Note 8 - Income Taxes

3 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Text Block]

8.  INCOME TAXES

The Company currently has net operating loss carryforwards available to offset future tax liabilities. The Company has recorded a full valuation allowance against its deferred tax assets in Hungary, the United States and Mexico because it is more likely than not that the value of the deferred tax assets will not be realized. In the consolidated balance sheets, the Company classifies its deferred tax assets and liabilities as either current or non-current based on the classification of the related liability or asset for financial reporting. A deferred tax asset or liability that is not related to an asset or liability for financial reporting, including deferred taxes related to loss carryforwards, is classified according to the expected reversal date of the temporary differences as of the reporting date.

As of December 31, 2011, we had uncertain tax positions  which may change as a result of the outcomes of audits. The Company tracks uncertain tax positions under the guidance of ASC 740-10.

Income tax expense was $0.4 million for the first quarter of fiscal 2012 compared to an expense of $0.3 million for the first quarter of fiscal 2011.  An expense of $0.4 million was incurred related to the local Hungarian municipality tax and less than $0.1 million was recorded related to U.S. and Mexico minimum tax payments.  During the first quarter of fiscal 2011, the Company recognized a $0.3 million expense as we adjusted our Hungarian effective tax rate to reflect a change to tax law which made a flat 10% corporate rate effective for fiscal years beginning after January 1, 2013. An additional $0.1 million was incurred related to the local Hungarian municipality tax and $0.1 million was recorded related to US and Mexico minimum tax payments.  A tax benefit of approximately $0.2 million was recorded related to an increase in the Hungarian subsidiary’s deferred tax position.