Note 15. Income Taxes

6 Months Ended

Jun. 30, 2012

Income Tax Disclosure [Text Block]

15.       Income Taxes

The Company uses an estimated annual effective tax rate based upon a projection of its annual fiscal year results to measure the income tax benefit or expense recognized in each interim period. The Company’s effective tax rate, including the impact of discreet benefit items, was 38% and 40% for the three months ended June 30, 2012 and 2011, respectively, and 37% and 43% for the six months ended June 30, 2012 and 2011, respectively. The decrease in our effective tax rate in 2012 was primarily attributable to the use of a single sales factor for California state income tax apportionment.  The difference between the consolidated effective income tax rate and the U.S. federal statutory rate is primarily attributable to the effect of certain permanent differences and state income taxes.

During the first quarter of 2012, the Internal Revenue Service (“IRS”) completed its examination of the Company’s employment taxes for the 2010 and 2009 tax years and federal income tax returns for the 2009 and 2008 tax years.  In addition, during the fourth quarter of 2011, the IRS issued a Notice of Proposed Adjustments (“NOPA”) for the 2008 and 2009 tax years with proposed adjustments and no assessment.  The Company has agreed to the adjustments which have been approved by the IRS.  The adjustments did not have a material impact on the Company's consolidated financial statements.  The Company’s 2009 and 2008 tax years are currently under examination by the State of California Franchise Tax Board. The Company does not expect a material impact on its consolidated financial statements as a result of this examination.  The 2008 through 2011 tax periods remain open to examination by federal and most state tax authorities.  For the Company's foreign jurisdictions, the 2009 through 2011 tax years remain open to examination by their respective tax authorities.