XML 64 R17.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Taxes [Abstract] |
Income Taxes | NOTE 11 - INCOME TAXES Income tax expense from continuing operations consists of the following:
|  | Year Ended December 31
|  | 2013 |  | 2012 |  | 2011
Currently payable income taxes: |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,114,000 |  | $ | 1,669,000 |  | $ | 5,609,000
State |  |  | 297,000 |  |  | 141,000 |  |  | 414,000
Foreign |  |  | (32,000) |  |  | (18,000) |  |  | 103,000
|  |  | 2,379,000 |  |  | 1,792,000 |  | $ | 6,126,000
Deferred income taxes (benefit): |  |  |  |  |  |  |  |  |
Federal |  | $ | (303,000) |  | $ | (542,000) |  | $ | 1,204,000
State |  |  | 18,000 |  |  | (33,000) |  |  | 72,000
Foreign |  |  | (33,000) |  |  | (57,000) |  |  | 420,000
|  |  | (318,000) |  |  | (632,000) |  |  | 1,696,000
|  | $ | 2,061,000 |  | $ | 1,160,000 |  | $ | 7,822,000
Austin Taylor Communications, Ltd. operates in the United Kingdom (U.K.) and is subject to U.K. rather than U.S. income taxes. Austin Taylor had pretax loss es of $428,000, $419,000 and $1,474,000 in 2013, 2012 and 2011 respectively. At the end of 2013, Austin Taylor’s net operating loss carry-forward was $6,568,000. T he Company remains uncertain that it will be able to generate the future income needed to realize the tax benefit of the carry-forward. Accordingly, the Company has continued to maintain its deferred tax valuation allowance against the potential carry-forward benefit. Patapsco operates in the United Kingdom (U.K.) and is subject to U.K. rather than U.S. income taxes. Patapsco had pretax losses of $2,754,000 in 2013 respectively and pretax income of $316,000 and $55,000 in 2012 and 2011. Austin Taylor's net operating loss provided group relief to Patapsco during 2012 and 2011. At the end of 2013, Patapsco net operating loss carry-forward was $90,000. In 2007 Transition Networks China began operations in China and is subject to Chinese taxes rather than U.S. income taxes. Transition Networks China had pretax income of $341,000, $36,000 and $24,000 in 2013, 2012 and 2011 respectively. At the end of 2013, Transition Networks China's net operating loss carry-forward was $306,000. Due to the history of losses in China the Company remains uncertain that it will be able to generate the future income needed to realize the tax benefit of the carry-forward. Accordingly, the Company has continued to maintain its deferred tax valuation reserve against the potential carry-forward benefit. Suttle Costa Rica, S.A. operates in Costa Rica and is subject to Costa Rica income taxes. In 2005, the Board of Directors of Suttle Costa Rica S. A. declared a dividend in the amount of $3,500,000 payable to the Company. The dividend and related “dividend reinvestment plan” qualify under I nternal R evenue C ode Sec. 965, which allows the Company to receive an 85% dividend received deduction if the amount of the dividend is reinvested in the United States pursuant to a domestic reinvestment plan. The Company made the required qualified capital expenditures in 2006. It is the Company’s intention to maintain the remaining undistributed earnings in its Costa Rica subsidiary to support continued operations there. No deferred taxes have been provided for the undistributed earnings. Suttle Costa Rica had pretax income of $152,000, $168,000 and $155,000 in 2013, 2012 and 2011 respectively. At the end of 2012, Suttle Costa Rica’s net operating loss carry-forward was $0. The provision for income taxes for continuing operations varied from the federal statutory tax rate as follows:
|  | Year Ended December 31
|  | 2013 |  | 2012 |  | 2011
Tax at U.S. statutory rate |  | 35.0% |  | 35.0% |  | 35.0%
Surtax exemption |  | (5.4) |  | (1.5) |  | (0.3)
State income taxes, net of federal benefit |  | 19.1 |  | 1.7 |  | 1.9
Foreign income taxes, net of |  |  |  |  |  |
foreign tax credits |  | 3.3 |  | (0.2) |  | 4.7
Impairment of goodwill |  | 116.2 |  | - |  | 2.5
Other nondeductible items |  | 4.9 |  | - |  | -
Effect of increase in uncertain tax positions |  | 7.3 |  | - |  | -
Other |  | 6.4 |  | (0.9) |  | 0.6
Effective tax rate |  | 186.8% |  | 34.1% |  | 44.4%
Deferred tax assets and liabilities as of December 31 related to the following:
|  | 2013 |  |  | 2012
Deferred tax assets: |  |  |  |  |
Allowance for doubtful accounts | $ | 19,000 |  | $ | 25,000
Inventory |  | 3,295,000 |  |  | 3,393,000
Accrued and prepaid expenses |  | 502,000 |  |  | 530,000
Domestic net operating loss carry-forward |  | 26,000 |  |  | 106,000
Long-term compensation plans |  | 373,000 |  |  | 330,000
Nonemployee director stock compensation |  | 243,000 |  |  | 200,000
Other stock compensation |  | 111,000 |  |  | 176,000
State income taxes |  | 75,000 |  |  | 69,000
Foreign net operating loss carry-forwards and credits |  | 1,639,000 |  |  | 2,092,000
Gross deferred tax assets |  | 6,283,000 |  |  | 6,921,000
Valuation allowance |  | (1,618,000) |  |  | (2,091,000)
Net deferred tax assets |  | 4,665,000 |  |  | 4,830,000
Deferred tax liabilities |  |  |  |  |
Depreciation |  | (1,668,000) |  |  | (1,439,000)
Intangible assets |  | (47,000) |  |  | (759,000)
Gross deferred tax liability |  | (1,715,000) |  |  | (2,198,000)
Total net deferred tax asset | $ | 2,950,000 |  | $ | 2,632,000
As part of previous acquisitions, the Company purchased net operating loss carry-forwards in the amount of $3,790,000. At December 31, 2013, the Company ha d $75,000 remaining net operating loss carry-forwards for income tax purposes which expire in 2014. Utilization of net operating loss carry-forwards is limited to $228,000 per year in future years. The Company assesses uncertain tax positions in accordance with ASC 740. Under this method, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such uncertain tax positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense. Changes in the Company’s unrecognized tax benefits are summarized as follows:
|  | 2013 |  | 2012 |  | 2011
Unrecognized tax benefits – January 1 | $ | 153,000 | $ | 234,000 | $ | 270,000
Gross increases - tax positions in prior period |  | 0 |  | 0 |  | 0
Gross decreases - tax positions in prior period |  | 0 |  | 0 |  | 0
Gross increases - current period tax positions |  | 158,000 |  | 0 |  | 7,000
Settlements |  | (5,000) |  | 0 |  | 0
Expiration of statute of limitations |  | (66,000) |  | (81,000) |  | (43,000)
Unrecognized tax benefits – December 31, 2013 | $ | 240,000 | $ | 153,000 | $ | 234,000
Included in the balance of unrecognized tax benefits at December 31, 2013 are $323,000 of tax benefits that if recognized would affect the tax rate. The Company’s unrecognized tax benefits could be reduced by $7,000 in the next twelve months due to statute of limitations expirations. The Company’s income tax liability accounts included accruals for interest and penalties of $161,000 at December 31, 2013. The Company’s 2013 income tax expense decreased by $7,000 due to net decreases for accrued interest and penalties. The Company’s federal and state tax returns and tax returns it has filed in Costa Rica and the United Kingdom are open for review going back to the 20 10 tax year.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration