INCOME TAXES

12 Months Ended

Dec. 31, 2011

INCOME TAXES [Abstract]

INCOME TAXES

11. INCOME TAXES

Income tax expense was as follows for the years ended December 31:
(In thousands)		2011		2010		2009
Current:
Federal	$	126	$	151	$	(298)
State and local		390		11		(22)
Deferred		2,043		1,666		1,068
	$	2,559	$	1,828	$	748

Following is a reconciliation of federal income tax at the statutory rate of 34% to the actual income taxes provided for the years ended December 31:

(In thousands)		2011		2010		2009
Computed expected federal income tax expense (benefit)	$	2,384	$	1,647	$	696
State tax, net of federal effect		176		121		52
Other, net		(1)		60		-
	$	2,559	$	1,828	$	748

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred assets (liabilities) were as follows at December 31:

(In thousands)		2011		2010
Deferred income tax assets:
Accounts receivable allowances	$	828	$	715
Inventories		168		145
Accrued expenses		375		423
Deferred compensation		1,785		1,580
Research and experimental credit carryforwards		749		705
Federal alternative minimum tax credit carryforwards		178		110
Net operating loss carryforwards		369		1,659
Other		109		8
Total deferred tax assets		4,561		5,345
Deferred income tax liabilities:
Building, equipment and improvements		(2,257)		(1,049)
Goodwill and other intangible assets		(4,144)		(4,093)
Total deferred tax liabilities		(6,401)		(5,142)
Net deferred tax (liabilities) assets	$	(1,840)	$	203

At December 31, 2011, the Company had federal net operating loss carryforwards (NOLs) of $1,100,000, which are available to offset future taxable income.  The Company's federal NOLs expire in varying amounts each year from 2029 through 2030 in accordance with applicable federal tax regulations and the timing of when the NOLs were incurred. Section 382 of the Internal Revenue Code restricts the annual utilization of certain NOLs incurred prior to a change in ownership.  However, such limitation is not expected to impair the realization of these NOLs.  In the future, subsequent revisions to the estimated net realizable value of these deferred tax assets could cause the provision for income taxes to vary significantly from period to period, although the Company's cash payments would remain unaffected until the benefit of the NOLs is completely utilized or expires unused. We anticipate fully utilizing our NOLs and expect an increase in income tax payments in 2012.

In 2011 and 2010, income tax benefits attributable to share-based compensation of $100,000 and $192,000, respectively, were allocated as an increase to additional paid-in capital in stockholder's equity in the accompanying consolidated balance sheet.  In 2010, income tax benefits attributable to participating dividends of $177,000 were also allocated as an increase to additional paid-in capital in stockholder's equity.

The Company did not have any unrecognized tax benefits at December 31, 2011 or 2010.

The tax years 2007-2010 remain open to examination by the major taxing jurisdictions to which the Company is subject.

The Company records income tax related interest expense, interest income and penalties in income tax expense in its consolidated statements of income.  The Company did not have any accrued interest related to uncertain tax positions at December 31, 2011 or 2010.