Significant components of our deferred tax assets and liabilities as of December 31, 2014 and 2013 are as
follows (in thousands):
Year Ended December 31,
2014
2013
Deferred TaxAssets:
Net operating loss carryovers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 231,654 $ 260,462
R&D credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
93,594 65,600
Capitalized R&D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,088
2,736
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58,836 28,555
Accrued restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,374
3,304
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,762
7,107
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 393,308 $ 367,764
Deferred Tax Liabilities:
Convertible debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (73,733) $ (20,895)
Intangible and capital assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,641)
(4,614)
Net deferred tax asset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 315,934 $ 342,255
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (315,934) (342,255)
Net deferreds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
—
The deferred tax assets and liabilities shown above do not include certain deferred tax assets at
December 31, 2014 and 2013 that arose directly from (or the use of which was postponed by) tax deductions
related to equity compensation in excess of compensation recognized for financial reporting. Those deferred tax
assets include non-qualified stock options and incentive stock options we issued. We will increase stockholders’
equity by approximately $49.5 million if and when we ultimately realize such deferred tax assets. We use the
with and without approach for purposes of determining when excess tax benefits have been realized.
At December 31, 2014, we had federal and California tax net operating loss carryforwards of approximately
$671.9 million and $888.7 million, respectively. Our federal tax loss carryforwards begin to expire in 2023. Our
California tax loss carryforwards began to expire in 2014. At December 31, 2014, we also had federal and
California research and development tax credit carryforwards of approximately $86.0 million and $34.5 million,
respectively. Our Federal research and development tax credit carryforwards began expiring in 2004 and will
continue to expire unless we use them prior to expiration. Our California research and development tax credit
carryforwards are available indefinitely. In 2009, we had a substantial amount of taxable income and we used a
portion of our Federal NOL carryforwards to reduce our federal income taxes. We did not use any of our
California NOL carryforwards to offset our state taxes in 2009 because California suspended the use of NOL
carryforwards for 2009. As a result, our Federal NOL carryforwards are lower than our California NOL
carryforwards.
We analyze filing positions in all of the federal and state jurisdictions where we are required to file income
tax returns, and all open tax years in these jurisdictions to determine if we have any uncertain tax positions on
any of our income tax returns. We recognize the impact of an uncertain tax position on an income tax return at
the largest amount that the relevant taxing authority is more-likely-than not to sustain upon audit. We do not
recognize uncertain income tax positions if they have less than 50 percent likelihood of being sustained.
The following table summarizes our gross unrecognized tax benefits (in thousands):
Year Ended December 31,
2014
2013
2012
Beginning balance of unrecognized tax benefits . . . . . . . . . . . $23,964 $10,872 $ 9,834
Decrease for prior period tax positions. . . . . . . . . . . . . . . . . . .
(1,653)
— (174)
Increase for prior period tax positions . . . . . . . . . . . . . . . . . . .
— 9,821
791
Increase for current period tax positions. . . . . . . . . . . . . . . . . .
5,054 3,271
421
Ending balance of unrecognized tax benefits . . . . . . . . . . . . . . $27,365 $23,964 $10,872
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