GNC 2012 Annual Report Download - page 92

Table of Contents
NOTE 4. INCOME TAXES (Continued)
Significant components of the Company's deferred tax assets and liabilities consisted of the following:
December 31,
2011 2010
Assets Liabilities Net Assets Liabilities Net
(in thousands)
Deferred tax:
Current assets
(liabilities):
Operating reserves $ 4,292 $ — $ 4,292 $ 3,018 $ — $ 3,018
Deferred revenue 2,278 — 2,278 2,257 — 2,257
Prepaid expenses — (5,384) (5,384) — (7,032) (7,032)
Accrued worker
compensation 2,358 — 2,358 2,270 — 2,270
Other 2,033 (3,581) (1,548) 4,778 (1,284) 3,494
Total current $10,961 $ (8,965)$ 1,996 $12,323 $ (8,316)$ 4,007
Non-current assets
(liabilities):
Intangibles $ — $(314,829)$(314,829)$ — $(312,119)$(312,119)
Fixed assets 12,744 — 12,744 8,285 — 8,285
Stock compensation 3,222 — 3,222 3,871 — 3,871
Net operating loss
carryforwards 6,921 — 6,921 7,432 — 7,432
Other 11,485 — 11,485 11,001 (2,067) 8,934
Valuation allowance (2,946) — (2,946) (4,418) — (4,418)
Total non-current $31,426 $(314,829)$(283,403)$26,171 $(314,186)$(288,015)
Total net deferred taxes $42,387 $(323,794)$(281,407)$38,494 $(322,502)$(284,008)
As of December 31, 2011 and 2010, the Company had deferred tax assets relating to state net operating losses ("NOLs") in the amount of $6.9 million
and $7.4 million, respectively. As of December 31, 2011 and 2010, a valuation allowance was provided for certain state NOLs, as the Company currently
believes that these NOLs, with lives ranging from five to twenty years, may not be realizable prior to their expiration. During 2011 and 2010, the Company
recorded a valuation allowance adjustment of $1.5 million and $3.1 million, respectively, which reduced income tax expense. These valuation allowance
adjustments reflect a change in circumstances that caused a change in judgment about the realizability of certain deferred tax assets related to state NOLs. The
effect of this tax benefit is included in the income tax reconciliation table under the caption "State income taxes, net of federal tax benefit."
The Company does not have any undistributed earnings of international subsidiaries, at December 31, 2011 and 2010, as these subsidiaries are either
considered to be a branch for U.S. tax purposes, or have incurred cumulative NOLs.
In addition, at December 31, 2011 and 2010, the Company had a liability of $10.6 million and $8.7 million, respectively, for unrecognized tax benefits.
The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. Accrued interest and penalties were
$3.5 million and $2.9 million as of December 31, 2011 and 2010, respectively.
As of December 31, 2011, the Company is not aware of any positions for which it is reasonably possible that the total amounts of unrecognized tax
benefits will significantly increase or decrease within the next 12 months.
Holdings files a consolidated federal tax return and various consolidated and separate tax returns as prescribed by the tax laws of the state and local
jurisdictions in which it and its subsidiaries operate. The
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