Pandora 2016 Annual Report Download - page 106
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Eleven Months Ended€
€December 31, Twelve Months Ended December 31,
2013 2014 2015
U.S. federal taxes at statutory rate 34%34 %34%
State taxes, net of federal benefit — (1)—
Permanent differences 5 4 3
Foreign rate differential (4)(7)(1)
Federal and state credits, net of reserve 8 11 2
Impact of acquired DTAs and DTLs — — 1
Change in valuation allowance (46)(55)(33)
Change in rate — 6 (1)
Deferred adjustments 3 6 (4)
Effective tax rate —%(2)% 1%
The major components of deferred tax assets and liabilities consist of the following:
As of December 31,
2014 2015
(in thousands)
Deferred tax assets
Net operating loss carryforwards $27,487 $91,658
Tax credit carryforwards 10,839 14,204
Allowances and other 13,832 21,802
Stock options 24,215 29,927
Depreciation and amortization 255 —
Total deferred tax assets $76,628 $157,591
Valuation allowance (73,983)(92,772)
Total deferred tax assets, net of valuation allowance $2,645 $64,819
Deferred tax liabilities
Convertible debt — (37,580)
Depreciation and amortization (2,645)(27,252)
Total deferred tax liabilities $(2,645) $ (64,832)
Net deferred tax assets (liabilities) $—$(13)
During the year ended December 31, 2015, we released $1.8 million of our valuation allowance as a result of
acquisitions. Deferred tax liabilities were established for the book-tax basis difference related to acquired intangible assets. The
net deferred tax liabilities provided an additional source of income to support the realizability of pre-existing deferred tax
assets.
At December€31, 2015, we had federal net operating loss carryforwards of approximately $613.0 million and tax credit
carryforwards of approximately $9.7 million. If realized, approximately $377.0 million of the net operating loss carryforwards
will be recognized as a benefit through additional paid in capital. The federal net operating losses and tax credits expire in years
beginning in 2021. At December€31, 2015, we had state net operating loss carryforwards of approximately $480.0 million
which expire in years beginning in 2016. In addition, we had state tax credit carryforwards of approximately $10.7 million that
do not expire and approximately $4.9 million of credits that will expire beginning in 2024.
At December€31, 2015, we had foreign net operating loss carryforwards of approximately $4.3 million which expire in
years beginning in 2033.
Included in the net operating loss carryforward amounts above are approximately $67.6 million of federal, $42.9 million
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Pandora Media,€Inc.
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