|3 Months Ended|
Mar. 31, 2017
|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, the Company concluded that a full valuation allowance should continue to be recorded against its U.S. and certain foreign net deferred tax assets at March 31, 2017. Furthermore, the Company does not incur expense or benefit in certain tax free jurisdictions in which it operates.
The Company recorded a provision for income taxes of $2.0 million and $1.0 million in the three months ended March 31, 2017 and 2016, respectively. The provision for income taxes in the three months ended March 31, 2017 primarily relates to federal alternative minimum tax due to the Company’s limitation on use of net operating losses, credit carryforwards, state income taxes, and income taxes in certain foreign jurisdictions. In the three months ended March 31, 2017, the Company elected to early adopt ASU No. 2016-16, Income Taxes (Topic 740), which requires companies to recognize the income tax effects of intra-entity sales and transfers of assets other than inventory in the period in which the transfer occurs (Note 1). The amendments in this update are applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. Due to a full valuation allowance on the Company's U.S. and certain foreign deferred tax assets, the adoption of the amendments in this update did not have a material impact on the Company’s consolidated financial position and results of operations for the three months ended March 31, 2017.
The income tax provision in the three months ended March 31, 2016 primarily relates to federal tax due to the Company’s limitation on use of net operating losses, state income taxes, and income taxes in certain foreign jurisdictions. During the quarter ended June 30, 2016, the Company adopted ASU No. 2016-09, Improvements to Share Based Compensation, which resulted in the recognition of excess tax benefits within the provision for income taxes in the unaudited consolidated statement of operations. ASU No. 2016-09 permitted early adoption in an interim period but required the adjustments to be reflected as of the beginning of the fiscal year that includes that interim period and accordingly, we restated the previously reported income tax provision for the three months ended March 31, 2016. For the three months ended March 31, 2016, the impact of including net excess tax benefits was to reduce the provision for income taxes by $1.6 million (Note 1).
During the three months ended March 31, 2017, the Company’s unrecognized tax benefits increased by $0.5 million. The Company expects decreases to its unrecognized tax benefits of $0.2 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, 2017 were $0.19 million and $0.02 million, respectively.
The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of March 31, 2017, the Company's tax years for 2013 to 2016, 2012 to 2016, and 2009 to 2016 are subject to examination by federal, state, and foreign tax authorities. The Company is not currently under any tax examinations.
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