Vonage 2015 Annual Report Download - page 80

VONAGE HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
F-20 VONAGE ANNUAL REPORT 2015
The components of the income tax expense are as follows:
For the years ended December 31,
2015 2014 2013
Current:
Federal $ (1,846) $ (1,452) $ (907)
Foreign (1,667) (376)(155)
State and local taxes (956)(803)(337)
$ (4,469) $ (2,631) $ (1,399)
Deferred:
Federal $ (11,289) $ (15,239) $ (14,954)
Foreign (1,088) (2,985)(1,603)
State and local taxes (1,572) (904)(238)
$ (13,949) $ (19,128) $ (16,795)
$ (18,418) $ (21,759) $ (18,194)
The following table summarizes deferred taxes resulting from differences between financial accounting basis and tax basis of assets and
liabilities.
December 31,
2015 December 31, 2014
Current assets and liabilities:
Deferred revenue $ 12,096 $13,265
Accounts receivable and inventory allowances 640 289
Accrued expenses 11,249 8,295
Deferred tax assets, net, current $ 23,985 $21,849
Non-current assets and liabilities:
Acquired intangible assets and property and equipment $ (33,129) $ (13,799)
Accrued expenses (1,054)(1,937)
Research and development and alternative minimum tax credit 6,630 4,952
Stock option compensation 20,545 17,802
Capital leases (6,442)(5,401)
Deferred revenue (634)(524)
Net operating loss carryforwards 237,127 241,525
223,043 242,618
Valuation allowance (20,456) (17,451)
Deferred tax assets, net, non-current $ 202,587 $225,167
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
our sustained profitable operating performance over the past three years
excluding certain losses associated with our prior convertible notes and
our December 2010 debt refinancing, our evaluation determined that
the benefit resulting from our net deferred tax assets (namely, the NOLs),
are likely to be realized prior to their expiration. Accordingly, we released
the related valuation allowance against our United States federal and
Canada net deferred tax assets, and a portion of the allowance against
our state net deferred tax assets as certain NOLs may expire prior to
utilization due to shorter utilization periods in certain states, resulting in
a one-time non-cash income tax benefit of $325,601 and a
corresponding net deferred tax asset of $325,601 in the fourth quarter
of 2011. We still maintain a full valuation allowance against our United
Kingdom net deferred tax assets as we are unable to conclude that it
is more likely than not that some or all of the related United Kingdom
net deferred tax assets will be realized.
In connection with the acquisition of iCore, we recorded a
deferred tax liability of $12,944 related to the $38,064 of identified
intangible assets that will be amortized for financial reporting purposes
but not for tax purposes and a deferred tax asset of $4,457 related to
NOLs.
In connection with the acquisition of Simple Signal, we
recorded a deferred tax liability of $2,441 related to the $6,407 of
identified intangible assets that will be amortized for financial reporting
purposes but not for tax purposes and a deferred tax asset of $3,182
related to NOLs.
In connection with the acquisition of Telesphere, we recorded
a deferred tax liability of $17,050 related to the $50,925 of identified
intangible assets that will be amortized for financial reporting purposes