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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Provision for Income Tax

Provision for income taxes reflected in the accompanying consolidated statements of operations are comprised of the following (in thousands):

		2013				2014				2015
Federal		$	(1,862	)		$	(4	)		$	—
State and local			(390	)			287				708
Foreign			4,894				3,887				3,044
Total Current			2,642				4,170				3,752
APIC			(160	)			(84	)			—
Deferred			129				(371	)			(329	)
Total		$	2,611			$	3,715			$	3,423

Components of Deferred Tax Assets (Liabilities)

The components of deferred tax assets/(liabilities) are as follows (in thousands):

		2014				2015
Net deferred tax assets/(liabilities):
Current:
Reserve for sales allowances and possible losses		$	1,034			$	797
Accrued expenses			8,231				1,252
Prepaid royalties			16,322				13,869
Accrued royalties			5,029				4,178
Inventory			4,065				3,495
State income taxes			(8,206	)			(7,231	)
Other			709				487
Gross current			27,184				16,847
Valuation allowance			(23,826	)			(19,586	)
Net current			3,358				(2,739	)
Long Term:
Federal and state net operating loss carryforwards			29,383				37,473
Property and equipment			4,542				4,039
Original issue discount interest			(13,561	)			(10,419	)
Goodwill and intangibles			43,269				36,990
Share based compensation			2,309				2,487
Other			11,037				11,228
Gross long-term			76,979				81,798
Valuation allowance			(82,959	)			(81,352	)
Net long-term			(5,980	)			446
Total net deferred tax assets/(liabilities)		$	(2,622	)		$	(2,293	)

Significant Differences in Tax at Statutory and Effective Rates

Provision for income taxes varies from the U.S. federal statutory rate. The following reconciliation shows the significant differences in the tax at statutory and effective rates:

		2013				2014				2015
Federal income tax expense			35.0	%			35.0	%			35.0	%
State income tax expense, net of federal tax effect			6.2				―				1.0
Effect of differences in U.S. and Foreign statutory rates			4.8				(14.1	)			(9.4	)
Uncertain tax positions			0.4				―				0.3
Earn out adjustments			―				―				(7.4	)
Provision to return			―				―				12.2
Other			4.3				(0.4	)			1.6
Foreign deemed dividend			(45.3	)			―				1.7
Foreign tax credit			21.4				―				(0.5	)
Valuation allowance			(31.9	)			(5.8	)			(21.6	)
			(5.1	)%			14.7	%			12.9	%

Income (Loss) Before Provision (benefit) for Income Tax

The components of income (loss) before provision (benefit) for income taxes are as follows (in thousands):

		2013				2014				2015
Domestic		$	(66,470	)		$	5,358			$	11,692
Foreign			15,175				19,866				14,901
		$	(51,295	)		$	25,224			$	26,593

Effective Tax Rate

The following table provides further information of UTPs that would affect the effective tax rate, if recognized, as of December 31, 2015 (in millions):

Balance, January 1, 2013		$	4.8
Current year additions			0.3
Current year reduction due to lapse of applicable statute of limitations			(2.5	)
Balance, December 31, 2013			2.6
Current year additions			—
Current year reduction due to lapse of applicable statute of limitations			(0.1	)
Balance, December 31, 2014			2.5
Current year additions			1.8
Current year reduction due to audit settlement			(2.1	)
Balance, December 31, 2015		$	2.2

X

- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 10
-Section 50
-Paragraph 9
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