
5.	INCOME TAXES

The effective income tax rate for the three months ended July 31, 2014 was 35.5% versus 34.2% in the prior year. The effective income tax rate for the three months ended July 31, 2014 includes an increase of 0.6 percentage point due to the one-time impact of a change in state tax legislation. The effective income tax rate for the six months ended July 31, 2014 was 35.3% versus 34.5% in the prior year. The effective income tax rate for the six months ended July 31, 2014 includes an increase of 1.3 percentage points due to the one-time impact of changes in state tax legislation offset by the favorable impact of a valuation allowance release of 0.6 percentage point.

At July 31, 2014, the Company’s gross uncertain tax positions decreased by $20,231,000 from January 31, 2014 primarily as a result of the settlement of an audit conducted by the Internal Revenue Service ("IRS"). At July 31, 2014, gross accrued interest and penalties decreased by $4,605,000 from January 31, 2014, primarily due to the settlement of the IRS audit. These decreases were primarily a result of payments due to federal and state taxing authorities. The effect of this settlement on the Condensed Consolidated Statements of Earnings was not material for the three and six months ended July 31, 2014.

The Company conducts business globally, and as a result, is subject to taxation in the U.S. and various state and foreign jurisdictions. As a matter of course, tax authorities regularly audit the Company. The Company's tax filings are currently being examined by a number of tax authorities in several jurisdictions. An audit is currently being conducted by the IRS (tax years 2010–2011). Tax years from 2006–present are open to examination in U.S. Federal and various state, local and foreign jurisdictions. As part of these audits, the Company engages in discussions with the taxing authorities regarding tax positions. As of July 31, 2014, unrecognized tax benefits are not expected to change materially in the next 12 months. Future developments may result in a change in this assessment.