Symantec 2000 Annual Report Download - page 45

NOTE 9. INCOME TAXES
The components of the provision for income taxes were as follows:
Year Ended March 31,
(In thousands) 2000 1999 1998
Current:
Federal $51,193 $11 ,649 $13,615
State 16,600 5,335 4,879
International 27,995 22,226 15,368
95,788 39,210 33,862
Deferred:
Federal (5,735)(1,949)(5,788)
State (1,957)(597)(2,247)
International (953)(3,692)1,181
(8,645)(6,238)(6,854)
$87,143 $32,972 $27,008
The difference between our effective income tax rate and the fed-
eral statutory income tax rate as a percentage of income before
income taxes was as follows:
Year Ended March 31,
2000 1999 1998
Federal statutory rate 35 .0%35.0%35 .0%
State taxes, net of federal benefit 3.03.51.5
Acquired in-process research and
development charges with
no tax benefit — 7.1—
Non-deductible goodwill amortization 2.1——
Impact of international operations (5.6)(3.9)(4.0)
Benefit of pre-acquisition
losses of acquired entities — — (10 .1)
Other, net (0.6) (2.1)1.7
33 .9%39.6%24 .1%
The principal components of deferred tax assets were as follows:
March 31,
(In thousands) 2000 1999
Tax credit carryforwards $3,891 $232
Net operating loss carryforwards
of acquired companies 18 ,949 2,927
Inventory valuation accounts 1,756 3,057
Other reserves and accruals not
currently tax deductible 6,749 10,943
Accrued compensation and benefits 3,751 3,722
Deferred revenue 4,864 6,019
Sales incentive programs 5,768 5,195
Reserve for returns and allowances 15 ,806 9,536
Acquired in-process research and
development expenses
and other intangible assets 7,535 9,135
Unrealized loss on
available-for-sale investments 2,224 —
Other 7,723 7,854
79,016 58,620
Valuation allowance — (30,465)
$79,016 $28,155
Realization of a significant portion of the $79 million of net
deferred tax asset is dependent upon our ability to generate suf-
ficient future U.S. taxable income. We believe that it is more likely
than not that the asset will be realized based on historical and
forecasted U.S. earnings, and accordingly, the valuation allowance
has been reduced to zero as of March 31, 2000. The change in the
valuation allowance for the years ended March 31, 2000, 1999 and
1998 was a net decrease of approximately $30 million, a net
increase of $5million, and a net decrease of $15 million, respec-
tively. Of the $30 million decrease in the valuation allowance
during the year ended March 31, 2000, approximately $21 million
was attributable to previously unbenefitted stock option deduc-
tions, the benefit of which was credited to stockholders’ equity.
In the December 2000 quarter, we made a decision to forego a
Section 338 election in connection with our acquisition of Quarter-
deck. Accordingly, a $26 million deferred tax asset was
established for the tax carryforward attributes of Quarterdeck.
The offsetting adjustment reduced goodwill. Additionally, we
eliminated the accounting for $6million of deferred tax assets and
valuation allowance related to the acquired technology of
Quarterdeck.
As of March 31, 2000, we have tax credit carryforwards of approx-
imately $4million that expire in fiscal 2003 through 2005. In
addition, we have net operating loss carryforwards, attributable
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