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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2012
Income Taxes |
Income Taxes | Note 7: Income Taxes The income tax provision (benefit) consisted of the following (in thousands):
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
Current portion: |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (5 | ) | $ | 247 |  | $ | (19 | )
State |  |  | 3 |  |  | 3 |  |  | 2 |
Foreign |  |  | 112 |  |  | 38 |  |  | 68 |
|  | $ | 110 |  | $ | 288 |  | $ | 51 |
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount 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 were as follows (in thousands):
|  | December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |
Deferred tax assets: |  |  |  |  |  |  |
Federal and state loss carryforwards |  | $ | 30,977 |  | $ | 20,196 |
Reserves, accruals and other |  |  | 341 |  |  | 685 |
Depreciation and amortization |  |  | 1,991 |  |  | 2,117 |
Deferred stock-based compensation |  |  | 3,319 |  |  | 3,061 |
Research and development credit carryforwards |  |  | 7,476 |  |  | 6,856 |
Foreign tax and other credits |  |  | 1,326 |  |  | 1,347 |
Total deferred tax assets |  |  | 45,430 |  |  | 34,262 |
Deferred tax liabilities: |  |  |  |  |  |  |
Acquired intangible assets and other |  |  | 1,652 |  |  | 1,898 |
Less: Valuation allowance |  |  | (43,778 | ) |  | (32,364 | )
Net deferred tax assets |  | $ | — |  | $ | — |
The valuation allowance increased by $11.4 million during the year ended December 31, 2012 and decreased $2.7 million during the year ended December 31, 2011. The valuation allowance at December 31, 2012 includes $1.8 million related to stock option deductions incurred prior to January 1, 2006, the benefit of which will be credited to additional paid-in capital if they become realized. As of December 31, 2012, the Company had net operating loss carryforwards of approximately $80.6 million for federal income tax purposes and approximately $86.5 million for state income tax purposes. These losses are available to reduce future taxable income and expire at various times from 2013 through 2032. Approximately $5.5 million of federal net operating loss carryforwards and $4.7 million of state net operating loss carryforwards are related to excess tax benefits from stock-based compensation and will be charged to additional paid-in capital when realized. The Company also had federal research and development tax credit carryforwards of approximately $4.6 million, which began expiring in 2012, and California research and development credits of approximately $4.4 million, which do not have an expiration date. The Company had foreign tax credits available for federal income tax purposes of approximately $1.1 million which will begin to expire in 2014. In January 2013, The American Taxpayer Relief Act of 2012 reinstated the research tax credit retroactive to January 1, 2012 and extended the credit through December 31, 2013. As a result of this new legislation, the Company is expected to recognize an increase in its federal tax credit carryforward of $1.0 million during the three months ended March 31, 2013. Utilization of the Company's net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. Management does not believe it is likely that utilization will in fact be significantly limited due to ownership change limitation provisions. A reconciliation of income taxes provided at the federal statutory rate (35%) to actual income tax provision (benefit) follows (in thousands):
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
Income tax benefit computed at U.S. statutory rate |  | $ | (9,626 | ) | $ | 4,040 |  | $ | (8,054 | )
Federal alternative minimum tax |  |  | — |  |  | 247 |  |  | — |
State income tax (net of federal benefit) |  |  | 2 |  |  | 2 |  |  | 2 |
Foreign income tax at rate different from U.S. statutory rate |  |  | (13 | ) |  | (9 | ) |  | (90 | )
Research and development credits |  |  | (691 | ) |  | (1,254 | ) |  | (1,239 | )
Foreign tax credit |  |  | — |  |  | (17 | ) |  | (21 | )
Stock-based compensation |  |  | 252 |  |  | 292 |  |  | 607 |
Amortization of intangible assets |  |  | (100 | ) |  | (657 | ) |  | — |
Valuation allowance changes affecting tax provision |  |  | 10,526 |  |  | (2,363 | ) |  | 8,979 |
Other |  |  | (240 | ) |  | 7 |  |  | (133 | )
Income tax provision |  | $ | 110 |  | $ | 288 |  | $ | 51 |
The domestic and foreign components of income (loss) before income tax provision were as follows (in thousands):
|  | Year Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
U.S. |  | $ | (27,737 | ) | $ | 11,363 |  | $ | (23,499 | )
Non-U.S. |  |  | 233 |  |  | 181 |  |  | 488 |
|  | $ | (27,504 | ) | $ | 11,544 |  | $ | (23,011 | )

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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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