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Income Taxes | 12 Months Ended
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Jan. 31, 2013
Income Taxes [Abstract] |
Income Taxes | 11. Income Taxes
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Income (loss) before income taxes is attributable to the following jurisdictions: |  |  |  |
Domestic |  | $ | (2,824 | ) |  | $ | 14,875 |  |  | $ | (522 | )
Foreign |  |  | 16,348 |  |  |  | 19,455 |  |  |  | 7,316 |
Total |  | $ | 13,524 |  |  | $ | 34,330 |  |  | $ | 6,794 |
The components of income tax expense (benefit) were as follows: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | (2,306 | ) |  | $ | 4,090 |  |  | $ | (171 | )
Foreign |  |  | 3,229 |  |  |  | 6,204 |  |  |  | 2,466 |
|  |  | 923 |  |  |  | 10,294 |  |  |  | 2,295 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  |  | (4,757 | ) |  |  | 1,042 |  |  |  | (183 | )
Foreign |  |  | 307 |  |  |  | (1,327 | ) |  |  | (47 | )
|  |  | (4,450 | ) |  |  | (285 | ) |  |  | (230 | )
Income tax (benefit) expense |  | $ | (3,527 | ) |  | $ | 10,009 |  |  | $ | 2,065 |
The following is a reconciliation of expected to actual income tax expense:
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Federal income tax expense at 34% in 2013, 35% in 2012 and 34% in 2011 |  | $ | 4,598 |  |  | $ | 12,016 |  |  | $ | 2,310 |
Changes in tax rates |  |  | 23 |  |  |  | (7 | ) |  |  | 131 |
Permanent differences |  |  | (741 | ) |  |  | 347 |  |  |  | (300 | )
Foreign effective tax rate differential |  |  | (3,092 | ) |  |  | (2,574 | ) |  |  | (1,149 | )
Potential tax, penalties and interest resulting from uncertain tax positions |  |  | (5,059 | ) |  |  | 529 |  |  |  | 279 |
Undistributed earnings of foreign affiliates |  |  | — |  |  |  | (435 | ) |  |  | 646 |
Foreign withholding taxes |  |  | — |  |  |  | 268 |  |  |  | 122 |
Other |  |  | 744 |  |  |  | (135 | ) |  |  | 26 |
|  | $ | (3,527 | ) |  | $ | 10,009 |  |  | $ | 2,065 |
The components of the Company’s deferred taxes consisted of the following:
|  | As of January 31, |
|  | 2013 |  |  | 2012 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 1,246 |  |  | $ | 146 |
Tax credit carry forwards |  |  | 3,449 |  |  |  | 803 |
Stock option book expense |  |  | 2,605 |  |  |  | 2,533 |
Allowance for doubtful accounts |  |  | 1,752 |  |  |  | 1,645 |
Allowance for inventory obsolescence |  |  | 192 |  |  |  | 192 |
Accruals not yet deductible for tax purposes |  |  | 692 |  |  |  | 1,115 |
Other |  |  | 675 |  |  |  | 1,531 |
Gross deferred tax assets |  |  | 10,611 |  |  |  | 7,965 |
Valuation allowance |  |  | — |  |  |  | — |
Deferred tax assets |  |  | 10,611 |  |  |  | 7,965 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | (1,841 | ) |  |  | (3,617 | )
Intangible assets |  |  | (595 | ) |  |  | (774 | )
Foreign branch taxes |  |  | (1,626 | ) |  |  | (1,575 | )
Other |  |  | (411 | ) |  |  | — |
Deferred tax liabilities |  |  | (4,473 | ) |  |  | (5,966 | )
Total deferred tax assets, net |  | $ | 6,138 |  |  | $ | 1,999 |
In the fiscal years ended January 31, 2013 and 2012, the tax deduction related to stock-based compensation awards exceeded the cumulative book expense related to these awards. The associated excess tax benefit amounting to approximately $420,000 and $778,000 was recognized as additional paid-in capital in the fiscal years ended January 31, 2013 and 2012, respectively. During the fiscal year ended January 31, 2010, certain stock based compensation agreements were settled or expired such that the book expense related to these agreements exceeded the tax deduction received by the Company. Accordingly, the deferred tax asset related to these items was reduced by approximately $346,000, which reduced additional paid-in capital. At January 31, 2013, the Company had foreign withholding tax credit carry forwards of approximately $3,449,000, which amounts can be carried forward through at least 2020. In July 2012, the Company reached a settlement with the Canadian Revenue Agency (“CRA”) and the Internal Revenue Service (“IRS”) regarding its request for competent authority assistance for matters arising from an audit of the Company’s Canadian income tax returns for the fiscal years ended January 31, 2004, 2005 and 2006. The issues involved related to intercompany repair charges, management fees and the deductibility of depreciation charges and whether those deductions should be taken in Canada or in the United States. Pursuant to the settlement agreement, adjustments will be made to the Company’s Canadian and United States income tax returns for the fiscal years ended January 31, 2004 through January 31, 2012. These changes are estimated to result in a net reduction to consolidated income tax expense of approximately $141,000, which is reflected in the Company’s benefit from income taxes for the fiscal year ended January 31, 2013. As a result of the settlement, the Company has recognized the benefit of certain tax positions amounting to approximately $3,300,000 and has reversed previous estimates of potential penalties and interest amounting to approximately $1,900,000. As of January 31, 2013 and 2012, the Company had unrecognized tax benefits amounting to approximately $376,000 and $5,435,000, respectively, attributable to uncertain tax positions. The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. The unrecognized tax benefits attributable to uncertain tax positions include accrued interest and penalties of approximately $376,000 and $2,135,000 as of January 31, 2013 and January 31, 2012, respectively. Included in income tax expense for the fiscal years ended January 31, 2013, 2012 and 2011 are expenses of $93,000, $578,000 and $256,000, respectively, related to potential penalties and interest. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding potential penalties and interest, is as follows:
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Unrecognized tax benefits as beginning of year |  | $ | (3,300 | ) |  | $ | (3,350 | ) |  | $ | (3,327 | )
Increases (decreases) as a result of tax positions taken in prior years |  |  | — |  |  |  | 50 |  |  |  | (23 | )
Increases as a result of tax positions taken in current year |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | 3,300 |  |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Unrecognized tax benefits as of end of year |  | $ | — |  |  | $ | (3,300 | ) |  | $ | (3,350 | )
The Company files U.S. federal income tax returns as well as separate returns for its foreign subsidiaries within their local jurisdictions. The Company’s U.S. federal tax returns are subject to examination by the IRS for fiscal years ended January 31, 2010 through 2013. However, the fiscal years ended January 31, 2004 through January 31, 2009 remain open as they relate to the implementation of competent authority settlement with the IRS. The Company’s tax returns may also be subject to examination by state and local revenue authorities for fiscal years ended January 31, 2008 through 2013. The Company’s Canadian income tax returns are subject to examination by the Canadian tax authorities for fiscal years ended January 31, 2009 through 2013. However, the fiscal years ended January 31, 2004 through January 31, 2008 remain open as they relate to the implementation of the competent authority settlement agreement with the CRA. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2008 through January 31, 2013.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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