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Income Taxes | 12 Months Ended
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Jan. 31, 2016
Income Tax Disclosure [Abstract] |
Income Taxes | 11. Income Taxes
|  | Years Ended January 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in thousands) |
(Loss) income before income taxes is attributable to the following jurisdictions: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | (11,900 | ) |  | $ | (6,766 | ) |  | $ | (4,323 | )
Foreign |  |  | (15,859 | ) |  |  | (3,420 | ) |  |  | 10,349 |
Total |  | $ | (27,759 | ) |  | $ | (10,186 | ) |  | $ | 6,026 |
The components of income tax expense (benefit) were as follows: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  | $ | (16 | ) |  | $ | 387 |  |  | $ | 802 |
Foreign |  |  | 684 |  |  |  | 1,687 |  |  |  | 2,660 |
|  |  | 668 |  |  |  | 2,074 |  |  |  | 3,462 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Domestic |  |  | 10,762 |  |  |  | (4,230 | ) |  |  | (3,039 | )
Foreign |  |  | (453 | ) |  |  | 1,162 |  |  |  | 835 |
|  |  | 10,309 |  |  |  | (3,068 | ) |  |  | (2,204 | )
Income tax expense (benefit) |  | $ | 10,977 |  |  | $ | (994 | ) |  | $ | 1,258 |
The following is a reconciliation of expected to actual income tax expense:
|  | Years Ended January 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in thousands) |
Federal income tax (benefit) expense at 34% |  | $ | (9,436 | ) |  | $ | (3,463 | ) |  | $ | 2,049 |
Changes in tax rates |  |  | (82 | ) |  |  | — |  |  |  | 22 |
Permanent differences |  |  | 509 |  |  |  | (224 | ) |  |  | 132 |
Foreign effective tax rate differential |  |  | 1,609 |  |  |  | 540 |  |  |  | (1,884 | )
Potential tax, penalties and interest resulting from uncertain tax positions |  |  | (236 | ) |  |  | (172 | ) |  |  | 32 |
Foreign withholding taxes |  |  | 717 |  |  |  | 920 |  |  |  | 642 |
Election to deduct foreign taxes in prior years U.S. income tax returns |  |  | 2,610 |  |  |  | — |  |  |  | — |
Valuation allowance on deferred tax assets |  |  | 15,477 |  |  |  | 1,379 |  |  |  | — |
Other |  |  | (191 | ) |  |  | 26 |  |  |  | 265 |
|  | $ | 10,977 |  |  | $ | (994 | ) |  | $ | 1,258 |
The components of the Company’s deferred taxes consisted of the following:
|  | As of January 31, |
|  | 2016 |  |  | 2015 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 10,127 |  |  | $ | 4,053 |
Tax credit carry forwards |  |  | 823 |  |  |  | 4,472 |
Stock option book expense |  |  | 2,716 |  |  |  | 2,837 |
Allowance for doubtful accounts |  |  | 2,121 |  |  |  | 1,798 |
Allowance for inventory obsolescence |  |  | 116 |  |  |  | 68 |
Accruals not yet deductible for tax purposes |  |  | 636 |  |  |  | 421 |
Fixed assets |  |  | 299 |  |  |  | — |
Other |  |  | 627 |  |  |  | 620 |
Gross deferred tax assets |  |  | 17,465 |  |  |  | 14,269 |
Valuation allowance |  |  | (16,647 | ) |  |  | (1,379 | )
Deferred tax assets |  |  | 818 |  |  |  | 12,890 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Fixed assets |  |  | — |  |  |  | (636 | )
Intangible assets |  |  | (215 | ) |  |  | (390 | )
Foreign branch taxes |  |  | — |  |  |  | (274 | )
Other |  |  | (17 | ) |  |  | (4 | )
Deferred tax liabilities |  |  | (232 | ) |  |  | (1,304 | )
Unrecognized tax benefits |  |  | — |  |  |  | (237 | )
Total deferred tax assets, net |  | $ | 586 |  |  | $ | 11,349 |
The Company has determined that the undistributed earnings of foreign subsidiaries, other than branch operations in Colombia and Peru, as of January 31, 2016, 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, 2016, the unrecognized deferred tax liability related to these items amounts to approximately $4.2 million. Effective January 31, 2016 the Company has adopted the provisions of ASU 2015-17 on a prospective basis. Accordingly, all net deferred tax assets are classified as long-term assets as of January 31, 2016 in the accompanying Consolidated Balance Sheets. Amounts for prior periods have not been restated. The provisions of this pronouncement have been adopted in order to simplify the presentation of deferred income taxes. Included in deferred tax assets is approximately $2.7 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, a valuation allowance has not been computed based on the decline in stock price. As of January 31, 2016, the Company has recorded valuation allowances of approximately $16.7 million related to deferred tax assets. These deferred tax assets relate primarily to net operating loss carryforwards in the United States and other jurisdictions. The valuation allowances were determined based on management’s judgment as to the likelihood that these deferred tax assets would be realized. The judgment was based on an evaluation of available evidence, both positive and negative. In the fiscal year ended January 31, 2016, 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 $416,000, which amount reduced paid-in capital. 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. At January 31, 2016, the Company had foreign withholding tax credit carry forwards of approximately $823,000, which amounts can be carried forward through at least 2021. As of January 31, 2015, the Company had unrecognized tax benefits amounting to approximately $237,000 attributable to uncertain tax positions. There were no such amounts as of January 31, 2016. 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 as of January 31, 2015. Included in income tax expense for the fiscal years ended January 31, 2016, 2015 and 2014 are benefits related to a reduction in estimated potential penalties and interest of approximately $145,000, $10,000 and $222,000, respectively. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding potential penalties and interest, is as follows:
|  | Years Ended January 31, |
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | (in thousands) |
Unrecognized tax benefits as of beginning of year |  | $ | 92 |  |  | $ | 254 |  |  | $ | — |
Increases as a result of tax positions taken in prior years |  |  | — |  |  |  | — |  |  |  | 254 |
Increases as a result of tax positions taken in current year |  |  | — |  |  |  | — |  |  |  | — |
Settlements |  |  | (44 | ) |  |  | (162 | ) |  |  | — |
Lapse of statute of limitations |  |  | (48 | ) |  |  | — |  |  |  | — |
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, 2013 through 2016. The Company’s tax returns may also be subject to examination by state and local revenue authorities for fiscal years ended January 31, 2011 through 2016. The Company’s Canadian income tax returns are subject to examination by the Canadian tax authorities for fiscal years ended January 31, 2012 through 2016. The Company’s tax returns in other foreign jurisdictions are generally subject to examination for the fiscal years ended January 31, 2011 through January 31, 2016.

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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 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 2: 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 Reference 3: 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 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 + Details
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