Invacare 2011 Annual Report Download - page 104

INVACARE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Income Taxes—Continued
The foreign tax audit settlement above relates to a tax settlement in Germany as the German government
agreed to follow a European Court of Justice case and a German Tax Court case that impacted an open tax return
year for a benefit of $4,947,000 or $0.15 per diluted share.
At December 31, 2011, total deferred tax assets were $104,493,000, total deferred tax liabilities were
$39,278,000 and the tax valuation allowance total was $92,543,000 for a net deferred income tax liability of
$27,328,000 compared to total deferred tax assets of $108,850,000, total deferred tax liabilities of $53,650,000
and a tax valuation allowance total of $81,981,000 for a net deferred income tax liability of $26,781,000 at
December 31, 2010. Significant components of deferred income tax assets and liabilities at December 31, 2011
and 2010 are as follows (in thousands):
2011 2010
Current deferred income tax assets (liabilities), net:
Loss carryforwards ........................................... $ 2,017 $ 5,853
Bad debt ................................................... 9,698 9,398
Warranty ................................................... 4,591 4,338
State and local taxes .......................................... 2,687 2,699
Other accrued expenses and reserves ............................. 2,068 5,535
Inventory ................................................... 1,949 2,742
Compensation and benefits ..................................... 2,644 1,182
Product liability ............................................. 292 292
Valuation allowance .......................................... (24,887) (21,657)
Other, net .................................................. 561 (4,604)
$ 1,620 $ 5,778
Long-term deferred income tax assets (liabilities), net:
Goodwill & intangibles ....................................... (23,388) (24,478)
Convertible debt ............................................. (941) (8,798)
Fixed assets ................................................. (14,949) (15,770)
Compensation and benefits ..................................... 14,388 13,416
Loss and credit carryforwards .................................. 43,603 45,519
Product liability ............................................. 4,236 4,428
State and local taxes .......................................... 10,734 9,480
Valuation allowance .......................................... (67,656) (60,324)
Other, net .................................................. 5,025 3,968
$(28,948) $(32,559)
Net Deferred Income Taxes ........................................ $(27,328) $(26,781)
The company recorded a valuation allowance for its domestic net deferred tax assets due to a domestic loss
recognized in each year from 2007 through 2011 and based upon near term domestic projections. For 2010, the
company had a domestic current tax return liability of $1,800,000 and for 2011 the company estimates a
domestic current tax return liability of approximately $4,750,000 and has recorded a deferred tax asset equal to
these amounts. In addition, during 2007 through 2010, 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 do not warrant substantial positive evidence to overcome the past losses. The company
made net payments for income taxes of $14,290,000, $2,600,000, and $12,340,000 during the years ended
December 31, 2011, 2010 and 2009, respectively.
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