Income Taxes

12 Months Ended

Jan. 31, 2013

Income Taxes [Abstract]

INCOME TAXES

NOTE 14 – INCOME TAXES

As of January 31, 2013, the amount presented in the consolidated balance sheet for accrued expenses included accrued income taxes of approximately $1,362,000. As of January 31, 2012, the amount presented in the consolidated balance sheet for prepaid expenses and other current assets included prepaid income taxes of approximately $1,602,000. The Company’s consolidated balance sheets as of January 31, 2013 and 2012 included net deferred tax assets in the amounts of $1,639,000 and $1,529,000, respectively, 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 tax effects of temporary differences that gave rise to deferred tax assets and liabilities as of January 31, 2013 and 2012 are presented below:

	2013		2012
Assets:
Purchased intangibles	$	1,407,000	$	1,557,000
Stock options		1,675,000		1,497,000
Accrued liabilities		855,000		695,000
Moxie Project net operating losses		432,000		—
Other		144,000		228,000
		4,513,000		3,977,000
Liabilities:
Purchased intangibles		2,258,000		1,942,000
Property and equipment		581,000		453,000
Other		35,000		53,000
		2,874,000		2,448,000
Net deferred tax assets	$	1,639,000	$	1,529,000

The components of the Company’s income tax expense related to continuing operations for the years ended January 31, 2013 and 2012 are presented below:

	2013			2012
Current:
Federal	$	11,555,000		$	3,771,000
State		2,224,000			836,000
		13,779,000			4,607,000
Deferred:
Federal		(207,000	)		41,000
State		68,000			(92,000	)
		(139,000	)		(51,000	)
Income tax expense	$	13,640,000		$	4,556,000

The actual income tax expense amounts for the years ended January 31, 2013 and 2012 differed from the expected tax amounts computed by applying the U.S. federal corporate income tax rate of 35% for the year ended January 31, 2013, and 34% for the year ended January 31, 2012, to income from continuing operations before income taxes as presented below:

	2013			2012
Computed “expected” income tax	$	12,510,000		$	4,068,000
Increase (decrease) resulting from:
State income taxes, net		1,459,000			460,000
Permanent differences		(730,000	)		(138,000	)
Federal income tax true-up and other adjustments		401,000			166,000
Income tax expense	$	13,640,000		$	4,556,000

For the years ended January 31, 2013 and 2012, the favorable tax effects of permanent differences related primarily to the tax benefit of the domestic manufacturing deduction for the years.

The Company is subject to income taxes in the United States 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, 2009. Tax penalties recorded during the years ended January 31, 2013 and 2012, and included in selling, general and administrative expenses for the years, were not material. Tax interest amounts recorded during the years ended January 31, 2013 and 2012, and included in income tax expense for the years, were not material.