10-K
2011-12-31
false
Omega Flex, Inc.
0001317945
--12-31
10091822
44935957
Smaller Reporting Company
No
No
No
2011
FY
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>1. BASIS OF PRESENTATION AND CONSOLIDATION</b></p> <p style="MARGIN:0in 0in 12pt -2.4pt; tab-stops:.5in"><b><u>Description of Business</u></b></p> <p style="MARGIN:0in 0in 12pt; TEXT-AUTOSPACE:ideograph-numeric; tab-stops:.5in"> The accompanying consolidated financial statements include the accounts of Omega Flex, Inc. (Omega) and its subsidiaries (collectively the “Company”). The Company’s audited consolidated financial statements for the year ended December 31, 2011 and 2010 have been prepared in accordance with accounting standards set by the Financial Accounting Standards Board (FASB), and with the instructions of Form 10-K and Article 8 of Regulation S-X. All material inter-company accounts and transactions have been eliminated in consolidation.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b> </b>The Company is a leading manufacturer of flexible metal hose, which is used in a variety of applications to carry gases and liquids within their particular applications. The Company’s business is controlled as a single operating segment that consists of the manufacture and sale of flexible metal hose and accessories. These applications include carrying liquefied gases in certain processing applications, fuel gases within residential and commercial buildings and vibration absorbers in high vibration applications. The Company’s flexible metal piping is also used to carry other types of gases and fluids in a number of industrial applications where the customer requires the piping to have both a degree of flexibility and/or an ability to carry corrosive compounds or mixtures, or to carry at both very high and very low (cryogenic) temperatures.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The Company manufactures flexible metal hose at its facility in Exton, Pennsylvania with a minor amount of manufacturing performed in the United Kingdom, and sells its products through distributors, wholesalers and to original equipment manufacturers (“OEMs”) throughout North America, and in certain European markets.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>2. SIGNIFICANT ACCOUNTING POLICIES</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Use of Estimates</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The most significant estimates and assumptions relate to revenue recognition, inventory valuations, goodwill and intangible asset valuations, product liability costs, phantom stock and accounting for income taxes. Actual amounts could differ significantly from these estimates.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Revenue Recognition</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The Company’s revenue recognition activities relate almost entirely to the manufacture and sale of flexible metal hose and pipe. Under GAAP, revenues are considered to have been earned when the Company has substantially accomplished what it must do to be entitled to the benefits represented by the revenues. The following criteria represent preconditions to the recognition of revenue:</p> <ul> <li> <div style="MARGIN:0in 0in 6pt 20.15pt">Persuasive evidence of an arrangement for the sale of product or services must exist.</div></li> <li> <div style="MARGIN:0in 0in 6pt 20.15pt">Delivery has occurred or services rendered.</div></li> <li> <div style="MARGIN:0in 0in 6pt 20.15pt">The sales price to the customer is fixed or determinable.</div></li> <li> <div style="MARGIN:0in 0in 12pt 20.15pt; tab-stops:-.3in -15.6pt .25in">Collection is reasonably assured.</div></li></ul> <blockquote dir="ltr" style="MARGIN-RIGHT:0px"> <p style="MARGIN:0in 0in 12pt 20.15pt; tab-stops:-.3in -15.6pt .25in">The Company generally recognizes revenue upon shipment in accordance with the above principles.</p></blockquote> <p style="MARGIN:0in 0in 12pt -1.2pt; tab-stops:-.3in -15.6pt .25in"><b><u>Cash Equivalents</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.25in"> The Company considers all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash equivalents include investments in an institutional money market fund, which invests in U.S. Treasury bills, notes and bonds, and/or repurchase agreements, backed by such obligations. Carrying value approximates fair value. Cash and cash equivalents are deposited at various area banks, which at times may exceed federally insured limits. The Company has not experienced any losses related to these balances, and management believes its credit risk to be minimal.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Inventories</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.25in"> Inventories are valued at the lower of cost or market. The cost of inventories are determined by the first-in, first-out (FIFO) method. The Company generally considers inventory quantities beyond two-years usage, measured on a historical usage basis, to be excess inventory and reduces the gross carrying value of inventory accordingly.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Property and Equipment</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:19.2pt"> Property and equipment are carried at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets or, for leasehold improvements, the life of the lease, if shorter. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in other income or expense for the period. The cost of maintenance and repairs is expensed as incurred; significant improvements are capitalized.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Goodwill</u></b></p> <p style="TEXT-ALIGN:left; MARGIN:0in 0in 12pt; tab-stops:.5in" align="left"> In accordance with FASB ASC Topic 350, with respect to Goodwill and Intangibles, the Company does not amortize goodwill. Instead, the Company performs annual impairment tests using the market capitalization on the last day of the year to determine the fair value of the reporting unit and then compares that value to the carrying value. As of December 31, 2011 and December 31, 2010, the Company concluded that goodwill was not impaired.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Fair Value of Financial and Nonfinancial Instruments</u></b></p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The Company measures financial instruments in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures. The accounting standard defines fair value, establishes a framework for measuring fair value under GAAP, and enhances disclosures about fair value measurements. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard creates a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. The Company relies on its actively traded share value – a level 1 input – in determining the fair value of the reporting unit in its annual impairment test as described in the FASB ASC Topic 350 Goodwill and Intangibles.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Advertising Expense</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Advertising costs are charged to operations as incurred and are included in selling expenses in the accompanying consolidated financial statements. Such charges aggregated $1,104,000 and $510,000, for the years ended December 31, 2011, and 2010, respectively. </p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Research and Development Expense</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Research and development expenses are charged to operations as incurred. Such charges aggregated $850,000, and $788,000, for the years ended December 31, 2011 and 2010, respectively and are included in engineering expense in the accompanying consolidated financial statements.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.25in"> </p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Shipping Costs</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Shipping costs are included in selling expense on the consolidated statements of operations. The expense relating to shipping was $1,467,000 and $1,224,000 for the years ended December 31, 2011 and 2010, respectively.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Provision for Doubtful Accounts</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. The Company determines the allowance based on any known collection issues, historical experience, and other currently available evidence. The reserve for future credits, discounts, and doubtful accounts was $624,000 and $644,000 as of December 31, 2011 and 2010, respectively. In regards to identifying uncollectible accounts, the Company reviews an aging report on a consistent basis to determine past due accounts, and utilizes a well established credit rating agency. The Company charges off those accounts that are deemed uncollectible once all collection efforts have been exhausted.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Earnings per Common Share</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Basic earnings per share have been computed using the weighted-average number of common shares outstanding. For the periods presented, there are no dilutive securities. Consequently, basic and dilutive earnings per share are the same.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Currency Translation</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Assets and liabilities denominated in foreign currencies, most of which relate to our United Kingdom subsidiary whose functional currency is British pound sterling, are translated into U.S. dollars at exchange rates prevailing on the balance sheet date. The statements of operations are translated into U.S. dollars at average exchange rates. Adjustments resulting from the translation of financial statements are excluded from the determination of income and are accumulated in a separate component of shareholders’ equity. For the years ended December 31, 2011 and 2010, exchange gains and losses resulting from foreign currency transactions were not significant and are included in the statements of operations (other income (expense)) in the period in which they occur.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Income Taxes</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The Company accounts for federal tax liabilities in accordance with the FASB ASC Topic 740, Income Taxes. Under this method the Company recorded tax expense, related deferred taxes and tax benefits, and uncertainties in tax positions.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize the benefit, or that future deductibility is uncertain.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The FASB ASC Topic 740, Income Taxes clarifies the criteria that an individual tax position must satisfy for some or all of the benefits of that position to be recognized in a company’s financial statements. This guidance prescribes a recognition threshold of more-likely than-not, and a measurement attribute for all tax positions taken or expected to be taken on a tax return, in order for those tax positions to be recognized in the financial statements.</p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 12pt; tab-stops:.5in"> The Company follows the provisions of ASC 740-10 relative to accounting for uncertainties in tax positions. These provisions provide guidance on the recognition, de-recognition and measurement of potential tax benefits associated with tax positions. The Company elected to recognize interest and penalties related to income tax matters as a component of the income tax provision in the consolidated statements of operations. For additional information regarding ASC 740-10, see Note 7.</p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 12pt; tab-stops:.5in"> </p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 12pt; tab-stops:.5in"> </p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Other Comprehensive Loss</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> For the years ended December 31, 2011 and 2010, respectively, the components of other comprehensive loss consisted solely of foreign currency translation adjustments.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Significant Concentration</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> One customer accounted for approximately 15% of sales in 2011 and 19% in 2010. That same customer accounted for 17% and 22% of Accounts Receivable at December 31, 2011 and 2010, respectively. Also, in 2011, approximately 89% of sales occur in North America, with the remaining 11% portion scattered among other countries, but mostly pertaining to the United Kingdom, compared to 91% and 9% in 2010.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Subsequent Events</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The Company evaluates all events or transactions through the date of the related filing that may have a material impact on its consolidated financial statements.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>New Accounting Pronouncements</u></b></p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">ASU 2011-08, <i>Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment</i>. In September 2011, the FASB issued guidance to amend and simplify the rules related to testing goodwill for impairment. The revised guidance allows an entity to make an initial qualitative evaluation, based on the entity’s events and circumstances, to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. The results of this qualitative assessment determine whether it is necessary to perform the currently required two-step impairment test. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of this guidance will not have a material effect on the Company’s consolidated financial statements.</p> <p style="LINE-HEIGHT:12pt; TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">ASU 2011-05, <i>Comprehensive Income (Topic 220): Presentation of Comprehensive Income</i>. In June 2011, the FASB issued new accounting guidance related to the presentation of comprehensive income that eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments require that all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. The Company will adopt this guidance in the quarter ended March 31, 2012 and is currently evaluating which presentation option it will utilize for comprehensive income in its consolidated financial statements. The adoption of this guidance will not impact the Company's financial position, results of operations or cash flows and will only impact the presentation of other comprehensive income in the financial statements.</p> <p style="LINE-HEIGHT:96%; MARGIN:0in 0in 12pt; tab-stops:.5in"> ASU 2011-06, <i>Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements<b> </b></i>This ASU affects all entities that are required to make disclosures about recurring and nonrecurring fair value measurements under FASB ASC Topic 820, originally issued as FASB Statement No. 157, <i>Fair Value Measurements</i>. The ASU requires certain new disclosures and clarifies two existing disclosure requirements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2010, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. The portions adopted by the Company did not have a significant impact on the year ended December 31, 2011. Those disclosures are effective for fiscal years beginning after December 15, 2011, and for interim periods within those fiscal years. The Company does not believe that these new fair value measurement requirements will have a significant impact on the Company’s financial position, results or operation, or cash flows.</p>
<!--egx--><p style="MARGIN:0in 0in 6pt"><b>3. INVENTORIES</b></p> <p style="MARGIN:0in 0in 6pt"> Inventories, net of reserves of $1,116,000 and $1,296,000, respectively, consisted of the following at December 31:</p> <p style="MARGIN:0in 0in 0pt"> </p> <div align="center"> <table style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 38.0pt"><b> 2011</b></p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"> </font></u></b></p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"><b> 2010</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="184" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:137.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">(in thousands)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Finished Goods</p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 38.0pt"> $ 4,824</p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> $ 4,297</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Raw Materials</p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 38.0pt"> 1,641</p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"> </font></u></p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> 1,719</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="413" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:309.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Total Inventory-Net</p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 38.0pt"> $ 6,465</p></td> <td width="33" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> $ 6,016</p></td></tr></table></div>
<!--egx--><p style="MARGIN:0in 0in 0pt"><b>4. PROPERTY AND EQUIPMENT</b></p> <p style="MARGIN:0in 0in 0pt"> </p> <p style="MARGIN:0in 0in 0pt"> Property and equipment consisted of the following at December 31:</p> <p style="MARGIN:0in 0in 0pt; tab-stops:-.75in 0in 27.0pt 45.0pt right 279.0pt 5.0in 6.0in left 6.5in"> </p> <div align="center"> <table width="634" style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"><b> 2011 </b></p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b> </b></p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"><b> 2010 </b></p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b>Depreciation and Amortization Est.</b></p> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b><u>Useful Lives</u></b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="188" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:141.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">(in thousands)</p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:0.1in"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt">Land</p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt">$ 538 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt">$ 538 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt">Buildings</p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"> 4,141 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"> 4,141 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">39 Years</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt">Leasehold Improvements</p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"> 211 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"> 211 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">3-10 Years (Lesser of Life or Lease)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt">Equipment</p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"> 8,626 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"> 8,494 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">3-10 Years</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"> 13,516 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"> 13,384 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt">Accumulated Depreciation</p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt"> (8,246)</p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt"> (7,600)</p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:3.0pt right 43.0pt">$ 5,270 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 42.0pt">$ 5,784 </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"><u style="text-underline:double"><font style="TEXT-DECORATION:none"> </font></u></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:0.1in"> <td width="192" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:2in; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="76" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.8pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.35pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.2pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="253" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:189.9pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"><u style="text-underline:double"><font style="TEXT-DECORATION:none"> </font></u></p></td></tr></table></div> <p style="MARGIN:0in 0in 0pt"> </p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The above amounts include approximately $1,000 of equipment at December 31, 2011 and $150,000 at December 31, 2010 that had not yet been placed in service by the Company. No depreciation was recorded in the related periods for these assets. Depreciation and amortization expense was approximately $651,000 and $637,000 for the years ended December 31, 2011 and 2010, respectively.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>5. LINE OF CREDIT</b></p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">On December 30, 2010, the Company agreed to a new Revolving Line of Credit Note and Loan Agreement with Sovereign Bank, NA (“Sovereign”). The Company established a line of credit facility in the maximum amount of $10,000,000, maturing on December 31, 2014, with funds available for working capital purposes and other cash needs. The loan is collateralized by all of the Company’s tangible and intangible assets. The loan agreement provides for the payment of any borrowings under the agreement at an interest rate range of either LIBOR plus 1.75% to plus 2.75% (for borrowings with a fixed term of 30, 60, or 90 days), or, Prime less 0.50% to plus 0.50% (for borrowings with no fixed term other than the December 31, 2014 maturity date), depending upon the Company’s then existing financial ratios. At December 31, 2011, the Company’s ratio would allow for the most favorable rate under the agreement’s range, which would be a rate of 2.05% (LIBOR plus 1.75%). The Company is required to pay an annual commitment fee for the access to the funds, and is also obligated to pay a “Line Fee” ranging from 17.5 to 35.0 basis points of the average unused balance on a quarterly basis, depending again upon the Company’s then existing financial ratios, both of which are recorded in other income and expense. The Company may terminate the line at any time during the four year term, as long as there are no amounts outstanding.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">As of December 31, 2011 and 2010, the Company had no outstanding borrowings on its line of credit, and was in compliance with all debt covenants.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>6. SHAREHOLDERS’ EQUITY</b></p> <p style="MARGIN:0in 0in 12pt"> As of December 31, 2011 and December 31, 2010, the Company had authorized 20,000,000 common stock shares with par value of $0.01 per share. For the same periods, the number of shares issued were 10,153,633, and the total number of outstanding shares were 10,091,822, with the variance representing shares held in Treasury.</p> <p style="MARGIN:0in 0in 12pt"> On April 5, 2011, the Company’s Board of Directors authorized an extension of its stock repurchase program without expiration, up to a maximum amount of $2,000,000. The original program established in December of 2007 authorized the purchase of up to $5,000,000 of its common stock. The purchases may be made from time-to-time in the open market or in privately negotiated transactions, depending on market and business conditions. The Board retained the right to cancel, extend, or expand the share buyback program, at any time and from time-to-time. Since inception, the Company has purchased a total of 61,811 shares for approximately $932,000, or $15 per share. The Company did not make any stock repurchases during 2011 or 2010.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:-60.0pt right -.75in left -28.05pt .5in right 3.25in 297.0pt 5.0in 423.9pt 6.5in"> In connection with the aforementioned share buyback program, on December 15, 2009 the Company entered into an amendment of its Rule 10b5-1 Repurchase Plan (the “Plan”) dated December 15, 2008 with Hunter Associates, Inc. (“Hunter”), by which Hunter will continue to implement the share buyback program by purchasing shares of the Company’s common stock in accordance with the terms of the Plan and within the safe harbor afforded by Rule 10b5-1.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>7. INCOME TAXES</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> Income tax expense consisted of the following:</p> <p style="MARGIN:0in 0in 0pt"> </p> <div align="center"> <table width="506" style="WIDTH:379.85pt; BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"><b> 2011 </b></p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"></font></u></b> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"><b> 2010 </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="192" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:143.8pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b> (in thousands)</b></p> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b> </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Federal Income Tax:</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Current</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> $ 2,020 </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> $ 2,273 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Deferred</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> 87 </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> (165)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">State Income Tax:</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Current</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> 122 </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> 244 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Deferred</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> 4 </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> (26)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Foreign Income Tax:</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Current</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> -- </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> -- </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Deferred</p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> (126)</p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> (157)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="315" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:236.05pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Income Tax Expense</p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:6.0pt right 42.0pt"> $ 2,107 </p></td> <td width="40" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.7pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:5.0pt right 40.0pt"> $ 2,169 </p></td></tr></table></div> <p style="MARGIN:0in 0in 0pt"> </p> <p style="MARGIN:0in 0in 12pt"> Pre-tax income included foreign losses of ($505,000) and ($591,000) in 2011 and 2010, respectively.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">Total income tax expense differed from “statutory” income tax expense, computed by applying the U.S. federal income tax rate of 34% to earnings before income tax, as follows:</p> <div align="center"> <table style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="66" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"><b> 2011 </b></p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"></font></u></b> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"><b> 2010 </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="179" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:133.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b>(in thousands)</b></p> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b> </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Computed “Statutory” Income Tax Expense</p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt">$ 2,292 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> $ 2,361 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">State Income Tax, Net of Federal Tax Benefit</p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"> 145 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> 168 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Foreign Tax Rate Differential</p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"> 55 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> 41 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Manufacturing Deduction </p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"> (141)</p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> (154)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Reduction in Tax Uncertainties </p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"> (149)</p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> (178)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Other - Net</p></td> <td width="66" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt"> (95)</p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> (69)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Income Tax Expense</p></td> <td width="66" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:2.0pt right 37.0pt">$ 2,107 </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:4.0pt right 40.0pt"> $ 2,169 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:5.85pt"> <td width="319" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:239.4pt; PADDING-RIGHT:5.4pt; HEIGHT:5.85pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="66" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:49.5pt; PADDING-RIGHT:5.4pt; HEIGHT:5.85pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="39" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:29.25pt; PADDING-RIGHT:5.4pt; HEIGHT:5.85pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="74" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:55.15pt; PADDING-RIGHT:5.4pt; HEIGHT:5.85pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr></table></div> <p style="MARGIN:0in 0in 0pt"> </p> <p style="MARGIN:0in 0in 0pt; tab-stops:.5in"> </p> <p style="MARGIN:0in 0in 0pt; tab-stops:.5in"> </p> <p style="MARGIN:0in 0in 0pt; tab-stops:.5in"> A deferred income tax (expense) benefit results from temporary timing differences in the recognition of income and expense for income tax and financial reporting purposes. The components of and changes in the net deferred tax assets (liabilities) which give rise to this deferred income tax (expense) benefit for the years ended December 31, 2011 and 2010 are as follows:</p> <p style="TEXT-ALIGN:justify; MARGIN:0in 0in 0pt"> </p> <table style="MARGIN:auto auto auto 81.85pt; BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="180" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:135.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b>December 31,</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"><b> 2011 </b></p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"></font></u></b> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"><b> 2010 </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="180" colspan="3" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:135.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b> (in thousands)</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u>Deferred Tax Assets:</u></p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Compensation Assets</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt">$ 99 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in">$ 97 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Inventory Valuation</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 530 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 583 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Accounts Receivable Valuation</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 169 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 183 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Deferred Litigation Costs</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 33 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 41 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Foreign Net Operating Losses</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 204 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 137 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Other</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 268 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 196 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Compensation Liabilities</p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> 275 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> 251 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Total Deferred Assets</p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt">$ 1,578 </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in">$ 1,488 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:8.1pt"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; HEIGHT:8.1pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; HEIGHT:8.1pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; HEIGHT:8.1pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; HEIGHT:8.1pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u>Deferred Tax Liabilities:</u></p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Prepaid Expenses</p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> (351)</p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> (207)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Depreciation and Amortization</p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> (1,550)</p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> (1,639)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Total Deferred Liabilities</p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> ($1,901)</p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in">($ 1,846)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="72" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="306" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:229.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Total Deferred Tax Liability</p></td> <td width="72" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:0.75in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 43.0pt"> ($323)</p></td> <td width="46" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:34.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="62" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:46.55pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right .5in"> ($358)</p></td></tr></table> <p style="MARGIN:0in 0in 0pt"> </p> <p style="MARGIN:0in 0in 12pt"> Management believes it is more likely than not that the Company will have sufficient taxable income when these timing differences reverse and that the deferred tax assets will be realized and, accordingly, no valuation allowance is deemed necessary.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The Company is currently subject to audit by the Internal Revenue Service for the calendar year ended 2010. In 2010, the Company settled an audit by the Internal Revenue Service of its 2008 and 2009 returns. The audit adjustments, all of which were temporary differences, resulted in net additional federal and state tax of $108,000, plus interest of $10,000. The Company and its Subsidiaries state income tax returns are subject to audit for the calendar years ended 2007 through 2010.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">As of December 31, 2010, the Company had provided a liability of $276,000 for unrecognized tax benefits related to various federal and state income tax matters, which is included in Other Long Term Liabilities. Of this amount, the amount that would impact the Company’s effective tax rate, if recognized, was $255,000. The difference between the total amount of unrecognized tax benefits and the amount that would impact the effective tax rate consists of items that are offset by the federal tax benefit of state income tax items of $21,000. The reserve at December 31, 2011 was $135,000, most of which would impact the effective tax rate.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year:</p> <div align="center"> <table width="569" style="WIDTH:426.5pt; BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"></font></u></b> </p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"><b> 2011 </b></p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b><u><font style="TEXT-DECORATION:none"></font></u></b> </p></td> <td width="75" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"><b> 2010 </b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Beginning Unrecognized Tax Benefits – </p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> $ 276 </p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> $ 431 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Current Year – Increases</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> --- </p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> 3 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Current Year – Decreases </p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> (105)</p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> --- </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Current Year – Interest/Penalties</p></td> <td width="78" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> 8 </p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> 20 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Expired Statutes</p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> (44)</p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="75" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> (178)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="384" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:4in; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt">Ending Unrecognized Tax Benefits – </p></td> <td width="78" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:58.2pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 40.0pt"> $ 135 </p></td> <td width="32" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:23.95pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="75" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:56.35pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 39.0pt"> $ 276 </p></td></tr></table></div> <p style="MARGIN:0in 0in 0pt"> </p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>8. LEASES</b></p> <p style="MARGIN:0in 0in 12pt"> In the United Kingdom the Company leases a facility in Banbury, England for approximately $19,000 per month, which serves sales, warehousing and operational functions. The lease in Banbury was effective April 1, 2006 and has a 15-year term ending in March of 2021. There is an option to terminate in December of 2012, and again in December of 2017. If the Company elects to terminate in 2012, a penalty of 7.5 months additional rent must be paid, or approximately $142,000. Termination in 2017 requires a penalty of 2 months rentals, or approximately $38,000. The Company’s current intention is to utilize the facility for the 15 years.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">In the United States, in 2011 and 2010, the Company leased office space in Middletown, CT for approximately $8,000 a month.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">In addition to property rentals, the Company also leases several automobiles, which are included in the rent expense and operating lease details below.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">Rent expense for operating leases was approximately $308,000 and $317,000 for the years ended December 31, 2011, and 2010, respectively.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">Present value of future minimum lease payments under non-cancelable leases as of December 31, 2011 is as follows:</p> <table style="BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center"><b> Year Ending December 31,</b></p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><b> </b></p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in -5.4pt 0pt 0in" align="center"><b>Operating Leases</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">(in thousands)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 235.0pt"> 2012</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> $ 412</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 235.0pt"> 2013</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> 385</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 235.0pt"> 2014</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> 329</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 235.0pt"> 2015</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> 318</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 235.0pt"> 2016</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> 318</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt" align="center">Thereafter</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"> </font></u></p></td> <td width="114" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> 998</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:0.15in"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; HEIGHT:0.15in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; HEIGHT:0.15in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; HEIGHT:0.15in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> Total Minimum Lease Payments</p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 68.0pt"> $ 2,760</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:0.1in"> <td width="337" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:252.9pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="42" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:31.5pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="114" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:85.5pt; PADDING-RIGHT:5.4pt; HEIGHT:0.1in; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr></table>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>9. EMPLOYEE BENEFIT PLANS</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b>Defined Contribution and 401(K) Plans</b></p> <p style="MARGIN:0in 0in 12pt"> The Company maintains a qualified non-contributory profit-sharing plan covering all eligible employees. There were $239,000 and $224,000 of contributions made to the plan in 2011 and 2010 respectively, which were charged to expense.</p> <p style="MARGIN:0in 0in 12pt"> Contributions to the Plan are defined as three percent (3%) of gross wages up to the current Old Age, Survivors, and Disability (OASDI) limit and six percent (6%) of the excess over the OASDI limit, subject to the maximum allowed under the Employee Retirement Income Security Act (ERISA). The Plan’s vesting terms fully vest participants over six years. </p> <p style="MARGIN:0in 0in 12pt"> The Company also maintains a savings & retirement plan qualified under Internal Revenue Code Section 401(k) for all employees. Employees are eligible to participate in the Plan the first day of the month following date of hire. Participants may elect to have up to fifty percent (50%) of their compensation withheld, up to the maximum allowed by the Internal Revenue Code. After completing (1) year of service, the Company contributes an additional amount equal to 25% of all employee contributions, up to a maximum of 6% of an employee’s gross wages. Contributions are funded on a current basis. Contributions to the Plan charged to expense for the years ended December 31, 2011 and 2010 were $70,000 and $67,000, respectively. The participant’s Company contribution vests over six years.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt"><b>10. <font style="FONT-VARIANT:small-caps">COMMITMENTS AND CONTINGENCIES</font></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Commitments:</u></b></p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">Under a number of indemnity agreements between the Company and each of its officers and directors, the Company has agreed to indemnify each of its officers and directors against any liability asserted against them in their capacity as an officer or director, or both. The Company’s indemnity obligations under the indemnity agreements are subject to certain conditions and limitations set forth in each of the agreements. Under the terms of the Agreement, the Company is contingently liable for costs which may be incurred by the officers and directors in connection with claims arising by reason of these individuals’ roles as officers and directors. The Company has obtained directors’ and officers’ insurance policies to fund certain of the Company’s obligations under the indemnity agreements.</p> <p style="TEXT-INDENT:4.5pt; MARGIN:0in 0in 12pt"> The Company has salary continuation agreements with one current employee, and one former employee who retired at the end of 2010. These agreements provide for monthly payments to each of the employees or their designated beneficiary upon the employee’s retirement or death. The payment benefits range from $1,000 per month to $3,000 per month with the term of such </p> <p style="MARGIN:0in 0in 12pt"> </p> <p style="MARGIN:0in 0in 12pt">payments limited to 15 years after the employee’s retirement at age 65. The agreements also provide for survivorship benefits if the employee dies before attaining age 65, and severance payments if the employee is terminated without cause; the amount of which is dependent on the length of company service at the date of termination. The net present value of the retirement payments associated with these agreements is $468,000 at December 31, 2011, of which $456,000 is included in Other Long Term Liabilities, and the remaining current portion of $12,000 is included in other liabilities, associated with the retired employee previously noted who is now receiving benefit payments.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The December 31, 2010 liability of $407,000, had $395,000 reported in Other Long Term Liabilities, and a current portion of $12,000 in Other Liabilities. </p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The Company has obtained and is the beneficiary of three whole life insurance policies with respect to the two employees discussed above, and one other policy. The cash surrender value of such policies (included in Other Long Term Assets) amounts to $756,000 at December 31, 2011 and $706,000 at December 31, 2010.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:-22.5pt"><b><u>Contingencies:</u></b></p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">The Company’s general liability insurance policies are subject to deductibles or retentions, ranging from $25,000 to $250,000 per claim, (depending on the terms of the policy and the applicable policy year) up to an aggregate amount. The Company is insured on a ‘first dollar’ basis for workers’ compensation subject to statutory limits. </p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">In the ordinary and normal conduct of the Company’s business, it is subject to periodic lawsuits, investigations and claims (collectively, the “Claims”). There has been an increase in the frequency of those Claims over the past two years relating to product liability. The Company does not believe that the Claims have legal merit, and is therefore vigorously defending against those Claims. The Company has in place commercial general liability insurance policies that cover the Claims, as noted above, including those alleging damages as a result of product defects. Litigation is subject to many uncertainties and management is unable to predict the outcome of the pending suits and claims. It is possible that the results of operations or liquidity and capital resources of the Company could be adversely affected by the ultimate outcome of the pending litigation or as a result of the costs of contesting such lawsuits, potentially materially. The Company is currently unable to estimate the ultimate liability, if any, that may result from the pending litigation and, accordingly, no provision for any liability (except for accrued legal costs for services and claim settlements previously rendered) has been made in the consolidated financial statements. Those liabilities were estimated to be $414,000 and $309,000, at December 31, 2011 and December 31, 2010, respectively, and are included in Other Liabilities. </p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt">In 2007, the Company instituted a legal complaint against a former insurer, seeking reimbursement of amounts paid in defense of a class action litigation, as well as supplementary payments made in connection with the class action. In January 2011, an appellate court found in the Company’s favor, establishing the insurer’s legal obligation to reimburse the Company for the defense costs. Subsequently, in March of 2012, the Company and the insurer settled the litigation for $4,700,000, with receipt of the cash occurring during that same month.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"><b><u>Warranty Commitments:</u></b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:34.8pt"> Gas transmission products such as those made by the Company carry potentially serious personal injury risks in the event of failures in the field. As a result, the Company performs extensive internal testing and other quality control procedures. Historically, due to the extensive nature of these quality controls the Company has not had a meaningful warranty claim rate, and the warranty expense is <i>de minimis. A</i>ccordingly, the Company does not maintain a warranty reserve beyond a nominal amount.</p>
<!--egx--><p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"><b>11. STOCK – BASED COMPENSATION PLANS</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"><b>Phantom Stock Plan</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"><b> <i>Plan Description. </i></b>On April 1, 2006, the Company adopted the Omega Flex, Inc. 2006 Phantom Stock Plan (the “Plan”). The Plan authorizes the grant of up to one million units of phantom stock to employees, officers or directors of the Company and of any of its subsidiaries. The phantom stock units ("Units") each represent a contractual right to payment of compensation in the future based on the market value of the Company’s common stock. </p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in">The Units are not shares of the Company’s common stock, and a recipient of the Units <u>does not</u> receive any of the following:</p> <p style="TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 0.75in; tab-stops:0in .75in center 6.25in left 6.5in"><font style="FONT-FAMILY:Wingdings">§<font style="FONT:7pt 'Times New Roman'"> </font></font>ownership interest in the Company</p> <p style="TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 0.75in; tab-stops:0in .75in center 6.25in left 6.5in"><font style="FONT-FAMILY:Wingdings">§<font style="FONT:7pt 'Times New Roman'"> </font></font>shareholder voting rights </p> <p style="TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 0.75in; tab-stops:0in .75in center 6.25in left 6.5in"><font style="FONT-FAMILY:Wingdings">§<font style="FONT:7pt 'Times New Roman'"> </font></font>other incidents of ownership to the Company’s common stock</p> <p style="TEXT-INDENT:-0.25in; MARGIN:0in 0in 0pt 0.75in; tab-stops:0in .75in center 6.25in left 6.5in"> </p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:0in center 6.25in left 6.5in">The Units are granted to participants upon the recommendation of the Company’s CEO, and the approval of the compensation committee. Each of the Units that are granted to a participant will be initially valued by the compensation committee, and at a minimum, the Unit’s value will be equal to the closing price of the Company’s common stock on the grant date. The Units follow a vesting schedule, with a maximum vesting of 3 years after the grant date. Upon vesting, the Units represent a contractual right of payment for the value of the Unit. The Units will be paid on their maturity date, one year after all of the Units granted in a particular award have fully vested, unless an acceptable event occurs under the terms of the Plan prior to one year, which would allow for earlier payment. The amount to be paid to the participant on the maturity date is dependent on the type of Unit granted to the participant.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:0in center 6.25in left 6.5in">The Units may be <i>Full Value,</i> in which the value of each Unit at the maturity date, will equal the closing price of the Company’s common stock as of the maturity date; or <i>Appreciation Only</i>, in which the value of each Unit at the maturity date will be equal to the closing price of the Company’s common stock at the maturity date <i>minus</i> the closing price of the Company’s common stock at the grant date.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:0in center 6.25in left 6.5in">On December 9, 2009, the Board of Directors authorized an amendment to the Plan to pay an amount equal to the value of any cash or stock dividend declared by the Company on its common stock to be accrued to the phantom stock units outstanding as of the record date of the common stock dividend. The dividend equivalent will be paid at the same time the underlying phantom stock units are paid to the participant.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:0in center 6.25in left 6.5in">In certain circumstances, the Units may be immediately vested upon the participant’s death or disability. All Units granted to a participant are forfeited if the participant is terminated from his relationship with the Company or its subsidiary for “cause,” which is defined under the Plan. If a participant’s employment or relationship with the Company is terminated for reasons other than for “cause,” then any vested Units will be paid to the participant upon termination. However, Units granted to certain “specified employees” as defined in Section 409A of the Internal Revenue Code will be paid approximately 181 days after termination.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in center 6.25in left 6.5in"><b><i> Grants of Phantom Stock Units. </i></b>As of December 31, 2010, the Company had 15,555 unvested units outstanding, all of which were granted at <i>Full Value</i>. On March 3, 2011, the Company granted an additional 8,100 <i>Full Value</i> Units with a fair value of $10.55 per unit on grant date, using historical volatility. In all cases, the grant price was equal to the closing price of the Company’s common stock at the grant date. In March 2011, the Company paid $40,000 for the 2,724 fully vested and matured units that were granted on March 5, 2007. </p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"> The Company uses the Black-Scholes option pricing model as its method for determining fair value of the Units. The Company uses the straight-line method of attributing the value of the stock-based compensation expense relating to the Units. The compensation expense (including adjustment of the liability to its fair value) from the Units is recognized over the vesting period of each grant or award.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:.5in"> The FASB ASC Topic 718, Stock Compensation requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates in order to derive the Company’s best estimate of awards ultimately to vest.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:.5in">Forfeitures represent only the unvested portion of a surrendered Unit and are typically estimated based on historical experience. Based on an analysis of the Company’s historical data, which has limited experience related to any stock-based plan forfeitures, the Company applied a 0% forfeiture rate to Plan Units outstanding in determining its Plan Unit compensation expense as of December 31, 2011.</p> <p style="TEXT-INDENT:0.5in; MARGIN:0in 0in 12pt; tab-stops:.5in">The total Phantom Stock related liability as of December 31, 2011 was $298,000 of which $81,000 is included in other liabilities, as it is expected to be paid in March 2012, and the balance of $217,000 is included in other long term liabilities.</p> <p style="MARGIN:0in 0in 0pt"> In accordance with FASB ASC Topic 718 Stock Compensation, the Company recorded compensation expense of approximately $73,000 and $99,000 related to the Phantom Stock Plan for the twelve months ended December 31, 2011 and 2010, respectively. The total unrecognized compensation cost calculated at December 31, 2011 is $116,000 which will be recognized through March of 2014. The Company will recognize the related expense over the weighted average period of 1.45 years.</p> <p style="MARGIN:0in 0in 12pt; tab-stops:-.25in .5in"> The following table summarizes information about the Company’s total vested and nonvested phantom stock Units at December 31, 2011:</p> <div align="center"> <table width="632" style="MARGIN:auto auto auto 40.2pt; BORDER-COLLAPSE:collapse" cellpadding="0" cellspacing="0"> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="126" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in" align="center"><b>Units</b></p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-ALIGN:center; MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in" align="center"><b>Weighted Average Grant Date Fair Value</b></p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in">Number of Phantom Stock Unit Awards:</p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in"> Nonvested at December 31, 2010</p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> 15,555 </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> $ 11.01 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="TEXT-INDENT:-8.4pt; MARGIN:0in 0in 0pt 8.4pt; tab-stops:12.9pt .5in center 6.25in left 6.5in"> Granted</p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> 8,100 </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> $ 10.55 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in"> Vested</p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> (7,274)</p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> $ (11.92)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in"> Forfeited</p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> (---)</p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> (---)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in"> Canceled</p></td> <td width="126" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> (---)</p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="158" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> (---)</p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in">Nonvested at December 31, 2011</p></td> <td width="126" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> 16,381 </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u style="text-underline:double"><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="158" style="BORDER-BOTTOM:windowtext 1.5pt double; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> $ 10.38 </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="126" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"> </p></td> <td width="158" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt"> </p></td></tr> <tr style="PAGE-BREAK-INSIDE:avoid; HEIGHT:12.6pt"> <td width="328" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:245.65pt; PADDING-RIGHT:5.4pt; HEIGHT:12.6pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:0in .5in center 6.25in left 6.5in">Phantom Stock Unit Awards Expected to Vest</p></td> <td width="126" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:94.3pt; PADDING-RIGHT:5.4pt; HEIGHT:12.6pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:right 77.0pt"> 16,381 </p></td> <td width="21" style="BORDER-BOTTOM:#f0f0f0; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:15.6pt; PADDING-RIGHT:5.4pt; HEIGHT:12.6pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="top"> <p style="MARGIN:0in 0in 0pt"><u style="text-underline:double"><font style="TEXT-DECORATION:none"></font></u> </p></td> <td width="158" style="BORDER-BOTTOM:windowtext 1pt solid; BORDER-LEFT:#f0f0f0; PADDING-BOTTOM:0in; BACKGROUND-COLOR:transparent; PADDING-LEFT:5.4pt; WIDTH:118.75pt; PADDING-RIGHT:5.4pt; HEIGHT:12.6pt; BORDER-TOP:#f0f0f0; BORDER-RIGHT:#f0f0f0; PADDING-TOP:0in" valign="bottom"> <p style="MARGIN:0in 0in 0pt; tab-stops:7.0pt right 101.0pt"> $ 10.38 </p></td></tr></table></div> <p style="MARGIN:0in 0in 0pt"> </p> <p style="MARGIN:0in 0in 12pt"> The fair value of the 7,274 vested during the current year is $96,000. </p>
<!--egx--><p style="TEXT-INDENT:0.6pt; MARGIN:0in 0in 12pt; tab-stops:.25in"><b>12. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</b></p> <p style="MARGIN:0in 0in 12pt"><b><u>Mestek, Inc.</u></b> </p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"> On June 10, 2009, the Company agreed to loan Mestek, Inc. (Mestek), the Company’s former parent, $3,250,000 as evidenced by a promissory note in that amount (the “Note”). The Note required monthly interest payments at a rate of 6% per annum on all unpaid principal, and payment in full to be received no later than October 20, 2010. Payment of the Note was however subject to the terms and conditions of a subordination agreement that existed between The Company and Bank of America, N.A. The Company received an unconditional and continuing guaranty of the loan from Sterling Realty Trust, of which J. E. Reed is the trustee. Mr. J. E. Reed, the Company’s chairman of the board, and Mr. S. B. Reed, one of the Company’s directors, are also directors, executive officers, and greater than 10% owners of Mestek. On October 20, 2010, Mestek repaid all unpaid principal and interest under the Note, and the Note and the guaranty from Sterling Realty Trust were cancelled.</p>
<!--egx--><p style="TEXT-INDENT:0.6pt; MARGIN:0in 0in 12pt; tab-stops:.25in"><b>13. SUBSEQUENT EVENTS</b></p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"> In February of 2012, the Company was made aware of a fraud perpetrated by an outside party involving approximately $400,000 of insurance related premiums that the Company had prepaid for umbrella coverage. The assets are currently secured by a governmental agency who is investigating the case, and being held in a custodial account. It is possible that not all of those funds will be returned to the Company, or the Company may need to incur additional costs to procure collection. The Company is currently pursing all avenues in an effort to bring closure to the event, reclaim the assets, and replace the insurance coverage. </p> <p style="MARGIN:0in 0in 12pt; tab-stops:0in .5in center 6.25in left 6.5in"> Except for the matter previously disclosed in Note 10, there were no other events that required disclosure.</p>
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Accounts Receivable less allowance of $624
Accounts Receivable less allowance of $644