Columbia Sportswear 2013 Annual Report Download - page 63

COLUMBIA SPORTSWEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
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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 $77,825,000
at December 31, 2013. 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.
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. Internationally, the Company
has effectively settled Canadian and Korean tax examinations of all years through 2008, French tax examinations of all
years through 2009 and Swiss and Japanese tax examinations of all years through 2010. The Company received notification
from the Korean National Tax Service on February 11, 2014, indicating that its 2009 and 2010 income tax returns have been
selected for audit. The Company has effectively settled U.S. tax examinations of all years through 2009, with the exception
of amended 2008 and 2009 income tax refund claims that are being reviewed by the Internal Revenue Service ("IRS"). The
IRS commenced an examination of the Company's U.S. income tax returns for 2011 and 2012 in the second quarter and
fourth quarter of 2013, respectively. It is anticipated that these examinations will be completed by the end of 2014. The
Company does not anticipate that adjustments relative to ongoing tax audits will result in a material changes to its consolidated
financial position, results of operations or cash flows.
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands):
December 31,
2013 2012 2011
Balance at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,431 $ 14,316 $ 18,694
Increases related to prior year tax positions . . . . . . . . . . . . . . . 252 3,208 43
Decreases related to prior year tax positions. . . . . . . . . . . . . . . (332) (19) (141)
Increases related to current year tax positions . . . . . . . . . . . . . 4,281 2,049 1,388
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (84) (1,817) (649)
Expiration of statute of limitations . . . . . . . . . . . . . . . . . . . . . . (1,909) (5,306) (5,019)
Balance at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,639 $ 12,431 $ 14,316
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, 2013 by a range of zero to $14,077,000. 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.
Unrecognized tax benefits of $12,679,000 and $10,328,000 would affect the effective tax rate if recognized at December
31, 2013 and 2012, respectively.
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 $253,000, $357,000 and $501,000 in 2013, 2012
and 2011, respectively, all of which related to uncertain tax positions. The Company had $2,823,000 and $3,077,000 of
accrued interest and penalties related to uncertain tax positions at December 31, 2013 and 2012, respectively.
NOTE 12—OTHER LONG-TERM LIABILITIES
Other long-term liabilities consisted of the following (in thousands):