LifeLock 2013 Annual Report Download - page 85

The following weighted-average number of outstanding employee stock options, restricted stock units, warrants to purchase common and convertible
redeemable preferred stock, and convertible redeemable preferred stock were excluded from the computation of diluted net loss per share for the years ended
December 31:
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Stock options outstanding 4,315,153 - 2,551,074
Restricted stock units 45,673 - -
Common equivalent shares from stock warrants - 3,585,996 2,727,702
Common shares from convertible redeemable
preferred stock - 8,770,427 29,239,607
4,360,826 12,356,423 34,518,383
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We have deferred tax assets and liabilities that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income tax purposes. In assessing the realizability of deferred tax assets, we consider whether it is
more likely than not that some portion or all of the deferred tax assets will be realized. For the year ended December 31, 2012, we recorded a valuation
allowance on our net deferred tax asset as prior to 2012, we had recorded operating losses. As a result of operating income generated in 2012 and 2013,
management has concluded that our deferred tax assets with the exception of certain state net operating losses that are set to expire in 2014 and 2015 will be
realized. Realization of our deferred tax assets, net of liabilities, depends upon the achievement of projected future taxable income. As a result of the 2013
operating income and our change in judgment regarding the realization of our deferred tax assets, our valuation allowance decreased approximately $47,917 in
the year ended December 31, 2013. During the years ended December 31, 2012 and 2011, our valuation allowance decreased $12,418 and $974,
respectively. The decrease in the valuation allowance during 2012 was principally attributable to the generation of operating profits and net deferred tax
liabilities established in connection with the acquisition of ID Analytics.
The components of income tax provision were as follows at December 31:
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Current:
U.S. federal $ 30 $ 388 $ 36
U.S. state and local taxes 58 67 178
Total current 88 455 214
Deferred:
U.S. federal (36,631) (11,877) -
U.S. state and local taxes (2,503) (2,308) -
Foreign (63)
Total deferred (39,197) (14,185) -
Total income tax (benefit) expense $ (39,109) $ (13,730) $ 214
A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax rate is as follows at December 31:
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Statutory federal income tax rate 35.0% 35.0% 34.0%
State tax expense, net of federal benefit 3.8% 6.1% -4.5%
Nondeductible expense related to stock warrants 0.0% -11.2% -72.8%
Nondeductible expense related to embedded derivative 0.0% 10.0% 0.0%
Other nondeductible expenses 6.2% 2.7% -2.5%
Effect of change in income tax rates -2.4% 14.4% 5.1%
Impact of state net operating losses 7.0% -11.4% 15.5%
Stock options 0.1% 0.7% -4.8%
Other 0.0% 1.0% 0.6%
Expired net operating losses 16.3% 0.0% 0.0%
Reduction in valuation allowance due to business
combination 0.0% -145.1% 0.0%
Change in valuation allowance -359.1% -42.7% 24.1%
Total expense -293.1% -140.5% -5.3%
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