Classmates.com 2003 Annual Report Download - page 64

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Components of the deferred tax assets, liabilities and related valuation allowance at December 31, 2003 and June 30, 2003 and 2002 are as
follows (in thousands):
F-28
The following is a reconciliation of the statutory federal income tax rate to the Company's effective income tax rate (in thousands):
The increase in the Company's net deferred tax assets during the six months ended December 31, 2003 of $10.1 million is primarily
attributable to additional net operating loss carryforwards that are available to offset future taxable income as a result of the issuance of
Notice 2003
-65 by the Internal Revenue Service, partially offset by the utilization of net operating loss carryforwards and a change in deferred
tax liabilities during the period. Pursuant to Notice 2003-65, taxpayers were permitted to modify the calculation of the annual limitation
associated with acquired net operating loss carryforwards under Internal Revenue Code section 382. As a result, the Company increased its net
State
1,313
2,555
7,351
2,555
Deferred:
Federal
(4,948
)
(3,473
)
State
(684
)
(863
)
(5,632
)
(4,336
)
Provision (benefit) for income taxes $
1,719
$
(1,781
)
December 31,
2003
June 30,
2003
June 30,
2002
Deferred tax assets:
Net operating loss carryforwards
$
114,804
$
104,705
$
110,482
Equity compensation
—
—
6,532
Depreciation and amortization
6,195
7,556
9,454
Other
3,078
5,454
4,368
Total deferred tax assets
124,077
117,715
130,836
Less: valuation allowance
(87,212
)
(95,423
)
(110,360
)
Total deferred tax assets
36,865
22,292
20,476
Deferred tax liabilities:
Amortization of acquired intangible assets
(10,052
)
(13,243
)
(20,476
)
Other
(440
)
(993
)
—
Deferred tax liabilities
(10,492
)
(14,236
)
(20,476
)
Net deferred tax assets
$
26,373
$
8,056
$
—
Six Months
Ended
December 31,
2003
Year Ended June 30,
2003
2002
2001
Taxes on income at the statutory federal rate
$
12,266
$
9,104
$
(16,734
)
$
(72,015
)
State income taxes, net of federal tax benefits
408
1,100
—
—
Non
-
deductible acquisition
-
related costs
—
—
4,955
22,911
Other differences, net
252
222
54
—
Change in valuation allowance
(11,207
)
(12,207
)
11,725
49,104
Provision (benefit) for income taxes
$
1,719
$
(1,781
)
$
—
$
—