Additionally, in connection with the Company’s acquisition of the publishing rights to the franchise of  Duke Nukem PC and video games in December 2000, the Company is contingently obligated to pay $6,000 in cash upon delivery of the final version of  Duke Nukem Forever for the PC. In May 2003, the Company agreed to make pay- ments of up to $6,000 in cash upon the achievement of certain sales targets for  Max Payne 2 . The Company also agreed to make addition- al payments of up to $2,500 to the former owners of Cat Daddy based on a percentage of Cat Daddy’s future profits for the first three years after acquisition. See Note 4. The payables will be recorded when the conditions requiring their payment are met. The differences between the provision for income taxes and the income tax computed using the U.S. statutory federal income tax rate to pretax income are as follows: The Company maintains a 401(k) retirement savings plan and trust (the “401(k) Plan”). The 401(k) Plan is offered to all eligible employees and participants may make voluntary contributions. The Company did not match employee contributions during the year ended October 31, 2001. The Company began matching contributions in July 2002. The matching contribution expense incurred by the Company during the years ended October 31, 2003 and 2002 was $384 and $95, respectively. 14. EMPLOYEE SAVINGS PLAN 15. INCOME TAXES The Company is subject to foreign income taxes in certain coun- tries where it does business. Domestic and foreign income (loss) before income taxes and cumulative effect of change in accounting principle is as follows: Years Ended October 31, 2003 2002 2001 (Restated) (Restated) Domestic $134,746 $115,142 $(29,594) Foreign 30,569 5,796 25,470 Total $165,315 $120,938 $ (4,124) Years Ended October 31, 2003 2002 2001 (Restated) (Restated) Current: Federal $33,167 $35,275 $ — State and local 6,287 4,381 500 Foreign 14,703 2,993 5,450 Deferred 13,040 6,726 (8,400) Total $67,197 $49,375 $(2,450) Income tax expense (benefit) is as follows: At October 31, 2003 and October 31, 2002, the Company had capital loss carryforwards totaling approximately $21,000. The capital loss carryforwards will expire in the periods fiscal 2006 through fiscal 2008. Failure to achieve sufficient levels of taxable income from capi- tal transactions will affect the ultimate realization of the capital loss carryforwards. At October 31, 2002 management had a strategy of The components of the net deferred tax asset as of October 31, 2003 and 2002 consist of the following: Years ended October 31, 2003 2002 2001 (Restated) (Restated) Statutory federal tax  expense (benefit) $57,860 $42,324 $(1,442) Changes in expenses resulting from: State taxes, net of federal benefit 4,035 2,995 (1,729) Foreign tax expense differential 2,191 568 (3,355) Goodwill and intangible  amortization 363 513 1,656 Other permanent items 1,482 1,874 123 Foreign income exclusion (9,163) — — Valuation allowances 10,429 1,101 968 Impairment of intangibles — — 1,329 Income tax expense (benefit) $67,197 $49,375 $(2,450) 2003 2002 (Restated) Current: Deferred tax assets: Sales and related allowances $ 8,173 $ 5,861 Depreciation and amortization 160 384 Total current deferred tax assets 8,333 6,245 Non-current deferred tax assets: Foreign net operating losses 3,240 2,016 State net operating losses 3,311 2,069 Capital loss carryforward 7,963 7,983 14,514 12,068 Less: Valuation allowances (14,514) (4,085) Total non-current deferred tax assets — 7,983 Non-current deferred tax liability: Capitalized software (8,486) (3,885) Net deferred tax (liability) asset $ (153) $10,343 43