Note 7 - Taxes on Income

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE

7

– Taxes on Income:

Aggregate income tax provisions consist of the following:

	2016			2015			2014
Current:
Federal	$	5,642,000		$	6,527,000		$	5,576,000
State and local		628,000			519,000			603,000
		6,270,000			7,046,000			6,179,000
Deferred tax provision (benefit)		(1,010,000	)		(1,216,000	)		1,000
	$	5,260,000		$	5,830,000		$	6,180,000

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

	2016			2015
Deferred income tax assets:
Pension accruals	$	3,581,000		$	3,678,000
Operating reserves and other accruals		3,656,000			1,231,000
Tax carrying value in excess of book basis of goodwill		1,377,000			1,514,000
Tax credits		99,000
Deferred income tax liabilities:
Book carrying value in excess of tax basis of property		(827,000	)		(691,000	)
Deferred expenses		(1,086,000	)		(752,000	)
Net deferred income tax asset	$	6,800,000		$	4,980,000

The difference between the total statutory Federal income tax rate and the actual effective income tax rate is

accounted for as follows:

	2016			2015			2014
Statutory Federal income tax rate		34.0	%		34.0	%		34.0	%
State and local income taxes, net of Federal income tax benefit		1.9			1.6			2.2
Effect of change in unrecognized tax benefit		-			(0.1	)		-
Untaxed foreign income		(5.1	)		(6.0	)		(3.3	)
Non-deductible share-based employee compensation expense		1.2			1.3			1.6
Excess tax benefit from stock compensation		(4.4	)		-			-
Federal tax credits		(0.8	)		-			-
Other items		(0.4	)		0.1			0.8
Effective income tax rate		26.4	%		30.9	%		35.3	%

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

As of

December

31,

2016

and

2015,

respectively, we have

$500,000

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

$500,000

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:

	2016			2015
Balance at January 1,	$	399,000		$	462,000
Additions based on tax positions related to the current year		55,000			58,000
Additions for tax positions of prior years		4,000			2,000
Reductions due to lapse of statute of limitations		(59,000	)		(123,000	)
Balance at December 31,	$	399,000		$	399,000

We recognize interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes. During

2016,

2015

and

2014,

we recorded

$28,000,

$27,000

and

$28,000

respectively, for interest and penalties, net of tax benefits. During

2016,

2015

and

2014,

we reduced the liability by

$28,000,

$44,000

and

$38,000

respectively, of interest and penalties due to lapse of statute of limitations. At

December

31,

2016

and

2015,

we had

$101,000

and

$101,000

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

$58,000

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

2013

and significant state examinations is

2010.

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

$15,036,000

and

$12,236,000

at

December

31,

2016

and

2015,

respectively. It is not practical to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested.