Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 2001, 2000 and 1999
The Internal Revenue Service is auditing the Company's payroll tax returns for the year 2000. The Company expects this audit to be
concluded in 2002. No amounts have been accrued in the financial statements for any liability that may result as the amount, if any, the
Company will be required to pay related to this matter is not determinable.
The Company has pledged a portion of its cash as collateral for standby letters of credit, a bank guaranty and in the form of certificates of
deposit that guarantee the future monthly lease payments for certain of its property leases. At December 31, 2001, the total amount of collateral
pledged under these agreements was approximately $4.7 million, which consists of $4.0 million of standby letters of credit, $418,000 of
certificates of deposit and $342,000 of bank guaranty.
The Company was audited by the Department of Labor in February 2001. The Department of Labor determined that numerous employees,
primarily former employees of Go2Net, were improperly classified as exempt and should have been classified as non exempt. As a result, for
the year ended December 31, 2000, the Company recorded an estimated accrual in the amount of $3.0 million for the past wages that are due
for overtime worked. Based on the overtime questionnaires the Company has received from the applicable employees and a revision to the
methodology used to calculate overtime pay approved by the Department of Labor, the Company has revised the estimate for this liability to be
$629,000 of which $507,000 has been paid through December 31, 2001. The Company anticipates that this matter will be resolved in 2002.
Note 9: Income Taxes
The provision for income taxes consists of the following components (in thousands):
$ (664 )
$ (137 )
$ (664 )
$ (137 )
The current income tax expense in the year ended December 31, 2001 and December 31, 2000 is related to the Company's international
operations and withholding taxes.
The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before taxes
as follows (in thousands):
Income tax (provision) / benefit at federal statutory rate of 35%
Nondeductible charges for purchased research and development
Change in valuation allowance resulting from items other than
those attributable to paid in capital and acquisition
Net tax (provision)/benefit