Toro 2013 Annual Report Download - page 62

Components of the provision for income taxes were as follows: are as follows: $10,477 that do not expire; none that expire in
fiscal years 2014 thru 2017; and $6,202 that expire between fiscal
years 2018 and 2021.
Fiscal years ended October 31 2013 2012 2011
As of October 31, 2013, the company had approximately
Provision for income taxes:
$52,587 of accumulated undistributed earnings from subsidiaries
Current –
Federal $61,388 $59,405 $47,922 outside the U.S. that are considered to be reinvested indefinitely.
State 5,108 4,609 3,963 No deferred tax liability has been provided for such earnings.
Non-U.S.5,734 3,854 7,103 A reconciliation of the beginning and ending amount of unrecog-
Current provision $72,230 $67,868 $58,988 nized tax benefits is as follows:
Deferred –
Federal $ 824 $ (685) $ (31) Balance as of October 31, 2012 $4,421
State 91 (132) (211) Decrease as a result of tax positions taken during a prior period (626)
Non-U.S.(1,277) (330) (1,578) Increase as a result of tax positions taken during the current period 940
Deferred benefit (362) (1,147) (1,820) Decrease relating to settlements with taxing authorities (214)
Reduction as a result of a lapse of the applicable statute of
Total provision for income taxes $71,868 $66,721 $57,168 limitations (15)
Earnings before income taxes were as follows: Balance as of October 31, 2013 $4,506
Included in the balance of unrecognized tax benefits as of Octo-
Fiscal years ended October 31 2013 2012 2011 ber 31, 2013 are potential benefits of $3,276 that, if recognized,
Earnings before income taxes: would affect the effective tax rate from continuing operations.
U.S.$213,509 $189,206 $160,444 The company recognizes potential accrued interest and penalties
Non-U.S.13,204 7,056 14,382
related to unrecognized tax benefits as a component of the provi-
Total $226,713 $196,262 $174,826 sion for income taxes. In addition to the liability of $4,506 for
During the fiscal years ended October 31, 2013, 2012, and unrecognized tax benefits as of October 31, 2013 was an amount
2011, respectively, $6,134, $9,017, and $2,988 was added to of approximately $66 for accrued interest and penalties. To the
stockholders’ equity reflecting the permanent book to tax difference extent interest and penalties are not assessed with respect to
in accounting for tax benefits related to employee stock-based uncertain tax positions, the amounts accrued will be revised and
award transactions. reflected as an adjustment to the provision for income taxes.
The tax effects of temporary differences that give rise to the net The company anticipates that total unrecognized tax benefits will
deferred income tax assets are presented below: not change significantly within the next 12 months.
The company is subject to U.S. federal income tax as well as
October 31 2013 2012 income tax of numerous state and foreign jurisdictions. The com-
Deferred tax assets (liabilities): pany is generally no longer subject to U.S. federal tax examina-
Allowance for doubtful accounts $ 1,635 $ 1,959 tions for taxable years before fiscal 2010 and with limited excep-
Inventory items 3,969 4,595 tions, state and foreign income tax examinations for fiscal years
Warranty reserves and other accruals 38,168 39,559 before 2008.
Employee benefits 18,315 16,466
Depreciation (2,467) (4,389)
Other 5,550 9,625
Deferred tax assets $65,170 $67,815 10 STOCK-BASED COMPENSATION PLANS
Valuation allowance (5,572) (6,781)
Net deferred tax assets $59,598 $61,034 The company maintains The Toro Company 2010 Equity and
Incentive Plan, as amended, for officers, other employees, and
The valuation allowance as of October 31, 2013 and 2012 princi- non-employee members of the company’s Board of Directors. The
pally applies to capital loss carryforwards and foreign net operating company’s incentive plan allows it to grant equity-based compen-
loss carryforwards that are expected to expire prior to utilization. sation awards, including stock options, restricted stock and
As of October 31, 2013, the company had net operating loss restricted stock unit awards, and performance share awards.
carryforwards of approximately $16,679 in foreign jurisdictions. The
carryforward periods on the company’s foreign loss carryforwards
56