INCOME TAXES (Tables)

12 Months Ended

Sep. 30, 2014

Schedule of the Components of Loss From Continuing Operations Before (Benefit) Provision for Income Taxes

The components of loss before income tax expense (benefit) for the years ended September 30, 2014, 2013 and 2012 were as follows:



	September 30,
	2014			2013			2012
	(in thousands)
(Loss) income before income taxes:
Domestic	$	(18,871	)	$	(23,646	)	$	(3,406	)
Foreign	1,137			1,020			2,120
	$	(17,734	)	$	(22,626	)	$	(1,286	)

Schedule of Components of Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following for the years ended September 30, 2014, 2013 and 2012:



	September 30,
	2014			2013			2012
	(in thousands)
Income tax expense (benefit):
Current:
Federal	$	(27	)	$	—		$	(188	)
State	71			54			41
Foreign	312			(758		)	1,510
Total current	356			(704		)	1,363
Deferred:
Federal	—			—			—
State	—			—			—
Foreign	(15		)	156			(1,537		)
Total deferred	(15		)	156			(1,537		)
Total income tax expense (benefit):	$	341		$	(548	)	$	(174	)

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the income tax expense (benefit) by applying the statutory United States federal income tax rate to loss before income tax expense (benefit) is as follows:



	September 30,
	2014					2013					2012
	$			%		$			%		$			%
	(in thousands, except for percentages)
Federal income tax benefit at statutory rate	$	(6,030	)	34.0	%	$	(7,693	)	34.0	%	$	(437	)	34.0	%
State tax benefit net of federal benefit	(242		)	1.4	%	(536		)	2.4	%	(13		)	1.0	%
Foreign taxes	(68		)	0.4	%	(1,156		)	5.1	%	1,102			(85.7	)%
Tax credits	—			—	%	(438		)	1.9	%	(1,230		)	95.6	%
Nondeductible expenses	650			(3.7	)%	771			(3.4	)%	1,015			(78.9	)%
Other	—			—	%	87			(0.4	)%	(100		)	7.9	%
Change in valuation allowance	6,131			(34.6	)%	7,164			(31.7	)%	(1,147		)	89.2	%
Rate change/other adjustments on deferred taxes	(100		)	0.6	%	1,253			(5.5	)%	636			(49.5	)%
Income tax expense (benefit)	$	341		(1.9	)%	$	(548	)	2.4	%	$	(174	)	13.6	%

Schedule of Deferred Tax Assets and Liabilities

Significant deferred tax assets and liabilities, consist of the following:



	September 30,
	2014			2013
	(in thousands)
Deferred Tax Assets:
Net operating loss carryforward	$	31,418		$	27,110
Research and development tax credits	10,165			10,574
Deferred income	2,724			2,664
Stock based compensation⁽¹⁾	3,354			12,313
Fixed assets and intangible property	7,293			7,955
Inventories	1,714			2,256
Allowances and reserves	9,436			9,277
Foreign tax credit/AMT credit	88			88
Other	3			11
Total deferred tax assets	66,195			72,248
Deferred Tax Liabilities:
Debt amortization	(11		)	(2,065		)
Total deferred tax liabilities	(11		)	(2,065		)
Net deferred income taxes	66,184			70,183
Valuation allowance⁽¹⁾	(64,788		)	(68,802		)
Net deferred tax assets	$	1,396		$	1,381

Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefit

A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:



	2014			2013			2012
	(in thousands)
Beginning balance as of September 30:	$	(10,615	)	$	(10,822	)	$	(10,215	)
Gross decreases - tax positions in prior period	290			354			—
Gross increases - current-period tax positions	—			(147		)	(47		)
Gross increases - tax positions in prior period	—			—			(560		)
Ending balance as of September 30:	$	(10,325	)	$	(10,615	)	$	(10,822	)

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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