Callaway 2014 Annual Report Download - page 94

F-26
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, 2014 and
2013 are as follows (in thousands):
December 31,
2014 2013
Deferred tax assets:
Reserves and allowances not currently deductible for tax purposes ......................................... $ 15,861 $ 16,953
Basis difference related to fixed assets...................................................................................... 10,943 13,137
Compensation and benefits........................................................................................................ 8,147 6,878
Basis difference for inventory valuation ................................................................................... 1,526 1,593
Compensatory stock options and rights..................................................................................... 4,334 3,925
Deferred revenue and other ....................................................................................................... 201 459
Operating loss carryforwards .................................................................................................... 100,227 94,639
Tax credit carryforwards............................................................................................................ 15,987 11,584
State taxes, net of federal income tax benefit............................................................................ 1 1
Basis difference related to intangible assets with a definite life................................................ 15,557 18,363
Other .......................................................................................................................................... 434 —
Total deferred tax assets.................................................................................................................... 173,218 167,532
Valuation allowance for deferred tax assets...................................................................................... (165,427)(158,747)
Deferred tax assets, net of valuation allowance................................................................................ $ 7,791 $ 8,785
Deferred tax liabilities:
Prepaid expenses ....................................................................................................................... (1,368)(970)
Other .......................................................................................................................................... — (84)
Basis difference related to intangible assets with an indefinite life .......................................... (34,065)(34,284)
Total deferred tax liabilities.............................................................................................................. (35,433)(35,338)
Net deferred tax liabilities ................................................................................................................ $ (27,642)$
(26,553)
Net deferred tax assets (liabilities) are shown on the accompanying consolidated balance sheets
as follows:
Current deferred tax assets ........................................................................................................ $ 5,081 $ 6,419
Non-current deferred tax assets ................................................................................................. 2,346 2,299
Current deferred tax liabilities................................................................................................... (26)—
Non-current deferred tax liabilities ........................................................................................... (35,043)(35,271)
Net deferred tax liabilities ................................................................................................................ $ (27,642)$
(26,553)
The change in net deferred taxes in 2014 of $1,089,000 is comprised of a net deferred expense of $29,000 related to the
change in the basis difference of intangible assets with an indefinite life, a net deferred expense of $596,000 related to foreign
and separate state jurisdictions for which no valuation allowance has been provided, and $464,000 of 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 evidence, including prior operating results, the nature and reason for any losses, its forecast of future
taxable income, and the dates on which any deferred tax assets are expected to expire. These assumptions require a significant
amount of judgment, including estimates of future taxable income. These estimates are based on the Company’s best judgment
at the time made based on current and projected circumstances and conditions.