Under Armour 2011 Annual Report Download - page 74

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Deferred tax assets and liabilities consisted of the following:
December 31,
(In thousands) 2011 2010
Deferred tax asset
Stock-based compensation $ 11,238 $ 8,790
Foreign net operating loss carryforward 11,078 10,917
Allowance for doubtful accounts and other reserves 9,576 8,996
Deferred rent 4,611 2,975
Tax basis inventory adjustment 4,317 3,052
Inventory obsolescence reserves 3,789 2,264
Foreign tax credits 1,784 —
Deferred compensation 1,448 1,449
State tax credits, net of federal tax impact — 1,750
Other 3,427 2,709
Total deferred tax assets 51,268 42,902
Less: valuation allowance (1,784) (1,765)
Total net deferred tax assets 49,484 41,137
Deferred tax liability
Intangible asset (341) 372
Prepaid expenses (2,968) (1,865)
Property, plant and equipment (13,748) (3,104)
Total deferred tax liabilities (17,057) (4,597)
Total deferred tax assets, net $ 32,427 $36,540
As of December 31, 2011, the Company had $11.1 million in deferred tax assets associated with foreign net
operating loss carryforwards which will begin to expire in 4 to 9 years. As of December 31, 2010, the Company
believed certain deferred tax assets associated with foreign net operating loss carryforwards would expire unused
based on the Company’s forward-looking financial information during 2010. Therefore, a valuation allowance of
$1.8 million was recorded against the Company’s net deferred tax assets as of December 31, 2010. Based upon
updated forward-looking financial information, during September 2011, the Company reversed the full valuation
allowance of $1.8 million as the Company believed, and continues to believe as of December 31, 2011, the
foreign net operating loss carryfowards will not expire unused. The reversal of the valuation allowance resulted
in a decrease to income tax expense of $1.8 million for the year ended December 31, 2011.
During 2011, the Company recorded $1.8 million in deferred tax assets associated with foreign tax credits.
As of December 31, 2011 the Company believed that the foreign taxes paid would not be creditable against its
future income taxes and therefore, the Company recorded a valuation allowance against these deferred tax assets.
The recording of the valuation allowance associated with foreign tax credits resulted in an increase to income tax
expense of $1.8 million for the year ended December 31, 2011.
As of December 31, 2011, withholding and U.S. taxes have not been provided on approximately $23.4
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.
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