XML 138 R22.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2019
Income Tax Disclosure [Abstract] |
Income Taxes | INCOME TAXES Loss from operations before income taxes consists of the following (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
United States | $ | 1,769 |  |  | $ | (19,780 | ) |  | $ | (50,041 | )
International | (8,365 | ) |  | 2,832 |  |  | (34,666 | )
Loss before income taxes | $ | (6,596 | ) |  | $ | (16,948 | ) |  | $ | (84,707 | )
The components of the provision for (benefit from) income taxes consist of the following (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Current: |  |  |  |  |
Federal | $ | (180 | ) |  | $ | (305 | ) |  | $ | (4,530 | )
State | 108 |  |  | 116 |  |  | 129 |
International | 1,525 |  |  | 2,958 |  |  | 273 |
Deferred: |  |  |  |  |
International | (2,125 | ) |  | 1,318 |  |  | 2,376 |
Total provision for (benefit from) income taxes | $ | (672 | ) |  | $ | 4,087 |  |  | $ | (1,752 | )
The differences between the provision for (benefit from) income taxes computed at the U.S. federal statutory rate at 21% for 2019 and 2018, and 35% for 2017, and the Company’s actual provision for (benefit from) income taxes are as follows (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Benefit from for income taxes at U.S. Federal statutory rate | $ | (1,384 | ) |  | $ | (3,559 | ) |  | $ | (29,648 | )
Differential in rates on foreign earnings | 2,422 |  |  | 4,299 |  |  | 15,920 |
Tax Reform tax rate reduction | — |  |  | — |  |  | 14,527 |
Change in valuation allowance | (923 | ) |  | 1,449 |  |  | (2,834 | )
Change in liabilities for uncertain tax positions | (411 | ) |  | (250 | ) |  | (2,009 | )
Non-deductible stock-based compensation | 553 |  |  | 1,363 |  |  | 1,934 |
Permanent Differences | (698 | ) |  | 1,096 |  |  | 380 |
Adjustments related to tax positions taken during prior years | (403 | ) |  | 184 |  |  | (473 | )
Tax refund | — |  |  | (305 | ) |  | (834 | )
Other | 172 |  |  | (190 | ) |  | 1,285 |
Total provision for (benefit from) income taxes | $ | (672 | ) |  | $ | 4,087 |  |  | $ | (1,752 | )
The Company operates in multiple jurisdictions and its profits are taxed pursuant to the tax laws of these jurisdictions. The Company’s effective income tax rate may be affected by changes in its interpretations of tax laws and tax agreements in any given jurisdiction, utilization of net operating loss and tax credit carry forwards, changes in geographical mix of income and expense, and changes in management's assessment of matters such as the ability to realize deferred tax assets. The Company’s effective tax rate varies from year to year primarily due to the absence of several onetime, discrete items that benefited or decremented the tax rates in the previous years. In 2019, the Company had a worldwide consolidated loss before tax of $6.6 million and tax benefit of $0.7 million, with an annual effective income tax rate of 10%. The Company’s 2019 effective income tax rate differed from the U.S. federal statutory rate of 21% primarily due to geographical mix of income and losses, full valuation allowance against U.S. federal, California and other states deferred tax assets, foreign withholding taxes and income taxes on earnings from operations in foreign tax jurisdictions. In addition, during 2019, the Company recorded a one-time benefit of approximately $2.0 million due to changes in the Company's global tax structure, and a $0.8 million benefit from a valuation allowance release for one of its foreign subsidiaries. This release of the valuation allowance was due to changes in forecasted taxable income resulting from the Company receiving a favorable tax ruling during 2019. In 2018, the Company had a worldwide consolidated loss before tax of $16.9 million and tax expense of $4.1 million, with an annual effective income tax rate of (24)%. The Company’s 2018 effective income tax rate differed from the U.S. federal statutory rate of 21% primarily due to geographical mix of income and losses, full valuation allowance against U.S. federal, California and other states deferred tax assets, foreign withholding taxes and income taxes on earnings from operations in foreign tax jurisdictions. In 2017, the Company had a worldwide consolidated loss before tax of $84.7 million and tax benefit of $1.8 million, with an annual effective tax rate of 2%. The Company’s 2017 effective income tax rate differed from the U.S. federal statutory rate of 35% primarily due to geographical income mix, favorable tax rates associated with certain earnings from operations in lower-tax jurisdictions, tax rate change in foreign jurisdictions, tax benefits associated with the release of tax reserves for uncertain tax positions resulting from the expiration of the statutes of limitations, a one-time benefit of $2.6 million from the reduction of a valuation allowance on alternative minimum tax (“AMT”) credit carryforwards that will be refundable as a result of the TCJA, partially offset by the increase in the valuation allowance against U.S. federal, California and other state deferred tax assets, detriment from non-deductible stock-based compensation, and the net of various other discrete tax adjustments. The components of net deferred tax assets included in the Consolidated Balance Sheets are as follows (in thousands):
| December 31,
| 2019 |  | 2018
Deferred tax assets: |  |  |
Reserves and accruals | $ | 20,622 |  |  | $ | 17,090 |
Net operating loss carryforwards | 33,811 |  |  | 29,900 |
Research and development credit carryforwards | 36,914 |  |  | 36,446 |
Deferred stock-based compensation | 1,675 |  |  | 2,201 |
Intangibles | 8,224 |  |  | 2,585 |
Operating lease liabilities | 5,877 |  |  | — |
Capitalized research and development expenses | 10,897 |  |  | — |
Other | — |  |  | 939 |
Gross deferred tax assets | 118,020 |  |  | 89,161 |
Valuation allowance | (95,518 | ) |  | (77,144 | )
Gross deferred tax assets after valuation allowance | 22,502 |  |  | 12,017 |
Deferred tax liabilities: |  |  |
Depreciation | (1,272 | ) |  | (391 | )
Convertible notes | (6,275 | ) |  | (2,931 | )
Operating lease right-of-use assets | (4,061 | ) |  | — |
Other | (319 | ) |  | — |
Gross deferred tax liabilities | (11,927 | ) |  | (3,322 | )
Net deferred tax assets | $ | 10,575 |  |  | $ | 8,695 |
The following table summarizes the activities related to the Company’s valuation allowance (in thousands):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Balance at beginning of period | $ | 77,144 |  |  | $ | 77,756 |  |  | $ | 74,480 |
Additions | 23,929 |  |  | 928 |  |  | 9,028 |
Deductions | (5,555 | ) |  | (1,540 | ) |  | (5,752 | )
Balance at end of period | $ | 95,518 |  |  | $ | 77,144 |  |  | $ | 77,756 |
Management regularly assesses the ability to realize deferred tax assets recorded based upon the weight of available evidence, including such factors as recent earnings history and expected future taxable income on a jurisdiction by jurisdiction basis. In the event that the Company changes its determination as to the amount of realizable deferred tax assets, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made. In 2019, the Company continued to record a valuation allowance against all of its United States deferred tax assets due to cumulative losses in the United States. In addition, during the 2019, it recorded a partial valuation allowance on its deferred tax assets in Switzerland due to the generation of current year losses in excess of the amount that can be realized. This results in an increase to the valuation allowance of $23.9 million. This increase in the valuation allowance is offset partially by the release of $5.6 million valuation allowance against its Israel subsidiary due to a reduced tax rate as a result of a local tax authority ruling. As of December 31, 2019, the Company had a valuation allowance of $95.5 million against all of its U.S. federal and states net deferred tax assets and certain foreign deferred tax assets. On July 27, 2015, the U.S. Tax Court issued an opinion in Altera Corp. v. Commissioner, 145 T.C. No.3 (2015) related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was entered by the U.S. Tax Court on December 1, 2015 (the “2015 Decision”). On February 19, 2016, the U.S. Internal Revenue Service filed a notice of appeal in Altera Corp. v. Commissioner, 145 T.C. No. 3 (2015), to the Ninth Circuit Court of Appeals. The Ninth Circuit was to decide whether a regulation that mandates that stock-based compensation costs related to the intangible development activity of a qualified cost sharing arrangement (a “QCSA”) must be included in the joint cost pool of the QCSA (the “all costs rule”) is consistent with the arm’s length standard as set forth in Section 482 of the Internal Revenue Code. On June 7, 2019, the Ninth Circuit overturned the earlier Tax Court decision and ruled to include share-based compensation in the cost sharing pool. On July 22, 2019, Altera Corp. filed a petition for an en banc rehearing before the U.S. Court of Appeals for the Ninth Circuit, which was denied on November 12, 2019. Altera Corp. has 90 days from this date to petition the U.S. Supreme Court for review of the decision. During 2019, the Company continued to include share-based compensation in the cost base consistent with the Ninth Circuit's ruling. As of December 31, 2019, the Company had $159.8 million, $31.2 million, $27.0 million and $55.3 million of foreign, U.S. federal, U.S. California state, and U.S. other states net operating loss carryforwards (“NOL”), respectively. Certain foreign NOLs expire beginning in 2027, if not utilized, while the majority of the foreign NOLs carryforward indefinitely. The U.S. federal and California NOLs begin to expire at various dates beginning in 2026 through 2039, if not utilized. As of December 31, 2019, the Company had U.S. federal and California state tax credit carryforwards of approximately $13.7 million and $35.7 million, respectively. If not utilized, the U.S. federal tax credit carryforwards will begin to expire in 2031, while the California tax credit carryforward will not expire. The Company has not provided U.S. state income taxes and foreign withholding taxes, on approximately $20.5 million of cumulative earnings for certain non-U.S. subsidiaries, because such earnings are intended to be indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable. The Company applies the provisions of the applicable accounting guidance regarding accounting for uncertainty in income taxes, which require application of a more-likely-than-not threshold to the recognition and derecognition of uncertain tax positions. If the recognition threshold is met, the applicable accounting guidance permits the recognition of a tax benefit measured at the largest amount of such tax benefit that, in our judgment, is more than fifty percent likely to be realized upon settlement. It further requires that a change in judgment related to the expected ultimate resolution of uncertain tax positions to be recognized in earnings in the period in which such determination is made. The Company will continue to review its tax positions and provide for, or reverse, unrecognized tax benefits as issues arise. As of December 31, 2019, the Company had $15.7 million of unrecognized future tax benefits that would favorably impact the effective tax rate in future periods if recognized. The following table summarizes the activities related to the Company’s gross unrecognized tax benefits (in millions):
| Year ended December 31,
| 2019 |  | 2018 |  | 2017
Balance at beginning of period | $ | 18.0 |  |  | $ | 18.8 |  |  | $ | 19.2 |
Increase in balance related to tax positions taken during current year | 0.2 |  |  | 1.0 |  |  | 1.4 |
Decrease in balance as a result of a lapse of the applicable statues of limitations | (0.1 | ) |  | (0.1 | ) |  | (2.2 | )
Decrease in balance due to settlement with tax authorities | — |  |  | (1.6 | ) |  | — |
Increase in balance related to tax positions taken during prior years | — |  |  | 0.2 |  |  | 1.8 |
Decrease in balance related to tax positions taken during prior years | (1.1 | ) |  | (0.3 | ) |  | (1.4 | )
Balance at end of period | $ | 17.0 |  |  | $ | 18.0 |  |  | $ | 18.8 |
The Company recognizes interest and penalties related to unrecognized tax positions in income tax expenses on the Consolidated Statements of Operations. The net interest and penalties charges recorded for the years ended December 31, 2017 through 2019, were not material. The 2016 through 2019 tax years generally remain subject to examination by U.S. federal and most state tax authorities.

X
- References No definition available. + 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://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