Classmates.com 2008 Annual Report Download - page 144

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Table of Contents
UNITED ONLINE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. INCOME TAXES (Continued)
The following is a reconciliation of the statutory federal income tax rate to the Company's effective income tax rate (in thousands):
The significant components of net deferred tax balances were as follows (in thousands):
The Company had a valuation allowance of $9.7 million and $8.6 million at December 31, 2008 and 2007, respectively, to reduce deferred
tax assets to an amount that is more likely than not to be realized in future periods. Based on an assessment of all available evidence, the
Company concluded that, with the exception of certain stock-based compensation that is expected to be limited under
F-49
Year Ended December 31,
2008
2007
2006
Federal taxes at statutory rate of 35%
$
(24,980
)
$
34,541
$
27,133
State taxes, net
912
4,660
3,858
Change in uncertain tax positions
1,942
336
—
Goodwill impairment
39,900
—
—
Re
-
measurement of deferred tax assets
406
(331
)
2,265
Other differences
986
(837
)
(427
)
Increase in valuation allowance
4,121
2,546
3,464
Provision for income taxes
$
23,287
$
40,915
$
36,293
December 31,
2008
2007
Deferred tax assets:
Net operating loss carryforwards
$
61,242
$
62,743
Depreciation and amortization
—
2,429
Stock
-
based compensation
11,243
10,411
Other
6,885
8,042
Total gross deferred tax assets
79,370
83,625
Less: valuation allowance
(9,721
)
(8,623
)
Total deferred tax assets after valuation allowance
69,649
75,002
Deferred tax liabilities:
Amortization of acquired intangible assets
(109,200
)
(10,393
)
Depreciation and amortization
(5,113
)
—
Total deferred tax liabilities
(114,313
)
(10,393
)
Net deferred tax assets (liabilities)
$
(44,664
)
$
64,609
December 31,
2008
2007
Current portion of net deferred tax assets
$
16,170
$
7,050
Long
-
term portion of net deferred tax assets (liabilities)
(60,834
)
57,559
Net deferred tax assets (liabilities)
$
(44,664
)
$
64,609