Radio Shack 2013 Annual Report Download - page 60

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to be realized. The significant negative evidence of our
losses generated before income taxes in 2012 and the
unfavorable shift in our business could not be overcome by
considering other sources of taxable income, which
included the reversal of taxable temporary differences and
tax-planning strategies. These deferred tax assets are still
available to us to offset future taxable income, subject to
limitations in the event of an “ownership change” under
Section 382 of the Internal Revenue Code and we will
adjust this valuation allowance if we change our
assessment of the amount of deferred income tax asset
that is more likely than not to be realized.
We continue to provide a valuation allowance against all of
our U.S. federal and state deferred tax assets in 2013. As a
result, any U.S. federal or state income tax benefit related
to our operating losses in 2013 was offset by an increase in
our valuation allowance. In addition we determined, based
on an evaluation of the positive and negative evidence, that
the net deferred tax assets of our subsidiary, RadioShack
de Mexico, were not more likely than not to be realized.
Accordingly, we established a full valuation allowance
against RadioShack de Mexico’s deferred tax assets in the
amount of $5.2 million. This tax expense was partially
offset by the deferred tax benefit related to their current
operating losses. We continue to recognize income tax
expense or benefit related to our other foreign operations
and interest accrued on our liabilities for uncertain tax
positions. In addition, we continue to recognize income tax
expense in certain state jurisdictions.
We have not recorded deferred U.S. income taxes or
foreign withholding taxes on temporary differences resulting
from earnings for certain foreign subsidiaries that are
considered permanently invested outside the United States.
At December 31, 2013, there were no cumulative earnings
for those foreign subsidiaries for which earnings are
considered permanently invested outside the United States.
A reconciliation of the consolidated liability for gross
unrecognized income tax benefits (excluding interest) from
January 1, 2011, to December 31, 2013, is as follows:
(In millions) 2013 2012 2011
Balance at beginning of year $ 139.8 $ 27.3
$
25.9
Increases related to
prior period tax positions 4.3 96.9 1.8
Decreases related to
prior period tax positions (19.8) (2.9) (0.4)
Increases related to
current period tax positions 0.3 19.3 1.8
Settlements (5.0) (0.3) (0.6)
Lapse in applicable
statute of limitations (0.5) (0.5) (1.2)
Balance at end of year $ 119.1 $ 139.8
$
27.3
In 2012 we took certain tax positions that resulted in
approximately $97 million of tax benefits on our 2011
federal and state tax returns. In connection with these tax
positions, we recorded a liability for unrecognized tax
benefits, of which approximately $87 million was classified
as other non-current liabilities in our Consolidated Balance
Sheets. The remaining $10 million of unrecognized tax
benefit liabilities were offset as a reduction against certain
state net operating loss carryforwards recorded as part of
our deferred tax assets. These unrecognized tax benefits
are directly associated with tax positions taken in the tax
years that resulted in the net operating loss carryforwards.
The amount of unrecognized tax benefits that, if
recognized, would affect the effective tax rate as of
December 31, 2013, was $113.8 million.
We recognize accrued interest and penalties associated
with unrecognized tax benefits as part of the tax provision.
As of December 31, 2013 and 2012, we had $9.4 million
and $14.0 million, respectively, of accrued interest expense
associated with unrecognized tax benefits. Income tax
expense included interest associated with unrecognized tax
benefits of $4.2 million, $2.5 million, and $2.7 million, in
2013, 2012 and 2011, respectively.
RadioShack Corporation and its U.S. subsidiaries join in the
filing of a U.S. federal consolidated income tax return. The
U.S. federal statute of limitations is closed for all years prior
to 2007. Foreign and U.S. state jurisdictions have statutes
of limitations generally ranging from 3 to 5 years. Our tax
returns are currently under examination in various federal,
state and foreign jurisdictions. It is reasonably possible that
the amount of unrecognized tax benefits related to certain
tax positions could be reduced by $0.8 million over the next
12 months because of settlements or the expiration of the
applicable statute of limitations.
NOTE 11 – NET (LOSS) INCOME PER SHARE
Basic net (loss) income per share is computed based only
on the weighted-average number of common shares
outstanding for each period presented. Diluted net (loss)
income per share reflects the potential dilution that would
have occurred if securities or other contracts to issue
common stock had been exercised, converted, or resulted
in the issuance of common stock that would have then
shared in the earnings of the entity.
The following table reconciles the numerator and
denominator used in the basic and diluted net (loss) income
per share calculations for the years presented:
(In millions) 2013 2012 2011
Numerator:
(Loss) income from
continuing operations $ (392.0)
$
(110.8)
$
78.7
Discontinued operations,
net of taxes (8.2) (28.6) (6.5)
Net (loss) income $ (400.2)
$
(139.4)
$
72.2
Denominator:
Weighted-average
common shares
outstanding 100.7 100.1
102.5
Dilutive effect of
stock-based awards -- -- 0.8
Weighted-average shares
for diluted net
(loss) income per share 100.7 100.1 103.3