Under Armour 2010 Annual Report Download - page 69

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Deferred tax assets and liabilities consisted of the following:
December 31,
(In thousands) 2010 2009
Deferred tax asset
State tax credits, net of federal tax impact $ 1,750 $ —
Tax basis inventory adjustment 3,052 1,874
Inventory obsolescence reserves 2,264 2,800
Allowance for doubtful accounts and other reserves 8,996 7,042
Foreign net operating loss carryforward 10,917 9,476
Stock-based compensation 8,790 5,450
Intangible asset 372 1,068
Deferred rent 2,975 1,728
Deferred compensation 1,449 1,105
Other 2,709 3,151
Total deferred tax assets 43,274 33,694
Less: valuation allowance (1,765) —
Total net deferred tax assets 41,509 33,694
Deferred tax liability
Prepaid expenses (1,865) (1,133)
Property, plant and equipment (3,104) (5,783)
Total deferred tax liabilities (4,969) (6,916)
Total deferred tax assets, net $36,540 $26,778
As of December 31, 2010, the Company had $10.9 million in deferred tax assets associated with foreign net
operating loss carryforwards which will begin to expire in 5 to 9 years. As of December 31, 2010, the Company
believed certain deferred tax assets associated with foreign net operating loss carryforwards would expire unused
based on updated forward-looking financial information. Therefore, a valuation allowance of $1.5 million and
$1.8 million was recorded against the Company’s net deferred tax assets as of September 30, 2010 and
December 31, 2010, respectively. The valuation allowance resulted in an increase to income tax expense of $1.8
million for the year ended December 31, 2010. Although realization of the remaining foreign net operating loss
carryforwards is not assured, the Company believes it is more likely than not that the remaining $9.1 million will
be realized. This realizable amount could be increased or decreased if future taxable income during the
carryforward periods is increased or reduced.
As of December 31, 2010, withholding and U.S. taxes have not been provided on approximately $37.3
million of cumulative undistributed earnings of the Company’s non-U.S. subsidiaries because the Company
intends to indefinitely reinvest these earnings in its non-U.S. subsidiaries.
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