INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

The Company files income tax returns in the U.S. federal and various state and local jurisdictions and foreign jurisdictions. The Company's loss before provision for income taxes consisted of the following (in thousands):

	Year Ended December 31,
	2012			2011			2010
U.S.	$	(6,767	)	$	(10,458	)	$	(11,114	)
Foreign		437			640			598
Loss before income taxes	$	(6,330	)	$	(9,818	)	$	(10,516	)

Income Tax Provision

The components of the provision for income taxes are as follows (in thousands):

	Year Ended December 31,
	2012			2011			2010
Current:
Federal	$	(13	)	$	(52	)	$	(154	)
State		(56	)		69			37
Foreign		366			208			235
		297			225			118
Deferred:
Federal		(12	)		(13	)		(45	)
State		—			13			45
Foreign		(67	)		18			(116	)
		(79	)		18			(116	)
Provision for income taxes	$	218		$	243		$	2

Deferred Tax Assets

The Company's deferred tax asset consists of the following (in thousands):

	December 31,
	2012			2011(1)
Net operating loss	$	9,409		$	8,660
Stock-based compensation		6,560			6,374
Other accruals and reserves		3,259			3,374
Credits		2,261			2,062
Capital loss		796			312
Foreign		436			370
Accrued warranty		466			429
Depreciation and amortization		180			206
Other		(31	)		(143	)
Net deferred tax asset before valuation allowance		23,336			21,644
Valuation allowance		(22,906	)		(21,274	)
Net deferred tax asset after valuation allowance	$	430		$	370

(1) The Company revised the 2011 tax footnote to reduce deferred tax assets by approximately $280,000 related to future tax benefits for net operating losses that were not properly recorded in the previous period. This reduction in deferred taxes was offset by a corresponding reduction in the valuation allowance, and as such had no impact to the Consolidated Financial Statements, earnings per share, statement of cash flows, or statement of equity for any period presented.

Deferred Tax Asset Balance

The Company's deferred tax asset balance is reported in the following captions in the Consolidated Balance Sheets (in thousands):

	December 31,
	2012			2011
Deferred tax asset (current portion)	$	40		$	55
Deferred tax asset, net of current portion		553			446
Accrued liabilities (current deferred tax liability)		(163	)		(131	)
Net deferred tax asset after valuation allowance	$	430		$	370

Reconciliation of Effective Tax Rate

The differences between the U.S. federal statutory income tax rates to the Company's effective tax rate are as follows:

	Year Ended December 31,
	2012			2011	*	2010	*
U.S. federal statutory income tax rate		35.00	%	35.00	%	35.00	%
State tax rate, net of federal benefit		3.28		2.56		2.81
Benefit for research and development credit		3.40		6.02		2.97
Changes in unrecognized tax benefits		1.06		(0.02	)	2.59
Foreign income inclusion		(0.05	)	(2.15	)	—
Income tax refund		1.07		2.34		(1.13	)
Stock-based compensation		(16.95	)	(9.64	)	(1.54	)
Tax effect of other comprehensive income		0.28		(2.01	)	—
Valuation allowance		(25.51	)	(34.70	)	(38.31	)
Other		(5.03	)	.12		(2.39	)
Effective tax rate		(3.45	)%	(2.48	)%	0.00	%

*Certain items have changed for classification purposes.

Unrecognized Tax Benefits

The following table summarizes the activity related to the Company's gross unrecognized tax benefits in December 31, 2010 to December 31, 2012 (in thousands):

	Year Ended December 31,
	2012			2011			2010
Balance at beginning of year	$	583		$	555		$	787
Increases related to prior year tax positions		—			—			—
Decreases related to prior year tax positions		—			—			(29	)
Increases related to current year tax positions		29			44			24
Decreases related to lapsing of statute of limitations		(76	)		(16	)		(227	)
Balance at end of year	$	536		$	583		$	555