Entity information:

• Entity registrant name: SILVER SPRING NETWORKS INC
• CIK: 0001180079
• SEC filing page: http://www.sec.gov/Archives/edgar/data/1180079/000156459017003988/0001564590-17-003988-index.htm
• XBRL Instance: http://www.sec.gov/Archives/edgar/data/1180079/000156459017003988/ssni-20161231.xml
• XBRL Cloud Viewer: https://edgardashboard.xbrlcloud.com/flex/viewer/XBRLViewer.html#instance=http://www.sec.gov/Archives/edgar/data/1180079/000156459017003988/ssni-20161231.xml
• EDGAR Dashboard: https://edgardashboard.xbrlcloud.com/edgar-dashboard/?cik=0001180079
• Generator: Donnelley Financial Solutions
• Total assets: 447,128,000
• Income tax expense (benefit): 2,375,000
• Found reconcilation from statutory to effective rates: True
• Found income tax policy: Coming soon!

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9. INCOME TAXES

The components of (loss) income before income taxes are as follows (in thousands):

 

 

The provision for income taxes consists of the following (in thousands):  

 

 

The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate of 35% to loss before income taxes as follows (in thousands):  

 

 

Excess tax benefits associated with stock option exercises and other equity awards are credited to stockholders' deficit. The income tax benefits resulting from stock awards that were credited to stockholders' deficit were $0.1 million and $0.2 million for the years ended December 31, 2016 and 2015, respectively.

Deferred income taxes reflect the tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of our deferred tax assets and liabilities are as follows (in thousands):

 

Our deferred tax asset valuation allowance decreased by $11.1 million and $43.6 million in 2016 and 2015, respectively, which was primarily due to the utilization of U.S. deferred tax assets from net operating loss carryforwards. We have not yet been able to establish a sustained level of profitability in the United States or other sufficient significant positive evidence to conclude that our U.S. deferred tax assets are more likely than not to be realized. Therefore, we continue to maintain a valuation allowance against our U.S. deferred tax assets, our most significant jurisdiction where we maintain a full valuation allowance.

 

As of December 31, 2016, we had federal and state net operating loss carryforwards of $140.2 million and $265.1 million, respectively. If not utilized, the federal and state net operating loss carryforwards will begin to expire in 2028 and 2018, respectively.  In addition, we had federal and California research tax credit carryforwards of $11.9 million and $15.2 million, respectively. The federal credit carryforwards will begin to expire in 2024, and the California credit carryforwards have no expiration date.

Under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. It is possible that an ownership change, or any future ownership change, could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our operating results.

Below summarizes the change in deferred tax assets valuation allowance (in thousands):

 

 

 

Undistributed earnings of our foreign subsidiaries amounted to $3.4 million as of December 31, 2016. Those earnings are considered to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, we would be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. The income tax liability that might be incurred if these earnings were to be distributed is not material to our financial statements because of our full valuation allowance position.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in thousands):

 

 

As of December 31, 2016, $0.2 million of the gross unrecognized tax benefits have been recorded as other liabilities.  The remainder is reflected as a reduction of deferred tax assets.  Up to $11.6 million and $9.8 million of unrecognized tax benefits at December 31, 2016 and 2015, respectively, would reduce our effective income tax rate in future periods if recognized. However, one or more of these unrecognized tax benefits relate to deferred tax assets that could be subject to a valuation allowance if and when recognized in a future period, which could impact the timing and amount of any related effective tax rate benefit.

We recognize interest and penalties related to uncertain tax positions in income tax expense. To the extent accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction of the provision for income taxes in the period that such determination is made. Due to our net operating loss position, we have not recorded interest and penalties related to uncertain tax positions as of December 31, 2016.

We file income tax returns in the United States, including various states, and certain foreign jurisdictions. The tax years 2002 to 2016 remain open to examination by the major taxing jurisdictions in which we are subject to tax. As of December 31, 2016, we were not under examination by the Internal Revenue Service or any state or foreign tax jurisdiction.