v2.4.0.8

Income Taxes | 12 Months Ended
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Apr. 30, 2014
Income Taxes | 15. Income Taxes U.S. and international components of loss before income taxes were as follows (in thousands):
|  | Year Ended April 30, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
U.S. |  | $ | (55,508 | ) |  | $ | (50,538 | ) |  | $ | (24,711 | )
International |  |  | 2,162 |  |  |  | 1,863 |  |  |  | 1,193 |
Loss from continuing operations before income taxes |  | $ | (53,346 | ) |  | $ | (48,675 | ) |  | $ | (23,518 | )
Income tax expense (benefit) is composed of the following (in thousands):
|  | Year Ended April 30, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
State |  | $ | 294 |  |  | $ | 931 |  |  | $ | 350 |
International |  |  | 567 |  |  |  | 518 |  |  |  | 767 |
Total |  |  | 861 |  |  |  | 1,449 |  |  |  | 1,117 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (13,930 | ) |  |  | (11,190 | ) |  |  | (7,488 | )
State |  |  | (2,091 | ) |  |  | 9 |  |  |  | 1 |
International |  |  | 203 |  |  |  | (90 | ) |  |  | (282 | )
Total |  |  | (15,818 | ) |  |  | (11,271 | ) |  |  | (7,769 | )
Change in valuation allowance |  |  | 14,457 |  |  |  | 8,650 |  |  |  | 7,463 |
Provision for (benefit from) income taxes |  | $ | (500 | ) |  | $ | (1,172 | ) |  | $ | 811 |
The difference between the tax expense (benefit) derived by applying the Federal statutory income tax rate to net losses and the expense recognized in the financial statements is as follows (in thousands):
|  | Year Ended April 30, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
U.S. federal taxes at statutory rate |  | $ | (18,138 | ) |  | $ | (16,550 | ) |  | $ | (7,996 | )
State tax provision |  |  | (1,510 | ) |  |  | 250 |  |  |  | 237 |
Foreign tax rate differentials |  |  | (123 | ) |  |  | (185 | ) |  |  | (110 | )
Research and development credit |  |  | (1,201 | ) |  |  | (1,198 | ) |  |  | (613 | )
Stock options |  |  | 1,608 |  |  |  | 3,752 |  |  |  | 1,448 |
Nondeductible legal expenses |  |  | 5,796 |  |  |  | 3,956 |  |  |  | — |
Permanent differences and other |  |  | (1,389 | ) |  |  | 153 |  |  |  | 382 |
Change in valuation allowance |  |  | 14,457 |  |  |  | 8,650 |  |  |  | 7,463 |
Provision for (benefit from) income taxes |  | $ | (500 | ) |  | $ | (1,172 | ) |  | $ | 811 |
As of April 30, 2014 and 2013, the Company had federal net operating loss carry-forwards of $190.9 million and $148.5 million and research and development credit carry-forwards of $4.8 million and $4.0 million, respectively, which will begin expiring in 2026 if not utilized. At April 30, 2014, the Company had $32.1 million of excess stock based compensation tax deductions that have not been used to reduce income taxes payable. As of April 30, 2014 and 2013, the Company had state net operating loss carryforwards of $83.5 million and $46.2 million, respectively, which will begin expiring in 2015 if not utilized and research and development credits of $1.4 million and $0.8 million, respectively, of which a portion will begin expiring in 2033 and another portion will not expire. The components of the net deferred tax amounts recognized in the accompanying consolidated balance sheets are (in thousands):
|  | Year Ended April 30, |
|  | 2014 |  |  | 2013 |
Deferred tax asset: |  |  |  |  |  |  |  |
Bad debts |  | $ | 743 |  |  | $ | 761 |
Other accruals |  |  | 2,165 |  |  |  | 2,158 |
Charitable contributions |  |  | 274 |  |  |  | 216 |
Stock options |  |  | 4,829 |  |  |  | 3,476 |
State tax credit |  |  | 554 |  |  |  | 15 |
Net operating losses |  |  | 58,536 |  |  |  | 45,309 |
Research and development credit |  |  | 3,497 |  |  |  | 3,169 |
Deferred rent |  |  | 671 |  |  |  | 1,045 |
Deferred revenue |  |  | 1,175 |  |  |  | 1,694 |
Total deferred tax asset |  |  | 72,444 |  |  |  | 57,843 |
Less valuation allowance |  |  | (52,734 | ) |  |  | (37,902 | )
Net deferred tax assets |  |  | 19,710 |  |  |  | 19,941 |
Deferred tax liability: |  |  |  |  |  |  |  |
Amortization of intangible assets |  |  | (15,190 | ) |  |  | (16,756 | )
Depreciation |  |  | (4,517 | ) |  |  | (3,152 | )
Total deferred tax liability |  |  | (19,707 | ) |  |  | (19,908 | )
Total net deferred tax assets |  | $ | 3 |  |  | $ | 33 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of April 30, 2014 and 2013, the Company had net deferred tax assets of $19.7 million and $19.9 million, respectively. Utilization of the net operating losses and tax credit carry-forwards may be subject to an annual limitation due to the “change in ownership” provisions of the Internal Revenue Code. The annual limitation may result in the expiration of net operating loss and tax credit carry-forwards before utilization. The Company has established a valuation allowance equal to the net deferred tax asset in the U.S. due to uncertainties regarding the realization of the deferred tax assets based on the Company’s lack of earnings history. During the year ended April 30, 2014, the Company recorded a tax benefit of $1.4 million resulting from a reduction in the valuation allowance associated with the FeedMagnet acquisition. During the year ended April 30, 2013, the Company recorded a tax benefit of $2.5 million resulting from a reduction in the valuation allowance associated with the Longboard Media acquisition. The valuation allowance increased by $14.8 million and $18.0 million during the years ended April 30, 2014 and 2013, respectively. Deferred U.S. income taxes and foreign withholding taxes are not provided on the undistributed cumulative earnings of foreign subsidiaries because those earnings are considered to be permanently reinvested in those operations. The permanently reinvested undistributed earnings were $5.1 million, $3.7 million and $2.7 million as of April 30, 2014, 2013 and 2012, respectively. The tax impact resulting from a distribution of these earnings would be approximately $1.7 million, $1.3 million and $0.9 million for the years ended April 30, 2014, 2013 and 2012, respectively, based on the U.S. statutory rate of 34 percent. These amounts could be impacted due to different jurisdictional tax rates and foreign tax credits. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense. During the years ended April 30, 2014 and 2013, the Company recognized immaterial amounts in interest and penalties, respectively. The Company had an immaterial amount accrued for the payment of interest and penalties as of April 30, 2014 and 2013. The Company does not anticipate a material change in unrecognized tax benefits in the next twelve months. The aggregate changes in the balance of unrecognized tax benefits were as follows (in thousands):
|  | Year Ended April 30, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
Unrecognized tax benefits as of May 1, |  | $ | 1,729 |  |  | $ | 539 |  |  | $ | 369 |
Tax positions taken in prior periods: |  |  |  |  |  |  |  |  |  |  |  |
Gross increases |  |  | — |  |  |  | 862 |  |  |  | 9 |
Gross decreases |  |  | (14 | ) |  |  | — |  |  |  | (68 | )
Tax positions taken in current period: |  |  |  |  |  |  |  |  |  |  |  |
Gross increases |  |  | 442 |  |  |  | 330 |  |  |  | 232 |
Gross decreases |  |  | — |  |  |  | — |  |  |  | — |
Lapse of statute of limitations |  |  | — |  |  |  | (2 | ) |  |  | (3 | )
Balance as of April 30, |  | $ | 2,157 |  |  | $ | 1,729 |  |  | $ | 539 |
As of April 30, 2014, the total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $1.9 million. The Company is subject to taxation in the U.S., various state, and foreign jurisdictions. As of April 30, 2014, the Company’s fiscal years 2006 forward are subject to examination by the U.S. tax authorities and in material state jurisdictions, primarily Texas, due to loss carry-forwards, and fiscal years 2010 forward are subject to examination in material foreign jurisdictions, primarily the United Kingdom.

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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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