Stock Unit Awards, Employees. In fiscal year 2009, the Company issued, for the first time, stock unit awards to employees. The grant date for
these awards is equal to the measurement date. These awards are valued as of the measurement date and amortized over the requisite vesting
period (typically 4 years). The following table summarizes stock unit awards activity for fiscal year 2009:
(in thousands, except per share price)
Weighted Average
Grant Date
Fair Value
(per unit)
Number of
Units
January 27, 2008
Aggregate
Unrecognized
Compensation
Aggregate
Intrinsic
Value (1)
Weighted Average
Period Over
Which Expected
to be Recognized
(in years)
-
Granted
331
Vested
-
Forfeited
(15)
January 25, 2009
316
$
14.97
-
$
14.97
$
3,345
3.6
(1) Reflects the value of Semtech stock on the date that the stock unit vested.
Note 9. Income Taxes
The provision for taxes consists of the following:
Provision for Taxes
(fiscal years, in thousands)
Current:
Federal
State
Foreign
Subtotal
January 25,
2009
$
Deferred:
Federal
State
Foreign
Subtotal
Provision for taxes
4,446 $
157
10,080
14,683
336
(387)
(5,975)
(6,026)
$
8,657 $
January 27,
2008
January 28,
2007
11,222 $
786
656
12,664
(12,685)
10,438
107
(2,140)
760
185
1,874
2,819
3,650
328
(514)
3,464
10,524 $
6,283
The change in the net deferred tax asset differs from the deferred tax provision as a result of deferred tax assets that do not typically impact the
provision. This includes the benefit related to tax deductions from the exercise of non-qualified stock options in excess of compensation cost
recognized for financial reporting purposes (recorded as an increase to additional paid-in capital when realized).
Under SFAS 123R, the income tax effects of share-based payments are recognized for financial reporting purposes only if such awards are
expected to result in a tax deduction. SFAS 123R prohibits recognition of a deferred tax asset for an excess tax benefit (that is, a tax benefit that
exceeds the tax benefit for the amount of compensation cost recognized for the award for financial reporting purposes) that has not been
realized. In determining when an excess tax benefit is realized, we have elected to follow the ordering provision of the tax law.
For income taxes paid on intercompany profits on assets remaining within the group, Accounting Research Bulletin No. 51, “Consolidated
Financial Statements,” (“ARB 51”) prohibits recognition of a deferred tax asset for the difference between the tax basis of the assets in the
buyer’s tax jurisdiction and their cost as reported in the consolidated financial statements. Pursuant to ARB 51, current foreign tax expense and
income tax payable on intercompany profits generated as a result of an internal restructuring during the fourth quarter of fiscal year 2009 was
effectively offset in consolidation by a $5.8 million reduction to deferred tax expense. This resulted in an increase to prepaid income tax instead
of deferred tax assets.
48