Shutterfly 2007 Annual Report Download - page 75

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Table of Contents
SHUTTERFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts) — (Continued)
Note 9 — Income Taxes
The following table reflects the components of the provision for income taxes of the Company:
The Company’s actual tax expense (benefit) differed from the statutory federal income tax rate of 34.0%, as shown in the following
schedule:
At December 31, 2006, the Company had approximately $43,000 and $41,000 of federal and state net operating loss carryforwards,
respectively, to reduce future regular taxable income. These carryforwards will expire beginning in the year 2020 through 2022 for federal and
2008 through 2012 for state purposes, if not utilized.
The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in the case of an “ownership change” of a
corporation or separate return loss year limitations. Any ownership changes, as defined, may restrict utilization of carryforwards.
The Company also had federal and state research and development credit carryforwards of approximately $700 and $500 for federal and
state income tax purposes, respectively, at December 31, 2006. The research and development credits may be carried forward over a period of
20 years for federal tax purposes, and indefinitely for California tax purposes.
70
December 31,
2006
2005
2004
Federal:
Current
$
610
$
(187
)
$
194
Deferred
2,809
(20,230
)
—
Total
$
3,419
$
(20,417
)
$
194
State:
Current
$
133
$
(40
)
$
64
Deferred
390
(3,603
)
—
Total
$
523
$
(3,643
)
$
64
Total income tax expense (benefit):
Current
$
743
$
(227
)
$
258
Deferred
3,199
(23,833
)
—
Total
$
3,942
$
(24,060
)
$
258
December 31,
2006
2005
2004
Income tax expense at statutory rate
34.0
%
34.0
%
34.0
%
State income taxes
5.8
%
5.8
%
5.8
%
Stock
-
based compensation
4.3
%
10.7
%
7.4
%
Non
-
qualified deductions
—
(
13.1
)%
—
Change in valuation allowance
—
(
527.7
)%
(38.0
)%
Other
(3.7
)%
(3.5
)%
(2.7
)%
40.4
%
(493.8
)%
6.5
%