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ATVI » Topics » Benefit for Income Taxes (in thousands, as restated)

This excerpt taken from the ATVI 10-Q filed Jun 7, 2007.

Benefit for Income Taxes (in thousands, as restated)

Three Months
Ended

 

% of

 

Three Months
Ended

 

% of

 

 

 

 

 

June 30,

 

Pretax

 

June 30,

 

Pretax

 

Increase/

 

Percent

 

2006

 

Income

 

2005

 

Income

 

(Decrease)

 

Change

 

$(6,865)

 

27%

 

$(2,724)

 

39%

 

$(4,141)

 

(152)%

 

 

The income tax benefit of $6.9 million for the three months ended June 30, 2006 reflects our effective income tax rate for the quarter of 27.3%.  The significant items that generated the variance between our effective rate and our statutory rate of 35% were research and development tax credits for state purposes and the impact of foreign tax rate differentials, partially offset by state taxes.

The aforementioned effective income tax rate for the quarter of 27.3% differs from our effective income tax rate of 39.1% for the three months ended June 30, 2005 due to (1) a one-time international tax benefit for the release of certain tax reserves in the three months ended June 30, 2005 due to the expiration of a tax statute of limitations, and (2) a decrease in anticipated pretax income for fiscal year 2007 determined at June 30, 2006 versus the anticipated pretax income for fiscal year 2006 determined at June 30, 2005, without a corresponding decrease in the benefit of book/tax differences.

The income tax benefit of $2.7 million for the three months ended June 30, 2005 reflects our effective income tax rate for the quarter of 39.1%, which differs from our effective tax rate of 12.2% for the year ended March 31, 2006 due to (1) a one-time international tax benefit for the release of certain tax reserves in the year ended March 31, 2006 due to the expiration of a tax statute of limitations; (2) an increase in federal research and development credit for the full year ended March 31, 2006 over the amount originally anticipated for the year at the first quarter, and (3) a decrease in pretax income for the year versus the amount originally anticipated for the year at the first quarter, without a corresponding decrease in the benefit of book/tax differences.  The significant items that generated the variance between our effective rate and our statutory rate of 35% were research and development tax credits and the impact of foreign tax rate differentials, partially offset by state taxes.

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