iRobot 2011 Annual Report Download - page 117

Download and view the complete annual report

Please find page 117 of the 2011 iRobot annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The reconciliation of the expected tax (benefit) expense (computed by applying the federal statutory rate to
income before income taxes) to actual tax expense was as follows:
Fiscal Year Ended
December 31,
2011
January 1,
2011
January 2,
2010
(In thousands)
Expected federal income tax ........................... $18,739 $11,891 $1,991
Miscellaneous permanent items ........................ (13) 164 125
State taxes ......................................... 543 1,545 94
Federal and state research credits ....................... (3,283) (997) (367)
Domestic production activities deduction ................. (2,695) — —
Non deductible stock compensation ..................... — — 259
Conversion of incentive stock options(1) ................. — — (346)
Other ............................................. 59 (275) 111
Increase (decrease) in valuation allowance ................ — (3,868) 159
$13,350 $ 8,460 $2,026
(1) The Company recorded a discrete benefit from the conversion of incentive stock options to non-qualified stock
options as a result of its stock option exchange program which concluded in the second fiscal quarter of 2009.
Prior to January 1, 2011, the Company had no material unrecognized tax benefits recorded. A summary of
the Company’s adjustments to its uncertain tax position is the current year is as follows:
Fiscal Year Ended
December 31, 2011
Balance at beginning of period .......................................... $ 0
Increase for tax positions related to the current year ....................... 1,218
Increase for tax positions related to prior years ........................... 1,221
Decreases for settlements with applicable taxing authorities ................. —
Decreases for lapses of statute of limitations ............................. —
Balance at end of period ............................................... $2,439
The Company recognizes interest and penalties related to unrecognized tax benefits in its tax provision. As
of December 31, 2011, January 1, 2011 and January 2, 2010, there were no material accrued interest or penalties.
We anticipate the settlement of federal tax audits may be finalized within the next twelve months and could result
in a decrease in our unrecognized tax benefits of up to $1.0 million. If all of our unrecognized tax benefits as of
December 31, 2011 were to become recognizable in the future, we would record a $1.9 million benefit to the
income tax provision.
We follow the with and without approach for direct and indirect effects of the windfall tax deductions.
11. Commitments and Contingencies
Legal
On August 17, 2007, the Company filed a lawsuit in Massachusetts Superior Court against Robotic FX, Inc.
and Jameel Ahed alleging, among other things, misappropriation of trade secrets and breach of contract, and
seeking both injunctive and monetary relief. The case was subsequently removed to the United States District
70