Income Taxes

3 Months Ended

Apr. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 11—INCOME TAXES

The Company’s income tax expense amounts related to continuing operations for the three months ended April 30, 2012 and 2011 differed from the expected income tax expense amounts computed by applying the federal corporate income tax rate of 34% to the income from continuing operations before income taxes as shown in the table below.

	Three Months Ended April 30,
	2012			2011
Computed expected income tax expense	$	2,402,000		$	395,000
State income taxes, net of federal tax benefit		276,000			31,000
Permanent differences, net		(162,000	)		10,000
Other, net		1,000			(20,000	)
	$	2,517,000		$	416,000

For the three months ended April 30, 2012, the favorable tax effects of permanent differences relate primarily to the tax benefit of the domestic manufacturing deduction for the period.

As of April 30, 2012, the amount presented in the condensed consolidated balance sheet for accrued expenses included accrued income taxes of approximately $802,000. As of January 31, 2012, the amount presented in the condensed consolidated balance sheet for prepaid expenses and other current assets included prepaid income taxes of approximately $1,602,000.

The Company’s condensed consolidated balance sheets as of both April 30, 2012 and January 31, 2012 included net deferred tax assets in the amount of approximately $1.5 million resulting from future deductible temporary differences. The Company’s ability to realize its deferred tax assets depends primarily upon the generation of sufficient future taxable income to allow for the utilization of the Company’s deductible temporary differences and tax planning strategies. If such estimates and assumptions change in the future, the Company may be required to record additional valuation allowances against some or all of the deferred tax assets resulting in additional income tax expense in the consolidated statement of operations. At this time, based substantially on the strong earnings performance of the Company’s power industry services business segment, management believes that it is more likely than not that the Company will realize benefit for its deferred tax assets.

The Company is subject to income taxes in the United States of America and in various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to federal, state and local income tax examinations by tax authorities for its fiscal years ended on or before January 31, 2008.