INCOME TAXES (Tables)

12 Months Ended

Jan. 31, 2014

Income tax expense is summarized as follows:

	Years Ended January 31,
	2014		2013			2012
	(in thousands)
Current:
Federal	$	303	$	684		$	1,669
State		33		25			376
Foreign		2,703		2,569			3,231
Subtotal		3,039		3,278			5,276
Deferred:
Federal		20		942			889
State		306		220			21
Foreign		297		(929	)		(175	)
Subtotal		623		233			735
Equity adjustment		104		140			5
Total	$	3,766	$	3,651		$	6,016

Reconciliation of Income Taxes to the Statutory Rate

Actual income tax expense differs from that obtained by applying the statutory federal income tax rate of 34% to income before income taxes as follows:

	Years Ended January 31,
	2014			2013			2012
	(in thousands)
Computed expected tax expense	$	3,452		$	3,499		$	5,712
State income taxes, net of federal income tax expense		330			208			580
Incremental tax benefit from foreign operations		(2,676	)		(1,355	)		(1,945	)
Non-deductible equity compensation		1,176			913			898
Foreign withholding taxes		1,171			928			981
Net change in valuation allowance		(108	)		(826	)		(336	)
Net change in contingency reserve		45			(68	)		147
Non-deductible expenses		1,084			296			354
Benefit of tax credits		(1,624	)		(446	)		(1,437	)
Subpart F income		198			313			784
Rate change impact		(88	)		164			(61	)
Other		806			25			339
	$	3,766		$	3,651		$	6,016

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities are as follows:

	January 31,
	2014			2013
	(in thousands)
Deferred tax assets:
Allowance for doubtful accounts and sales adjustments	$	492		$	689
Accrued vacation		1,923			1,946
Tax credits		7,911			8,417
Deferred revenue		3,467			4,135
Net operating loss carry forwards		10,608			12,011
Accrued expenses - other		2,076			1,906
Section 263(a) interest capitalization		368			385
Equity compensation		4,306			4,856
Other		1,423			1,176
Total deferred tax assets		32,574			35,521
Less valuation allowance		(10,293	)		(10,417	)
Deferred tax assets, net of valuation allowance	$	22,281		$	25,104
Deferred tax liabilities:
Unrecognized capital gain		1,033			944
Depreciation and amortization		654			1,352
Other comprehensive income		295			1,507
Other		378			456
Total deferred tax liabilities		2,360			4,259
Total net deferred tax assets	$	19,921		$	20,845
Recorded as:
Current portion of deferred tax assets		8,242			4,426
Non-current portion of deferred tax assets		13,110			17,301
Current portion of deferred tax liabilities (in current deferred tax assets)		(109	)		(12	)
Non-current portion of deferred tax liabilities (in non-current deferred tax assets)		(1,322	)		(870	)
Total net deferred tax assets	$	19,921		$	20,845

Gross Amounts of Unrecognized Tax Benefits

The following table reconciles the gross amounts of unrecognized tax benefits at the beginning and end of the period:

	Years Ended January 31,
	2014		2013
	(in thousands)
Unrecognized tax benefits at beginning of the year	$	2,581	$	2,649
Increases as a result of tax positions taken in a prior period		45		42
Increases as a result of tax positions taken in the current period		—		39
Reduction as a result of a lapse of the statute of limitations		—		(130	)
Decreases as a result of tax settlements		—		(19	)
Unrecognized tax benefit at end of year	$	2,626	$	2,581

List of Open Tax Year by Jurisdiction

The Company files U.S. federal, state, and foreign income tax returns in jurisdictions with varying statute of limitations. The years that may be subject to examination will vary by jurisdiction. Below is a list of our material jurisdictions and the years open for audit as of fiscal 2014:

Jurisdiction	Years Open for Audit
U.S. Federal	FY11 and beyond
California	FY10 and beyond
Michigan	FY10 and beyond
New Jersey	FY10 and beyond
Australia	FY10 and beyond
France	FY11 and beyond
India	FY98 and beyond
Ireland	FY10 and beyond
United Kingdom	FY11 and beyond