WeightWatchers 2012 Annual Report Download - page 105
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WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The deferred tax assets and liabilities recorded on the Company’s consolidated balance sheets are as
follows:
December 29,
2012
December 31,
2011
Provision for estimated expenses ................................ $ 8,561 $ 7,514
Operating loss carryforwards ................................... 34,714 29,676
Salaries and wages ........................................... 4,522 7,663
Share-based compensation ..................................... 6,958 6,339
Other ..................................................... 6,336 7,183
Less: valuation allowance ..................................... (31,015) (25,781)
Total deferred tax assets ....................................... $ 30,076 $ 32,594
Depreciation ................................................ $ (2,844) $ (2,740)
Other comprehensive income .................................. (8,180) (3,659)
Amortization ............................................... (126,726) (102,306)
Total deferred tax liabilities .................................... $(137,750) $(108,705)
Net deferred tax liabilities ..................................... $(107,674) $ (76,111)
Certain foreign operations of the Company have generated net operating loss carryforwards. If it has been
determined that it is more likely than not that the deferred tax assets associated with these net operating loss
carryforwards will not be utilized, a valuation allowance has been recorded. As of December 29, 2012 and
December 31, 2011, various foreign subsidiaries had net operating loss carryforwards of approximately $126,219
and $105,575, respectively, most of which can be carried forward indefinitely.
The Company’s undistributed earnings of foreign subsidiaries are not considered to be reinvested
permanently. Accordingly, the Company has recorded all taxes, after taking into account foreign tax credits, on
the undistributed earnings of foreign subsidiaries.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
December 29,
2012
December 31,
2011
January 1,
2011
Balance at beginning of year ......................... $5,040 $ 15,794 $12,897
Additions based on tax positions related to the current
year .......................................... 1,647 1,537 2,115
Additions based on tax positions of prior years .......... 0 0 782
Reductions for tax positions of prior years .............. (1,219) (11,901) 0
Settlements ...................................... (149) (390) 0
Balance at end of year .............................. $5,319 $ 5,040 $15,794
At December 29, 2012, the total amount of unrecognized tax benefits that, if recognized, would affect our
effective tax rate is $4,387. As of December 29, 2012, given the nature of the Company’s uncertain tax positions,
it is reasonably possible that there will not be a significant change in the Company’s uncertain tax benefits within
the next twelve months.
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