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Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Taxes [Abstract]  
Income Taxes

Note F—Income Taxes

Income before income taxes and discontinued operations was derived from the following sources:

 

      September 30,       September 30,       September 30,  
     2011     2010     2009  
       

United States

   $ 18,842     $ 9,007     $ 8,498  

Foreign

     27,152       21,176       21,095  
   

 

 

    

 

 

    

 

 

  
    $ 45,994     $ 30,183     $ 29,593  
   

 

 

    

 

 

    

 

 

  

The components of income taxes for the years ended December 31 are as follows:

 

      September 30,       September 30,       September 30,  
     2011     2010     2009  

Current

                        

Federal

   $ 5,679     $ 1,768     $ 1,912  

Foreign

     8,896       5,498       3,659  

State and local

     1,123       809       507  
   

 

 

    

 

 

    

 

 

  
      15,698       8,075       6,078  
   

 

 

    

 

 

    

 

 

  

Deferred

                        

Federal

     726       342       81  

Foreign

     (1,199 )      (1,098 )      615  

State and local

     (215 )      (144 )      (14 ) 
   

 

 

    

 

 

    

 

 

  
      (688 )      (900 )      682  
   

 

 

    

 

 

    

 

 

  

Income taxes

   $ 15,010     $ 7,175     $ 6,760  
   

 

 

    

 

 

    

 

 

  

The differences between the provision for income taxes at the U.S. federal statutory rate and the tax shown in the Statements of Consolidated Income for the years ended December 31 are summarized as follows:

 

      September 30,       September 30,       September 30,  
    2011     2010     2009  

U. S. federal statutory tax rate

     35 %      35 %      34 % 
       

Federal tax at statutory rate

   $ 16,098     $ 10,564     $ 10,062  

State and local taxes, net of federal benefit

     590       432       325  

U.S. federal permanent items

     (387 )      12       461  

Foreign earnings and related tax credits

     261       641       394  

Non-U.S. tax rate variances

     (1,510 )      (3,121 )      (918 ) 

ASC 740 (formally FIN 48)

     21       (368 )      (607 ) 

Valuation allowance

     19       (403 )      (480 ) 

Tax credits

     (265 )      (329 )      (77 ) 

Gain from acquisition of business

     —         —         (2,711 ) 

Other, net

     183       (253 )      311  
   

 

 

    

 

 

    

 

 

  
    $ 15,010     $ 7,175     $ 6,760  
   

 

 

    

 

 

    

 

 

  

Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and their carrying value for financial statement purposes. The tax effects of temporary differences that give rise to the Company’s deferred tax assets and liabilities at December 31 are as follows:

 

      September 30,       September 30,  
    2011     2010  

Deferred tax assets:

                

Accrued compensation and benefits

   $ 1,520     $ 1,126  

Inventory valuation reserves

     1,938       1,798  

Allowance for doubtful accounts

     138       69  

Benefit plan reserves

     9,126       6,183  

Foreign tax credits

     202       1,397  

Capital tax loss carryforwards

     2,054       2,056  

Net operating loss carryforwards

     1,061       937  

Other accrued expenses

     1,882       1,565  

Unrealized foreign exchange

     346       —    
   

 

 

    

 

 

  

Gross deferred tax assets

     18,267       15,131  

Valuation allowance

     (3,115 )      (2,993 ) 
   

 

 

    

 

 

  

Net deferred tax assets

     15,152       12,138  
   

 

 

    

 

 

  
     

Deferred tax liabilities:

                

Depreciation and other basis differences

     (4,602 )      (3,535 ) 

Undistributed foreign earnings

     (139 )      (236 ) 

Prepaid expenses

     (64 )      (70 ) 

Intangibles

     (2,706 )      (3,299 ) 

Unrealized foreign exchange

     —         (166 ) 

Other

     (104 )      (109 ) 
   

 

 

    

 

 

  

Deferred tax liabilities

     (7,615 )      (7,415 ) 
   

 

 

    

 

 

  

Net deferred tax assets

   $ 7,537     $ 4,723  
   

 

 

    

 

 

  

 

      September 30,       September 30,  
    2011     2010  

Change in net deferred tax assets:

                

Deferred income tax benefit

   $ 688     $ 900  

Items of other comprehensive income (loss)

     2,175       (202 ) 

Currency translation

     (49 )      78  

Deferred tax balances from business acquisition

     —         (2,148 ) 
   

 

 

    

 

 

  

Total change in net deferred tax assets

   $ 2,814     $ (1,372 ) 
   

 

 

    

 

 

  

Deferred taxes are recognized at currently enacted tax rates for temporary differences between the financial reporting and income tax bases of assets and liabilities and operating loss and tax credit carryforwards.

At December 31, 2011, the Company had $.2 million of U.S. foreign tax credit carryforwards that will expire in 2014, $2.1 million of U.S. capital loss carryfowards that will expire in 2013 and $1 million of foreign net operating loss carryfowards that will expire between the years 2012 and 2015.

The Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. Based on this evaluation, the Company has established a valuation allowance of $3.1 million at December 31, 2011 in order to measure only the portion of the deferred tax asset that is more likely than not will be realized. Therefore, the Company recorded an allowance of $2.1 million against the U.S. capital loss carryfoward and $1 million against the foreign net operating loss carryforwards. The net increase of $.1 million in the valuation allowance is primarily due to foreign net operating loss carryfowards. In 2010, the net decrease in the valuation allowance was primarily due to the reversal of U.S. foreign tax credit carryforwards.

As of December 31, 2011, the Company established a deferred tax liability of $.1 million associated with undistributed foreign earnings of $1.3 million. The Company has not established a deferred tax liability associated with approximately $118 million of its undistributed foreign earnings at December 31, 2011 as these earnings are considered to be permanently reinvested. These earnings would be taxable upon the sale or liquidation of these foreign subsidiaries, or upon the remittance of dividends. While the measurement of the unrecognized U.S. income taxes with respect to these earnings is not practicable, foreign tax credits would be available to offset some or all of any portion of such earnings that would be remitted as dividends.

Income taxes paid, net of refunds, were approximately $14 million in 2011, $8.4 million in 2010, and $5.8 million in 2009.

The Company is subject to taxation in the U.S. and various states and foreign jurisdictions. As of December 31, 2011, with few exceptions, the Company is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2005.

The changes in unrecognized tax benefits for the years ended December 31 are as follows:

 

      September 30,       September 30,       September 30,  
    2011     2010     2009  

Balance at January 1

   $ 1,062     $ 1,304     $ 1,176  

Additions for tax positions of current year

     —         53       164  

Additions for tax positions of prior years

     —         62       678  

Reductions for tax positions of prior years

     (32 )      (281 )      (79 ) 

Expiration of statutes of limitations

     (15 )      (76 )      (635 ) 
   

 

 

    

 

 

    

 

 

  

Balance at December 31

   $ 1,015     $ 1,062     $ 1,304  
   

 

 

    

 

 

    

 

 

  

Accrued interest and penalties are not included in the above unrecognized tax balances. The Company records accrued interest as well as penalties related to unrecognized tax benefits as part of the provision for income taxes. The Company recognized less than $.1 million, $.1 million and $(.2) in interest, net of the amount lapsed through expiring statutes during the years ended December 31, 2011, 2010 and 2009, respectively. The Company had approximately $.5 million, $.4 million and $.3 million for the payment of interest accrued at December 31, 2011, 2010 and 2009, respectively. The Company had approximately $.3 million accrued for the payment of penalties at December 31, 2011, 2010 and 2009. If recognized, approximately $.5 million, $.4 million, and $.7 million of unrecognized tax benefits would affect the tax rate for the years ended December 31, 2011, 2010 and 2009, respectively. The Company does not expect that the unrecognized tax benefits will change significantly within the next twelve months.