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Note 9 - Income Taxes
 12 Months Ended
Dec. 31, 2011
Income Tax Disclosure [Text Block]
(9)
Income Taxes

The components of the provision for income taxes are as follows (in thousands):

   
2011
   
2010
   
2009
 
Current:
                 
Federal
  $ -     $ (171 )   $ (6,272 )
State
    (439 )     31       (410 )
Foreign
    906       859       405  
Deferred:
                       
Federal
    11,592       (1,965 )     (2,610 )
State
    2,281       (1,205 )     (332 )
Foreign
    70       (125 )     (2,148 )
Income tax expense (benefit)
  $ 14,410     $ (2,576 )   $ (11,367 )

A reconciliation between the statutory federal income tax rate and the effective income tax rate is as follows (in thousands):

   
2011
   
2010
   
2009
 
                   
Loss before income taxes
  $ (2,652 )   $ (2,472 )   $ (23,840 )
Statutory federal income tax rate
    34 %     34 %     35 %
Income tax expense (benefit) at statutory federal rate
    (902 )     (840 )     (8,344 )
State income taxes, net of federal tax benefit
    2       (74 )     (482 )
Valuation allowance
    15,565       (1,249 )     (1,758 )
Effect of lower foreign taxes
    (231 )     (174 )     (154 )
Release of state tax reserves
    (47 )     (174 )     (595 )
Other items, net
    23       (65 )     (34 )
Income tax expense (benefit)
  $ 14,410     $ (2,576 )   $ (11,367 )
Effective tax rate
    (543.4 )%     104.2 %     47.7 %

Temporary differences that gave rise to deferred tax assets and liabilities are as follows (in thousands):

   
2011
   
2010
 
Deferred tax assets:
           
Deferred revenue
  $ 4,711     $ 4,481  
Accrued rents
    2,414       2,743  
Net operating loss carryforwards
    1,770       2,229  
Intangible assets
    1,837       1,794  
Deferred compensation
    2,218       1,768  
Accrued bonuses
    91       1,012  
Carryforward of tax credits
    2,251       931  
Receivable and investment write-offs
    840       619  
Stock compensation
    179       179  
Depreciation
    743       -  
Other
    1,834       1,730  
      18,888       17,486  
Less: Valuation allowance
    16,126       561  
Total deferred tax assets
    2,762       16,925  
                 
Deferred tax liabilities:
               
Depreciation
    -       (1,515 )
Other
    (1,925 )     (586 )
Total deferred tax liabilities
    (1,925 )     (2,101 )
Net deferred tax asset
  $ 837     $ 14,824  

We evaluate the realizability of our deferred tax assets on a quarterly basis.  As the Company has incurred a cumulative book loss over the three year period ended December 31, 2011, management evaluated the realizability of the Company’s deferred tax assets.  The Company performed an analysis of all available evidence, both positive and negative, consistent with the provisions of ASC 740-10-30-17.  Some of the evidence evaluated includes our historical operating performance, the macroeconomic factors contributing to the recent fiscal loss for which the tax benefits have been fully realized by the carryback availability, and our forecast of future taxable income, including the availability of prudent and feasible tax planning strategies.  The three-year cumulative loss is a significant piece of negative evidence and while management believes that it is primarily a result of losses that were primarily attributable to the significant economic conditions experienced in 2009 and not an indication of continuing operations, ASC 740 requires that objective historical evidence be given more weight than subjective evidence, such as forecasts of future income.  Accordingly, in the fiscal 2011 fourth quarter, the Company recorded a $15.6 million valuation allowance on its US deferred tax assets.

Included in the deferred tax asset is $0.6 million related to state net operating loss carryforwards for which a valuation allowance of $0.6 million has been recorded and $1.2 million related to net operating loss carryforwards in foreign jurisdictions.  Net operating loss carryforwards in foreign jurisdictions total $4.3 million and $5.7 million as of December 31, 2011 and January 1, 2011, respectively.  Although net operating losses in foreign jurisdictions do not expire, a valuation allowance of $0.6 million was recorded at December 31, 2011 and January 1, 2011.  Also included in the deferred tax asset in $2.3 million related to foreign tax credits for which a valuation allowance of $2.3 million has been recorded.

The Company has not provided for United States income taxes on the accumulated but undistributed earnings of its non-U.S. subsidiaries of $20.5 million and $18.0 million as of December 31, 2011 and January 1, 2011, respectively, as the Company intends to indefinitely reinvest these undistributed earnings.  However, if any portion were to be distributed, the related U.S. tax liability may be reduced by foreign income taxes paid on these earnings.  Determination of the unrecognized deferred tax liability related to these undistributed earnings is not practicable because of the complexities with its hypothetical calculation.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance as of January 2, 2010
  $ 570  
Lapse of statute
    (166 )
Settlements
    (141 )
Balance as of January 1, 2011
  $ 263  
Lapse of statute
    (50 )
Balance as of December 31, 2011
  $ 213  

As of December 31, 2011 and January 1, 2011, approximately $0.2 million and $0.3 million respectively, of the unrecognized tax benefits would impact the Company’s provision for income taxes and effective tax rate if recognized.  In the normal course of business, the Company provides for uncertain tax positions and the related interest and penalties and adjusts its unrecognized tax benefits and accrued interest and penalties accordingly.  During the next fiscal year, it is reasonably possible to reduce unrecognized tax benefits by $8,000 either because the tax positions are sustained on audit or expiration of statute of limitations.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  There was approximately $40,000 of accrued interest related to uncertain tax positions as of December 31, 2011 and January 1, 2011.

The Company’s income before income taxes from domestic and foreign operations (which include the United Kingdom, Canada, France and Ireland), are as follows (in thousands):

   
2011
   
2010
   
2009
 
Domestic
  $ (6,200 )   $ (8,744 )   $ (23,500 )
Foreign
    3,548       6,272       (340 )
Total
  $ (2,652 )   $ (2,472 )   $ (23,840 )

The following tax years remain open in the Company’s major taxing jurisdictions as of December 31, 2011:

United States  (Federal)
2008 through 2011
United Kingdom
2006 through 2011
Canada
   
2009 through 2011
France
   
2007 through 2011
Ireland
   
2007 through 2011