v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Tax Disclosure [Abstract] |
Income Taxes |
NOTE 10. | Income Taxes
The Company’s geographical breakdown of income before provision for income taxes is as follows:
|  | Year Ended December 31,
|  | 2013 |  | 2012 |  | 2011
|  | (in thousands)
Domestic |  | $ | 947 |  |  | $ | 1,656 |  |  | $ | 1,593 |
Foreign |  | 1,177 |  |  | 982 |  |  | 777 |
Income before provision for income taxes |  | $ | 2,124 |  |  | $ | 2,638 |  |  | $ | 2,370 |
The provision for income taxes consists of the following:
|  | Year Ended December 31,
|  | 2013 |  | 2012 |  | 2011
|  | (in thousands)
Current |  |  |  |  |  |
Federal |  | $ | (40 | ) |  | $ | (18 | ) |  | $ | 45 |
State |  | 154 |  |  | 202 |  |  | 112 |
Foreign |  | 452 |  |  | 147 |  |  | 259 |
Total current provision |  | 566 |  |  | 331 |  |  | 416 |
Deferred |  |  |  |  |  |
Federal |  | $ | 6 |  |  | $ | 27 |  |  | $ | — |
State |  | — |  |  | — |  |  | — |
Foreign |  | (72 | ) |  | — |  |  | — |
Total deferred provision (benefit) |  | (66 | ) |  | 27 |  |  | — |
Total provision for income taxes |  | $ | 500 |  |  | $ | 358 |  |  | $ | 416 |
The reconciliation of the statutory federal income tax rate of 34.0% to the Company’s effective tax rate is as follows:
|  | Year Ended December 31,
|  | 2013 |  | 2012 |  | 2011
Federal statutory rate |  | 34.0 | % |  | 34.0 | % |  | 34.0 | %
State taxes |  | 4.9 |  |  | 5.4 |  |  | 3.5 |
Stock-based compensation |  | 8.7 |  |  | 22.4 |  |  | 19.4 |
Foreign source income |  | 0.5 |  |  | (4.1 | ) |  | 1.4 |
Change in valuation allowance |  | (27.3 | ) |  | (46.9 | ) |  | (44.0 | )
Other |  | 2.7 |  |  | 2.8 |  |  | 3.3 |
Provision for income taxes |  | 23.5 | % |  | 13.6 | % |  | 17.6 | %
Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities are as follows:
|  | December 31,
|  | 2013 |  | 2012
|  | (in thousands)
Deferred tax assets |  |  |  |
Net operating loss carryforwards |  | $ | 18,894 |  |  | $ | 19,658 |
Research and development credit carryforwards |  | 5,189 |  |  | 4,055 |
Accrued liabilities |  | 581 |  |  | 535 |
Deferred revenues |  | 3,188 |  |  | 3,085 |
Deferred rent |  | 210 |  |  | 153 |
Intangible assets |  | 440 |  |  | 385 |
Stock-based compensation |  | 1,714 |  |  | 843 |
Foreign |  | — |  |  | 4 |
Other |  | 521 |  |  | 403 |
Gross deferred tax assets |  | 30,737 |  |  | 29,121 |
Valuation allowance |  | (27,181 | ) |  | (26,257 | )
Net deferred tax assets |  | 3,556 |  |  | 2,864 |
Deferred tax liabilities |  |  |  |
Fixed assets |  | (3,484 | ) |  | (2,854 | )
Intangible assets |  | (34 | ) |  | (27 | )
Total deferred tax liabilities |  | (3,518 | ) |  | (2,881 | )
Net deferred tax assets (liabilities) |  | $ | 38 |  |  | $ | (17 | )
Current and non-current deferred tax assets and liabilities included in the consolidated balance sheets are recorded as follows:
|  | December 31,
|  | 2013 |  | 2012
|  | (in thousands)
Current deferred tax assets |  | $ | 113 |  |  | $ | 106 |
Current deferred tax liabilities |  | — |  |  | — |
Noncurrent deferred tax assets |  | 72 |  |  | — |
Noncurrent deferred tax liabilities |  | (147 | ) |  | (123 | )
Net deferred tax assets (liabilities) |  | $ | 38 |  |  | $ | (17 | )
Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. As of December 31, 2013, we have provided a valuation allowance for our deferred tax assets that we believe are not more likely than not realizable. The valuation allowance increased by $0.9 million for 2013 and decreased by $0.5 million for 2012. At December 31, 2013, the Company had federal and state net operating loss carryforwards of approximately $51.4 million and $21.9 million respectively, available to reduce federal and state taxable income. The Company’s federal net operating losses expire in the years 2021 to 2033, and its state net operating losses expire from 2014 to 2033. Utilization of the Company’s net operating loss carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration of the net operating loss carryforwards before utilization. As of December 31, 2013, the Company had federal and state research and development credits of $4.3 million and $4.6 million, respectively. Federal research and development credits expire in the years 2022 to 2033. State research and development credits do not expire. U.S. income taxes were not provided on undistributed earnings from investments in non-U.S. subsidiaries as the Company intends to continue to reinvest the earnings of these foreign subsidiaries indefinitely. The Company’s share of undistributed earnings of foreign subsidiaries that could be subject to additional U.S. income tax if remitted was approximately $8.5 million and $8.2 million as of December 31, 2013 and 2012, respectively. Determination of the amount of unrecognized deferred tax liability for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable. The evaluation of a tax position is a two-step process. The first step requires the Company to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires the Company to recognize in the financial statement each tax position that meets the more likely than not criteria, measured at the amount of benefit that has a greater than fifty percent likelihood of being realized. A reconciliation of the Company’s unrecognized tax benefits is as follows:
|  | Year Ended December 31,
|  | 2013 |  | 2012 |  | 2011
|  | (in thousands)
Unrecognized tax benefits beginning balance |  | $ | 2,647 |  |  | $ | 2,792 |  |  | $ | 2,648 |
Gross increase for tax positions of prior years |  | 241 |  |  | — |  |  | 87 |
Gross decrease for tax positions of prior years |  | — |  |  | (46 | ) |  | (120 | )
Gross increase for tax positions of current year |  | 446 |  |  | 140 |  |  | 242 |
Settlements |  | — |  |  | (106 | ) |  | — |
Lapse of statute of limitations |  | (79 | ) |  | (133 | ) |  | (65 | )
Total unrecognized tax benefits |  | $ | 3,255 |  |  | $ | 2,647 |  |  | $ | 2,792 |
The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $1.0 million, $1.0 million and $1.2 million as of December 31, 2013, 2012 and 2011, respectively. The Company has elected to include interest and penalties as a component of income tax expense. The amounts were not material for 2013, 2012 and 2011. The Company files income tax returns in the United States, including various state jurisdictions. The Company’s subsidiaries file tax returns in various foreign jurisdictions. The tax years 2008 to 2013 remain open to examination by the major taxing jurisdictions in which the Company is subject to tax, with the exception of France which remains open to examination for the 2011 through 2013 tax years only. As of December 31, 2013, the Company was not under examination by the Internal Revenue Service or any state tax jurisdictions. On January 2, 2013, the American Taxpayer Relief Act of 2012 (H.R. 8) was signed into law which retroactively extends the federal research and development credit from January 1, 2012 through December 31, 2013.

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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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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=26873400&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: 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 5: 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 6: 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 + Details
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