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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes | Note 13. Income Taxes Consolidated income before provision for income taxes includes non-U.S. income of approximately $16.3 million, $22.0 million and $14.5 million for the years ended December 31, 2012, 2011 and 2010, respectively. We recorded a current tax provision of $853,000, $2.8 million and $2.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. The components of the provision (benefit) for income taxes are summarized below (in thousands):
| Years Ended December 31, |
| 2012 | 2011 | 2010 |
Current: |  |  |  |
Federal | $ — | $ — | $ —
State | (113) | 259 | 130
Foreign | 966 | 2,536 | 2,193
Total current | 853 | 2,795 | 2,323
Deferred: |  |  |
Federal | — | — | —
State | — | — | —
Total deferred | — | — | —
Total net provision for income taxes | $ 853 | $2,795 | $2,323
A reconciliation of the effective income tax rates and the U.S. statutory federal income tax rate is summarized below:
| Years Ended December 31,
| 2012 | 2011 | 2010
Statutory federal income tax rate | 35.0% | 35.0% | 35.0%
State income taxes, net of federal tax benefits | (1.0) | 0.6 | 0.4
Change in valuation allowance | 23.3 | (11.5) | (13.3)
Stock compensation | 1.5 | 0.3 | (0.4)
Foreign rate differences | (72.5) | (17.1) | (12.3)
Dividend from PRC investee | 30.1 | 3.2 | —
Net loss from privately-held PRC investments | (2.6) | (0.7) | (0.4)
Other | (1.6) | — | 1.2
Effective tax rate | 12.2% | 9.8% | 10.2%
Deferred tax assets and liabilities are summarized below (in thousands):
| As of December 31,
| 2012 | 2011
Deferred tax assets: |  |
Net operating loss | $ 44,155 | $ 43,583
Accruals and reserves not yet deductible | 5,389 | 4,494
Credits | 1,488 | 1,488
| 51,032 | 49,565
Deferred tax liabilities: |  |
Unrepatriated foreign earnings | — | —
| — | —
Net deferred tax assets | 51,032 | 49,565
Valuation allowance | (51,032) | (49,565)
Net deferred tax assets | $ — | $ —
As of December 31, 2012, we have federal and state net operating loss carryforwards of approximately $131.8 million and $42.2 million, respectively, which will expire beginning in 2022 and 2017, respectively. In addition, we have federal tax credit carryforwards of approximately $1.5 million, which will expire beginning in 2019. The deferred tax assets valuation allowance as of December 31, 2012 is attributed to U.S. federal, and state deferred tax assets, which result primarily from future deductible accruals, reserves, net operating loss carryforwards, and tax credit carryforwards. We believe that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded. These factors include our history of losses, related to domestic operations and the lack of carryback capacity to realize deferred tax assets. The valuation allowance increased by $1.5 million and decreased by $3.5 million for the years ended December 31, 2012 and 2011, respectively. Our consolidated subsidiaries in China have enjoyed various tax holidays since 2000. Benefits under the tax holidays vary by jurisdiction. In accordance with Section 382 of the Internal Revenue Code, the amounts of and benefits from net operating loss and tax credit carryforwards may be impaired or limited in certain circumstances. Events which cause limitations in the amount of net operating losses or credits that we may utilize in any one year include, but are not limited to, a cumulative ownership change of more that 50% as defined, over a three year period. As a result of the implementation of Interpretation 48, we recognized $16.4 million of liability for unrecognized tax benefits. Of this amount, none was accounted for as a reduction to the January 1, 2007 balance of retained earnings. The amount decreased tax loss carryforwards in the U.S., which are fully offset by a valuation allowance. We recognize interest and penalties related to uncertain tax positions in income tax expense. Income tax expense for the year ended December 31, 2012 includes no interest and penalties. As of December 31, 2012, we have no accrued interest and penalties related to uncertain tax positions. We file income tax returns in the U.S. federal, various states and foreign jurisdictions. We have substantially concluded all U.S. federal and state income tax matters through December 31, 2011. Deferred tax liabilities have not been recognized for $43.5 million of undistributed earnings of our foreign subsidiaries at December 31, 2012. We have made no provision for U.S. income taxes on undistributed earnings of certain foreign subsidiaries because it is our intention to permanently reinvest such earnings in its foreign subsidiaries. If such earnings were distributed, we would be subject to additional U.S. income tax expense. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. A reconciliation of the beginning and ending amount of the gross unrecognized tax benefits is as follows (in thousands):
Gross unrecognized tax benefits balance as of December 31, 2011 | $16,403
Add: |
Additions based on tax positions related to the current year | —
Additions for tax positions of prior years | —
Gross unrecognized tax benefits balance as of December 31, 2012 | $16,403
Excluding the effects of recorded valuation allowances for deferred tax assets, $16.4 million of the unrecognized tax benefit would favorably impact the effective tax rate in future periods if recognized.

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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 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 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: 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 6: 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 7: 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 8: 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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