Logitech 2007 Annual Report Download - page 144

LOGITECH INTERNATIONAL S.A.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The provision for income taxes is summarized as follows (in thousands):
Year ended March 31,
2007 2006 2005
Current:
Swiss ............................................. $ 4,644 $ 3,950 $ 2,773
Foreign ........................................... 36,295 31,497 29,637
Deferred:
Swiss ............................................. (89) (178) (620)
Foreign ........................................... (15,141) (6,520) (5,450)
Total ............................................. $25,709 $28,749 $26,340
Deferred income tax assets and liabilities consist of the following (in thousands):
March 31,
2007 2006
Deferred tax assets:
Net operating loss carryforwards ................................. $ 457 $ —
Other tax credit carryforwards ................................... — 1,389
Accruals ..................................................... 32,856 25,946
Depreciation and amortization ................................... 10,032 2,742
Gross deferred tax assets ............................................ 43,345 30,077
Deferred tax liabilities:
Acquired intangible assets ....................................... (4,981) (453)
Unrecognized gains ............................................ — (1,659)
Gross deferred tax liabilities ......................................... (4,981) (2,112)
Net deferred tax assets .............................................. $38,364 $27,965
The current and deferred tax provision is calculated based on estimates and assumptions that could differ
from the actual results reflected in income tax returns filed. Adjustments for differences between the tax
provisions and tax returns are recorded when identified, which is generally in the third or fourth quarter of the
subsequent year.
The Company maintains reserves for tax contingencies within the accrued liabilities account. These reserves
involve considerable judgment and estimation and are continuously monitored by management based on the best
information available including changes in tax regulations, the outcome of relevant court cases, and other
information. The Company is currently under examination by various taxing authorities. Although the outcome
of any tax audit is uncertain, management believes it has adequately provided in the Company’s financial
statements for any additional taxes that it may be required to pay as a result of such examinations. If the payment
ultimately proves to be unnecessary, the reversal of the tax liabilities would result in tax benefits being
recognized in the period the Company determines such liabilities are no longer necessary. However, if a final tax
assessment exceeds the Company’s estimate of tax liabilities, an additional tax provision will be recorded. Such
adjustments could have a material impact on the Company’s results of operations in future periods.
Management regularly assesses the ability to realize deferred tax assets recorded in the Company’s entities
based upon the weight of available evidence, including such factors as the recent earnings history and expected
future taxable income. In the event future taxable income is below management’s estimates or is generated in tax
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