Rosetta Stone 2011 Annual Report Download - page 115

Table of Contents
ROSETTA STONE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. INCOME TAXES
The following table summarizes the significant components of the Company's deferred tax assets and liabilities as of December 31, 2011 and 2010 (in
thousands):
As of
December 31,
2011 2010
Deferred tax assets:
Inventory $ 478 $ 1,015
Amortization and depreciation 509 1,995
Net operating loss carryforwards 1,002 1,105
Deferred revenue 1,826 2,026
Accrued liabilities 9,117 8,714
Stock-based compensation 4,271 2,926
Bad debt reserve 770 698
Foreign currency translation 77 59
Foreign and other tax credits 1,704 —
19,754 18,538
Valuation allowance — —
19,754 18,538
Deferred tax liabilities:
Prepaid expenses 727 876
Foreign currency translation loss — —
Other 4 5
731 881
Net deferred tax assets $ 19,023 $ 17,657
Net deferred tax assets as of December 31 are classified as follows:
Current $ 10,985 $ 11,159
Non-current 8,038 6,498
Total $ 19,023 $ 17,657
During the quarter ended December 31, 2010, the Company determined that the relative weight of positive and negative evidence supported 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, 2011, the Company had fully utilized the net operating loss ("NOL")
carryforwards for United Kingdom income tax purposes and the NOL carryforwards for Japanese income tax purposes upon which the valuation allowance
had been released.
At December 31, 2011, the Company had estimated state tax NOL carryforwards in the amount of $12.5 million in the United States that if unutilized,
would begin to expire in 2017. The state NOL's have a tax value of $0.6 million. Additionally, the Company has $0.4 million related to certain U.S. tax
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