8x8 2014 Annual Report Download - page 44

PROVISION (BENEFIT) FOR INCOME TAXES
We recorded an income tax provision of $2.2 million in fiscal year 2014 of which $0.9 million related to net income from operations and $1.3
million due to an increase in our valuation allowance. During the fourth quarter of fiscal 2014, we evaluated the need for a valuation allowance
against our net deferred tax asset and determined that an additional $1.3 million was needed for certain net operating loss and research credit
carryovers that may expire before utilization. Therefore, we increased the valuation allowance related to the deferred tax asset which resulted in
an additional provision for income taxes to the consolidated income statement of approximately $1.3 million.
We recorded an income tax provision of $9.4 million in fiscal year 2013 of which $8.4 million related to net income from operations, including
the sale of patent under our patent purchase agreement, and $1.0 million due to an increase in our valuation allowance. During the fourth quarter
of fiscal 2013, we evaluated the need for a valuation allowance against our net deferred tax asset and determined that an additional $1.0 million
was needed for certain net operating loss carryovers that may expire before utilization. Therefore, we increased the valuation allowance related
to the deferred tax asset which resulted in a debit to the consolidated income statement of approximately $1.0 million.
At March 31, 2014, we had net operating loss carryforwards for federal and state income tax purposes of approximately $149.2 million and
$93.5 million, respectively that expire at various dates beginning in 2015 and continuing through 2034. In addition, at March 31, 2014, we had
research and development credit carryforwards for federal and state tax reporting purposes of approximately $2.7 million and $4.4 million,
respectively. The federal credit carryforwards will begin expiring in 2021 continuing through 2034, while the California credit will carry forward
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 limited in certain circumstances.
At March 31, 2014 and 2013, we had net deferred tax assets before valuation allowances of approximately $55.4 million and $55.6 million,
respectively.
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES
On September 30, 2013, we sold our dedicated server hosting business. The current and historical results of our dedicated server hosting
business have been reclassified to income (loss) from discontinued operations, net of income tax provision. For the years ended March 31, 2014,
2013 and 2012, income taxes were $0.2, million, $0.3 million and $0 million, respectively.
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Years Ended March 31,
Year
-
over
-
Year Change
2014
2013
2012
2013 to 2014
2012 to 2013
(dollar amounts in thousands)
Provision (benefit) for income taxes
$
2,219
$
9,399
$
(62,354)
$
(7,180)
-
76.4%
$
71,753
-
115.1%
Percentage of total revenue
1.7%
9.1%
-
74.8%
Years Ended March 31,
Year
-
over
-
Year Change
2014 2013 2012 2013 to 2014 2012 to 2013
(dollar amounts in thousands)
Income (loss) from discontinued
operations, net of income
tax provision
$
320
$
489
$
(1,452)
$
(169)
-
34.6%
$
1,941
-
133.7%
Percentage of total revenue
0.2%
0.5%
-
1.7%