|3 Months Ended|
Mar. 31, 2016
|Income Tax Disclosure [Abstract]|
In order to determine the quarterly provision for income taxes, the Company used an estimated annual effective tax rate, which is based on expected annual income and statutory tax rates in the various jurisdictions in which the Company operates. The provision for income taxes primarily relates to projected current federal and state income taxes and income taxes in certain foreign jurisdictions. Certain significant or unusual items are separately recognized in the quarter during which they occur and can be a source of variability in the effective tax rates from quarter to quarter.
The Company utilizes the asset and liability method of accounting for income taxes. The Company records deferred tax assets to the extent it believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence quarterly, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies, and recent financial performance. Based upon the Company's review of all positive and negative evidence, including its three year U.S. cumulative pre-tax book loss and taxable loss, the Company concluded that a full valuation allowance should continue to be recorded against its U.S. net deferred tax assets at March 31, 2016. Additionally, the Company completed the acquisition of Entropic in the second quarter 2015. As a result of the acquisition, there was a valuation allowance release that resulted in a tax benefit of $1.8 million due to the purchase accounting adjustment for the net deferred tax liability. Furthermore, the Company does not incur expense or benefit in the certain tax free jurisdictions in which it operates.
The Company recorded a provision for income taxes of $2.6 million and $0.2 million for the three months ended March 31, 2016 and 2015, respectively. The provision for income taxes for the three months ended March 31, 2016 primarily relates to federal alternative minimum tax due to the Company’s limitation on use of net operating losses, state income taxes, and income taxes in certain foreign jurisdictions. The impact of the federal alternative minimum tax will be reduced when the Company adopts ASU No. 2016-09, Improvements to Share-Based Compensation, since net excess tax benefits will then be recognized in income tax expense or benefit in the statement of operations (Note 1). The provision for income taxes for the three months ended March 31, 2015 primarily relates to income taxes in certain foreign jurisdictions.
During the three months ended March 31, 2016, the Company’s unrecognized tax benefits increased by $0.3 million. The Company expects decreases to its unrecognized tax benefits of $0.1 million within twelve months, due to the lapse of statutes of limitations. Accrued interest and penalties associated with uncertain tax positions as of March 31, 2016 were $0.1 million and $0.05 million, respectively.
The Company is not currently under examination in any jurisdictions.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef