Netgear 2013 Annual Report Download - page 87

Table of Contents NETGEAR, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits (“UTB”) is as follows (in thousands):
The total amount of net UTB that, if recognized would affect the effective tax rate as of December 31, 2013 is $11.8 million
. The ending net UTB
results from adjusting the gross balance at December 31, 2013
for items such as U.S. federal and state deferred tax, foreign tax credits, interest, and
deductible taxes. The net UTB is included as a component of non-current income taxes payable within the consolidated balance sheet.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. During the years ended
December 31, 2013 , 2012 , and 2011 , total interest and penalties expensed were $446,000 , $74,000 and $30,000 , respectively. As of
December 31,
2013 and December 31, 2012 , accrued interest and penalties on a gross basis was $2.1 million and $1.8 million
, respectively. Included in accrued
interest are amounts related to tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of
such deductibility. Because of the impact of deferred tax accounting, other than interest, the impact of any uncertain tax benefits related to temporary
differences would not affect the annual effective tax rate but would accelerate the payment of cash to the taxing authority to an earlier period.
With the exception of those foreign sales subsidiaries for which deferred tax has been provided, the Company intends to indefinitely reinvest
foreign earnings. These earnings were approximately $60.5 million and $63.4 million as of December 31, 2013 and December 31, 2012
, respectively.
Because of the availability of U.S. foreign tax credits, it is not practicable to determine the income tax liability that would be payable if such earnings
were not indefinitely reinvested.
Note 9. Commitments and Contingencies
Leases
The Company leases office space, cars and equipment under non-cancelable operating leases with various expiration dates through
December
2026 . Rent expense in the years ended, December 31, 2013 , 2012 , and 2011 was $9.9 million , $7.6 million
84
Federal, State, and Foreign
Tax
Gross UTB Balance at December 31, 2010
$
18,432
Additions based on tax positions related to the current year
1,795
Additions for tax positions of prior years
1,015
Settlements
(179
)
Reductions for tax positions of prior years
(2
)
Reductions due to lapse of applicable statutes
(3,699
)
Adjustments due to foreign exchange rate movement
(27
)
Gross UTB Balance at December 31, 2011
17,335
Additions based on tax positions related to the current year
711
Additions for tax positions of prior years
956
Settlements
(2,620
)
Reductions for tax positions of prior years
(3,590
)
Reductions due to lapse of applicable statutes
(449
)
Adjustments due to foreign exchange rate movement
(4
)
Gross UTB Balance at December 31, 2012
12,339
Additions based on tax positions related to the current year
1,866
Additions for tax positions of prior years
4,106
Settlements
(3,134
)
Reductions for tax positions of prior years
(1,163
)
Reductions due to lapse of applicable statutes
(1,314
)
Adjustments due to foreign exchange rate movement
43
Gross UTB Balance at December 31, 2013
$
12,743