Callaway 2012 Annual Report Download - page 101

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, 2012 and 2011 are as follows (in thousands):
December 31,
2012 2011
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes ............. $ 15,617 $ 14,161
Basis difference related to fixed assets .................................... 10,711 7,891
Compensation and benefits ............................................. 3,808 3,932
Basis difference for inventory valuation .................................. 2,502 2,252
Compensatory stock options and rights ................................... 5,238 9,927
Deferred revenue and other ............................................ 101 2,151
Operating loss carryforwards ........................................... 105,748 66,332
Tax credit carryforwards .............................................. 6,024 9,402
Correlative effects of global income allocations ............................ 363 424
Federal impact of state taxes ........................................... 808 —
Basis difference related to intangible assets with a definite life ................ 6,165 2,725
Total deferred tax assets ................................................... 157,085 119,197
Valuation allowance for deferred tax assets .................................... (151,097) (110,844)
Deferred tax assets, net of valuation allowance ................................. $ 5,988 $ 8,353
Deferred tax liabilities:
State taxes, net of federal income tax benefit ............................... (33) (1,472)
Prepaid expenses ..................................................... (1,102) (2,582)
Deferred revenue .................................................... (330) —
Other .............................................................. (69) (108)
Basis difference related to intangible assets with an indefinite life .............. (32,834) (34,313)
Total deferred tax liabilities ................................................ (34,368) (38,475)
Net deferred tax assets .................................................... $ (28,380) $ (30,122)
Net deferred tax assets are shown on the accompanying consolidated balance sheets as
follows:
Current deferred tax assets ............................................. $ 4,170 $ 4,029
Non-current deferred tax assets ......................................... 1,910 1,386
Current deferred tax liabilities .......................................... (927) (4,108)
Non-current deferred tax liabilities ...................................... (33,533) (31,429)
Net deferred tax assets (liabilities) ........................................... $ (28,380) $ (30,122)
The current year change in net deferred taxes of $1,742,000 is comprised of a net deferred expense of
$1,479,000 related to the change in the basis difference of intangible assets with an indefinite life, a net deferred
expense of $191,000 related to foreign and separate state jurisdictions for which no valuation allowance has been
provided, and a $72,000 expense related to foreign currency translation adjustments.
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 is deemed to be
more likely than not that some or all of the deferred tax assets will not be realized. In evaluating whether a
valuation allowance is required under such rules, the Company considers all available positive and negative
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