Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Income Tax Expense Benefit

Our provision for (benefit from) income taxes for the years ended December 31, 2012, 2011 and 2010 consisted of the following:

	Year Ended December 31,
	2012			2011			2010
Current tax benefit:	(Dollars in thousands)
Federal	$	(374	)	$	(3,652	)	$	(481	)
State		(1,210	)		(5,430	)		(5,350	)
Total current		(1,584	)		(9,082	)		(5,831	)
Deferred tax expense:
Federal		-			-			-
State		-			-			-
Total deferred		-			-			-
Benefit from income taxes	$	(1,584	)	$	(9,082	)	$	(5,831	)

Schedule of Effective Income Tax Rate Reconciliation

The provision for (benefit from) income taxes differs from the amount that would be computed by applying the statutory federal income tax rate of 35% to income before income taxes as a result of the following:

	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
Tax expense(benefit) computed at federal statutory rate	$	21,390		$	(37,615	)	$	(24,711	)
State income tax expense(benefit), net of federal benefit		2,139			(3,762	)		(2,471	)
Permanent differences		1,771			93			319
Expiration of statute, Arizona net operating loss		2,634			-			-
Liability for unrecognized tax benefits		(1,857	)		(9,173	)		(4,082	)
Change in valuation allowance		(27,661	)		41,375			25,114
Benefit from income taxes	$	(1,584	)	$	(9,082	)	$	(5,831	)
Effective tax rate		2.6%			8.5%			8.3%

Components of Deferred Tax Assets and Liabilities

The tax effects of significant temporary differences that give rise to the net deferred tax asset are as follows:

	December 31,
	2012			2011
Deferred tax assets:	(Dollars in thousands)
Federal net operating loss carryforward	$	129,695		$	133,454
State net operating loss carryforward		49,551			53,350
Asset impairment charges		14,080			31,137
Stock-based compensation expense		29,196			26,771
Warranty, litigation and other reserves		14,556			18,933
Accrued liabilities		12,166			10,667
Alternative minimum tax and other tax credit carry forwards		10,988			10,296
Inventory, additional costs capitalized for tax purposes		3,930			3,466
Unrealized loss on marketable securities		-			2,787
Charitable contribution on carryforward		520			942
Deferred revenue		629			580
Total deferred tax assets		265,311			292,383
Valuation allowance		(248,306	)		(281,178	)
Total deferred tax assets, net of valuation allowance		17,005			11,205
Deferred tax liabilities:
Deferred revenue		3,796			5,589
Property, equipment and other assets		5,753			706
Inventory, additional costs capitalized for financial statement purposes		450			542
Accrued liabilities		758			32
Unrealized gain on marketable securities		1,863			-
Other, net		4,385			4,336
Total deferred tax liabilities		17,005			11,205
Net deferred tax asset	$	-		$	-

Liability Associated with Unrecognized Tax Benefits

The following table summarizes our liability associated with unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010:

	Year Ended December 31,
	2012			2011			2010
	(Dollars in thousands)
Gross unrecognized tax benefits at beginning of year	$	2,712		$	48,963		$	52,837
Increases related to prior year tax positions		63			-			13
Decreases related to prior year tax positions		(84	)		(286	)		(2,323	)
Increases related to current year tax positions		-			85			385
Decreases related to current year tax positions		-			-			-
Settlements with taxing authorities		-			(38,543	)		(1,414	)
Lapse of applicable statute of limitations		(2,116	)		(7,507	)		(535	)
Gross unrecognized tax benefits at end of year	$	575		$	2,712		$	48,963