American Home Shield 2011 Annual Report Download - page 94

Table of Contents
Notes to the Consolidated Financial Statements (Continued)
Note 5. Income Taxes (Continued)
Significant components of the Company's deferred tax balances are as follows:
December 31,
(In thousands) 2011 2010
Deferred tax assets (liabilities):
Current:
Prepaid expenses $ (14,240) $ (21,182)
Receivables allowances 13,343 12,446
Accrued insurance expenses 8,231 5,245
Current reserves 5,398 5,986
Accrued expenses and other 27,337 9,091
Net operating loss and tax credit carryforwards 50,540 —
Less valuation allowance — (28)
Total current asset 90,609 11,558
Long-Term:
Intangible assets(1) (1,061,604) (1,043,910)
Accrued insurance expenses 4,640 5,770
Net operating loss and tax credit carryforwards 102,558 141,706
Other long-term obligations (76,011) (23,128)
Less valuation allowance (6,276) (15,409)
Total long-term liability (1,036,693) (934,971)
Net deferred tax liability $ (946,084) $ (923,413)
The deferred tax liability relates primarily to the difference in the tax versus book basis of intangible assets. The majority of
this liability will not actually be paid unless certain business units of the Company are sold.
(1)
As of December 31, 2011, the Company had deferred tax assets, net of valuation allowances, of $137.7 million for federal and state net operating loss
and capital loss carryforwards which expire at various dates up to 2031. The Company also had deferred tax assets, net of valuation allowances, of
$9.1 million for federal and state credit carryforwards which expire at various dates up to 2031.
The Company has historically determined that the undistributed earnings of foreign subsidiaries will be repatriated to the U.S. There was no net deferred
tax liability recorded as of December 31, 2010, related to such undistributed earnings due to the existence of available foreign tax credits. For the year ended
December 31, 2011, the Company reorganized certain foreign subsidiaries in conjunction with its international growth initiatives and evaluated its liquidity
requirements in the U.S. and the capital requirements of its foreign subsidiaries. Based on these factors, the Company has determined that undistributed
earnings of foreign subsidiaries will no longer be repatriated. Accordingly, the Company has not recorded deferred taxes for U.S. income or foreign
withholding taxes on the excess of the amount for financial reporting over the tax basis of investments in foreign subsidiaries that are essentially permanent in
duration. This amount becomes taxable upon a repatriation of assets from the subsidiary or a sale or liquidation of the subsidiary. The amount of such
undistributed earnings totaled $22.0 million as of December 31, 2011 and any tax liability is
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