MET PRO CORP - 10-K filing on 2013-03-21

INCOME TAXES (Tables)

12 Months Ended

Jan. 31, 2013

The provision (benefit) for income taxes was comprised of the following:

	2013		2012			2011
Current
Federal	$	2,488,953	$	2,010,929		$	2,106,753
State		311,905		290,461			299,616
Foreign		163,921		201,565			135,327
		2,964,779		2,502,955			2,541,696
Deferred
Federal		790,748		1,112,827			429,442
State		42,539		98,191			37,892
Foreign		22,392		(13,364	)		(28,265	)
		855,679		1,197,654			439,069
Provision for taxes	$	3,820,458	$	3,700,609		$	2,980,765

Significant components of the net deferred tax assets (liabilities)

Deferred income taxes reflect the net tax effect 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 net deferred tax assets (liabilities) were as follows:

	January 31,
	2013			2012
Deferred tax assets
Inventory cost capitalization	$	155,301		$	110,306
Pension cost		3,577,115			3,964,282
Management incentive		34,131			262,612
Stock options		656,650			458,468
Interest rate swap		111,191			135,526
Other		434,910			446,576
Total deferred tax assets		4,969,298			5,377,770

Deferred tax liabilities
Property, plant and equipment		2,396,065			2,348,541
Inventory – LIFO		318,222			320,759
Prepaid expenses		266,431			205,501
Goodwill		4,106,338			3,839,091
Total deferred tax liabilities		7,087,056			6,713,892
Net deferred tax liabilities	$	(2,117,758	)	$	(1,336,122	)

A reconciliation of the federal statutory rate and the Company's effective tax rate

A reconciliation of the federal statutory rate and the Company's effective tax rate is presented as follows:

	2013					2012					2011
Computed expected federal tax expense	$	4,034,330		34.0	%	$	3,683,665		34.0	%	$	3,100,765		34.0	%
Manufacturing exemption		(271,862	)	(2.3	)		(205,457	)	(1.9	)		(207,968	)	(2.3	)
State income taxes,net of federal income tax benefit		282,226		2.3			289,895		2.7			235,638		2.6
Research and development tax credits		(153,689	)	(1.3	)		(149,728	)	(1.4	)		(143,361	)	(1.5	)
Stock option tax expense		75,880		.7			78,473		.7			20,076		.2
Stock option modification		(110,311	)	(.9	)		-		-			-		-
Other		(36,116	)	(.3	)		3,761		-			(24,385	)	(.3	)
Effective income taxes	$	3,820,458		32.2	%	$	3,700,609		34.1	%	$	2,980,765		32.7	%

Reconciliation of beginning and ending balances of unrecognized tax benefits

A reconciliation of the beginning and ending balances of the amounts of unrecognized tax benefits is as follows:

	2013
Balance at February 1, 2012	$	49,000
Increases in tax positions for prior years		-
Decreases in tax positions for prior years		(49,000	)
Increases in tax positions for current year		-
Balance at January 31, 2013	$	-

Summary of tax years that remain subject to examination by major jurisdictions

The Company and its subsidiaries are subject to income taxes in the U.S. federal jurisdiction, various states and foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The following table summarizes tax years that remain subject to examination by major jurisdictions:

	Open Tax Year
	Examination in Progress	Examination Not Yet Initiated
United States
Federal	n/a	2010 – 2013
State	n/a	2008 – 2013
Canada	n/a	2007 – 2013
The Netherlands	n/a	2008 – 2013
People's Republic of China	n/a	2011 – 2013
Chile	n/a	2012 – 2013