Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes [Abstract]

Income Taxes

Note J. Income Taxes

The components of income tax expense (benefit) for the years ended December 31, 2011, 2010 and 2009 were as follows:

	2011		2010			2009
Current provision:
U.S. federal	$	6,202	$	5,958		$	2,778
Foreign		292		682			250
State		1,678		1,238			735
Total current		8,172		7,878			3,763
Deferred provision:
U.S. federal		3,015		2,497			4,133
Foreign		5		(96	)		—
State		43		476			369
Total deferred		3,063		2,877			4,502
Income tax expense	$	11,235	$	10,755		$	8,265

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows:

	2011			2010
Deferred tax assets:
Net operating loss carry forwards	$	4,017		$	4,947
Accrued expenses		9,651			9,079
Accrued compensation		6,081			5,371
Other		274			253
Gross deferred tax assets		20,023			19,650
Less: valuation allowance		(318	)		(318	)
Total deferred tax asset		19,705			19,332
Deferred tax liabilities:
Prepaid expenses		(244	)		(253	)
Undistributed foreign earnings		(1,176	)		(1,100	)
Tax over book depreciation and amortization		(3,012	)		(1,849	)
Tax over book goodwill amortization		(25,426	)		(23,357	)
Other		(83	)		(97	)
Total deferred tax liabilities		(29,941	)		(26,656	)
Net deferred tax liability	$	(10,236	)	$	(7,324	)

Amounts recognized on the balance sheet consist of:

	2011			2010
Deferred tax asset, current	$	2,745		$	2,314
Deferred tax (liability), long term		(12,981	)		(9,637	)
Net deferred tax liability	$	(10,236	)	$	(7,323	)

The accounting guidance for accounting for income taxes requires that we assess the realizability of deferred tax assets at each reporting period. These assessments generally consider several factors including the reversal of existing temporary differences, projected future taxable income, and potential tax planning strategies. We have valuation allowances totaling $318 at December 31, 2011 and 2010 related to our state net operating loss (NOLs) carryforwards that we believe are not likely to be realized based upon our estimates of future state taxable income limitations of the use of our state NOLs, and the carryforward life over which the state tax benefit will be realized.

At December 31, 2011, the Company had $8,869 of gross federal net operating loss (NOLs) carryforwards, which will expire in the years 2023 through 2024, and $913 of tax effected state net operating loss (NOLs) carryforwards which will expire 2012 through 2026. As a result of the initial public offering completed in June of 2004, an ownership change occurred under Internal Revenue Code Section 382 which limits our ability to use pre-change NOLs to reduce future taxable income. Additionally, a second ownership change occurred in May 2009, however, since the fair market value of the Company’s shares were significantly higher than at the time of the initial public offering, there was no change in the applicable Section 382 limitation that limits our ability to utilize pre-change NOLs.

Since 2005, the Company has treated its investment in its Canadian subsidiary as non-permanent in duration and provided taxes on the undistributed Canadian earnings under the applicable accounting guidance. In 2011 the Company reassessed the treatment of the undistributed earnings of its Canadian subsidiary and determined that approximately $1,600 of Canadian earnings are permanently reinvested to meet the Canadian subsidiary’s working capital requirements. The Company has provided taxes for the remaining undistributed earnings of its Canadian subsidiary in excess of the permanently reinvested amount.

A reconciliation of the Company’s reported income tax provision (benefit) to the amount computed by multiplying book income/(loss) before income taxes by the statutory United States federal income tax rate for the years ended December 31, 2011, 2010 and 2009 is as follows:

	2011			2010			2009
Tax at statutory rate	$	10,330		$	9,752		$	7,868
Permanent differences		572			464			447
State taxes, net of federal benefit		1,134			1,314			933
Effect of foreign tax rates		(71	)		(24	)		(86	)
Recognition of tax credits		(903	)		(526	)		(929	)
Other		173			(174	)		119
		11,235			10,806			8,352
Change in valuation allowance		—			(51	)		(87	)
Income tax expense	$	11,235		$	10,755		$	8,265

Income taxes paid in aggregate to United States federal, state and Canadian tax authorities was $7,507, $7,270 and $2,938 in 2011, 2010 and 2009, respectively.

As of December 31, 2011, the Company has not identified any uncertain tax positions that would have a material impact on the Company’s financial position. The Company recognizes potential interest and penalties related to uncertain tax positions, if any, in income tax expense.

The tax years that remain subject to examination for the Company’s major tax jurisdictions at December 31, 2011 are shown below:

2005 – 2010	United States—federal income tax
2005 – 2010	United States—state and local income tax
2007 – 2010	Canada