Note 8 - Income Taxes

3 Months Ended

Dec. 31, 2012

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. The valuation allowance will be retained until there is sufficient positive evidence to conclude that it is more likely than not that the tax benefits associated with the deferred tax asset, or some portion of them, will be realized. In the consolidated balance sheet, the Company classifies its deferred tax assets and liabilities as either current or non-current, according to the expected reversal date of the temporary differences as of the reporting date.

As of December 31, 2012, 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 $0.6 million for the first quarter of fiscal 2013 and $0.4 million for the first quarter of fiscal 2012.  The Company recognized $0.4 million in Hungarian federal income tax, as our utilization of tax loss carryforwards is limited to only 50% of taxable income in fiscal 2013 and beyond. An expense of $0.2 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 2012, the Company recognized a $0.3 million expense as we adjusted our Hungarian effective tax rate to reflect a change to tax law. An additional $0.1 million was incurred related to the local Hungarian municipality tax and $0.1 million was recorded related to U.S. 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.