Harley Davidson 2015 Annual Report Download - page 81

81
The principal components of the Company’s deferred tax assets and liabilities as of December 31 include the following
(in thousands):
2015 2014
Deferred tax assets:
Accruals not yet tax deductible $ 129,449 $ 120,817
Pension and postretirement benefit plan obligations 126,952 104,723
Stock compensation 20,111 21,089
Net operating loss carryforward 38,250 41,927
Valuation allowance (20,659)(25,462)
Other, net 47,039 38,465
341,142 301,559
Deferred tax liabilities:
Depreciation, tax in excess of book (136,340)(128,117)
Other (2,419)(5,691)
(138,759)(133,808)
Total $ 202,383 $ 167,751
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, 2015, the Company had approximately $339.4 million state net operating loss carry-forwards expiring
in 2031. At December 31, 2015 the Company also had Wisconsin research and development credit carryforwards of $13.1
million expiring in 2028. The Company had a deferred tax asset of $26.0 million as of December 31, 2015 for the benefit of
these losses and credits.
The Company has foreign net operating losses (NOL) totaling $12.2 million as of December 31, 2015. It has a valuation
allowance of $20.7 million against the NOLs as well as other associated deferred tax assets of $8.5 million.
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):
2015 2014
Unrecognized tax benefits, beginning of period $ 64,200 $ 63,057
Increase in unrecognized tax benefits for tax positions taken in a prior period 9,149 900
Decrease in unrecognized tax benefits for tax positions taken in a prior period (1,993)(4,989)
Increase in unrecognized tax benefits for tax positions taken in the current period 6,302 5,876
Statute lapses (2,465) —
Settlements with taxing authorities (2,093)(644)
Unrecognized tax benefits, end of period $ 73,100 $ 64,200
The amount of unrecognized tax benefits as of December 31, 2015 that, if recognized, would affect the effective tax rate
was $56.9 million.
The total gross amount of expense related to interest and penalties associated with unrecognized tax benefits recognized
during 2015 in the Company’s Consolidated Statements of Income was $3.7 million.
The total gross amount of interest and penalties associated with unrecognized tax benefits recognized at December 31,
2015 in the Company’s Consolidated Balance Sheets was $28.7 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, 2016. However, the Company is under regular audit by tax