Plantronics 2007 Annual Report Download - page 97

part ii
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We assess the probability of adverse outcomes from tax examinations regularly to determine the adequacy
of our reserve for income taxes. Tax reserves have been established despite the Company’s belief that tax
return positions are consistent with applicable tax laws, certain positions are subject to challenge and the
Company may not successfully defend its position. While it is difficult to predict the final outcome or
timing of resolution of any particular tax matter, the company believes that reserves reflect the probable
outcome of known tax contingencies.
Pre-tax earnings of our foreign subsidiaries were $44.2 million, $45.6 million and $54.4 million for fiscal
years 2005, 2006 and 2007, respectively. Permanently reinvested foreign earnings were approximately
$259.4 million at March 31, 2007. The determination of the tax liability that would be incurred if these
amounts were remitted back to the United States is not practical.
Deferred tax assets and liabilities represent the tax effects of temporary differences between the carrying
amounts of assets and liabilities for financial reporting and income tax purposes. Significant components
of our deferred tax assets and liabilities are as follows:
March 31, 2006 2007
Current assets:
Accruals and other reserves $ 11,904 $ 11,784
Deferred state tax 351 523
Deferred foreign tax 154 352
12,409 12,659
Non-current assets:
Net operating loss carryover 2,967 2,658
Stock compensation — 4,219
Other deferred tax assets 518 684
3,485 7,561
Total deferred tax assets 15,894 20,220
Non-current liabilities:
Deferred gains on sales of properties (2,286) (2,223)
Purchased intangibles (43,498) (37,791)
Unremitted earnings of certain subsidiaries (3,064) (3,064)
Other deferred tax liabilities (2,883) (1,827)
Total deferred tax liabilities (51,731) (44,905)
Net deferred tax liabilities $ (35,837) $ (24,685)