Under Armour 2009 Annual Report Download - page 69

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Fair values of the financial assets and liabilities listed above are determined using inputs that use as their
basis readily observable market data that are actively quoted and are validated through external sources,
including third-party pricing services and brokers. The foreign currency forward contracts represent gains and
losses on derivative contracts, which is the net difference between the U.S. dollars to be received or paid at the
contracts’ settlement date and the U.S. dollar value of the foreign currency to be sold or purchased at the current
forward exchange rate. The fair value of the TOLI held by the Rabbi Trust is based on the cash-surrender value
of the life insurance policies, which are invested primarily in mutual funds and a separately managed fixed
income fund. These investments are in the same funds and purchased in substantially the same amounts as the
selected investments of participants in the Deferred Compensation Plan, which represent the underlying liabilities
to participants in the Deferred Compensation Plan. Liabilities under the Deferred Compensation Plan are
recorded at amounts due to participants, based on the fair value of participants’ selected investments.
10. Provision for Income Taxes
Income (loss) before income taxes is as follows:
Year Ended December 31,
(In thousands) 2009 2008 2007
Income (loss) before income taxes:
United States $86,752 $ 85,204 $91,929
Foreign (4,334) (15,304) (2,886)
Total $82,418 $ 69,900 $89,043
The components of the provision for income taxes consisted of the following:
Year Ended December 31,
(In thousands) 2009 2008 2007
Current
Federal $32,215 $28,225 $35,446
State 7,285 5,022 5,379
Other foreign countries 1,345 1,242 569
40,845 34,489 41,394
Deferred
Federal (2,421) 226 (4,257)
State 244 1,699 290
Other foreign countries (3,035) (4,743) (942)
(5,212) (2,818) (4,909)
Provision for income taxes $35,633 $31,671 $36,485
A reconciliation from the U.S. statutory federal income tax rate to the effective income tax rate is as
follows:
Year Ended December 31,
2009 2008 2007
U.S. federal statutory income tax rate 35.0% 35.0% 35.0%
State taxes, net of federal tax impact 5.9 6.5 5.0
Nondeductible expenses 2.2 1.7 0.2
Foreign rate differential (0.7) 2.2 0.7
Other 0.8 (0.1) 0.1
Effective income tax rate 43.2% 45.3% 41.0%
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