Blizzard 2007 Annual Report Download - page 81

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84
A C T I V I S I O N , I N C . • • 2 0 0 7 A N N U A L R E P O R T
Options to purchase approximately 7.9 million, 993,000, and 243,000 shares of common stock for the
years ended March 31, 2007, 2006, and 2005, respectively, were not included in the calculation of
diluted earnings per share because their effect would be antidilutive.
12. Income Taxes
Domestic and foreign income before income taxes and details of the income tax provision are as
follows (amounts in thousands):
For the years ended March 31, 2007 2006 2005
Income (loss) before income taxes:
Domestic $ 99,210 $ 52,321 $ 169,572
Foreign 10,615 (6,465) 23,128
$ 109,825 $ 45,856 $ 192,700
Income tax expense (benefit):
Current:
Federal $ 34,342 $ — $ (355)
State 15,325 308 342
Foreign 3,842 4,383 5,126
Total current 53,509 4,691 5,113
Deferred:
Federal (17,074) (11,095) 4,346
State (19,608) (7,266) (2,863)
Foreign (4,127) (10,092) (2,159)
Total deferred (40,809) (28,453) (676)
Add back benefit credited to additional paid-in capital:
Tax benefit related to stock option and warrant exercises 11,338 29,367 53,206
Income tax provision $ 24,038 $ 5,605 $ 57,643
The items accounting for the difference between income taxes computed at the U.S. federal statu-
tory income tax rate and the income tax provision for each of the years are as follows:
For the years ended March 31, 2007 2006 2005
Federal income tax provision at statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit 4.1 4.3 2.8
Research and development credits (8.5) (36.2) (6.6)
Decremental effect of foreign tax rates (3.6) (10.5) (2.4)
Increase (decrease) in valuation allowance (26.6) 18.0 3.2
Increase (decrease) in tax reserves 18.8 (2.2) (0.9)
Other 2.7 3.8 (1.2)
21.9% 12.2% 29.9%
Notes to Consolidated Financial Statements