Income Taxes (Tables)

12 Months Ended

Jan. 25, 2015

Schedule of components of income tax expense

The provision (benefit) for taxes consists of the following:



	Fiscal Year Ended
(in thousands)	January 25, 2015			January 26, 2014			January 27, 2013
Current tax provision
Federal	$	749		$	3,769		$	7,100
State	—			554			784
Foreign	7,810			14,962			5,745
Subtotal	8,559			19,285			13,629
Deferred tax provision (benefit)
Federal	508			23,938			(15,812		)
State	(100		)	(1,293		)	(148		)
Foreign	(419		)	(5,945		)	(39,359		)
Subtotal	(11		)	16,700			(55,319		)
Provision (benefit) for taxes	$	8,548		$	35,985		$	(41,690	)

Schedule of income tax reconciliation

The provision (benefit) for taxes reconciles to the amount computed by applying the statutory federal rate to income before taxes as follows:



	Fiscal Year Ended
(in thousands)	January 25, 2015			January 26, 2014			January 27, 2013
Federal income tax at statutory rate	$	12,775		$	(44,968	)	$	86
State income taxes, net of federal benefit	(100		)	(1,260		)	(2,472		)
Foreign taxes at rates less than federal rates	(11,960		)	(8,378		)	(9,655		)
Tax credits generated	(5,302		)	(5,523		)	(5,328		)
Changes in valuation allowance	14,284			52,942			2,703
Goodwill impairment	—			40,840			—
Changes in uncertain tax positions	(5,167		)	893			132
Deemed dividends	2,513			726			1,101
Equity compensation	2,200			1,173			793
Permanent differences	(93		)	2,895			1,571
Sales exclusion - foreign jurisdiction	—			—			(10,689		)
Dividend and U.S. tax on foreign earnings	—			—			(23,443		)
Revaluation of deferred tax assets and liabilities	(432		)	(12		)	3,510
Other	(170		)	(3,343		)	1
Provision (benefit) for taxes	$	8,548		$	35,985		$	(41,690	)

Schedule of deferred tax assets and liabilities

The deferred tax assets and deferred tax liabilities are classified in the consolidated balance sheets as follows:



(in thousands)	January 25, 2015			January 26, 2014
Deferred tax assets
Current	$	2,478		$	2,946
Non-current	106			348
Subtotal	2,584			3,294
Deferred tax liabilities
Current	(1,444		)	(930		)
Non-current	(2,477		)	(3,626		)
Subtotal	(3,921		)	(4,556		)
Net deferred tax liabilities	$	(1,337	)	$	(1,262	)

Schedule of components of deferred tax assets and deferred tax liabilities

The components of the net deferred income tax assets and liabilities at January 25, 2015 and January 26, 2014 are as follows:



(in thousands)	January 25, 2015			January 26, 2014
Current deferred tax asset:
Deferred revenue	$	3,052		$	2,773
Inventory reserve	3,156			3,032
Payroll and related accruals	2,306			2,133
Bad debt reserve	927			416
Accrued service fees	608			591
Other deferred assets	1,191			1,562
Valuation allowance	(8,637		)	(7,321		)
Total current deferred tax asset	2,603			3,186
Non-current deferred tax asset:
Research and development charges	1,323			2,109
Research credit carryforward	40,819			39,350
NOL carryforward	29,144			31,165
Payroll and related accruals	7,148			6,268
Stock-based compensation	6,176			5,732
Other deferred assets	5,054			3,567
Valuation allowance	(66,899		)	(53,931		)
Total non-current deferred tax asset	22,765			34,260
Current deferred tax liabilities:
Inventory reserve - foreign	(826		)	(430		)
Bad debt reserve - foreign	(256		)	(223		)
Other current deferred tax liabilities	(373		)	(517		)
Total current deferred tax liabilities	(1,455		)	(1,170		)
Non-current deferred tax liabilities:
Purchase accounting deferred tax liabilities	(20,917		)	(32,466		)
Depreciation and amortization	(2,956		)	(3,695		)
Other non-current deferred tax liabilities	(1,377		)	(1,377		)
Total non-current deferred tax liabilities	(25,250		)	(37,538		)
Net deferred tax liabilities	$	(1,337	)	$	(1,262	)

Schedule of gross unrecognized tax benefits

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



	Fiscal Year Ended
(in thousands)	January 25, 2015			January 26, 2014
Beginning balance	$	14,414		$	13,144
Additions based on tax positions related to the current year	526			1,484
Reductions for tax positions of prior years, net	(3,982		)	(214		)
Reductions for settlements with tax authorities, net	(1,070		)	—
Ending balance	$	9,888		$	14,414

Schedule of liability for uncertain tax positions

The liability for UTP is reflected on the consolidated balance sheets as follows:



	Fiscal Year Ended
(in thousands)	January 25, 2015		January 26, 2014
Deferred tax assets - non-current	$	7,522	$	12,095
Accrued liabilities	—		—
Other long-term liabilities	252		252
Total accrued taxes	$	7,774	$	12,347

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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