Sapient (SAPE)

 

For the years ended December 31, 2007 and 2006, we recorded an income tax provision of approximately $9.0 million and $4.4 million respectively. Our income tax provision is primarily related to foreign, federal alternative minimum tax and state tax obligations. We have deferred tax assets that have arisen primarily as a result of net operating losses incurred in 2001, 2002 and 2003, as well as other temporary differences between book and tax accounting. Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. As a result of losses incurred in the United States during 2006 and 2007, and our inability to predict the extent and timing of profitability in future periods; in the United States, we have continued to record a valuation allowance against our deferred tax assets of $117.4 million, at December 31, 2007 and $119.0 million at December 31, 2006. As of December 31, 2007, and reflected in the tax provision, is a deferred tax liability of approximately $1.1 million that has been recorded as a result of the goodwill acquired in connection with acquisitions, as well as approximately $0.6 million related to the effects of certain tax rate changes in foreign jurisdictions.

 

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction and as a result of acquisitions.

 

 

For the years ended December 31, 2007 and 2006, we recorded
an income tax provision of approximately $9.0 million and
$4.4 million respectively. Our income tax provision is
primarily related to foreign, federal alternative minimum tax
and state tax obligations. We have deferred tax assets that have
arisen primarily as a result of net operating losses incurred in
2001, 2002 and 2003, as well as other temporary differences
between book and tax accounting. Statement of Financial
Accounting Standards No. 109, Accounting for Income
Taxes, requires the establishment of a valuation allowance
to reflect the likelihood of realization of deferred tax assets.
Significant management judgment is required in determining our
provision for income taxes, deferred tax assets and liabilities
and any valuation allowance recorded against the net deferred
tax assets. As a result of losses incurred in the United States
during 2006 and 2007, and our inability to predict the extent
and timing of profitability in future periods; in the
United States, we have continued to record a valuation
allowance against our deferred tax assets of
$117.4 million, at December 31, 2007 and
$119.0 million at December 31, 2006. As of
December 31, 2007, and reflected in the tax provision, is a
deferred tax liability of approximately $1.1 million that
has been recorded as a result of the goodwill acquired in
connection with acquisitions, as well as approximately
$0.6 million related to the effects of certain tax rate
changes in foreign jurisdictions.

 

Our effective tax rate may vary from period to period based on
changes in estimated taxable income or loss, changes to the
valuation allowance, changes to federal, state or foreign tax
laws, future expansion into areas with varying country, state,
and local income tax rates, deductibility of certain costs and
expenses by jurisdiction and as a result of acquisitions.

 

 

We have deferred tax assets that have arisen primarily as a result of net operating losses incurred in 2001, 2002 and 2003, as well as other temporary differences between book and tax accounting. Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. As a result of net operating losses incurred from 2001 through 2003, and uncertainty as to the extent, and timing of profitability in future periods; in the United States, we have continued to record a valuation allowance against our deferred tax assets of $119.0 million at December 31, 2006. For the years ended December 31, 2006 and 2005, we recorded an income tax provision (benefit) of approximately $4.4 million and ($612,000) respectively. Our income tax provision is primarily related to foreign, federal alternative minimum tax and state tax obligations. As of December 31, 2006, and reflected in the tax provision, is a deferred tax liability of approximately $1.1 million that has been recorded as a result of the goodwill acquired in connection with the BIS and PGI acquisition. See Note 3 of the Consolidated Financial Statements.

 

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction and as a result of acquisitions.

 

 

We have deferred tax assets that have arisen primarily as a
result of net operating losses incurred in 2001, 2002 and 2003,
as well as other temporary differences between book and tax
accounting. Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes, requires the
establishment of a valuation allowance to reflect the likelihood
of realization of deferred tax assets. Significant management
judgment is required in determining our provision for income
taxes, deferred tax assets and liabilities and any valuation
allowance recorded against the net deferred tax assets. As a
result of net operating losses incurred from 2001 through 2003,
and uncertainty as to the extent, and timing of profitability in
future periods; in the United States, we have continued to
record a valuation allowance against our deferred tax assets of
$119.0 million at December 31, 2006. For the years
ended December 31, 2006 and 2005, we recorded an income tax
provision (benefit) of approximately $4.4 million and
($612,000) respectively. Our income tax provision is primarily
related to foreign, federal alternative minimum tax and state
tax obligations. As of December 31, 2006, and reflected in
the tax provision, is a deferred tax liability of approximately
$1.1 million that has been recorded as a result of the
goodwill acquired in connection with the BIS and PGI
acquisition. See Note 3 of the Consolidated Financial
Statements.

 

Our effective tax rate may vary from period to period based on
changes in estimated taxable income or loss, changes to the
valuation allowance, changes to federal, state or foreign tax
laws, future expansion into areas with varying country, state,
and local income tax rates, deductibility of certain costs and
expenses by jurisdiction and as a result of acquisitions.

 

 

We have deferred tax assets that have arisen primarily as a result of net operating losses incurred in 2001, 2002 and 2003, as well as other temporary differences between book and tax accounting. Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes,” requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against the net deferred tax assets. As a result of net operating losses incurred from 2001 through 2003, and uncertainty as to the extent, and timing of profitability in future periods, at December 31, 2005 we have continued to record a valuation allowance against our deferred tax assets in the United States of $117.2 million. In 2005, the Company concluded that Germany’s deferred taxes would be realized in the foreseeable future and as such released the full valuation allowance resulting in an income statement benefit of $4.3 million at the end of December 31, 2005. For the years ended December 31, 2005 and 2004, we recorded an income tax provision (benefit) of approximately $612,000 and $2.4 million, respectively. Excluding the benefit from the reversal of the $4.3 million and $635,000 foreign valuation allowances in 2005 and 2004, respectively, our income tax provision is primarily related to foreign, federal alternative minimum tax and state tax obligations. As of December 31, 2005, and reflected in the tax provision, is a deferred tax liability of approximately $188,000 that has been recorded as a result of the goodwill acquired in connection with the BIS acquisition. See Note 4 of the Consolidated Financial Statements.

 

Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss, changes to the valuation allowance, changes to federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates, deductibility of certain costs and expenses by jurisdiction and as a result of acquisitions.