INCOME TAXES

9 Months Ended

Sep. 30, 2011

INCOME TAXES

INCOME TAXES

NOTE 5.  INCOME TAXES

On a quarterly basis, we estimate what our effective tax rate will be for the full fiscal year and record a quarterly income tax provision based on the anticipated rate.  As the year progresses, we refine our estimate based on the facts and circumstances by each tax jurisdiction.  Our effective tax rate for the three and nine months ended September 30, 2011 was 35% and 31%, respectively, compared with 42% and 52% for the three and nine months ended September 30, 2010, respectively.

The differences between federal income taxes computed at the federal statutory rate and reported income taxes for the three and nine months ended September 30, 2011 are as follows:

	Three Months Ended						Nine Months Ended
	September 30						September 30
	2011			2010			2011			2010
Statutory federal tax provision	$	96,000		$	71,000		$	473,000		$	261,000
State income taxes	8,000			8,000			41,000			24,000
Income tax credits	(20,000		)	(2,000		)	(52,000		)	(6,000		)
NOL carryback true up	—			—			—			111,000
Tax authority closing agreement	—			—			(96,000		)	—
Reserve for uncertain tax positions	5,000			—			95,000			—
Other	9,000			16,000			(26,000		)	8,000
Income tax expense	$	98,000		$	93,000		$	435,000		$	398,000

At September 30, 2011 we had $113,000 of net uncertain tax benefit positions recorded in other long-term liabilities that would reduce our effective income tax rate if recognized.  The $1,000 decrease from December 31, 2010 was related to the release of reserves for uncertain tax positions of $96,000 recorded for the years ended December 31, 2004 through 2009, offset in part by an increase in uncertain tax positions of $95,000 related to R&E credits.