Nautilus 2012 Annual Report Download - page 50

Table of Contents
Following is a reconciliation of the U.S. statutory federal income tax rate with the Company's effective income tax rate for continuing operations
for the years ended December 31, 2012 , 2011 and 2010 :
Nautilus periodically evaluates the potential realization of its deferred income tax assets and, if necessary, records a valuation allowance to
reduce the net carrying value of such assets to the amount expected to be realized. As part of this assessment, the Company considers positive
and negative evidence, including cumulative income or loss for the past three years and forecasted taxable income. Nautilus evaluated the
potential realization of deferred income tax assets as of December 31, 2012 and 2011 and concluded that a valuation allowance was required. It
is at least reasonably possible that, within the next twelve months, a review of the objective evidence may indicate that a portion of the
Company's valuation allowance is no longer appropriate. If such a determination is made, release of the valuation allowance would be
recognized as an income tax benefit to continuing operations in the period in which such assessment is made and the amount recognized could be
material.
The amount of valuation allowance offsetting the Company's deferred income tax assets was $57.2 million and $60.3 million as of
December 31,
2012 and 2011 , respectively.
Nautilus has net operating loss, capital loss and income tax credit carryforwards in various jurisdictions, all of which are fully offset by valuation
allowances and are available to offset future taxable income, if any. The timing and manner in which the Company is permitted to utilize its net
operating loss carryforwards may be limited by Internal Revenue Code Section 382, Limitation on Net Operating Loss Carry-forwards and
Certain Built-in-Losses Following Ownership Change .
As of December 31, 2012 , the Company had the following income tax carryforwards (in millions):
44
2012 2011 2010
U.S. statutory income tax rate
35.0
%
35.0
%
35.0
%
State tax, net of U.S. federal tax benefit
1.1
5.2
2.2
Nondeductible incentive stock option expense —
—
0.2
Non-U.S. income taxes —
2.1
13.1
Effect of double taxation dividend received —
—
(
13.6
)
Nondeductible operating expenses
0.4
(1.8
)
(0.1
)
Research and development credit — (
2.6
)
—
Change in deferred tax measurement rate
0.1
(0.3
)
0.3
Change in uncertain tax positions
(6.5
)
13.0
(1.0
)
Valuation allowance
(32.3
)
(29.0
)
(40.4
)
Other —
(
0.1
)
(2.1
)
Effective income tax rate for continuing operations
(2.2
)%
21.5
%
(6.4
)%
Amount Expires in
Net operating loss carryforwards:
Federal
$
75.0
2029 - 2031
State
104.0
2013 - 2031
Germany
11.5
Indefinite
Switzerland
26.0
2014 - 2019
China
3.7
2013 - 2016
Italy
2.6
2013 - 2017
Federal capital loss carryforward
11.3
2013
Income tax credit carryforwards:
Federal
2.7
2018 - 2031
State
0.4
2019 - 2022