Note 7. INCOME TAXES

9 Months Ended

Sep. 30, 2011

Income Tax Disclosure [Text Block]

Note 7.  INCOME TAXES

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions.  The Company and its subsidiaries are generally no longer subject to U.S. federal, state and local examinations by tax authorities for years before 2006.

As of September 30, 2011 and December 31, 2010, the Company had deferred tax assets, net of deferred tax liabilities, of $78.2 million.  Domestic net operating loss (“NOL”) carry forwards comprised $53.9 million of the deferred tax assets for both periods.  The Company’s history of operating losses in many of its taxing jurisdictions provides significant negative evidence with respect to its ability to generate future taxable income.  As a result, valuation allowances have been recorded as of such dates for the full amount of deferred tax assets, net of the amount of deferred tax liabilities.

Accounting for Uncertainty in Income Taxes

Included in the balances at each of September 30, 2011 and December 31, 2010 are $0.1 million and $0.4 million, respectively, of liabilities for unrecognized tax benefits.  Because of the impact of deferred tax accounting, other than interest and penalties, the recognition of these liabilities would not affect the annual effective tax rate.  The income tax benefit for the nine months ended September 30, 2011 and October 1, 2010 primarily reflects current tax benefit for the recognition of uncertain tax positions of $0.3 million and $0.5 million, respectively, due to the expiration of certain statutes of limitations.   The Company anticipates reductions to the total amount of unrecognized tax benefits of an additional $0.1 million within the next twelve months due to expiring statutes of limitations.

The Company recognizes interest and penalties accrued related to the unrecognized tax benefits in the income tax provision.  The Company had approximately $23,000 and $0.1 million of interest and penalties accrued at each of September 30, 2011 and December 31, 2010, respectively.