Toro 2011 Annual Report Download - page 60

Components of the provision for income taxes were as follows: As of October 31, 2011, the company had approximately
$48,690 of accumulated undistributed earnings from subsidiaries
outside the United States that are considered to be reinvested
Fiscal years ended October 31 2011 2010 2009
indefinitely. No deferred tax liability has been provided for such
Provision for income taxes:
earnings.
Current –
Federal $47,922 $34,582 $23,954 A reconciliation of the beginning and ending amount of unrecog-
State 3,963 2,918 1,951 nized tax benefits is as follows:
Non-U.S. 7,103 4,436 4,972
Current provision $58,988 $41,936 $30,877 Balance as of October 31, 2010 $5,752
Deferred – Increase as a result of tax positions
Federal $ (31) $ 5,305 $ 1,948 taken during a prior period 175
State (211) 198 (110) Increase as a result of tax positions taken during the current period 846
Non-U.S. (1,578) 592 236 Decrease relating to settlements with taxing authorities (1,245)
Reduction as a result of a lapse
Deferred benefit (1,820) 6,095 2,074 of the applicable statute of limitations (199)
Total provision for income taxes $57,168 $48,031 $32,951 Balance as of October 31, 2011 $5,329
As of October 31, 2011, the company had net operating loss Included in the balance of unrecognized tax benefits as of Octo-
carryforwards of approximately $13,822 in foreign jurisdictions with ber 31, 2011 are potential benefits of $3,774 that, if recognized,
unlimited expiration. would affect the effective tax rate from continuing operations.
Earnings before income taxes were as follows: The company recognizes potential accrued interest and penalties
related to unrecognized tax benefits as a component of the provi-
Fiscal years ended October 31 2011 2010 2009 sion for income taxes. In addition to the liability of $5,329 for
Earnings before income taxes: unrecognized tax benefits as of October 31, 2011 was an amount
U.S. $160,444 $127,508 $83,357 of approximately $760 for accrued interest and penalties. To the
Non-U.S. 14,382 13,760 12,431 extent interest and penalties are not assessed with respect to
Total $174,826 $141,268 $95,788 uncertain tax positions, the amounts accrued will be revised and
During the fiscal years ended October 31, 2011, 2010, and reflected as an adjustment to the provision for income taxes.
2009, respectively, $2,988, $3,396, and $7,403 was added to The company anticipates that total unrecognized tax benefits will
stockholders’ equity reflecting the permanent book to tax difference not change significantly within the next 12 months.
in accounting for tax benefits related to employee stock-based The company is subject to U.S. federal income tax as well as
award transactions. income tax of numerous state and foreign jurisdictions. The com-
The tax effects of temporary differences that give rise to the net pany is generally no longer subject to U.S. federal tax examina-
deferred income tax assets are presented below: tions for taxable years before fiscal 2008 and with limited excep-
tions, state and foreign income tax examinations for fiscal years
October 31 2011 2010 before 2006.
Deferred tax assets (liabilities):
Allowance for doubtful accounts $ 1,156 $ 1,865
Inventory items 5,121 1,750
Warranty reserves and other accruals 38,370 40,156 10 STOCK-BASED COMPENSATION PLANS
Employee benefits 16,831 16,159 The company maintains The Toro Company 2010 Equity and
Depreciation (3,909) (2,411)
Other 8,514 7,399 Incentive Plan for officers, other employees, and non-employee
members of the company’s Board of Directors. The company’s
Deferred tax assets $66,083 $64,918
Valuation allowance (4,928) (4,538) incentive plan allows it to grant equity-based compensation
awards, including stock options, restricted stock awards, and per-
Net deferred tax assets $61,155 $60,380
formance share awards.
The valuation allowance as of October 31, 2011 and 2010 princi-
pally applies to capital loss carryforwards and foreign net operating
loss carryforwards that are expected to expire prior to utilization.
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