XML 32 R15.htm IDEA: XBRL DOCUMENT
v3.7.0.1

INCOME TAXES | 12 Months Ended
--- | ---
Jan. 31, 2017
Income Tax Disclosure [Abstract] |
Income Tax Disclosure [Text Block] |
8. | INCOME TAXES
The provision for income taxes is based on the following pretax income (loss):
Domestic and Foreign Pretax Income (Loss) |  | FY17 |  | FY16 |
Domestic |  | $ | 1,833,377 |  | $ | 6,139,543 |
Foreign |  |  | 4,439,270 |  |  | (572,168) |
Total |  | $ | 6,272,647 |  | $ | 5,567,375 |
Income Tax Expense (Benefit) |  | FY17 |  | FY16 |
Current: |  |  |  |  |  |  |
Federal |  | $ | (49,191) |  | $ | 225,180 |
State and other taxes |  |  | 29,283 |  |  | (40,555) |
Foreign |  |  | 1,576,775 |  |  | 1,553,589 |
Deferred: |  |  |  |  |  |  |
Domestic |  | $ | 822,954 |  | $ | 156,448 |
Valuation allowance-deferred tax asset |  |  | — |  |  | (181,338) |
Foreign |  |  | — |  |  | — |
Total |  | $ | 2,379,821 |  | $ | 1,713,324 |
The following is a reconciliation of the effective income tax rate to the Federal statutory rate:
|  | 2017 |  | 2016 |
Statutory rate |  |  | 34.00 | % |  | 34.00 | %
State Income Taxes, Net of Federal Tax Benefit |  |  | 0.59 |  |  | 1.77 |
Adjustment to Deferred |  |  | — |  |  | 8.86 |
Foreign Dividend and Subpart F Income |  |  | 2.15 |  |  | 10.93 |
Brazil Worthless Stock Deduction |  |  | — |  |  | (14.21) |
Argentina Flow Through Loss |  |  | (0.38) |  |  | (1.76) |
Permanent Differences |  |  | 0.46 |  |  | (8.78) |
Valuation Allowance-Deferred Tax Asset |  |  | — |  |  | (3.26) |
Other |  |  | 1.12 |  |  | 3.22 |
Effective Rate |  |  | 37.94 | % |  | 30.77 | %
The tax effects of temporary differences which give rise to deferred tax assets at January 31, 2017 and 2016 are summarized as follows:
|  | 2017 |  | 2016 |
Deferred tax assets: |  |  |  |  |  |  |
Inventories |  | $ | 1,122,234 |  | $ | 1,266,718 |
US tax loss carryforwards, including work opportunity credit* |  |  | 8,612,947 |  |  | 9,335,575 |
Accounts receivable and accrued rebates |  |  | 265,745 |  |  | 238,261 |
Accrued compensation and other |  |  | 108,987 |  |  | 266,272 |
India reserves - US deduction |  |  | 73,697 |  |  | 75,053 |
Equity based compensation |  |  | 286,278 |  |  | 201,925 |
Foreign tax credit carry-forward |  |  | 3,698,351 |  |  | 3,388,051 |
State and local carry-forwards |  |  | 791,180 |  |  | 899,824 |
Argentina timing difference |  |  | 51,113 |  |  | 116,194 |
Depreciation and other |  |  | 80,468 |  |  | 103,372 |
Amortization |  |  | (239,715) |  |  | (217,811) |
Allowance for Note Receivable - Brazil |  |  | 833,705 |  |  | 834,510 |
Deferred tax asset |  |  | 15,684,990 |  |  | 16,507,944 |
Less valuation allowance |  |  | 2,170,309 |  |  | 2,170,309 |
Net deferred tax asset - USA |  | $ | 13,514,681 |  | $ | 14,337,635 |
*The federal net operating loss (“NOL”) that is left after FY17 will expire after 1/31/2034 (20 years from the generated date of 1/31/2014). The credits will begin to expire after 1/31/2020 (10 years from the 1st carryover year generated date of 1/31/2010) and will fully expire after 1/31/2025.
The state NOLs will begin to expire after 1/31/2025 and will continue to expire at various periods up until 1/31/2035 when they will be fully expired. The states have a larger spread because some only carryforward for 15 years and some allow 20 years. The Company early adopted ASU No. 2015-17 and reclassed the current portion of the deferred taxes totaling approximately $1,555,000 to non-current as of January 31, 2016.
Income Tax Audits The Company is subject to US federal income tax, as well as income tax in multiple US state and local jurisdictions and a number of foreign jurisdictions. Returns for the years since FY2014 are still open based on statutes of limitation only. Chinese tax authorities have performed limited reviews on all Chinese subsidiaries as of tax years 2008 through 2015 with no significant issues noted and we believe our tax positions are reasonably stated as of January 31, 2017. Weifang Meiyang Products Co., Ltd. (“Meiyang”), one of our Chinese operations, was changed to a trading company from a manufacturing company in Q1 FY16 and all direct workers and equipment were transferred from Meiyang to Weifang Lakeland Safety Products Co., Ltd., (“WF”), another entity of our Chinese operation thereby reducing our tax exposure. Lakeland Protective Wear, Inc., our Canadian subsidiary, is subject to Canadian federal income tax, as well as income tax in the Province of Ontario. Income tax returns for the 2013 fiscal year and subsequent years are still within the normal reassessment period and open to examination by tax authorities. In connection with the exit from Brazil (see Note 13), the Company claimed a worthless stock deduction which generated a tax benefit of approximately USD $9.5 million, net of a USD $2.2 million valuation allowance. While the Company and its tax advisors believe that this deduction is valid, there can be no assurance that the IRS will not challenge it and, if challenged, there is no assurance that the Company will prevail. Except in Canada, and as set forth in the next paragraph, it is our practice and intention to reinvest the earnings of our non-US subsidiaries in their operations. As of January 31, 2017, the Company had not made a provision for US or additional foreign withholding taxes on approximately $24.7 million of the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in duration ($22.3 million at January 31, 2016). Generally, such amounts become subject to US taxation upon remittance of dividends and under certain other circumstances. If these earnings were repatriated to the US, the deferred tax liability associated with these temporary differences would be approximately $3.1 million at January 31, 2017. The Company’s Board of Directors has instituted a plan subject to declaration and approval each year to elect to pay annual dividends to the Company from a portion of Weifang’s future profits, a portion of Meiyang’s future profits and a portion of the UK’s future profits starting in FY15 and from a portion of Beijing’s future profits starting in FY18. All other retained earnings are expected to be reinvested indefinitely. Change in Valuation Allowance We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. The valuation allowance was $2.2 million for both of the years ended January 31, 2017 and 2016. Income Tax Expense Income tax expenses consist of federal, state and foreign income taxes. The statutory rate is the US rate. Reconciling items to the effective rate are foreign dividend income, Argentina income, and other permanent tax differences.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 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 2: 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=65882285&loc=d3e32559-109319 Reference 3: 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=65882285&loc=d3e32718-109319 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=65882285&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=65882285&loc=d3e32537-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration