8x8 2005 Annual Report Download - page 60

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57
A reconciliation of the tax provision (benefit) to the amounts computed using the statutory U.S. federal income tax
rate of 34% is as follows (in thousands):
9. COMMITMENTS AND CONTINGENCIES
Guaranties
Indemnifications
In the normal course of business, the Company indemnifies other parties, including customers, lessors and parties to
other transactions with the Company, with respect to certain matters. The Company has agreed to hold the other
party harmless against losses arising from: i) a breach of representations or covenants or ii) out of intellectual
property infringement or other claims made against certain parties. These agreements may limit the time within
which an indemnification claim can be made and the amount of the claim. In addition, the Company has entered into
indemnification agreements with its officers and directors.
It is not possible to determine the maximum potential amount of the Company’s exposure under these
indemnification agreements due to the limited history of prior indemnification claims and the unique facts and
circumstances involved in each particular agreement. Historically, payments made by the Company under these
agreements have not had a material impact on the Company’s operating results, financial position or cash flows.
Year s Ende d Mar ch 3 1 ,
2005 2004 2003
Benefit at statutory rate................................................... $ (6,575) $ (1,033) $ (3,877)
State income tax benefit before valuation
allowance, net of federal effect..................................... (1,127) (177) (684)
N
on-deductible goodwill................................................. -- -- 523
Research and development credits................................ (45) (208) --
Change in valuation allowance......................................
.
6,704 3,614 3,245
Release of income taxes previously accrued................ (203) -- --
Compensation/option differences.................................
.
(332) (1,549) --
Prior year loss carryforward reduction..................... 1,216 (1,599) 785
N
on-deductible compensation.......................................
.
2 522 --
Foreign rate differences................................................... (6) (8) --
Other................................................................................... 163 438 8
$ (203) $ -- $ --