Litigation Settlement Expense. During 1999, we incurred a charge of $97.0 million in connection with our entering into a memorandum of understanding regarding the settlement of the private securities and related litigation against us. The charge consists of $3.2 million in cash, $91.0 million in common stock and approximately $2.8 million in legal fees required to obtain and complete the settlement. The charge excludes approximately $13.8 million of insurance proceeds which, according to the terms of the memorandum of understanding, were contributed directly by our insurance carriers.

Other Income (Expense), Net. Other income (expense), net, increased to net other income of $2.5 million for 1999 from a net other expense of $4.6 million for 1998. For 1999, other income included approximately $3.7 million of net realized gains on the sale of long-term investments, offset by a downward adjustment of $0.5 million to the carrying value of certain investments and approximately $0.3 million of net foreign currency transaction losses. During 1998, other income (expense), net, decreased to a net other expense of $4.6 million from net other income of $10.5 million for 1997. Other income (expense), included $4.8 million of foreign currency transaction losses and $8.0 million of foreign currency transaction gains in 1998 and 1997, respectively. Approximately $7.5 million of the $8.0 million of foreign currency transaction gains recognized in 1997 resulted primarily from a change in our foreign currency denominated intercompany accounts payable and accounts receivable balances arising from the restatement of our 1996, 1995 and 1994 financial statements. Other components of other income (expense) for 1997 included $8.1 million of net realized gains on the sale of long-term investments offset by a downward adjustment of $4.5 million to the carrying value of certain investments.

Income Taxes

In 1999, income tax expense of $21.9 million resulted primarily from foreign withholding taxes and taxable earnings in certain foreign jurisdictions. We have provided a valuation allowance for the net deferred tax assets that are dependent on taxable income beyond 2000 in foreign jurisdictions, and domestic taxable income. The expected tax expense of $3.8 million, computed by applying the federal statutory rate of 35% to the income before income taxes, was offset primarily by a $12.7 million decrease in the valuation allowance and a $19.4 million net foreign tax expense.

In 1998, income tax expense resulted primarily from foreign withholding taxes and taxable earnings in certain foreign jurisdictions. We have provided a valuation allowance for the net deferred tax assets that are dependent on future taxable income. The expected tax expense of $19.1 million, computed by applying the federal statutory rate of 35% to the income before income taxes, was offset primarily by an $11.2 million decrease in the valuation allowance and a $4.4 million net foreign tax benefit.

In 1997, income tax expense resulted primarily from foreign withholding taxes and taxable earnings in certain foreign jurisdictions. The expected tax benefit computed by applying the federal statutory rate to the loss before income taxes was substantially offset by a corresponding increase in the valuation allowance for net deferred tax assets. We have provided a valuation allowance for the net deferred tax assets in excess of amounts recoverable through carryback of net operating losses. Accordingly, the net deferred tax asset at December 31, 1997 of $34 million was provided for anticipated IRS tax refunds, which were received during 1998.