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Income Taxes | 12 Months Ended
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Jan. 31, 2013
Income Taxes [Abstract] |
Income Taxes | Note 8—Income Taxes The components of income from continuing operations before income taxes are as follows:
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |
(In thousands) |  |  |  |  |  |
Domestic |  | $ | 1,850 |  |  | $ | (1,103 | )
Foreign |  |  | 1,035 |  |  |  | 1,747 |
|  | $ | 2,885 |  |  | $ | 644 |
The components of the provision (benefit) for income taxes from continuing operations are as follows:
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |
(In thousands) |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 425 |  |  | $ | (371 | )
State |  |  | (237 | ) |  |  | 11 |
Foreign |  |  | 366 |  |  |  | 516 |
|  |  | 554 |  |  |  | 156 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | 253 |  |  |  | (248 | )
State |  |  | 38 |  |  |  | (28 | )
Foreign |  |  | 2 |  |  |  | 23 |
|  |  | 293 |  |  |  | (253 | )
|  | $ | 847 |  |  | $ | (97 | )
The provision (benefit) for income taxes from continuing operations differs from the amount computed by applying the statutory federal income tax rate of 35% in fiscal 2013 and 34% in fiscal 2012 to income before income taxes due to the following:
|  | Years Ended January 31, |
|  | 2013 |  |  | 2012 |
(In thousands) |  |  |  |  |  |
Income tax provision at statutory rate |  | $ | 1,010 |  |  | $ | 219 |
State taxes, net of federal tax effect |  |  | 114 |  |  |  | (12 | )
Officers life insurance |  |  | 4 |  |  |  | (93 | )
Change in valuation allowance |  |  | (49 | ) |  |  | 35 |
Change in reserves related to ASC 740 liability |  |  | (197 | ) |  |  | 61 |
Meals and entertainment |  |  | 55 |  |  |  | 40 |
Domestic product deduction |  |  | (60 | ) |  |  | — |
Share-based compensation |  |  | 26 |  |  |  | 54 |
Tax-exempt income |  |  | (16 | ) |  |  | (27 | )
Prior year tax filing true up adjustment |  |  | 90 |  |  |  | (157 | )
R&D credits |  |  | (106 | ) |  |  | (175 | )
Foreign rate differential |  |  | (22 | ) |  |  | (39 | )
Other, net |  |  | (2 | ) |  |  | (3 | )
|  | $ | 847 |  |  | $ | (97 | )
The components of deferred income tax expense arise from various temporary differences and relate to items included in the statement of income. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities are as follows:
|  | January 31, |
|  | 2013 |  |  | 2012 |
(In thousands) |  |  |  |  |  |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Inventory |  | $ | 1,258 |  |  | $ | 1,515 |
Stock-Based Compensation |  |  | 403 |  |  |  | 380 |
R&D Credits |  |  | 231 |  |  |  | 280 |
Vacation Accrual |  |  | 349 |  |  |  | 355 |
ASC 740 Liability Federal Benefit |  |  | 361 |  |  |  | 336 |
Deferred Service Contract Revenue |  |  | 106 |  |  |  | 126 |
Warranty Reserve |  |  | 135 |  |  |  | 132 |
Reserve for Doubtful Accounts |  |  | 117 |  |  |  | 150 |
Other |  |  | 166 |  |  |  | 336 |
|  |  | 3,126 |  |  |  | 3,610 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Accumulated Tax Depreciation in Excess of Book Depreciation |  |  | 532 |  |  |  | 907 |
Currency Translation Adjustment |  |  | 189 |  |  |  | 155 |
Lease Amortization |  |  | — |  |  |  | 70 |
Other |  |  | 63 |  |  |  | 63 |
|  |  | 784 |  |  |  | 1,195 |
Subtotal |  |  | 2,342 |  |  |  | 2,415 |
Valuation Allowance |  |  | (231 | ) |  |  | (280 | )
Net Deferred Tax Assets |  | $ | 2,111 |  |  | $ | 2,135 |
At January 31, 2013, we have state net operating loss carryforwards of $131,000, which can be used to offset future tax liabilities and expire at various dates beginning in fiscal 2024. At January 31, 2013 we have state research and development credit carryforwards of approximately $349,000, which can be used to offset future tax liabilities and expire at various dates beginning in fiscal 2013. The valuation allowance at January 31, 2013 relates to certain state research and development tax credit carryforwards which are expected to expire unused. The change in the valuation allowance is a decrease of approximately $49,000 and represents a reduction in the reserve due to the expiration of research and development credits expiring during the current year net of federal benefit. The Company reasonably believes that it is possible that some unrecognized tax benefits, accrued interest and penalties could decrease income tax expense in the next year due to either the review of previously filed tax returns or the expiration of certain statutes of limitation. A reconciliation of unrecognized tax benefits, excluding interest and penalties follows:
|  | 2013 |  |  | 2012 |
(In thousands) |  |  |  |  |  |
Balance at February 1 |  |  | $780 |  |  |  | $727 |
Increases in prior period tax positions |  |  | 16 |  |  |  | 31 |
Increases in current period tax positions |  |  | 386 |  |  |  | 79 |
Reductions related to lapse of statute of limitations |  |  | (241 | ) |  |  | (57 | )
Balance at January 31 |  | $ | 941 |  |  | $ | 780 |
If the $941,000 is recognized, $580,000 would decrease the effective tax rate in the period in which each of the benefits is recognized and the remainder would be offset by a reversal of deferred tax assets. During fiscal 2013 and 2012 the Company recognized $105,000 of benefit and $33,000 of expense, respectively, related to interest and penalties, which are included as a component of income tax expense in the accompanying statement of income. At January 31, 2013 and 2012, the Company had accrued potential interest and penalties of $348,000 and $453,000, respectively. The Company and its subsidiaries file income tax returns in U.S. federal jurisdictions, various state jurisdictions, and various foreign jurisdictions. The Company is no longer subject to U.S. federal examinations prior to 2009. At January 31, 2013, the Company has indefinitely reinvested $3,143,000 of the cumulative undistributed earnings of its foreign subsidiary in Germany, all of which would be subject to U.S. taxes if repatriated to the U.S. Through January 31, 2013, the Company has not provided deferred income taxes on the undistributed earnings of this subsidiary because such earnings are considered to be indefinitely reinvested. Non-U.S. income taxes are, however, provided on these undistributed earnings.

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- 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 Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: 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=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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=6907707&loc=d3e32537-109319 Reference 7: 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=6907707&loc=d3e32639-109319 Reference 8: 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=6907707&loc=d3e32559-109319 + Details
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