Nautilus 2015 Annual Report Download - page 54
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Please find page 54 of the 2015 Nautilus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Our net deferred income tax assets (liabilities) were recorded on our consolidated balance sheets as follows (in thousands):
December 31,
2015
2014
Deferred income tax assets $ 8,904
$ 12,368
Long-term deferred income tax assets —
9,546
Long-term deferred income tax liabilities (18,380)
—
Other long-term liabilities —
(60)
Net deferred income tax assets (liabilities) $ (9,476)
$ 21,854
The table of deferred tax assets and liabilities shown above does not include certain deferred tax assets as of December 31, 2015 and 2014, that arose directly from
tax deductions related to equity compensation greater than compensation recognized for financial reporting. Instead, equity will be increased by $1.4 million if and
when such deferred tax assets are ultimately realized. We use FASB ASC 740 ordering for purposes of determining when excess tax benefits have been realized.
We account for income taxes based on the asset and liability method, whereby deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. We have recorded a valuation
allowance to reduce our deferred income tax assets to the amount we believe is more likely than not to be realized. Evaluating the need for, and amount of, a
valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence on a jurisdiction-by-jurisdiction
basis. Such judgments require us to interpret existing tax law and other published guidance as applied to our circumstances. As part of this assessment, we consider
both positive and negative evidence. The weight given to the potential effect of positive and negative evidence must be commensurate with the extent to which the
strength of the evidence can be objectively verified.
Each quarter, we assess the total weight of positive and negative evidence including cumulative income or loss for the past three years and forecasted taxable
income and re-evaluate whether any adjustments or release of all or any portion of valuation allowance is appropriate. As a result of this evaluation, in 2014, we
determined that a portion of the existing valuation allowance against the state net operating loss deferred tax assets was no longer necessary. Accordingly, an
income tax benefit of $1.2 million was recorded in the fourth quarter of 2014 related to the reduction of our existing valuation allowance. Further, in the fourth
quarter of 2015, after re-evaluating the potential realization of the remainder of our deferred income tax assets, we concluded that, as of December 31, 2015, the
existing valuation allowance against the foreign tax credit deferred tax assets as well as the substantially all of the remaining valuation allowance against the state
net operating loss deferred tax assets were no longer necessary. As such, an income tax benefit of $2.4 million was recorded in the fourth quarter of 2015 related to
the reduction of our existing valuation allowance.
As of December 31, 2015, we have a valuation allowance against net deferred income tax assets of $0.9 million . Of the remaining valuation allowance, $0.6
million primarily relates to domestic tax credit carryforwards as we currently do not anticipate generating the income of appropriate character to utilize those
credits. The remainder of $0.3 million relates to foreign net operating loss carryforwards. Should it be determined in the future that it is more likely than not that
our domestic deferred income tax assets will be realized, an additional valuation allowance would be released during the period in which such an assessment is
made. There have been no material changes to our foreign operations since December 31, 2014 and, accordingly, we maintain our existing valuation allowance on
foreign deferred income tax assets in such jurisdictions at December 31, 2015.
Income Tax Carryforwards
As of December 31, 2015 , we had the following income tax carryforwards (in millions):
Amount
Expires in
Net operating loss carryforwards
U.S. State
$ 71.1
2016 - 2035
China
$ 0.3
2020
Italy
$ 0.8
2016 - 2017
Income tax credit carryforwards
U.S. Federal
$ 3.2
2018 - 2035
U.S. State
$ 0.5
2018 - 2022
50