Jamba Juice 2007 Annual Report Download - page 77

Table of Contents
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The deferred tax asset consisted of the following temporary differences as of January 9, 2007, January 10, 2006, and December 31, 2005 (in
thousands):
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Net operating losses $ — $ — $57
Reserves and accruals 5,166 — —
Deferred franchise revenue 734 — —
Class action payable 270 — —
Other — — 38
Total current deferred tax asset 6,170 — 95
Net operating losses 2,365 48 77
Deferred rent 85 — 1,685
Tax credit attributes 2,015 — 1,187
Basis difference in intangibles (74,111) — —
Stock-based compensation 143 — —
Basis difference in fixed assets 9,446 42 6,109
Basis difference in investments (226) — (46)
Total non-current deferred tax (liability) (60,283) 90 9,012
Valuation allowance (48) (48) (95)
Total net deferred tax asset (liability) $(54,161) $42 $ —
At January 9, 2007 the Company has federal and net operating loss carryovers of $2.6 million and $16.1 million respectively, which expire between
2017 and 2027. In addition, the Company also has tax credit carryforwards for federal and state purposes of $1.4 million and $619,000 respectively, which
do not expire.
A valuation allowance is provided for deferred tax assets when it is more likely than not that some portion of the deferred tax asset will not be realized.
Due to the uncertainty of realizing certain tax attributes, the Company, as of January 9, 2007 has continued to record a valuation allowance for the federal net
operating loss generated in a separate return year. For all other deferred tax assets, management believes it is more likely than not that sufficient taxable income
will be generated in future periods to utilize the net deferred tax assets that are dependent on such taxable income.
The Company incurred expenses related to the acquisition of Jamba Juice Company and has recognized a tax deduction for such expenses. Such
deductions will not be finalized until an examination of the Company’s returns is complete. Accordingly, the Company has recorded a reserve of $288,000 for
the estimated future resolution of this uncertain tax matter. While the Company believes the recorded reserve is adequate, the ultimate resolution of this
uncertain tax matter may exceed or be below the recorded reserve.
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Stock Options—The Company maintains three stock-based compensation plans (collectively, the “Plans”). The Company’s 2006 Employee, Director
and Consultant Stock Plan (the “2006 Plan”) was approved by the Company’s stockholders on November 28, 2006, and provides for the granting of up to
5 million shares of common stock in the form of nonqualified and incentive stock options, stock grants or other stock-based awards to employees,
nonemployee directors and consultants. In connection with the Merger (see Note 2), the Company assumed the outstanding options under the Jamba Juice
Company 1994 Stock Incentive Plan (the “1994 Plan”) and the 2001 Equity Incentive Plan (the “2001 Plan”), which provided for granting nonqualified and
incentive
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