Note 5 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(5)      Income Taxes

For the years ended December 31, 2013, 2012, and 2011, income before income taxes consists of the following:

	2013		2012		2011
	(In thousands)
U.S. Operations	$	21,882	$	19,836	$	16,017
Foreign Operations		2,606		2,371		2,143
	$	24,488	$	22,207	$	18,160

Income tax expense consisted of the following components:

	2013			2012			2011
	(In thousands)
Federal:
Current	$	7,169		$	5,488		$	4,018
Deferred		195			1,140			1,170
Total	$	7,364		$	6,628		$	5,188
Foreign:
Current	$	716		$	684		$	606
Deferred		(7	)		(6	)		(1	)
Total	$	709		$	678		$	605
State:
Current	$	1,020		$	787		$	609
Deferred		(89	)		(954	)		194
Total	$	931		$	(167	)	$	803
Total	$	9,004		$	7,139		$	6,596

The difference between the Company’s income tax expense as reported in the accompanying consolidated financial statements and the income tax expense that would be calculated applying the U.S. federal income tax rate of 35% for 2013, 2012, and 2011 on pretax income was as follows:

	2013			2012			2011
	(In thousands)
Expected federal income taxes	$	8,571		$	7,772		$	6,356
Foreign tax rate differential		(226	)		(203	)		(145	)
U.S. tax graduated rates		--			11			(99	)
State income taxes, net of federal benefit and state tax credits		605			552			522
Federal tax credits		(217	)		(282	)		(132	)
Uncertain tax positions		(43	)		(73	)		9
Deferred tax adjustment due to change in state tax law		--			(661	)		--
Recapitalization expenses		182			--			--
Other		132			23			85
Total	$	9,004		$	7,139		$	6,596

Deferred tax assets and liabilities at December 31, 2013 and 2012, were comprised of the following:

	2013			2012
	(In thousands)
Deferred tax assets:
Allowance for doubtful accounts	$	63		$	86
Accrued expenses		497			356
Share based compensation		1,113			859
Capital loss carryforward		1,124			1,132
Net operating loss		--			170
Tax credit carryforward		--			319
Other		39			--
Gross deferred tax assets		2,836			2,922
Less Valuation Allowance		(1,124	)		(1,138	)
Deferred tax assets		1,712			1,784
Deferred tax liabilities:
Prepaid expenses		286			324
Property and equipment		1,426			1,790
Intangible assets		6,879			6,415
Other		200			235
Deferred tax liabilities		8,791			8,764
Net deferred tax liabilities	$	(7,079	)	$	(6,980	)

At December 31, 2013 and 2012, net deferred tax assets of $53,000 and $547,000 respectively, were included in current deferred income taxes. At December 31, 2013 and 2012, net deferred tax liabilities of $7.1 million and $7.5 million, respectively, were included in long term deferred income taxes.

In assessing the realizability of deferred tax assets, the Company 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. The Company considers projected future taxable income, carry-back opportunities, 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 which the deferred tax assets are deductible, the Company believes it is more likely than not that it will realize the benefits of these deductible differences, net of the valuation allowance recorded. The net impact on income tax expense related to changes in the valuation allowance for 2013, 2012, and 2011, were $14,000, $214,000 and $0, respectively.

The Company has domestic capital loss carryforwards of $3.1 million at December 31, 2013. The total $3.1 million of the capital loss carryforwards relate to the pre-acquisition periods of acquired companies and are due to expire in 2014. The Company has provided a $1.1 million valuation allowance against the tax benefit associated with the capital loss carryforwards.

The undistributed foreign earnings of the Company’s foreign subsidiary of approximately $10.7 million are considered to be indefinitely reinvested. Accordingly, no provision for U.S. federal and state income taxes or foreign withholding taxes has been provided for such undistributed earnings. The Company estimated at December 31, 2013, that an additional tax liability of $705,000 would become due if repatriation of undistributed earnings would occur.

The unrecognized tax benefit at December 31, 2013, was $188,000, excluding interest of $5,000 and no penalties. The full unrecognized tax benefits, if recognized, would favorably impact the effective income tax rate. The Company believes it is reasonably possible that the total amount of unrecognized tax benefits could continue to decrease during the next 12 months due to the expiration of the U.S. federal statute of limitations associated with certain other tax positions. The Company accrues interest and penalties related to uncertain tax position in the statements of income as income tax expense.

The change in the unrecognized tax benefits for 2013 and 2012 is as follows:

	(In thousands)
Balance of unrecognized tax benefits at December 31, 2011	$	266
Reductions due to lapse of applicable statute of limitations		(117	)
Additions based on tax positions of prior years		84
Additions based on tax positions related to the current year		(9	)
Balance of unrecognized tax benefits at December 31, 2012	$	224
Reductions due to lapse of applicable statute of limitations		(91	)
Additions based on tax positions of prior years		27
Additions based on tax positions related to the current year		28
Balance of unrecognized tax benefits at December 31, 2013	$	188

The Company files a U.S. federal income tax return, various state jurisdictions and a Canada federal and provincial income tax return. The 2010 to 2013 U.S. federal and state returns remain open to examination. The 2009 to 2013 Canada federal and provincial income tax returns remain open to examination.