XML 61 R14.htm IDEA: XBRL DOCUMENT v2.4.1.9
Note 8 - Income Taxes
 12 Months Ended
Dec. 31, 2014
Note 8 - Income Taxes  
Note 8 - Income Taxes

Note 8 - Income Taxes

 

      Our income tax provision (benefit) consists of:

 

   Years Ended December 31,
   2014  2013
Current:          
   Federal  $—     $—   
   State   12    —   
   Foreign   65    94 
    77    94 
Deferred:          
   Federal   220    220 
   State   —      —   
   Foreign   (29)   (75)
    191    145 
Total income tax provision (benefit)  $268   $239 

 

The income tax provision (benefit) related to discontinued operations was immaterial in both years.

 

The deferred tax provision in both 2014 and 2013 is principally a result of the increase in the net deferred tax liability related to deferred tax liabilities generated from goodwill and certain intangible assets that cannot be predicted to reverse for book purposes during our loss carryforward periods.

 

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. Significant components of our deferred tax liabilities and assets are as follows:

 

   December 31,
   2014  2013
Deferred tax liabilities:          
   Property, plant and equipment  $—     $232 
   Intangible assets   4,462    4,242 
      Total deferred tax liabilities   4,462    4,474 
           
Deferred tax assets:          
   Property, plant and equipment   88    —   
   Net operating loss carryforwards   20,164    18,976 
   Tax credit carryforwards   1,455    1,380 
   Intangible assets   3,841    4,266 
   Accrued expenses, reserves and other   2,509    2,984 
      Total deferred tax assets   28,057    27,606 
Valuation allowance for deferred tax assets   (27,951)   (27,292)
Net deferred tax assets   106    314 
           
Net deferred tax liabilities  $4,356   $4,160 

 

Net deferred tax liabilities is comprised of the following balance sheet amounts:

 

   Years Ended December 31,
   2014  2013
       
Current deferred tax assets  $106   $91 
Current deferred tax liabilities   —     (9)
Non-current deferred tax liabilities   (4,462)   (4,251)
   $(4,356)  $(4,160)

 

The valuation allowance for deferred tax assets increased $659 and $1,041 in the years ended December 31, 2014 and 2013, respectively.

 

In 2014 and 2013, in the U.S. and the U.K., we continue to report a valuation allowance for our deferred tax assets that cannot be offset by reversing temporary differences. We continue to conclude that, based on historical factors, it is more likely than not that we will not fully utilize our U.S. and U.K. NOLs that have accumulated over time. The recognition of a valuation allowance on our deferred tax assets results from our evaluation of all available evidence, both positive and negative. The assessment of the realizability of the NOLs is based on a number of factors including, our history of net operating losses, the volatility of our earnings, our historical operating volatility, our historical inability to accurately forecast earnings for future periods and the continued uncertainty of the general business climate as of the end of 2014. We believe that these historical factors represent negative evidence sufficient to conclude that we should record a full valuation allowance against our deferred tax assets. In both 2014 and 2013, we have not recorded a valuation allowance against our foreign deferred tax assets as we believe that it is more likely than not that they will be realized. We continually assess the carrying value of this asset based on relevant accounting standards.

 

As of December 31, 2014, we have foreign and domestic NOLs and credit carryforwards totaling approximately $65,900 and $1,400, respectively, available to reduce future taxable income. Included in our NOL carryforward are foreign loss carryforwards of approximately $12,400 which can be carried forward indefinitely. The domestic NOL carryforward of $53,500 beginning in 2019, through 2034. The domestic NOL carryforward includes approximately $2,900 for which a benefit will be recorded in capital in excess of par value when realized.

 

     For financial reporting purposes, income (loss) from continuing operations before income taxes is as follows:

 

   Years Ended December 31,
   2014  2013
United States  $(1,808)  $(875)
Foreign   6    26 
   $(1,802)  $(849)

   

There are no undistributed earnings of our foreign subsidiaries, at December 31, 2014 or 2013.

 

      The provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to income (loss) from continuing operations before income taxes as follows:

 

   Years Ended December 31,
   2014  2013
       
Statutory income tax rate   34.0%   34.0%
(Increase) decrease in tax provision resulting from:          
    Equity compensation   (12.9)   (38.6)
    Income tax credits   4.2    13.9 
    Foreign tax rates   (1.9)   (1.2)
    Valuation allowance   (36.6)   (34.2)
    Other   (1.7)   (2.1)
Effective income tax rate   (14.9%)   (28.2%)

 

Accounting for Uncertainty in Income Taxes

 

Our unrecognized tax benefits related to uncertain tax positions at December 31, 2014 relate to Federal and various state jurisdictions. The following table summarizes the activity related to our unrecognized tax benefits:

 

   Years Ended December 31,
   2014  2013
Balance – beginning of year  $7,296   $7,508 
   Increases related to current year tax positions   —      —   
   Increases related to prior year tax positions   —      —   
   Decreases related to prior year tax positions   —      (212)
   Expiration of statute of limitations for assessment of taxes   —      —   
   Settlements with taxing authorities   —     —   
Balance – end of year  $7,296   $7,296 

 

The total unrecognized tax benefit balances at December 31, 2013 was comprised of tax benefits that, if recognized, would result in a deferred tax asset and a corresponding increase in our valuation allowance. As a result, because the benefit would be offset by an increase in the valuation allowance, there would be no net effect on our effective tax rate or income tax provision.

 

We are not required to accrue interest and penalties as the unrecognized tax benefits have been recorded as a decrease in our NOL. Interest and penalties would begin to accrue in the period in which the NOLs related to the uncertain tax positions are utilized. We do not expect our unrecognized tax benefits to change significantly over the next twelve months.

 

As a result of our operations, we file income tax returns in various jurisdictions including U.S. federal, U.S. state and foreign jurisdictions. We are routinely subject to examination by taxing authorities in these various jurisdictions. Our U.S. tax matters for the years 2001 through 2014 remain subject to examination by the Internal Revenue Service (“IRS”) due to our NOL carryforwards. Our U.S. tax matters for the years 2001 through 2014 remain subject to examination by various state and local tax jurisdictions due to our NOL carryforwards. Our tax matters for the years 2008 through 2013 remain subject to examination by the respective foreign tax jurisdiction authorities. The IRS is examining our U.S. income tax returns through 2013.