XML 90 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2012
Income Taxes | 14. Income Taxes Income Tax Expense The components of the Company’s income before income taxes and our provision for (benefit from) income taxes consist of the following:
|  | Year ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Income (loss) before income taxes |  |  |  |  |  |  |  |  |
Domestic |  | $ | 26,170,313 |  |  | $ | 15,962,992 |  |  | $ | 11,944,795 |
Foreign |  |  | (6,642,892 | ) |  |  | (2,177,978 | ) |  |  | (4,601,729 | )
|  | $ | 19,527,421 |  |  | $ | 13,785,014 |  |  | $ | 7,343,066 |
|  | Year ended December 31, |
|  |  | 2012 |  |  |  | 2011 |  |  |  | 2010 |
Provision for (benefit from) income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 7,594,287 |  |  | $ | 3,327,626 |  |  | $ | 1,063,841 |
State |  |  | 885,958 |  |  |  | 155,855 |  |  |  | (6,920 | )
Foreign |  |  | (188,650 | ) |  |  | 90,626 |  |  |  | - |
|  |  | 8,291,595 |  |  |  | 3,574,107 |  |  |  | 1,056,921 |
Deferred provision: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 776,486 |  |  |  | 1,907,408 |  |  |  | 2,828,029 |
State |  |  | 602,447 |  |  |  | 570,869 |  |  |  | 479,529 |
Foreign |  |  | (1,900,567 | ) |  |  | (734,050 | ) |  |  | (1,337,408 | )
|  |  | (521,634 | ) |  |  | 1,744,227 |  |  |  | 1,970,150 |
Total provision |  | $ | 7,769,961 |  |  | $ | 5,318,334 |  |  | $ | 3,027,071 |
Deferred Tax Assets and Liabilities Significant components of the Company’s deferred tax assets and liabilities consist of the following:
|  | December 31, |
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |
Deferred revenue |  | $ | 1,988,509 |  |  | $ | 2,072,931 |
Stock-based compensation expense |  |  | 1,584,583 |  |  |  | 1,496,910 |
Tax credit carry forward |  |  | 194,364 |  |  |  | 695,914 |
Net operating loss carryforward, foreign |  |  | 2,520,746 |  |  |  | 1,839,924 |
Accrued expenses and other |  |  | 954,559 |  |  |  | 825,884 |
Inventory reserve |  |  | 405,302 |  |  |  | 417,726 |
Deferred tax asset |  | $ | 7,648,063 |  |  | $ | 7,349,289 |
|  | December 31, |
|  |  | 2012 |  |  |  | 2011 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Intangibles related to Srl acquisition |  | $ | (6,482,404 | ) |  | $ | (7,594,729 | )
Depreciation |  |  | (6,131,473 | ) |  |  | (5,210,775 | )
Deferred tax liability |  | $ | (12,613,877 | ) |  | $ | (12,805,504 | )
Tax Rate The reconciliation between the U.S. federal statutory rate and our effective rate is summarized as follows:
| Year ended December 31, |
| 2012 |  | 2011 |  | 2010
Statutory federal income tax rate | 35.0 | % |  | 34.0 | % |  | 34.0 | %
State tax expense, net of federal benefit | 6.4 | % |  | 5.7 | % |  | 7.8 | %
Permanent items, including nondeductible expenses | 0.9 | % |  | 0.9 | % |  | 2.2 | %
State investment tax credit | (0.2 | )% |  | (0.2 | )% |  | (0.8 | )%
Federal, state and foreign research and development credits | (1.2 | )% |  | (0.4 | )% |  | (2.5 | )%
Foreign rate differential | 2.5 | % |  | 0.9 | % |  | 2.6 | %
Domestic production deduction | (3.6 | )% |  | (2.3 | )% |  | (2.1 | )%
Effective income tax rate | 39.8 | % |  | 38.6 | % |  | 41.2 | %
As of December 31, 2012, the Company had net operating losses (“NOL”) for federal income tax purposes in Italy of $9,144,154 with no expiration date. For Massachusetts state income tax purposes, the Company also had an investment tax credit carry-forward of $298,769 expiring through 2021. In connection with the preparation of the financial statements, the Company performed an analysis to ascertain if it was more likely than not that it would be able to utilize, in future periods, the net deferred tax assets associated with its NOL carry-forward and its investment tax credit carry-forward. We have concluded that the positive evidence outweighs the negative evidence and, thus, that those deferred tax assets not otherwise subject to a valuation allowance are realizable on a “more likely than not” basis. As such, we have not recorded a valuation allowance at December 31, 2012, and 2011, respectively. Accounting for Uncertainty in Income Taxes A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:
|  | Year ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Unrecognized tax benefit, beginning of year |  | $ | 56,170 |  |  | $ | 37,428 |  |  | $ | 40,900 |
Tax positions related to current year |  |  | - |  |  |  | 38,329 |  |  |  | - |
Tax positions related to prior years |  |  | 38,329 |  |  |  | (19,587 | ) |  |  | 37,427 |
Settlements |  |  | - |  |  |  | - |  |  |  | (3,089 | )
Statute expirations |  |  | (38,329 | ) |  |  | - |  |  |  | (37,810 | )
Unrecognized tax benefit, end of year |  | $ | 56,170 |  |  | $ | 56,170 |  |  | $ | 37,428 |
In the normal course of business, Anika and its subsidiaries may be periodically examined by various taxing authorities. We file income tax returns in the U.S. federal jurisdiction, in certain U.S. states, and in Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. The 2009 through 2012 tax years remain subject to examination by the IRS and other taxing authorities for U.S. federal and state tax purposes. The 2009 through 2012 tax years remain subject to examination by the appropriate governmental authorities for Italy. We do not anticipate experiencing any significant increases or decreases in our unrecognized tax benefits within the twelve months following December 31, 2012. We incurred expenses related to stock-based compensation in 2012, 2011 and 2010 of $1,151,199, $1,190,697, and $1,102,617, respectively. Accounting for the tax effects of certain stock-based awards requires that we establish a deferred tax asset as the compensation expense is recognized for financial reporting prior to recognizing the related tax deduction upon exercise of the awards. The tax benefit recognized in the consolidated statement of operations related to stock-based compensation totaled $285,068, $219,626, and $244,746 in 2012, 2011 and 2010, respectively. Upon the settlement of the certain stock-based awards (i.e., exercise, vesting, forfeiture or cancellation), the actual tax deduction is compared with the cumulative financial reporting compensation cost and any excess tax deduction related to these awards is considered a windfall tax benefit, and is tracked in a "windfall tax benefit pool" to offset any future tax deduction shortfalls and will be recorded as increases to additional paid-in capital in the period when the tax deduction reduces income taxes payable. We follow the with-and-without approach for the direct effects of windfall/shortfall items and to determine the timing of the recognition of any related benefits. We recorded a net windfall of approximately $452,000 and $274,000 in 2012 and 2011, respectively and a net shortfall of approximately $21,000 in 2010.

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