12.

Provision for Income Taxes

The overall effective income tax rate for the three months ended April 30, 2016 was 31.9% compared with 32.8% for the three months ended April 30, 2015. The primary reason for the decrease is related to favorable fiscal 2015 tax return adjustments that were recorded in the three months ended April 30, 2016 when the return was filed. The effective income tax rates for the fiscal 2016 three-month period and fiscal 2015 three-month period were both impacted, to a similar extent, by uncertain tax benefit settlements and expirations of the statute of limitations.

The overall effective income tax rate for the nine months ended April 30, 2016 was 32.6% compared with 31.9% for the nine months ended April 30, 2015. The primary reason for the increase in the effective income tax rate is due to the larger amount of uncertain tax benefits that settled favorably in the nine months ended April 30, 2015 when compared to the nine months ended April 30, 2016. The effective income tax rates for the fiscal 2015 and fiscal 2016 periods were both impacted, to a similar extent, by the retroactive reinstatement of the federal research and development credit and other credits that were enacted on December 19, 2014 and December 18, 2015, respectively.

It is the Company’s policy to recognize interest and penalties accrued relative to unrecognized tax benefits in income tax expense. For the nine months ended April 30, 2016, the Company released $2,891 of gross uncertain tax positions and related interest and penalties recorded at July 31, 2015 related to the effective settlement of various uncertain tax positions and statute of limitation expirations, which resulted in a net income tax benefit of $1,420. The Company accrued $332 in interest and penalties related to the remaining uncertain tax positions recorded at July 31, 2015. For the three months ended April 30, 2016, the Company released $2,891 of gross uncertain tax positions and related interest and penalties recorded at July 31, 2015 related to the effective settlement of various uncertain tax positions and statute of limitation expirations, which resulted in a net income tax benefit of $1,420 and accrued $50 in interest and penalties.

For the nine months ended April 30, 2015, the Company released $7,368 of gross uncertain tax positions and related interest and penalties recorded at July 31, 2014 related to the effective settlement of various uncertain tax positions and statute of limitation expirations, which resulted in a net income tax benefit of $3,762. The Company accrued $385 in interest and penalties related to the remaining uncertain tax positions recorded at July 31, 2014 and recorded $90 of additional uncertain tax benefit reserve related to previous tax periods. For the three months ended April 30, 2015, the Company released $2,862 of gross uncertain tax positions and related interest and penalties recorded at July 31, 2014 related to the effective settlement of various uncertain tax positions and statute of limitation expirations, which resulted in a net income tax benefit of $1,375 and accrued $92 in interest and penalties.

The Company anticipates a decrease of approximately $4,665 in unrecognized tax benefits, and $760 in accrued interest and penalties related to unrecognized tax benefits recorded as of April 30, 2016, within the next 12 months from expected settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations. Actual results may differ from these estimates.

Generally, fiscal years 2013, 2014 and 2015 remain open for federal income tax purposes and fiscal years 2012, 2013, 2014 and 2015 remain open for state and Canadian income tax purposes. The Company and its subsidiaries file a consolidated U.S. federal income tax return and multiple state income tax returns. The Company is currently being audited by the IRS for tax year end July 31, 2014, the state of California for tax years ended July 31, 2013 and 2014 and the state of Idaho for tax years ended July 31, 2012, 2013 and 2014. In addition, the Company is currently disputing the audit results by the state of Indiana for tax years ended July 31, 2008, 2009 and 2010. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions related to its Federal, California, Idaho and Indiana income tax returns in its liability for unrecognized tax benefits.