INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2015

The components of the Company’s income before income taxes are attributable to the following jurisdictions for the years ended December 31 (in thousands):

	2015		2014
United States	$	769	$	2,044
Foreign		7,430		7,777
	$	8,199	$	9,821

Income tax provision

The components of the Company’s income tax provision for the years ended December 31 are as follows (in thousands):

Current provision (benefit):	2015			2014
Federal	$	(336	)	$	2,433
State		21			43
Foreign		2,518			2,547
		2,203			5,023
Deferred provision (benefit):
Federal		191			(1,792	)
State		72			349
Foreign		(106	)		(255	)
		157			(1,698	)
	$	2,360		$	3,325

Reconciliation of effective income tax rate and United States federal statutory income tax rate

A reconciliation of the Company’s effective income tax rate and the United States federal statutory income tax rate is summarized as follows, for the years ended December 31:

	2015			2014
Federal statutory income taxes		35.0	%		35.0	%
State income taxes, net of federal benefit		1.0			3.5
Difference in foreign and United States tax on foreign operations		(14.8	)		(16.1	)
Effect of changes in valuation allowance for net operating loss carryforwards		(8.7	)		14.3
Effect of change in uncertain tax positions (net)		(0.2	)		0.5
Federal Sub-Part F Income from foreign operations		5.1			2.9
Foreign exchange		5.3			(0.3	)
Other		6.2			(5.9	)
		28.9	%		33.9	%

Deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities consisted of the following at December 31 (in thousands):

Deferred tax assets:	2015			2014
Current:
Deferred revenue	$	567		$	453
Inventory capitalization		209			171
Inventory reserves		376			762
Accrued expenses		974			697
Other		205			127
Total current deferred tax assets		2,331			2,210
Noncurrent:
Depreciation and amortization		1,788			1,867
Net operating loss⁽¹⁾		5,378			5,842
Deferred royalty		16			28
Non-cash accounting charges related to stock options and warrants		684			628
Accrued expenses		239			350
Foreign tax credit carryover		3,568			3,855
Other		620			506
Total noncurrent deferred tax assets		12,293			13,076
Total deferred tax assets		14,624			15,286
Valuation allowance		(9,028	)		(9,745	)
Total deferred tax assets, net of valuation allowance	$	5,596		$	5,541
Deferred tax liabilities:
Current:
Prepaid expenses	$	406		$	413
Deferred commissions		846			769
Other		—			10
Total current deferred tax liabilities		1,252			1,192
Noncurrent:
Internally-developed software		266			11
Depreciation and amortization		1			2
Sub-Part F income deferred		—			—
Other		—			24
Total noncurrent deferred tax liabilities		267			37
Total deferred tax liabilities	$	1,519		$	1,229

⁽¹⁾ The Company’s net operating loss will expire as follows (dollar amounts in thousands):

Net operating loss by Jurisdiction

Jurisdiction	Gross NOL		Tax Effected NOL		Expiration Years
Colombia	$	64	$	22		2019
Mexico		8,482		2,545		2020-2024
Norway		249		67		Indefinite
Singapore		131		22		Indefinite
Sweden		513		113		Indefinite
Switzerland		11,371		1,028		2016-2020
Taiwan		7,133		1,213		2016-2024
Ukraine⁽¹⁾		581		105		Indefinite
United States (states)		11,079		277		2016-2032

⁽¹⁾ On March 21, 2014, the Company suspended operations in the Ukraine.

Summary of valuation allowance

The valuation allowances presented below (in millions) at December 31, 2015 and 2014, represented a reserve against the Company’s net deferred tax asset the Company believed the “more likely than not” criterion for recognition purposes could not be met. The U.S. valuation allowance decreased due to the usage of foreign tax credits.

Country	2015		2014
Mexico	$	2.5	$	2.7
Norway		—		0.1
Sweden		0.1		0.1
Switzerland		1.0		1.2
Taiwan		1.2		1.2
Ukraine⁽¹⁾		0.1		0.1
United States		4.0		4.3
Other Jurisdictions		0.1		—
Total	$	9.0	$	9.7

⁽¹⁾ On March 21, 2014, the Company suspended operations in the Ukraine.

Deferred tax assets (liabilities) classified in Consolidated Balance Sheets

Deferred tax assets (liabilities) are classified in the accompanying Consolidated Balance Sheets of December 31 as follows (in thousands):

	2015			2014
Current deferred tax assets	$	460		$	1,141
Noncurrent deferred tax assets		3,725			3,320
Current deferred tax liabilities		(84	)		(123	)
Other long-term liabilities		(24	)		(26	)
Net deferred tax assets	$	4,077		$	4,312

Unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows, for the years ended December 31, 2015 and 2014 (in thousands):

	2015			2014
Balance as of January 1	$	803		$	738
Additions for tax positions related to the current year		—			1
Additions for tax positions of prior years		—			111
Reductions of tax positions of prior years		(71	)		(47	)
Settlements		(17	)		—
Balance as of December 31	$	715		$	803

Tax years subject to examinations

As of December 31, 2015, the tax years that remained subject to examination by a major tax jurisdiction for the Company’s most significant subsidiaries were as follows:

Jurisdiction	Open Years
Australia		2011-2015
Canada		2011-2015
Denmark		2012-2015
Japan		2012-2015
Mexico		2011-2015
Norway		2009-2015
Republic of Korea		2010-2015
Singapore		2011-2015
South Africa		2012-2015
Sweden		2010-2015
Switzerland		2010-2015
Taiwan		2010-2015
United Kingdom		2009-2015
United States		2012-2015