Note 8 - Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

(8)      INCOME TAXES:

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

	Year Ended December 31,
	2012		2011		2010
United States	$	10,147	$	8,356	$	4,965
Foreign		50,296		49,323		46,651
	$	60,443	$	57,679	$	51,616

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

	Year Ended December 31,
	2012		2011		2010
U.S. Federal	$	3,247	$	2,244	$	1,992
U.S. State		177		269		250
Foreign		3,917		4,231		5,051
	$	7,341	$	6,744	$	7,293
Current	$	4,094	$	4,500	$	5,301
Deferred		3,247		2,244		1,992
	$	7,341	$	6,744	$	7,293

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,
	2012			2011			2010
Provision using statutory U.S. federal tax rate	$	21,152		$	20,188		$	18,066
Income earned in jurisdictions not subject to income taxes		(12,362	)		(11,712	)		(8,916	)
Impact of foreign tax rates		(1,449	)		(1,732	)		(1,857	)
	$	7,341		$	6,744		$	7,293

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

	December 31, 2012			December 31, 2011
Deferred income tax assets:
Net operating loss carry-forwards	$	34,839		$	32,933
Gift certificates		2,437			2,936
Depreciation and amortization		1,649			1,650
Interest		1,754			1,754
Accounts receivable allowances		4,477			2,995
Lease obligations		2,464			2,603
Unicap and inventory reserves		781			834
Other accruals		696			266
Deferred revenue		7,831			8,800
Total deferred income tax assets		56,928			54,771
Valuation allowance		(52,551	)		(51,536	)
		4,377			3,235
Deferred income tax liabilities:
Goodwill amortization		(21,195	)		(17,947	)
Intangibles		(17,233	)		(17,233	)
Stock compensation		(1,430	)		(289	)
Other accruals		(647	)		(647	)
Total deferred income tax liabilities		(40,505	)		(36,116	)
Net deferred income tax liabilities	$	(36,128	)	$	(32,881	)

Our U.S. subsidiaries have available net federal operating loss carry forwards ("NOLs") of approximately $89.4 million, which are available through 2031 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, 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 was increased by approximately $1.0 million, $14.5 million and $1.5 million in 2012, 2011 and 2010, 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, 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 Inland Revenue, in the United Kingdom, for the year ended December 31, 2009.  The results of this examination cannot presently be determined.

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