INCOME TAXES

9 Months Ended

Sep. 30, 2012

INCOME TAXES

INCOME TAXES

NOTE 11. INCOME TAXES

        We recorded a tax benefit of $9,892,000 for the nine months ended September 30, 2012, compared to a tax benefit of $2,302,000 for the nine months ended September 30, 2011. The tax benefits are related to refundable UK research and development tax credits, which are included in income taxes receivable on the accompanying balance sheet, benefits related to amortization of acquired intangibles related to our ATL acquisition that reduced our deferred tax liabilities, and utilization of net operating loss carryforwards. The 2012 tax benefit also reflects the results of changes in UK tax rates.

        Utilization of our net operating loss carryforwards are subject to substantial annual limitations due to ownership change limitations provided by the Internal Revenue Code and similar state provisions. The annual limitation will result in the expiration of the net operating losses before utilization. The Company's deferred tax assets have been adjusted for the expected limitation.

        We have no unrecognized tax benefits as of September 30, 2012. Our policy is to recognize interest and penalties related to income taxes as a component of income tax expense and there have been no such interest and penalties recorded for any of the periods presented. We are subject to income tax examinations for U.S. federal and state income taxes from 1997 forward due to net operating losses in tax years 1995 through 2009. We are subject to tax examinations in the UK from 2010 forward. We do not anticipate that our total unrecognized tax benefits will significantly change prior to September 30, 2013.