Under Armour 2009 Annual Report Download - page 70

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The decrease in the 2009 full year effective income tax rate, as compared to 2008, is primarily attributable
to decreased losses in foreign subsidiaries and certain tax planning strategies implemented during 2009. The
increase in the nondeductible expenses primarily relates to nondeductible compensation recorded during the year.
The increase in the 2008 full year effective income tax rate, as compared to 2007, is primarily attributable to
increased losses in foreign subsidiaries and an increase in the state income tax rate in Maryland, where the
Company’s corporate headquarters is located.
Deferred tax assets and liabilities consisted of the following:
December 31,
(In thousands) 2009 2008
Deferred tax asset
State tax credits, net of federal tax impact $ — $ 899
Tax basis inventory adjustment 1,874 2,495
Inventory obsolescence reserves 2,800 1,985
Allowance for doubtful accounts and other reserves 7,042 7,802
Foreign net operating loss carryforward 9,476 6,378
Stock-based compensation 5,450 3,425
Intangible asset 1,068 1,354
Deferred rent 1,728 1,292
Deferred compensation 1,105 872
Other 3,151 857
Total deferred tax assets 33,694 27,359
Deferred tax liability
Prepaid expenses (1,133) (837)
Property, plant and equipment (5,783) (5,285)
Total deferred tax liabilities (6,916) (6,122)
Total deferred tax assets, net $26,778 $21,237
As of December 31, 2009, no deferred tax liabilities were included in current or other long term liabilities.
As of December 31, 2008, deferred tax liabilities of $260.3 thousand and $14.0 thousand were included in other
current liabilities and other long term liabilities, respectively.
As of December 31, 2009, the available foreign net operating loss carryforward included in the table above
will begin to expire in 6 to 9 years. A valuation allowance has not been recorded against the foreign subsidiary
net operating loss based on the Company’s ability to implement tax planning strategies to utilize these net
operating losses.
As of December 31, 2009, withholding and U.S. taxes have not been provided on approximately $11.1
million of cumulative undistributed earnings of the Company’s non-U.S. subsidiaries because the Company
intends to indefinitely reinvest these earnings in its non-U.S. subsidiaries.
As a result of tax accounting guidance implemented on January 1, 2007, the Company recorded an
additional $1.6 million liability for uncertain tax positions, including related interest and penalties, of which $1.2
million was accounted for as a reduction to the January 1, 2007 balance of retained earnings and the remainder
was recorded within deferred tax assets. After recognizing the adoption of the guidance, the total liability for
uncertain tax positions, including related interest and penalties, was approximately $2.0 million.
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