Adobe 2008 Annual Report Download - page 87

87
Total income tax expense differs from the expected tax expense (computed by multiplying the United States federal
statutory rate of 35% by income before income taxes) as a result of the following:
2008
2007
2006
Computed “expected” tax expense .......................
$
377,478
$
331,516
$
237,905
State tax expense, net of federal benefit ...................
12,700
8,938
8,768
Tax-exempt income ...................................
(342
)
(11,123
)
(12,637
)
Tax credits ...........................................
(12,873
)
(23,341
)
(1,204
)
Differences between statutory rate and foreign effective tax
rate ............................................... (132,470 ) (84,740 ) (61,067 )
Change in deferred tax asset valuation allowance ...........
(1,105
)
1,694
(7,539
)
FAS 123R stock compensation (net of tax deduction) ........
5,457
2,587
3,320
Resolution of U.S. income tax exam for fiscal 2001 - 2004
years ..............................................
(20,712
)
—
—
Foreign tax refund for fiscal 2000 - 2002 ...................
(16,351
)
—
—
Domestic manufacturing deduction benefit .................
(6,300
)
(4,419
)
(1,400
)
Other, net ............................................
1,212
2,271
7,772
$
206,694
$
223,383
$
173,918
Deferred Tax Assets and Liabilities
The tax effects of the temporary differences that gave rise to significant portions of the deferred tax assets and liabilities
as of November 28, 2008 and November 30, 2007 are presented below:
2008
2007
Deferred tax assets:
Acquired technology ...........................................
$
4,497
$
7,603
Reserves and accruals ...........................................
71,174
61,772
Deferred revenue ..............................................
46,200
38,663
Unrealized losses on investments .................................
10,350
18,756
FAS 123R stock compensation ...................................
50,329
40,682
Net operating loss of acquired companies ..........................
7,621
66,677
Credits .......................................................
19,130
44,866
Depreciation and amortization ....................................
—
1,213
Capitalized expenses ...........................................
5,688
—
Other ........................................................
3,538
4,763
Total gross deferred tax assets ..................................
218,527
284,995
Deferred tax asset valuation allowance ...........................
(1,524
)
(2,629
)
Total deferred tax assets .......................................
217,003
282,366
Deferred tax liabilities:
Depreciation and amortization ....................................
(3,113
)
—
Undistributed earnings of foreign subsidiaries .......................
(167,760
)
(166,629
)
Acquired intangible assets .......................................
(52,745
)
(93,208
)
Total deferred tax liabilities ....................................
(223,618
)
(259,837
)
Net deferred tax (liabilities) assets ..................................
$
(6,615
)
$
22,529
The deferred tax assets and liabilities for fiscal 2008 and fiscal 2007 include amounts related to various acquisitions.
The total change in deferred tax assets and liabilities in fiscal 2008 includes changes that are recorded to other comprehensive
income, goodwill and retained earnings.
We provide United States income taxes on the earnings of foreign subsidiaries unless the subsidiaries’ earnings are
considered permanently reinvested outside the United States. To the extent that the foreign earnings previously treated as
permanently reinvested are repatriated, the related United States tax liability may be reduced by any foreign income taxes