Harman Kardon 2009 Annual Report Download - page 95

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Harman International Industries, Incorporated and Subsidiaries
(Dollars in thousands, except per-share data and unless otherwise indicated)
Income tax (benefit) expense for the years ended June 30, 2009, 2008 and 2007 consisted of the following:
Year Ended June 30,
2009 2008 2007
Current:
Federal .................................................... $ 2,430 $ 2,194 $ 3,991
State ...................................................... 300 400 400
Foreign .................................................... 2,445 22,551 107,818
Current income tax expense ....................................... 5,175 25,145 112,209
Deferred:
Federal .................................................... (58,369) (11,124) (43,913)
State ...................................................... — — —
Foreign .................................................... (44,829) (2,223) (8,566)
Deferred income tax benefit ....................................... (103,198) (13,347) (52,479)
Excess tax benefits from share-based payment arrangements ............. 126 5,321 10,456
Total income tax (benefit) expense, net .............................. $ (97,897) $ 17,119 $ 70,186
Deferred taxes are recorded based upon differences between the financial statement basis and tax basis of
assets and liabilities and available tax loss and credit carryforwards.
At June 30, 2009 and 2008, deferred taxes consisted of the following:
June 30,
Assets/(Liabilities) 2009 2008
Federal tax credits .............................................. $215,378 $ 203,535
Inventory costing differences ..................................... 12,809 12,285
Capitalized research and development .............................. 51,082 63,104
U.S. tax loss carryforward ....................................... 61,527 —
Foreign tax loss and credit carryforwards ........................... 44,182 18,089
Non-qualified stock options—GAAP deductions ..................... 12,134 16,212
Other assets and other allowances ................................. 63,488 52,274
Deferred tax asset, gross ......................................... 460,600 365,499
Less valuation allowance ........................................ (131,601) (120,220)
Deferred tax asset, net of valuation allowance ........................ 328,999 245,279
Gross deferred tax liability from fixed asset depreciation ............... (3,465) (9,301)
Foreign statutory accounting ..................................... (765) (14,206)
Deferred tax liability, gross ...................................... (4,230) (23,507)
Net deferred tax asset ........................................... $324,769 $ 221,772
Although realization is not assured, we believe that the realization of the recognized net deferred tax asset of
$324.8 million is more likely than not based on expectations as to future taxable income in the jurisdictions in
which we operate and available tax planning strategies, as defined in SFAS No. 109 “Accounting for Income
Taxes,” that could be implemented if necessary to prevent a carryforward from expiring. We have Federal
research credit, alternative minimum tax credit and foreign income tax credit carryforwards valued at $32.2
million, $1.9 million and $181.3 million at June 30, 2009. The research credit carryforward will begin to expire
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