Invacare 2007 Annual Report Download - page 96

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income Taxes—Continued
Significant components of deferred income tax assets and liabilities at December 31, 2007 and 2006 are as
follows (in thousands):
2007 2006
Current deferred income tax assets (liabilities), net:
Loss carryforwards ............................................... $ 2,345 $ 7,375
Bad debt ....................................................... 13,575 14,006
Warranty ....................................................... 3,837 3,365
State and local taxes .............................................. (1,441) 3,154
Other accrued expenses and reserves ................................. 1,759 2,645
Inventory ....................................................... 2,557 2,337
Compensation and benefits ......................................... 3,228 3,079
Product liability ................................................. 292 292
Valuation allowance .............................................. (25,446) (22,552)
Other, net ...................................................... 1,772 (189)
$ 2,478 $ 13,512
Long-term deferred income tax assets (liabilities), net:
Goodwill & intangibles ........................................... (25,329) (29,480)
Fixed assets ..................................................... (13,441) (18,289)
Compensation and benefits ......................................... 15,943 16,541
Loss and credit carryforwards ...................................... 39,374 6,453
Product liability ................................................. 4,511 4,715
State and local taxes .............................................. 16,128 10,619
Valuation allowance .............................................. (64,276) (27,721)
Other, net ...................................................... (1,734) 2,569
$(28,824) $(34,593)
Net Deferred Income Taxes ........................................ $(26,346) $(21,081)
At December 31, 2007, the company had domestic federal loss carryforwards of $26,880,000 which expire
in 2027, domestic charitable contribution carryforwards of $680,000 which expire in 2011 and 2012, federal
foreign tax loss carryforwards of approximately $43,400,000 of which $32,500,000 are non-expiring, $5,850,000
expire in 2012, and $5,050,000 expire in 2013. The loss carryforward amounts include $10,600,000 of remaining
federal foreign loss carryforwards associated with 2004 acquisitions. At December 31, 2007 the company also
had a $12,960,000 domestic capital loss carryforward of which $8,960,000 expires in 2011 and $4,000,000
expires in 2012 and $350,200,000 of domestic state and local tax loss carryforwards, of which $170,100,000
expire between 2008 and 2011, $66,100,000 expire between 2012 and 2021 and $114,000,000 expire after 2021,
all of which are fully offset by valuation allowances. The company has domestic federal tax credit carryforwards
of $10,775,000 of which $8,575,000 expire between 2014 and 2017 and $2,200,000 expire between 2025 and
2027. The company made income tax payments of $1,060,000, $14,370,000 and $10,435,000 during the years
ended December 31, 2007, 2006 and 2005, respectively. The company recorded a valuation allowance for its
domestic net deferred tax assets due to the domestic loss recognized in 2006 and 2007 and based upon near term
domestic projections. During 2007, the company also recorded valuation allowances for certain foreign country
net deferred tax assets where recent performance results in a three year cumulative loss and near term projections
indicate it is more likely than not that the deferred tax assets will not be realized.
The company adopted the provisions of FIN 48 on January 1, 2007. As of December 31, 2007 and 2006, the
company had a liability for uncertain tax positions, excluding interest and penalties of $8,085,000 and
$8,875,000, respectively. The company does not believe there will be a material change in its unrecognized tax
positions over the next twelve months.
FS-32