XML 48 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
3 Months Ended
Jun. 30, 2012
Income Taxes [Abstract]  
Income Taxes

Note 7 – Income Taxes

The provision for income taxes for the three months ended June 30, 2012 was $229,000 on income before tax of $826,000 at the effective tax rate of 28% compared to a provision for income taxes of $700,000 on income before tax of $2,369,000 at the effective tax rate of 30% in the first quarter of the prior fiscal year. The year-over-year quarterly change in estimated effective tax rate was primarily due to a higher percentage of the estimated pre-tax profit applying to a lower tax bracket in fiscal 2013 compared to the estimated pre-tax profit for 2012 at the same time last year and due to a higher tax rate in the first quarter of fiscal 2012 resulting from recording a reserve for an uncertain tax position.  

The income tax provision for interim periods reflects the Company’s computed estimated annual effective tax rate and differs from the taxes computed at the federal and state statutory rates primarily due to the effects of foreign rate differentials, R&D tax credits, domestic manufacturing tax deduction, non-deductible stock-based compensation expense, tax exempt interest income and tax contingencies.

During the three months ended June 30, 2012, the liability for uncertain income tax positions excluding accrued interest and penalties increased from $3,661,000 to $3,664,000. Of the total $3,664,000 of unrecognized tax benefits, $2,847,000 represents the amount that, if recognized, would favorably affect the Company’s effective income tax rate in a future period. The Company cannot conclude on the range of cash payments that will be made within the next twelve months associated with its uncertain tax positions.

The Company records interest and penalties related to unrecognized tax benefits in income tax expense. On June 30, 2012, the Company had approximately $478,000 accrued for estimated interest and $152,000 for estimated penalties related to uncertain tax positions. For the three months ended June 30, 2012, the Company recorded a reduction of estimated interest of $16,000 and estimated penalties of $1,000.

The balance of unrecognized income tax benefits, including accrued interest and accrued penalties on June 30, 2012, was approximately $1,706,000 related to tax positions for which it is reasonably possible that the statute of limitations will expire in various jurisdictions within the next twelve months.

The Company’s major tax jurisdictions are the United States federal, State of California and Hong Kong and the Company’s income tax returns are no longer subject to examination by these taxing authorities for fiscal years before 2002.