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Income Taxes | 12 Months Ended
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Jan. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | 11. Income Taxes
|  | Years Ended January 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (in thousands) |
Income (loss) before income taxes is attributable to the following jurisdictions: |  |  |  |
Domestic |  | $ | (6,766 | ) |  | $ | (4,323 | ) |  | $ | (2,824 | )
Foreign |  |  | (3,420 | ) |  |  | 10,349 |  |  |  | 16,348 |
Total |  | $ | (10,186 | ) |  | $ | 6,026 |  |  | $ | 13,524 |
The components of income tax expense (benefit) were as follows: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | 387 |  |  | $ | 802 |  |  | $ | (2,306 | )
Foreign |  |  | 1,687 |  |  |  | 2,660 |  |  |  | 3,229 |
|  |  | 2,074 |  |  |  | 3,462 |  |  |  | 923 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  |  | (4,230 | ) |  |  | (3,039 | ) |  |  | (4,757 | )
Foreign |  |  | 1,162 |  |  |  | 835 |  |  |  | 307 |
|  |  | (3,068 | ) |  |  | (2,204 | ) |  |  | (4,450 | )
Income tax expense (benefit) |  | $ | (994 | ) |  | $ | 1,258 |  |  | $ | (3,527 | )
The following is a reconciliation of expected to actual income tax expense:
|  | Years Ended January 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (in thousands) |
Federal income tax (benefit) expense at 34% |  | $ | (3,463 | ) |  | $ | 2,049 |  |  | $ | 4,598 |
Changes in tax rates |  |  | — |  |  |  | 22 |  |  |  | 23 |
Permanent differences |  |  | (224 | ) |  |  | 132 |  |  |  | (741 | )
Foreign effective tax rate differential |  |  | 540 |  |  |  | (1,884 | ) |  |  | (3,092 | )
Potential tax, penalties and interest resulting from uncertain tax positions |  |  | (172 | ) |  |  | 32 |  |  |  | (5,059 | )
Foreign withholding taxes |  |  | 920 |  |  |  | 642 |  |  |  | — |
Valuation allowance on deferred tax assets |  |  | 1,379 |  |  |  | — |  |  |  | — |
Other |  |  | 26 |  |  |  | 265 |  |  |  | 744 |
|  | $ | (994 | ) |  | $ | 1,258 |  |  | $ | (3,527 | )
The components of the Company’s deferred taxes consisted of the following:
|  | As of January 31, |
|  | 2015 |  |  | 2014 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 4,053 |  |  | $ | 2,592 |
Tax credit carry forwards |  |  | 4,472 |  |  |  | 3,470 |
Stock option book expense |  |  | 2,837 |  |  |  | 2,689 |
Allowance for doubtful accounts |  |  | 1,798 |  |  |  | 1,704 |
Allowance for inventory obsolescence |  |  | 68 |  |  |  | 94 |
Accruals not yet deductible for tax purposes |  |  | 421 |  |  |  | 620 |
Other |  |  | 620 |  |  |  | 679 |
Gross deferred tax assets |  |  | 14,269 |  |  |  | 11,848 |
Valuation allowance |  |  | (1,379 | ) |  |  | — |
Deferred tax assets |  |  | 12,890 |  |  |  | 11,848 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | (636 | ) |  |  | (2,172 | )
Intangible assets |  |  | (390 | ) |  |  | (435 | )
Foreign branch taxes |  |  | (274 | ) |  |  | (1,140 | )
Other |  |  | (4 | ) |  |  | — |
Deferred tax liabilities |  |  | (1,304 | ) |  |  | (3,747 | )
Unrecognized tax benefits |  |  | (237 | ) |  |  | — |
Total deferred tax assets, net |  | $ | 11,349 |  |  | $ | 8,101 |
The Company has determined that the undistributed earnings of foreign subsidiaries, other than branch operations in Colombia and Peru, have been permanently reinvested outside of the United States. These permanent investments include the purchase of lease pool equipment by those subsidiaries and other investments. Accordingly, no deferred tax liability has been recognized related to these undistributed earnings. As of January 31, 2015, the unrecognized deferred tax liability related to these items amounts to approximately $8.5 million. Included in deferred tax assets is approximately $2.8 million related to stock based compensation, including non-qualified stock options. Recent prices for the Company’s common stock are below the exercise price for a significant number of these stock options. Should the price of the Company’s common stock remain below the exercise price of the options, these stock options will expire without exercise. In accordance with the provisions of ASC 718-740-10, no valuation allowance has been provided based on the decline in stock price. The reversal of this deferred tax asset would result in a decrease in additional paid-in capital of approximately $2.6 million and in increase in income tax expense of approximately $200,000. In the fiscal year ended January 31, 2015, the tax deduction related to stock-based compensation awards exceeded the cumulative book expense related to these awards. The associated tax benefit, which amounted to approximately $123,000, will be recognized as additional paid-in capital upon the realization of this benefit. In the fiscal year ended January 31, 2014, the cumulative book expense related to stock-based compensation awards exceeded the tax deduction related to these awards. Accordingly, the deferred tax asset related to these awards was reduced by the tax effect of approximately $5,000, which reduced paid-in capital. In the fiscal year ended January 31, 2013, the tax deduction related to stock-based compensation awards exceeded the cumulative book expense related to these awards. The realized associated excess tax benefit, amounting to approximately $420,000, was recognized as additional paid-in capital in the fiscal year ended January 31, 2013. At January 31, 2015, the Company had foreign withholding tax credit carry forwards of approximately $4.5 million, which amounts can be carried forward through at least 2025. 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 have been 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 resulted 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, in the fiscal year ended January 31, 2013, the Company recognized the benefit of certain tax positions amounting to approximately $3.3 million and reversed previous estimates of potential penalties and interest amounting to approximately $1.9 million. As of January 31, 2015 and 2014, the Company had unrecognized tax benefits amounting to approximately $237,000 and $408,000, 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 $145,000 and $154,000 as of January 31, 2015 and January 31, 2014, respectively. Included in income tax expense for the fiscal years ended January 31, 2015 and 2014 are benefits related to a reduction in estimated potential penalties and interest of approximately $10,000 and $222,000, respectively, and for the year ended January 31, 2013 an expense of $93,000. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding potential penalties and interest, is as follows:
|  | Years Ended January 31, |
|  | 2015 |  |  | 2014 |  |  | 2013 |
|  | (in thousands) |
Unrecognized tax benefits as beginning of year |  | $ | 254 |  |  | $ | — |  |  | $ | (3,300 | )
Increases (decreases) as a result of tax positions taken in prior years |  |  | — |  |  |  | 254 |  |  |  | — |
Increases as a result of tax positions taken in current year |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | (162 | ) |  |  | — |  |  |  | 3,300 |
Lapse of statute of limitations |  |  | — |  |  |  | — |  |  |  | — |
Unrecognized tax benefits as of end of year |  | $ | 92 |  |  | $ | 254 |  |  | $ | — |
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, 2012 through 2015. The Company’s tax returns may also be subject to examination by state and local revenue authorities for fiscal years ended January 31, 2010 through 2015. The Company’s Canadian income tax returns are subject to examination by the Canadian tax authorities for fiscal years ended January 31, 2011 through 2015. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2010 through January 31, 2015.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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