XML 38 R24.htm IDEA: XBRL DOCUMENT
v3.10.0.1

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2018
Income Tax Expense (Benefit), Continuing Operations [Abstract] |
Income Taxes | Income Taxes Income (loss) before taxes consisted of the following:
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
| (In thousands)
Domestic | $ | (63,829 | ) |  | $ | 46,031 |  |  | $ | 38,211 |
Foreign | (6,799 | ) |  | (5,042 | ) |  | (15,574 | )
| $ | (70,628 | ) |  | $ | 40,989 |  |  | $ | 22,637 |
The provision for (benefit from) income taxes is comprised of:
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
| (In thousands)
Federal: |  |  |  |  |
Current | $ | 5,451 |  |  | $ | 20,661 |  |  | $ | 22,115 |
Deferred | 82,726 |  |  | 43,678 |  |  | (2,198 | )
State: |  |  |  |  |
Current | 333 |  |  | 495 |  |  | 884 |
Deferred | 522 |  |  | (43 | ) |  | (271 | )
Foreign: |  |  |  |  |
Current | 1,592 |  |  | 1,101 |  |  | 1,275 |
Deferred | (3,295 | ) |  | (2,041 | ) |  | (5,988 | )
| $ | 87,329 |  |  | $ | 63,851 |  |  | $ | 15,817 |
The differences between Rambus’ effective tax rate and the U.S. federal statutory regular tax rate are as follows:
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Expense at U.S. federal statutory rate | 21.0 | % |  | 35.0 | % |  | 35.0 | %
Expense (benefit) at state statutory rate | (1.2 | ) |  | 0.7 |  |  | 1.8 |
Withholding tax | (7.7 | ) |  | 50.1 |  |  | 97.0 |
Foreign rate differential | (0.2 | ) |  | 2.8 |  |  | 4.1 |
Research and development (“R&D”) credit | 2.2 |  |  | (3.9 | ) |  | (8.3 | )
Executive compensation | (0.1 | ) |  | 1.8 |  |  | 1.5 |
Stock-based compensation | (2.8 | ) |  | 14.9 |  |  | 34.8 |
Foreign tax credit | 7.7 |  |  | (50.1 | ) |  | (97.0 | )
Foreign derived intangible income deduction | 14.8 |  |  | — |  |  | — |
Impact of corporate rate change on deferred taxes | — |  |  | 50.6 |  |  | — |
Other | 0.7 |  |  | 1.4 |  |  | 1.0 |
Valuation allowance | (158.0 | ) |  | 52.5 |  |  | — |
| (123.6 | )% |  | 155.8 | % |  | 69.9 | %
The components of the net deferred tax assets (liabilities) are as follows:
| As of December 31,
| 2018 |  | 2017
| (In thousands)
Deferred tax assets: |  |  |
Depreciation and amortization | $ | 13,085 |  |  | $ | 10,840 |
Other timing differences, accruals and reserves | 8,272 |  | 8,766
Deferred equity compensation | 6,236 |  | 7,979
Net operating loss carryovers | 21,259 |  | 16,335
Tax credits | 253,890 |  | 157,051
Total gross deferred tax assets | 302,742 |  |  | 200,971 |
Deferred tax liabilities: |  |  |
Convertible debt | (207) |  | (791)
Deferred revenue | (143,182) |  | — |
Total gross deferred tax liabilities | (143,389) |  | (791 | )
Total net deferred tax assets | 159,353 |  |  | 200,180 |
Valuation allowance | (173,878 | ) |  | (50,911 | )
Net deferred tax assets (liabilities) | $ | (14,525 | ) |  | $ | 149,269 |
| As of December 31,
| 2018 |  | 2017
| (In thousands)
Reported as: |  |  |
Non-current deferred tax assets | $ | 4,435 |  |  | $ | 159,099 |
Non-current deferred tax liabilities | (18,960 | ) |  | (9,830 | )
Net deferred tax assets (liabilities) | $ | (14,525 | ) |  | $ | 149,269 |
On December 22, 2017, the Tax Act was enacted into law in the United States. The Tax Act, among other things, lowered U.S. corporate income tax rates from 35% to 21%, implemented a territorial tax system, and imposed a one-time transition tax on deemed repatriated earnings of non-U.S. subsidiaries. The U.S. tax law changes, including limitations on various business deductions such as executive compensation under Internal Revenue Code §162(m), will not impact the Company’s federal tax expense in the short-term due to the Company’s tax credit carryovers and associated valuation allowance. The Tax Act’s new international rules, including Global Intangible Low-Taxed Income (“GILTI”), Foreign Derived Intangible Income (“FDII”), and Base Erosion Anti-Avoidance Tax (“BEAT”) are effective beginning in 2018. The Company has included these effects of the Tax Act in its financial statements. Regarding the new GILTI tax rules, the Company is required to make an accounting policy election to either treat taxes due on future GILTI inclusions in U.S. taxable income as a current period expense when incurred or reflect such portion of the future GILTI inclusions in U.S. taxable income that relate to existing basis differences in the Company's current measurement of deferred taxes. The Company has made a policy election to treat GILTI taxes as a current period expense. Pursuant to SEC Staff Accounting Bulletin (“SAB”) 118 (regarding the application of ASC 740, Income Taxes (“ASC 740”) associated with the enactment of the Tax Act), the Company believes its accounting under ASC 740 for the provisions of the Tax Act is now complete. The Company periodically evaluates the realizability of its net deferred tax assets based on all available evidence, both positive and negative. During the third quarter of 2018, the Company assessed the changes in its underlying facts and circumstances and evaluated the realizability of its existing deferred tax assets based on all available evidence, both positive and negative, and the weight accorded to each, and concluded a full valuation allowance associated with U.S. federal and California deferred tax assets was appropriate. The basis for this conclusion was derived primarily from the fact that the Company completed its forecasting process during the third quarter of 2018. At a domestic level, losses are expected in future periods in part due to the impact of the adoption of ASC 606. In addition, the decrease in the U.S. federal tax rate from 35% to 21% as a result of U.S. tax reform has further reduced the Company's ability to utilize its deferred tax assets. In light of the above factors, the Company concluded that it is not more likely than not that it can realize its U.S. deferred tax assets. As such, the Company has set up and maintains a full valuation allowance against its U.S. federal deferred tax assets. The following table presents the tax valuation allowance information for the years ended December 31, 2018, 2017 and 2016:
| Balance at Beginning of Period |  | Charged (Credited) to Operations |  | Charged to Other Account* |  | Valuation Allowance Release |  | Valuation Allowance Set up |  | Balance at End of Period
Tax Valuation Allowance |  |  |  |  |  |  |  |  |  |  |
Year ended December 31, 2016 | $ | 20,717 |  |  | — |  |  | 2,812 |  |  | — |  |  | — |  |  | $ | 23,529 |
Year ended December 31, 2017 | $ | 23,529 |  |  | — |  |  | 5,855 |  |  | — |  |  | 21,527 |  |  | $ | 50,911 |
Year ended December 31, 2018 | $ | 50,911 |  |  | — |  |  | 9,238 |  |  | — |  |  | 113,729 |  |  | $ | 173,878 |
______________________________________
* | Amounts not charged to operations are charged to other comprehensive income or deferred tax assets (liabilities).
As of December 31, 2018, Rambus had California and other state net operating loss carryforwards of $244.1 million and $124.6 million, respectively. The California net operating losses will begin to expire in 2020. As of December 31, 2018, Rambus had federal research and development tax credit carryforwards of $34.3 million and foreign tax credits of $215.5 million. The federal foreign tax credits and research and development credits will begin to expire in 2020. If not utilized, approximately $51.3 million of federal foreign tax credits will expire in 2020. As of December 31, 2018, Rambus had California research and development tax credit carryforwards of $28.5 million. The California research and development credits carry forward indefinitely. 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. As of December 31, 2018, the Company had $23.5 million of unrecognized tax benefits including $21.4 million recorded as a reduction of long-term deferred tax assets and $2.1 million recorded in long term income taxes payable. If recognized, $2.1 million would be recorded as an income tax benefit in the consolidated statements of operations. As of December 31, 2017, the Company had $22.6 million of unrecognized tax benefits including $20.4 million recorded as a reduction of long-term deferred tax assets and $2.2 million recorded in long term income taxes payable. If recognized, $2.2 million would be recorded as an income tax benefit in the consolidated statements of operations. It is reasonably possible that a reduction of $0.2 million of existing unrecognized tax benefits could occur in the next 12 months. A reconciliation of the beginning and ending amounts of unrecognized income tax benefits for the years ended December 31, 2018, 2017 and 2016 is as follows (amounts in thousands):
| Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Balance at January 1 | $ | 22,652 |  |  | $ | 21,925 |  |  | $ | 20,836 |
Tax positions related to current year: |  |  |  |  |
Additions | 1,032 |  |  | 1,083 |  |  | 1,225 |
Tax positions related to prior years: |  |  |  |  |
Additions | 115 |  |  | 16 |  |  | 256 |
Reductions | (317 | ) |  | (372 | ) |  | (171 | )
Settlements | — |  |  | — |  |  | (221 | )
Balance at December 31 | $ | 23,482 |  |  | $ | 22,652 |  |  | $ | 21,925 |
Rambus recognizes interest and penalties related to uncertain tax positions as a component of the income tax provision (benefit). At December 31, 2018 and 2017, an immaterial amount of interest and penalties are included in long-term income taxes payable. Rambus files income tax returns for the U.S., California, India, the U.K., the Netherlands and various other state and foreign jurisdictions. The U.S. federal returns are subject to examination from 2015 and forward. The California returns are subject to examination from 2010 and forward. In addition, any research and development credit carryforward or net operating loss carryforward generated in prior years and utilized in these or future years may also be subject to examination. The India returns are subject to examination from fiscal year ending March 2012 and forward. The Company is currently under examination by the IRS for the 2015 tax year and California for the 2010 and 2011 tax years. The Company’s India subsidiary is under examination by the Indian tax administration for tax years beginning with 2011, except for 2014, which was assessed in the Company's favor. The Company’s France subsidiary is under examination by the French tax agency for the 2013 to 2017 tax years. These examinations may result in proposed adjustments to the income taxes as filed during these periods. Management regularly assesses the likelihood of outcomes resulting from income tax examinations to determine the adequacy of their provision for income taxes and believes their provision for unrecognized tax benefits is adequate. Additionally, 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. At December 31, 2018, no other income taxes (state or foreign) have been provided on undistributed earnings of approximately $12.1 million from the Company’s international subsidiaries since these earnings have been, and under current plans will continue to be, indefinitely reinvested outside the United States. However, if such earnings were distributed, the Company would incur approximately $1.3 million of foreign withholding taxes and an immaterial amount of U.S. taxes.

X
- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxExpenseBenefitContinuingOperationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration