DERIVATIVE INSTRUMENTS AND FOREGIN CURRENCY EXPOSURE

12 Months Ended

Jan. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

14. Derivative Instruments and Foreign Currency Exposure

The Company has foreign currency exposure, principally through sales in Canada, Brazil, China, Argentina, Chile and the EEC, and production in Brazil, Mexico and China. Management has commenced a derivative instrument program to partially offset this risk by purchasing forward contracts to sell the Canadian Dollar, the Chilean Peso, the Euro, the Great Britain Pound and the Argentina Peso other than the cash flow hedge discussed below. Such contracts are largely timed to expire with the last day of the fiscal quarter, with a new contract purchased on the first day of the following quarter, to match the operating cycle of the Company. Management has decided not to hedge its long position in the Chinese Yuan or the Brazilian Real. We designated the forward contracts as derivatives not designated as hedging instruments with loss and gain recognized in the current earnings. In the year ended January 31, 2012, the Company sustained a loss on foreign exchange in Brazil of $304,000 or $0.05 per share included in net income from continuing operations. In the year ended January 31, 2011, the Company recorded a gain on foreign exchange in Brazil of $224,000 or $0.04 per share included in net income from continuing operations.

The Company accounts for its foreign exchange derivative instruments by recognizing all derivatives as either assets or liabilities at fair value, which may result in additional volatility in both current period earnings and other comprehensive income as a result of recording recognized and unrecognized gains and losses from changes in the fair value of derivative instruments.

Currently, we have two types of derivatives to manage the risk of foreign currency fluctuations. We enter into forward contracts with financial institutions to manage our currency exposure related to net assets and liabilities denominated in foreign currencies. Those forward contract derivatives, not designated as hedging instruments, are generally settled quarterly. Gain and loss on those forward contracts are included in current earnings. We also enter cash flow hedge contracts with financial institutions to manage our currency exposure on future cash payments denominated in foreign currencies. The effective portion of gain or loss on cash flow hedge is reported as a component of other comprehensive income. Our hedge positions are summarized below:

Fair Value of Derivative Instruments

Derivatives not designated as hedging instruments
Foreign Exchange Forward Contracts
	Years Ended
	January 31, 2012			January 31, 2011
Notional Value in USD	$	12,730,191		$	9,159,417
Gain and loss reported in current operating income (expense)	$	(230,110	)	$	(243,475	)

There is no outstanding balance from foreign exchange forward contracts as of January 31, 2012 or January 31, 2011.

Derivatives designated as hedging instruments
Asset Derivative from Foreign Currency Cash Flow Hedge
	As of January 31, 2012		Reported in balance sheet
Notional value in USD	$	6,904,150
Gain and loss reported in equity as other comprehensive income	$	123,313		Other assets
Effect of Derivative on Income Statement from Foreign Currency Cash Flow Hedge

		Years Ended  January 31, 2012
Gain reclassed from other comprehensive income into current earnings during three months ended January 31, 2012, reported in operating income	$	123,313

The cash flow hedge is designed to hedge the payments made in Euros and USD to our China subsidiaries. As of January 31, 2012, $123,313 has been recorded as other asset to account for the value of cash flow hedge. There was no cash flow hedge in fiscal 2011.