Adaptec 2006 Annual Report Download - page 100

Table of Contents
December 31,
(in thousands) 2006 2005
Deferred tax assets:
Net operating loss carryforwards $ 215,547 $ 241,027
Capital loss 42,043 42,957
Credit carryforwards 25,216 29,054
Reserves and accrued expenses 16,988 11,401
Intangible assets 8,683 —
Depreciation and amortization 8,694 11,948
Restructuring and other charges 6,896 9,128
State tax loss carryforwards 6,439 11,883
Deferred income 2,926 2,876
Total deferred tax assets 333,432 360,274
Valuation allowance (333,432) (360,274)
Total net deferred tax assets — —
Deferred tax liabilities:
Acquired intangible assets and goodwill (12,095) —
Capitalized technology (74) (74)
Unrealized gain on investments — (1,037)
Total deferred tax liabilities (12,169) (1,111)
Total net deferred taxes $ (12,169) $ (1,111)
At December 31, 2006, the Company has approximately $615.9 million of federal net operating losses, which will expire through 2026. Approximately $3.1
million of the federal net operating losses is subject to ownership change limitations provided by the Internal Revenue Code of 1986. The Company also has
approximately $214.6 million of state tax loss carryforwards, which expire through 2016. A portion of our net operating losses were used in 2005 and 2006 to
reduce the taxes otherwise payable on intercompany dividends. The utilization of a portion of these state losses is also subject to ownership change limitations
provided by the various states’ income tax legislation.
Included in the credit carry-forwards are $16.7 million of federal research and development credits which expire through 2025, $2.2 million of federal AMT
credits which carryforward indefinitely, $17.8 million of state research and development credits which do not expire, $0.8 million of state research and
development credits which expire through 2008, and $0.8 million of state manufacturer’s investment credits which expire through 2011.
Included in the above net operating loss carryforwards are $23.8 million and $3.9 million of federal and state net operating losses related to acquisitions
accounted for under the purchase method of accounting. The benefit of such losses, if and when realized, will be credited first to reduce to zero any goodwill
related to the respective acquisition, second to reduce to zero other non-current intangible assets related to the respective acquisition, and third to reduce income
tax expense.
Included in the deferred tax assets before valuation allowance are approximately $165.4 million of cumulative tax benefits related to equity transactions, which
will be credited to stockholder’s equity if and when realized.
The pretax income from foreign operations was $48.2 million, $65.7 million, and $75.8 million in 2006, 2005, and 2004, respectively. The Company recorded
$7.1 million tax expense related to earnings it repatriated in 2006 to fund the purchase of the Storage Semiconductor Business
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠