WeightWatchers 2015 Annual Report Download - page 103

WEIGHT WATCHERS INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The difference between the US federal statutory tax rate and the Company’s consolidated effective tax rate
is as follows:
January 2,
2016
January 3,
2015
December 28,
2013
US federal statutory rate ......................................... 35.0% 35.0% 35.0%
States income taxes (net of federal benefit) .......................... 3.8 1.3 2.7
Reserves for uncertain tax positions ................................ 3.5 0.4 (0.1)
Foreign taxes .................................................. (0.4) (0.6) 0.4
(Decrease) increase in valuation allowance .......................... (2.2) 1.7 0.9
Loss on closure of China ......................................... 0.0 (2.1) 0.0
Other ........................................................ 1.4 0.2 0.1
Effective tax rate ........................................... 41.1% 35.9% 39.0%
The deferred tax assets and liabilities recorded on the Company’s consolidated balance sheets are as
follows:
January 2,
2016
January 3,
2015
Provision for estimated expenses .................................. $ 4,638 $ 7,863
Depreciation .................................................. 4,164 0
Operating loss carryforwards ..................................... 34,285 37,746
Salaries and wages ............................................. 641 9,567
Share-based compensation ....................................... 14,330 6,653
Other ........................................................ 8,024 6,922
Other comprehensive income ..................................... 24,778 13,060
Less: valuation allowance ........................................ (28,279) (34,640)
Total deferred tax assets ......................................... $ 62,581 $ 47,171
Depreciation .................................................. $ 0 $ (6,482)
Other ........................................................ (1,823) (3,123)
Amortization .................................................. (210,901) (188,745)
Total deferred tax liabilities ...................................... $(212,724) $(198,350)
Net deferred tax liabilities ....................................... $(150,143) $(151,179)
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 January 2, 2016 and January 3,
2015, various foreign subsidiaries had net operating loss carryforwards of approximately $138,562 and $142,433,
respectively, most of which can be carried forward indefinitely.
The Company’s undistributed earnings of substantially all of its foreign subsidiaries are not considered to be
permanently reinvested. Accordingly, the Company has recorded all taxes, after taking into account foreign tax
credits, on the undistributed earnings of these foreign subsidiaries.
The undistributed earnings of the remaining foreign subsidiaries are indefinitely invested outside the United
States. We have not recorded a deferred tax liability of approximately $10,000 for the U.S. income taxes on the
undistributed earnings of these foreign subsidiaries.
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