XML 45 R15.htm IDEA: XBRL DOCUMENT v3.3.0.814
Income Taxes
9 Months Ended
Sep. 30, 2015
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes
Income taxes for the interim periods presented have been included in the accompanying condensed consolidated financial statements on the basis of an estimated annual effective tax rate. Based on an estimated annual effective tax rate and discrete items, the estimated income tax benefit for the three- and nine-month periods ended September 30, 2015 was $22.1 million and $27.8 million, respectively. The estimated income tax expense for the three-month period ended September 30, 2014 was $3,933, and the estimated income tax benefit for the nine-month period ended September 30, 2014 was $0.1 million. The determination of the interim period income tax provision utilizes the effective tax rate method, which requires us to estimate certain annualized components of the calculation of the income tax provision, including the annual effective tax rate by entity and jurisdiction.
We continually evaluate all positive and negative information to determine if our deferred tax assets are realizable in accordance with ASC 740-10-30, which states that "all available evidence shall be considered in determining whether a valuation allowance for deferred tax assets is needed". In October 2015, we reached proposed agreements with the staff of the Federal Trade Commission (“FTC”), which remains subject to approval by the Commission and entry by the court, and with representatives of a national class of consumers, which remains subject to approval by the court, on a comprehensive settlement resolving outstanding litigation relating to our past marketing representations and information security programs. As a result of these proposed settlements, as well as a reserve for potential settlements with certain states' attorneys general of $3 million, we accrued a settlement amount of $96 million in the three and nine month periods ended September 30, 2015. In the twelve month period ended December 31, 2014 we accrued $20 million based on discussions with the FTC at that time. As a result of the cumulative $116 million of accrued expenses related to the proposed settlements and potential settlements, we have three years of cumulative pre tax net losses. We reviewed the accrued expense, including performing an analysis of the proposed settlements, and determined that it was non-recurring in nature, not indicative of future performance and as such would not materially affect our ability to generate taxable income in the future. In addition to excluding the impact of the non-recurring accrued expenses for the proposed settlements we have seen improving pre-tax book income over the past 5 years and we expect to continue generating pre-tax book income. As a result of the consideration of the factors discussed above, we believe that it is more likely than not that we will be able to realize our net deferred tax assets not currently subject to a valuation allowance.