Columbia Sportswear 2011 Annual Report Download - page 64

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Non-current deferred tax assets of $11,605,000 and $14,806,000 are included as a component of other
non-current assets in the consolidated balance sheet at December 31, 2011 and 2010, respectively.
The Company had undistributed earnings of foreign subsidiaries of approximately $218,023,000 at
December 31, 2011 for which deferred taxes have not been provided. Such earnings are considered indefinitely
invested outside of the United States. If these earnings were repatriated to the United States, the earnings would
be subject to U.S. taxation. The amount of the unrecognized deferred tax liability associated with the
undistributed earnings was approximately $50,059,000 at December 31, 2011. The unrecognized deferred tax
liability approximates the excess of the United States tax liability over the creditable foreign taxes paid that
would result from a full remittance of undistributed earnings.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in
thousands):
December 31,
2011 2010 2009
Balance at beginning of period ................................. $18,694 $20,183 $21,839
Increases related to prior year tax positions ....................... 43 893 1,346
Decreases related to prior year tax positions ...................... (141) (27) (634)
Increases related to current year tax positions ..................... 1,388 1,278 1,598
Settlements ................................................ (649) — (1,194)
Expiration of statute of limitations .............................. (5,019) (3,633) (2,772)
Balance at end of period ...................................... $14,316 $18,694 $20,183
Unrecognized tax benefits of $12,735,000 and $16,740,000 would affect the effective tax rate if recognized
at December 31, 2011 and 2010, respectively.
The Company conducts business globally, and as a result, the Company or one or more of its subsidiaries
files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company
is subject to examination by taxing authorities throughout the world, including such major jurisdictions as
Canada, China, France, Germany, Hong Kong, Italy, Japan, South Korea, Switzerland, the United Kingdom and
the United States. The Company has effectively settled U.S. tax examinations of all years through 2007.
Internationally, the Company has effectively settled Canadian tax examinations of all years through 2004, Swiss
tax examinations of all years through 2008, French tax examinations of all years through 2008, Japanese tax
examinations of all years through 2007 and Korean tax examinations of all years through 2007. The Company is
currently under examination in Canada for the tax years 2005 through 2008 and in Japan for the tax years 2008
through 2010. The Company does not anticipate that adjustments relative to these ongoing tax audits will result
in a material change to its consolidated financial position, results of operations or cash flows.
Due to the potential for resolution of income tax audits currently in progress, and the expiration of various
statutes of limitation, it is reasonably possible that the unrecognized tax benefits balance may change within the
twelve months following December 31, 2011 by a range of zero to $10,195,000. Open tax years, including those
previously mentioned, contain matters that could be subject to differing interpretations of applicable tax laws and
regulations as they relate to the amount, timing, or inclusion of revenue and expenses or the sustainability of
income tax credits for a given examination cycle.
The Company recognizes interest expense and penalties related to income tax matters in income tax
expense. The Company recognized a net reversal of accrued interest and penalties of $501,000 in 2011, net
accrued interest and penalties of $780,000 in 2010 and a net reversal of accrued interest and penalties of $80,000
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