Audiovox 2008 Annual Report Download - page 93

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Audiovox Corporation and Subsidiaries
Notes to Consolidated Financial Statements, continued
February 29, 2008
(Dollars in thousands, except share and per share data)
As of February 29, 2008, the Company had approximately $13,532 of U.S. federal net operating loss carryforwards, which
are available to offset future taxable income. These carryforwards expire in the tax years between 2027 and 2028, if not
utilized. In addition, the Company has approximately $3,342 of foreign tax credits that expire in 2012 through 2016 if not
utilized. In addition, the Company has various state net operating loss carryforwards that expire in varying amounts through
fiscal year 2028.
The Company has not provided for U.S. federal and foreign withholding taxes on its foreign subsidiaries undistributed
earnings in Germany and Venezuela as of February 29, 2008, because such earnings are intended to be indefinitely reinvested
overseas. The amount of unrecognized deferred tax liabilities for temporary differences related to investments in
undistributed earnings is not practicable to determine at this time.
The Company adopted the provisions of FIN No. 48 on March 1, 2007. Upon adoption of FIN No. 48, the Company reduced
its uncertain tax positions by $2,714 which was accounted for as an increase to the Company's opening retained earnings
balance as of March 1, 2007. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding
interest and penalties, is as follows:
Balance at March 1, 2007 $ 3,491
Additions based on tax positions taken in the current and prior years 507
Settlements (108)
Lapse in statute of limitations (25)
Balance at February 29, 2008 $ 3,865
The entire amount of unrecognized tax benefits if recognized would reduce our annual effective tax rate. As of March 1,
2007, the Company had approximately $556 of accrued interest and penalties and $701 as of February 29, 2008. The
Company records both accrued interest and penalties related to income tax matters in the provision for income taxes in the
accompanying consolidated statement of operations. The Company does not expect its unrecognized tax benefits to change
significantly over the next 12 months.
The Company files its tax returns in the U.S. and certain state and foreign income tax jurisdictions with varying statutes of
limitations. The earliest years’ tax returns filed by the Company that are still subject to examination by the tax authorities in
the major jurisdictions are as follows:
Jurisdiction Tax Year
U.S. 2004
Germany 2005
Canada 2004
Indiana 2003
The Company is in the process of concluding an IRS examination for the tax year ended February 28, 2005 and the
preliminary results of the examination did not have a material impact on the Company’s consolidated statement of operations
from continuing operations.
F-35
Source: AUDIOVOX CORP, 10-K, May 14, 2008