3Ware 1999 Annual Report Download - page 39

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March 31,
(in thousands) 1998 1999
Deferred tax assets:
Inventory write downs and other reserves $1,814 $1,850
Net operating loss carryforwards 1,719
Capitalization of inventory and research and development costs 242 313
Research and development credit carryforwards 898 298
Depreciation and amortization 242
State income taxes 239 47
Other credit carryforwards 447 447
Total deferred tax assets 3,882 4,674
Deferred tax liabilities:
Depreciation and amortization 101
Net deferred tax assets $3,882 $4,573
At March 31, 1999, the Company has federal alternative minimum tax and federal and state research and development tax
credit carryforwards of approximately $447,000, $195,000 and $103,000, respectively, which will begin to expire in 2007
unless previously utilized. The Company also has federal and state net operating loss carryforwards of approximately
$4,043,000, which will expire in 2018 and 2003, respectively, unless previously utilized. These net operating loss carryforwards
are the result of the operating losses generated by the Companys subsidiary, Cimaron, prior to the acquisition. Under Internal
Revenue Code Section 382 and 383, the Companys use of its tax loss carryforwards and tax credit carryforwards could be
limited in the event of certain cumulative changes in the Companys stock ownership.
7. COMMITMENTS
In July 1998, the Company acquired the right to purchase, in the form of a ground lease, a parcel of land as a site for a poten-
tial new wafer fabrication facility. This parcel of land is located approximately one quarter mile from the Companys
headquarters in San Diego, California. The Company has made payments of $1.0 million related to this transaction.
In December 1998, the Company exercised its right to acquire the land, which commits the Company to take title to the land
by May 31, 1999 upon payment of an additional $3.7 million.
The Company leases certain of its facilities under long-term operating leases, which expire at various dates through 2011. The
lease agreements frequently include renewal provisions, which require the Company to pay taxes, insurance and maintenance
costs, and contain escalation clauses based upon increases in the Consumer Price Index or defined rent increases.
The Company also leases certain software under noncancellable operating leases expiring through 2002.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
37
1999
AMCC