eTrade 2002 Annual Report Download - page 153
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Table of Contents
Index to Financial Statements
Deferred income taxes are recorded when revenues and expenses are recognized in different periods for financial statement and tax return
purposes. The temporary differences and tax carryforwards that created deferred tax assets and deferred tax liabilities are as follows (in
thousands):
December31,
2002 2001
Deferred tax assets:
Reserves and allowances $ 5,245 $ 3,281
Basis difference in investments 113,425 52,494
Net operating loss carryforwards 51,176 113,882
Depreciation and amortization 15,713 6,324
Deferred compensation 13,781 31,369
Capitalized technology development 12,033 10,161
Provision for loan loss 7,107 7,032
Undistributed earnings in subsidiaries 18,003 8,199
Alternative minimum tax credit 1,680 1,840
Restructuring reserve and related writedowns 75,354 79,704
Other 5,980 5,947
Total deferred tax assets 319,497 320,233
Deferred tax liabilities:
Internally developed software (29,518 ) (29,598 )
Acquired intangibles (75,163 ) (45,390 )
Purchased software (3,024 ) (3,024 )
Other (7,322 ) (7,322 )
Total deferred tax liabilities (115,027 ) (85,334 )
Valuation allowance (92,246 ) (69,398 )
Net deferred tax asset $ 112,224 $ 165,501
The Company recorded a valuation allowance of $92.2 million and $69.4 million at December 31, 2002 and 2001 for the deferred tax assets, as
full realization of domestic capital loss carryforwards and net operating loss carryforwards in certain foreign countries are not expected.
The effective tax rates differed from the federal statutory rates as follows:
YearEnded December31, ThreeMonths Ended
December 31, 2000 YearEnded
September30, 2000
2002 2001
Federal statutory rate 35.0 % (35.0 )
%
35.0 %
35.0 %
State income taxes, net of federal tax benefit 4.7 (3.2 ) (24.0 ) 5.8
Nondeductible acquisition costs — 0.1 6.8 12.6
Nondeductible compensation 1.0 3.9 — —
Difference between statutory rate and foreign
effective tax rate
(1.3 ) 7.7 156.3 10.3
Amortization of goodwill — 3.4 (9.0 ) 7.4
Change in valuation allowance 5.4 13.9 (119.0 ) 8.5
Other (0.9 ) 1.6 12.9 2.2
2003. EDGAR Online, Inc.