LWSN » Topics » 8. INCOME TAXES

This excerpt taken from the LWSN 10-Q filed Apr 3, 2009.

10.          INCOME TAXES

 

Our quarterly tax expense is measured using an estimated annual effective tax rate for the period.  For the nine month period ended February 28, 2009, our estimated annual global effective tax rate was 62.0% after considering those entities for which no tax benefit from operating losses is expected to occur during the year as a result of such entities requiring a full valuation allowance against current year losses.  We estimate our annual effective tax rate on a quarterly basis and make any necessary changes to adjust the rate for the year-to-date period based upon the annual estimate. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income, changes in the jurisdictional mix of the forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, changes to actual or forecasted permanent book to tax differences, impacts from future tax settlements with state, federal or foreign tax authorities or impacts from enacted tax law changes.  We identify items which are unusual and non-recurring in nature and treat these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

 

Our income tax expense for the three and nine months ended February 28, 2009 was $6.7 million and $23.3 million, respectively.  This resulted in an overall effective tax rate of 47.6% for the third quarter of fiscal 2009 and 72.0% for the nine months ended February 28, 2009.  The rate for the current quarter was unfavorably impacted 3.0% for return to provision true-ups and favorably impacted by 5.2% due to the settlement with taxing authorities of an uncertain tax position in a foreign jurisdiction.  The rate for the current quarter was also positively impacted due to the jurisdictional mix of income in the quarter versus the annual forecast.  For the three and nine months ended February 29, 2008, our income tax expense was $9.9 million and $21.7 million, respectively, which resulted in an overall effective tax rate of 93.1% and 68.4% for the respective three and nine month periods.

 

As of February 28, 2009, we had a liability of approximately $6.1 million for unrecognized tax benefits all of which would affect earnings and the effective tax rate, if recognized.  We recognize interest accrued related to unrecognized tax benefits and penalties, if incurred, as a component of our income tax expense.  During the three and nine months ended February 28, 2009, we recognized less than $0.1 million and $0.3 million in interest, respectively, and had $0.6 million accrued for the payment of interest at February 28, 2009.  Interest recognized for the three and nine months ended February 29, 2008 was $0.1 million and $0.2 million, respectively.

 

We file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions.  With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years ending before May 31, 2004.  A foreign taxing authority commenced an examination of tax returns for periods January 1, 2005 through May 31, 2007 in the fourth quarter of fiscal 2008 that was completed during the quarter ended February 28, 2009.  In addition, there is limited audit activity in certain other jurisdictions.  While we believe we have adequately provided for all tax positions under examination, amounts asserted by taxing authorities could be greater or less than the accrued provision.  We do not anticipate that the adjustments would result in a material change to our financial position nor do we expect the amount of unrecognized tax benefits or cash payments related to these obligations to significantly change over the next 12 months.

 

This excerpt taken from the LWSN 10-Q filed Oct 10, 2008.

10.          INCOME TAXES

 

Our quarterly tax expense is measured using an estimated annual tax rate for the period.  At August 31, 2008, our estimated annual global effective tax rate was 45.2% after considering those entities for which no tax benefit is expected to occur during the year as a result of such entities requiring a full valuation allowance against current year losses.  We review our annual tax rate on a quarterly basis and make any necessary changes. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income, changes in the jurisdictional mix of the forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, changes to actual or forecasted permanent book to tax differences, impacts from future tax settlements with state, federal or foreign tax authorities or impacts from enacted tax law changes.  We identify items which are unusual and non-recurring in nature and treat these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

 

Our income tax expense for the three months ended August 31, 2008 was $9.8 million.  This resulted in an overall effective tax rate of 134.8% for the first quarter of fiscal 2009.  The rate for the quarter was negatively impacted by 90.6% due to $19.8 million of foreign losses for which we recognized no tax benefit and by 0.5% for a discrete item related to a tax rate change in a foreign jurisdiction. For the three months ended August 31, 2007, our income tax expense was $4.4 million which resulted in an overall effective tax rate for the first quarter of fiscal 2008 of 44.1%. The increase in income tax expense for the three months ended August 31, 2008 as compared to August 31, 2007 primarily related to increased profitability in jurisdictions in which we record a tax provision.

 

As of August 31, 2008, we had recorded a liability of approximately $5.8 million for unrecognized tax benefits all of which would affect earnings and the effective tax rate, if recognized.  We recognize interest accrued related to unrecognized tax benefits and penalties, if incurred, as a component of our income tax expense.  During the three months ended August 31, 2008 we recognized approximately $0.1 million in interest and had $0.4 million accrued for the payment of interest at August 31, 2008.  Interest recognized for the three months ended August 31, 2007 was nominal.

 

We file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions.  With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years ending before May 31, 2004.  The French taxing authorities commenced an examination of our French tax returns for periods January 1, 2005 through May 31, 2007 in the 4th quarter of fiscal 2008 that is anticipated to be completed by the end of fiscal 2009.  In addition to the French examination, there is limited audit activity in certain other jurisdictions.  While we believe we have adequately provided for all tax positions under examination, amounts asserted by taxing authorities could be greater or less than the accrued provision.  We do not anticipate that the adjustments would result in a material change to our financial position nor do we expect the amount of unrecognized tax benefits or cash payments related to these obligations to significantly change over the next 12 months.

 

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Table of Contents

 

We are in the process of analyzing and refining our existing global intercompany financing structure. Such refinements will result in a decrease of interest expense in various tax jurisdictions including some where valuation allowances against foreign deferred tax assets have been released.

 

These excerpts taken from the LWSN 10-K filed Jul 11, 2008.

Income Taxes

        Consistent with prior quarters, and upon our June 1, 2007 adoption of FIN 48, we recognize accrued interest related to unrecognized tax benefits in tax expense. Penalties, if incurred, are also recognized as a component of tax expense. In addition, the tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

        Our provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various locations outside of the United States. Accordingly, our consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

        Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Consolidated Balance Sheets and Consolidated Statements of Operations.

        In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. The determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Consolidated Statements of Operations.

        Under the provisions of SFAS 109 and related interpretations, future period reductions to the valuation allowance related to Intentia's deferred tax assets that existed as of the date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to zero, credited to the income tax provision. A non-cash provision will be credited against goodwill for the utilization of pre-acquisition net operating losses that had been fully reserved in purchase accounting.

75


LAWSON SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(in thousands, except share and per share data)

2. Summary of Significant Accounting Policies (Continued)

Income Taxes



        Consistent with prior quarters, and upon our June 1, 2007 adoption of FIN 48, we recognize accrued interest related to unrecognized tax benefits in
tax expense. Penalties, if incurred, are also recognized as a component of tax expense. In addition, the tax effect of discrete items is booked entirely in the quarter in which the discrete event
occurs.



        Our
provision for income taxes consists of provisions for federal, state, and foreign income taxes. We operate in an international environment with significant operations in various
locations outside of the United States. Accordingly, our consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.



        Significant
judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the
ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and
possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be
different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Consolidated Balance Sheets and
Consolidated Statements of Operations.



        In
conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting
purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that
deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. The determination of our valuation allowance is based upon a
number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in
the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for
pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our
Consolidated Statements of Operations.



        Under
the provisions of SFAS 109 and related interpretations, future period reductions to the valuation allowance related to Intentia's deferred tax assets that existed as of the
date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to
zero, credited to the income tax provision. A non-cash provision will be credited against goodwill for the utilization of pre-acquisition net operating losses that had been
fully reserved in purchase accounting.



75








LAWSON SOFTWARE, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



(in thousands, except share and per share data)



2. Summary of Significant Accounting Policies (Continued)




This excerpt taken from the LWSN 10-Q filed Apr 4, 2008.
INCOME TAXES

 

On June 1, 2007, the Company adopted the provisions of FIN 48.  As a result of implementation, there was no impact to retained earnings for unrecognized tax benefits that would be accounted for as a cumulative effect adjustment.  The balance of unrecognized tax benefits at adoption, exclusive of interest, was $10.3 million of which $4.6 million would affect earnings, if recognized.  The Company recognizes accrued interest related to unrecognized tax benefits in tax expense.  Penalties, if incurred, are also recognized as a component of tax expense.  As of June 1, 2007, the Company did not have any accrued interest expense related to uncertain tax benefits given the Company’s net operating loss carry forward position associated with prior years.  However,

 

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during the quarter ended February 29, 2008, the Company recorded approximately $0.1 million of interest related to unrecognized tax benefits.  In addition, the company utilized $0.1 million of the uncertain tax benefits, resulting in a balance of $4.6 million at February 29, 2008.

 

Lawson is subject to taxation in the U.S. and various states and foreign jurisdictions.  The material jurisdictions that are subject to examination by the taxing authorities primarily include the U.S., U.K., Denmark, France, Switzerland and Sweden and are generally for tax years 2003 and forward.  The Company is currently under examination by certain taxing authorities in a few foreign jurisdictions.  While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater or less than its accrued position.  Accordingly, additional provisions on state, federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.  The Company closed a foreign tax audit which resulted in full utilization of the portion of the unrecognized tax benefits which would not affect earnings if recognized, as noted above, as of the date of adoption.  The Company does not expect the amount of unrecognized tax benefits or cash payments related to these obligations to significantly change over the next 12 months.

 

The Company’s quarterly tax expense is measured using an estimated annual tax rate for the period. At February 29, 2008, the Company’s estimated annual global effective tax rate was 45.4% after considering those entities for which no tax benefit is expected to occur during the year as a result of such entities requiring a full valuation allowance against current year losses.

 

The Company’s income tax expense for the three and nine months ended February 29, 2008 was $9.9 million and $21.7 million, respectively.  This resulted in an overall effective tax rate of 93.1% and 68.4% for the quarter and nine months ended February 29, 2008, respectively.  The rate for the quarter was negatively impacted by 27.9% for a discrete item related to a capital loss on an other-than-temporary impairment charge on auction rate securities for which no tax benefit is expected.  The quarterly rate for the three months ended February 29, 2008 was also higher than the expected annual rate due to the mix of quarterly income by jurisdiction.  The Company’s income tax expense for the three and nine months ended February 28, 2007 was $2.8 million and $9.6 million, respectively.  The overall effective tax rate for the three and nine months ended February 28, 2007 was not meaningful due to the Company recording a tax provision on the pre-tax losses in the respective periods.  The increase in income tax expense for the three months ended February 29, 2008 as compared to February 28, 2007 primarily related to increased profitability.

 

The Company reviews its annual tax rate on a quarterly basis and makes any necessary changes. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income, changes in the jurisdictional mix of the forecasted annual operating income, positive or negative changes to the valuation allowance for net deferred tax assets, changes to actual or forecasted permanent book to tax differences, impacts from future tax settlements with state, federal or foreign tax authorities or impacts from enacted tax law changes.  The Company identifies items which are unusual and non-recurring in nature and treats these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

 

This excerpt taken from the LWSN 10-Q filed Jan 8, 2008.

8.             INCOME TAXES

 

On June 1, 2007, the Company adopted the provisions of FIN 48.  As a result of implementation, there was no impact to retained earnings for unrecognized tax benefits that would be accounted for as a cumulative effect adjustment.  The balance of unrecognized tax benefits at adoption, exclusive of interest, was $10.3 million of which $4.6 million would affect earnings, if recognized.  The Company recognizes accrued interest related to unrecognized tax benefits in tax expense.  Penalties, if incurred, are also recognized as a component of tax expense.  As of June 1, 2007, the Company did not have any accrued interest expense related to uncertain tax benefits given the Company’s net operating loss carryforward position associated with prior years.  However, during the quarter ended November 30, 2007, the Company recorded approximately $0.1 million of interest related to unrecognized tax benefits.  In addition, the company utilized $0.2 million of the uncertain tax benefits, resulting in a balance of $4.5 million at November 30, 2007.

 

Lawson is subject to taxation in the U.S. and various states and foreign jurisdictions.  The material jurisdictions that are subject to examination by the taxing authorities primarily include the U.S., U.K., Denmark, France, Switzerland and Sweden and are generally for tax years 2003 and forward.  The Company is currently under examination by certain taxing authorities in a few foreign jurisdictions.  While the Company believes it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater or less than its accrued position.  Accordingly, additional provisions on federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved.  The Company is in the process of closing a foreign tax audit which is expected to result in a decrease in the amount of the portion of the unrecognized tax benefits which would not affect earnings if

 

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recognized, as noted above, as of the date of adoption.  Other than related to the resolution of this tax audit, the Company does not expect the amount of unrecognized tax benefits or cash payments related to these obligations to significantly change over the next 12 months.

 

The quarterly tax expense is measured using an estimated annual tax rate for the period. At November 30, 2007, the Company’s estimated annual global effective tax rate was 44.8 percent after considering those entities for which no tax benefit is expected to occur during the year as a result of such entities requiring a full valuation allowance against current year losses.

 

The Company’s income tax expense for the three and six months ended November 30, 2007 was $7.4 million and $11.8 million, respectively.  This resulted in an overall effective tax rate of 66.6 percent and 56.0 percent for the quarter and six months ended November 30, 2007, respectively.  The rate for the quarter is negatively impacted by 12.3 percent for a discrete item related to a capital loss on an other than temporary impairment charge on auction rate securities for which no tax benefit is expected and positively impacted by 2.5 percent for discrete items related to a return to provision true-up and tax reserve release.  The quarterly rate for the three months ended November 30, 2007 was also higher than the expected annual rate due to the mix of quarterly income by jurisdiction.  The Company’s income tax expense for the three and six months ended November 30, 2006 was $4.2 million and $6.7 million, respectively.  The overall effective tax rate for the three and six months ended November 30, 2006 was not meaningful due to the Company recording a tax provision on the nominal pre-tax book income and net loss in the respective periods.  The increase in income tax expense for the three months ended November 30, 2007 as compared to November 30, 2006 primarily related to increased profitability.

 

 The Company reviews its annual tax rate on a quarterly basis and makes any necessary changes. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income; changes in the jurisdictional mix of the forecasted annual operating income; positive or negative changes to the valuation allowance for net deferred tax assets; changes to actual or forecasted permanent book to tax differences; impacts from future tax settlements with state, federal or foreign tax authorities or impacts from enacted tax law changes.  The Company identifies items which are unusual and non-recurring in nature and treats these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

 

This excerpt taken from the LWSN 10-Q filed Oct 9, 2007.

8.             INCOME TAXES

 

On June 1, 2007, we adopted the provisions of FASB Interpretation No. FIN 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB statement No. 109 (FIN 48). As a result of implementation, there was no impact to retained earnings for unrecognized tax benefits that would be accounted for as a cumulative effect adjustment. The balance of unrecognized tax benefits at adoption, exclusive of interest, is $10.3 million of which $4.6 million would affect earnings if recognized. We recognize interest accrued related to unrecognized tax benefits in tax expense. Penalties, if incurred, would be recognized as a component of tax expense. As of June 1, 2007, we did not have any required interest expense accrued related to uncertain tax benefits given the Company’s prior years’ net operating loss carryforward position. For the quarter ended August 31, 2007, an immaterial amount of interest was accrued related to unrecognized tax benefits.

 

We are subject to taxation in the U.S. and various states and foreign jurisdictions. The material jurisdictions that are subject to examination by the taxing authorities primarily include the U.S., UK, Denmark and Sweden and are generally for tax years 2003 and forward. We are currently under examination by certain tax authorities in a few foreign jurisdictions. While we believe we have adequately provided for all tax positions, amounts asserted by taxing authorities could be greater or less than our accrued position. Accordingly, additional provisions on federal and foreign tax-related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. We do not expect the amount of unrecognized tax benefits or cash payments related to these obligations will significantly change over the next 12 months.

 

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The quarterly tax expense is measured using an estimated annual tax rate for the period. At August 31, 2007, the Company’s estimated annual global effective tax rate was 43.6% after considering those entities for which no tax benefit is expected to occur during the year as a result of such entities requiring a full valuation allowance against current year losses.

 

The Company’s income tax expense for the three months ended August 31, 2007 was $4.4 million which resulted in an overall effective tax rate of 44.1% for the quarter. This rate is slightly higher than the expected annual effective tax rate due to accruing interest expense for the quarter related to uncertain tax positions and recording discrete items related to various jurisdictional statutory tax rate changes. The Company’s income tax expense for the three months ended August 31, 2006 was $2.5 million. The overall effective tax rate for that quarter was not meaningful due to the Company recording a tax expense on a quarterly net loss pursuant to recording tax valuation allowances for certain net operating losses. The increase in income tax expense for the three months ended August 31, 2007 as compared to August 31, 2006 primarily relates to increased profitability.

 

The Company reviews its annual tax rate on a quarterly basis and makes any necessary changes. The estimated annual tax rate may fluctuate due to changes in forecasted annual operating income; changes in the jurisdictional mix of the forecasted annual operating income; positive or negative changes to the valuation allowance for net deferred tax assets; changes to actual or forecasted permanent book to tax differences; impacts from future tax settlements with state, federal or foreign tax authorities; or impacts from enacted tax law changes.  The Company identifies items which are unusual and non-recurring in nature, and treats these as discrete events. The tax effect of discrete items is booked entirely in the quarter in which the discrete event occurs.

 

This excerpt taken from the LWSN 10-K filed Jul 30, 2007.

Income Taxes

The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

F-12




LAWSON SOFTWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands, except share and per share data)

Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Consolidated Balance Sheets and Consolidated Statements of Operations.

In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Consolidated Statements of Operations.

Under the provisions of SFAS 109 and related interpretations, future period reductions to the valuation allowance related to Intentia’s deferred tax assets that existed as of the date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to zero, credited to the income tax provision. A non-cash provision will be credited against goodwill for the utilization of pre-acquisition net operating losses that had been fully reserved in purchase accounting.

In connection with our adoption of SFAS 123(R), we have elected the “long form” method for calculating the tax effects of stock-based compensation pursuant to SFAS 123(R), paragraph 81. Under the “long form” method, we determined the beginning balance of the additional paid-in capital pool (APIC pool) related to the tax effects of the employee stock-based compensation as if we had adopted the recognition provisions of SFAS 123 since its effective date of January 1, 1995. We also determined the subsequent impact on the APIC pool and Consolidated Statement of Cash Flows of the tax effect of employee stock-based compensation awards that were issued after our adoption of SFAS 123(R) and were outstanding at the adoption date.

When assessing whether a tax benefit relating to share-based compensation has been realized, we follow the tax law ordering method, under which current year share-based compensation deductions are assumed to be utilized before net operating loss carryforwards and other tax attributes.

This excerpt taken from the LWSN 10-Q filed Apr 13, 2007.
Income Taxes.   The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

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In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Condensed Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Condensed Consolidated Statements of Operations.

Under the provisions of SFAS No. 109 Accounting for Income Taxes, and related interpretations, future period reductions to the valuation allowance related to Intentia’s deferred tax assets that existed as of the date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to zero, credited to the income tax provision. A provision benefit will not be realized for amounts credited against goodwill and other identifiable assets.

This excerpt taken from the LWSN 10-Q filed Apr 9, 2007.
Income Taxes.   The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

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In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Condensed Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Condensed Consolidated Statements of Operations.

Under the provisions of SFAS No. 109 Accounting for Income Taxes, and related interpretations, future period reductions to the valuation allowance related to Intentia’s deferred tax assets that existed as of the date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to zero, credited to the income tax provision. A provision benefit will not be realized for amounts credited against goodwill and other identifiable assets.

This excerpt taken from the LWSN 10-Q filed Jan 9, 2007.
Income Taxes.   The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Condensed Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. Our determination of our valuation allowance is based upon a number of

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assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Condensed Consolidated Statements of Operations.

Under the provisions of SFAS No. 109, Accounting for Income Taxes, and related interpretations, future period reductions to the valuation allowance related to Intentia’s deferred tax assets that existed as of the date of the acquisition of Intentia are first credited against goodwill, then to the other identifiable assets existing at the date of acquisition, and then, once these assets have been reduced to zero, credited to the income tax provision. A provision benefit will not be realized for amounts credited against goodwill and other identifiable assets.

This excerpt taken from the LWSN 10-Q filed Oct 10, 2006.
Income Taxes.   The provision for income taxes consists of provisions for federal, state, and foreign income taxes. The Company operates in an international environment with significant operations in various locations outside of the United States. Accordingly, the consolidated income tax rate is a composite rate reflecting the earnings in various locations and the applicable rates.

Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions and calculations where the ultimate tax outcome is uncertain. Our judgments, assumptions, and estimates relative to the provision for income tax take into account current tax laws, our interpretation of current tax laws, and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Although we believe that our estimates are reasonable, the final tax outcome of matters could be different from that which is reflected in our historical income tax provision and accruals. Such differences could have a material effect on the amounts provided in our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.

In conjunction with preparing the global tax provision, we must assess temporary differences resulting from the different treatment of specific items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included within our Condensed Consolidated Balance Sheets. As part of this process, we must also assess the likelihood that deferred tax assets will be realized from future taxable income and, based on this assessment establish a valuation allowance, if required. Our determination of our valuation allowance is based upon a number of assumptions, judgments, and estimates, including historical operating results, forecasted earnings, future taxable income, and the relative proportions of revenue and income before taxes in the various domestic and international jurisdictions in which we operate. To the extent we establish a valuation allowance or change the valuation allowance in a period, except as discussed below for pre-acquisition deferred tax assets that had a pre-acquisition valuation allowance, we reflect the change with a corresponding increase or decrease to our tax provision in our Condensed Consolidated Statements of Operations.

Under the provisions of SFAS No. 109,

This excerpt taken from the LWSN 10-K filed Aug 29, 2006.

Income Taxes

The Company provides for income taxes using the liability method under SFAS No. 109, “Accounting for Income Taxes,” which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this statement, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some component or all of the deferred tax assets will not be realized. Tax rate changes are reflected in income during the period such changes are enacted.

F-11




LAWSON SOFTWARE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(in thousands, except share and per share data)

This excerpt taken from the LWSN 8-K filed Jul 21, 2006.

Income taxes

 

Intentia has concluded that certain tax assets primarily related to net operating losses in Sweden do not meet the criteria to be recorded as assets under IFRS. The majority of deferred tax assts eliminated upon conversion to IFRS had been recorded prior to January 1, 2004.

 

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