Note 12 - Income Taxes

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

(12)  INCOME TAXES.

We are subject to Federal and certain state income taxes. In addition, we are taxed in certain foreign countries. As of December 31, 2013 and 2012, there were no cumulative undistributed earnings of our foreign subsidiaries for which U.S. income taxes have not been provided.

Earnings before income taxes was as follows:

	Years Ended December 31,
	2013		2012
Domestic	$	3,245	$	2,580
Foreign		763		473
	$	4,008	$	3,053

Income tax expense (benefit) was as follows:

	Years Ended December 31,
	2013			2012
Current
Domestic -- Federal	$	515		$	362
Domestic -- state		74			62
Foreign		35			30
		624			454
Deferred
Domestic -- Federal		218			396
Domestic -- state		212			(126	)
Foreign		(123	)		173
		307			443
Income tax expense	$	931		$	897

Deferred income taxes reflect the net tax effect of net operating loss and credit carryforwards as well as temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of our deferred tax assets and liabilities as of December 31, 2013 and 2012:

	December 31,
	2013			2012
Deferred tax assets:
Net operating loss ("NOL") (state and foreign)	$	829		$	1,182
Depreciation of property and equipment		646			793
Tax credit carryforwards (foreign, research and AMT)		269			440
Inventories		180			177
Accrued vacation pay and stock-based compensation		169			182
Intangibles		162			86
Allowance for doubtful accounts		56			56
Acquisition costs		37			39
Accrued warranty		11			22
Other		26			68
		2,385			3,045
Valuation allowance		(287	)		(573	)
Deferred tax assets		2,098			2,472
Deferred tax liabilities:
Net intangible assets		(260	)		(307	)
Unremitted earnings of foreign subsidiaries		(107	)		(127	)
Deferred tax liabilities		(367	)		(434	)
Net deferred tax asset	$	1,731		$	2,038

The valuation allowance for deferred tax assets as of the beginning of 2013 and 2012 was $573 and $484, respectively. The net change in the valuation allowance for the years ended December 31, 2013 and 2012 was a decrease of $286 and an increase of $89, respectively. In assessing the ability to realize the deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the total deferred tax assets, we will need to generate future taxable income prior to the expiration of net operating loss and credit carryforwards which expire in various years through 2033.

An analysis of the effective tax rate for the years ended December 31, 2013 and 2012 and a reconciliation from the expected statutory rate of 34% is as follows:

		Years Ended December 31,
		2013			2012
Expected income tax provision at U.S. statutory rate		$	1,363		$	1,038
Increase (decrease) in tax from:
	Current year tax credits (foreign and research)		(417	)		(523	)
	Foreign income tax rate differences		(80	)		(36	)
	Changes in valuation allowance		(286	)		89
	Deemed dividend from foreign subsidiaries		135			212
	Domestic tax expense, net of Federal benefit		127			72
	Nondeductible expenses		10			20
	NOL carryforwards utilized		200			103
	Other		(121	)		(78	)
Income tax expense		$	931		$	897

In accounting for income taxes, we follow the guidance in ASC Topic 740 (Income Taxes) regarding the recognition and measurement of uncertain tax positions in our financial statements. Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. Our policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations. As of December 31, 2013 and 2012, we did not have an accrual for uncertain tax positions.

We file U.S. income tax returns and multiple state and foreign income tax returns. With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2010 and thereafter are subject to examination by the relevant taxing authorities.