Note 7 - Income Taxes

3 Months Ended

Aug. 28, 2011

Income Tax Disclosure [Text Block]

7.  Income Taxes

The provision for income taxes for the three months ended August 28, 2011 was $1.1 million. The effective tax rate for the three months ended August 28, 2011 was 38 percent compared to 37 percent for the same period in fiscal year 2011. The effective tax rate for the three months ended August 28, 2011 differs from the statutory federal income tax rate of 35 percent as a result of several factors, including state taxes, non-deductible stock-based compensation expense, tax exempt interest and the benefit of federal and state research and development credits.  

As of May 29, 2011, the Company had unrecognized tax benefits of approximately $760,000.  Included in the balance of unrecognized tax benefits as of May 29, 2011 is approximately $601,000 of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company expects its unrecognized tax benefits to change by $240,000 within the next twelve months related to the expiration of tax attributes.

In accordance with accounting guidance, the Company has decided to classify interest and penalties related to uncertain tax positions as a component of its provision for income taxes.  The Company has accrued an insignificant amount of interest and penalties relating to the income tax on the unrecognized tax benefits as of August 28, 2011 and May 29, 2011.

Due to tax attribute carry forwards, the Company is subject to examination for tax years 1996 forward for U.S. tax purposes.  The Company was also subject to examination in various state jurisdictions for tax years 1998 forward, none of which were individually significant.