8x8 2001 Annual Report Download - page 52

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NETERGY NETWORKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- INCOME TAXES
The Company's loss before income taxes includes $162,000, $160,500, and $105,000 of foreign subsidiary income for the fiscal years ended
March 31, 2001, 2000, and 1999, respectively. The components of the consolidated provision for income taxes consisted of the following (in
thousands):
Deferred tax assets are comprised of the following (in thousands):
Management believes that, based on a number of factors, the weight of objective available evidence indicates that it is more likely than not that
the Company will not be able to realize its deferred tax assets, and thus a full valuation allowance was recorded at March 31, 2001 and March
31, 2000.
At March 31, 2001, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $61.4
million and $38.7 million, respectively, which expire at various dates beginning in 2005. The net operating loss carryforwards include
approximately $4.3 million resulting from employee exercises of non-qualified stock options or disqualifying dispositions the tax benefits of
which, when realized, will be accounted for as an addition to additional paid-in capital rather than as a reduction of the provision for income
taxes. In addition, at March 31, 2001, the Company had research and development credit carryforwards for federal and state tax reporting
purposes of approximately $2.9 million and $2.1 million, respectively. The federal credit carryforwards will begin expiring in 2010 while the
can be carried forward may be impaired or limited in certain circumstances. Events which may cause limitations in the amount of net operating
loss carryforwards that the Company may utilize in any one year include, but are not limited to, a cumulative ownership change of more than
50% over a three year period.
47
YEAR ENDED MARCH 31,
--------------------
2001 2000 1999
---- ---- ----
Current:
Federal............................................. $ -- $ -- $(26)
State............................................... -- -- --
Foreign............................................. 17 120 26
---- ---- ----
$ 17 $120 $ --
==== ==== ====
MARCH 31,
--------------------
2001 2000
-------- --------
Research and development credit carryforwards.......... $ 4,455 $ 2,982
Net operating loss carryforwards....................... 22,625 11,678
Inventory valuation.................................... 650 1,104
Reserves and allowances................................ 1,181 697
Goodwill............................................... 15,584 --
Other.................................................. 3,155 2,162
-------- --------
47,650 18,623
Valuation allowance.................................... (47,650) (18,623)
-------- --------
Total........................................ $ -- $ --
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