Plantronics 2009 Annual Report Download - page 100

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The effective tax rate for fiscal 2009 differs from the statutory rate due to the impact of foreign operations taxed at different statutory
rates, income tax credits, state taxes, the impairment of non-deductible goodwill and other factors. The effective tax rate for fiscal
2008 differs from the statutory rate due to the impact of foreign operations taxed at different statutory rates, income tax credits, state
taxes, and other factors. The future tax rate could be impacted by a shift in the mix of domestic and foreign income; tax treaties with
foreign jurisdictions; changes in tax laws in the U.S. or internationally; or a change in estimates of future taxable income which could
result in a valuation allowance being required
Permanently reinvested foreign earnings were approximately $337.7 million at March 31, 2009. The determination of the tax liability
that would be incurred if these amounts were remitted back to the U.S. 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:
(in thousands) 2008 2009
Accruals and other reserves $ 12,249 $ 9,887
Deferred state tax 422 233
Deferred foreign tax 685 254
Net operating loss carryover 3,293 3,118
Stock compensation 6,314 8,714
Other deferred tax assets 3,325 3,654
Valuation allowance (1,088) (123)
Total deferred tax assets 25,200 25,737
Deferred gains on sales of properties (2,160) (2,096)
Purchased intangibles (36,871) (10,024)
Unremitted earnings of certain subsidiaries (3,064) (3,064)
Fixed asset depreciation (1,358) (3,949)
Other deferred tax liabilities (557) (2,203)
Total deferred tax liabilities (44,010) (21,336)
Net deferred tax asset (liabilities) $(18,810) $4,401
March 31,
The Company evaluates its deferred tax assets including a determination of whether a valuation allowance is necessary based upon its
ability to utilize the assets using a more likely than not analysis. Deferred tax assets are only recorded to the extent that they are
realizable based upon past and future income. The Company has a long established earnings history with taxable income in its
carryback years and forecasted future earnings. The Company has concluded that except for the specific items discussed below, no
valuation allowance is required.
As of March 31, 2009, the Company has state tax credit carryforwards of $1.4 million with no expiration provisions.
The Company established a valuation allowance of $1.1 million during fiscal 2008 related to the temporary decline in fair market
value of its ARS under SFAS No. 115. The valuation allowance was recorded to Accumulated other comprehensive income (loss).
During fiscal 2009, the decline in fair value of the ARS was treated as an other-than-temporary loss and the valuation allowance of
$1.1 million was reversed. The loss was mostly offset by the value of the Rights offer from UBS the Company accepted during fiscal
2009. A valuation allowance has been established for the tax effect of the $0.1 million net loss from the decline in value of the ARS
offset by the Rights. The Company has also established a $0.1 million valuation allowance in relation to the operating losses of one of
its foreign subsidiaries where there is an insufficient history of earnings to support realization of the deferred tax asset.