v2.4.1.9

Income Taxes (Notes) | 12 Months Ended
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Dec. 31, 2014
INCOME TAXES: [Abstract] |
Income Tax Disclosure [Text Block] |
. | TAXES
Our income tax provision consists of the following components for 2014, 2013 and 2012 (in thousands):
| 2014 |  | 2013 |  | 2012
Current |  |  |  |  |  |  |  |
Federal | $ | 49,049 |  |  | $ | (6,093 | ) |  | $ | 93,441 |
State | 2,499 |  |  | 225 |  |  | 44 |
Foreign source withholding tax | 70,703 |  |  | 23,269 |  |  | 4,173 |
| 122,251 |  |  | 17,401 |  |  | 97,658 |
Deferred |  |  |  |  |  |  |  |
Federal | (121,937 | ) |  | (18,727 | ) |  | 22,209 |
State | (437 | ) |  | 2,614 |  |  | (4,494 | )
Foreign source withholding tax | 52,231 |  |  | 24,548 |  |  | 21,457 |
| (70,143 | ) |  | 8,435 |  |  | 39,172 |
Total | $ | 52,108 |  |  | $ | 25,836 |  |  | $ | 136,830 |
The deferred tax assets and liabilities are comprised of the following components at December 31, 2014 and 2013 (in thousands):
| 2014
| Federal |  | State |  | Foreign |  | Total
Net operating losses | $ | — |  |  | $ | 71,837 |  |  | $ | 4 |  |  | $ | 71,841 |
Deferred revenue, net | 50,575 |  |  | 41 |  |  | 22,657 |  |  | 73,273 |
Stock compensation | 10,567 |  |  | 1,751 |  |  | — |  |  | 12,318 |
Patent amortization | 18,337 |  |  | — |  |  | — |  |  | 18,337 |
Depreciation | 1,110 |  |  | 29 |  |  | — |  |  | 1,139 |
Other-than-temporary impairment | 10,010 |  |  | 154 |  |  | — |  |  | 10,164 |
Other accrued liabilities | 1,097 |  |  | (28 | ) |  | — |  |  | 1,069 |
Other employee benefits | 8,784 |  |  | 668 |  |  | — |  |  | 9,452 |
| 100,480 |  |  | 74,452 |  |  | 22,661 |  |  | 197,593 |
Less: valuation allowance | — |  |  | (71,731 | ) |  | — |  |  | (71,731 | )
Net deferred tax asset | $ | 100,480 |  |  | $ | 2,721 |  |  | $ | 22,661 |  |  | $ | 125,862 |
| 2013
| Federal |  | State |  | Foreign |  | Total
Net operating losses | $ | — |  |  | $ | 70,602 |  |  | $ | — |  |  | $ | 70,602 |
Deferred revenue, net | 8,564 |  |  | 56 |  |  | 4,189 |  |  | 12,809 |
Stock compensation | 7,606 |  |  | 1,088 |  |  | — |  |  | 8,694 |
Patent amortization | 16,424 |  |  | — |  |  | — |  |  | 16,424 |
Depreciation | 1,295 |  |  | 169 |  |  | — |  |  | 1,464 |
Other accrued liabilities | 1,044 |  |  | 44 |  |  | — |  |  | 1,088 |
Other-than-temporary impairment | 9,815 |  |  | 301 |  |  | — |  |  | 10,116 |
Other employee benefits | 4,497 |  |  | 517 |  |  | — |  |  | 5,014 |
| 49,245 |  |  | 72,777 |  |  | 4,189 |  |  | 126,211 |
Less: valuation allowance | — |  |  | (70,492 | ) |  | — |  |  | (70,492 | )
Net deferred tax asset | $ | 49,245 |  |  | $ | 2,285 |  |  | $ | 4,189 |  |  | $ | 55,719 |
The following is a reconciliation of income taxes at the federal statutory rate with income taxes recorded by the company for the years ended December 31, 2014, 2013 and 2012 (in thousands):
| 2014 |  | 2013 |  | 2012
Tax at U.S. statutory rate | 35.0 | % |  | 35.0 | % |  | 35.0 | %
State tax provision | 0.1 | % |  | 4.1 | % |  | (1.1 | )%
Change in federal and state valuation allowance | — | % |  | 0.4 | % |  | (0.5 | )%
Research and development tax credits | (4.7 | )% |  | — | % |  | — | %
Uncertain tax positions | 0.9 | % |  | — | % |  | — | %
Permanent differences | 1.5 | % |  | 3.5 | % |  | 0.1 | %
Settlement with taxing authorities | 1.1 | % |  | — | % |  | — | %
Other | 0.1 | % |  | (1.1 | )% |  | 0.1 | %
Total tax provision | 34.0 | % |  | 41.9 | % |  | 33.6 | %
Valuation Allowances and Net Operating Losses We establish a valuation allowance for any portion of our deferred tax assets for which management believes it is more likely than not that we will be unable to utilize the assets to offset future taxes. We believe it is more likely than not that the majority of our state deferred tax assets will not be utilized; therefore we have maintained a near full valuation allowance against our state deferred tax assets as of December 31, 2014. All other deferred tax assets are fully benefited. We recognize excess tax benefits associated with share-based compensation to shareholders’ equity only when realized. When assessing whether excess tax benefits relating to share-based compensation have been realized, we follow the with and without approach excluding any indirect effects of the excess tax deductions. Under the approach, excess tax benefits related to share-based compensation are not deemed to be realized until after the utilization of all other tax benefits available to the company. During 2014, we realized $1.2 million of tax shortfalls and accordingly recorded a corresponding debit to additional paid-in capital. We had sufficient windfall benefits previously recorded in additional paid-in capital to offset the shortfall in the current year. During 2013 and 2012, we realized $0.8 million and $0.9 million, respectively, of such excess tax benefits for federal purposes, and accordingly recorded a corresponding credit to additional paid-in capital. As of both December 31, 2014 and 2013, we had $12.2 million of state unrealized tax benefits associated with share-based compensation. These state tax benefits will be accounted for as a credit to additional paid-in capital, if and when realized, rather than a reduction of the provision for income taxes. Uncertain Income Tax Positions As of December 31, 2014, the company had $1.4 million of unrecognized tax expense. At December 31, 2013 and 2012, the company had zero unrecognized tax benefits. The total amount of unrecognized tax benefits could change within the next twelve months for a number of reasons including audit settlements, tax examination activities and the recognition and measurement considerations under this guidance. During 2014, we established a reserve of $0.7 million related to the recognition of a gross benefit for research and development credits. We also recorded$0.7 million of unrecognized tax benefits related to certain deductions that may not be allowed by the Internal Revenue Code. The following is a roll forward of our total gross unrecognized tax benefits, which if reversed would impact the effective tax rate, for the fiscal years 2012 through 2014 (in thousands):
| 2014 |  | 2013 |  | 2012
Balance as of January 1 | $ | — |  |  | $ | — |  |  | $ | — |
Tax positions related to current year: |  |  |  |  |  |  |  |
Additions | 95 |  |  | — |  |  | — |
Reductions | — |  |  | — |  |  | — |
Tax positions related to prior years: |  |  |  |  |
Additions | 1,266 |  |  | — |  |  | — |
Reductions | — |  |  | — |  |  | — |
Settlements | — |  |  | — |  |  | — |
Lapses in statues of limitations | — |  |  | — |  |  | — |
Balance as of December 31 | $ | 1,361 |  |  | $ | — |  |  | $ | — |
Our policy is to recognize interest and/or penalties related to income tax matters in income tax expense. Because we had zero unrecognized tax benefits as of each of December 31, 2013 and 2012, we also had zero accrued interest as of the same dates. For certain positions that related to years prior to 2014, we have recorded less than $0.1 million of accrued interest during 2014. The company and its subsidiaries are subject to United States federal income tax, foreign income and withholding taxes and income taxes from multiple state jurisdictions. Our federal income tax returns for 2007 to the present are currently open and will not close until the respective statutes of limitations have expired. The statutes of limitations generally expire three years following the filing of the return or in some cases three years following the utilization or expiration of net operating loss carry forwards. The statute of limitations applicable to our open federal returns will expire at the end of 2018. The 2014 return is expected to be filed by September 15, 2015 and the statute of limitations will expire three years from the date it is filed. Specific tax treaty procedures remain open for certain jurisdictions for 2006, 2007 and 2008. Many of our subsidiaries have filed state income tax returns on a separate company basis. To the extent these subsidiaries have unexpired net operating losses, their related state income tax returns remain open. These returns have been open for varying periods, some exceeding ten years. The total amount of state net operating losses is $1.3 billion. Currently, the company is under audit by the U.S. Internal Revenue Service for the tax year ended December 31, 2010. To date, there have not been any identified issues. The company is also under audit by the State of New York for tax years 2009 through 2012. No other federal, state or foreign audits are in process. The IRS examination for 2011 was closed in 2014 resulting in no changes. The New York State audit for the years 2002 to 2008 was concluded in 2014 resulting in a $2.5 million settlement with the state. Foreign Taxes We pay foreign source withholding taxes on patent license royalties and state taxes when applicable. We apply foreign source withholding tax payments against our United States federal income tax obligations to the extent we have foreign source income to support these credits. In 2014, 2013 and 2012, we paid $70.7 million, $23.3 million and $3.6 million in foreign source withholding taxes, respectively, and applied these payments as credits against our United States federal tax obligation. We previously accrued approximately$5.7 million of the 2014 foreign source withholding payments and established a corresponding deferred tax asset representing the associated foreign tax credit that we expect to utilize to offset future U.S. federal income taxes. Between 2006 and 2014, we paid approximately $239.8 million in foreign taxes for which we have claimed foreign tax credits against our U.S. tax obligations. It is possible that as a result of tax treaty procedures, the U.S. government may reach an agreement with the related foreign governments that will result in a partial refund of foreign taxes paid with a related reduction in our foreign tax credits. Due to both foreign currency fluctuations and differences in the interest rate charged by the U.S. government compared to the interest rates, if any, used by the foreign governments, any such agreement could result in interest expense and/or foreign currency gain or loss.

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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 Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 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=26873400&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 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 5: 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 6: 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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