Income Taxes |
9 Months Ended |
|---|---|
Sep. 30, 2011 | |
| Income Taxes [Abstract] | |
| INCOME TAXES |
NOTE 13—INCOME TAXES
Our
effective tax rate was (4.01%) and (2.84%) for the three and nine month periods ended
September 30, 2011, respectively, as compared to (1.04%) and (0.43%) for three and nine month
periods ended September 30, 2010. Our effective rates differ from the U.S. federal statutory rate
primarily due to our U.S. and foreign deferred tax asset valuation allowance position, foreign
taxes and state taxes.
As of December 31, 2010, we had cumulative unrecognized tax benefit of approximately $91,000,
which if recognized, would increase our annual effective tax rate. We do not expect that our
unrecognized tax benefit will change significantly within the next 12 months. There have been no
material changes to the unrecognized tax benefit during the three and nine month periods ended September 30,
2011.
We periodically evaluate likelihood of the realization of deferred tax assets, and adjust the
carrying amount of the deferred tax assets by the valuation allowance to the extent the future
realization of the deferred tax assets is not judged to be more likely than not. We considered many
factors when assessing the likelihood of future realization of our deferred tax assets, including
any recent cumulative earnings experience by taxing jurisdictions, expectations of future taxable
income or loss, the carryforward periods available to us for tax reporting purposes and other
relevant factors.
At December 31, 2010, we had federal and state net operating loss (NOL) carryforward balances
of approximately $66.1 million and $41.0 million respectively, which began to expire in 2011. In
addition, we had federal and state tax credits of approximately $665,000 and $458,000 respectively.
Federal credits will begin to expire in 2018 and the state tax credits carryforward indefinitely.
As of December 31, 2010, based on the weight of available evidence, including cumulative
losses in recent years and expectations regarding future taxable income, realization of our
deferred tax assets does not appear more likely than not and, as such, we have recorded a valuation
allowance of approximately $34.3 million. In addition, we recorded a deferred tax liability
related to its indefinite-lived other intangible assets that is not expected to reverse in the
foreseeable future resulting in a net deferred tax liability of approximately $533,000. As of
September 30, 2011, due to uncertainties surrounding the timing of realizing tax benefits of NOL
carryforwards in the future, we continue to carry the full valuation allowance net of the naked
liability.
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