iRobot 2008 Annual Report Download - page 125

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The components of net deferred tax assets are as follows at December 27, 2008 and December 29, 2007:
2008 2007
(In thousands)
Net deferred tax assets
Current net deferred tax assets
Reserves and accruals ......................................... $ 8,372 $ 6,789
Valuation allowance .......................................... (1,073) (884)
Total current net deferred tax assets ............................. 7,299 5,905
Non-current net deferred tax assets
Capital loss carryforwards . . . ................................... 99 99
Tax credits ................................................. 2,119 2,913
Fixed assets ................................................ 1,256 1,129
Stock based compensation . . . ................................... 3,413 1,948
Valuation allowance .......................................... (2,379) (1,796)
Total non-current net deferred tax assets.......................... 4,508 4,293
Total net deferred tax assets ................................... $11,807 $10,198
In 2007 the Company made the determination that the realization of certain deferred tax assets was more likely
than not based on future projections of taxable income. The Company released the valuation allowance associated
with these assets and recorded a income statement benefit of $10.2 million in fiscal 2007. The valuation allowance
as of December 27, 2008 relates to all state deferred tax assets, including state credits, and state net operating losses.
As of December 27, 2008, the Company has utilized all of its available net operating loss carryforwards for
federal and state purposes. The Company does possess research and development credits carryforwards to offset
future federal and state taxes of $2.9 million and $2.2 million respectively, which expire at various dates from 2013
to 2023, and investment tax credit carryforwards to offset future state taxes of $0.7 million, which expire from 2010
to 2011. Under the Internal Revenue Service Code, certain substantial changes in the Company’s ownership could
result in an annual limitation on the amount of these tax carryforwards which can be utilized in future years.
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:
2008 2007 2006
(In thousands)
Expected federal income tax ................................ $382 $ 171 $1,315
Permanent items ......................................... 127 91 38
State taxes ............................................. (690) 301 (236)
Credits ................................................ (494) (1,148) (742)
Non deductible stock compensation ........................... 189 276 234
Other ................................................. 16 (115) 6
Increase (decrease) in valuation allowance ...................... 839 (8,134) (311)
$ 369 $(8,558) $ 304
As disclosed in Note 2, the Company adopted the provisions of FIN 48 as of December 31, 2006. At
December 27, 2008, the Company had no material unrecognized tax benefits. Additionally, there were no accrued
interest or penalties as of December 27, 2008, December 29, 2007 or December 30, 2006.
77
iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Form 10-K