Ronny, assuming the comments Fagan made during the cc in Oct 2004 were correct, or I interpreted them correctly, then the majority of the reversal will hit Paid In Capital and not a credit to expense. If that is the case, the street will give them no credit for it. In addition, they probably wont give much credit for the reversal anyway since it is not part of their overall business even if 100% was reversed against income tax expense since it is non recurring.
I think the signal it sends is huge when you consider the value of the allowance is $75 million which means that in order to use that up, they will need to generate about 3 times that in taxable income in the future AND they are NOT including revenue from arbitrations and litigation in their internal projections. I came across that in the 10k and q's when I was trying to find the quote from Fagan. In their analysis about whether or not it is more likely than not they will be able to utilize the NOL in the future, they stated that they are projecting nothing from the arbitrations. I don't agree with that, but knowing that they are only projecting future income from licensees to use up the reserve is very bullish IMO.
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