ESIO » Topics » Income Taxes

These excerpts taken from the ESIO 10-K filed Jun 10, 2009.

Income Taxes

The income tax benefit recorded for the twelve months ended March 28, 2009 was $13.6 million on pretax loss of $64.7 million, an effective rate of 21.1%. In the ten-month fiscal 2008, the income tax provision recorded was $9.9 million on pretax income of $26.5 million, which represented an effective tax rate of 37.4%. The change in the effective tax rates is primarily related to the 2009 goodwill impairment charge of $17.4 million which is not deductible for US tax purposes as well as an increase in the valuation allowance on certain deferred tax assets. The increase to the valuation allowance was required as the unrealized capital losses arising from the $13.6 million write-down of our auction rate securities will only be deductible when realized to the extent of future capital gain income. We do not believe it is more likely than not we will have the ability to generate

 

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sufficient capital gains in the future to realize these losses. In addition, we have a limited ability to utilize tax planning strategies while the current market price of the Company’s stock is less than its associated net book value.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events such as changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any further discrete events which are likely to occur that would have a material effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next twelve months as the result of examinations or lapsed statutes of limitation.

Income Taxes

The income tax benefit recorded for the twelve months ended March 28, 2009 was $13.6 million on pretax loss of $64.7 million, an effective rate of 21.1%. In the ten-month fiscal 2008, the income tax provision recorded was $9.9 million on pretax income of $26.5 million, which represented an effective tax rate of 37.4%. The change in the effective tax rates is primarily related to the 2009 goodwill impairment charge of $17.4 million which is not deductible for US tax purposes as well as an increase in the valuation allowance on certain deferred tax assets. The increase to the valuation allowance was required as the unrealized capital losses arising from the $13.6 million write-down of our auction rate securities will only be deductible when realized to the extent of future capital gain income. We do not believe it is more likely than not we will have the ability to generate

 

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sufficient capital gains in the future to realize these losses. In addition, we have a limited ability to utilize tax planning strategies while the current market price of the Company’s stock is less than its associated net book value.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events such as changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any further discrete events which are likely to occur that would have a material effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next twelve months as the result of examinations or lapsed statutes of limitation.

Income Taxes

The income tax provision recorded for the ten-month fiscal year ended March 29, 2008 was $9.9 million on pretax income of $26.5 million, an effective rate of 37%. In fiscal 2007, the income tax provision recorded was $11.1 million on pretax income of $34.6 million, which represented an effective tax rate of 32%. The higher rate in fiscal 2008 was significantly impacted by discrete purchase accounting expenses of $2.8 million associated with the write-off of in-process research and development, which were non-deductible for tax purposes.

Income Taxes

The income tax provision recorded for the ten-month fiscal year ended March 29, 2008 was $9.9 million on pretax income of $26.5 million, an effective rate of 37%. In fiscal 2007, the income tax provision recorded was $11.1 million on pretax income of $34.6 million, which represented an effective tax rate of 32%. The higher rate in fiscal 2008 was significantly impacted by discrete purchase accounting expenses of $2.8 million associated with the write-off of in-process research and development, which were non-deductible for tax purposes.

Income Taxes

We are subject to income taxes in the United States and in numerous foreign jurisdictions and in the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain. The Company accounts for uncertain tax positions in accordance with Financial Accounting Standards Board (FASB) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48). Accordingly, the Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to the unrecognized tax benefits in income tax expense.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be recovered or settled. Under SFAS No. 109 “Accounting for Income Taxes,” the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. When management determines that it is more likely than not that a deferred tax asset will not be fully realized, a valuation allowance is established to reduce deferred tax assets to the amount expected to be realized. Should management’s assumptions and expectations be inaccurate, our results of operations and financial condition could be adversely affected in future periods. At March 28, 2009, our net deferred tax assets totaled $28.9 million, which included a valuation allowance of $11.2 million.

Income Taxes

We are subject to income taxes in the United States and in numerous foreign jurisdictions and in the ordinary course of business, there are transactions and calculations where the ultimate tax determination is uncertain. The Company accounts for uncertain tax positions in accordance with Financial Accounting Standards Board (FASB) Interpretation No. 48 “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (FIN 48). Accordingly, the Company reports a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company recognizes interest and penalties, if any, related to the unrecognized tax benefits in income tax expense.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those assets and liabilities are expected to be recovered or settled. Under SFAS No. 109 “Accounting for Income Taxes,” the effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. When management determines that it is more likely than not that a deferred tax asset will not be fully realized, a valuation allowance is established to reduce deferred tax assets to the amount expected to be realized. Should management’s assumptions and expectations be inaccurate, our results of operations and financial condition could be adversely affected in future periods. At March 28, 2009, our net deferred tax assets totaled $28.9 million, which included a valuation allowance of $11.2 million.

These excerpts taken from the ESIO 10-Q filed Feb 4, 2009.

16. Income Taxes

The income tax benefit recorded for the three months ended December 27, 2008 was $1.8 million on pretax loss of $31.1 million, an effective rate of 5.9%. Comparatively, the income tax provision was $3.4 million on pretax income of $10.1 million for the three months ended December 29, 2007, an effective tax rate of 33.7%.

The total income tax benefit for the nine months ended December 27, 2008 was $6.0 million on pretax loss of $42.1 million, an effective rate of 14.2%. Comparatively, the total income tax provision for the seven months ended December 29, 2007 was $8.3 million on $21.9 million pretax income, an effective tax rate of 37.9%.

 

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The change in the effective tax rate for each comparison period is primarily due to the goodwill impairment charge recorded in the third quarter of 2009 that is not deductible for US tax purposes as well as a valuation allowance on deferred tax assets that was established in the third quarter. This valuation allowance was due to unrealized capital losses arising from the write-down of our auction rate securities and was necessary because capital losses are only deductible to the extent of capital gains. It is uncertain whether the Company will have the ability to generate sufficient capital gains in the future to utilize these losses and has a limited ability to utilize tax planning strategies given the current market price of the Company’s stock compared to net book value.

Current and non-current deferred income taxes were $20.0 million and $4.7 million, respectively at December 27, 2008. This represents an increase of $5.1 million and $3.7 million, respectively, from March 29, 2008. The increase in current deferred tax assets is primarily related to increased net operating loss. The non-current deferred tax asset increase was due to the expected utilization of our tax credits.

Income Taxes

The income tax benefit recorded for the three months ended December 27, 2008 was $1.8 million on pretax loss of $30.1 million, an effective rate of 5.9%. Comparatively, the income tax provision was $3.4 million on pretax income of $10.1 million for the three months ended December 29, 2007, an effective tax rate of 33.7%. The change in the effective tax rates is primarily related to the goodwill impairment charge recorded in the third quarter of 2009 that is not deductible for US tax purposes as well as a valuation allowance on deferred tax assets that was established in the third quarter. This allowance was required due to unrealized capital losses arising from the write-down of our auction rate securities.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. For example, the recent re-enactment of the research and experimentation credit will continue to positively impact our effective tax rate for the remainder of fiscal 2009. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapse of statutes of limitation.

Income Taxes

The total income tax benefit for the nine months ended December 27, 2008 was $6.0 million on pretax loss of $42.1 million, an effective rate of 14.2%. Comparatively, the total income tax provision for the seven months ended December 29, 2007 was $8.3 million on $21.9 million pretax income, an effective tax rate of 37.9%, and the total income tax provision for the pro forma nine months ended December 29, 2007 was $14.4 million on pretax income of $37.3 million, for an effective tax rate of 38.6%. The change in the effective tax rates is primarily related to the goodwill impairment charge recorded in the third quarter of 2009 that is not deductible for US tax purposes as well as a valuation allowance on deferred tax assets that was established in the third quarter. This valuation allowance was due to unrealized capital losses arising from the write-down of our auction rate securities and was necessary because capital losses are only deductible to the extent of capital gains. It is uncertain whether the Company will have the ability to generate sufficient capital gains in the future to utilize these losses and has a limited ability to utilize tax planning strategies given the current market price of the Company’s stock compared to net book value.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapse of statutes of limitation.

 

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This excerpt taken from the ESIO 10-Q filed Nov 6, 2008.

Income Taxes

The total income tax benefit for the six months ended September 27, 2008 was $4.1 million on pretax net loss of $11.0 million, an effective rate of 37.6%. Comparatively, the total income tax provision for the pro-forma six months ended September 29, 2007 was $11.0 million on pretax net income of $27.2 million, for an effective tax rate of 40.3%, and the total income tax provision for the four months ended September 29, 2007 was $4.9 million on $11.9 million pretax net income, an effective tax rate of 41.4%. The effective tax rate declined reflecting the implementation of our tax planning strategy associated with increased offshore manufacturing.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapse of statutes of limitation.

This excerpt taken from the ESIO 10-Q filed Aug 5, 2008.

Income Taxes

The income tax benefit recorded for the first quarter of fiscal 2009 was $1.7 million on a pretax net loss of $4.5 million, an effective rate of 38.0%. Comparatively, the income tax provision was $5.2 million on pretax income of $13.1 million in the fourth quarter of fiscal 2007, an effective tax rate of 39.5%.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapse of statutes of limitation.

This excerpt taken from the ESIO 10-Q filed Jan 25, 2008.

Income Taxes

The income tax provision recorded for the third quarter of fiscal 2008 was $3.4 million on pretax income of $10.1 million, an effective rate of 34%. Comparatively, the income tax provision was $2.1 million on pretax income of $5.9 million in the second quarter of fiscal 2007, an effective tax rate of 36%. The prior year effective tax rate was higher due to certain discrete adjustments related to the adoption of SFAS 123R, and to the expiration of a research and experimentation tax credit as of December 31, 2005 which was ultimately retroactively reinstated in the third quarter of fiscal 2007.

The provision for income taxes in the six months ended December 29, 2007 was $7.5 million on pretax income of $19.7 million, an effective tax rate of 38%, compared to an income tax provision of $4.9 million on pretax income of $14.9 million in the six months ended December 2, 2006, an effective tax rate of 33%. The increase in the effective tax rate in the six months ended December 29, 2007 compared to the first six months of fiscal 2007 is primarily due to discrete purchase accounting charges of $2.8 million associated with the write-off of in-process research and development, which is non-deductible for tax purposes.

Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any further discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapsed of statutes of limitation.

This excerpt taken from the ESIO 10-Q filed Nov 7, 2007.

Income Taxes

The income tax provision recorded for the second quarter of fiscal 2008 was $4.1 million on pretax income of $9.6 million, an effective rate of 42%. Comparatively, the income tax provision was $2.1 million on pretax income of $5.9 million in the first quarter of fiscal 2007, an effective tax rate of 36%. Excluding purchase accounting charges of $4.3 million, the effective tax rate would be 29%, as these charges are not deductible for tax return purposes but do reduce pretax income for financial reporting purposes.

The effective tax rate for the third quarter of fiscal 2008 is expected to be approximately 37%. The projected decrease in the effective tax rate results from the reduction in purchase accounting adjustments from $4.3 million in the current quarter to approximately $1.0 million for the third quarter of fiscal 2008. This will result in a reduction in the effective tax rate of approximately 5%. Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We expect our normalized annual effective tax rate to be approximately 32%, excluding the impact of purchase accounting. We anticipate no significant changes in unrecognized tax benefits in the next 12 months as the result of examinations or lapse of statutes of limitation.

 

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This excerpt taken from the ESIO 10-K filed Aug 15, 2007.

Income Taxes

The income tax benefit for fiscal 2006 was $1.5 million on pre-tax income of $19.3 million, compared to the income tax expense in the prior fiscal year of $6.4 million on pretax income of $26.3 million. The effective tax rate for fiscal 2006 was a benefit of 8% compared to a provision of 24% in fiscal 2005. The tax benefit in fiscal 2006 resulted from a $5.9 million reduction in accrued income taxes due to the statutory closure of various tax years, partially offset by income tax expense of $3.7 million and other discrete income tax expense items totaling $0.7 million.

In October 2003 the Internal Revenue Service (IRS) began an audit of the tax years ending in 1996 through 2003. During fiscal 2005 we reached an agreement with the IRS on the tax return years under review. The examination process required a special report to be submitted by the IRS for congressional approval from the Joint Committee on Taxation. In fiscal 2006, we received notice from the IRS that the Joint Committee’s review was completed without exception. As a result, we received approximately $7.2 million in tax refunds relating to those years. Additionally, we are subject to numerous ongoing state and foreign tax audits. Although the final outcome of these audits are uncertain, based on currently available information, management believes the ultimate resolutions will not have a materially adverse effect on our financial position or results of operations.

This excerpt taken from the ESIO 10-Q filed Apr 10, 2007.

Income Taxes

The income tax provision recorded for the third quarter of fiscal 2007 was $1.0 million on pre-tax income of $6.6 million, an effective tax rate of 15%. The fiscal year-to-date provision for income taxes at March 3, 2007 is $5.9 million on pre-tax income of $21.6 million, an effective tax rate of 28%. The income tax provision in the third quarter of fiscal 2007 and for the nine months ended March 3, 2006 reflected a $1.2 million reduction due to the extension in December 2006 of the research and experimentation credit and the related impact of this benefit for both the latter portion of fiscal 2006 as well as the year-to-date impact for the current fiscal year.

Comparatively, the income tax benefit for the third quarter of fiscal 2006 was $3.7 million on pre-tax income of $6.7 million, an effective tax benefit rate of 55%. The income tax benefit was $2.1 million on pre-tax income of $12.8 million for the nine months ended February 25, 2006, an effective tax benefit rate of 17%. In the prior year, the third quarter tax benefit resulted from a $5.3 million reduction in accrued income taxes due to the statutory closure of various tax years, offset by income tax expense of $1.6 million. The year-to-date tax benefit in the prior year resulted from a $5.3 million reduction in accrued income taxes as discussed above, offset by income tax expense of $2.7 million and other discrete income tax expense items totaling $0.5 million.

The effective tax rate for the fourth quarter of fiscal 2007 is expected to be approximately 31%. Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur and which would have a materially adverse effect on our financial position, expected cash flows or results of operations.

This excerpt taken from the ESIO 10-Q filed Jan 5, 2007.

Income Taxes

The income tax provision recorded for the second quarter of fiscal 2007 was $2.1 million on pretax income of $5.9 million, an effective tax rate of 36%. Comparatively, the income tax provision was $0.9 million on pretax income of $4.1 million in the second quarter of fiscal 2006, an effective tax rate of 22%. The increase in the effective tax rate is due primarily to the expiration of the research and experimentation tax credit as of December 31, 2005 and the impact of the adoption of SFAS 123R.

The fiscal year-to-date provision for income taxes at December 2, 2006 is $5.4 million on pretax income of $15.9 million, an effective tax rate of 34%, compared to an income tax provision of $1.5 million on pretax income of $6.1 million in the six months ended November 26, 2005, an effective tax rate of 25%. The increase in the effective tax rate in the current fiscal year compared to the same period in fiscal 2006 is also due to the factors discussed above.

The effective tax rate for the third quarter of fiscal 2007 is expected to be approximately 20%. The projected decrease in the effective tax rate is due to the recent extension in December 2006 of the research and experimentation credit and the related estimated impact of this benefit for both the latter portion of fiscal 2006 as well as the current fiscal year. Our effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur that would have a materially adverse effect on our financial position, expected cash flows or results of operations. We expect our normalized effective tax rate to be approximately 32%.

This excerpt taken from the ESIO 10-Q filed Sep 29, 2006.

Income Taxes

The income tax provision recorded for the first quarter of fiscal 2007 was $3.2 million on pretax income of $10.0 million, an effective rate of 32%. The effective tax rate in the first quarter of fiscal 2007 is lower than our statutory tax rate of 36%, primarily due to export tax incentives.

The effective tax rate for the second quarter of fiscal 2007 is expected to be approximately 34%. The effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and development credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur and which would have a materially adverse effect on our consolidated financial position, expected cash flows or results of operations.

This excerpt taken from the ESIO 10-K filed Aug 15, 2006.

Income Taxes

The income tax provision recorded for fiscal year 2005 was $6.4 million on pretax income of $26.3 million, an effective rate of 24.5%. An income tax benefit of $9.3 million was recorded for fiscal 2004 on pretax income of $2.6 million as a result of export tax incentives and research and foreign tax credits.

This excerpt taken from the ESIO 10-Q filed Mar 22, 2006.

Income Taxes

The income tax benefit for the third quarter of fiscal 2006 was $3.7 million on pre-tax income of $6.7 million, compared to the income tax provision in the third quarter of the prior fiscal year of $0.7 million on pretax income of $2.7 million. The effective tax rate in the third quarter of fiscal 2006 was a benefit of 55% compared to a provision of 25% in the third quarter of fiscal 2005. The third quarter tax benefit resulted from a $5.3 million reduction in accrued income taxes due to the statutory closure of various tax years, offset by income tax expense of $1.6 million.

The fiscal year-to-date benefit for income taxes at February 25, 2006 is $2.1 million on pretax income of $12.8 million compared to an income tax provision of $6.7 million on pretax income of $27.3 million in the nine months ended February 26, 2005. The year-to-date tax benefit resulted from a $5.3 million reduction in accrued income taxes as discussed above, offset by income tax expense of $2.7 million and other discrete income tax expense items totaling $0.5 million.

The effective tax rate for the fourth quarter of fiscal 2006 is expected to be approximately 21%. The effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and

 

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experimentation credits, closure of tax years subject to examination and finalization of income tax returns. Based on currently available information, we are not aware of any such discrete events which are likely to occur and which would have a materially adverse effect on our financial position, expected cash flows or results of operations.

This excerpt taken from the ESIO 10-Q filed Dec 22, 2005.

Income Taxes

 

The income tax provision recorded for the second quarter of fiscal 2006 was $0.9 million on pretax income of $4.1 million.  Comparatively, the income tax provision was $1.6 million on pretax income of $9.6 million in the second quarter of fiscal 2005.  The fiscal year-to-date provision for income taxes at November 26, 2005 is $1.5 million on pretax income of $6.1 million compared to an income tax provision of $6.0 million on pretax income of $24.6 million in the six months ended November 27, 2004.

 

The effective tax rate in the second quarter was 22% compared to 32% in the prior quarter.  Included in the rate this quarter is a benefit for state tax refunds resulting from the settlement of our IRS examination and a benefit resulting from an adjustment to the company’s accrued taxes on foreign earnings, both of which were offset by a $1.1 million increase in the valuation allowance against state tax operating loss carryforwards resulting from changes in state tax laws during the quarter.

 

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As previously disclosed, during the first quarter of fiscal 2006 we received notice from the IRS that the Joint Committee on Taxation accepted, without exception, a special report that resulted from an examination of the company’s tax years 1996 through 2003.  During the second quarter of fiscal 2006 we received $7.2 million in expected tax refunds, plus interest of $0.7 million.

 

The effective tax rate for the third quarter of fiscal 2006 is expected to be approximately 20%.  The effective tax rate is subject to fluctuation based upon the occurrence and timing of numerous discrete events, including, for example, changes in tax laws or their interpretations, extensions or expirations of research and experimentation credits, closure of tax years subject to examination and finalization of income tax returns.  Based on currently available information, we are not aware of any such discrete events which are likely to occur and which would have a materially adverse effect on our financial position, expected cash flows or results of operations.

 

This excerpt taken from the ESIO 10-Q filed Sep 23, 2005.

Income Taxes

 

The income tax provision recorded for the first quarter of fiscal 2006 was $0.6 million on pretax income of $2.0 million, an effective rate of 32%.  The effective tax rate is lower than our statutory tax rate of 36%, primarily due to incentives for export sales and research credits.

 

In October 2003 the Internal Revenue Service (IRS) began an audit of the fiscal tax years ending in 1996 through 2003.  During fiscal 2005 we reached an agreement with the IRS on the tax return years under review.  The examination required a special report to be submitted by the IRS for congressional approval from the Joint Committee on Taxation.  During the first quarter of fiscal 2006, we received notice from the IRS that the Joint Committee’s review was completed without exception.  As a result, we will receive approximately $7.2 million in tax refunds.  Additionally, we are subject to numerous ongoing state and foreign tax audits.  Although the final outcome of these audits is uncertain, based on currently available information we believe the ultimate resolutions will not have a materially adverse effect on the Company’s financial position or results of operations.

 

This excerpt taken from the ESIO 10-K filed Jul 27, 2005.

Income Taxes

The income tax benefit recorded for fiscal year 2004 was $9.3 million on pretax income of $2.6 million. The tax benefit in fiscal 2004 resulted primarily from export tax incentives of approximately $4.8 million and $2.6 million in research and foreign tax credits, respectively, for current and prior periods resulting from tax returns filed in the current year. To a lesser extent, the net tax benefit was also impacted by the effect of foreign income taxed at rates lower than U.S. federal statutory income tax rates, and the recording of temporary differences previously not recognized. The income tax benefit recorded for fiscal 2003 of $29.1 million resulted in an effective benefit rate of 36.8%.

This excerpt taken from the ESIO 10-Q filed Mar 23, 2005.

Income Taxes

 

The income tax provision recorded for the third quarter of fiscal 2005 was $0.7 million on pretax income of $2.7 million, an effective rate of 25%.  The fiscal year-to-date provision for income taxes at February 26, 2005 is $6.7 million on pretax income of $27.3 million, an effective annual rate of 25%.  The estimated effective annual tax rate for fiscal 2005 of 25% is lower than our statutory tax rate of 36%, primarily due to incentives for export sales and research credits.

 

The income tax benefit for the third quarter of fiscal year 2004 was $5.8 million despite recording pre-tax income of $4.2 million for the quarter.  The tax benefit recorded was a result of the dollar amount of permanent income tax deductions and tax credits relative to estimated pre-tax earnings.  The income tax benefit rate for the nine months ended February 28, 2004 was 70%.  This effective rate was higher than the statutory tax rate as a result of the inclusion of certain export tax incentives and increased research and development tax credits as a result of tax returns filed in fiscal 2004.

 

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We currently have an outstanding examination by the Internal Revenue Service for our tax returns for the tax years ending in 1996 through 2003.  Although the examination is substantially complete, the final outcome of the federal tax audit is uncertain.  We believe the ultimate results will not have a materially adverse effect on our results of operations or financial position.

 

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