Income Tax Income Tax Disclosure

9 Months Ended

Oct. 31, 2019

Income Tax Disclosure [Abstract]

Income Tax Disclosure

INCOME TAXES

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, 2019		October 31, 2018		October 31, 2019		October 31, 2018
Effective tax rate	13.0	%	8.6	%	14.7	%	15.6	%

Timing of discrete items was the primary driver of the year-over-year volatility in the effective tax rate for the three- and nine-month periods ended October 31, 2019.

The Company’s effective tax rates, excluding discrete items, in the three-month periods ended October 31, 2019 and 2018, were 15.3 percent and 18.7 percent, respectively. This 3.4 percentage point decrease was driven primarily by a decrease in the Company’s effective tax rate, excluding discrete items, from 19.6 percent for the six-month period ended July 31, 2019, to 18.3 percent for nine-month period ended October 31, 2019.

The Company’s effective tax rates, excluding discrete items, in the nine-month periods ended October 31, 2019 and 2018, were 18.3 percent and 19.3 percent, respectively. This 1 percentage point decrease was driven primarily by a decrease in current year profitability that caused a higher research and development tax credit as a percentage of pre-tax income.

The Company's net favorable discrete tax benefits for the nine-month periods ended October 31, 2019 and 2018 were primarily related to the vesting or settlement of equity awards. The Company's total net favorable discrete tax benefits were as follows:

	Three Months Ended				Nine Months Ended
	October 31, 2019		October 31, 2018		October 31, 2019		October 31, 2018
Discrete tax benefit	$	268	$	1,440	$	1,336	$	2,129

The Company operates both domestically and internationally. As of October 31, 2019, undistributed earnings from the Company's foreign subsidiaries were considered to have been reinvested indefinitely.