NOTE 12 — INCOME TAXES

The Company’s income tax expense amounts for the nine months ended October 31, 2016 and 2015 differed from the expected income tax expense amounts computed by applying the federal corporate income tax rate of 35% to income before income taxes for the periods as shown in the table below.

	Nine Months Ended October 31,
	2016			2015
Computed expected income tax expense	$	29,318		$	21,311
State income taxes, net of federal tax benefit	3,296			2,997
Permanent differences, net	(6,419		)	(4,794		)
Other, net	927			331

	$	27,122		$	19,845

For the nine months ended October 31, 2016 and 2015, the favorable income tax effects of permanent differences related primarily to the exclusion from taxable income of the income attributable to noncontrolling interest entities (which are considered partnerships for income tax reporting purposes), the domestic manufacturing deduction, and the recognition of the excess income tax benefits associated with stock options exercised during the current year, all offset partially in the current period by the unfavorable income tax effect of the impairment loss. For the nine months ended October 31, 2016, the largest other reconciling item was the unfavorable foreign income tax rate differential.

As of October 31 and January 31, 2016, the condensed consolidated balance sheets included prepaid income taxes in the amounts of $0.7 million and $3.3 million, respectively. As of October 31, 2016, the Company does not believe that it has any material uncertain income tax positions reflected in its accounts.

The income tax effects of temporary differences that gave rise to deferred tax assets and liabilities as of October 31 and January 31, 2016 included the following:

	October 31,			January 31,
	2016			2016
Assets:
Net operating loss (“NOL”) carryforwards	$	3,210		$	3,345
Accrued expenses	3,524			2,144
Stock options	1,821			2,354
Purchased intangibles	1,678			1,905
Other	993			328

	11,226			10,076

Liabilities:
Purchased intangibles	(4,483		)	(4,375		)
Property and equipment and other	(2,481		)	(2,244		)
Construction contracts	(2,282		)	(3,681		)

	(9,246		)	(10,300		)

Net deferred tax assets (liabilities)	$	1,980		$	(224	)

The Company’s ability to realize deferred tax assets, including those related to the NOLs discussed above, depends primarily upon the generation of sufficient future taxable income to allow for the utilization of the Company’s deductible temporary differences and tax planning strategies. If such estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against some or all of its deferred tax assets resulting in additional income tax expense in the condensed consolidated statement of earnings. At this time, based substantially on the strong earnings performance of the Company’s power industry services reporting segment, management believes that it is more likely than not that the Company will realize the benefits of its deferred tax assets.

The Company is subject to income taxes in the United States of America, the Republic of Ireland and in various other state and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company is no longer subject to income tax examinations by tax authorities for its fiscal years ended on or before January 31, 2012 except for a few notable exceptions including the Republic of Ireland and California where the open periods are one year longer.