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INCOME TAXES (Tables) | 12 Months Ended
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Dec. 31, 2014
INCOME TAXES [Abstract] |
Income (loss) before income taxes | The components of the Company’s income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands):
|  | 2014 |  |  | 2013 |
United States |  | $ | 2,044 |  |  | $ | 702 |
Foreign |  |  | 7,777 |  |  |  | 2,107 |
|  | $ | 9,821 |  |  | $ | 2,809 |
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: |  | 2014 |  |  | 2013 |
Federal |  | $ | 2,433 |  |  | $ | 124 |
State |  |  | 43 |  |  |  | 144 |
Foreign |  |  | 2,547 |  |  |  | 1,434 |
|  |  | 5,023 |  |  |  | 1,702 |
Deferred provision (benefit): |  |  |  |  |  |  |  |
Federal |  |  | (1,792 | ) |  |  | (1,883 | )
State |  |  | 349 |  |  |  | — |
Foreign |  |  | (255 | ) |  |  | (184 | )
|  |  | (1,698 | ) |  |  | (2,067 | )
|  | $ | 3,325 |  |  | $ | (365 | )
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:
|  | 2014 |  |  | 2013 |
Federal statutory income taxes |  |  | 35.0 | % |  |  | 35.0 | %
State income taxes, net of federal benefit |  |  | 3.5 |  |  |  | 1.3 |
Difference in foreign and United States tax on foreign operations |  |  | (16.1 | ) |  |  | (11.6 | )
Effect of changes in valuation allowance for net operating loss carryforwards |  |  | 14.3 |  |  |  | (55.9 | )
Effect of change in uncertain tax positions (net) |  |  | 0.5 |  |  |  | (17.0 | )
Federal Sub-Part F Income from foreign operations |  |  | 2.9 |  |  |  | 11.8 |
Other |  |  | (6.2 | ) |  |  | 23.4 |
|  |  | 33.9 | % |  |  | (13.0 | )%
Deferred tax assets and liabilities | Significant components of the Company’s deferred tax assets and liabilities consisted of the following at December 31 (in thousands):
Deferred tax assets: |  | 2014 |  |  | 2013 |
Current: |  |  |  |  |  |
Deferred revenue |  | $ | 453 |  |  | $ | (26 | )
Inventory capitalization |  |  | 171 |  |  |  | 228 |
Inventory reserves |  |  | 762 |  |  |  | 644 |
Accrued expenses |  |  | 697 |  |  |  | 917 |
Other |  |  | 127 |  |  |  | 108 |
Total current deferred tax assets |  |  | 2,210 |  |  |  | 1,871 |
Noncurrent: |  |  |  |  |  |  |  |
Depreciation and amortization |  |  | 1,867 |  |  |  | 1,834 |
Net operating loss(1) |  |  | 5,842 |  |  |  | 5,078 |
Deferred royalty |  |  | 28 |  |  |  | 39 |
Non-cash accounting charges related to stock options and warrants |  |  | 628 |  |  |  | 520 |
Accrued expenses |  |  | 350 |  |  |  | 366 |
Foreign tax credit carryover |  |  | 3,855 |  |  |  | — |
Other |  |  | 506 |  |  |  | 843 |
Total noncurrent deferred tax assets |  |  | 13,076 |  |  |  | 8,680 |
Total deferred tax assets |  |  | 15,286 |  |  |  | 10,551 |
Valuation allowance |  |  | (9,745 | ) |  |  | (5,264 | )
Total deferred tax assets, net of valuation allowance |  | $ | 5,541 |  |  | $ | 5,287 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |
Prepaid expenses |  | $ | 413 |  |  | $ | 396 |
Deferred Commissions |  |  | 769 |  |  |  | 5 |
Other |  |  | 10 |  |  |  | — |
Total current deferred tax liabilities |  |  | 1,192 |  |  |  | 401 |
Noncurrent: |  |  |  |  |  |  |  |
Internally-developed software |  |  | 11 |  |  |  | 15 |
Depreciation and amortization |  |  | 2 |  |  |  | 2 |
Sub-Part F Income Deferred |  |  | — |  |  |  | 2,163 |
Other |  |  | 24 |  |  |  | (52 | )
Total noncurrent deferred tax liabilities |  |  | 37 |  |  |  | 2,128 |
Total deferred tax liabilities |  | $ | 1,229 |  |  | $ | 2,529 |
(1) The Company’s net operating loss will expire as follows (dollar amounts in thousands):
Jurisdiction |  | Gross NOL |  |  | Tax Effected NOL |  |  | Expiration Years |
Canada |  | $ | — |  |  |  | — |  |  |  | 2043 |
Cyprus |  |  | 5 |  |  |  | 1 |  |  |  | 2019 |
Denmark |  |  | 1 |  |  |  | — |  |  |  | Indefinite |
Mexico |  |  | 9,000 |  |  |  | 2,700 |  |  |  | 2020-2023 |
Norway |  |  | 448 |  |  |  | 121 |  |  |  | Indefinite |
Singapore |  |  | 28 |  |  |  | 5 |  |  |  | Indefinite |
Sweden |  |  | 541 |  |  |  | 119 |  |  |  | Indefinite |
Switzerland |  |  | 13,612 |  |  |  | 1,234 |  |  |  | 2016-2020 |
Taiwan |  |  | 7,152 |  |  |  | 1,215 |  |  |  | 2016-2023 |
Ukraine |  |  | 678 |  |  |  | 122 |  |  |  | Indefinite |
United States (states) |  |  | 12,996 |  |  |  | 325 |  |  |  | 2015-2032 |
Summary of valuation allowance | The valuation allowances presented below (in millions) at December 31, 2014 and 2013, 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. The U.S. valuation allowance increased due to the carryover of foreign tax credits that we do not anticipate to utilize in future years.
Country |  | 2014 |  |  | 2013 |
Mexico |  | $ | 2.7 |  |  | $ | 2.7 |
Norway |  |  | 0.1 |  |  |  | 0.2 |
Sweden |  |  | 0.1 |  |  |  | 0.1 |
Switzerland |  |  | 1.2 |  |  |  | 0.2 |
Taiwan |  |  | 1.2 |  |  |  | 1.2 |
Ukraine |  |  | 0.1 |  |  |  | 0.1 |
United States |  |  | 4.3 |  |  |  | 0.8 |
Total |  | $ | 9.7 |  |  | $ | 5.3 |
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):
|  | 2014 |  |  | 2013 |
Current deferred tax assets |  | $ | 1,141 |  |  | $ | 1,578 |
Noncurrent deferred tax assets |  |  | 3,320 |  |  |  | 1,303 |
Current deferred tax liabilities |  |  | (123 | ) |  |  | (114 | )
Other long-term liabilities |  |  | (26 | ) |  |  | (9 | )
Net deferred tax assets |  | $ | 4,312 |  |  | $ | 2,758 |
Unrecognized tax benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, for the years ended December 31, 2014 and 2013 (in thousands):
|  | 2014 |  |  | 2013 |
Balance as of January 1 |  | $ | 738 |  |  | $ | 3,039 |
Additions for tax positions related to the current year |  |  | 1 |  |  |  | 436 |
Additions for tax positions of prior years |  |  | 111 |  |  |  | 292 |
Reductions of tax positions of prior years |  |  | (47 | ) |  |  | (3,029 | )
Balance as of December 31 |  | $ | 803 |  |  | $ | 738 |
Tax years subject to examinations | As of December 31, 2014, 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 |  |  | 2010-2014 |
Canada |  |  | 2010-2014 |
Denmark |  |  | 2011-2014 |
Japan |  |  | 2011-2014 |
Mexico |  |  | 2010-2014 |
Norway |  |  | 2008-2014 |
Republic of Korea |  |  | 2009-2014 |
Singapore |  |  | 2010-2014 |
South Africa |  |  | 2011-2014 |
Sweden |  |  | 2009-2014 |
Switzerland |  |  | 2009-2014 |
Taiwan |  |  | 2009-2014 |
United Kingdom |  |  | 2008-2014 |
United States |  |  | 2008-2014 |

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