in service | 44,508 |  |  | 56,707 |
Other | 318 |  |  | 25 |
Total deferred tax liabilities | 111,909 |  |  | 144,880 |
Net deferred tax liability | $ | 68,765 |  |  | $ | 76,586 |
The Company has evaluated its deferred tax assets and believes that they will be fully recovered. As a result, the Company has not established a valuation allowance. The reduction in the effective tax rates in the fiscal year ended August 25, 2018 as compared to the prior year period was due primarily to the impact of the Act enacted on December 22, 2017. As a result of the Act, U.S. corporations will be subject to lower income tax rates, which also caused the Company to remeasure its U.S. net deferred tax liabilities at the lower rates. The remeasurement of the Company's net deferred tax assets and liabilities resulted in an estimated net benefit of $22.6 million recorded to the Company’s provision for income taxes for the fiscal year ended August 25, 2018. Also because of this Act, the Company will be subject to a one-time transition tax for the deemed repatriation of its foreign earnings. The Company recorded an estimated charge of $2.5 million in the fiscal year ended August 25, 2018 for this transition tax which partially offset the benefit mentioned above. For the fiscal year ended August 25, 2018, the Company’s effective tax rates also were lower than the statutory tax rate due to the tax benefit of $3.1 million during the fiscal year ended August 25, 2018, from restricted stock upon vesting. U.S. Tax Reform The Act, among other matters, reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and creates new taxes on certain foreign sourced earnings. As of August 25, 2018, the Company had not completed its accounting for the tax effects of enactment of the Act; however, as described below, the Company has made a reasonable estimate of the effects on its existing deferred tax balances and the one-time transition tax, and recognized a provisional net benefit of $20.1 million, which is included in income tax expense for the fiscal year ended August 25, 2018. On December 22, 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Act (“SAB 118”) directing SEC registrants to consider the impact of the U.S. legislation as “provisional” when they do not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete their accounting for the change in tax law. In accordance with SAB 118, the amounts recorded related to accounting for the Act represent the Company’s best estimate based on its interpretation of the U.S. legislation as the Company is still accumulating data to finalize the underlying calculations, or in certain cases, the U.S. Treasury is expected to issue further guidance on the application of certain provisions of the U.S. legislation. In addition, we also used assumptions and estimates that may change as a result of future guidance and interpretation from the Internal Revenue Service, the SEC, the FASB and various other taxing jurisdictions. In particular, we anticipate that the U.S. state jurisdictions will continue to determine and announce their conformity or decoupling from the Act, either in its entirety or with respect to specific provisions. All of these potential legislative and interpretive actions could result in adjustments to our provisional estimates when the accounting for the income tax effects of the Act is completed. In the fiscal year ended August 25, 2018, the Company revised its estimated annual effective rate to reflect a change in the federal statutory income tax rate from 35% to 21%. The rate change is administratively effective at the beginning of the Company’s fiscal year, using a blended rate for the annual period. The Company's blended federal statutory income tax rate for fiscal 2018 is 25.9%. The Company re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is 25.9% for fiscal 2018 reversals and 21% for post-fiscal 2018 reversals. However, the Company is still analyzing certain aspects of the Act and refining its calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional net benefit amount recorded related to the re-measurement of the Company’s deferred tax balance was $22.6 million in the fiscal year ended August 25, 2018. The one-time transition tax is based on the Company’s total post-1986 earnings and profits (“E&P”) in foreign subsidiaries which were previously deferred from U.S. income taxes. The Company recorded a provisional amount for its one-time transition tax liability related to the deemed repatriation of the earnings of its foreign subsidiaries, resulting in an increase in income tax expense of $2.5 million in the fiscal year ended August 25, 2018. The Company has not yet finalized its calculation of the total post-1986 foreign E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when the Company finalizes the calculation of its post-1986 foreign E&P previously deferred from U.S. federal taxation and finalizes the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax and any additional outside basis difference inherent in these entities as these amounts continue to be indefinitely reinvested in foreign operations. The Company continues to evaluate this assertion in its ongoing analysis of the effects of tax reform on the Company's strategic initiatives. The Company believes that determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable. Uncertain tax positions As of August 25, 2018 and August 26, 2017, there was $2.2 million and $4.2 million, respectively, of unrecognized tax benefits, of which $1.9 million and $3.6 million, respectively, would favorably impact the Company’s effective tax rate, if recognized. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense which is consistent with the recognition of these items in prior reporting periods. As of August 25, 2018 and August 26, 2017, the Company had accrued a total of $0.1 in interest and penalties, in its long-term accrued liabilities. For the years ended August 25, 2018, August 26, 2017 and August 27, 2016 the Company recognized a nominal expense in its Consolidated Statement of Income related to interest and penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Balance at August 27, 2016 | $ | 3,743 |
Additions based on tax positions related to the current year | 490 |
Additions for tax positions of prior years | 331 |
Statute expirations | (350 | )
Balance at August 26, 2017 | 4,214 |
Additions based on tax positions related to the current year | 487 |
Additions for tax positions of prior years | — |
Reductions for tax positions of prior years | (2,073 | )
Statute expirations | (430 | )
Balance at August 25, 2018 | $ | 2,198 |
The Company has a significant portion of its operations in the United States and Canada. It is required to file federal income tax returns as well as state income tax returns in a majority of the U.S. states and also in the Canadian provinces of Alberta, British Columbia, Ontario, Saskatchewan, Quebec and New Brunswick. At times, the Company is subject to audits in these jurisdictions, which typically are complex and can require several years to resolve. The final resolution of any such tax audits could result in either a reduction in the Company’s accruals or an increase in its income tax provision, both of which could have a material impact on the consolidated results of operations in any given period. All U.S. and Canadian federal income tax statutes have lapsed for filings up to and including fiscal years 2013 and 2010, respectively. With a few exceptions, the Company is no longer subject to state and local income tax examinations for periods prior to fiscal 2014. The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the next 12 months.

X
- References No definition available. + 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 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration