Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Text Block]

(8)      INCOME TAXES:

Income before provision for income taxes consists of (in thousands):

	Year Ended December 31,
	2011		2010		2009
United States	$	8,356	$	4,965	$	4,048
Foreign		49,323		46,651		38,958
	$	57,679	$	51,616	$	43,006

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2011		2010		2009
U.S. Federal	$	2,244	$	1,992	$	1,210
U.S. State		269		250		192
Foreign		4,231		5,051		3,612
	$	6,744	$	7,293	$	5,014
Current	$	4,500	$	5,301	$	3,804
Deferred		2,244		1,992		1,210
	$	6,744	$	7,293	$	5,014

A reconciliation of the difference between the expected provision for income taxes using the U.S. federal tax rate and our actual provision is as follows (in thousands):

	Year Ended December 31,
	2011				2010			2009
Provision using statutory U.S. federal tax rate	$	20,188		$	18,066		$	15,052
Income earned in jurisdictions not subject to income taxes		(11,712	)		(8,916	)		(8,050	)
Impact of foreign tax rates		(1,732	)		(1,857	)		(1,988	)
	$	6,744		$	7,293		$	5,014

The following is a summary of the significant components of our deferred income tax assets and liabilities (in thousands):

	December 31, 2011			December 31, 2010
Deferred income tax assets:
Net operating loss carry-forwards	$	32,933		$	30,671
Gift certificates		2,936			2,093
Depreciation and amortization		1,650			3,036
Interest		1,754			1,743
Accounts receivable allowances		2,995			2,972
Lease obligations		2,603			1,455
Unicap and inventory reserves		834			922
Other accruals		266			249
Deferred revenue		8,800			--
Total deferred income tax assets		54,771			43,141
Deferred income tax liabilities:
Goodwill amortization		(17,947	)		(14,863	)
Intangibles		(17,233	)		--
Stock compensation		(289	)		(3,798	)
Other accruals		(647	)		--
Total deferred income tax liabilities		(36,116	)		(18,661	)
Valuation allowance		(51,536	)		(37,042	)
Net deferred income tax liabilities	$	(32,881	)	$	(12,562	)

Our U.S. subsidiaries have available net federal operating loss carry forwards ("NOLs") of approximately $69.4 million, which are available through 2030 to offset future taxable income. The tax benefit of such NOLs are recorded as an asset to the extent that management assesses the utilization of such NOLs to be more likely than not. Management has determined that, based on the recent results of operations of our subsidiaries, that it is not more likely than not that future taxable income of the subsidiaries will be sufficient to fully utilize the available NOLs and, as a result, a valuation allowance has been established. The valuation allowance increased by approximately $14.5 million, $1.5 million and $2.2 million in 2011, 2010 and 2009, respectively.

We do not expect to incur income taxes on future distributions of undistributed earnings of our foreign subsidiaries and, accordingly, no deferred income taxes have been provided for the distribution of these earnings.

The Company is subject to routine audit by U.S. federal, state and local and foreign taxing authorities. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable includes amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, the amount paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by the Company are recorded in the period they become known. We are under examination by the Internal Revenue Service and Inland Revenue, in the United Kingdom, for the year ended December 31, 2009. The results of these examinations cannot presently be determined.

There are no unrecognized tax benefits that, if recognized, would materially affect our effective tax rate.