

NOTE 9	INCOME TAXES

The reconciliation of income tax computed at the federal statutory rate to the company's effective income tax rate was as follows:



	For the years ended January 31
	2012		2011		2010
Tax at U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of U.S. federal benefit	1.0		1.3		1.3
Tax benefit on qualified production activities	(2.4	)	(3.0	)	(2.1	)
Tax credit for research activities	(0.7	)	(0.7	)	(0.7	)
Other, net	0.2		0.2		0.5
	33.1	%	32.8	%	34.0	%

Significant components of the company's income tax provision were as follows:



	For the years ended January 31
	2012		2011		2010
Income taxes:
Currently payable	$	19,705	$	19,322	$	14,653
Deferred	5,358		423		95
	$	25,063	$	19,745	$	14,748

Deferred Tax Assets

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the company's deferred tax assets and liabilities were as follows:



	As of January 31
	2012			2011			2010
Current deferred tax assets:
Accounts receivable	$	58		$	103		$	103
Inventories	452			463			344
Accrued vacation	1,248			1,008			857
Insurance obligations	559			485			553
Warranty obligations	595			503			441
Other accrued liabilities	387			171			173
	3,299			2,733			2,471

Non-current deferred tax assets (liabilities):
Postretirement benefits	2,571			2,014			1,849
Depreciation and amortization	(9,673		)	(3,050		)	(1,970		)
Uncertain tax positions	1,673			1,426			1,180
Other	911			534			521
	(4,518		)	924			1,580
Net deferred tax asset (liability)	$	(1,219	)	$	3,657		$	4,051

Pre-tax book income for the U.S. companies and the Canadian subsidiary was $74,219 and $1,338, respectively. As of January 31, 2012, undistributed earnings of the Canadian subsidiary were considered to have been reinvested indefinitely and, accordingly, the company has not provided United States income taxes on such earnings.

Uncertain Tax Positions

A summary of the activity related to the gross unrecognized tax benefits (excluding interest and penalties) is as follows:



	For the years ended January 31
	2012			2011			2010
Gross unrecognized tax benefits at beginning of year	$	3,112		$	2,656		$	2,269
Increases in tax positions related to the current year	699			601			463
Decreases as a result of a lapse in applicable statute of limitations	(244		)	(145		)	(76		)
Gross unrecognized tax benefits at end of year	$	3,567		$	3,112		$	2,656

During the fiscal year ended January 31, 2012, the only change to uncertain tax positions related to prior years resulted from the lapse of a statute of limitations. The company does not expect any significant change in the amount of unrecognized tax benefits in the next fiscal year.

The total unrecognized tax benefits that, if recognized, would affect the company's effective tax rate were $2,318, $2,023 and $1,727 as of January 31, 2012, January 31, 2011 and January 31, 2010, respectively.

The company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. At January 31, 2012, January 31, 2011 and January 31, 2010, accrued interest and penalties were $1,379, $1,112 and $857, respectively.

The company files tax returns, including returns for its subsidiaries, with various federal, state and local jurisdictions. Uncertain tax positions are related to tax years that remain subject to examination. As of January 31, 2012, federal tax returns filed in the U.S., Canada and Switzerland for fiscal years ended January 31, 2008-2011 remain subject to examination by federal tax authorities. In state and local jurisdictions, tax returns for fiscal years ended January 31, 2004-2011 remain subject to examination by state and local tax authorities.