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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2012
INCOME TAXES [Abstract] |
Reconciliation of beginning and ending amount of liability for uncertain tax positions | A reconciliation of the beginning and ending amount of the liability for uncertain tax positions is as follows (dollars in thousands):
|  | 2012 |  |  | 2011 |  |  | 2010 |
Liability for uncertain tax positions - January 1 |  | $ | 4,132 |  |  | $ | 3,835 |  |  | $ | 4,722 |
Additions based on tax positions |  |  |  |  |  |  |  |  |  |  |  |
related to the current year |  |  | 1,221 |  |  |  | 297 |  |  |  | 948 |
Settlement/expiration of statutes of limitations |  |  | (2,642 | ) |  |  | - |  |  |  | (1,835 | )
Liability for uncertain tax positions - December 31 |  | $ | 2,711 |  |  | $ | 4,132 |  |  | $ | 3,835 |
Provision (benefit) for income taxes | The (benefit) provision for income taxes consists of the following (dollars in thousands):
|  | Years Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | (459 | ) |  | $ | 2,585 |  |  | $ | 221 |
Foreign |  |  | 241 |  |  |  | 478 |  |  |  | 803 |
State |  |  | 76 |  |  |  | 362 |  |  |  | 182 |
|  |  | (142 | ) |  |  | 3,425 |  |  |  | 1,206 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (807 | ) |  |  | 599 |  |  |  | (133 | )
State |  |  | (58 | ) |  |  | 102 |  |  |  | 189 |
Foreign |  |  | (357 | ) |  |  | (18 | ) |  |  | 669 |
|  |  | (1,222 | ) |  |  | 683 |  |  |  | 725 |
|  | $ | (1,364 | ) |  | $ | 4,108 |  |  | $ | 1,931 |
Reconciliation of taxes on income computed at the federal statutory rate | A reconciliation of taxes on income computed at the U.S. federal statutory rate to amounts provided is as follows (dollars in thousands):
|  | Years Ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
|  | $ |  |  | % |  |  | $ |  |  | % |  |  | $ |  |  | % |
Tax provision computed at the |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
federal statutory rate |  | $ | 353 |  |  |  | 34 | % |  | $ | 2,676 |  |  |  | 34 | % |  | $ | 5,297 |  |  |  | 34 | %
Increase (decrease) in taxes resulting from: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Different tax rates and permanent differences |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
applicable to foreign operations |  |  | (306 | ) |  |  | -29 | % |  |  | 1,526 |  |  |  | 19 | % |  |  | (2,377 | ) |  |  | -15 | %
Increase in (reversal of) liability for uncertain |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
tax positions - net |  |  | (1,421 | ) |  |  | -137 | % |  |  | 297 |  |  |  | 4 | % |  |  | (887 | ) |  |  | -6 | %
Utilization of research and development and foreign |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
tax credits |  |  | - |  |  |  | 0 | % |  |  | (762 | ) |  |  | -10 | % |  |  | (549 | ) |  |  | -4 | %
State taxes, net of federal benefit |  |  | - |  |  |  | 0 | % |  |  | 341 |  |  |  | 4 | % |  |  | 309 |  |  |  | 2 | %
Current year valuation allowance - U.S. segment |  |  | 298 |  |  |  | 29 | % |  |  | - |  |  |  | 0 | % |  |  | - |  |  |  | 0 | %
Permanent differences applicable to U.S. operations |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
including qualified production activity credits, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
SERP/COLI income, unrealized foreign exchange gains |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
and amortization of purchase accounting intangibles |  |  | (260 | ) |  |  | -25 | % |  |  | 44 |  |  |  | 1 | % |  |  | (73 | ) |  |  | 0 | %
Other |  |  | (28 | ) |  |  | -3 | % |  |  | (14 | ) |  |  | 0 | % |  |  | 211 |  |  |  | 1 | %
Tax (benefit) provision computed at the Company's |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
effective tax rate |  | $ | (1,364 | ) |  |  | -131 | % |  | $ | 4,108 |  |  |  | 52 | % |  | $ | 1,931 |  |  |  | 12 | %
As of December 31, 2012, the Company has gross foreign income tax net operating losses ("NOL") of $3.4 million and capital loss carryforwards of $0.2 million. The Company has established valuation allowances of $0.5 million and $0.1 million, respectively, against these deferred tax assets. In addition, the Company has gross state income tax NOLs of $1.7 million, capital loss carryforwards of $2.7 million and tax credit carryforwards of $1.2 million. The Company has established valuation allowances of $0.2 million, $0.4 million and $0.7 million, respectively, against these deferred tax assets. The foreign NOL's can be carried forward indefinitely and the state NOL's expire at various times during 2013 - 2029. Upon the acquisition of Fibreco, Fibreco had a deferred tax liability in the amount of $0.1 million arising from various timing differences. In connection with the 2012 Acquisitions, the Company was required to complete a preliminary fair market value report of property, plant and equipment and intangibles. As a result of that report, the Company established deferred tax liabilities at the date of acquisition in the amounts of $1.7 million and $0.6 million, respectively for the Fibreco and Gigacom acquisitions. At December 31, 2012, a deferred tax liability of $2.3 million remains on the consolidated balance sheet. At December 31, 2012, the Company had no additional deferred tax amounts relating to the Powerbox acquisition as the fair market value report has not been completed. The Company has made elections under IRC Section 338(g) to step-up the tax basis of the 2012 Acquisitions to fair value. The elections made under Section 338(g) only affect the U.S. income taxes (not those of the foreign countries where the acquired entities were incorporated).
Components of deferred income tax assets | Components of deferred income tax assets are as follows (dollars in thousands).
|  | December 31, |
|  | 2012 |  |  | 2011 |
|  | Tax Effect |  |  | Tax Effect |
Deferred Tax Assets - current: |  |  |  |  |  |
State tax credits |  | $ | 845 |  |  | $ | 766 |
Reserves and accruals |  |  | 1,334 |  |  |  | 1,195 |
Valuation allowance |  |  | (745 | ) |  |  | (666 | )
|  | $ | 1,434 |  |  | $ | 1,295 |
Deferred Tax Assets - noncurrent: |  |  |  |  |  |  |  |
Unfunded pension liability |  | $ | 1,150 |  |  | $ | 941 |
Depreciation |  |  | (426 | ) |  |  | (369 | )
Amortization |  |  | (2,063 | ) |  |  | 243 |
Federal, state and foreign net operating loss |  |  |  |  |  |  |  |
and credit carryforwards |  |  | 1,114 |  |  |  | 566 |
Restructuring expenses |  |  | 319 |  |  |  | - |
Other accruals |  |  | 2,438 |  |  |  | 1,999 |
Valuation allowances |  |  | (1,129 | ) |  |  | (566 | )
|  | $ | 1,403 |  |  | $ | 2,814 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: 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 + Details
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- Definition Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets. + References Reference 1: 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 + Details
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- Definition Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32687-109319 + Details
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- Definition Tabular disclosure of the change in unrecognized tax benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 55 -Paragraph 217 -URI http://asc.fasb.org/extlink&oid=21917533&loc=d3e36027-109320 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15A -URI http://asc.fasb.org/extlink&oid=6907707&loc=SL6600010-109319 + Details
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