8x8 2012 Annual Report Download - page 54

Download and view the complete annual report

Please find page 54 of the 2012 8x8 annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 74

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74

Current: 2012 2011 2010
Federal $ - $ - $ (77)
State 76 53 70
Foreign (8) 2 10
68 55 3
Deferred
Federal $ (56,665) $ - $ -
State (5,757) - -
Foreign - - -
Total deferred tax benefi
t
(62,422) - -
Income tax provision (benefit) $ (62,354) $ 55 $ 3
March 31,
The Company's income before income taxes included $0, $3,000 and $38,000 of foreign subsidiary income for the fiscal years
ended March 31, 2012, 2011 and 2010, respectively.
Deferred tax assets were comprised of the following (in thousands):
Current deferred tax assets 2012 2011
Net operating loss carryforwards $ 6,518 $ -
Inventory valuatio
n
45 133
Reserves and allowances 1,167 1,392
Net current deferred tax assets 7,730 1,525
Net operating loss carryforwards 54,783 57,484
Research and development and other credit carryforwards 2,436 2,196
Fixed assets and intangibles (1,172) 4,279
Net non-current deferred tax assets 56,047 63,959
Valuation allowance (2,070) (65,484)
Total $ 61,707 $ -
March 31,
As required, the Company assessed the recoverability of its deferred tax assets. To assess the likelihood that the deferred tax
assets will be recovered from taxable income, the Company considered both positive evidence that indicates a valuation
allowance is not needed and negative evidence that indicates a valuation allowance is needed. At March 31, 2012, the
Company considered its recent history of three consecutive years profitability and anticipated profit in future periods, and as a
result of these and other factors, it released the valuation allowance recorded against its deferred tax assets of approximately
$62.1 million as it believes that it is more likely than not the deferred tax assets will be realized in the future.
At March 31, 2012, the Company had net operating loss carryforwards for federal and state income tax purposes of
approximately $168.8 million and $105.5 million, respectively, which expire at various dates beginning in 2013 and continuing
through 2032. The net operating loss carryforwards include approximately $7.3 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,
2012, the Company had research and development credit carryforwards for federal and state tax reporting purposes of
approximately $1.8 million and $3.2 million, respectively. The federal credit carryforwards will expire at various dates
beginning in 2021 and continuing through 2032, while the California credits will carry forward indefinitely. A reconciliation
of the tax provision to the amounts computed using the statutory U.S. federal income tax rate of 34% is as follows (in
thousands):
52