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Taxes | 12 Months Ended
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Dec. 31, 2011
Taxes [Abstract] |
Taxes | NOTE 16: Taxes Domestic income (loss) before taxes was income of $24,836,000 in 2011, income of $19,424,000 in 2010, and a loss of $5,555,000 in 2009. Foreign income (loss) before taxes was income of $62,281,000 in 2011, income of $56,679,000 in 2010, and a loss of $4,821,000 in 2009. The provision (benefit) for income taxes consisted of the following (in thousands):
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Current: |  |  |  |
Federal |  | $ | 6,711 |  |  | $ | 5,749 |  |  |  | $ (12,771 | )
State |  |  | 806 |  |  |  | 199 |  |  |  | (774 | )
Foreign |  |  | 10,519 |  |  |  | 7,740 |  |  |  | 1,053 |
|  |  | 18,036 |  |  |  | 13,688 |  |  |  | (12,492 | )
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (812 | ) |  |  | 901 |  |  |  | 6,434 |
State |  |  | 34 |  |  |  | 217 |  |  |  | 57 |
Foreign |  |  | (10 | ) |  |  | (84 | ) |  |  | 494 |
|  |  | (788 | ) |  |  | 1,034 |  |  |  | 6,985 |
|  | $ | 17,248 |  |  | $ | 14,722 |  |  |  | $ (5,507 | )
A reconciliation of the United States federal statutory corporate tax rate to the Company’s effective tax rate was as follows:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
Income tax provision (benefit) at federal statutory rate |  |  | 35 | % |  |  | 35 | % |  |  | (35 | )%
State income taxes, net of federal benefit |  |  | 1 |  |  |  | 1 |  |  |  | (2 | )
Foreign tax rate differential |  |  | (15 | ) |  |  | (15 | ) |  |  | 22 |
Tax credit |  |  | (1 | ) |  |  | (1 | ) |  |  | (3 | )
Discrete tax events |  |  | - |  |  |  | (1 | ) |  |  | (34 | )
Tax-exempt investment income |  |  | - |  |  |  | - |  |  |  | (5 | )
Other |  |  | - |  |  |  | - |  |  |  | 4 |
Income tax provision (benefit) |  |  | 20 | % |  |  | 19 | % |  |  | (53 | )%
The effective tax rate for 2011 included the impact of the following discrete events: (1) a decrease in tax expense of $808,000 from the expiration of the statutes of limitations for certain reserves for income taxes, (2) a decrease in tax expense of $155,000 from the finalization of the Advanced Pricing Agreement between Japan and Ireland, partially offset by, (3) an increase in tax expense of $574,000 from the final true-up of the prior year’s tax accrual upon filing the actual tax returns, and (4) an increase in tax expense of $201,000 from the write down of a noncurrent deferred tax asset based upon a change in the tax rate in Japan. The effective tax rate in 2011 was a provision of 20%, with or without these discrete events. Interest and penalties included in these amounts was a decrease to tax expense of $2,000. The effective tax rate for 2010 included the impact of the following discrete events: (1) a decrease in tax expense of $462,000 from the settlement of the Competent Authority case with Japan, (2) a decrease in tax expense of $151,000 from the final true-up of the prior year’s tax accrual upon filing the actual tax returns, (3) a decrease in tax expense of $124,000 from the receipt of a state refund, and (4) a decrease in tax expense of $105,000 from the expiration of the statutes of limitations for certain reserves for income taxes. These discrete events changed the effective tax rate in 2010 from a provision of 20% to a provision of 19%. Interest and penalties included in these amounts was a decrease to tax expense of $228,000. The effective tax rate for 2009 included the impact of the following discrete events: (1) a decrease in tax expense of $3,150,000 from the expiration of the statutes of limitations for certain reserves for income taxes, (2) a decrease in tax expense of $406,000 from the receipt of a state refund, (3) a decrease in tax expense of $51,000 from the final true-up of the prior year’s tax accrual upon filing the actual tax returns and other year-end adjustments, partially offset by (4) an increase in tax expense of $72,000 resulting from the write-off of certain foreign tax credits. These discrete events changed the effective tax rate in 2009 from a benefit of 19% to a benefit of 53%. Interest and penalties included in these amounts was a decrease to tax expense of $325,000. The changes in the reserve for income taxes, excluding interest and penalties, were as follows (in thousands):
Balance of reserve for income taxes as of December 31, 2009 |  | $ | 5,355 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in prior periods |  |  | 420 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in the current period |  |  | 606 |
Gross amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities |  |  | (2,122 | )
Gross amounts of decreases in unrecognized tax benefits as a result of the expiration of the applicable statutes of limitations |  |  | (78 | )
Balance of reserve for income taxes as of December 31, 2010 |  |  | 4,181 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in prior periods |  |  | 7 |
Gross amounts of increases in unrecognized tax benefits as a result of tax positions taken in the current period |  |  | 937 |
Gross amounts of decreases in unrecognized tax benefits relating to settlements with taxing authorities |  |  | (192 | )
Gross amounts of decreases in unrecognized tax benefits as a result of the expiration of the applicable statutes of limitations |  |  | (785 | )
Balance of reserve for income taxes as of December 31, 2011 |  | $ | 4,148 |
The Company’s reserve for income taxes, including gross interest and penalties, was $5,354,000 as of December 31, 2011, of which $558,000 was classified as current and $4,796,000 was classified as noncurrent, and $5,361,000 as of December 31, 2010. The amount of gross interest and penalties included in these balances was $1,206,000 and $1,180,000 as of December 31, 2011 and December 31, 2010, respectively. If the Company’s tax positions were sustained or the statutes of limitations related to certain positions expired, these reserves would be released and income tax expense would be reduced in a future period. As a result of the expiration of certain statutes of limitations, there is a potential that a portion of these reserves could be released, which would decrease income tax expense by approximately $300,000 to $500,000 over the next twelve months. The Company has defined its major tax jurisdictions as the United States, Ireland, and Japan, and within the United States, Massachusetts and California. The tax years 2007 through 2010 remain open to examination by various taxing authorities in the jurisdictions in which the Company operates. During the third quarter of 2010, the Company concluded its Competent Authority tax case with Japan. A settlement was finalized between Japan and Ireland as a transfer price adjustment and no finding of a permanent establishment against the Company in Japan was noted. The Company’s deposit of 766,257,300 Yen ($9,336,000) placed with Japan in 2007 was returned, plus interest. This deposit had been included in “Other assets” on the Consolidated Balance Sheets in prior periods. This Competent Authority agreement closed the Company’s tax years 2002 through 2005 to future examination in Japan. During the third quarter of 2011, the Company finalized an Advanced Pricing Agreement (APA) with Japan that will cover tax years 2006 through 2011, with a requested extension to 2012. The Company believes it is adequately reserved for these open years. Deferred tax assets consisted of the following (in thousands):
|  | December 31, |
|  | 2011 |  |  | 2010 |
Current deferred tax assets: |  |  |  |  |  |  |  |
Inventory and revenue related |  | $ | 5,202 |  |  | $ | 4,031 |
Bonuses, commissions, and other compensation |  |  | 1,273 |  |  |  | 1,029 |
Other |  |  | 1,283 |  |  |  | 1,242 |
Gross current deferred tax assets |  |  | 7,758 |  |  |  | 6,302 |
Valuation allowance |  |  | (878 | ) |  |  | - |
Net current deferred tax assets |  | $ | 6,880 |  |  | $ | 6,302 |
Noncurrent deferred tax assets: |  |  |  |  |  |  |  |
Federal and state tax credit carryforwards |  | $ | 12,274 |  |  | $ | 11,482 |
Stock-based compensation expense |  |  | 6,160 |  |  |  | 5,830 |
Depreciation |  |  | 1,798 |  |  |  | 1,950 |
Acquired completed technologies and other intangible assets |  |  | 1,519 |  |  |  | 1,870 |
Unrealized investment gains and losses |  |  | 891 |  |  |  | 934 |
Correlative tax relief and deferred interest related to reserves |  |  | 609 |  |  |  | 655 |
Capital loss carryforward |  |  | 373 |  |  |  | 373 |
Acquired in-process technology |  |  | 178 |  |  |  | 303 |
Other |  |  | 1,928 |  |  |  | 1,430 |
Gross noncurrent deferred tax assets |  |  | 25,730 |  |  |  | 24,827 |
Noncurrent deferred tax liabilities: |  |  |  |  |  |  |  |
Nondeductible intangible assets |  |  | (6,244 | ) |  |  | (7,543 | )
Other |  |  | (1,045 | ) |  |  | (1,356 | )
Gross noncurrent deferred tax liabilities |  |  | (7,289 | ) |  |  | (8,899 | )
Valuation allowance |  |  | (2,522 | ) |  |  | (373 | )
Net noncurrent deferred tax assets |  | $ | 15,919 |  |  | $ | 15,555 |
As of December 31, 2011, the Company had $2,200,000 of alternative minimum tax credits and $6,077,000 of foreign tax credits. The Company recorded a valuation allowance of $2,457,000 resulting from foreign tax credits generated in 2010 that were not considered to be realizable. The Company also recorded a valuation allowance of $570,000 for current-year state research and experimentation tax credits that were not considered to be realizable. These credits may be utilized in a future period, and the reserve associated with these credits will be reversed in the period when it is determined that the credits can be utilized to offset future federal and state income tax liabilities. The alternative minimum tax credits have an unlimited life and the foreign tax credits will expire between 2018 and 2021. In addition, the Company had $3,997,000 of state research and experimentation tax credit carryforwards as of December 31, 2011, which will begin to expire in 2015. If certain of the Company’s tax liabilities were paid, the Company would receive correlative tax relief in other jurisdictions. Accordingly, the Company has recognized a deferred tax asset in the amount of $609,000 as of December 31, 2011, which represents this correlative tax relief and deferred interest. The Company sold its lane departure warning business to Takata Holdings, Inc. in July 2008. A deferred tax asset was established for the tax effect of this capital loss on the books of the Company’s Irish subsidiary in the amount of $373,000. The Company recorded a valuation allowance of $373,000 to fully reserve this asset. The Company recorded certain intangible assets as a result of the acquisition of DVT Corporation in May 2005. The amortization of these intangible assets is not deductible for U.S. tax purposes. A deferred tax liability was established to reflect the federal and state liability associated with not deducting the acquisition-related amortization expenses. The balance of this liability was $6,244,000 as of December 31, 2011. While the deferred tax assets, net of valuation allowance, are not assured of realization, management has evaluated the realizability of these deferred tax assets and has determined that it is more likely than not that these assets will be realized. In reaching this conclusion, we have evaluated certain relevant criteria including the Company’s historical profitability, current projections of future profitability, and the lives of tax credits, net operating losses, and other carryforwards. Should the Company fail to generate sufficient pre-tax profits in future periods, we may be required to establish valuation allowances against these deferred tax assets, resulting in a charge to income in the period of determination. The Company does not provide U.S. income taxes on its foreign subsidiaries’ undistributed earnings, as they are deemed to be permanently reinvested outside the United States. Non-U.S. income taxes are, however, provided on those foreign subsidiaries’ undistributed earnings. Upon repatriation, the Company would provide the appropriate U.S. income taxes on these earnings, net of applicable foreign tax credits. It is not practicable to determine the income tax liability that might be incurred if the earnings were to be distributed. The Company recorded $2,003,000 of other income in 2009 upon the expiration of the statute of limitations relating to a tax holiday, during which time the Company collected value-added taxes from customers that were not required to be remitted to the government authority. This amount was included in “Other income” on the Consolidated Statements of Operations. Cash paid for income taxes totaled $18,389,000 in 2011, $8,019,000 in 2010, which includes a payment of $2,526,000 to conclude the Japan Competent Authority case, and $2,242,000 in 2009.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 + Details
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