Harman Kardon 2011 Annual Report Download - page 95

The tax provisions and analysis of effective income tax rates for the years ended June 30, 2011, 2010 and
2009 consisted of the following:
Year Ended June 30,
2011 2010 2009
Provision for Federal income taxes before credits at statutory rate .......... $56,077 $ 17,177 $(185,014)
State income taxes ............................................... 623 (311) 195
Difference between Federal statutory rate and foreign effective rate ........ (16,688) (11,893) (4,429)
Goodwill impairment without tax benefit ............................. 0 2,028 77,886
Expenses not deductible for tax purposes and other ..................... 1,703 4,276 1,259
Tax benefit from U.S. production activities ............................ (1,581) 0 0
Change in valuation allowance ..................................... 166 4,767 9,699
Change in uncertain tax positions ................................... 7,206 (857) 5,151
Deferred tax true-up .............................................. (3,703) 1,248
Difference between Federal and financial accounting for incentive stock
option grants .................................................. 494 1,009 1,005
Federal income tax credits ......................................... (18,024) (9,397) (11,843)
Other .......................................................... (1,969) 563 (926)
Income tax expense (benefit), net ................................... $24,304 $ 8,610 $(107,017)
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, 2011 and 2010, deferred taxes
consisted of the following:
June 30,
Assets/(Liabilities) 2011 2010
Federal and state tax credits ...................................... $233,070 $ 247,208
Deferred interest and loss carryforwards ............................ 46,938 56,753
Inventory costing differences ..................................... 9,504 10,707
Capitalized research and development .............................. 108,733 88,853
Amortization of share-based compensation .......................... 19,204 16,499
Pension liability and other ....................................... 35,251 36,653
Other assets and other allowances ................................. 42,735 32,718
Deferred tax assets, gross ........................................ 495,435 489,391
Less valuation allowance ........................................ (159,378) (158,739)
Deferred tax assets net of valuation allowance ....................... 336,057 330,652
Unrepatriated foreign earnings .................................... (35,409) (35,367)
Interest expense on Convertible Senior Notes ........................ (8,034) (13,958)
Other deferred tax liabilities ...................................... (10,670) (16,525)
Deferred tax liability, gross ...................................... (54,113) (65,850)
Net deferred tax asset ........................................... $281,944 $ 264,802
The above amounts are classified as current or long-term in the Consolidated Balance Sheets in accordance
with the asset or liability to which they relate or, when applicable, based on the expected timing of the reversal.
The net current deferred tax assets of $52.4 million and $21.9 million are recorded in Other current assets in the
Consolidated Balance Sheets at June 30, 2011 and 2010, respectively. The net non-current deferred tax liabilities
of $0.4 million and $4.7 million are recorded in Other non-current liabilities in the Consolidated Balance Sheets
at June 30, 2011 and 2010, respectively.
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