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INCOME TAXES
 12 Months Ended
Dec. 31, 2012
Income Tax Disclosure [Abstract]  
Income Tax Disclosure [Text Block]
13. INCOME TAXES

 

The provision for income taxes included the following components at December 31, 2012, 2011 and 2010:

 

    2012     2011     2010  
    (Dollars in thousands)  
Current:                        
Federal   $ 6,985     $ 5,483     $ 5,228  
State     928       951       1,020  
Foreign     972       2,490       420  
Total     8,885       8,924       6,668  
Deferred     1,648       (343 )     503  
Total provision   $ 10,533     $ 8,581     $ 7,171  

 

The differences between the U.S. federal statutory income tax rate and the Company’s effective tax rate were as follows for the years ended December 31, 2012, 2011 and 2010:

 

    2012     2011     2010  
U.S. federal statutory income tax rate     35.0 %     35.0 %     35.0 %
State income taxes, net of federal tax benefit     2.3       2.5       3.1  
Non-taxable municipal bond interest     (1.9 )     (2.7 )     (3.2 )
Foreign income tax rate differences     (2.2 )     (1.5 )     (0.6 )
Other     0.9       1.0       (0.6 )
Effective tax rate     34.1 %     34.3 %     33.7 %

 

The foreign component of pretax net earnings was $6.2 million, $5.3 million and $3.8 million for 2012, 2011 and 2010, respectively. As of December 31, 2012, the total amount of unremitted foreign earnings was $5.7 million. The repatriation of foreign earnings would not have a material impact on the Company’s financial statements.

 

The components of deferred taxes as of December 31, 2012 and 2011 were as follows:

  

    2012     2011  
    (Dollars in thousands)  
Deferred tax benefits:                
Accounts receivable reserves   $ 421     $ 507  
Pension liability     10,882       10,428  
Accrued liabilities     1,934       1,727  
      13,237       12,662  
Deferred tax liabilities:                
Inventory and related reserves     (1,316 )     (964 )
Cash value of life insurance     (3,029 )     (2,821 )
Property, plant and equipment     (1,713 )     (1,516 )
Intangible assets     (5,051 )     (2,827 )
Prepaid and other assets     (268 )     (263 )
Foreign currency gains on intercompany loans     (419 )     (448 )
      (11,796 )     (8,839 )
Net deferred income tax benefits   $ 1,441     $ 3,823  

 

The net deferred tax benefit is classified in the Consolidated Balance Sheets as follows:

 

    2012     2011  
    (Dollars in thousands)  
Current deferred income tax benefits   $ 649     $ 395  
Noncurrent deferred income tax benefits     792       3,428  
    $ 1,441     $ 3,823  

 

Uncertain Tax Positions

 

The Company accounts for its uncertain tax positions in accordance with ASC 740, Income Taxes (“ASC 740”). ASC 740 provides that the tax effects from an uncertain tax position can be recognized in the Company’s consolidated financial statements only if the position is more likely than not of being sustained on audit, based on the technical merits of the position.

 

The following table summarizes the activity related to the Company’s unrecognized tax benefits:

 

(Dollars in thousands)      
Balance at December 31, 2009   $ 449  
Increases related to current year tax positions     9  
Expiration of the statute of limitations for the assessment of taxes     (23 )
Favorable settlements of tax positions     (351 )
Balance at December 31, 2010   $ 84  
Expiration of the statute of limitations for the assessment of taxes     (84 )
Balance at December 31, 2011   $ -  
Increases related to current year tax positions     124  
Balance at December 31, 2012   $ 124  

 

The Company had unrecognized tax benefits of $124,000 at December 31, 2012. This amount, if recognized, would reduce the Company’s annual effective tax rate. Included in the Consolidated Balance Sheets at December 31, 2012 was a liability for potential interest related to these positions of $2,000. The Company had no unrecognized tax benefits as of December 31, 2011.

 

The Company files a U.S. federal income tax return, various U.S. state income tax returns and several foreign returns. In general, the 2008 through 2012 tax years remain subject to examination by those taxing authorities.