XML 29 R18.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2011
Income Taxes | 10. Income Taxes Components of our income (loss) from continuing operations are as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (In thousands) |
Income (loss) from continuing operations before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  | $ | (871 | ) |  | $ | 1,302 |  |  | $ | 2,609 |
U.S. |  |  | 15,928 |  |  |  | (6,813 | ) |  |  | (75,798 | )
Other |  |  | 17,000 |  |  |  | 15,611 |  |  |  | 1,279 |
Total |  | $ | 32,057 |  |  | $ | 10,100 |  |  | $ | (71,910 | )
Components of the Company’s income tax provision (benefit) are as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (In thousands) |
Current |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  | $ | — |  |  | $ | 629 |  |  | $ | 81 |
U.S. |  |  | 1,358 |  |  |  | 1,781 |  |  |  | (2,712 | )
Other |  |  | 1,620 |  |  |  | 3,192 |  |  |  | 623 |
|  |  | 2,978 |  |  |  | 5,602 |  |  |  | (2,008 | )
Deferred |  |  |  |  |  |  |  |  |  |  |  |
Canadian |  |  | — |  |  |  | (40 | ) |  |  | 3,691 |
U.S. |  |  | (743 | ) |  |  | 4,946 |  |  |  | (2,565 | )
Other |  |  | 821 |  |  |  | 231 |  |  |  | 109 |
|  |  | 78 |  |  |  | 5,137 |  |  |  | 1,235 |
Income tax provision (benefit) |  | $ | 3,056 |  |  | $ | 10,739 |  |  | $ | (773 | )
The Company is incorporated in Canada and therefore uses the Canadian statutory rate. The reconciliation of the statutory Canadian income tax rate related to income from continuing operations before income taxes to the effective rate is as follows:
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (In thousands, except percentages) |
Statutory Canadian tax rate |  |  | 27.0 | % |  |  | 28.0 | % |  |  | 31.5 | %
Expected income tax provision (benefit) |  | $ | 8,655 |  |  | $ | 2,828 |  |  | $ | (22,652 | )
Permanent differences |  |  | 187 |  |  |  | 9,606 |  |  |  | 1,288 |
International tax rate differences |  |  | 1,313 |  |  |  | (863 | ) |  |  | (2,858 | )
Change in valuation allowance |  |  | (9,814 | ) |  |  | (3,778 | ) |  |  | 22,480 |
Prior year provision to return differences |  |  | 1,115 |  |  |  | 832 |  |  |  | (271 | )
NOL expirations |  |  | — |  |  |  | 877 |  |  |  | 2,653 |
Statutory tax rate change |  |  | 516 |  |  |  | 371 |  |  |  | (41 | )
Uncertain tax positions |  |  | 1,332 |  |  |  | 972 |  |  |  | 732 |
Tax credits |  |  | (416 | ) |  |  | (197 | ) |  |  | (193 | )
State income tax, net |  |  | 577 |  |  |  | 520 |  |  |  | (1,736 | )
Amended returns and prior filings |  |  | (268 | ) |  |  | (318 | ) |  |  | (762 | )
Other |  |  | (141 | ) |  |  | (111 | ) |  |  | 587 |
Reported income tax provision (benefit) |  | $ | 3,056 |  |  | $ | 10,739 |  |  | $ | (773 | )
Effective tax rate |  |  | 9.5 | % |  |  | 106.3 | % |  |  | (1.1 | )%
Deferred income taxes result principally from temporary differences in the recognition of certain revenue and expense items and operating loss carryforwards and credit carryforwards for financial and tax reporting purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2011 and 2010 are as follows:
|  | 2011 |  |  | 2010 |
|  | (In thousands) |
Deferred tax assets |  |  |  |  |  |  |  |
Losses & IRC Section 163(j) carryforwards |  | $ | 17,892 |  |  | $ | 27,546 |
Compensation related deductions |  |  | 3,533 |  |  |  | 2,271 |
Tax credits |  |  | 6,395 |  |  |  | 5,958 |
Restructuring related liabilities |  |  | 581 |  |  |  | 508 |
Deferred revenue |  |  | 263 |  |  |  | 128 |
Transaction costs |  |  | — |  |  |  | 1,792 |
Inventory |  |  | 7,088 |  |  |  | 6,172 |
Depreciation |  |  | 208 |  |  |  | 439 |
Amortization |  |  | 32 |  |  |  | 3,675 |
Warranty |  |  | 761 |  |  |  | 819 |
Other |  |  | 1,231 |  |  |  | 1,105 |
Total deferred tax assets |  |  | 37,984 |  |  |  | 50,413 |
Valuation allowance for deferred tax assets |  |  | (20,357 | ) |  |  | (29,663 | )
Net deferred income tax assets |  | $ | 17,627 |  |  | $ | 20,750 |
Deferred tax liabilities |  |  |  |  |  |  |  |
Equity investment |  | $ | (699 | ) |  | $ | — |
Depreciation |  |  | (3,277 | ) |  |  | (3,248 | )
Amortization |  |  | (15,542 | ) |  |  | (19,884 | )
Other |  |  | (822 | ) |  |  | (320 | )
Total deferred tax liabilities |  | $ | (20,340 | ) |  | $ | (23,452 | )
Net deferred income tax asset (liability) |  | $ | (2,713 | ) |  | $ | (2,702 | )
In determining its fiscal 2011, 2010, and 2009 tax provisions, the Company calculated deferred tax assets and liabilities for each separate jurisdiction. Management then considered a number of factors, including positive and negative evidence related to the realization of its deferred tax assets to determine whether a valuation allowance should be recognized with respect to its deferred assets. The Company has recorded valuation allowances on its deferred tax assets in jurisdictions where it is more likely than not that the deferred tax assets will not be realized. The Company has considered forecasted earnings, the mix of earnings in the jurisdictions in which the Company operates, and prudent and feasible tax planning strategies in determining the need for valuation allowances. In the United States, Canada, and the United Kingdom, the Company determined that it is more likely than not that it will not realize certain of its deferred tax assets. The Company has provided valuation allowances in the amount of $20.4 million and $29.7 million at December 31, 2011 and December 31, 2010, respectively. The change in valuation allowance is due to changes in the Company’s net deferred tax asset position in various jurisdictions. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company continuously reassesses the possibility of releasing the valuation allowance currently in place on its deferred tax assets. It is reasonably possible that a significant portion of the valuation allowance will be released within the next twelve months. Such a release will be reported as a reduction to income tax expense with no impact on cash flows in the quarter in which it is released. At December 31, 2011, the Company has loss carryforwards of $17.9 million (tax effected) available to reduce future years’ income for tax purposes. Of this amount, approximately $14.6 million relates to the United States and expires through 2032; $0.4 million relates to Canada and expires starting in 2015; $2.7 million relates to the United Kingdom and can be carried forward indefinitely; and the remaining $0.2 million relates to various foreign jurisdictions. At December 31, 2011, the Company had tax credits of approximately $6.4 million available to reduce future years’ income taxes. Of this amount, approximately $4.0 million relates to the United States and expires through 2031 and $2.4 million relates to Canada of which $1.6 million expires between 2020 and 2022 and $0.8 million can be carried forward indefinitely. As of December 31, 2011, the amount of non-Canadian earnings that are expected to remain indefinitely reinvested in the business as defined in the provisions of ASC 740, “Income Taxes”, and for which we have not provided any tax costs of repatriation, is $13.6 million. In general, the determination of the amount of the unrecognized deferred tax liability related to the reinvested earnings is not practical because of the complexities associated with its hypothetical calculation. As of December 31, 2010, the Company’s total amount of gross unrecognized tax benefits was $5.1 million all of which would favorably affect its effective tax rate, if recognized. As of December 31, 2011, the amount of gross unrecognized tax benefits totaled approximately $7.3 million all of which would favorably affect the Company’s effective tax rate, if recognized. The Company is currently under examination in the United States for tax years from 2000 to 2008. It is reasonably possible that the U.S. examination for the periods from 2000 to 2008 will be completed during the next 12 months, which might result in a decrease of approximately $0 to $3.6 million in the Company’s balance of unrecognized tax benefits as a result of a settlement. The Company believes that there are no other jurisdictions in which the outcome of unresolved issues or claims is likely to be material to its results of operations, financial position or cash flows. Furthermore, the Company believes that it has adequately provided for all income tax uncertainties. The reconciliation of the total amounts of unrecognized tax benefits is as follows (in thousands):
Balance at December 31, 2008 |  | $ | 4,656 |
Additions based on tax positions related to the current year |  |  | 677 |
Balance at December 31, 2009 |  |  | 5,333 |
Additions based on tax positions related to the current year |  |  | 241 |
Additions for tax positions of prior years |  |  | (36 | )
Reductions for tax positions of prior years |  |  | (450 | )
Balance at December 31, 2010 |  |  | 5,088 |
Additions based on tax positions related to the current year |  |  | 2,318 |
Additions for tax positions of prior years |  |  | 55 |
Reductions to tax positions resulting from a lapse of the applicable statute of limitations |  |  | (177 | )
Balance at December 31, 2011 |  | $ | 7,284 |
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2011 and 2010, the Company had approximately $1.2 million and $1.6 million, respectively, of accrued interest and penalties related to uncertain tax positions. During the years ended December 31, 2010 and 2009, the Company recognized approximately $0.8 million and $0.2 million, respectively, of interest and penalties related to uncertain tax positions. During the year ended December 31, 2011, the Company recognized approximately $0.2 million in interest related to uncertain tax positions and recognized a $0.5 million benefit from lower penalties related to uncertain tax positions. The Company files income tax returns in Canada and the U.S., various states, and foreign jurisdictions. Generally, the Company is no longer subject to U.S. federal, state or local, or foreign income tax examinations by tax authorities for the years before 2000. Currently, the Company is under examination in the United States for tax years 2000 through 2008. The Company’s income tax returns may be reviewed in the following countries for the following periods under the appropriate statute of limitations:
United States |  |  | 2000 - Present |
Canada |  |  | 2005 - Present |
United Kingdom |  |  | 2008 - Present |
China |  |  | 2008 - Present |
Japan |  |  | 2007 - Present |
Germany |  |  | 2006 - Present

X
- 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration