INCOME TAXES

12 Months Ended

Dec. 31, 2011

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

8. INCOME TAXES

For fiscal years 2011 and 2010, the income tax benefit (provision) consists of the following (amounts in thousands):

	Fiscal Year 2011			Fiscal Year 2010
Federal
Deferred tax (expense) benefit, net	$	(104	)	$	(111	)
State
Current tax (expense) benefit					35
Deferred tax (expense) benefit, net		(16	)		(17	)
		(16	)		18
Foreign
Current tax (expense) benefit		199			803
Total	$	79		$	710

The Company has reserved all of its domestic and foreign net deferred tax assets with a valuation allowance as of December 31, 2011 and January 1, 2011, in accordance with the provisions of FASB ASC 740 "Income Taxes." Realization of the deferred tax asset is dependent on generating sufficient income in future periods. In evaluating the ability to use its deferred tax assets, the Company considers all positive and negative evidence including the Company's past operating results, the existence of cumulative losses in the most recent fiscal year and the Company's forecast of future income. In determining future income, the Company is responsible for assumptions utilized including the amount of state, federal and international operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future income and are consistent with the plans and estimates the Company is using to manage the underlying business.

The following is a reconciliation between the provision for income taxes and the amounts computed based on loss before income taxes at the statutory federal income tax rate (amounts in thousands):

	Fiscal Year 2011						Fiscal Year 2010
	Amount			%			Amount			%
Computed expected federal income tax benefit	$	1,573			35.0		$	1,016			35.0
State income tax (expense) benefit, net of federal benefit		54			1.2			(10	)		(0.3	)
Rate differential on foreign operations		(293	)		(6.5	)		(263	)		(9.1	)
Reversal of reserve for uncertain income tax positions, net of interest		199			4.5			753			26.0
Forfeited vested stock options		(581	)		(12.9	)		(168	)		(5.8	)
Adjustment to estimated tax loss carryforward		(106	)		(2.4	)		(76	)		(2.6	)
Change in statutory tax rate		(205	)		(4.6	)		(75	)		(2.6	)
Non-deductible expenses		(97	)		(2.1	)		(115	)		(4.0	)
Other		(17	)		(0.4	)		27			1.0
Change in valuation allowance		(448	)		(10.0	)		(379	)		(13.1	)
Total	$	79			1.8		$	710			24.5

The significant components of deferred income tax assets and the related balance sheet classifications, as of December 31, 2011 and January 1, 2011, are as follows (amounts in thousands):

	December 31, 2011			January 1, 2011
Current deferred tax assets (liabilities):
Unfavorable liabilities	$			$	25
Other		108			130
Valuation allowance		(108	)		(155	)
Current deferred tax asset	$	0		$	0
Non-current deferred tax assets (liabilities):
Goodwill and intangible assets	$	8,667		$	10,347
Share-based compensation expense		1,381			2,031
Net operating loss carryforward		22,025			19,417
Auction rate securities					85
Other		504			384
Foreign tax credit carryforward		1,006			1,067
Valuation allowance		(33,949	)		(33,577	)
Non-current deferred tax liabilities	$	(366	)	$	(246	)

 The federal net operating loss carryforward as of December 31, 2011 is scheduled to expire as follows (amounts in thousands):

	Amount		Year
	$	1,640	2015
		5,602	2023
		9,094	2024
		7,432	2025
		9,854	2026
		5,152	2027
		1,637	2028
		3,279	2030
		4,664	2031
Total	$	48,354

As of December 31, 2011, the Company has a deferred tax asset of $2.9 million related to state net operating loss carryforwards. In addition, the Company has a deferred tax asset of $2.1 million related to foreign net operating loss carryforwards as of December 31, 2011 that have no expiration date. As of December 31, 2011, the Company has net of foreign tax credits of $1.0 million. If unutilized, the expiration of these foreign tax credits is $317,000 and $689,000 in fiscal years 2018 and 2019, respectively. The Company has not provided tax on undistributed earnings of foreign subsidiaries, because it is the Company's intention to reinvest these earnings indefinitely.

The determination of the amount of unrecognized deferred tax liabilities related to investments in foreign subsidiaries that is essentially permanent in nature is not practicable.

The Company analyzes its uncertain tax positions pursuant to the provisions of FASB ASC 740 "Income Taxes." ASC 740 prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed "more-likely-than-not" to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the taxing authority. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits (excluding penalties and interest) is as follows:

	December 31, 2011			January 1, 2011
	(In thousands)
Gross unrecognized tax benefits at beginning of year	$	108		$	730
Gross decreases in tax positions taken in prior periods		(108	)		(622	)
Gross unrecognized tax benefits at end of year	$	-		$	108

As of December 31, 2011, the Company had no remaining unrecognized tax benefits (including penalties and interest). As of January 1, 2011, the Company reported total unrecognized tax benefits (including penalties and interest) of $199,000. When these amounts are recognized, the entire amount impacts the effective tax rate. During fiscal years 2011 and 2010, the Company decreased the reserves related to uncertain income tax positions by $108,000 and $622,000, respectively, due to the expiration of statutes of limitations of tax filings in foreign jurisdictions.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of the income tax provision. As of December 31, 2011, there were no accrued income tax-related interest and penalties included in the Consolidated Balance Sheet. As of January 1, 2011, the total amount of accrued income tax-related interest and penalties included in the Consolidated Balance Sheet was $91,000.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2004. As of December 31, 2011, the Company has no income tax examinations in process.