Vonage 2013 Annual Report Download - page 74

F-18 VONAGE ANNUAL REPORT 2013
Note 5. Income Taxes
The components of income (loss) before income tax expense are as follows:
For the years ended December 31,
2013 2012 2011
United States $ 39,650 $46,904 $77,821
Foreign 6,345 11,818 8,519
$45,995 $58,722 $86,340
The components of the income tax (expense) benefit are as follows:
For the years ended December 31,
2013 2012 2011
Current:
Federal $ (907)$ (979)$ (1,199)
Foreign (155)(142)(24)
State and local taxes (337)(1,486)(1,674)
$ (1,399) $ (2,607)$ (2,897)
Deferred:
Federal $ (14,954) $ (12,642) $ 297,127
Foreign (1,603) (3,479)9,797
State and local taxes (238)(3,367)18,677
$ (16,795) $ (19,488) $ 325,601
$ (18,194) $ (22,095) $ 322,704
The following table summarizes deferred taxes resulting from differences between financial accounting basis and tax basis of assets and
liabilities.
December 31,
2013
December 31,
2012
Current assets and liabilities:
Deferred revenue $ 14,846 $13,806
Accounts receivable and inventory allowances 335 370
Accrued expenses 3,180 1,771
Deferred tax assets, net, current $ 18,361 $15,947
Non-current assets and liabilities:
Acquired intangible assets and property and equipment $ (23,762) $ 3,735
Research and development and alternative minimum tax credit 3,613 2,697
Stock option compensation 17,317 16,965
Capital leases (4,486)(3,250)
Deferred revenue (627)—
Net operating loss carryforwards 271,503 282,609
263,558 302,756
Valuation allowance (16,922) (12,590)
Deferred tax assets, net, non-current $ 246,636 $290,166
We recognize deferred tax assets and liabilities at enacted
income tax rates for the temporary differences between the financial
reporting bases and the tax bases of our assets and liabilities. Any effects
of changes in income tax rates or tax laws are included in the provision
for income taxes in the period of enactment. Our net deferred tax assets
primarily consist of net operating loss carry forwards (“NOLs”). We are
required to record a valuation allowance against our net deferred tax
assets if we conclude that it is more likely than not that taxable income
generated in the future will be insufficient to utilize the future income tax
benefit from our net deferred tax assets (namely, the NOLs), prior to
expiration. We periodically review this conclusion, which requires
significant management judgment. Until the fourth quarter of 2011, we
recorded a valuation allowance fully against our net deferred tax assets.
In 2011, we completed our first full year of taxable income and completed
our budgetary process for periods subsequent to 2011, which anticipates
continued taxable income in the future. Based upon these factors and
Table of Contents
VONAGE HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)