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Sensata Technologies Holding N.V.'s SEC Filings

S-1/A
SENSATA TECHNOLOGIES HOLDING PLC filed this Form S-1/A on 03/09/2010
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Table of Contents

The primary components of deferred income tax assets and liabilities as of December 31, 2009 and 2008 are as follows:

 

     December 31,
2009
    December 31,
2008
 

Deferred tax assets:

    

Inventories and related reserves

   $ 4,763      $ 5,450   

Accrued expenses

     32,881        25,782   

Property, plant and equipment

     5,673        4,215   

Intangible assets

     56,295        19,149   

NOL and interest expense carryforwards

     264,235        208,927   

Pension liability

     10,468        15,916   

Other

     3,351        2,607   
                

Total deferred tax assets

     377,666        282,046   

Valuation allowance

     (314,180     (224,214
                

Net deferred tax asset

     63,486        57,832   

Deferred tax liabilities:

    

Property, plant and equipment

     (14,042     (18,705

Intangible assets and goodwill

     (185,847     (150,901

Unrealized foreign exchange gain

     (1,485     (1,475

Tax on undistributed earnings of subsidiaries

     (10,450     (3,969
                

Total deferred tax liabilities

     (211,824     (175,050
                

Net deferred tax liability

   $ (148,338   $ (117,218
                

 

Subsequently reported tax benefits relating to the valuation allowance for deferred tax assets as of December 31, 2009 and 2008 will be allocated as follows:

 

     December 31,
2009
    December 31,
2008
 

Income tax benefit recognized in the consolidated statement of operations

   $ (304,555   $ (205,496

Other comprehensive loss

     (9,625     (14,912

Goodwill

     —          (3,806
                
   $ (314,180   $ (224,214
                

 

After the effective date of ASC 805, all changes in the carrying amount of a valuation allowance for an acquired deferred income tax asset or in a liability for an assumed income tax uncertainty will be recognized in income tax expense, even if the deferred tax asset or income tax uncertainty was initially recognized as a result of a business combination with an acquisition date prior to the effective date of ASC 805.

 

A full valuation allowance has been established on the net deferred tax assets in jurisdictions that have incurred net operating losses, in which it is more likely than not that such losses will not be utilized in the foreseeable future. For tax purposes, goodwill and indefinite-lived intangible assets are generally amortizable over 6 to 20 years. For book purposes, goodwill and indefinite-lived intangible assets are not amortized, but tested for impairment annually. The tax amortization of goodwill and indefinite-lived intangible assets will result in a taxable temporary difference which will not reverse unless the related book goodwill and/or intangible asset is impaired or written off. As a result, the Company must recognize a deferred tax liability. This liability may not be offset by deductible temporary differences, such as net operating loss carryforwards, which may expire within a definite period. The net change in the total valuation allowance for the years ended December 31, 2009 and 2008 is an increase of $89,966 and $69,613, respectively.

 

In April 2007, the Company’s subsidiary in Malaysia was granted a five-year tax exemption, retroactive to April 2006. The tax exemption is conditional upon the subsidiary meeting certain local investment requirements over the exemption period, as established by the Ministry of Finance. The current exemption will end in

 

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