Provision for Income Taxes

9 Months Ended

Apr. 30, 2017

12.

Provision for Income Taxes

The overall effective income tax rate for the three months ended April 30, 2017 was 33.1% compared with 31.9% for the three months ended April 30, 2016. The primary reason for the increase in the effective income tax rate is due to the larger amount of uncertain tax benefit settlements and expirations that occurred in the three months ended April 30, 2016 compared to the three months ended April 30, 2017.

The overall effective income tax rate for the nine months ended April 30, 2017 was 33.0% compared with 32.6% for the nine months ended April 30, 2016. The effective income tax rate for the fiscal 2017 nine-month period includes a benefit of $1,843 related to the adoption of ASU 2016-09 as discussed in Note 1 to the Condensed Consolidated Financial Statements. The effective income tax rate for the fiscal 2016 nine-month period was favorably impacted by the retroactive reinstatement of the federal research and development credit and other credits that were enacted on December 18, 2015. The effective income tax rates for the fiscal 2017 and fiscal 2016 periods were both favorably impacted by various uncertain tax benefit settlements and expirations.

The Company anticipates a decrease of approximately $5,036 in unrecognized tax benefits, and $734 in accrued interest related to unrecognized tax benefits recorded as of April 30, 2017, 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 2015 and 2016 remain open for federal income tax purposes and fiscal years 2013, 2014, 2015 and 2016 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. During the three months ended April 30, 2017 the Company finalized its IRS audit for fiscal year 2014. There were no tax assessments related to the completion of the IRS audit. The Company is also under exam by various state authorities for fiscal years ended July 31, 2013 through 2015. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions related to its Federal and State income tax returns in its liability for unrecognized tax benefits.