NOTE 8 - INCOME TAXES

Income tax expense consists of the following:

	2011		2010			2009
Current:
Federal	$	16,096	$	14,329		$	11,922
Foreign		1,441		1,287			1,700
State		131		1,906			1,425
Deferred:
Federal		177		(803	)		(1,181	)
Foreign		127		183			53
State		1		(48	)		(102	)
Total income tax provision	$	17,973	$	16,854		$	13,817

The provision for income taxes differs from the amount computed by applying the Federal statutory rate of 35% to earnings before income tax expense due to the following:

	2011			2010			2009
Income tax at Federal statutory rate	$	19,858		$	17,546		$	14,211
State income taxes, net of Federal income taxes		(207	)		987			766
Other		(1,678	)		(1,679	)		(1,160	)
Total income tax provision	$	17,973		$	16,854		$	13,817

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2011 and 2010 were as follows:

	2011		2010
Deferred tax assets:
Inventories	$	396	$	388
Restricted stock and stock options		4,218		3,352
Other		773		774
Total deferred tax assets		5,387		4,514
Deferred tax liabilities:
Customer list and goodwill amortization	$	2,952	$	3,313
Depreciation		6,471		4,855
Prepaid expense		574		642
Trade names and trademarks		157		171
Technology and trade secrets		176		192
Other		485		431
Total deferred tax liabilities		10,815		9,604
Net deferred tax liability	$	5,428	$	5,090

There is no valuation allowance for deferred tax assets at December 31, 2011 and 2010. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not the Company will realize the benefits of these deductible differences. The amount of deferred tax asset realizable, however, could change if management's estimate of future taxable income should change.

Provisions of ASC 740-10 clarify whether or not to recognize assets or liabilities for tax positions taken that may be challenged by a tax authority. Upon adoption of ASC 740-10, the Company recognized approximately a $291 decrease in its retained earnings balance. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

	2011			2010			2009
Balance at beginning of period	$	1,246		$	972		$	813
Increases for tax positions of prior years		397			97			73
Decreases for tax positions of prior years		(168	)		(127	)		(131	)
Increases for tax positions related to current year		546			304			217
Balance at end of period	$	2,021		$	1,246		$	972

All of the Company's unrecognized tax benefits, if recognized in future periods, would impact the Company's effective tax rate in such future periods.

The Company recognizes both interest and penalties as part of the income tax provision. During the years ended December 31, 2011, 2010 and 2009, the Company recognized approximately $133, $152 and $110 in interest and penalties, respectively. As of December 31, 2011 and 2010, accrued interest and penalties were $547 and $414, respectively.

The Company files income tax returns in the U.S. and in various states and foreign countries. In the major jurisdictions where the Company operates, it is generally no longer subject to income tax examinations by tax authorities for years before 2008. The Company does not anticipate any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.