iRobot 2015 Annual Report Download - page 152

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iROBOT CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
69
The Company has federal net operating loss carryforwards of $8.0 million and $15.1 million as of January 2, 2016
and December 27, 2014, respectively, which expire in 2031. The Company has state net operating loss carryforwards of
$15.0 million and $19.4 million as of January 2, 2016 and December 27, 2014, respectively, which expire from 2029 to
2031. The Company has federal research and development credit carryforwards of $1.0 million and $1.0 million as of
January 2, 2016 and December 27, 2014, respectively, which expire from 2026 to 2031. The Company has state research
and development credit carryforwards of $9.3 million and $8.1 million as of January 2, 2016 and December 27, 2014,
respectively, which expire from 2023 to 2030. The Company has state investment tax credit carryforwards of $0.3 million
and $0.7 million as of January 2, 2016 and December 27, 2014, respectively, which expire from 2024 to 2025. Under the
Internal Revenue 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. As of January 2, 2016, the Company has
$23.0 million of federal and state 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 federal and
state net operating loss carryforwards or federal and state research and development credits to expire prior to being
utilized.
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
January 2,
2016 December 27,
2014
December 28,
2013
(In thousands)
Expected federal income tax $22,040 $ 18,344
$11,345
Miscellaneous permanent items 608 691 405
State taxes (net of federal benefit) 982 1,058 867
Federal and state credits (2,767) (1,487) (3,909)
Change in valuation allowance
—
(2,090)
—
Domestic production activities deduction (2,145) (1,562) (1,168)
Settlement of uncertain tax positions (194) (176)(2,696)
Other 317 (172) (70)
$ 18,841 $ 14,606
$4,774
A summary of the Company’s adjustments to its gross unrecognized tax benefits in the current year is as follows:
Fiscal Year Ended
January 2, 2016 December 27,
2014
December 28,
2013
(in thousands)
Balance at beginning of period $ 2,491 $ 2,618 $ 4,469
Increase for tax positions related to the current year 786 252 355
Increase (decrease) for tax positions related to prior years 3,533 (108) 490
Decreases for settlements with applicable taxing authorities
—
(271)(2,696)
Decreases for lapses of statute of limitations (194)
—
—
Balance at end of period $6,616 $ 2,491 $2,618
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 January 2, 2016, December 27, 2014 and December 28, 2013