Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Taxes [Abstract]

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes attributable to income from operations includes the following (in thousands):

	For the Years Ended December 31,
	2013		2012		2011
Current provision
Federal	$	1,219	$	4,362	$	3,426
State		264		829		621
Total current		1,483		5,191		4,047
Deferred provision (benefit)
Federal		133		1,881		(718	)
State		62		158		(91	)
Total deferred		195		2,039		(809	)
Total provision	$	1,678	$	7,230	$	3,238

Reconciliation of Effective Tax Rate

The provision for income taxes related to operations varies from the amount determined by applying the federal income tax statutory rate to the income or loss before income taxes, exclusive of net income attributable to non-controlling interest. The reconciliation of these differences is as follows:

	For the Years Ended December 31,
	2013			2012			2011
Computed expected income tax provision		35.0	%		35.0	%		35.0	%
State income taxes, net of federal income tax benefit		(17.3	)		3.6			3.5
Change in valuation allowance for deferred tax assets		(0.3	)		(1.3	)		(1.4	)
Cumulative deferred adjustments		(16.9	)		----			----
Provision to return adjustments		(11.5	)		----			----
Other permanent differences		(15.4	)		(0.1	)		1.0
Dividend and accretion on preferred stock		(146.0	)		10.7			34.1
FIN 48 liability		(5.9	)		0.6			(1.6	)
R&D credit		----			----			(1.8	)
Other		----			0.8			0.2
		(178.3	)%		49.3	%		69.0	%

Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2013 and 2012 are as follows (in thousands):

	December 31,
	2013			2012
Deferred tax assets:
Accounts receivable, principally due to allowance for doubtful accounts	$	124		$	123
Allowance for inventory obsolescence and amortization		356			628
Accrued liabilities not currently deductible		2,071			2,071
Accrued compensation		527			686
Amortization and depreciation		2,442			2,149
Telos ID basis difference		150			81
Net operating loss carryforwards - state		213			446
Total gross deferred tax assets		5,883			6,184
Less valuation allowance		(1,901	)		(2,084	)
Total deferred tax assets, net of valuation allowance		3,982			4,100
Deferred tax liabilities:
Unbilled accounts receivable, deferred for tax purposes		(1,413	)		(1,373	)
Section 481(a) adjustment - inventory		----			(221	)
Goodwill basis adjustment and amortization		(2,763	)		(2,505	)
Total deferred tax liabilities		(4,176	)		(4,099	)
Net deferred tax assets	$	(194	)	$	1

Components of Valuation Allowance

The components of the valuation allowance are as follows (in thousands):

	Balance Beginning of Period		Additions		Deductions		Balance End of Period
December 31, 2013	$	2,084	$	----	$	183	$	1,901
December 31, 2012	$	2,281	$	----	$	197	$	2,084
December 31, 2011	$	2,348	$	----	$	67	$	2,281

Unrecognized Tax Benefits Roll Forward

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2013		2012		2011
Unrecognized tax benefits, beginning of period	$	534	$	400	$	501
Gross increases—tax positions in prior period		55		34		20
Gross increases—tax positions in current period		18		100		90
Settlements		----		----		(211	)
Unrecognized tax benefits, end of period	$	607	$	534	$	400