Income Taxes

3 Months Ended

Mar. 31, 2013

Income Taxes [Abstract]

INCOME TAXES

10. INCOME TAXES

Income tax provisions from continuing operations consisted of the following:

	Three Months Ended
	March 31,
	2013			2012
	(In thousands)
Income before provision for income taxes	$	2,270		$	334
Provision for income taxes		(17	)		(553	)
Effective tax rate		0.7	%		165.6	%

The effective tax rates differ from the statutory rate primarily due to the valuation allowance, foreign withholding taxes, and unrecognized tax benefits. The income tax provision for the three months ended March 31, 2013 is primarily as a result of estimated state taxes. The income tax provision for the three months ended March 31, 2012 is primarily as a result of foreign withholding tax expense.

As of March 31, 2013, the Company had unrecognized tax benefits under ASC 740 “Income Taxes” of approximately $685,000, including interest of $58,000. The total amount of unrecognized tax benefits that would affect the Company’s effective tax rate, if recognized, was $257,000. There were no material changes in the amount of unrecognized tax benefits during the three months ended March 31, 2013. The Company expects to release reserves and record a tax benefit due to the expiration of the statute of limitations during the next nine months. The Company’s policy is to account for interest and penalties related to uncertain tax positions as a component of income tax provision.

Because the Company had net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state, and foreign taxing authorities may examine the Company’s tax returns for all years from 1998 through the current period.

The Company maintains a valuation allowance for its entire deferred tax assets at March 31, 2013 as a result of uncertainties regarding the realization of the asset balance due to historical losses, the variability of operating results, and uncertainty regarding near term projected results. The Company expects to have better visibility into its near term projected results in the second half of the current year. In the event that the Company determines the deferred tax assets are realizable based on its assessment of relevant factors, an adjustment to the valuation allowance may increase income in the period such determination is made. The valuation allowance does not impact the Company’s ability to utilize the underlying net operating loss carryforwards.