12.	Income Taxes

Income (loss) before income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2016			2015		2014
	(in thousands)

Domestic	$	4,558		$	3,500	$	(4,305	)
Foreign		(191	)		4,469		3,858
	$	4,367		$	7,969	$	(447	)

The income tax provision is summarized in the following table.

	Fiscal Year Ended July 31,
	2016		2015			2014
	(in thousands)
Current:
Federal	$	1,155	$	488		$	86
State		177		80			63
Foreign		730		2,047			1,012
Total current		2,062		2,615			1,161

Deferred:
Federal		587		1,379			(975	)
State		269		172			24
Foreign		841		(397	)		133
Total deferred		1,697		1,154			(818	)
Total income tax provision	$	3,759	$	3,769		$	343

A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table.

	Fiscal Year Ended July 31,
	2016			2015			2014
	(in thousands)

Income tax (benefit) provision at the U.S. federal statutory income tax rate	$	1,485		$	2,709		$	(152	)
Brazil valuation allowance		1,582			---			---
Income from "pass-through" entities taxable to noncontrolling partners		(39	)		31			35
International rate differences		(145	)		(338	)		(144	)
Other foreign taxes, net of federal benefit		153			161			(34	)
Foreign dividend income		263			508			597
State taxes, net of federal benefit		312			166			28
Re-evaluation and settlements of tax contingencies		---			---			(20	)
Peru non-deductible expenses		59			167			44
Canada and China valuation allowance		1			156			(83	)
Other permanent differences		88			209			72
Income tax provision, as reported on the consolidated statements of operations	$	3,759		$	3,769		$	343

The Company adopted the provisions of ASU 2015-17 effective November 1, 2015, and elected to adopt the guidance retrospectively. As a result of adopting ASU 2015-17, deferred income tax assets of $3.9 million were reclassified from current assets and included in non-current deferred income tax assets on the consolidated balance sheet at July 31, 2015. The significant components of deferred tax assets and liabilities are summarized in the following table.

	Balance at July 31,
	2016			2015
	(in thousands)
Deferred tax assets:
Contract and other reserves	$	3,023		$	3,257
Accrued compensation and expenses		734			836
Net operating loss carryforwards		1,265			737
Foreign and state income taxes		59			57
Foreign tax credit		296			296
Federal benefit from foreign tax audits		157			212
Other		(26	)		454
Deferred tax assets		5,508			5,849
Less: valuation allowance		(2,278	)		(560	)
Net deferred tax assets	$	3,230		$	5,289

Deferred tax liabilities:
Federal expense on state deferred taxes	$	(133	)	$	(225	)
Fixed assets and intangibles		(759	)		(341	)
Federal expense from foreign accounting differences		(213	)		(542	)
Net deferred tax liabilities	$	(1,105	)	$	(1,108	)

During the fiscal year ended July 31, 2014, the Company generated a net operating loss in the U.S. of $1.7 million, which was carried forward and fully utilized in fiscal year 2015. As of July 31, 2016, net operating losses attributable to operations in Brazil, Canada and China and net operating losses for state income tax purposes still exist.

The Company periodically evaluates the likelihood of realization of deferred tax assets, and provides for a valuation allowance when necessary. Activity within the deferred tax asset valuation allowance is summarized in the following table.

	Fiscal Year Ended July 31,
	2016			2015
	(in thousands)

Balance at beginning of period	$	560		$	398
Additions during the period		1,765			176
Reductions during period		(47	)		(14	)
Balance at end of period	$	2,278		$	560

The valuation allowance maintained by the Company primarily relates to: (i) net operating losses in Brazil and Canada, the utilization of which is dependent on future earnings; (ii) excess foreign tax credit carryforwards, the utilization of which is dependent on future foreign source income; and (iii) capital loss carryforwards, the utilization of which is dependent on future capital gains. Additions to the valuation allowance during the fiscal year ended July 31, 2016 primarily related to a deferred tax asset that resulted from net operating loss carryforwards from the Company’s Brazilian operations. During the fiscal year ended July 31, 2016, based on available evidence including recent cumulative operating losses, management determined that it is more likely than not that these deferred tax assets will not be realized.

The Company has recorded $0.1 million and $0 of income taxes applicable to undistributed earnings of foreign subsidiaries that will not be indefinitely reinvested in those operations. At July 31, 2016, the Company’s operations in Chile, Peru and Ecuador had $6.9 million of combined undistributed earnings that were indefinitely reinvested in those operations.

The Company files numerous consolidated and separate income tax returns in U.S. federal, state and foreign jurisdictions. The Company’s tax matters for the fiscal years 2013 through 2016 remain subject to examination by the IRS. The Company’s tax matters in other material jurisdictions remain subject to examination by the respective state, local, and foreign tax jurisdiction authorities. No waivers have been executed that would extend the period subject to examination beyond the period prescribed by statute.

At July 31, 2016, 2015 and 2014, the Company had $0.1 million of uncertain tax positions (“UTPs”) resulting from gross unrecognized tax benefits that if realized, would favorably affect the effective income tax rate in future periods. It is reasonably possible that the liability associated with UTPs will increase or decrease within the next twelve months. At this time, an estimate of the range of the reasonably possible outcomes cannot be made.

The Company recognizes interest and penalties related to liabilities for UTPs in other accrued liabilities on the consolidated balance sheets and in administrative and indirect operating expenses on the consolidated statements of operations. The Company recorded interest and penalties expense related to liabilities for UTPs of less than $0.1 million during the fiscal years ended July 31, 2016, 2015 and 2014. The Company had $0.1 million of accrued interest and penalties recorded at July 31, 2016 and 2015.