INCOME TAXES

3 Months Ended

Mar. 31, 2013

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 March 31, 2013 and 2012 was (17%) and 32%, respectively.  The effective tax rate for the year ended December 31, 2013 is expected to be 24% compared to 32% for the year ended December 31, 2012.  The decreases are principally due to the federal government reinstating the research and development credit for the 2012 tax year and extending it to 2013.

The differences between federal income taxes computed at the federal statutory rate and reported income taxes for the three months ended March 31, 2013 and 2012 are as follows:

	Three Months Ended
	March 31
	2013			2012
Statutory federal tax provision	$	43,000		$	62,000
State income taxes	10,000			4,000
Income tax credits	(86,000		)	(3,000		)
Change in uncertain tax positions	14,000			10,000
Other	(2,000		)	(14,000		)
Income tax expense	$	(21,000	)	$	59,000

At March 31, 2013, we had $156,000 of net uncertain tax benefit positions recorded in other long-term liabilities that would reduce our effective income tax rate if recognized.  The $16,000 increase from December 31, 2012 primarily relates to 2012 and 2013 state research and experimentation credits.