Note 11 — Income Taxes

The following table summarizes the effective tax rate for the three months ended July 31, 2018 and 2017:

	Three Months Ended July 31,
	2018			2017
Effective tax rate as reported		22.8	%		(51.5	)%
Impact of restructuring and impairment charges		(0.1	)%		69.6	%
Effective tax rate excluding the impact of restructuring and impairment charges		22.7	%		18.1	%

The effective tax rate in the first quarter of fiscal year 2019 was 22.8%, compared to a benefit of 51.5% in the first quarter of fiscal year 2018. Fiscal year 2018 benefitted from significant restructuring and impairment charges in relatively high tax rate jurisdictions. Excluding these items, the effective tax rate for the first quarter of fiscal year 2018 was 18.1%. The increase in rate in fiscal year 2019 excluding the impact of restructuring and impairment charges compared to fiscal year 2018 was primarily due to large equity compensation deductions from significant vesting of restricted stock and other adjustments in the first quarter of fiscal year 2018 that were not significant for the first quarter of fiscal year 2019. This was partially offset by net benefits from the Tax Act and a more favorable earnings mix in fiscal 2019 compared to the first quarter of fiscal year 2018.

The Tax Act

On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation originally known as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The Tax Act significantly revised the future ongoing U.S. corporate income tax system by, among other changes, the following:



lowering the U.S. federal corporate income tax rate to 21% with a potentially lower rate for certain foreign derived income;



accelerating deductions for certain business assets;



changing the U.S. system from a worldwide tax system;



requiring companies to pay a one-time transition tax on post-1986 unrepatriated cumulative non-U.S. earnings and profits ("E&P") of foreign subsidiaries;



eliminating certain deductions such as the domestic production deduction;



establishing limitations on the deductibility of certain expenses including interest and executive compensation; and



creating new taxes on certain foreign earnings.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allows us to record provisional amounts related to the Tax Act during a measurement period not to extend beyond one year of the enactment date. In fiscal year 2018, we estimated a provisional estimated net tax benefit of $25.1 million related to the Tax Act. We are still analyzing certain aspects of the Tax Act and refining our calculations, including our estimates of expected reversals, which could affect the measurement of these balances and give rise to new deferred tax amounts. As the Tax Act was passed late in December 2017 and ongoing guidance and accounting interpretation are expected over the 12 months following enactment, we consider the accounting for the transition tax and other items included last year, as well as items described below which were included in the three months ended July 31, 2018, to be provisional due to the forthcoming guidance and our ongoing analysis of final data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

The Tax Act created new taxes, effective for us on May 1, 2018, including a provision designed to tax certain global income ("GILTI"), a base erosion anti-abuse tax ("BEAT") as well as a new deduction for certain foreign derived intangible income ("FDII"). We recorded a minor provisional expense during the three months ended July 31, 2018. We expect to adjust this provisional amount as additional guidance is provided.