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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2012
INCOME TAXES [Abstract] |
Components of Company's income (loss) before income taxes | The components of the Company's income (loss) before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands):
|  |  | 2012 |  |  |  | 2011 |
United States |  | $ | (778 | ) |  | $ | (11,551 | )
Foreign |  |  | 478 |  |  |  | (6,327 | )
|  | $ | (300 | ) |  | $ | (17,878 | )
Components of Company's income tax provision (benefit) | The components of the Company's income tax provision (benefit) for the years ended December 31 are as follows (in thousands):
Current provision (benefit): |  |  | 2012 |  |  |  | 2011 |
Federal |  | $ | (743 | ) |  | $ | 2,002 |
State |  |  | 7 |  |  |  | 127 |
Foreign |  |  | 1,437 |  |  |  | 1,197 |
|  |  | 701 |  |  |  | 3,326 |
Deferred provision (benefit): |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | (347 | )
State |  |  | — |  |  |  | 18 |
Foreign |  |  | 387 |  |  |  | (216 | )
|  |  | 387 |  |  |  | (545 | )
|  | $ | 1,088 |  |  | $ | 2,781 |
Reconciliation of effective income tax rate and United States federal statutory income tax rate | A reconciliation of the Company's effective income tax rate and the United States federal statutory income tax rate is summarized as follows, for the years ended December 31:
|  | 2012 |  |  | 2011 |
Federal statutory income taxes |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | 2.6 |  |  |  | 1.1 |
Difference in foreign and United States tax on foreign operations |  |  | (194.0 | ) |  |  | (6.7 | )
Effect of changes in valuation allowance for net operating loss carryforwards |  |  | (106.2 | ) |  |  | (32.1 | )
Effect of change in uncertain tax positions (net) |  |  | 315.2 |  |  |  | (10.5 | )
Federal Sub-Part F Income from foreign operations |  |  | (170.2 | ) |  |  | (2.9 | )
Research and experimentation income tax credits |  |  | 0.0 |  |  |  | 0.0 |
Other |  |  | (245.5 | ) |  |  | 0.5 |
|  |  | (363.1 | )% |  |  | (15.6 | )%
Components of deferred tax assets and liabilities | Deferred income taxes reflect the net 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. Significant components of the Company's deferred tax assets and liabilities consisted of the following at December 31 (in thousands):
|  | 2012 |  |  | 2011 |
Deferred tax assets: |  |  |  |  |  |
Current: |  |  |  |  |  |
Deferred revenue |  | $ | 7 |  |  | $ | 23 |
Inventory capitalization |  |  | 429 |  |  |  | 837 |
Inventory reserves |  |  | 457 |  |  |  | 451 |
Accrued expenses |  |  | 935 |  |  |  | 2,643 |
Other |  |  | 66 |  |  |  | 147 |
Total current deferred tax assets |  |  | 1,894 |  |  |  | 4,101 |
Noncurrent: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,508 |  |  |  | 1,539 |
Net operating loss(1) |  |  | 6,255 |  |  |  | 5,731 |
Deferred royalty |  |  | 119 |  |  |  | 482 |
Non-cash accounting charges related to stock options and warrants |  |  | 491 |  |  |  | 684 |
Accrued expenses |  |  | 409 |  |  |  | 79 |
Other |  |  | 1,117 |  |  |  | 1,176 |
Total noncurrent deferred tax assets |  |  | 9,899 |  |  |  | 9,691 |
Total deferred tax assets |  |  | 11,793 |  |  |  | 13,792 |
Valuation allowance |  |  | (8,519 | ) |  |  | (9,503 | )
Total deferred tax assets, net of valuation allowance |  | $ | 3,274 |  |  | $ | 4,289 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Prepaid expenses |  | $ | 576 |  |  | $ | 528 |
Other |  |  | 0 |  |  |  | 18 |
Total current deferred tax liabilities |  |  | 576 |  |  |  | 546 |
Noncurrent: |  |  |  |  |  |  |  |
Internally-developed software |  |  | 37 |  |  |  | 740 |
Depreciation and amortization |  |  | 2 |  |  |  | — |
Sub-Part F Income Deferred |  |  | 1,830 |  |  |  | 1,320 |
Other |  |  | (53 | ) |  |  | 161 |
Total noncurrent deferred tax liabilities |  |  | 1,816 |  |  |  | 2,221 |
Total deferred tax liabilities |  | $ | 2,392 |  |  | $ | 2,767 |
(1) | The Company's net operating loss will expire as follows (dollar amounts in thousands):
Jurisdiction |  | Gross NOL |  |  | Tax Effected NOL |  | Expiration Years |
Denmark |  | $ | 3 |  |  | $ | 1 |  | Indefinite |
Mexico |  |  | 7,587 |  |  |  | 2,276 |  | 2020-2021 |
Norway |  |  | 743 |  |  |  | 208 |  | Indefinite |
Singapore |  |  | 59 |  |  |  | 10 |  | Indefinite |
Sweden |  |  | 502 |  |  |  | 132 |  | Indefinite |
Switzerland |  |  | 12,448 |  |  |  | 1,144 |  | 2016-2018 |
Taiwan |  |  | 7,012 |  |  |  | 1,192 |  | 2016-2021 |
United States (federal) |  |  | 1,837 |  |  |  | 643 |  | 2030-2031 |
United States (states) |  |  | 25,960 |  |  |  | 649 |  | 2015-2031 |
Summary of valuation allowance | The valuation allowances presented below (in millions) at December 31, 2012 and 2011, represented a reserve against the Company's net deferred tax asset the Company believed the "more likely than not" criterion for recognition purposes could not be met.
Country |  | 2012 |  |  | 2011 |
Mexico |  | $ | 2,276 |  |  | $ | 1,889 |
Norway |  |  | 208 |  |  |  | 198 |
Sweden |  |  | 132 |  |  |  | 122 |
Switzerland |  |  | 1,043 |  |  |  | 784 |
Taiwan |  |  | 1,192 |  |  |  | 1,074 |
United States |  |  | 3,668 |  |  |  | 5,436 |
Total |  | $ | 8,519 |  |  | $ | 9,503 |
Deferred tax assets liabilities classified in Consolidated Balance Sheets | Deferred tax assets (liabilities) are classified in the accompanying Consolidated Balance Sheets of December 31 as follows (in thousands):
|  | 2012 |  | 2011 |
Current deferred tax assets |  | $ | 561 |  |  | $ | 936 |
Noncurrent deferred tax assets |  |  | 502 |  |  |  | 772 |
Current deferred tax liabilities |  |  | (179 | ) |  |  | (185 | )
Noncurrent deferred tax liabilities |  |  | (2 | ) |  |  | (1 | )
Net deferred tax assets (liabilities) |  | $ | 882 |  |  | $ | 1,522 |
Reconciliation of beginning and ending amount of unrecognized tax benefits | On January 1, 2007, the Company adopted FIN 48, which was codified into Topic 740, which prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements, uncertain tax positions that it has taken or expects to take on a tax return. Topic 740 requires that a company recognize in its financial statements the impact of tax positions that meet a "more likely than not" threshold, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. As of December 31, 2012, the Company recorded $2.8 million in current liabilities and $0.2 million in other long-term liabilities related to uncertain income tax positions and income tax reserves associated with various audits. At December 31, 2012, the Company had gross tax-affected unrecognized tax benefits of $3.0 million that, if recognized, would impact the effective tax rate. The Company recognizes penalties and interest charges related to unrecognized tax benefits in current tax expense. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, for the years ended December 31, 2012 and 2011 (in thousands):
|  | 2012 |  |  | 2011 |
Balance as of January 1 |  | $ | 3,984 |  |  | $ | 2,114 |
Additions for tax positions related to the current year |  |  | 81 |  |  |  | 570 |
Additions for tax positions of prior years |  |  | 58 |  |  |  | 1,300 |
Reductions of tax positions of prior years |  |  | (1,084 | ) |  |  | — |
Balance as of December 31 |  | $ | 3,039 |  |  | $ | 3 ,984 |
Summary of income tax examinations | The Company files income tax returns in the United States federal jurisdiction and various state and foreign jurisdictions. As of December 31, 2012, the tax years that remained subject to examination by a major tax jurisdiction for the Company's most significant subsidiaries were as follows:
Jurisdiction |  | Open Years |
Australia |  | 2008-2012 |
Canada |  | 2006-2012 |
Denmark |  | 2009-2012 |
Japan |  | 2007-2012 |
Mexico |  | 2010-2012 |
Norway |  | 2010-2012 |
Republic of Korea |  | 2007-2012 |
Singapore |  | 2009-2012 |
South Africa |  | 2009-2012 |
Sweden |  | 2010-2012 |
Switzerland |  | 2009-2012 |
Taiwan |  | 2007-2012 |
United Kingdom |  | 2006-2012 |
United States |  | 2006-2012 |

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- Definition Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years. + References Reference 1: 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 + Details
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