Note 8 - Income Taxes

9 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Text Block]

8.     INCOME TAXES

The Company recorded a provision for income taxes amounting to $491,000 or 21% of income before income taxes for the three months ended March 31, 2012 compared to a provision of $817,000 or 37% of income before income taxes for the three months ended March 31, 2011.  The Company recorded a provision for income taxes amounting to $2,130,000 or 30% of income before income taxes for the nine months ended March 31, 2012 compared to a provision of $1,735,000 or 29% of income before income taxes for the nine months ended March 31, 2011.  The decline in the effective tax rate between the three months ended March 31, 2012 and March 31, 2011 is mainly due to the recognition of additional research and development tax credits and higher benefit from the domestic production activities realized upon the filing of the fiscal year 2011 tax returns.

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using the enacted rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.  A valuation allowance is provided against net deferred tax assets when it is not more likely than not that a tax benefit will be realized.  Income taxes include U.S. and foreign taxes.

As of March 31, 2012, as required by accounting guidance, the Company’s unrecognized tax benefits totaled $596,000.  Accrued interest and penalties at March 31, 2012 amounted to $206,000.  The Company recognizes accrued interest and penalties in income tax expense.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions.  In general, the Company’s filed income tax returns are no longer subject to examination by the respective taxing authorities for years ending before June 30, 2008.  However, to the extent utilized, the Company’s net operating loss carryforwards originating in closed years remain subject to examinations.