Note J - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

NOTE J—INCOME TAXES

Income tax expense consisted of the following at December 31:

	2013			2012		2011
Current:
Federal	$	15,154		$	7,730	$	20,632
State		3,247			1,328		4,274
Foreign		1,651			1,184		801
		20,052			10,242		25,707
Deferred:
Federal		2,523			10,977		(3,173	)
State		323			2,550		(630	)
Foreign		(2	)		67		(9	)
		2,844			13,594		(3,812	)
Income Tax Expense	$	22,896		$	23,836	$	21,895

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Such amounts are classified in the consolidated statements of financial position as current or non-current assets or liabilities based upon the classification of the related assets and liabilities.

Deferred tax assets (liabilities) consisted of the following at December 31:

	2013			2012
Deferred Tax Assets
Current:
Stock option compensation	$	503		$	214
Allowance for bad debt		687			573
Accrued PTO		2,647			3,026
Accrued bonus		524			408
Foreign tax credits		642			174
Accrued liabilities		1,474			202
Total current deferred tax asset		6,477			4,597
Non-current:
Foreign net operating loss (NOL) carry forward		784			548
Stock option compensation		2,237			3,497
Deferred rent		4,096			3,303
Deferred compensation		2,273			1,783
Foreign tax credits		947			1,047
State tax credits		712			—
Other		2,592			1,892
Total non-current deferred tax assets		13,641			12,070
Less: Valuation Allowance		(513	)		(463	)
Total Deferred Tax Assets	$	19,605		$	16,204
Deferred Tax Liabilities
Current:
Retention	$	(1,319	)	$	(1,228	)
Section 481(a) adjustment		—			(674	)
Prepaids		(946	)		(1,400	)
Payroll taxes		(819	)		(766	)
Unbilled revenue		(9,449	)		(6,319	)
Other		(88	)		—
Total current deferred liability		(12,621	)		(10,387	)
Non-current:
Depreciation		(4,751	)		(5,715	)
Amortization		(19,022	)		(14,615	)
Other		(135	)		(358	)
Total non-current deferred tax liabilities		(23,908	)		(20,688	)
Total Deferred Tax Liabilities		(36,529	)		(31,075	)
Total Net Deferred Tax Liability	$	(16,924	)	$	(14,871	)

At December 31, 2013 and 2012, the Company had net operating loss carry-forwards for foreign income taxes of approximately $1.6 million and $1.4 million, respectively, some of which will expire in 2018 and others which may be carried forward indefinitely.

At December 31, 2013, the Company had gross state income tax credit carry-forwards of approximately $1.0 million, which expire between 2017 and 2023. A deferred tax asset of approximately $0.7 million (net of federal benefit) has been established related to these state income tax credit carry-forwards as of December 31, 2013.

The need to establish valuation allowances for deferred assets is based on a more-likely-than-not threshold that the benefit of such assets will be realized in future periods. Appropriate consideration has been given to all available evidence, including historical operating results, projections of taxable income, and tax planning alternatives. The Company concluded that a valuation allowance of approximately $0.5 million is required for tax attributes related to specified foreign jurisdictions as of each of December 31, 2013 and 2012.

Effective January 1, 2009, the Company made no provisions for deferred U.S. income taxes or additional foreign taxes on any unremitted earnings of its controlled foreign subsidiaries because the Company considers these earnings to be permanently invested. If these earnings were repatriated, in the form of dividends or otherwise, the Company would be subject to U.S. income tax on these earnings. Determination of the amount of unrecognized deferred U.S. income tax liability is not practicable due to the complexities associated with this hypothetical calculation; however, unrecognized foreign tax credit carry forwards would be available to reduce some portion of the U.S. tax liability. The Company has $1.6 million of foreign tax credits available for carry forward related to its foreign branch operations as of December 31, 2013.

The total amount of unrecognized tax benefits as of December 31, 2013 and 2012, was $0.7 million and $1.1 million, respectively. Included in the balance as of December 31, 2013 and 2012, were $0.2 million and $0.6 million, respectively, of tax positions that, if recognized, would impact the effective tax rate.

The unrecognized tax benefit reconciliation, excluding penalty and interest, is as follows:

Unrecognized tax benefits at January 1, 2011	$	944
Increase attributable to tax positions taken during the current period		117
Unrecognized tax benefits at December 31, 2011		1,061
Increase attributable to tax positions taken during a prior period		78
Decrease attributable to lapse of statute of limitations		(48	)
Unrecognized tax benefits at December 31, 2012		1,091
Decrease attributable to settlements		(8	)
Increase attributable to tax positions taken during a prior period		43
Decrease attributable to lapse of statute of limitations		(424	)
Unrecognized tax benefits at December 31, 2013	$	702

The Company’s policy is not to recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. The Company had approximately $0.2 million and $0.4 million of accrued penalty and interest at December 31, 2013, and 2012, respectively.

The Company’s 2008 through 2013 tax years remain subject to examination by the Internal Revenue Service for U.S. federal tax purposes. In addition, certain significant state and foreign tax jurisdictions are either currently under examination or remain open under the statute of limitations and subject to examination for the tax years from 2008 to 2013.

Although the Company believes it has adequately provided for all uncertain tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position. Accordingly, additional provisions on federal, state and foreign income tax related matters could be recorded in the future as revised estimates are made or the underlying matters are effectively settled or otherwise resolved. Conversely, the Company could settle positions with the tax authorities for amounts lower than have been accrued. The Company believes it is reasonably possible that, during the next 12 months, the Company’s liability for uncertain tax positions may decrease by approximately $0.4 million.

The Company’s provision for income taxes differs from the anticipated United States federal statutory rate. Approximate differences between the statutory rate and the Company’s provision are as follows:

	2013			2012			2011
Taxes at statutory rate		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		4.2	%		4.6	%		4.6	%
Foreign tax rate differential and U.S. unrepatriated earnings		(0.3	)%		(0.3	)%		0	%
Other permanent differences		0.7	%		0.8	%		0.6	%
Prior year tax adjustments and changes in unrecognized tax benefits		(2.1	)%		(0.9	)%		(1.2	)%
Tax credits		(0.7	)%		(0.7	)%		(0.4	)%
		36.8	%		38.5	%		38.6	%