CONTROL4 CORP - 10-K filing on 2016-02-16

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of domestic and foreign components of net income (loss) before income tax expense

The domestic and foreign components of net income (loss) before income tax expense consists of the following for the periods shown below (in thousands):


	Years Ended
	December 31,
	2013		2014		2015
Income (loss) before income taxes:
Domestic	$	3,633	$	7,464	$	(933)
Foreign		118		1,103		(451)
Total income (loss) before income taxes	$	3,751	$	8,567	$	(1,384)

Schedule of components of provision for income taxes

The provision for income taxes consisted of the following components (in thousands):


	Years Ended
	December 31,
	2013		2014		2015
Current:
Domestic
Federal	$	64	$	76	$	154
State		53		52		45
Foreign		147		288		366
Total current tax expense		264		416		565
Deferred:
Domestic
Federal		1,572		1,761		822
State		44		30		5
Foreign		(16)		(5)		(296)
Valuation allowance		(1,616)		(1,791)		(828)
Total deferred tax benefit		(16)		(5)		(297)
Total income tax expense	$	248	$	411	$	268

Schedule of reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate


	Years Ended
	December 31,
	2013		2014		2015
Federal income tax rate	34.0	%	34.0	%	34.0	%
State taxes, net of federal benefit	1.1		0.4		(2.1)
Stock-based compensation	22.7		(2.1)		(80.0)
Stock warrant	6.4		—		—
Research and development credits	(18.3)		(8.1)		—
Change in valuation allowance	(42.0)		(20.6)		59.5
Non-deductible acquisition costs	—		—		(21.2)
Return to provision adjustments	(1.6)		(0.8)		10.6
Permanent items	4.0		2.9		(9.5)
Differences in foreign tax rates	2.2		(0.9)		(11.9)
Other, net	(1.9)		—		1.2
Effective income tax rate	6.6	%	4.8	%	(19.4)	%

Schedule of deferred tax assets and (liabilities)

Deferred tax assets and (liabilities) are comprised of the following (in thousands):


	December 31,
	2014		2015
Deferred Tax Assets:
Reserves and accruals	$	1,449	$	1,968
Inventories		1,063		1,469
Net operating loss carryforwards		25,007		22,076
Property, plant and equipment		1,831		1,609
Intangible assets		—		428
Stock-based compensation		1,540		2,727
Research and development credit carryforwards		5,243		5,366
Other		—		73
Total deferred tax assets		36,133		35,716
Valuation allowance		(36,050)		(35,222)
Total deferred tax assets		83		494
Deferred Tax Liabilities:
Undistributed earnings of foreign subsidiaries		(56)		(109)
Intangible assets		(116)		—
Property and equipment		(16)		—
Total deferred tax liabilities		(188)		(109)
Net deferred tax asset (liability)	$	(105)	$	385

Schedule of net operating loss and tax credit carryforwards

Net operating loss and tax credit carryforwards as of December 31, 2015 are as follows (in thousands):


	Amount		Expiration Years
Net operating losses, federal	$	78,135	2025 - 2035
Net operating losses, state		75,926	2019 - 2033
Tax credit carryforwards, federal		6,743	2023 - 2034
Tax credit carryforwards, state		2,799	2017 - 2028
Net operating losses, foreign		20	None

Schedule of reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties

The following is a reconciliation of the changes in the gross balance of unrecognized tax benefits, excluding interest and penalties (in thousands):


	Years Ended
	December 31,
	2013		2014		2015
Balance at the beginning of the period	$	2,318	$	2,943	$	3,583
Current year additions		625		640		—
Balance at the end of the period	$	2,943	$	3,583	$	3,583