XML 110 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.6

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2012
Income Taxes [Abstract] |
Income Taxes | NOTE 14. INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to difference s between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company is subject to income taxes in certain foreign jurisdictions based on operations. Deferred tax assets and liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Deferred income tax assets are reviewed for recoverability and valuation allowances are provided when it is more likely than not that a deferred tax asset is not realizable in the future. Tax positions are recognized in the financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. As of December 31, 2012, the Company had no uncertain tax positions that quality for either recognition or disclosure in the financial statements. The Company conducts its business globally. As a result, the Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions, and are subject to examination for the open tax years of 2009-2011. The Company’s foreign operations that are considered to be permanently reinvested have statutory tax rates of approximately 19% - 33%. The Company recognizes interest expense and penalties related to income tax matters in income tax expense. No amounts were recorded related to interest expense and penalties related to income tax matters by the Company during the years ended December 31, 2012, 201 1, and 20 10, respectively, and for the Predecessor Company for the period from July 1, 2 009 to May 28, 2010. Consolidated income (losses) from continuing operations before income taxes consists of the following:
|  | Year Ended December 31,
|  | 2012 |  | 2011 |  | 2010
U.S. operations |  | $ | 3,179 |  | $ | 1,755 |  | $ | (21,430)
Foreign operations |  |  | (3,091) |  |  | 449 |  |  | 2,391
Income (loss) before income tax |  | $ | 88 |  | $ | 2,204 |  | $ | (19,039)
|  |  |  |  |  |  |  | Predecessor Company
|  |  |  |  |  |  |  | Period from July 1, 2009 to May 28, 2010
U.S. operations |  |  |  |  |  |  |  | $ | 7,530
Foreign operations |  |  |  |  |  |  |  |  | 1,537
Income before income tax |  |  |  |  |  |  |  | $ | 9,067
The components of the provision (benefit) for income taxes consist of the following:
|  | Year Ended December 31,
|  | 2012 |  | 2011 |  | 2010
Current: |  |  |  |  |  |  |  |  |
Federal |  | $ | 10 |  | $ | 206 |  | $ | -
State and local |  |  | (20) |  |  | 41 |  |  | -
Foreign |  |  | 3 |  |  | 321 |  |  | -
|  |  | (7) |  |  | 568 |  |  | -
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  | 2,115 |  |  | 98 |  |  | (4,344)
State and local |  |  | (1,067) |  |  | (132) |  |  | (885)
Foreign |  |  | (1,605) |  |  | (222) |  |  | -
|  |  | (557) |  |  | (256) |  |  | (5,229)
Decrease in valuation allowance for deferred income taxes |  |  | (1,300) |  |  | (3,000) |  |  | (65,000)
|  |  | (1,857) |  |  | (3,256) |  |  | (70,229)
Income tax benefit |  | $ | (1,864) |  | $ | (2,688) |  | $ | (70,229)
|  |  |  |  |  |  |  | Predecessor Company
|  |  |  |  |  |  |  | Period from July 1, 2009 to May 28, 2010
Current: |  |  |  |  |  |  |  |  |
Federal |  |  |  |  |  |  |  | $ | 1,621
State and local |  |  |  |  |  |  |  |  | 227
Foreign |  |  |  |  |  |  |  |  | 161
|  |  |  |  |  |  |  |  | 2,009
Deferred: |  |  |  |  |  |  |  |  |
Federal |  |  |  |  |  |  |  |  | 716
State and local |  |  |  |  |  |  |  |  | 100
Foreign |  |  |  |  |  |  |  |  | -
|  |  |  |  |  |  |  |  | 816
Income tax expense |  |  |  |  |  |  |  | $ | 2,825
During the year ended December 31, 2012, the Company’s deferred foreign benefit for income taxes included a benefit of $1,025 related to changes in enacted foreign statutory tax rates. The following is a reconciliation of the normal expected statutory federal income tax rate to the effective rate reported in the Company’s financial statements:
|  | Year Ended December 31,
|  | 2012 |  | 2011 |  | 2010
Computed "expected" income tax expense (benefit) |  | 34.0 | % |  | 34.0 | % |  | (34.0) | %
Increase (decrease) in income taxes resulting from: |  |  |  |  |  |  |  |  |
Foreign taxes |  | 145.1 |  |  | (2.4) |  |  | - |
State income taxes, net of federal income taxes |  | 126.2 |  |  | 3.5 |  |  | (3.3) |
Transactions costs |  | 682.9 |  |  | - |  |  | 8.4 |
Change in effective state rate |  | (501.4) |  |  | - |  |  | - |
Change in enacted foreign statutory rates |  | (1,178.1) |  |  | - |  |  | - |
Other |  | 365.4 |  |  | (21.0) |  |  | 1.4 |
Decrease in valuation allowance |  | (1,792.3) |  |  | (136.1) |  |  | (341.4) |
Income tax benefit |  | (2,118.2) | % |  | (122.0) | % |  | (368.9) | %
The Predecessor’s effective tax rates varied from federal statutory rates primarily due to nondeductible items and statutory exclusions, such as a portion of the Predecessor’s meals and entertainment expenses, state income taxes, foreign income not subject to federal tax, federal and state research and development credits, and d eductions related to domestic production activities. Deferred income tax assets and liabilities are determined based on the difference between the financial reporting carrying amounts and tax bases of existing assets and liabilities and operating loss and tax credit carryforwards. Significant components of the Company’s existing deferred income tax assets and liabilities as of December 31, 201 2 and 201 1 are as follows:
|  | December 31,
|  | 2012 |  | 2011
Deferred tax assets: |  |  |  |  |  |
Net operating loss, capital loss amount and research & experimentation credit carryforwards |  | $ | 82,140 |  | $ | 82,016
Non-cash compensation |  |  | 2,717 |  |  | 2,888
Accrued liabilities |  |  | 1,968 |  |  | 2,092
Reserves and other |  |  | 2,740 |  |  | 2,763
Intangibles |  |  | 2,411 |  |  | 2,492
|  |  | 91,976 |  |  | 92,251
Valuation allowance |  |  | (17,610) |  |  | (18,504)
Net deferred tax assets |  |  | 74,366 |  |  | 73,747
Deferred tax liabilities: |  |  |  |  |  |
Depreciation |  |  | (1,219) |  |  | (1,621)
Discount on notes |  |  | (2,383) |  |  | (2,846)
Intangibles |  |  | (26,610) |  |  | (18,012)
Other |  |  | (300) |  |  | (569)
|  |  | (30,512) |  |  | (23,048)
Total |  | $ | 43,854 |  | $ | 50,699
The net change in the valuation allowance for deferred income tax assets was $894 ($1,300 of this change was benefited through the Company’s income tax expense; whereas, the off-setting change of $406 relates to an increase in valuation allowance due to the acquisition of certain deferred tax assets where the more likely than not criteria was not met), $3,000, and $67,364 ($65,000 of this change was benefited through the Company’s income tax expense; whereas, the remaining change of $2,364 was off-set by the write-off of expiring NOL’s during 2010), during the years ended December 31, 2012, 201 1, and 20 10, respectively. In assessing the realizability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income assets is dependent upon the generation of future taxable income during t he periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Management has provided a valuation allowance against some of the net deferred income tax assets as of December 31, 2012, because the ultimate realization of those benefits and assets does not meet the more likely than not criteria. The recognition of a valuation allowance for deferred taxes requires management to make estimates and judgments about the Company’s future profitability which are inherently uncertain. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The estimates and judgments associated with the Company’s valuation of deferred taxes are considered critical due to the amount of deferred taxes recorded by the Company on its consolidated balance sheet and the judgment required in determining the Company’s future profitability. If, in the opinion of management, it becomes more likely than not that some portion or all of the deferred tax assets will not be realized, deferred tax assets would be reduced by a valuation allowance and any such reduction could have a material adverse effect on the financial condition of the Company. The Company’s conclusion, based upon applicable accounting guidelines, that the deferred tax assets noted above is more than likely than not to be realized reflects, among other things, its ability to generate taxable income and its projections of future taxable income and include future years that the Company estimates it would have available net operating loss carryforwards. While the Company believes that its estimate of future taxable income is reasonable, it is inherently uncertain. If the Company realizes unforeseen material losses in the future, or its ability to generate future taxable income necessary to realize a portion of the deferred tax assets is materially reduced, additions to the valuation allowance which reduce the deferred tax assets could be recorded. Moreover, because the majority of the Company’s deferred tax assets consist of net operating loss carryforwards for federal tax purposes, if change in control events occur which could limit the availability of the net operating loss carryforwards under Section 382 of the Internal Revenue Code of 1986 (“Code”), as amended, additions to the valuation allowance which would reduce the deferred tax assets could also be recorded. A roll forward of our valuation allowance for deferred income tax assets for the years ended December 31, 2012, 201 1, and 20 10 is as follows:
|  | Balance at Beginning of Period |  | Charged (Credited) to Costs and Expenses |  | Other Adjustments (a) |  | Balance at End of Period
2010 |  | $ | 88,868 |  | $ | (67,364) |  | $ | - |  | $ | 21,504
2011 |  |  | 21,504 |  |  | (3,000) |  |  | - |  |  | 18,504
2012 |  | $ | 18,504 |  | $ | (1,300) |  | $ | 406 |  | $ | 17,610
(a) | Increase in valuation allowance due to the acquisition of certain deferred tax assets where the more likely than not criteria was not met.
As of December 31, 2012, the Company had net operating loss, research and experimentation credit and alternative minimum tax credit carryforwards for U.S. federal income tax purposes of $214,195 ($1,853, relates to tax windfall, which will not be realized until an income tax payable exists), $1,640 and $291, respectively. The Company believes its U.S. Federal net operating loss (“NOL”) will substantially offset its future U.S. Federal income taxes, excluding the amount subject to U.S. Federal Alternative Minimum Tax (“AMT”). AMT is calculated as 20% of AMT income. For purposes of AMT, a maximum of 90% of income is offset by available NOLs. The majority of the Company’s pre-tax income is currently earned and expected to be earned in the U.S., or taxed in the U.S. as Subpart F. income and will be offset with the NOL. Of the $212,342 of net operating losses available to offset taxable income, all of which does not expire until 2020 or later, subject to compliance with Section 382 of the Internal Revenue Code, as amended (the “Code”) as indicated by the following schedule:
Net Operating Loss Carryforward Expiration Dates
December 31, 2012
Expiration Dates December 31, |  | Net Operating Loss Amount
2020 |  | $ | 27,465
2021 |  |  | 50,430
2022 |  |  | 115,000
2023 |  |  | 5,712
2024 |  |  | 3,566
2025 |  |  | 1,707
2026 |  |  | 476
2028 |  |  | 1,360
2029 |  |  | 4,074
2030 |  |  | 4,405
Total |  |  | 214,195
Tax windfall |  |  | (1,853)
After limitations |  | $ | 212,342

X
- 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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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=6881521&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 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: 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 7: 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 8: 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
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration