Note 8 - Taxes on Income

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Text Block]

NOTE 8 –  Taxes on Income:

Aggregate income tax provisions consist of the following:

	2012			2011
Current:
Federal	$	1,508,000		$	1,594,000
State and local		213,000			173,000
		1,721,000			1,767,000
Deferred tax benefit		(131,000	)		(317,000	)
	$	1,590,000		$	1,450,000

The significant components of the deferred income tax asset (liability) are as follows:

	2012			2011
Deferred income tax assets:
Pension accruals	$	4,300,000		$	3,751,000
Operating reserves and other accruals		1,385,000			1,190,000
Tax carrying value in excess of book basis of goodwill		323,000			506,000
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		(549,000	)		(703,000	)
Deferred expenses		(1,324,000	)		(1,289,000	)
Net deferred income tax asset	$	4,135,000		$	3,455,000

The difference between the total statutory Federal income tax rate and the actual effective income tax rate is accounted for as follows:

	2012			2011
Statutory Federal income tax rate		34.0	%		34.0	%
State and local income taxes, net of Federal income tax benefit		3.0			2.0
Effect of change in unrecognized tax benefit		(1.1	)		(1.3	)
Untaxed foreign income		(9.1	)		(11.9	)
Non-deductible share-based employee compensation expense		4.6			3.6
Non-deductible portion of intangible asset impairment		1.8			-
Other items		1.2			(0.4	)
Effective income tax rate		34.4	%		26.0	%

Only tax positions that meet the more-likely-than-not recognition threshold are recognized in the consolidated financial statements.

As of December 31, 2012 and 2011, respectively, we have $736,000 and $735,000 of unrecognized tax benefits, all of which, if recognized, would favorably affect the annual effective income tax rate.   We do not expect any significant amount of this liability to be paid in the next twelve months.  Accordingly, the balance of $736,000 is included in other long-term liabilities.

Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows:

	2012			2011
Balance at January 1,	$	582,000		$	586,000
Additions based on tax positions related to the current year		68,000			79,000
Reduction for tax positions of prior years		(10,000	)		-
Reductions due to lapse of statute of limitations		(75,000	)		(83,000	)
Balance at December 31,	$	565,000		$	582,000

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes.  During 2012 and 2011, we recorded $46,000 and $41,000 respectively, for interest and penalties, net of tax benefits. During 2012 and 2011, we reduced the liability by $29,000 and $44,000, respectively, of interest and penalties due to lapse of statute of limitations. At December 31, 2012 and 2011, we had $171,000 and $153,000, respectively, accrued for interest and penalties, net of tax benefit.

We anticipate that it is reasonably possible that the total amount of unrecognized tax benefits could decrease by approximately $53,000 within the next 12 months due to the closure of tax years by expiration of the statute of limitations and audit settlements related to various state tax filing positions. The earliest year open to federal examinations is 2009 and significant state examination is 2002.

We have not provided deferred taxes on undistributed earnings attributable to foreign operations that have been considered to be reinvested indefinitely. These earnings relate to ongoing operations and were $5,578,000 and $4,141,000 at December 31, 2012 and 2011, respectively.  It is not practical to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested.