Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Loss Before Income Tax Provision (Benefit)

The Company’s income (loss) before income tax provision was subject to taxes in the following jurisdictions for the following periods (in thousands):



	Years Ended December 31,
	2015		2014		2013
United States	$	6,864	$	6,981	$	(28,622	)
Foreign	13,199		14,658		15,300
	$	20,063	$	21,639	$	(13,322	)

Expense Benefit for Income Taxes

The expense (benefit) for income taxes is comprised of (in thousands):



	Years Ended December 31,
	2015			2014			2013
Current tax provision (benefit):
Federal	$	271		$	496		$	195
State	431			612			382
Foreign	4,393			4,930			6,487
	5,095			6,038			7,064
Deferred tax expense (benefit):
Federal	(41		)	(1,549		)	1,100
State	113			70			(817		)
Foreign	328			1,072			(1,748		)
	400			(407		)	(1,465		)
Income tax provision	$	5,495		$	5,631		$	5,599

Components of Deferred Tax Assets and Liabilities

Deferred tax assets and liabilities of prior periods are classified as current or noncurrent according to the classification of the related asset or liability. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2015 and 2014 are as follows (in thousands):



	December 31,
	2015			2014
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$	14,292		$	15,861
Basis difference related to fixed assets	10,170			10,943
Compensation and benefits	8,964			8,147
Basis difference for inventory valuation	1,764			1,526
Compensatory stock options and rights	3,659			4,334
Deferred revenue and other	169			201
Operating loss carryforwards	96,067			100,227
Tax credit carryforwards	19,787			15,987
Basis difference related to intangible assets with a definite life	16,617			15,557
Other	(162		)	435
Total deferred tax assets	171,327			173,218
Valuation allowance for deferred tax assets	(164,616		)	(165,427		)
Deferred tax assets, net of valuation allowance	$	6,711		$	7,791
Deferred tax liabilities:
Prepaid expenses	(868		)	(1,368		)
Basis difference related to intangible assets with an indefinite life	(33,974		)	(34,065		)
Total deferred tax liabilities	(34,842		)	(35,433		)
Net deferred tax liabilities	$	(28,131	)	$	(27,642	)
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets as follows:
Current deferred tax assets	$	—		$	5,081
Non-current deferred tax assets	6,962			2,346
Current deferred tax liabilities	—			(26		)
Non-current deferred tax liabilities	(35,093		)	(35,043		)
Net deferred tax liabilities	$	(28,131	)	$	(27,642	)

Credit Carryforward Expiry

At December 31, 2015, the Company had federal and state income tax credit carryforwards of $15,136,000 and $11,994,000, respectively, which will expire at various dates beginning in 2020. Such credit carryforwards expire as follows (in thousands):



U.S. foreign tax credit	$	8,983	2020 - 2025
U.S. research tax credit	$	6,135	2030 - 2035
U.S. business tax credits	$	18	2030 - 2035
State investment tax credits	$	795	Do not expire
State research tax credits	$	11,199	Do not expire

Net Operating Losses Expiry

The Company has recorded a deferred tax asset reflecting the benefit of operating loss carryforwards. The net operating losses expire as follows (in thousands):



U.S. loss carryforwards	$	244,923	2031 - 2035
State loss carryforwards	$	172,259	2015 - 2035

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:



	Years Ended December 31,
	2015		2014		2013
Statutory U.S. tax rate	35.0	%	35.0	%	35.0	%
State income taxes, net of U.S. tax benefit	3.5	%	1.9	%	0.9	%
Federal and State tax credits, net of U.S. tax benefit	(11.5	)%	(9.8	)%	22.6	%
Foreign income taxed at other than U.S. statutory rate	(2.4	)%	(13.4	)%	(5.1	)%
Effect of foreign rate changes	0.9	%	1.3	%	(4.2	)%
Foreign tax credit	(12.0	)%	(13.5	)%	9.4	%
Basis differences of intangibles with an indefinite life	0.1	%	0.1	%	(4.1	)%
Change in deferred tax valuation allowance	0.3	%	35.3	%	(76.8	)%
Accrual for interest and income taxes related to uncertain tax positions	(0.3	)%	(7.3	)%	(0.1	)%
Income (loss) from flowthrough entities	(2.0	)%	(1.9	)%	1.3	%
Meals and entertainment	3.4	%	3.3	%	(7.2	)%
Group loss relief	(3.7	)%	(2.6	)%	4.9	%
Stock option compensation	(1.9	)%	2.3	%	(6.9	)%
Foreign dividends and earnings inclusion	7.1	%	(0.9	)%	(6.8	)%
Foreign tax withholding	1.4	%	2.4	%	(1.5	)%
Executive compensation limitation	4.3	%	—	%	—	%
Other	5.2	%	(6.2	)%	(3.4	)%
Effective tax rate	27.4	%	26.0	%	(42.0	)%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):



	2015			2014			2013
Balance at January 1	$	6,559		$	11,851		$	7,064
Additions based on tax positions related to the current year	1,120			638			4,853
Additions for tax positions of prior years	132			121			545
Reductions for tax positions of prior years	(255		)	(3,691		)	(538		)
Settlement of tax audits	—			(258		)	—
Reductions due to lapsed statute of limitations	(466		)	(2,102		)	(73		)
Balance at December 31	$	7,090		$	6,559		$	11,851

Major Jurisdictions No Longer Subject to Income Tax Examinations by Tax Authorities

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company is generally no longer subject to income tax examinations by tax authorities in its major jurisdictions as follows:



Major Tax Jurisdiction	Years No Longer Subject to Audit
U.S. federal	2010 and prior
California (U.S.)	2008 and prior
Canada	2009 and prior
Japan	2008 and prior
South Korea	2009 and prior
United Kingdom	2011 and prior