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Income Taxes
3 Months Ended
Mar. 31, 2013
Income Taxes [Abstract]  
Income Taxes

10. Income Taxes

 

The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions.  The Internal Revenue Service (the “IRS”) has completed examinations of the Company’s U.S. income tax returns or the statute has passed on returns for the years through and including 2009. As of March 31, 2013, the IRS has proposed no significant adjustments to any of the Company’s tax positions. The Company was notified in January 2013 that its 2011 U.S. income tax return will be audited by the IRS. 

 

Under the provisions of the ASC Subtopic 740-10-25, Income Taxes - Recognition, the Company had an unrecognized tax benefit of $0.3 million as of March 31, 2013.

 

The Company’s effective tax rate was 21.5% for the three months ended March 31, 2013 compared to 40.1% for the three months ended March 31, 2012. The decrease in the effective rate is primarily due to the research and development tax credit for 2012, which was approved by Congress in January 2013 and was recorded in the first quarter as a discrete item.  The Company also recorded a research and development tax credit for 2013 in the first quarter, which further reduced its effective tax rate. In addition to the research and development tax credit, the difference between the Company’s federal statutory rate of 35% and effective tax rate relates primarily to state income taxes, net of the federal benefit, and permanent non-deductible items such as non-deductible executive compensation and 50% of meals and entertainment expenses.  As of March 31, 2013, the Company’s net current deferred tax asset was $0.1 million and its net non-current deferred tax asset was $0.6 million.  Generally, deferred tax assets are related to stock compensation, accruals and net operating losses of acquired companies.  Net current deferred tax assets are recorded in “Other current assets” and net non-current deferred tax assets are recorded in “Other non-current assets” on the Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012.