PROVISION FOR INCOME TAXES. Reflects the income tax effect of the pro forma adjustments for the year ended December 31, 2017, which was calculated using a blended 38% U.S. federal, state and local statutory tax rate, net of federal tax benefit. The effective tax rate of the combined company could be significantly different from what is presented in these unaudited pro forma financial statements for a variety of reasons, including post Acquisition activities (in thousands). Pro forma selling, general and administrative expense adjustment $ (2,162 ) Pro forma interest expense adjustment (2,435 ) Pro forma redeemable preferred interest adjustment (3,760 ) Pro forma adjustments (8,357 ) Estimated effective tax rate 38.0 % Pro forma income tax provision adjustment $ (3,176 )
PROVISION FOR INCOME TAXES. The provision for income taxes reflects foreign withholding tax expense in various foreign jurisdictions. For all historic periods reported in the financial statements, Xxxxxxxx maintained valuation allowances against its net deferred tax assets, including net operating loss carryforwards, because it was more likely than not that the deferred taxes would not be realized. The provision for income taxes include foreign taxes withheld by our customers and paid to foreign jurisdictions on our behalf. The DMRC "carve-out" financial statements indicate cumulative losses through the first three months of 2008. Furthermore, the amounts of cumulative expenses in the financial statements that were not allowed for Federal and state income tax purposes were not sufficient enough to require us to record income tax expense. As a result of the above, no Federal and state income tax benefit was recognized for the book losses that were incurred in those periods prior to 2007 and no income tax expense was recognized during the 2007 and 2008 periods as any expense was offset by the benefit of net operating loss carry-forwards. After the spin-off, DMRC Corporation, as a separate legal entity, will not benefit from any of the carrryforward tax attributes of Digimarc, including net operating loss carryforwards. Revenue: Service $ 7,806 $ 6,812 $ 994 15 % License and subscription 5,219 4,259 960 23 % Total $ 13,025 $ 11,071 $ 1,954 18 % Revenue (as % of total revenue): Service 60 % 62 % License and subscription 40 % 38 % Total 100 % 100 % The increase in service revenue for the year was primarily due to increases in consulting revenue from our Central Banks consortium, Nielsen, and contracts with various other government agencies. We entered into our contract with Nielsen in late 2007. The increase in license and subscription revenue for the year was primarily attributable to higher license revenues from customers whose revenues fluctuate from period to period and a combination of growing levels of fixed and variable royalties from a larger customer base. Revenue by geography: Domestic $ 3,696 $ 2,414 $ 1,282 53 % International 9,329 8,657 672 8 % Total $ 13,025 $ 11,071 $ 1,954 18 % Revenue (as % of total revenue): Domestic 28 % 22 % International 72 % 78 % Total 100 % 100 % The increase in domestic revenue for the year was due primarily to increases in service and license revenues from Nielsen. The increase in international revenue for the year was due primarily to growing lic...
PROVISION FOR INCOME TAXES. The provision for income taxes reflects withholding tax expense in various foreign jurisdictions. For all historic periods reported in the financial statements, Xxxxxxxx maintained valuation allowances against its net deferred tax assets, including net operating loss carryforwards, because it was more likely than not that the deferred taxes would not be realized. The provision for income taxes included foreign taxes withheld by our customers and paid to foreign jurisdictions on our behalf. The DMRC "carve-out" financial statements indicate cumulative losses through the first three months of 2008. Furthermore, the amounts of cumulative expenses in the financial statements that were not allowed for federal and state income tax purposes were not sufficient enough to result in positive taxable income which would have required the company to record income tax expense. As a result of the above, no Federal and state income tax benefit was recognized for the book losses that were incurred in those periods prior to 2007 and no income tax expense was recognized during the 2007 and 2008 periods as any expense was offset by the benefit of net operating loss carry-forwards. After the spin-off, DMRC Corporation as a separate legal entity, will not benefit from any of the carrryforward tax attributes of Digimarc, including net operating loss carryforwards.
PROVISION FOR INCOME TAXES. The effective tax rate in fiscal 1998 is calculated as a percentage of income before taxes, exclusive of the non-recurring charges for in-process research and development. The effective tax rate decreased for fiscal 1998 to 33.6% of pre-tax income from 35.9% for fiscal 1997. This decrease was primarily due to utilization of foreign loss carrybacks, foreign tax credits, and research and development credits. COMPARISON OF FISCAL 1997 TO FISCAL 1996 The Company acquired DMCC and Setpoint in the third quarter of fiscal 1996 in transactions accounted for as purchases. The combined operations of DMCC and Setpoint at the time of acquisitions were roughly the same size as AspenTech. As a result, the Company's results of operations for fiscal 1997 and fiscal 1996 are not directly comparable.
PROVISION FOR INCOME TAXES. The effective tax rate in fiscal 1997 and fiscal 1996 is calculated as a percentage of income before taxes, exclusive of the non-recurring charges for in-process research and development. The effective tax rate decreased in fiscal 1997 to 35.9% of pre-tax income from 38.0% in fiscal 1996. This decrease was primarily due to utilization of various tax credits and carryforwards.
PROVISION FOR INCOME TAXES. For the six months ended June 30, 2000 we recorded an income tax benefit of $3.7 million compared to a net expense of $1.6 million for the six months ended June 30, 1999. The change from net income tax expense to net income tax benefit is due to our generation of net operating losses in the six months ended June 30, 2000, compared to net operating income in the six months ended June 30, 1999. The effective tax rate in both periods differs from statutory rates primarily as a result of the effect of non-deductible goodwill amortization expense. As of June 30, 2000, a significant portion of our long-term deferred tax assets related primarily to net operating loss carryforwards, which expire in 2020. Management has assessed the realizability of its deferred tax assets in light of our change in pricing model and product strategy and has concluded that it is more likely than not that such deferred tax assets will be fully utilized.
PROVISION FOR INCOME TAXES. The provision for income taxes increased $39.9 million to $126.3 million in 2006 from $86.3 million in 2005 primarily due to an increase in taxable income. Our effective tax rate increased to 38.0% in 2006 compared to 37.1% in 2005 primarily as a result of changes in tax legislation in Texas and Canada.
PROVISION FOR INCOME TAXES. During 2004, we recorded an income tax provision of $2.1 million reflecting an effective tax rate of 33.7%. During 2003, we recorded an income tax provision of $1.0 million reflecting an effective tax rate of 31%. The increase in our effective tax rate for fiscal year 2004 resulted primarily from our tax-exempt investment income comprising a smaller percentage of our estimated total pre-tax income in 2004 as compared to 2003. YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002 REVENUES YEAR ENDED DECEMBER 31, ABSOLUTE INCREASE PERCENTAGE INCREASE 2002 2003 (DECREASE) (DECREASE) Revenues (in millions)......................... Revenues from research services (in millions).................................... $ 96.9 $ 71.0 $126.0 $ 92.3 $29.1 $21.3 30% 30% Advisory services and other revenues (in millions).................................... $ 26.0 $ 33.7 $ 7.7 30% Revenues attributable to customers outside of the United States (in millions).............. $ 27.8 $ 36.6 $ 8.8 32% Revenues attributable to customers outside of the United States as a percentage of revenue...................................... 29% 29% -- -- Number of clients.............................. 1,125 1,812 687 61% Number of research employees................... 101 193 92 91% Number of events............................... 14 8 (6) (43)% The increases in total revenues, revenues from research services and in the number of clients are primarily attributable to the Giga acquisition which closed on February 28, 2003, and as such, Giga's operations have been included in the consolidated financial statements since February 28, 2003. No single client company accounted for more than 3% of revenues during 2003 or 2002. The increase in advisory services and other revenues is primarily attributable to increases in the number of clients and in the number of research employees delivering advisory services, which more than offset the decrease in event revenue attributable to our holding fewer events during 2003 than during 2002. The increase in the number of clients and research employees in our research organization is primarily attributable to the acquisition of Giga. The increase in international revenues is primarily attributable to the acquisition of Giga. We invoice our United Kingdom customers in pound sterling, the functional currency of our London subsidiary; our continental European customers in euros, the functional currency of our Amsterdam subsidiary and all other international customers ...
PROVISION FOR INCOME TAXES. The effective tax rate in fiscal 1998 is calculated as a percentage of income before taxes, exclusive of the non-recurring charges for in-process research and development. The effective tax rate decreased for fiscal 1998 to 33.6% of pre-tax income from 35.9% for fiscal 1997. This decrease was primarily due to utilization of foreign loss carrybacks, foreign tax credits, and research and development credits. QUARTERLY RESULTS The Company's operating results and cash flow have fluctuated in the past and may fluctuate significantly in the future as a result of a variety of factors, including purchasing patterns, timing of introductions of new solutions and enhancements by the Company and its competitors, and fluctuating economic conditions. Because license fees for the Company's software products are substantial and the implementation of the Company's solutions often requires the services of the Company's engineers over an extended period of time, the sales process for the Company's solutions is lengthy and can exceed one year. Accordingly, software revenue is difficult to predict, and the delay of any order could cause the Company's quarterly revenues to fall substantially below expectations. Moreover, to the extent that the Company succeeds in shifting customer purchases away from point solutions and toward integrated suites of its software and service solutions, the likelihood of delays in ordering may increase and the effect of any delay may become more pronounced. The Company ships software products within a short period after receipt of an order and usually does not have a material backlog of unfilled orders of software products. Consequently, revenues from software licenses, including license renewals in any quarter are substantially dependent on orders booked and shipped in that quarter. Historically, a majority of each quarter's revenues from software licenses has been derived from license agreements that have been consummated in the final weeks of the quarter. Therefore, even a short delay in the consummation of an agreement may cause revenues to fall below expectations for that quarter. The company's revenues in certain quarters of fiscal 1999 were lower than expected due to delayed decision making of economic difficulties among certain customers. These lower revenues resulted in lower than planned operating results and a net operating loss in each quarter of fiscal 1999. Additionally, since the Company's expense levels are based in part on anticipa...
PROVISION FOR INCOME TAXES. The pro forma adjustment to the provision for income taxes was calculated using the statutory federal income tax rate of 35.0%, as detailed below: Adjustment $ (0.3 ) $ (0.9 ) $ (2.6 ) Tax expense 0.1 0.3 0.9 Adjustment 9.5 9.3 36.8 Tax benefit (3.3 ) (3.3 ) (12.9 ) Adjustment 0.2 (0.4 ) (1.7 ) Tax (benefit) expense (0.1 ) 0.2 0.6 Total Adjustment for Pro Forma Tax Benefit $ (3.3 ) $ (2.8 ) $ (11.4 )
