foreign taxes of approximately $32 million, which will be recognized as other income by the Company in the first quarter of fiscal 1999. As a result of this sale, the Company's ownership interest in ARM has fallen to 19.7%, and the Company no longer has significant influence over the management or operating policies of ARM. Consequently, beginning in the first quarter of fiscal 1999, the Company will no longer account for its remaining investment in ARM using the equity method and has categorized its remaining shares as available for sale requiring they be carried at fair value, with future unrealized gains and losses reported as a component of shareholders' equity. Subsequent to the sale of shares, on October 14, 1998, the carrying value of the Company's investment in ARM was approximately $17 million, and the fair value, based on listed market quotes, was approximately $135 million. 

During 1998, the Company experienced a $27 million increase in interest income net of interest expense as a result of higher cash and investment balances and lower average short-term borrowings that was offset by decreased foreign exchange gains and increased other expense. 

Interest and other income (expense), net, decreased to $25 million in 1997 from $88 million in 1996. The decrease was primarily due to gains realized in 1996 on sales of available-for-sale and other securities and decreased foreign exchange gains in 1997 compared to 1996 partially offset by higher average cash balances during 1997. 

PROVISION (BENEFIT) FOR INCOME TAXES 

As of September 25, 1998, the Company had deferred tax assets arising from deductible temporary differences, tax losses, and tax credits of $688 million before being offset against certain deferred tax liabilities for presentation on the Company's balance sheet. A substantial portion of this asset is realizable based on the ability to offset existing deferred tax liabilities. As of September 25, 1998, a valuation allowance of $213 million was recorded against the deferred tax asset for the benefits of tax losses that may not be realized. Realization of approximately $73 million of the asset representing tax loss and credit carryforwards is dependent on the Company's ability to generate approximately $209 million of future U.S. taxable income. Management believes that it is more likely than not that forecasted U.S. income, including income that may be generated as a result of certain tax planning strategies, will be sufficient to utilize the tax carryforwards prior to their expiration in 2011 and 2012 to fully recover this asset. However, there can be no assurance that the Company will meet its expectations of future U.S. taxable income. As a result, the amount of the deferred tax assets considered realizable could be reduced in the near and long term if estimates of future U.S. taxable income are reduced. Such an occurrence could materially adversely affect the Company's consolidated financial results. The Company will continue to evaluate the realizability of the deferred tax assets quarterly by assessing the need for and amount of the valuation allowance. The Company's effective tax rate for fiscal 1998 was only 6.1%