Note 13 - Provision for Taxes

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Text Block]

Note 13 — Provision for Taxes

Income before taxes and the provision for taxes consisted of the following:

In Thousands	2011			2010			2009
Income (loss) before taxes:
United States of America (USA)	$	8,481		$	10,919		$	3,359
Non USA		(1,605	)		(1,843	)		(754	)
	$	6,875		$	9,076		$	2,605
Provision for taxes:
Current
Federal	$	965		$	118		$	(906	)
State		38			180			(685	)
International		568			(194	)		364
		1,571			104			(1,227	)
Deferred
Federal		163			2,802			1,686
State		621			59			964
International		79			52			(475	)
		863			2,913			2,175
	$	2,434		$	3,017		$	948

The Company has not provided for USA deferred taxes or foreign withholding taxes on undistributed earnings for non-USA subsidiaries where the Company intends to reinvest these earnings indefinitely in operations outside the USA.

The provision for income taxes was computed based on financial statement income. A reconciliation of the provision for income taxes to the amount computed using the statutory rate follows:

In Thousands	2011			2010			2009
Income tax at statutory rate	$	2,338		$	3,086		$	886
Increase (decrease) in income tax resulting from
Permanent differences (investment income, dividends, and captive insurance earnings)		(292	)		(368	)		(162	)
State tax expense, net of federal effect		435			158			184
Effect of foreign tax rates		(101	)		484			(188	)
Other		54			(343	)		228
Recorded provision for income taxes	$	2,434		$	3,017		$	948

The provision for income taxes was computed based on financial statement income. In accordance with FASB ASC 740, the Company has recorded the following changes in uncertain tax positions:

In Thousands	2011			2010
Balance, beginning of year	$	220		$	536
Additions for current year tax positions		—			—
Additions for prior year tax positions		—			—
Settlements		—			(263	)
Reductions settlements		—			—
Reductions for prior year tax positions		(174	)		(53	)
Balance, end of year	$	46		$	220

Interest costs and penalties related to income taxes are classified as interest expense and selling, general and administrative costs, respectively in the Company’s financial statements. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and multiple state and foreign jurisdictions. The Company is subject to future examinations by federal, state and other tax authorities for all years after 2007.

The components of the net deferred tax assets are as follows:

In Thousands	2011			2010
Assets
Employee benefits	$	55		$	58
Valuation reserves		1,584			1,727
Property and equipment		356			—
Stock based compensation		132			268
Federal and state credits		1,046			375
Net operating loss carry forward		7,132			7,584
Total assets		10,305			10,012
Liabilities
Unrealized equity investment income		(2,027	)		(1,627	)
Goodwill and intangible assets		(2,535	)		(2,184	)
Prepaid insurance		(90	)		—
Property and equipment		—			(218	)
Total liabilities		(4,652	)		(4,029	)
Valuation Allowance
Beginning balance		(6,626	)		(6,855	)
Increase (decrease) during period		(449	)		229
Ending balance		(7,075	)		(6,626	)
	$	(1,422	)	$	(643	)

Deferred tax assets (liabilities) are included in the consolidated balance sheets as follows:

In Thousands	2011			2010
Deferred income tax asset - current	$	1,478		$	1,502
Deferred income tax asset (liability) – long-term		(2,900	)		(2,145	)
	$	(1,422	)	$	(643	)

The Company has state unused net operating losses of approximately $5.1 million. All operating loss carry-forwards expire in various amounts through 2029. In addition, the Company has foreign unused net operating loss carry-forwards of approximately $20.6 million of which an estimated $19.7 million has been reserved as the Company does not expect to be able to utilize these carryforwards.