Income Taxes

9 Months Ended

Oct. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s effective tax rate differs from the statutory federal income tax rate of 21% primarily due to the regional mix of income, withholding taxes on certain foreign earnings, excess tax benefits from share-based compensation and research and development tax credits.

The Company uses a two-step approach to recognize and measure uncertain tax positions ("UTP"). The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained in audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (before the federal impact of state items) is as follows:

(in thousands)
Balance at January 31, 2021	$	26,850
Additions/(decreases) based on tax positions related to the current fiscal year	686
Additions/(decreases) based on tax positions related to the prior fiscal years	(1,160)
Balance at October 31, 2021	$	26,376

Included in the balance of gross unrecognized tax benefits at October 31, 2021 and January 31, 2021 are $8.8 million and $9.7 million, respectively, of net tax benefits (after the federal impact of state items), that, if recognized, would impact the effective tax rate, prior to consideration of any required valuation allowance.

The liability for UTP is reflected in the Balance Sheets as follows:        

(in thousands)	October 31, 2021		January 31, 2021
Deferred tax assets - non-current	$	16,256	$	15,770
Other long-term liabilities	8,754		9,731
Total accrued taxes	$	25,010	$	25,501

The Company’s policy is to include net interest and penalties related to unrecognized tax benefits in the "Provision for income taxes" in the Statements of Income.

Tax years prior to 2013 (the Company’s fiscal year 2014) are generally not subject to examination by the United States ("U.S.") Internal Revenue Service except for items involving tax attributes that have been carried forward to tax years whose statute of limitations remains open. For state returns in the U.S., the Company is generally not subject to income tax examinations for calendar years prior to 2012 (the Company’s fiscal year 2013). The Company has a significant tax presence in Switzerland for which Swiss tax filings have been examined through fiscal year 2020. The Company is also subject to routine examinations by various foreign tax jurisdictions in which it operates. The Company believes that adequate provisions have been made for any adjustments that may result from tax examinations. However, the outcome of tax examinations cannot be predicted with certainty. If any issues addressed in the Company’s tax examinations are resolved in a manner not consistent with the Company's expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.

The Company’s regional income (loss) from continuing operations before taxes and equity in net gains of equity method investments was as follows:

	Three Months Ended				Nine Months Ended
(in thousands)	October 31, 2021		October 25, 2020		October 31, 2021		October 25, 2020
Domestic	$	(5,358)	$	(2,054)	$	(17,466)	$	(19,065)
Foreign	41,438		21,957		115,384		65,813
Total	$	36,080	$	19,903	$	97,918	$	46,748