iRobot 2012 Annual Report Download - page 101

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
51
Net Income Per Share
The following table presents the calculation of both basic and diluted net income per share:
Fiscal Year Ended
December 29,
2012 December 31,
2011 January 1,
2011
Net income $ 17,297 $ 40,191 $ 25,514
Weighted-average shares outstanding 27,577 26,712 25,394
Dilutive effect of employee stock options and restricted shares 724 1,212 1,074
Diluted weighted average shares outstanding 28,301 27,924 26,468
Basic income per share $ 0.63 $ 1.50 $ 1.00
Diluted income per share $ 0.61 $ 1.44 $ 0.96
Potentially dilutive securities representing approximately 0.8 million, 0.4 million and 1.0 million shares of common stock
for the fiscal years ended December 29, 2012, December 31, 2011 and January 1, 2011, respectively, were excluded from the
computation of diluted earnings per share for these periods because their effect would have been antidilutive.
Income Taxes
The Company is subject to taxation in the United States and various states and foreign jurisdictions. The statute of
limitations for assessment by the IRS and state tax authorities is closed for fiscal years prior to December 31, 2008, although
carryforward attributes that were generated prior to fiscal year 2008 may still be adjusted upon examination by the IRS or state
tax authorities if they either have been or will be used in a future period. The IRS is currently examining the Company's tax
returns for the years 2009 and 2010.
Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and
liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Valuation allowances
are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets
will not be realized.
The Company monitors the realization of its deferred tax assets based on changes in circumstances, for example recurring
periods of income for tax purposes following historical periods of cumulative losses or changes in tax laws or regulations. The
Company's income tax provisions and its assessment of the ability to realize its deferred tax assets involve significant
judgments and estimates.
In fiscal 2012, as part of the Company's acquisition accounting for the acquisition of Evolution Robotics, Inc., the
Company recorded a valuation allowance of $2.7 million related to certain state tax attributes of Evolution Robotics, Inc. At
December 29, 2012, the Company has total deferred tax assets of $30.6 million offset by a valuation allowance of $2.7 million.
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.
Form 10-K