Plantronics 2015 Annual Report Download - page 76

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 the Company's deferred tax assets and
liabilities as of March 31, 2015 and 2014 are as follows:
March 31,
(in thousands) 2015 2014
Accruals and other reserves $ 5,100 $ 8,459
Net operating loss carry forward 3,043 4,580
Stock compensation 9,865 8,957
Other deferred tax assets 8,375 3,937
Valuation allowance (1,940)(3,351)
Total deferred tax assets 24,443 22,582
Deferred gains on sales of properties (1,756)(1,756)
Unremitted earnings of certain subsidiaries (3,064)(3,064)
Fixed asset depreciation (4,650)(3,571)
Total deferred tax liabilities (9,470)(8,391)
Net deferred tax assets(1) $ 14,973 $ 14,191
(1) The long-term portion of the Company's deferred tax assets for the fiscal years ending March 31, 2015 and March 31, 2014, are included as a component of
other assets on the consolidated balance sheets.
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 no valuation allowance is required, except
for the specific items discussed below.
The valuation allowance of $1.9 million as of March 31, 2015 was related to the net operating losses of a foreign subsidiary with
an insufficient history of earnings to support the realization of the deferred tax asset.
The impact of an uncertain income tax position on income tax expense must be recognized at the largest amount that is more likely
than not to be sustained. An uncertain income tax position will not be recognized unless it has a greater than 50% likelihood of
being sustained. As of March 31, 2015, 2014, and 2013, the Company had $12.8 million, $12.6 million, and $11.1 million,
respectively, of unrecognized tax benefits. The unrecognized tax benefits as of March 31, 2015 would favorably impact the
effective tax rate in future periods if recognized.
A reconciliation of the change in the amount of gross unrecognized income tax benefits for the periods is as follows:
March 31,
(in thousands) 2015 2014 2013
Balance at beginning of period $ 12,571 $ 11,072 $ 11,141
Increase (decrease) of unrecognized tax benefits related to prior years (244) 641 (117)
Increase of unrecognized tax benefits related to the current year 1,908 2,427 2,430
Reductions to unrecognized tax benefits related to lapse of applicable statute of
limitations (1,414)(1,569)(2,382)
Balance at end of period $ 12,821 $ 12,571 $ 11,072
The Company's continuing practice is to recognize interest and penalties related to income tax matters in income tax expense.
The interest related to unrecognized tax benefits was $1.8 million and $1.7 million as of March 31, 2015 and 2014, respectively.
No penalties have been accrued.
The Company and its subsidiaries are subject to taxation in various foreign and state jurisdictions, including the U.S. The Company
is under examination by the Internal Revenue Service for its 2010 tax year. The California Franchise Tax Board completed its
examination of our 2007 and 2008 tax years. The Company received a Notice of Proposed Assessment and responded by filing
a protest letter. The amount of the proposed assessment is not material. Foreign income tax matters for material tax jurisdictions
have been concluded for tax years prior to fiscal year 2011, except for the United Kingdom, which has been concluded for tax
years prior to fiscal year 2014.
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