Income Tax Income Tax Disclosure

9 Months Ended

Oct. 31, 2018

Income Tax Disclosure [Abstract]

Income Tax Disclosure

INCOME TAXES

The U.S. Tax Cuts and Jobs Act (TCJA) was enacted on December 22, 2017 and reduced the U.S. federal statutory tax rate to 21 percent effective January 1, 2018. In addition, the SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118), Income Tax Accounting Implications of the TCJA, which allows the Company to record provisional amounts during a measurement period not to extend beyond one year from the enactment date. The Company completed its accounting for the transition tax in the third quarter of fiscal 2019. Also, the Company has determined that it will elect to recognize Global Intangible Low Taxed Income (GILTI) as a period cost if, and when, incurred. As of October 31, 2018, undistributed earnings of the Canadian and European subsidiaries were considered to have been reinvested indefinitely.

The Company’s effective tax rate varies from the federal statutory rate primarily due to state and local taxes, research and development tax credit, foreign-derived intangible income deduction, and tax-exempt insurance premiums. The Company’s effective tax rates were as follows:

	Three Months Ended				Nine Months Ended
	October 31, 2018		October 31, 2017		October 31, 2018		October 31, 2017
Effective tax rate	8.6	%	32.6	%	15.6	%	31.3	%

The decrease in effective tax rates year-over-year is primarily due to the decrease in the federal statutory tax rate pursuant to the TCJA. The Company’s effective tax rates, excluding discrete items, in the three- and nine-month periods ended October 31, 2018 were 18.7 percent and 19.3 percent, respectively. These effective tax rates were approximately 14 and 11 percentage points lower than the three- and nine-month periods ended October 31, 2017, resulting in a lower tax expense of $1,971 and $6,320, respectively.

In addition, net favorable discrete items in the third quarter of fiscal year 2019 lowered tax expense by $1,440. Favorable discrete tax items for the current year nine-month period lowered tax expense by $2,129. The Company’s total discrete items were as follows:

	Three Months Ended					Nine Months Ended
	October 31, 2018		October 31, 2017			October 31, 2018		October 31, 2017
Total discrete tax benefit (expense), net	$	1,440	$	(9	)	$	2,129	$	(521	)