Classmates.com 2005 Annual Report Download - page 100

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6. 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 (the “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. At December 31, 2004, the Company had made no contributions since the inception of the Savings Plan; however, on
January 1, 2005, the Company began matching 25% of the employee’s contributions, up to plan limits. The Company recognized expenses of
approximately $0.6 million during the year ended December 31, 2005 related to the 401(k) match.
7. INCOME TAXES
The provision (benefit) for income taxes for the years ended December 31, 2005 and 2004, the six months ended December 31, 2003 and
the year ended June 30, 2003 is comprised of the following (in thousands):
The following is a reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate (in thousands):
F- 31
Year Ended December 31,
Six Months Ended
December 31,
Year Ended
June 30,
2005
2004
2003
2003
Current:
Federal
$
33,043
$
23,385
$
6,038
$
—
State
5,625
4,042
1,313
2,555
38,668
27,427
7,351
2,555
Deferred:
Federal
(4,684
)
2,577
5,675
8,734
State
3,529
3,423
985
(863
)
Change in valuation allowance
2,732
(67,478
)
(12,292
)
(12,207
)
1,577
(61,478
)
(5,632
)
(4,336
)
Provision (benefit) for income taxes
$
40,245
$
(34,051
)
$
1,719
$
(1,781
)
Year Ended December 31,
Six Months Ended
December 31,
Year Ended
June 30,
2005
2004
2003
2003
Taxes on income at the statutory federal
rate
$
30,580
$
29,200
$
12,266
$
9,104
State income taxes, net of federal tax
benefits
4,454
4,853
1,493
1,100
Re-measurement of net deferred tax
assets
2,473
4
—
—
Other differences, net
6
(630
)
252
222
Change in valuation allowance
2,732
(67,478
)
(12,292
)
(12,207
)
Provision (benefit) for income taxes
$
40,245
$
(34,051
)
$
1,719
$
(1,781
)