Rosetta Stone 2010 Annual Report Download - page 106

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Table of Contents
ROSETTA STONE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. INCOME TAXES (Continued)
During the quarter ended December 31, 2010, the Company determined that the relative weight of positive and negative evidence supports that it is more
likely than not that the deferred tax assets relating to foreign operations will be realized and accordingly the Company released its valuation allowance. The
Company had evaluated the valuation allowance on its foreign deferred tax assets quarterly prior to making the determination to release the valuation
allowance during the quarter ended December 31, 2010. As of December 31, 2010, the Company had $3.3 million of net operating loss ("NOL")
carryforwards for United Kingdom income tax purposes that do not expire, with a tax value of $0.9 million. The Company also had $0.5 million of NOL
carryforwards for Japanese income tax purposes which expire in 2015, with a tax value of $0.2 million.
The components of income (loss) before income taxes are as follows (in thousands):
Year Ended December 31,
2010 2009 2008
United States $ 1,683 $ 19,030 $ 36,109
Foreign 11,190 1,417 (8,782)
Income before income taxes $ 12,873 $ 20,447 $ 27,327
The provision for taxes on income consists of the following (in thousands):
Federal $ 2,739 $ 7,555 $ 12,842
State 1,066 1,864 2,788
Foreign 1,738 140 34
Total current $ 5,543 $ 9,559 $ 15,664
Deferred:
Federal $ (3,099) $ (1,917) $ (1,946)
State (456) (430) (283)
Foreign (2,399) (128) —
Total deferred (5,954) (2,475) (2,229)
Provision for income taxes $ (411) $ 7,084 $ 13,435
F-32