Nutrisystem 2015 Annual Report Download - page 58

A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:
Year Ended December 31,
2015 2014 2013
Statutory federal income tax rate ................................... 35.0% 35.0% 35.0%
State income taxes, net of federal benefit ............................. 0 0.5 (0.6)
Executive compensation limitation .................................. 0 0.9 1.6
Food donations ................................................. (1.2) (0.4) (2.8)
Fixed assets .................................................... 0.5 (1.4) 0
Changes in reserves ............................................. (0.1) 0.1 (6.7)
Tax credits ..................................................... (0.5) (0.5) (1.7)
Other ......................................................... 0.8 (0.6) 0.4
Expired charitable contribution carryover ............................ 1.9 0 0
Valuation allowance ............................................. (2.0) 0 7.1
34.4% 33.6% 32.3%
The change in the effective tax rate from 2014 to 2015 was due to the write-off of certain deferred tax assets and
liabilities offset by increased levels of food donations. The change in the effective tax rate from 2013 to 2014
was due to the changes in executive compensation, decreased levels of food donations and the reduction in tax
reserves due to the lapse of the statute of limitations which offset a charge to record a valuation allowance for
charitable contributions carryforwards that might not be realized due to the short carryforward period for this
temporary difference.
The significant items comprising the Company’s deferred income tax assets and liabilities are as follows:
December 31,
2015 2014
Deferred tax asset:
Reserves and accrual ............................. $ 1,071 $ 920
Goodwill/Intangible assets ........................ 801 235
Net operating loss carryforward .................... 1,591 1,639
Stock-based compensation ........................ 1,839 1,880
Charitable contribution carryforward ................ 1,895 3,180
Other ......................................... 1,068 909
8,265 8,763
Valuation allowance ................................. 0 (800)
Deferred tax asset ................................... 8,265 7,963
Deferred tax liability:
Property and equipment .......................... (966) (1,451)
Net deferred tax asset ................................ $ 7,299 $ 6,512
At December 31, 2015 and 2014, the Company had net operating loss carryforwards of approximately $28,696
and $29,474, respectively, for state tax purposes. For state tax purposes, there is a limitation on the amount of net
operating loss carryforwards that can be utilized in a given year to offset state taxable income. Net operating
losses will begin to expire in 2025.
In 2013, the Company recorded a valuation allowance of $800 against its deferred tax asset generated for
charitable contributions. The Company recorded the valuation allowance to reduce the deferred tax asset to an
amount it expects is more likely than not to be realized due to the short carryforward period for this temporary
difference. In 2015, the Company wrote off the valuation allowance as certain charitable contribution carryovers
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