Callaway 2007 Annual Report Download - page 96

Note 13. Income Taxes
The Company’s income (loss) before income tax provision was subject to taxes in the following
jurisdictions for the following periods (in thousands):
Year Ended December 31,
2007 2006 2005
United States ........................................................... $69,481 $18,455 $ (5,685)
Foreign ............................................................... 18,794 16,543 20,222
$88,275 $34,998 $14,537
The provision for income taxes is as follows (in thousands):
Year Ended December 31,
2007 2006 2005
Current tax provision (benefit):
Federal ............................................................ $25,127 $ 2,986 $(3,652)
State .............................................................. 4,061 1,085 (1,087)
Foreign ............................................................ 2,790 6,050 7,905
Deferred tax expense (benefit):
Federal ............................................................ (2,288) 645 (1,789)
State .............................................................. (675) 289 459
Foreign ............................................................ 4,673 653 (583)
Income tax provision ..................................................... $33,688 $11,708 $ 1,253
During 2007, 2006, and 2005, tax cash benefits related to the exercise or vesting of stock-based awards were
$6,031,000, $884,000 and $2,408,000, respectively. Such benefits were recorded as a reduction of income taxes
payable with a corresponding increase in additional paid-in capital or a decrease to deferred tax assets in
connection with compensation cost previously recognized in income.
Deferred tax assets and liabilities are classified as current or noncurrent according to the classification of the
related asset or liability. Significant components of the Company’s deferred tax assets and liabilities as of
December 31, 2007 and 2006 are as follows (in thousands):
December 31,
2007 2006
Deferred tax assets:
Reserves and allowances ...................................................... $18,476 $17,574
Compensation and benefits .................................................... 16,060 6,963
Effect of inventory overhead adjustment ......................................... 4,398 5,221
Compensatory stock options and rights .......................................... 5,836 5,480
Revenue recognition ......................................................... 2,080 2,032
Long-lived asset impairment ................................................... — 631
Operating loss carryforwards .................................................. 1,705 1,357
Tax credit carryforwards ...................................................... 3,633 3,605
Energy derivative ........................................................... 8,305 8,177
Other ..................................................................... 44 745
Total deferred tax assets .......................................................... 60,537 51,785
Valuation allowance for deferred tax assets ........................................... (4,702) (4,083)
Deferred tax assets, net of valuation allowance ........................................ 55,835 47,702
Deferred tax liabilities:
State taxes, net of federal income tax benefit ...................................... (3,094) (3,162)
Prepaid expenses ............................................................ (1,707) (2,373)
Depreciation and amortization ................................................. (11,182) (6,789)
Net deferred tax assets ........................................................... $39,852 $35,378
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