iRobot 2011 Annual Report Download - page 106

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Form 10-K
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
on recent and expected increased future profitability, the Company released its valuation allowance relating to
state deferred tax assets. At December 31, 2011, the Company has total deferred tax assets of $21.5 million with
no valuation allowance.
Comprehensive Income
Accumulated other comprehensive income includes unrealized gains and losses on certain investments. The
differences between net income and comprehensive income were related to unrealized gains (losses) on
investments, net of tax.
Fair Value Measurements
The authoritative guidance for fair value establishes a three-tier fair value hierarchy, which prioritizes the
inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted
prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either
directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data
exists, therefore requiring an entity to develop its own assumptions.
The Company’s assets measured at fair value on a recurring basis at December 31, 2011, were as follows:
Fair Value Measurements as of
December 31, 2011
Description Level 1 Level 2 Level 3
(In thousands)
Assets:
Money Market Funds ................................... $117,196 $ — $—
U.S. Government bonds ................................. — 2,502 —
Corporate bonds ....................................... — 15,309 —
Total assets measured at fair value ......................... $117,196 $17,811 $—
The bond investments are valued based on observable market values as of the Company’s reporting date and
are included in Level 2. The bond investments are recorded at fair value and marked-to-market at the end of each
reporting period and realized and unrealized gains and losses are included in comprehensive income for that
period. The fair value of the Company’s bond investments are included in short term investments in its
consolidated balance sheet.
The Company’s assets measured at fair value on a recurring basis at January 1, 2011, were as follows:
Fair Value Measurements as of
January 1, 2011
Description Level 1 Level 2 Level 3
(In thousands)
Assets:
Money Market Funds ..................................... $5,090 $ — $—
U.S. Government bonds ................................... — 2,504 —
Corporate bonds ......................................... — 11,424 —
Total assets measured at fair value ........................... $5,090 $13,928 $—
The bond investments are valued based on observable market values as of the Company’s reporting date and
is included in Level 2. The bond investment is recorded at fair value and marked-to-market at the end of each
reporting period and realized and unrealized gains and losses are included in comprehensive income for that
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