iRobot 2014 Annual Report Download - page 133

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
60
December 27, 2014, the Company has $34.5 million of net operating loss carryforwards and $2.2 million of federal and
state research and development credits related to the acquisition of Evolution Robotics that are limited by Section 382 and
Section 383, respectively, of the Internal Revenue Code. However, these limitations are not expected to cause any of
these net operating loss carryforwards or federal and state research and development credits to expire unused.
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 27,
2014 December 28,
2013 December 29,
2012
(In thousands)
Expected federal income tax $ 18,344 $ 11,345 $ 8,962
Miscellaneous permanent items 691 405 338
State taxes (net of federal benefit) 1,058 867 497
Federal and state credits (1,487)(3,909)(418)
Change in valuation allowance (2,090) — —
Domestic production activities deduction (1,562)(1,168)(1,100)
Settlement of uncertain tax positions (176)(2,696) —
Other (172)(70) 31
$ 14,606 $ 4,774 $ 8,310
A summary of the Company’s adjustments to its gross unrecognized tax benefits, inclusive of interest, in the current
year is as follows:
Fiscal Year Ended
December 27, 2014
Balance at beginning of period $ 2,618
Increase for tax positions related to the current year 252
Decrease for tax positions related to prior years (108)
Decreases for settlements with applicable taxing authorities (271)
Decreases for lapses of statute of limitations —
Balance at end of period $ 2,491
The Company accrues interest and, if applicable, penalties for any uncertain tax positions. Interest and penalties are
classified as a component of income tax expense. As of December 27, 2014, December 28, 2013 and December 29, 2012,
there were no material accrued interest or penalties. Over the next twelve months it is reasonably possible that the
Company may recognize approximately $0.2 million of previously net unrecognized tax benefits related to U.S. federal,
state and foreign tax audits and expiration of the statute of limitations. If all of our unrecognized tax benefits as of
December 27, 2014 were to become recognizable in the future, we would record a $1.9 million benefit to the income tax
provision, reflective of federal benefit on state items.
Included in the Company’s state tax credit carryforwards are unrecognized tax benefits related to stock-based
compensation beginning from January 1, 2006 of $0.5 million and $0.5 million as of December 27, 2014 and
December 28, 2013, respectively. Included in the Company's state net operating loss carryforwards are unrecognized tax
benefits related to stock-based compensation beginning from January 1, 2006 of $0.7 million and $0 as of December 27,
2014 and December 28, 2013, respectively. These unrecognized tax benefits will be credited to additional paid-in capital
when they reduce income taxes payable. Therefore, these amounts were not included in the Company’s gross or net
deferred tax assets at December 27, 2014 and December 28, 2013.
The Company follows the with and without approach for direct and indirect effects of windfall tax deductions.
Form 10-K