Classmates.com 2003 Annual Report Download - page 63

The diluted per share computations exclude options, unvested common stock and warrants, which are antidilutive. The number of
antidilutive shares at December 31, 2003 and June 30, 2003, 2002 and 2001 was 1.1 million, 4.8 million, 15.2 million and 4.5 million,
respectively.
8. EMPLOYEE BENEFIT PLANS
The Company has a savings plan (the "Savings Plan") that qualifies as a defined contribution plan under Section 401(k) of the Internal
Revenue Code. Under the Savings Plan, participating employees may defer a percentage (not to exceed 40%) of their eligible pretax earnings
up to the Internal Revenue Service annual contribution limit. All full-time employees on the payroll of the Company are eligible to participate
in the Plan. The Company is not required to contribute to the Savings Plan and has made no contributions since the inception of the Savings
Plan.
9. INCOME TAXES
For the six months ended December 31, 2003, the Company recorded a tax provision of $1.7 million on pre-tax income of $35.0 million,
resulting in an effective tax rate of 4.9%. The effective tax rate differs from the statutory tax rate primarily due to the release of valuation
allowance attributable to the expected utilization of net operating loss and tax credit carryforwards in the years ending December 31, 2004 and
2005, offset by state income taxes. In September 2002, the State of California enacted legislation that suspends the utilization of net operating
loss carryforwards to offset current taxable income for a two-year period beginning in the year ended June 30, 2003. As a result, the Company
recorded a California state income tax provision for the period.
F-27
For the year ended June 30, 2003, the Company recorded a tax benefit of $1.8 million on pre-tax income of $26 million for an effective
tax rate benefit of 6.9%. The effective tax rate benefit differs from the statutory tax rate primarily due to the release of valuation allowance
attributable to the actual utilization of net operating loss carryforwards, the benefit of which had not been previously recognized, as well as the
expected utilization of net operating loss and tax credit carryforwards in the period ended June 30, 2004, offset by state income taxes.
In the years ended June 30, 2002 and 2001, the Company generated pre-tax losses of $47.8 million and $205.8 million, respectively, and
as a result, did not record a provision or benefit for income taxes.
The provision (benefit) for income taxes for the six months ended December 31, 2003 and the year ended June 30, 2003 is comprised of
the following (in thousands):
Net income (loss)
$
33,327
$
27,792
$
(47,810
)
$
(205,756
)
Denominator:
Weighted average common shares
—
basic
64,419
62,148
54,841
37,122
Adjustment to weighted average for common shares
subject to repurchase
(256
)
(460
)
(1,532
)
(3,010
)
Adjusted weighted average common shares
—
basic
64,163
61,688
53,309
34,112
Effect of dilutive securities:
Stock options, restricted shares, warrants and employee
stock purchase plan shares
5,341
5,386
—
—
Weighted average common shares
—
diluted
69,504
67,074
53,309
34,112
Net income (loss) per share
—
basic
$
0.52
$
0.45
$
(0.90
)
$
(6.03
)
Net income (loss) per share
—
diluted
$
0.48
$
0.41
$
(0.90
)
$
(6.03
)
Six Months
Ended
December 31,
2003
Year Ended
June 30,
2003
Current:
Federal $
6,038
$ —