Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Loss Before Income Tax Provision (Benefit)

The Company’s loss before income tax provision (benefit) was subject to taxes in the following jurisdictions for the following periods (in thousands):

	Year Ended December 31,
	2012			2011			2010
United States	$	(134,384	)	$	(105,841	)	$	(46,365	)
Foreign		16,338			15,580			10,803
	$	(118,046	)	$	(90,261	)	$	(35,562	)

Expense Benefit for Income Taxes

The expense (benefit) for income taxes is comprised of (in thousands):

	Year Ended December 31,
	2012			2011		2010
Current tax provision (benefit):
Federal	$	(357	)	$	19,908	$	(18,494	)
State		130			580		361
Foreign		6,804			4,964		5,743
		6,577			25,452		(12,390	)
Deferred tax expense (benefit):
Federal		(1,448	)		43,948		117
State		92			10,987		(2,988	)
Foreign		(321	)		1,172		(1,497	)
		(1,677	)		56,107		(4,368	)
Income tax provision (benefit)	$	4,900		$	81,559	$	(16,758	)

Components of Deferred Tax Assets and Liabilities

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2012 and 2011 are as follows (in thousands):

	December 31,
	2012			2011
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes	$	15,617		$	14,161
Basis difference related to fixed assets		10,711			7,891
Compensation and benefits		3,808			3,932
Basis difference for inventory valuation		2,502			2,252
Compensatory stock options and rights		5,238			9,927
Deferred revenue and other		101			2,151
Operating loss carryforwards		105,748			66,332
Tax credit carryforwards		6,024			9,402
Correlative effects of global income allocations		363			424
Federal impact of state taxes		808			—
Basis difference related to intangible assets with a definite life		6,165			2,725
Total deferred tax assets		157,085			119,197
Valuation allowance for deferred tax assets		(151,097	)		(110,844	)
Deferred tax assets, net of valuation allowance	$	5,988		$	8,353
Deferred tax liabilities:
State taxes, net of federal income tax benefit		(33	)		(1,472	)
Prepaid expenses		(1,102	)		(2,582	)
Deferred revenue		(330	)		—
Other		(69	)		(108	)
Basis difference related to intangible assets with an indefinite life		(32,834	)		(34,313	)
Total deferred tax liabilities		(34,368	)		(38,475	)
Net deferred tax assets	$	(28,380	)	$	(30,122	)
Net deferred tax assets are shown on the accompanying consolidated balance sheets as follows:
Current deferred tax assets	$	4,170		$	4,029
Non-current deferred tax assets		1,910			1,386
Current deferred tax liabilities		(927	)		(4,108	)
Non-current deferred tax liabilities		(33,533	)		(31,429	)
Net deferred tax assets (liabilities)	$	(28,380	)	$	(30,122	)

Credit Carryforward Expiry

At December 31, 2012, the Company has federal and state income tax credit carryforwards of $4,354,000 and $6,985,000 respectively, which will expire at various dates beginning in 2020. Such credit carryforwards (in thousands) expire as follows:

U.S. foreign tax credit	2,776	2020 - 2022
U.S. research tax credit	1,578	2030 - 2032
State investment tax credits	197	Do not expire
State research tax credits	6,788	Do not expire

Net Operating Losses Expiry

The net operating losses (in thousands) expire as follows:

U.S. loss carryforwards	$	272,861	2031 - 2032
State loss carryforwards	$	186,344	2013 - 2035
Foreign loss carryforwards	$	492	2019

Reconciliation of Effective Tax Rate on Income or Loss and Statutory Tax Rate

A reconciliation of the effective tax rate on income or loss and the statutory tax rate is as follows:

	Year Ended December 31,
	2012			2011			2010
Statutory U.S. tax rate		35.0	%		35.0	%		35.0	%
State income taxes, net of U.S. tax benefit		(0.8	)%		(0.8	)%		1.5	%
Federal and State tax credits, net of U.S. tax benefit		—			—			2.6	%
Expenses with no tax benefit		(0.9	)%		0.2	%		(2.4	)%
Foreign income taxed at other than U.S. statutory rate		2.0	%		(1.0	)%		1.5	%
Effect of foreign rate changes		—			(0.5	)%		—
Foreign tax credit		(1.2	)%		—			—
Basis differences of intangibles with an indefinite life		1.3	%		(1.0	)%		—
Release of prepaid taxes on intercompany profit		—			(24.0	)%		—
Change in deferred tax valuation allowance		(37.7	)%		(98.6	)%		2.2	%
Reversal of previously accrued taxes		0.1	%		—			1.4	%
Accrual for interest and income taxes related to uncertain tax positions		0.8	%		(0.6	)%		5.2	%
Other		(2.8	)%		0.9	%		0.1	%
Effective tax rate		(4.2	)%		(90.4	)%		47.1	%

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

	2012			2011			2010
Balance at January 1	$	9,875		$	9,121		$	15,831
Additions based on tax positions related to the current year		432			830			1,825
Additions for tax positions of prior years		96			370			110
Reductions for tax positions of prior years		(24	)		(39	)		(1,832	)
Settlement of tax audits		(768	)		—			(4,157	)
Reductions due to lapsed statute of limitations		(2,547	)		(407	)		(2,656	)

Major Jurisdictions No Longer Subject to Income Tax Examinations by Tax Authorities

The Company is generally no longer subject to income tax examinations by tax authorities in its major jurisdictions as follows:

Major Tax Jurisdiction	Years No Longer Subject to Audit
U.S. federal		2008 and prior
California (U.S.)		2006 and prior
Canada		2007 and prior
Japan		2007 and prior
South Korea		2008 and prior
United Kingdom		2008 and prior