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INCOME TAXES - (Notes)
 12 Months Ended
Dec. 31, 2013
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES

The following is a summary of the components of (loss) earnings before (benefit) provision for income taxes for the periods presented:
 
 
 
For the year ended December 31,
 
 
2013
 
2012
 
2011
 
 
(Dollar amounts in millions)
Domestic
 
$
(31.8
)
 
$
0.2

 
$
(68.8
)
Foreign
 
20.4

 
24.6

 
(7.4
)
 
 
$
(11.4
)
 
$
24.8

 
$
(76.2
)

 
The following is a summary of the (benefit) provision for income taxes included in the accompanying consolidated statements of operations for the periods presented:
 
 
 
For the year ended December 31,
 
 
2013
 
2012
 
2011
 
 
(Dollar amounts in millions)
Federal income taxes:
 
 

 
 

 
 

Current
 
$
0.3

 
$
0.6

 
$
0.3

Deferred
 
(3.5
)
 
3.3

 
(20.8
)
 
 
(3.2
)
 
3.9

 
(20.5
)
Foreign
 
6.4

 
8.2

 
6.4

State
 
(6.3
)
 
3.2

 
(6.2
)
 
 
$
(3.1
)
 
$
15.3

 
$
(20.3
)

 
Included in the state provision above is a deferred benefit of approximately $4.2 million in 2013, a deferred provision of approximately $1.0 million in 2012, and a deferred benefit of approximately $8.3 million in 2011. There is no significant foreign deferred tax provision in any of these years.

Income tax payments, net of refunds, for 2013 and 2012 were approximately $12.2 million and $5.9 million, respectively. Net income taxes refunded during 2011 were approximately $4.6 million.

The following table reconciles the federal statutory income tax (benefit) provision and rate to the actual income tax (benefit) provision and related effective tax rate for the periods presented:

 
 
For the year ended December 31,
 
 
2013
 
2012
 
2011
 
 
$
 
%
 
$
 
%
 
$
 
%
 
 
(Dollar amounts in millions)
Income tax at the federal statutory rate
 
$
(4.0
)
 
35.0
 %
 
$
8.7

 
35.0
 %
 
$
(26.7
)
 
35.0
 %
Net change from federal statutory rate:
 
 
 
 

 
 
 
 

 
 
 
 
Change in valuation allowance related to deferred tax assets
 
5.3

 
(46.5
)
 
6.2

 
24.9

 
14.8

 
(19.4
)
Change in uncertain tax positions, including interest
 
(1.5
)
 
13.2

 
0.3

 
1.1

 
0.3

 
(0.4
)
State income tax, net of federal income tax effect
 
(4.1
)
 
35.9

 
2.1

 
8.4

 
(4.0
)
 
5.3

Tax effect resulting from foreign activities and foreign dividends
 
0.5

 
(4.3
)
 
(3.3
)
 
(13.4
)
 
(4.2
)
 
5.5

Non-deductible expenses
 
0.9

 
(7.9
)
 
2.3

 
9.4

 
1.5

 
(1.9
)
Research credits
 
(1.8
)
 
15.8

 
(1.7
)
 
(6.7
)
 
(1.7
)
 
2.2

Other, net
 
1.6

 
(14.0
)
 
0.7

 
3.0

 
(0.3
)
 
0.3

 
 
$
(3.1
)
 
27.2
 %
 
$
15.3

 
61.7
 %
 
$
(20.3
)
 
26.6
 %



The tax effect of temporary differences which give rise to significant portions of deferred income tax assets and liabilities as of December 31, 2013 and 2012 are as follows: 
 
 
December 31,
 
 
2013
 
2012
 
 
(Dollar amounts in millions)
Deferred Tax Assets (Liabilities) (classified current)
 
 

 
 

Arising From:
 
 

 
 

Accounts receivable
 
$
3.9

 
$
4.0

Inventories
 
(0.6
)
 
(0.9
)
Insurance reserves
 
2.5

 
2.8

Warranty accruals
 
10.7

 
9.3

Valuation allowances
 
(6.3
)
 
(5.8
)
Net loss and credit carry forwards
 
1.3

 
5.9

Other reserves and assets, net
 
18.2

 
14.0

 
 
$
29.7

 
$
29.3

Deferred Income Tax Assets (Liabilities) (classified non-current)
 
 

 
 

Arising From:
 
 

 
 

Property and equipment, net
 
$
(14.1
)
 
$
(19.3
)
Intangible assets, net
 
(227.7
)
 
(209.2
)
Pension and other benefit accruals
 
12.6

 
20.2

Insurance reserves
 
15.4

 
14.2

Warranty accruals
 
9.9

 
10.3

Net loss and credit carry forwards
 
47.9

 
40.2

Other reserves and assets, net
 
6.8

 
12.1

Valuation allowance
 
(39.9
)
 
(36.4
)
Tax deductible goodwill
 
30.0

 
35.2

 
 
$
(159.1
)
 
$
(132.7
)

 
The total deferred tax assets for the years ended December 31, 2013 and 2012 were approximately $159.2 million and $168.2 million, respectively. The total deferred tax liabilities for the years ended December 31, 2013 and 2012 were approximately $242.4 million and $229.4 million, respectively. The total valuation allowance for the years ended December 31, 2013 and 2012 were approximately $46.2 million and $42.2 million, respectively.

 As of December 31, 2009, as a result of income and related deferred tax liabilities recognized through fresh-start accounting, the Company determined that a valuation allowance was no longer required for most of its domestic deferred tax assets. The Company has sufficient reversing deferred tax liabilities available so that it is more likely than not that its federal deferred tax assets will be realized. The Company continues to maintain a valuation allowance for certain foreign net operating loss carryforwards, state net operating loss carryforwards, deferred state tax assets and for certain federal deferred tax assets that, if recognized, would result in capital losses. The increase in valuation allowance for 2013 relates to losses of certain foreign subsidiaries and losses in certain domestic jurisdictions. The Company has determined, based on the history of losses at these subsidiaries, and expectations for the future, a valuation allowance is required for these loss carry-forwards since it is more likely than not that these loss carry-forwards will not be realized.

At December 31, 2013, the Company has not provided United States income taxes or foreign withholding taxes on unremitted foreign earnings of approximately $45.0 million, as those amounts are considered indefinitely invested. Due to the complexities of the U.S. tax law, including the effect of U.S. foreign tax credits, it is not practicable to estimate the amount of tax that might be payable on these earnings in the event they no longer are indefinitely reinvested. The Company has provided United States income taxes and foreign withholding taxes on approximately $24.7 million of unremitted foreign earnings which are not indefinitely invested.

The Company has federal net operating loss carry forwards of approximately $7.0 million which will begin to expire in 2031 and approximately $2.5 million of federal research credit carryforwards that begin to expire in 2030. Included as part of the net operating loss and research credit carry forward are approximately $13.7 million related to the deductions for share-based compensation in excess of the corresponding book expense. The tax benefits of approximately $4.8 million related to these deductions will be recognized as a credit to additional paid in capital when the benefits are realized on a tax return. The Company accounts for excess stock compensation deductions on the basis that these are the last tax benefits that are utilized.

The federal net operating loss carry forward includes approximately $4.0 million that was acquired in connection with the acquisition of 2GIG.

The Company has state net operating losses in various jurisdictions which will begin to expire in 2015.

 The Company has approximately $96.0 million of foreign net operating loss carry-forwards that, if utilized, would offset future foreign tax payments. Approximately $85.2 million of these foreign net operating losses have an indefinite carry-forward period and the remaining foreign net operating losses will expire at various times beginning in 2017. The Company has recorded a full valuation allowance against these losses.

 A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ended December 31, 2013 and 2012 is as follows: 
 
 
December 31,
 
 
2013
 
2012
 
 
(Dollar amounts in millions)
 
 
 
 
 
Balance at January 1,
 
$
34.5

 
$
34.2

Gross increases related to positions taken in the current year
 
4.1

 
1.9

Gross increases related to positions taken in prior periods
 
1.6

 
—

Increases related to acquisitions
 
0.2

 
—

Decreases related to settlements with taxing authorities
 
(2.3
)
 
—

Decreases due to lapse of statutes of limitation related to state tax and foreign items
 
(4.3
)
 
(1.6
)
Decreases related to positions taken in the current year
 
$
(1.2
)
 
$
—

Balance at December 31,
 
$
32.6

 
$
34.5



As of January 1, 2013, the Company had a liability of approximately $26.4 million for unrecognized tax benefits related to various federal, foreign and state income tax matters.  The liability for uncertain tax positions at December 31, 2013 was approximately $22.8 million. The liability for uncertain tax positions is included in other long-term liabilities on the accompanying consolidated balance sheet. The corresponding amount of gross uncertain tax benefits was approximately $32.6 million and $34.5 million at December 31, 2013 and 2012, respectively.

During 2013, the Company increased the reserve for uncertain tax positions related to uncertainties surrounding the timing of deductions related to intercompany transactions with foreign affiliates. This item resulted in an increase of approximately $1.8 million in uncertain tax positions, with a corresponding increase in deferred tax assets of approximately $1.8 million. The increases in the liability for uncertain tax positions also include $0.8 million related to the audit of one of the Company’s foreign subsidiaries, discussed below.

During the first quarter of 2013, the Company reached a settlement related to certain state income tax matters.  As a result, the Company settled total uncertain tax positions of approximately $2.3 million and related interest of approximately $0.8 million for approximately $0.7 million.  The settlement resulted in a tax benefit in the first quarter of 2013 of approximately $1.6 million, net of related federal tax effect.

During the fourth quarter of 2013, the Company recorded a benefit of approximately $2.1 million related to the expiration of the statute of limitations in connection with an uncertain tax position that related to periods prior to the acquisition of Ergotron. This uncertain tax position was subject to an indemnification claim from the seller. As a result, the corresponding indemnification asset was written-off as part of SG&A in the fourth quarter of 2013.

As of December 31, 2013 and 2012, the amount of unrecognized tax benefits that, if recognized, would affect the Company's effective tax rate is approximately $12.8 million and $14.6 million, respectively. The difference between the total amount of uncertain tax positions and the amount that would affect the effective tax rate represents the federal tax effect of state tax items, items that offset temporary differences, and items that will result in a reduction of other tax assets.

As of December 31, 2013, the Company had approximately $3.9 million in unrecognized benefits relating to various tax issues, for which the statute of limitations is expected to expire in 2014.

As of December 31, 2013 and 2012, the total amount of accrued interest related to uncertain tax positions was approximately $2.1 million and $2.8 million, respectively.  In 2013, the Company has recorded a benefit of approximately $0.3 million as part of its 2013 tax provision related to a net reduction in interest on uncertain tax positions. The Company has included a provision of approximately $0.5 million as part of its 2012 tax provision related to an increase of interest on uncertain tax positions. The Company has included a benefit of approximately $0.6 million as part of its 2011 tax provision related to a reduction of interest on uncertain tax positions. The Company accounts for interest and penalties related to uncertain tax positions as part of its provision for federal and state taxes.

The Company's consolidated federal tax return has been audited through the period ended December 31, 2009. The Company's state and foreign tax filings generally remain open to examination by the relevant tax authority for the tax years 2009 through 2012. One of the Company's foreign subsidiaries is currently under audit for the years 2007 - 2012. In connection with this audit, the Company has recorded a liability of approximately $0.8 million for potential income tax liabilities and approximately $0.7 million for additional VAT liabilities.