Income Taxes

The following table provides details of income taxes:



	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2013			2012			2013			2012
Income before income taxes	$	37		$	10,571		$	1,114		$	23,375
Provision (benefit) for income taxes	$	(215	)	$	3,910		$	(290	)	$	8,506
Effective tax rate	(581.1		)%	37.0		%	(26.0		)%	36.4		%

The income tax provision for the three and nine months ended September 30, 2013 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year. The changes in the Company’s effective tax rate for the nine months ended September 30, 2013 compared to the same period for the prior year are primarily due to anticipated generation of federal R&D credits for both 2012 and 2013 recognized in 2013, which were not available in the 2012 period as a result of legislation. The changes in the effective tax rate for the three months ended September 30, 2013 compared to the same period for the prior year are primarily due to the impact of tax credits and lower annual profit projections.

The Company currently has a partial valuation allowance recorded against certain deferred tax assets. Each quarter, the Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers available evidence, both positive and negative, including prudent and feasible tax planning strategies in assessing the need for a valuation allowance. As a result of the Company’s analysis, it concluded that it is more likely than not that a portion of its deferred tax assets will not be realized. Therefore, the Company continues to provide a valuation allowance against certain deferred tax assets. The Company continues to closely monitor available evidence and may reverse some or all of the remaining valuation allowance in future periods, if appropriate. The Company has a valuation allowance of $1,361 as of September 30, 2013 and December 31, 2012.

In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is currently under a federal income tax examination by the Internal Revenue Service for the tax years ended December 31, 2007 through December 31, 2009. In addition, the Company is under examination by the State of New York for the tax years 2009 through 2011. The Company has not been contacted by any other U.S. state, local or foreign tax authority for all open tax periods beginning after December 31, 2007.