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Income Taxes | 12 Months Ended
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Dec. 31, 2015
Income Tax Disclosure [Abstract] |
Income Taxes | Income Taxes Loss before income taxes for the years ended December 31, 2015, 2014 and 2013 is comprised of the following (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Domestic | $ | (48,965 | ) |  | $ | (39,513 | ) |  | $ | (44,142 | )
Foreign | (3,148 | ) |  | 408 |  |  | 812 |
Loss before income taxes | $ | (52,113 | ) |  | $ | (39,105 | ) |  | $ | (43,330 | )
The provision for income taxes for the years ended December 31, 2015, 2014 and 2013 is comprised of the following (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Current: |  |  |  |  |
Federal | $ | — |  |  | $ | — |  |  | $ | (248 | )
State | (6 | ) |  | 21 |  |  | 33 |
Foreign | 81 |  |  | 16 |  |  | (229 | )
Total Current | 75 |  |  | 37 |  |  | (444 | )
Deferred: |  |  |  |  |
Federal | — |  |  | — |  |  | 53 |
State | — |  |  | — |  |  | — |
Foreign | 106 |  |  | 87 |  |  | 474 |
Total Deferred | 106 |  |  | 87 |  |  | 527 |
Provision for income taxes | $ | 181 |  |  | $ | 124 |  |  | $ | 83 |
The Company’s net deferred tax liabilities consist of the following (in thousands):
| December 31,
| 2015 |  | 2014
Deferred tax assets: |  |  |
Accrued expenses | $ | 3,134 |  |  | $ | 4,566 |
Inventory obsolescence provision | 1,576 |  |  | 2,352 |
Depreciation and amortization | 5,613 |  |  | 4,137 |
Deferred rent | 321 |  |  | 555 |
Net operating loss and tax credit carryforwards | 96,848 |  |  | 76,346 |
Stock-based compensation | 1,685 |  |  | 1,910 |
Unrecognized tax benefits | 1,407 |  |  | 1,296 |
Deferred tax assets | 110,584 |  |  | 91,162 |
Deferred tax liabilities: |  |  |
Convertible Notes | (12,207 | ) |  | — |
Acquired intangible assets | (6,868 | ) |  | (388 | )
Deferred tax liabilities | (19,075 | ) |  | (388 | )
Valuation allowance | (94,984 | ) |  | (90,774 | )
Net deferred tax liabilities | $ | (3,475 | ) |  | $ | — |
The Company recognizes federal, state and foreign current tax liabilities or assets based on its estimate of taxes payable to or refundable by tax authorities in the current fiscal year. The Company also recognizes federal, state and foreign deferred tax liabilities or assets based on the Company’s estimate of future tax effects attributable to temporary differences and carryforwards. The Company records a valuation allowance to reduce any deferred tax assets by the amount of any tax benefits that, based on available evidence and judgment, are not expected to be realized. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. After a review of the four sources of taxable income described above and after being in a three year cumulative loss position at the end of 2015, the Company recognized a full valuation allowance against all of its U.S.-based and some foreign-based deferred tax assets. At December 31, 2015 and 2014, the Company recognized valuation allowances of $15.4 million and $11.3 million, respectively, related to its deferred tax assets created in those respective years. As a result, no net income tax benefits resulted in the Company’s statements for operations from the operating losses created during those years. The provision for income taxes reconciles to the amount computed by applying the statutory federal income tax rate of 34% in 2015, 2014 and 2013 to loss before income taxes as follows (in thousands):
| Year Ended December 31,
| 2015 |  | 2014 |  | 2013
Federal tax benefit, at statutory rate | $ | (17,718 | ) |  | $ | (13,447 | ) |  | $ | (14,732 | )
State benefit, net of federal benefit | (280 | ) |  | (1,054 | ) |  | (922 | )
Foreign tax rate difference | 222 |  |  | — |  |  | — |
Change in valuation allowance | 15,389 |  |  | 11,316 |  |  | 15,577 |
Change in fair value of warrant | — |  |  | 1,203 |  |  | — |
Beneficial conversion feature | — |  |  | 163 |  |  | — |
Research and development credits | (796 | ) |  | 3 |  |  | (1,084 | )
Share-based compensation | 752 |  |  | 2,402 |  |  | 2,433 |
Uncertain tax positions | — |  |  | (62 | ) |  | (307 | )
Change in state apportionment | 2,561 |  |  | (347 | ) |  | (767 | )
Other | 51 |  |  | (53 | ) |  | (115 | )
Provision for income taxes | $ | 181 |  |  | $ | 124 |  |  | $ | 83 |
At December 31, 2015, the Company has U.S. federal net operating loss carryforwards of approximately $217.2 million. Federal net operating loss carryforwards expire at various dates from 2029 through 2035. The Company has California net operating loss carryforwards of approximately $38.5 million, which expire at various dates from 2017 through 2035. The Company has Oregon net operating loss carryforwards of approximately $2.3 million, which begin to expire in 2030. The Company has foreign net operating losses of approximately $29.5 million. Foreign net operating losses have no expiration date. The Company has California research and development tax credit carryforwards of approximately $5.8 million. The California tax credits have no expiration date. The Company also has federal research and development tax credit carryforwards of approximately $4.4 million. The federal tax credits expire at various dates from 2027 through 2035. Pursuant to Internal Revenue Code (“IRC”) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an IRC Section 382/383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. The Company does not expect this analysis to be completed within the next 12 months. Due to the existence of the valuation allowance, future changes in the Company’s unrecognized tax benefits will not impact the Company’s effective tax rate. Any carryforwards that will expire prior to utilization as a result of such limitations will be removed from deferred tax assets, with a corresponding reduction of the valuation allowance. On December 31, 2015, the California Supreme Court overturned the decision of the California Court of Appeals in Gillette v. FTB. The California Supreme Court ruling, coupled with administrative guidance from the California Franchise Tax Board, has the effect of requiring California businesses to apportion their losses to California using a single sales factor, based on market approach starting in 2013. Accordingly, the Company has redetermined its California net operating loss carryforwards for 2013 and 2014 and deferred tax assets using a single sales factor. The Company estimated the reduction of its California net operating losses to be approximately $31.1 million. Due to the existence of the valuation allowance, the adjustment of California net operating losses and deferred tax assets did not impact the Company’s effective tax rate. It is the Company’s intention to reinvest undistributed earnings of its foreign subsidiaries and thereby indefinitely postpone their remittance. Accordingly, no provision has been made for foreign withholding taxes on United States income taxes which may become payable if undistributed earnings of the foreign subsidiary were paid as dividends to the Company. The Company follows the accounting guidance related to financial statement recognition, measurement and disclosure of uncertain tax positions. The Company recognizes the impact of an uncertain income tax position on an income tax return at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. During the year ended December 31, 2014, the Company recognized approximately $61,000 of income tax benefit. No income tax benefit was recognized during the year ended December 31, 2015. At December 31, 2015 and 2014, the Company did not have interest expense related to uncertain tax positions or a liability for unrecognized tax benefits. The Company does not expect changes to its uncertain tax position in the next twelve months. A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):
Balance at December 31, 2012 | $ | 33,220 |
Increases related to current and prior year tax positions | 2,653 |
Settlements and lapses in statutes of limitations | (373 | )
Balance at December 31, 2013 | 35,500 |
Increases related to current and prior year tax positions | 204 |
Settlements and lapses in statutes of limitations | (61 | )
Balance at December 31, 2014 | 35,643 |
Increases related to current and prior year tax positions | 160 |
Balance at December 31, 2015 | $ | 35,803 |
There are no tax benefits that, if recognized, would affect the effective tax rate that are included in the balances of unrecognized tax benefits at December 31, 2015. The Company and its subsidiaries file U.S., state, and foreign income tax returns in jurisdictions with various statutes of limitations. The Company is also subject to various federal income tax examinations for the 2003 through 2014 calendar years due to the availability of net operating loss carryforwards. The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. However, because audit outcomes and the timing of audit settlements are subject to significant uncertainty, the Company’s current estimate of the total amounts of unrecognized tax benefits could increase or decrease for all open years.

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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 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 2: 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 Reference 3: 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 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 + Details
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