

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,
	2014		2013		2012
Tax at U.S. federal statutory rate	35.0	%	35.0	%	35.0	%
State and local income taxes, net of U.S. federal tax benefit	1.5		1.6		1.0
Tax benefit on qualified production activities	(2.9	)	(3.2	)	(2.4	)
Tax credit for research activities	(1.2	)	(0.9	)	(0.7	)
Other, net	0.2		(0.2	)	0.2
	32.6	%	32.3	%	33.1	%

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



	For the years ended January 31,
	2014		2013			2012
Income taxes:
Currently payable	$	20,098	$	26,894		$	19,705
Deferred expense (benefit)	623		(1,803		)	5,358
	$	20,721	$	25,091		$	25,063

Deferred Tax Assets

Deferred income taxes reflect the net tax 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,
	2014			2013			2012
Current deferred tax assets:
Accounts receivable	$	111		$	70		$	58
Inventories	583			507			452
Accrued vacation	1,032			1,118			1,248
Insurance obligations	567			576			559
Warranty obligations	898			661			595
Other accrued liabilities	181			175			387
	3,372			3,107			3,299

Non-current deferred tax assets (liabilities):
Postretirement benefits	2,799			2,826			2,571
Depreciation and amortization	(11,522		)	(9,114		)	(9,673		)
Uncertain tax positions	2,219			1,969			1,673
Share-based compensation	2,309			1,613			981
Other	669			253			(70		)
	(3,526		)	(2,453		)	(4,518		)
Net deferred tax (liability) asset	$	(154	)	$	654		$	(1,219	)

Pre-tax book income for the U.S. companies and the Canadian subsidiary was $62,996 and $481, respectively. As of January 31, 2014, 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,
	2014			2013			2012
Gross unrecognized tax benefits at beginning of year	$	4,213		$	3,567		$	3,112
Increases in tax positions related to the current year	795			993			699
Decreases as a result of lapses in applicable statutes of limitation	(348		)	(347		)	(244		)
Gross unrecognized tax benefits at end of year	$	4,660		$	4,213		$	3,567

During the fiscal year ended January 31, 2014, the only change to uncertain tax positions related to prior years resulted from the lapse of applicable statutes of limitation. The total unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate were $3,029, $2,738 and $2,318 as of January 31, 2014, January 31, 2013 and January 31, 2012, respectively.

The Company does not expect any significant change in the amount of unrecognized tax benefits in the next fiscal year.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. At January 31, 2014, January 31, 2013 and January 31, 2012, accrued interest and penalties were $1,897, $1,605 and $1,379, 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, 2014, federal tax returns filed in the U.S., Canada and Switzerland for fiscal years ended January 31, 2009 through January 31, 2013 remain subject to examination by federal tax authorities. In state and local jurisdictions, tax returns for fiscal years ended January 31, 2006 through January 31, 2013 remain subject to examination by state and local tax authorities.