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Income Taxes | 12 Months Ended
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Dec. 31, 2013
Income Taxes | NOTE I — INCOME TAXES The components of income before income taxes, equity in earnings and extraordinary item are as follows:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Domestic |  | $ | 26,470 |  |  | $ | 20,609 |  |  | $ | 16,178 |
Foreign |  |  | (3,233 | ) |  |  | (535 | ) |  |  | 648 |
Total income before income taxes and equity in earnings |  | $ | 23,237 |  |  | $ | 20,074 |  |  | $ | 16,826 |
The provision for income taxes (before equity in earnings) consists of:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 8,996 |  |  | $ | 6,691 |  |  | $ | 4,657 |
State and local |  |  | 1,707 |  |  |  | 761 |  |  |  | 2,063 |
Foreign |  |  | 747 |  |  |  | 503 |  |  |  | 618 |
Deferred |  |  | (2,275 | ) |  |  | (2,747 | ) |  |  | (1,216 | )
Income tax provision |  | $ | 9,175 |  |  | $ | 5,208 |  |  | $ | 6,122 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax assets are as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (in thousands) |
Deferred income tax assets: |  |  |  |  |  |  |  |
Deferred rent expense |  | $ | 3,694 |  |  | $ | 4,407 |
Stock options |  |  | 3,237 |  |  |  | 3,660 |
Inventory |  |  | 1,317 |  |  |  | 1,381 |
Operating loss carry-forward |  |  | 2,140 |  |  |  | 1,797 |
Accounts receivable allowances |  |  | 192 |  |  |  | 106 |
Accrued compensation |  |  | 758 |  |  |  | 669 |
Other |  |  | 1,831 |  |  |  | 1,915 |
Total deferred income tax assets |  | $ | 13,169 |  |  | $ | 13,935 |
Significant components of the Company’s net deferred income tax asset (liability) are as follows:
|  | December 31, |
|  | 2013 |  |  | 2012 |
|  | (in thousands) |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Depreciation and amortization |  | $ | (3,826 | ) |  | $ | (5,945 | )
Intangibles |  |  | (5,162 | ) |  |  | (4,645 | )
Equity in earnings |  |  | (805 | ) |  |  | (1,964 | )
Other |  |  | — |  |  |  | (167 | )
Total deferred income tax liabilities |  |  | (9,793 | ) |  |  | (12,721 | )
Net deferred income tax asset |  |  | 3,376 |  |  |  | 1,214 |
Valuation allowance |  |  | (1,213 | ) |  |  | (1,182 | )
Net deferred income tax asset (liability) |  | $ | 2,163 |  |  | $ | 32 |
The Company has generated various state net operating loss carryforwards of which $14.3 million remains at December 31, 2013 that begin to expire in 2014. The Company has net operating losses in foreign jurisdictions of $4.5 million at December 31, 2013 that begin to expire in 2016. In 2012, the Company recorded an income tax benefit for a non-cash adjustment to a deferred tax liability of $2.3 million related to the prior year. Additionally, the Company recorded a reduction in its valuation allowance of $1.9 million of which $1.1 million related to a portion of the translation adjustment deferred tax asset in connection with the equity method investee, Vasconia. The valuation allowance which remains as of December 31, 2013 relates to certain state net operating losses. The provision for income taxes (before equity in earnings) differs from the amounts computed by applying the applicable federal statutory rates as follows:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
Provision for federal income taxes at the statutory rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Increases (decreases): |  |  |  |  |  |  |  |  |  |  |  |
State and local income taxes, net of Federal income tax benefit |  |  | 5.5 |  |  |  | 3.2 |  |  |  | 6.4 |
Foreign rate differences |  |  | (1.1 | ) |  |  | (1.8 | ) |  |  | — |
Non-deductible stock options |  |  | — |  |  |  | — |  |  |  | 0.1 |
Non-deductible expenses |  |  | 2.8 |  |  |  | 1.2 |  |  |  | 3.4 |
Valuation allowance |  |  | — |  |  |  | — |  |  |  | (8.2 | )
Reduction of deferred tax liabilities related to the prior year |  |  | — |  |  |  | (11.6 | ) |  |  | — |
Other |  |  | (2.7 | ) |  |  | (0.1 | ) |  |  | (0.3 | )
Provision for income taxes |  |  | 39.5 | % |  |  | 25.9 | % |  |  | 36.4 | %
The estimated values of the Company’s gross uncertain tax positions at December 31, 2013, 2012 and 2011 are liabilities of $351,000, $301,000 and $134,000, respectively, and consist of the following:
|  | Year Ended December 31, |
|  | 2013 |  |  | 2012 |  |  | 2011 |
|  | (in thousands) |
Balance at January 1 |  | $ | (301 | ) |  | $ | (134 | ) |  | $ | (356 | )
Additions based on tax positions related to the current year |  |  | (31 | ) |  |  | — |  |  |  | — |
Additions for tax positions of prior years |  |  | (164 | ) |  |  | (167 | ) |  |  | (76 | )
Settlements |  |  | 145 |  |  |  | — |  |  |  | 298 |
Balance at December 31 |  | $ | (351 | ) |  | $ | (301 | ) |  | $ | (134 | )
The Company had approximately $71,000 and $39,000, net of federal and state tax benefit, accrued at December 31, 2013 and 2012, respectively, for the payment of interest. The Company’s policy for recording interest and penalties is to record such items as a component of income taxes. If the Company’s tax positions are ultimately sustained, the Company’s liability, including interest, would be reduced by $299,000, all of which would impact the Company’s tax provision. On a quarterly basis, the Company evaluates its tax positions and revises its estimates accordingly. The Company believes that it is reasonably possible that $143,000 of its tax positions will be resolved within the next twelve months. During 2013, the Company concluded an IRS audit examination related to the 2010 tax year. The settlement payment that resulted had no impact on the company’s effective tax rate as it related to the timing of a tax credit. The Company is no longer subject to U.S. Federal income tax examinations for the years prior to 2011. Also during 2013, the Company concluded an audit examination in the UK related to 2012 which resulted in an immaterial assessment. The Company has identified the following jurisdictions as “major” tax jurisdictions: U.S. Federal, California, Massachusetts, Illinois, New York, New Jersey and the United Kingdom. At December 31, 2013, the periods subject to examination for the Company’s major state jurisdictions are the years ended 2009 through 2012.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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