Taxes on Income (Tables)

12 Months Ended

Dec. 31, 2012

Deferred Income Taxes

e. Deferred income taxes

Provided in respect of the following:

	December 31
	2011			2012
	$ in thousands
Provision for vacation pay		553			680
Accrued severance pay		3,513			3,216
Carryforward tax losses		66,120			53,116
Research and development costs		5,415			4,197
Taxes on undistributed income of Israeli subsidiary		(2,236	)		(3,517	)
Intangible assets		(5,777	)		(21,500	)
Other		3,267			3,696
		70,855			39,888
Less—valuation allowance*		51,595			26,068
		19,260			13,820

Changes in Valuation Allowance

* The changes in the valuation allowance are comprised as follows:

	Year ended December 31
	2011		2010		2012
	$ in thousands
Balance at beginning of year		26,068		21,744		24,379
Additions (reductions) during the year		25,527		4,324		(2,635	)
Balance at end of year		51,595		26,068		21,744

Deferred Taxes Included in Balance Sheets

Deferred taxes are included in the balance sheets as follows:

	December 31
	2011	2012
	$ in thousands
Assets:
Current deferred income taxes	7,862		6,580
Non-current deferred income taxes	13,634		8,999
	21,496		15,579
Liability-
Non-current deferred income taxes	2,236		1,759
	19,260		13,820

Taxes on Income Included in Income Statements

f. Taxes on income included in the income statements

As follows:

	Year ended December 31
	2012			2011			2010
	$ in thousands
Current:
Israeli		578			(275	)		(1,226	)
Non-Israeli		5,318			5,369			12,489
		5,896			5,094			11,263
Deferred:
Israeli		(4,985	)		3,110			(1,469	)
Non-Israeli		(455	)		(527	)		(2,397	)
		(5,440	)		2,583			(3,866	)
Total income taxes expense		456			7,677			7,397

Reconciliation of Theoretical Tax Expense

Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the statutory corporate tax rate applicable to Israeli corporations, and the actual tax expense:

	Year ended December 31
	2012			2011			2010
	$ in thousands
Income (loss) from continuing operations before taxes on income*		(45,916	)		53,510			50,403
Theoretical tax expense (benefit) on the above amount		(11,479	)		12,842			12,600
Less—tax benefits arising from approved enterprises		(2,495	)		(4,731	)		(529	)
		(13,974	)		8,111			12,071
Increase (decrease) in taxes resulting from:
Different tax rates applicable to non-Israeli
subsidiaries		(9,141	)		(4,064	)		(2,192	)
Permanent differences, including difference between the basis of measurement of income reported for tax purposes and the basis of measurement of income for financial reporting purposes—net		(173	)		3,969			5,970
Deferred taxes on losses for which valuation allowance was provided		(1,529	)		(4,532	)		(5,232	)
Other		(254	)		(131	)		(585	)
Net change in valuation allowance		25,527			4,324			(2,635	)
Actual tax expense		456			7,677			7,397
*As follows:
Taxable in Israel		(3,885	)		19,332			(9,582	)
Taxable outside Israel		(42,031	)		34,178			59,985
		(45,916	)		53,510			50,403

Roll-forward of Total Amounts of Company's Unrecognized Tax Benefits

Following is a roll-forward of the total amounts of the Company’s unrecognized tax benefits at the beginning and the end of the years ending on December 31, 2012, 2011 and 2010 (not including interest or penalties):

	Year ended December 31
	2012			2011			2010
	$ in thousands
Balance at beginning of year		18,301			17,243			13,239
Increases in unrecognized tax benefits as a result of tax positions taken during the year		1,121			4,269			7,893
Decrease in unrecognized tax benefits as a result of tax positions taken during a prior year, net		(121	)		(1,582	)		(317	)
Decreases in unrecognized tax benefits as a result of statute of limitations expirations and tax audits		(985	)		(1,629	)		(3,572	)
Balance at end of year		18,316	*		18,301	*		17,243	*