8x8 2005 Annual Report Download - page 25

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the goodwill was less than the book value of the goodwill that arose from the acquisition of Odisei S.A. in fiscal
2000.
The following table illustrates the charges, credits and balances of the restructuring reserves for the years ended
March 31, 2005, 2004 and 2003, and summarizes asset impairment charges (in thousands):
OTHER INCOME, NET
In fiscal 2005, 2004 and 2003, other income, net, was $558,000, $822,000 and $597,000, respectively. In fiscal
2005, other income, net was primarily comprised of interest income earned on our cash, cash equivalents and
investment balances. The $264,000 decrease in fiscal 2005 was primarily attributable to a $790,000 one time gain
recorded in fiscal 2004 in connection with the sale of Centile Europe SA, partially offset by an increase in interest
income of $276,000 due to higher cash balances maintained during the year and the receipt of escrow funds of
$180,000 from a cost basis common stock investment in an entity acquired in 1999 by a third party.
The $225,000 increase in other income, net, in fiscal 2004 was primarily attributable to a $790,000 gain recorded in
fiscal 2004 in connection with the sale of Centile Europe SA, which was offset by a decrease of $560,000 related to
the Canadian tax credits that we collected in fiscal 2003 and recorded as other income.
BENEFIT FOR INCOME TAXES
We had no provisions for the fiscal years ended March 31, 2005, 2004 and 2003. We recorded a $203,000 benefit in
fiscal 2005, which was primarily attributable to the release of income tax reserves recorded in prior years and
$20,000 attributable to an income tax refund received by one of our foreign subsidiaries.
At March 31, 2005, we had net operating loss carryforwards for federal and state income tax purposes of
approximately $106 million and $57.3 million, respectively, which expire at various dates beginning in 2006 and
continuing through 2025. In addition, at March 31, 2005, we had research and development credit carryforwards for
federal and state tax reporting purposes of approximately $3.2 million and $2.4 million, respectively. The federal
credit carryforwards will begin expiring in 2010 continuing through 2017, while the California credit will
carryforward indefinitely. Under the ownership change limitations of the Internal Revenue Code of 1986, as
amended, the amount and benefit from the net operating losses and credit carryforwards may be impaired or limited
in certain circumstances.
At March 31, 2005 and 2004, we had gross deferred tax assets of approximately $60.9 million and $54.2 million.
We believe that, based on a number of factors, the weight of objective available evidence indicates that it is more
likely than not that we will not be able to realize our deferred tax assets, and a full valuation allowance was recorded
at March 31, 2005 and 2004.
Liability Liability Liability
Total Cash Non-Cash at March 31, Cash at March 31, Cash at March 31,
Charges Payments Charges 2003 Payments 2004 Payments 2005
Restructuring Charges:
Severance.......................................
.
$ 1,177 $ (1,002) $ -- $ 175 $ (175) $ -- $ -- $ --
Facility related................................ 508 (161) (273) 74 (33) 41 (33) 8
Total restructuring charges...........
.
1,685 (1,163) (273) 249 (208) 41 (33) 8
Asset Impairment s:
Fixed Assets.................................... 212 -- (212) -- -- -- -- --
Goodwill.........................................
.
1,539 -- (1,539) -- -- -- -- --
Total impairment charges............. 1,751 -- (1,751) -- -- -- -- --
T ot al rest ruct urin g and
impairment charges....................
.
$ 3,436 $ (1,163) $ (2,024) $ 249 $ (208) $ 41 $ (33) $ 8