Coach 2007 Annual Report Download - page 44

settlement of tax return
examination
Other, net 7,609 0.6 10,988 1.0 6,309 0.8
Taxes at effective worldwide rates $ 411,910 34.5 % $ 398,141 38.5 % $ 283,490 37.9 %
Current and deferred tax provisions (benefits) were:

   
      
Federal $ 334,381 $ (21,391) $ 323,087 $ (5,352) $ 245,203 $ (19,381)
Foreign 25,624 5,931 16,025 4,227 7,555 8,321
State 68,812 (1,447) 56,745 3,409 47,922 (6,130)
Total current and deferred tax
provisions (benefits)
$ 428,817 $ (16,907) $ 395,857 $ 2,284 $ 300,680 $ (17,190)
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


The components of deferred tax assets and liabilities at the respective year-ends were as follows:
 
Reserves not deductible until paid $ 129,287 $ 101,658
Pensions and other employee benefits 19,069 10,685
Property and equipment 23,361 25,580
Net operating loss 20,202 11,514
Other 11,537 4,914
Gross deferred tax assets $ 203,456 $ 154,351
Prepaid expenses $ 16,779 $ —
Equity adjustments 8,181 4,703
Goodwill 51,586 34,859
Other 2,424 481
Gross deferred tax liabilities $ 78,970 $ 40,043
Net deferred tax assets $ 124,486 $ 114,308

Deferred income taxes – current asset $ 69,557 $ 68,305
Deferred income taxes – noncurrent asset 81,346 86,046
Accrued liabilities — (3,595)
Deferred income taxes – noncurrent liability (26,417) (36,448)
Net amount recognized $ 124,486 $ 114,308
The Company adopted FIN 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” on July
1, 2007, the first day of fiscal 2008. FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. As a result, the Company recorded a non-cash
cumulative transition charge of $48,797 as a reduction to the opening retained earnings balance.
Significant judgment is required in determining the worldwide provision for income taxes, and there are many transactions for which the
ultimate tax outcome is uncertain. It is the Company’s policy to establish provisions for taxes that may become payable in future years as a
result of an examination by tax authorities. The Company establishes the provisions based upon management’s assessment of exposure
associated with uncertain tax positions. The provisions are analyzed periodically and adjustments are made as events occur that warrant
adjustments to those provisions. All of these determinations are subject to the requirements of FIN 48.
As of July 1, 2007, the gross amount of unrecognized tax benefits was $120,367. The total amount of unrecognized tax benefits that, if
recognized, would have affected the effective tax rate was $80,413.
A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows:
 $ 120,367
Gross increase due to tax positions related to prior periods 8,606
Gross decrease due to tax positions related to prior periods (10,122)
Gross increase due to tax positions related to current period 72,983
Gross decrease due to tax positions related to current period (24,369)
Decrease due to lapse of statutes of limitations (1,683)