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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES The jurisdictional components of income before taxes consist of the following:
|  | December 31,
(in thousands) |  | 2012 |  | 2011 |  | 2010
Income before income taxes: |  |  |  |  |  |
Domestic |  | $ | 29,390 |  |  | $ | 28,109 |  |  | $ | 15,639 |
Foreign |  | 14,056 |  |  | 20,020 |  |  | 13,393 |
|  | $ | 43,446 |  |  | $ | 48,129 |  |  | $ | 29,032 |
The components of income tax expense (benefit) consist of the following:
|  | December 31,
(in thousands) |  | 2012 |  | 2011 |  | 2010
Current: |  |  |  |  |  |
Domestic |  | $ | 9,273 |  |  | $ | 7,771 |  |  | $ | 8,995 |
Foreign |  | 4,919 |  |  | 5,682 |  |  | 3,851 |
State |  | 756 |  |  | 1,139 |  |  | 1,453 |
|  | 14,948 |  |  | 14,592 |  |  | 14,299 |
Deferred: |  |  |  |  |  |  |  |  |
Domestic |  | (192 | ) |  | 397 |  |  | (5,308 | )
Foreign |  | (363 | ) |  | 331 |  |  | (284 | )
State |  | 150 |  |  | 122 |  |  | (792 | )
|  | (405 | ) |  | 850 |  |  | (6,384 | )
Total income taxes |  | $ | 14,543 |  |  | $ | 15,442 |  |  | $ | 7,915 |
The difference between income tax expense (benefit) for financial statement purposes and the amount of income tax expense computed by applying the domestic statutory income tax rate of 35% to income loss before income taxes consist of the following:
|  | December 31,
(in thousands) |  | 2012 |  | 2011 |  | 2010
Domestic statutory rate at 35% (34% for 2011 and 2010) |  | $ | 15,206 |  |  | $ | 16,364 |  |  | $ | 9,871 |
Increase (reduction) from: |  |  |  |  |  |  |  |  |
Jurisdictional rate differences |  | (1,477 | ) |  | (1,315 | ) |  | (986 | )
Goodwill impairment |  | 157 |  |  | 633 |  |  | — |
Valuation allowance |  | 825 |  |  | — |  |  | — |
Stock based compensation |  | 214 |  |  | 161 |  |  | 135 |
U.S. state taxes |  | 589 |  |  | 740 |  |  | 436 |
Domestic Production Deduction |  | (948 | ) |  | (796 | ) |  | (744 | )
R&E Credit |  | (130 | ) |  | (252 | ) |  | (1,068 | )
Other, net |  | 107 |  |  | (93 | ) |  | 271 |
Provision for income taxes |  | $ | 14,543 |  |  | $ | 15,442 |  |  | $ | 7,915 |
Effective tax rate |  | 33 | % |  | 32 | % |  | 27 | %
Deferred income taxes arise from temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The components of the Company’s deferred income tax assets and liabilities consist of the following:
|  | December 31,
(in thousands) |  | 2012 |  | 2011
Deferred income tax assets: |  |  |  |
Inventory basis difference |  | $ | 1,475 |  |  | $ | 1,464 |
Accounts receivable reserve |  | 299 |  |  | 320 |
Stock based compensation |  | 614 |  |  | 518 |
Pension liability |  | 3,595 |  |  | 3,839 |
Employee benefit accrual |  | 459 |  |  | 382 |
Environmental reserve |  | — |  |  | 450 |
Product liability and warranty reserves |  | 1,120 |  |  | 797 |
Expenses not deductible for tax purposes |  | 487 |  |  | — |
Foreign net operating loss |  | 1,608 |  |  | 374 |
State net operating loss |  | 82 |  |  | 279 |
Other |  | 3 |  |  | — |
Total deferred income tax assets |  | $ | 9,742 |  |  | $ | 8,423 |
Less: Valuation allowance |  | (825 | ) |  | — |
Net deferred income tax assets |  | $ | 8,917 |  |  | $ | 8,423 |
Deferred income tax liabilities: |  |  |  |  |  |
Inventory basis differences |  | $ | (253 | ) |  | $ | (246 | )
Depreciation |  | (2,867 | ) |  | (3,924 | )
Intangible assets |  | (1,011 | ) |  | (710 | )
Deferred revenue |  | (135 | ) |  | (218 | )
Expenses not deductible for tax purposes |  | (777 | ) |  | (397 | )
Total deferred income tax liabilities |  | $ | (5,043 | ) |  | $ | (5,495 | )
Net deferred income tax assets |  | $ | 3,874 |  |  | $ | 2,928 |
As of December 31, 2012, the Company had foreign deferred tax assets consisting of foreign net operating losses and other tax benefits available to reduce future taxable income in a foreign jurisdiction. These foreign jurisdictions' net operating loss carryforwards are in the approximate amount of $10.6 million with an unlimited carryforward period. The Company also has U.S. state net operating loss carryforwards in the approximate amount of $3.5 million which expire from 2014 to 2028. 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. Based on the expectation of future taxable income and that the deductible temporary differences will offset existing taxable temporary differences, the Company believes it is more likely than not that it will realize the benefits of these deductible differences. Deferred income taxes have not been provided on the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and the respective tax bases of the Company’s foreign subsidiaries, based on the determination that such differences are essentially permanent in duration in that the earnings of the subsidiaries are expected to be indefinitely reinvested in foreign operations. As of December 31, 2012, the cumulative undistributed earnings of these subsidiaries approximated $125,731,000. If these earnings were not considered indefinitely reinvested, deferred income taxes would have been recorded after the consideration of foreign tax credits. At this time, it is not practicable to estimate the amount of additional income taxes that might be payable on those earnings, if distributed. The Company adopted the provisions of FASB ASC Section 740-10-25 (formerly FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”) on January 1, 2007. During the 3rd quarter of 2010, the Company completed a research and development credit study (R&D study) related to prior year tax returns. The R&D study resulted in tax credits of approximately $1,100,000. The Company has recorded an unrecognized tax benefit in the amount of $193,000 as of December 31, 2010. In 2011, the Company recorded an additional R&D tax credit of $252,000 for federal and $164,000 for state, and recorded an additional unrecognized tax benefit of approximately $42,000 that if recognized would affect our annual effective tax rate. In 2012, an additional $22,000 was added to the reserve related to the 2011 R&D credit. We do not expect our unrecognized tax benefits to change significantly over the next 12 months.
|  | December 31,
|  | 2012 |  | 2011
Balance as of beginning of year |  | $ | 235,000 |  |  | $ | 193,000 |
Additions for tax positions related to the current year |  | — |  |  | 42,000 |
Additions for tax positions related to prior years |  | 22,000 |  |  | — |
Balance as of end of year |  | $ | 257,000 |  |  | $ | 235,000 |
As of December 31, 2012 and 2011, there were $257,000 and $235,000, respectively, of unrecognized tax benefits that if recognized would affect our annual effective tax rate. The Company adopted the policy to include interest and penalty expense related to income taxes as interest and other expense, respectively. As of December 31, 2012, no interest or penalties has been accrued. The Company’s open tax years for its federal and state income tax returns are for the tax years ended 2008 through 2012. The Company's open tax years for its foreign income tax returns are for the tax years ended 2008 through 2012. On January 2, 2013, the American Taxpayer Relief Act of 2012 (Act) was enacted. The Act provides tax relief for businesses by reinstating certain tax benefits retroactively to January 1, 2012. There are several provisions of the Act that impact the Company, most notably the extension of the Research and Development credit. Income tax accounting rules require tax law changes to be recognized in the period of enactment; as such, the associated tax benefits of the Act will be recognized in the Company's provision for income taxes in the first quarter of 2013. The company expects that a benefit in the range of $300,000 to $400,000 will be recognized related to the enactment in the first quarter of 2013.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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