10.	INCOME TAXES

A reconciliation of the difference between the income tax expense and the computed income tax expense based on the Federal statutory corporate rate is as follows (in thousands):

	Year Ended December 31,
	2011					2010					2009
Income tax at Federal statutory rate	$	27,539		35.00	%	$	23,112		35.00	%	$	25,580		35.00	%
State and local income taxes and changes in valuation allowances, net of federal tax benefit		1,680		2.14			1,381		2.09			2,402		3.29
Foreign taxes at rates different from the U.S. rate		(893	)	(1.13	)		(1,407	)	(2.13	)		(991	)	(1.36	)
Changes in valuation allowances		(3,666	)	(4.66	)		(87	)	(.13	)		965		1.32
Decrease in tax reserves							-					(1,195	)	(1.64	)
Non-deductible items		75		.10			680		1.03
Adjustment for prior year taxes							(30	)	(.05	)		107		.15
Other items, net		(460	)	(.58	)		(167	)	(.25	)		32		.04

Income tax at Federal statutory rate	$	24,275		30.85	%	$	23,482		35.56	%	$	26,900		36.81	%

The components of income before income taxes are as follows (in thousands):

	Year Ended December 31,
	2011		2010		2009
United States	$	43,162	$	43,386	$	54,468
Foreign		35,521		22,647		18,617
Total	$	78,683	$	66,033	$	73,085

The provision for income taxes consists of the following (in thousands):

	Year Ended December 31,
	2011			2010			2009
Current:
Federal	$	13,472		$	9,535		$	11,987
State		2,158			2,269			3,005
Foreign		8,436			7,106			6,204
Total current		24,066			18,910			21,196

Deferred:
Federal		456			4,712			4,271
State		426			(193	)		844
Foreign		(673	)		53			589
Total deferred		209			4,572			5,704
TOTAL	$	24,275		$	23,482		$	26,900

Income taxes are accrued and paid by each foreign entity in accordance with applicable local regulations.

The deferred tax assets and liabilities are comprised of the following (in thousands):

	December 31,
	2011			2010
Assets:
Current:
Accrued expenses and other liabilities	$	13,575		$	12,720
Inventory		2,555			1,902
Valuation allowances		(1,471	)		(1,605	)
Total current assets	$	14,659		$	13,017

Non-current:
Net operating loss and credit carryforwards	$	23,405		$	22,842
Depreciation		3,644			4,728
Other		7,576			8,594
Valuation allowances		(28,443	)		(27,671	)
Total non-current assets	$	6,182		$	8,493

Liabilities :
Current :
Deductible assets	$	808		$	1,350
Other		4,311			4,534
Total current liabilities	$	5,119		$	5,884

Non-current:
Amortization	$	8,040		$	6,107
Other		427			73
Total non-current liabilities	$	8,467		$	6,180

The Company has not provided for federal income taxes applicable to the undistributed earnings of its foreign subsidiaries of approximately $73.8 million as of December 31, 2011, since these earnings are considered indefinitely reinvested. The Company has foreign net operating loss carryforwards which expire through 2025. The Company records these benefits as assets to the extent that utilization of such assets is more likely than not; otherwise, a valuation allowance has been recorded. The Company has also provided valuation allowances for certain state deferred tax assets and net operating loss carryforwards where it is not likely they will be realized.

As of December 31, 2011, the Company has recorded valuation allowances of approximately $29.9 million including valuations against the tax effected net operating loss carryforwards in foreign and state jurisdictions of $20.0 million and $2.3 million, respectively, deductible temporary differences incurred in foreign jurisdictions of $6.4 million, the majority of which relates to the WStore acquisition, and $1.2 million for state and other deductible temporary differences.

The Company is routinely audited by federal, state and foreign tax authorities with respect to its income taxes. The Company regularly reviews and evaluates the likelihood of audit assessments. The Company's federal income tax returns have been audited through 2006. The Company has not signed any consents to extend the statute of limitations for any subsequent years. The Company's significant state tax returns have been audited through 2006. The Company considers its significant tax jurisdictions in foreign locations to be the United Kingdom, Canada, France, Italy and Germany. The Company remains subject to examination in the United Kingdom for years after 2009, in Canada for years after 2007, in France for years after 2008, in Italy for years after 2006, in Netherlands for years after 2006 and in Germany for years after 2007.

In accordance with the guidance for accounting for uncertainty in income taxes the Company recognizes the tax benefits from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefit of an uncertain tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount that is greater than 50% likely to be realized upon settlement with the tax authority. To the extent we prevail in matters for which accruals have been established or are required to pay amounts in excess of accruals, our effective tax rate in a given financial statement period could be affected. There were no accrued interest or penalty charges related to unrecognized tax benefits recorded in income tax expense in 2011 or 2010. As of December 31, 2011 the Company had no uncertain tax positions.