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Income Taxes | 12 Months Ended
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Jan. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | Note 10—Income Taxes The components of income from continuing operations before income taxes are as follows:
|  | Years Ended January 31, |
|  | 2014 |  |  | 2013 |
(In thousands) |  |  |  |  |  |
Domestic |  | $ | 537 |  |  | $ | 1,850 |
Foreign |  |  | 875 |  |  |  | 1,035 |
|  | $ | 1,412 |  |  | $ | 2,885 |
The components of the provision (benefit) for income taxes from continuing operations are as follows:
|  | Years Ended January 31, |
|  | 2014 |  |  | 2013 |
(In thousands) |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Federal |  | $ | 930 |  |  | $ | 425 |
State |  |  | 179 |  |  |  | (237 | )
Foreign |  |  | 297 |  |  |  | 366 |
|  |  | 1,406 |  |  |  | 554 |
Deferred: |  |  |  |  |  |  |  |
Federal |  |  | (1,044 | ) |  |  | 253 |
State |  |  | (174 | ) |  |  | 38 |
Foreign |  |  | (13 | ) |  |  | 2 |
|  |  | (1,231 | ) |  |  | 293 |
|  | $ | 175 |  |  | $ | 847 |
The provision (benefit) for income taxes from continuing operations differs from the amount computed by applying the statutory federal income tax rate of 34% in fiscal 2014 and 35% in fiscal 2013 to income before income taxes due to the following:
|  | Years Ended January 31, |
|  | 2014 |  |  | 2013 |
(In thousands) |  |  |  |  |  |
Income tax provision at statutory rate |  | $ | 480 |  |  | $ | 1,010 |
State taxes, net of federal tax effect |  |  | (74 | ) |  |  | 114 |
Change in valuation allowance |  |  | 27 |  |  |  | (49 | )
Change in reserves related to ASC 740 liability |  |  | (59 | ) |  |  | (197 | )
Meals and entertainment |  |  | 38 |  |  |  | 55 |
Domestic production deduction |  |  | (30 | ) |  |  | (60 | )
Share-based compensation |  |  | 36 |  |  |  | 26 |
Tax-exempt income |  |  | (22 | ) |  |  | (16 | )
R&D credits |  |  | (114 | ) |  |  | (106 | )
Foreign rate differential |  |  | (26 | ) |  |  | (22 | )
Other permanent differences and miscellaneous, net |  |  | (81 | ) |  |  | 92 |
|  | $ | 175 |  |  | $ | 847 |
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, |
|  | 2014 |  |  | 2013 |
(In thousands) |  |  |  |  |  |
Deferred Tax Assets: |  |  |  |  |  |  |  |
Inventory |  | $ | 1,792 |  |  | $ | 1,258 |
Stock-Based Compensation |  |  | 535 |  |  |  | 403 |
State R&D Credits |  |  | 258 |  |  |  | 231 |
Compensation Accrual |  |  | 493 |  |  |  | 349 |
ASC 740 Liability Federal Benefit |  |  | 290 |  |  |  | 361 |
Deferred Service Contract Revenue |  |  | 181 |  |  |  | 106 |
Warranty Reserve |  |  | 137 |  |  |  | 135 |
Reserve for Doubtful Accounts |  |  | 127 |  |  |  | 117 |
Foreign Tax Credit |  |  | 213 |  |  |  | — |
Other |  |  | 119 |  |  |  | 166 |
|  |  | 4,145 |  |  |  | 3,126 |
Deferred Tax Liabilities: |  |  |  |  |  |  |  |
Accumulated Tax Depreciation in Excess of Book Depreciation |  |  | 830 |  |  |  | 532 |
Deferred Gain on Asset Held for Sale |  |  | 897 |  |  |  | — |
Currency Translation Adjustment |  |  | 173 |  |  |  | 189 |
Other |  |  | 78 |  |  |  | 63 |
|  |  | 1,978 |  |  |  | 784 |
Subtotal |  |  | 2,167 |  |  |  | 2,342 |
Valuation Allowance |  |  | (258 | ) |  |  | (231 | )
Net Deferred Tax Assets |  | $ | 1,909 |  |  | $ | 2,111 |
In fiscal 2014, we reclassified $1,151,000 from non-current liabilities of discontinued operations to deferred taxes. At January 31, 2014, we have state net operating loss carryforwards of $392,000, which can be used to offset future tax liabilities and expire at various dates beginning in fiscal 2014. The valuation allowance at January 31, 2014 relates to certain state research and development tax credit carryforwards which are expected to expire unused. The change in the valuation allowance in 2014 is an increase of approximately $27,000 and represents an increase in the reserve due to the generation of research and development credits during the current year, net of federal benefit. The change in the valuation allowance in 2013 was a decrease of approximately $49,000 and represents a reduction in the reserve due to the expiration of research and development credit expensed during the year net of federal benefits. 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:
|  | 2014 |  |  | 2013 |
(In thousands) |  |  |  |  |  |
Balance at February 1 |  | $ | 941 |  |  | $ | 780 |
Increases in prior period tax positions |  |  | 31 |  |  |  | 16 |
Increases in current period tax positions |  |  | 42 |  |  |  | 386 |
Reductions related to lapse of statute of limitations |  |  | (299 | ) |  |  | (241 | )
Balance at January 31 |  | $ | 715 |  |  | $ | 941 |
If the $715,000 is recognized, $425,000 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 2014 and 2013 the Company recognized $68,000 of expense and $105,000 of benefit, 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, 2014 and 2013, the Company had accrued potential interest and penalties of $416,000 and $348,000, 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 2010. On September 13, 2013, the Treasury Department and the Internal Revenue Service released final regulations that provided guidance on the application of IRC Section 263(a) for amounts paid to acquire, produce, or improve tangible property, as well as the rules for materials and supplies and proposed regulations addressing dispositions and general asset accounts. The final regulations are generally effective for tax years beginning on or after January 1, 2014. We are currently evaluating the impact of these new regulations and do not expect them to have a material impact to our financial statements. At January 31, 2014, the Company has indefinitely reinvested $3,462,000 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, 2014, 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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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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