INCOME TAXES

6 Months Ended

Jun. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 4.  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 months ended June 30, 2012 was 38%, compared with 14% for the three months ended June 30, 2011, respectively.  The effective tax rate for the year ended December 31, 2012 is expected to be 37% compared to 32% for the year ended December 31, 2011.

The differences between federal income taxes computed at the federal statutory rate and reported income taxes for the three and six months ended June 30, 2012 and 2011 are as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Statutory federal tax provision	$	63,000		$	58,000		$	125,000		$	377,000
State income taxes	12,000			6,000			16,000			33,000
Income tax credits	(3,000		)	(16,000		)	(6,000		)	(32,000		)
Tax authority closing agreement	—			(96,000		)	—			(96,000		)
Change in uncertain tax positions	(2,000		)	90,000			8,000			90,000
Other	6,000			(18,000		)	(8,000		)	(35,000		)
Income tax expense	$	76,000		$	24,000		$	135,000		$	337,000

At June 30, 2012 we had $126,000 of net uncertain tax benefit positions recorded in other long-term liabilities that would reduce our effective income tax rate if recognized.  The $8,000 increase from December 31, 2011 was related to 2012 state research and experimentation credits.