Callaway 2011 Annual Report Download - page 103

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, 2011 and 2010 are as follows (in thousands):
December 31,
2011 2010
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes .............. $ 14,161 $ 18,113
Basis difference related to fixed assets ..................................... 7,891 15,083
Compensation and benefits .............................................. 3,932 4,550
Basis difference for inventory valuation ................................... 2,252 3,549
Compensatory stock options and rights .................................... 9,927 9,932
Deferred revenue and other ............................................. 2,151 1,330
Operating loss carryforwards ............................................ 66,332 4,766
Tax credit carryforwards ............................................... 9,402 8,124
Correlative effects of global income allocations ............................. 424 —
Basis difference related to intangible assets with a definite life ................. 2,725 1,519
Total deferred tax assets .................................................... 119,197 66,966
Valuation allowance for deferred tax assets ..................................... (110,844) (1,704)
Deferred tax assets, net of valuation allowance .................................. $ 8,353 $ 65,262
Deferred tax liabilities:
State taxes, net of federal income tax benefit ................................ (1,472) (3,744)
Prepaid expenses ...................................................... (2,582) (2,086)
Other ............................................................... (108) (138)
Basis difference related to intangible assets with an indefinite life ............... (34,313) (33,397)
Total deferred tax liabilities ................................................. (38,475) (39,365)
Net deferred tax assets ..................................................... $ (30,122) $ 25,897
Net deferred tax assets are shown on the accompanying consolidated balance sheets as
follows:
Current deferred tax assets .............................................. $ 4,029 $ 23,514
Non-current deferred tax assets .......................................... 1,386 3,786
Current deferred tax liabilities ........................................... (4,108) (27)
Non-current deferred tax liabilities ....................................... (31,429) (1,376)
Net deferred tax assets (liabilities) ............................................ $ (30,122) $ 25,897
The current year change in net deferred taxes of $56,019,000 is comprised of a net deferred expense of
$57,291,000 recorded through current income tax expense for the year ended December 31, 2011, offset by
$88,000 of foreign currency translation adjustments and a net deferred benefit of $1,184,000 related to reserves
for uncertain tax positions in accordance with ASC Topic 740-25-6.
Deferred tax assets and liabilities result from temporary differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and laws that are anticipated to be in
effect at the time the differences are expected to reverse. The realization of the deferred tax assets, including the
loss and credit carry forwards listed above, is subject to the Company generating sufficient taxable income
during the periods in which the temporary differences become realizable. In accordance with the applicable
accounting rules, the Company maintains a valuation allowance for a deferred tax asset when it deemed it to be
more likely than not that some or all of the deferred tax asset will not be realized. In evaluating whether a
valuation allowance is required under such rules, the Company considers all available positive and negative
evidence, including prior operating results, the nature and reason for any losses, its forecast of future taxable
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