Invacare 2008 Annual Report Download - page 99

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INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income Taxes—Continued
The company recorded a valuation allowance for its domestic net deferred tax assets due to the domestic
loss recognized in 2006, 2007 and 2008 and based upon near term domestic projections. During 2007 and 2008,
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 made income tax payments of $10,564,000,
$1,060,000 and $14,370,000 during the years ended December 31, 2008, 2007 and 2006, respectively.
The company adopted the provisions of FIN 48 on January 1, 2007. As of December 31, 2008 and 2007, the
company had a liability for uncertain tax positions, excluding interest and penalties of $6,400,000 and
$8,085,000, respectively. The company does not believe there will be a material change in its unrecognized tax
positions over the next twelve months.
The total liabilities associated with unrecognized tax benefits that, if recognized, would impact the effective
tax rates were $6,400,000 and $8,085,000 at December 31, 2008 and 2007, respectively.
A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows (in
thousands):
2008 2007
Balance at beginning of year .................................................... $8,085 $8,785
Additions to:
Positions taken during the current year ........................................ 360 236
Positions taken during a prior year ........................................... 40 338
Deductions due to:
Exchange rate impact ...................................................... (260) —
Positions taken during the current year ........................................ (10) (3)
Positions taken during a prior year ........................................... (85) (37)
Settlements with taxing authorities ........................................... (1,370) (966)
Lapse of statute of limitations ............................................... (360) (268)
Balance at end of year ......................................................... $6,400 $8,085
The Company recognizes interest and penalties associated with uncertain tax positions in income tax
expense. During 2008, 2007 and 2006 the (benefit) provision for interest and penalties was ($155,000), $840,000
and $150,000, respectively. The Company had approximately $2,625,000 and $2,865,000 of accrued interest and
penalties as of December 31, 2008 and 2007, respectively.
The company and its subsidiaries file income tax returns in the U.S. and certain foreign jurisdictions. The
company is subject to U.S. federal income tax examinations for calendar years ending 2003 to 2008, and is
subject to various U.S. state income tax examinations for similar periods. With regards to foreign income tax
jurisdictions, the company is generally subject to examinations for the periods 2003 to 2008.
FS-33