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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Tax Expense (Benefit) [Abstract] |
Income Taxes | Income Taxes The provision for income taxes is comprised of:
| Years Ended December 31,
| 2012 |  | 2011 |  | 2010
| (In thousands)
Federal: |  |  |  |  |
Current | $ | 15,048 |  |  | $ | 16,595 |  |  | $ | 55,332 |
Deferred | 587 |  |  | (255 | ) |  | 255 |
State: |  |  |  |  |
Current | (2,868 | ) |  | 17 |  |  | 1,467 |
Deferred | 2,934 |  |  | — |  |  | — |
Foreign: |  |  |  |  |
Current | 543 |  |  | 886 |  |  | 401 |
Deferred | 207 |  |  | 9 |  |  | (328 | )
| $ | 16,451 |  |  | $ | 17,252 |  |  | $ | 57,127 |
The differences between Rambus’ effective tax rate and the U.S. federal statutory regular tax rate are as follows:
| Years Ended December 31,
| 2012 |  | 2011 |  | 2010
Expense (benefit) at U.S. federal statutory rate | (35.0 | )% |  | (35.0 | )% |  | 35.0 | %
Expense (benefit) at state statutory rate | 0.1 |  |  | (0.1 | ) |  | 0.5 |
Withholding tax | 13.3 |  |  | 64.2 |  |  | 17.3 |
Foreign rate differential | 17.4 |  |  | 33.0 |  |  | 2.4 |
Research and development (“R&D”) credit | — |  |  | (1.0 | ) |  | (0.3 | )
Executive compensation | 0.3 |  |  | 2.0 |  |  | 0.7 |
Non-deductible stock-based compensation | 0.7 |  |  | 2.8 |  |  | 0.3 |
Foreign tax credit | (13.3 | ) |  | (197.7 | ) |  | — |
Capitalized merger and acquisition costs | 0.3 |  |  | 5.9 |  |  | — |
Other | (2.2 | ) |  | 0.5 |  |  | (1.4 | )
Valuation allowance | 32.4 |  |  | 192.3 |  |  | (27.0 | )
| 14.0 | % |  | 66.9 | % |  | 27.5 | %
The components of the net deferred tax assets are as follows:
| As of December 31,
| 2012 |  | 2011
| (In thousands)
Deferred tax assets: |  |  |
Depreciation and amortization | $ | 20,230 |  |  | $ | 2,063 |
Other liabilities and reserves | 19,624 |  | 35,050
Deferred equity compensation | 64,193 |  | 58,329
Net operating loss carryovers | 38,133 |  | 8,432
Tax credits | 76,826 |  | 58,314
Total gross deferred tax assets | 219,006 |  |  | 162,188 |
Convertible debt | (8,019) |  | (12,932)
Total net deferred tax assets | 210,987 |  |  | 149,256 |
Valuation allowance | (206,464 | ) |  | (140,982 | )
Net deferred tax assets | $ | 4,523 |  |  | $ | 8,274 |
| As of December 31,
| 2012 |  | 2011
| (In thousands)
Reported as: |  |  |
Current deferred tax assets | $ | 788 |  |  | $ | 2,798 |
Non-current deferred tax assets | 4,458 |  |  | 7,531 |
Non-current deferred tax liabilities | (723 | ) |  | (2,055 | )
Net deferred tax assets | $ | 4,523 |  |  | $ | 8,274 |
As of December 31, 2012, the Company’s consolidated balance sheet included net deferred tax assets, before valuation allowance, of approximately $211.0 million, which consists of net operating loss carryovers, tax credit carryovers, amortization, employee stock-based compensation expenses and certain liabilities, partially reduced by deferred tax liabilities associated with convertible debt instruments. For the year ended December 31, 2012, the Company’s valuation allowance increased to $206.5 million because of an increase in deferred tax assets related to net operating losses and foreign tax credits. Management periodically evaluates the realizability of the Company's deferred tax assets based on all available evidence, both positive and negative. The realization of deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax attributes to fully utilize these assets. Management periodically evaluates the realizability of the Company's net deferred tax assets based on all available evidence, both positive and negative. The realization of net deferred tax assets is dependent on the Company's ability to generate sufficient future taxable income during periods prior to the expiration of tax statutes to fully utilize these assets. The Company weighed both positive and negative evidence and determined that there is a continued need for a valuation allowance due to the uncertainty of generating sufficient taxable income to utilize deferred tax assets based on forecasted revenues, which the Company considered significant negative evidence. Though considered positive evidence, potential income from currently unsigned favorable patent and related settlement litigation were not included in the determination for the valuation allowance due to the Company's inability to reliably estimate the probability, timing and amounts of such settlements. Even though the Company is no longer in a cumulative loss position, the uncertainty of generating sufficient taxable income to utilize deferred tax assets based on forecasted revenues is a negative factor that outweighs the positive factors leading to a conclusion that a release of the valuation allowance is not yet appropriate. As of December 31, 2012, Rambus has federal net operating loss carryforwards for income tax purposes of $79.2 million which begin to expire in 2029. As of December 31, 2012, Rambus has state net operating loss carryforwards for income tax purposes of $296.2 million which begin to expire in 2016. As of December 31, 2012, Rambus has federal research and development tax credit carryforwards for income tax purposes of $25.4 million and state research and development tax credit carryforwards of $11.3 million, net of federal benefit. The federal research and development tax credit carryforwards begin to expire in 2018 and the state tax credit can be carried forward indefinitely. As of December 31, 2012, Rambus has foreign tax credit carryforwards for income tax purposes of $82.4 million which begin to expire in 2016. In the event of a change in ownership, as defined under federal and state tax laws, Rambus' net operating loss and tax credit carryforwards could be subject to annual limitations. The annual limitations could result in the expiration of the net operating loss and tax credit carryforwards prior to utilization. Tax attributes related to stock option windfall deductions should not be recorded until they result in a reduction of cash taxes payable. The Company’s unrealized excess tax benefits from stock option deductions excluded from the federal and state tax attributes as of December 31, 2012 were $93.5 million and $99.2 million, respectively. The excess tax benefits will be recorded to additional paid-in capital when they reduce cash taxes payable. As of December 31, 2012, the Company had $16.8 million of unrecognized tax benefits including $10.6 million recorded as a reduction of long-term deferred tax assets and $6.2 million recorded in long term income taxes payable. If recognized, $2.0 million would be recorded as an income tax benefit in the consolidated statements of operations. As of December 31, 2011, the Company had $16.6 million of unrecognized tax benefits including $7.0 million recorded as a reduction of long-term deferred tax assets and $9.6 million recorded in long term income taxes payable. If recognized, $2.6 million would be recorded as an income tax benefit in the consolidated statements of operations. Although it is possible that some of the unrecognized tax benefits could be settled within the next 12 months, the Company cannot reasonably estimate the outcome at this time. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2012, 2011 and 2010 is as follows (amounts in thousands):
| Years Ended December 31,
| 2012 |  | 2011 |  | 2010
Balance at January 1 | $ | 16,610 |  |  | $ | 11,816 |  |  | $ | 10,353 |
Tax positions related to current year: |  |  |  |  |
Additions | 589 |  |  | 608 |  |  | 1,401 |
Tax positions related to prior years: |  |  |  |  |
Additions | 1,521 |  |  | 4,911 |  |  | 140 |
Reductions | (1,947 | ) |  | (725 | ) |  | (78 | )
Settlements | — |  |  | — |  |  | — |
Balance at December 31 | $ | 16,773 |  |  | $ | 16,610 |  |  | $ | 11,816 |
Rambus recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit). At December 31, 2012 and 2011, an immaterial amount of interest and penalties are included in long-term income taxes payable. At December 31, 2012, no deferred taxes have been provided on undistributed earnings of approximately $6.7 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, permanently reinvested outside the United States. It is not practicable to determine the amount of the unrecognized tax liability at this time. Rambus files U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions. The Company is subject to examination by the Internal Revenue Service ("IRS") for tax years ended 2009 through 2011. The Company is also subject to examination by the State of California for tax years ended 2008 through 2011. In addition, any R&D credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination by the IRS and the State of California. The Company is also subject to examination in various other foreign jurisdictions, including India, for various periods. The Company's future effective tax rates could be adversely affected by earnings being higher than anticipated in countries where the Company has higher statutory rates or lower than anticipated in countries where it has lower statutory rates, by changes in valuation of its deferred tax assets and liabilities or by changes in tax laws or interpretations of those laws.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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