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Income Taxes | 12 Months Ended
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Dec. 31, 2014
Income Taxes |
Income Taxes | Note 18 — Income Taxes The amounts of income from continuing operations before income taxes attributable to domestic and foreign operations were as follows:
|  | Year ended December 31, |
|  | 2014 |  |  | 2013 |  |  | 2012 |
|  |  |  |  | (in thousands) |  |  |  |
Domestic |  | $ | (95,195 | ) |  | $ | (84,942 | ) |  | $ | 5,811 |
Foreign |  | 16,841 |  |  | 13,732 |  |  | 32,375 |
|  | $ | (78,354 | ) |  | $ | (71,210 | ) |  | $ | 38,186 |
Significant components of the provision (benefit) for income taxes from continuing operations consisted of the following:
|  | Year ended December 31, |
|  | 2014 |  | 2013 |  | 2012 |
|  |  |  | (in thousands) |  |  |
Current: |  |  |  |  |  |  |
Federal |  | $ | (2,464 | ) | $ | (21,022 | ) | $ | 2,515 |
Foreign |  | 2,325 |  | 3,921 |  | 7,576 |
State and local |  | 55 |  | 148 |  | (317 | )
Total current provision (benefit) for income taxes |  | (84 | ) | (16,953 | ) | 9,774 |
Deferred: |  |  |  |  |  |  |
Federal |  | (11,230 | ) | (11,589 | ) | (482 | )
Foreign |  | (291 | ) | (462 | ) | 727 |
State and local |  | 191 |  | 57 |  | 1,638 |
Total deferred provision (benefit) for income taxes |  | (11,330 | ) | (11,994 | ) | 1,883 |
Total provision (benefit) for income taxes |  | $ | (11,414 | ) | $ | (28,947 | ) | $ | 11,657 |
The income tax expense from continuing operations was reconciled to the tax expense computed at the U.S. federal statutory tax rate as follows:
|  | Year ended December 31, |
|  | 2014 |  | 2013 |  | 2012 |
|  |  |  | (in thousands) |  |  |
Income tax provision (benefit) at U.S. statutory rates |  | $ | (27,424 | ) | $ | (24,923 | ) | $ | 13,366 |
State taxes, net of U.S. federal impact |  | (662 | ) | (1,554 | ) | (89 | )
Effect of international operations |  | (6,160 | ) | (4,275 | ) | (2,387 | )
Domestic production activities deduction |  | — |  | 1,554 |  | (489 | )
Research and development tax credit |  | (1,935 | ) | (3,151 | ) | (3,013 | )
Net change in valuation allowance |  | 27,156 |  | 2,420 |  | 2,943 |
Change in accrual for unrecognized tax benefits |  | (1,940 | ) | 577 |  | 533 |
Goodwill impairment |  | 9,786 |  | — |  | — |
Change in contingent consideration |  | (10,279 | ) | 290 |  | — |
Other |  | 44 |  | 115 |  | 793 |
Total provision (benefit) for income taxes |  | $ | (11,414 | ) | $ | (28,947 | ) | $ | 11,657 |
The Company entered into an agreement during the fourth quarter of fiscal year 2014 that concludes that it will receive a tax incentive pursuant to a negotiated tax holiday for the period from August 1, 2010 through July 31, 2014 in one of its foreign subsidiaries. As such, the Company reversed a $4.9 million tax liability, which represents the cumulative effect of calculating the tax provision using the incentive tax rate as compared to the foreign country’s statutory rate through the end of 2013. In connection with the acquisition of PSP, the Company recorded a $2.7 million deferred tax liability related to the difference between the basis of assets acquired as calculated for financial reporting purposes as compared with the basis of assets acquired as calculated for income tax purposes. Refer to Note 5, “Business combinations” for additional information on the acquisition of PSP. The Company did not record any excess tax benefits related to share-based compensation in 2014 or 2013, which would have been $0.6 million and $0.5 million, respectively. In the future, the Company will record the excess tax benefits to additional paid-in capital for financial reporting purposes when the net operating losses for excess tax benefits are utilized and reduce the Company’s current taxes payable. During 2012, the tax benefit from share-based incentive awards that was deductible for tax purposes exceeded that which was recorded for financial reporting purposes by $2.1 million and was recorded to “Additional paid-in capital” in the Consolidated Balance Sheets. Deferred income taxes reflect the effect of temporary differences between the carrying amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes. The tax effects of the temporary differences were as follows:
|  | December 31, |
|  | 2014 |  | 2013 |
|  | (in thousands) |
Deferred tax assets: |  |  |  |  |
Inventory valuation |  | $ | 8,244 |  | $ | 6,983 |
Net operating losses and credit carry forwards |  | 39,750 |  | 18,972 |
Warranty and installation accruals |  | 2,452 |  | 3,002 |
Share-based compensation |  | 11,794 |  | 10,638 |
Other |  | 2,647 |  | 3,716 |
Total deferred tax assets |  | 64,887 |  | 43,311 |
Valuation allowance |  | (34,909 | ) | (7,753 | )
Net deferred tax assets |  | 29,978 |  | 35,558 |
Deferred tax liabilities: |  |  |  |  |
Purchased intangible assets |  | 34,018 |  | 45,208 |
Undistributed earnings |  | 1,047 |  | 1,737 |
Depreciation |  | 2,274 |  | 4,711 |
Total deferred tax liabilities |  | 37,339 |  | 51,656 |
Net deferred taxes |  | $ | (7,361 | ) | $ | (16,098 | )
The Company did not make a provision for U.S. federal income taxes or additional withholding taxes on amounts invested in foreign subsidiaries in the amounts of $115.8 million and $101.0 million at December 31, 2014 and 2013, respectively, since such amounts are indefinitely reinvested. As such, it is not practicable to determine the amount of tax associated with such unremitted earnings. For financial reporting purposes, these balances are determined as amounts that exceed the tax basis of such investments. The Company has provided U.S. federal income taxes and additional withholding taxes on foreign earnings that are anticipated to be remitted. As of December 31, 2014, the Company had U.S. federal net operating loss carryforwards of approximately $53.3 million that will expire between 2031 and 2034, if not utilized. As of December 31, 2014, the Company had U.S. foreign tax credit carryforwards of $7.0 million that will expire between 2023 and 2024 and U.S. federal research and development credits of $9.2 million that will expire between 2031 and 2034. The Company also has state and local net operating losses and credit carryforwards. The Company makes assessments to estimate if sufficient taxable income will be generated in the future to use existing deferred tax assets. The Company’s cumulative three year loss in its domestic operations led to a full valuation allowance against the Company’s U.S. deferred tax assets, since the Company could not conclude that such amounts are realizable on a more-likely-than-not basis. As such, the Company increased the valuation allowance by approximately $27.2 million at December 31, 2014. The Company may amortize indefinite-lived intangible assets for tax purposes, which are not amortizable for financial reporting purposes. The deferred tax liability at December 31, 2014 relates to the tax effect of differences between financial reporting and tax bases of intangible assets that are not expected to reverse within the Company’s net operating loss carryforward period. A roll-forward of the Company’s uncertain tax positions for all U.S. federal, state, and foreign tax jurisdictions was as follows:
|  | December 31, |
|  | 2014 |  | 2013 |  | 2012 |
|  | (in thousands) |
Balance at beginning of year |  | $ | 6,228 |  | $ | 5,818 |  | $ | 4,748 |
Additions for tax positions related to current year |  | 244 |  | 324 |  | 435 |
Additions for tax positions related to prior years |  | 199 |  | 477 |  | 742 |
Reductions for tax positions related to prior years |  | (2,345 | ) | (224 | ) | (59 | )
Reductions due to the lapse of the applicable statute of limitations |  | (38 | ) | — |  | (48 | )
Settlements |  | (12 | ) | (167 | ) | — |
Balance at end of year |  | $ | 4,276 |  | $ | 6,228 |  | $ | 5,818 |
The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $4.3 million and $6.2 million at December 31, 2014 and 2013, respectively. The gross amount of interest and penalties accrued in income tax payable in the Consolidated Balance Sheets was approximately $0.3 million and $0.8 million at December 31, 2014 and 2013, respectively. The Company or one of its subsidiaries files income tax returns in the United States federal jurisdiction and various states, local, and foreign jurisdictions. All material federal income tax matters have been concluded for years through 2010 subject to subsequent utilization of net operating losses generated in such years. The recently settled 2010 IRS examination resulted in the reversal of approximately $2.3 million of liabilities relating to uncertain tax positions. The 2011 federal tax return is currently under examination. All material state and local income tax matters have been reviewed through 2008. The majority of the Company’s foreign jurisdictions have been reviewed through 2009. Principally all of the Company’s foreign jurisdictions remain open with respect to the tax years from 2010 through 2014. The Company does not anticipate that its uncertain tax position will change significantly within the next twelve months subject to the completion of the ongoing federal tax audit and any resultant settlement.

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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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