Harley Davidson 2013 Annual Report Download - page 85

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85
The principal components of the Company’s deferred tax assets and liabilities as of December 31 include the following
(in thousands):
2013 2012
Deferred tax assets:
Accruals not yet tax deductible $ 128,307 $ 118,434
Pension and postretirement benefit plan obligations 5,192 227,593
Stock compensation 22,370 28,001
Net operating loss carryforward 40,530 32,276
Valuation allowance (21,818)(16,314)
Other, net 37,034 45,053
211,615 435,043
Deferred tax liabilities:
Depreciation, tax in excess of book (119,916)(117,743)
Other (34,234)(34,602)
(154,150)(152,345)
Total $ 57,465 $ 282,698
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, 2013, the Company had approximately $420.0 million state net operating loss carry-forwards expiring
in 2031. At December 31, 2013 the Company also had Wisconsin research and development credit carryforwards of $10.4
million expiring in 2026. The Company had a deferred tax asset of $28.5 million as of December 31, 2013 for the benefit of
these losses and credits. A valuation allowance of $6.8 million has been established against the deferred tax asset.
The Company has foreign net operating losses (NOL) totaling $12.0 million as of December 31, 2013. It has a valuation
allowance of $15.0 million against the NOLs as well as other associated deferred tax assets.
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):
2013 2012
Unrecognized tax benefits, beginning of period $ 48,752 $ 57,137
Increase in unrecognized tax benefits for tax positions taken in a prior period 9,713 1,806
Decrease in unrecognized tax benefits for tax positions taken in a prior period (4,335)(6,439)
Increase in unrecognized tax benefits for tax positions taken in the current period 11,142 3,737
Statute lapses (336)(415)
Settlements with taxing authorities (1,879)(7,074)
Unrecognized tax benefits, end of period $ 63,057 $ 48,752
The amount of unrecognized tax benefits as of December 31, 2013 that, if recognized, would affect the effective tax rate
was $47.9 million.
The total gross amount of income related to interest and penalties associated with unrecognized tax benefits recognized
during 2013 in the Company’s Consolidated Statements of Operations was $3.7 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,
2013 in the Company’s Consolidated Balance Sheets was $24.4 million.
The Company does not expect a significant increase or decrease to the total amounts of unrecognized tax benefits related
to continuing operations during the fiscal year ending December 31, 2014. However, the Company is under regular audit by tax
authorities. The Company believes that it has appropriate support for the positions taken on its tax returns and that its annual