XML 65 R22.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2014
Income Tax Disclosure [Abstract] |
Income Taxes | 14. INCOME TAXES The tax provision is based on the annual effective tax rate for the year, which includes estimated federal, state and foreign income taxes on the Company’s pre-tax income and estimated federal and state income taxes for certain noncontrolling interest subsidiaries that are not part of the Company’s consolidated income tax returns. The tax provisions also include discrete items, principally related to tax credits, tax provision vs. tax return differences and accrued interest for potential liabilities. The reconciliation of the federal statutory rate to the effective income tax rate for the years ended December 31 is as follows:
|  | 2014 |  |  | 2013 |  |  | 2012 |
Statutory federal tax rate |  |  | (34.0 | %) |  |  | (34.0 | %) |  |  | (34.0 | %)
State income taxes, net of federal income tax benefit |  |  | 0.8 |  |  |  | 1.1 |  |  |  | (9.4 | )
Tax credits |  |  | (12.4 | ) |  |  | (8.1 | ) |  |  | 0.6 |
U.S. manufacturing deduction |  |  | — |  |  |  | 1.7 |  |  |  | (3.8 | )
Permanent items |  |  | 0.4 |  |  |  | 0.6 |  |  |  | 2.2 |
Book income attributable to noncontrolling interest |  |  | (0.6 | ) |  |  | 0.4 |  |  |  | 6.8 |
Foreign rate differential and deferred items |  |  | (0.3 | ) |  |  | (0.2 | ) |  |  | 0.1 |
Increase (decrease) in tax reserves |  |  | (3.7 | ) |  |  | (0.1 | ) |  |  | 0.3 |
Increase in valuation allowance |  |  | 46.9 |  |  |  | 53.3 |  |  |  | 84.5 |
Other |  |  | — |  |  |  | 0.1 |  |  |  | (0.7 | )
|  |  | (2.9 | %) |  |  | 14.8 | % |  |  | 46.6 | %
In 2014, the Company could not recognize a tax benefit for the majority of its losses due to a full valuation allowance against all domestic deferred tax assets, as described below. During the third quarter of 2014, the Company recognized a tax benefit of approximately $552,000 as a discrete item for the release of certain income tax reserves, due to the completion of an Internal Revenue Service examination of its 2010 and 2011 federal corporate income tax returns during the quarter (see below). On January 2, 2013 the American Taxpayer Relief Act of 2012 (“ATRA”) was signed into law. Under prior law, a taxpayer was entitled to a research tax credit for qualifying amounts paid or incurred on or before December 31, 2011. The ATRA, in effect, renewed the research credit for two years to December 31, 2013. The extension of the research tax credit was retroactive and includes amounts paid or incurred after December 31, 2011. Since the law was enacted in 2013, the federal research tax credit for 2012 of $549,000 was recorded as a discrete item in the first quarter of 2013. For financial reporting purposes, income (loss) before income taxes for the years ended December 31 include the following components (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Domestic |  | $ | (14,223 | ) |  | $ | (20,466 | ) |  | $ | (3,109 | )
Foreign |  |  | (272 | ) |  |  | 1 |  |  |  | 518 |
|  | $ | (14,495 | ) |  | $ | (20,465 | ) |  | $ | (2,591 | )
Significant components of the provision (benefit) for income taxes for the years ended December 31 are as follows (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (690 | ) |  | $ | (1,848 | ) |  | $ | 920 |
State |  |  | 147 |  |  |  | 284 |  |  |  | 425 |
Foreign |  |  | 124 |  |  |  | 112 |  |  |  | 231 |
|  |  | (419 | ) |  |  | (1,452 | ) |  |  | 1,576 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (6 | ) |  |  | 4,491 |  |  |  | (369 | )
|  | $ | (425 | ) |  | $ | 3,039 |  |  | $ | 1,207 |
The Company intends to continue to reinvest certain of its foreign earnings indefinitely. Accordingly, no U.S. income taxes have been provided for approximately $2,940,000 of unremitted earnings of international subsidiaries. As of December 31, 2014, the amount of unrecognized deferred tax liability on these earnings was $185,000. Significant components of the Company’s deferred tax assets and liabilities as of December 31 were as follows (in thousands):
|  | 2014 |  |  | 2013 |
Deferred tax assets: |  |  |  |  |  |  |  |
Research and development tax credit carryforwards |  | $ | 10,756 |  |  | $ | 8,754 |
Net operating loss carryforwards |  |  | 3,560 |  |  |  | 2,497 |
Stock-based compensation |  |  | 3,465 |  |  |  | 3,048 |
Inventory reserves |  |  | 3,024 |  |  |  | 2,687 |
Vacation accrual |  |  | 1,821 |  |  |  | 1,645 |
Investment tax credit carryforwards |  |  | 1,446 |  |  |  | 1,367 |
Foreign tax credits |  |  | 1,405 |  |  |  | — |
Accrued severance |  |  | 525 |  |  |  | — |
Alternative minimum tax credit carryforward |  |  | 340 |  |  |  | 340 |
Deferred revenue |  |  | 178 |  |  |  | 279 |
Unrealized loss on investments |  |  | 131 |  |  |  | 399 |
Warranty reserves |  |  | 65 |  |  |  | 88 |
Bad debt reserves |  |  | 59 |  |  |  | 65 |
Capital loss carryforward |  |  | — |  |  |  | 680 |
Other |  |  | 446 |  |  |  | 428 |
Total deferred tax assets |  |  | 27,221 |  |  |  | 22,277 |
Less: Valuation allowance for deferred tax assets |  |  | (25,818 | ) |  |  | (20,214 | )
Net deferred tax assets |  |  | 1,403 |  |  |  | 2,063 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Depreciation |  |  | (176 | ) |  |  | (918 | )
Prepaid expenses |  |  | (755 | ) |  |  | (598 | )
Patent amortization |  |  | (365 | ) |  |  | (416 | )
Unremitted Vicor Custom Power earnings |  |  | (329 | ) |  |  | (335 | )
Total deferred tax liabilities |  |  | (1,625 | ) |  |  | (2,267 | )
Net deferred tax liabilities |  | $ | (222 | ) |  | $ | (204 | )
As of December 31, 2014, the Company has a valuation allowance of approximately $25,818,000 primarily against all domestic net deferred tax assets, for which realization cannot be considered more likely than not at this time. Management assesses the need for the valuation allowance on a quarterly basis. In assessing the need for a valuation allowance, the Company considers all positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and past financial performance. In 2013, the Company recorded an increase to the valuation allowance of approximately $10,241,000 for all remaining domestic net deferred tax assets not previously covered by a valuation allowance due to the following factors: (1) the Company’s forecast of future taxable income, of the appropriate nature, based on its quarterly assessment was not sufficient to support the recoverability of the remaining domestic deferred tax assets; (2) recent cumulative losses and the Company’s projection of continued losses into 2014; (3) while the Company has the ability to carryback federal net operating losses or credits to utilize against federal taxable income, it will generate only $1,600,000 in cash refunds (which were received in the fourth quarter of 2014); and (4) the lack of prudent and feasible tax planning strategies. These assessment factors remain essentially unchanged, as the Company remains in a significant cumulative loss position as of December 31, 2014. As a result, management believes a full valuation allowance against all domestic net deferred tax assets is warranted as of December 31, 2014. The valuation allowance against these deferred tax assets may require adjustment in the future based on changes in the mix of temporary differences, changes in tax laws, and operating performance. If and when the Company determines the valuation allowance should be released (i.e., reduced), the adjustment would result in a tax benefit reported in that period’s Consolidated Statements of Operations, the effect of which would be an increase in reported net income. A portion of such an adjustment may be accounted for through an increase to “Additional paid-in capital”, a component of Stockholders’ Equity. The amount of any such tax benefit associated with release of our valuation allowance in a particular quarter may be material. As a result of certain realization requirements under the stock-based compensation guidance, the table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2014, that arose directly from tax deductions related to stock-based compensation greater than stock-based compensation recognized for financial reporting. Equity will be increased by $3,024,000 if and when such deferred tax assets are ultimately realized. The Company uses ASC 740 ordering when determining when excess tax benefits have been realized. The research and development tax credit carryforwards expire beginning in 2015 for state purposes and in 2025 for federal purposes. The Company has federal net operating loss carryforwards which expire beginning in 2033, as well as net operating loss carryforwards in certain states, which expire beginning in 2015 through 2034. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | 2014 |  |  | 2013 |  |  | 2012 |
Balance on January 1 |  | $ | 2,072 |  |  | $ | 1,506 |  |  | $ | 1,405 |
Additions based on tax provisions related to the current year |  |  | 161 |  |  |  | 566 |  |  |  | 134 |
Reductions for tax positions of prior years |  |  | (967 | ) |  |  | — |  |  |  | (33 | )
Lapse of statute |  |  | (12 | ) |  |  | — |  |  |  | — |
Balance on December 31 |  | $ | 1,254 |  |  | $ | 2,072 |  |  | $ | 1,506 |
The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. The total amount of unrecognized tax benefits, that is the aggregate tax effect of differences between tax return positions and the benefits recognized in the Company’s financial statements, as of December 31, 2014, 2013, and 2012 of $1,254,000, $2,072,000, and $1,506,000, respectively, if recognized, may decrease the Company’s income tax provision and effective tax rate. None of the unrecognized tax benefits as of December 31, 2014, are expected to significantly change during the next twelve months. The Company recognizes accrued interest and penalties, if any, related to unrecognized tax benefits as a component of income tax expense. During the years ended December 31, 2014, 2013, and 2012, the Company recognized approximately $32,000, ($28,000), and $32,000, respectively, in net interest (benefit) expense. As of December 31, 2014 and 2013, the Company had accrued approximately $181,000 and $149,000, respectively, for the potential payment of interest. The Company files income tax returns in the United States and various foreign tax jurisdictions. These tax returns are generally open to examination by the relevant tax authorities from three to seven years from the date they are filed. The tax filings relating to the Company’s federal and state taxes are currently open to examination for tax years 2012 and 2013 and 2007 through 2013, respectively. In addition, the 2003, 2004, and 2007 tax years resulted in losses. These years may also be subject to examination since the losses were carried forward and utilized in future years. In August 2013, the Company received notice from the Internal Revenue Service that its federal corporate tax returns for the tax years 2010 and 2011 had been selected for examination. The examination was completed resulting in a net refund due the Company of approximately $17,000, which was received and recorded as a discrete benefit in the third quarter of 2014. The Company’s subsidiary in Italy, Vicor Italy S.r.l. (“Vicor Italy”), underwent during 2014 a tax inspection for tax years 2009 through 2013, covering corporation, regional and value added taxes. Vicor Italy received a preliminary tax audit report dated June 30, 2014. The Company filed a response to the preliminary tax audit report in the third quarter of 2014. While management believes it is too early to determine the likelihood or amount of potential liability at this time, it does not believe the ultimate impact of this matter will be material to the Company’s financial statements. Other than the Vicor Italy matter discussed above there are no other income tax examinations or audits currently in process.

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

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://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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration