NOTE 8 - INCOME TAXES

Income tax expense consists of the following:

	2012			2011		2010
Current:
Federal	$	17,748		$	16,096	$	14,329
Foreign		1,080			1,441		1,287
State		1,104			131		1,906
Deferred:
Federal		(332	)		177		(803	)
Foreign		148			127		183
State		91			1		(48	)
Total income tax provision	$	19,839		$	17,973	$	16,854

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:

	2012			2011			2010
Income tax at Federal statutory rate	$	20,945		$	19,858		$	17,546
State income taxes, net of Federal income taxes		659			(207	)		987
Other		(1,765	)		(1,678	)		(1,679	)
Total income tax provision	$	19,839		$	17,973		$	16,854

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2012 and 2011 were as follows:

	2012		2011
Deferred tax assets:
Inventories	$	435	$	396
Restricted stock and stock options		4,555		4,218
Other		696		773
Total deferred tax assets		5,686		5,387
Deferred tax liabilities:
Customer list and goodwill amortization	$	2,567	$	2,952
Depreciation		6,981		6,471
Prepaid expense		665		574
Trade names and trademarks		157		157
Technology and trade secrets		176		176
Other		415		485
Total deferred tax liabilities		10,961		10,815
Net deferred tax liability	$	5,275	$	5,428

There is no valuation allowance for deferred tax assets at December 31, 2012 and 2011. 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. A reconciliation of the beginning and ending amount of unrecognized tax benefits, which is included in other long-term obligations on the Company's consolidated balance sheets, is as follows:

	2012			2011			2010
Balance at beginning of period	$	2,021		$	1,246		$	972
Increases for tax positions of prior years		116			397			97
Decreases for tax positions of prior years		(224	)		(168	)		(127	)
Increases for tax positions related to current year		379			546			304
Balance at end of period	$	2,292			2,021		$	1,246

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, 2012, 2011 and 2010, the Company recognized approximately $40, $133 and $152 in interest and penalties, respectively. As of December 31, 2012 and 2011, accrued interest and penalties were $587 and $547, 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.