Harley Davidson 2012 Annual Report Download - page 86

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The principal components of the Company’s deferred tax assets and liabilities as of December 31 include the following
(in thousands):
2012 2011
Deferred tax assets:
Accruals not yet tax deductible $ 118,434 $ 123,514
Pension and postretirement benefit plan obligations 227,593 219,071
Stock compensation 28,001 32,486
Net operating loss carryforward 32,276 28,914
Valuation allowance (16,314)(14,914)
Other, net 45,053 49,253
435,043 438,324
Deferred tax liabilities:
Depreciation, tax in excess of book (117,743)(77,787)
Other (34,602)(25,767)
(152,345)(103,554)
Total $ 282,698 $ 334,770
The Company reviews its deferred tax asset valuation allowances on a quarterly basis, or whenever events or changes in
circumstances indicate that a review is required. In determining the requirement for a valuation allowance, the historical and
projected financial results of the legal entity or consolidated group recording the net deferred tax asset is considered, along with
any positive or negative evidence such as tax law changes. Since future financial results and tax law may differ from previous
estimates, periodic adjustments to the Company’s valuation allowances may be necessary.
At December 31, 2012, the Company had approximately $420.8 million state net operating loss carry-forwards expiring
in 2031. At December 31, 2012 the Company also had Wisconsin research and development credit carryforwards of $15.3
million expiring in 2026. The Company had a deferred tax asset of $31.8 million as of December 31, 2012 for the benefit of
these losses and credits. A valuation allowance of $15.8 million has been established against the deferred tax asset.
At December 31, 2012, the Company had $1.4 million federal capital loss carryforwards expiring in 2013. The Company
had a deferred tax asset of $0.5 million as of December 31, 2012 for the benefit of this loss. A valuation allowance of $0.5
million has been established against the deferred tax asset.
The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes.
Changes in the Company’s gross liability for unrecognized tax benefits, excluding interest and penalties, were as follows (in
thousands):
2012 2011
Unrecognized tax benefits, beginning of period $ 57,137 $ 69,805
Increase in unrecognized tax benefits for tax positions taken in a prior period 1,806 13,745
Decrease in unrecognized tax benefits for tax positions taken in a prior period (6,439)(21,574)
Increase in unrecognized tax benefits for tax positions taken in the current period 3,737 3,036
Statute lapses (415)(2,249)
Settlements with taxing authorities (7,074)(5,626)
Unrecognized tax benefits, end of period $ 48,752 $ 57,137
The amount of unrecognized tax benefits as of December 31, 2012 that, if recognized, would affect the effective tax rate
was $35.5 million.
The total gross amount of income related to interest and penalties associated with unrecognized tax benefits recognized
during 2012 in the Company’s Consolidated Statements of Operations was $3.0 million due to favorable settlements and statute
lapses.
The total gross amount of interest and penalties associated with unrecognized tax benefits recognized at December 31,
2012 in the Company’s Consolidated Balance Sheets was $20.6 million.