Item 7.01 Regulation FD Disclosure.
The realization of deferred tax assets, including loss carry-forwards, is subject to the generation of sufficient taxable income during the periods in which the deferred tax assets become realizable. As previously reported, due to Intevac Inc.’s (the “Company”) cumulativepre-tax operating losses generated in our Singapore subsidiary from 2011-2014, the Company recorded a valuation allowance against the deferred tax assets of the Singapore subsidiary. As of September 29, 2018, the Company’s valuation allowance against these deferred tax assets was approximately $8.4 million.
During the fourth quarter of 2018, the Company conducted an evaluation of its deferred tax assets. As part of this process, in determining the likelihood of the Company’s ability to realize its deferred tax assets, the Company evaluated all available evidence, including the Singapore business losses in periods prior to 2015, the Singapore business profitability in 2015 through 2017,year-to-date and projected profitability for 2018, and expectations for future profitability. As a result of this evaluation, the Company believes that (i) it is more likely than not that the Company will be able to realize its Singapore deferred tax assets and (ii) the valuation allowance established on these deferred tax assets will be reversed during the fourth quarter of 2018. Upon the reversal of the valuation allowance, the Company anticipates that it will realize anon-cash tax benefit of approximately $8.4 million, which will be reflected in its Income Tax Provision in its 2018 Consolidated Statement of Income.
The reversal of the Company’s valuation allowance was not included in its financial guidance provided on October 29, 2018. Nothing in this report should be construed as an update to that financial guidance (except with regard to the effect of the reversal of the valuation allowance).
Forward-Looking Statements
Statements used in this report that relate to future plans, events, financial results, performance or prospects, including statements relating to the Company’s realization of its deferred tax assets of its Singapore subsidiary, reversal of the valuation allowance or the amount and timing thereof are forward-looking statements. These statements are based upon current information and expectations. The Company is still in the process of refining its calculation of the anticipatednon-cash tax benefit (which also could be affected by unforeseen developments that occur on or prior to December 29, 2018). Accurately estimating the forward-looking statements is based upon various risks and unknowns including the complexity of calculating the amount of deferred tax assets, future profitability, and future estimates of taxable income, which all can be affected by the future performance of the Company’s business. For additional information concerning the risks affecting the Company’s business and other risks and uncertainties that could affect these statements, see the Company’s Annual Report on Form10-K for the year ended December 30, 2017 as well as other risks and uncertainties detailed from time to time in the Company’s reports on Forms10-Q and8-K subsequently filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to republish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
