INCOME TAXES

3 Months Ended

Mar. 31, 2013

INCOME TAXES [Abstract]

INCOME TAXES

13. INCOME TAXES

The Company's effective tax rate was 8% for the three months ended March 31, 2013 and 5% for the three months ended March 31, 2012.  For the three months ended March 31, 2013, the Company recorded an income tax benefit of $623,000 on a loss before provision for income taxes of $7.3 million.  For the three months ended March 31, 2012, the Company recorded an income tax provision of $28,000 on an income before provision for income taxes of $0.6 million. The effective tax rate for the three months ended March 31, 2013 differs from the federal statutory tax rate as a result of the income tax benefit related to the release of Vineyard's pre-existing income tax valuation allowance, the amortization of the acquired intangibles, state taxes, earnings taxed in foreign jurisdictions and the anticipated tax expense in the U.S. that was offset by the utilization of federal tax attributes.

In 2002, the Company established a valuation allowance for substantially all of its deferred tax assets.   Since that time, the Company has continued to record a valuation allowance.  A valuation allowance is required to be established or maintained when it is more likely than not that all or a portion of deferred tax assets will not be realized.  The Company will continue to reserve for substantially all net deferred tax assets until there is sufficient evidence to warrant reversal.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.  As of March 31, 2013, the Company had no accrued interest or penalties related to uncertain tax positions.   The federal returns for the years ended 2009 through the current period and most state returns for the years ended 2008 through the current period remain open to examination.  In addition, all of the net operating losses and research and development credit carryforwards that may be used in future years are still subject to adjustment.  The Company is also subject to examinations in other foreign jurisdictions including Australia and Sweden beginning in 2006 through the current period.

At March 31, 2013, the Company had $193,000 of unrecognized tax benefits, a total of $158,000 which would affect the Company's effective tax rate if recognized. The Company does not anticipate that the total unrecognized tax benefits will change significantly over the next twelve months.