Enom 2011 Annual Report Download - page 103

2010 2011
Deferred tax assets
Accrued liabilities not currently deductible $ 5,424 $ 5,648
Intangible assets—excess of financial statement amortization over tax basis 9,352 12,923
Indirect federal impact of deferred state taxes 678 314
Deferred revenue 4,973 6,507
Net operating losses 22,532 19,448
Stock-based compensation 3,783 12,083
Other 394 601
47,136 57,524
Deferred tax liabilities
Deferred registration costs (16,461) (19,410)
Prepaid expenses (2,009) (2,037)
Goodwill not amortized for financial reporting (14,155) (18,293)
Intangible assets—excess of financial statement basis over tax basis (9,201) (8,243)
Property and equipment (5,292) (5,125)
(47,118) (53,108)
Valuation allowance (14,421) (22,662)
Net deferred tax liabilities $ (14,403) $ (18,246)
Current $ (15,248) $ (18,288)
Non-current 845 42
$ (14,403) $ (18,246)
The Company had federal net operating loss ("NOL") carryforwards of approximately $62,000 and $54,000 as of December 31, 2010 and 2011,
respectively, which expire between 2020 and 2029. In addition, as of December 31, 2010 and 2011 the Company had state NOL carryforwards of
approximately $10,000 and $12,000, which expire between 2013 and 2030.
Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, provide for annual limitations on the utilization of net operating loss and
credit carryforwards if the Company were to undergo an ownership change, as defined in Section 382. Changes in the Company's equity structure and the
acquisitions by the Company of eNom, Trails.com, Maps a La Carte, Pagewise, Pluck, and Indieclick resulted in such an ownership change. Currently, the
Company does not expect the utilization of its net operating loss and tax credit carry-forwards in the near term to be materially affected as no significant
limitations are expected to be placed on these carry-forwards as a result of its previous ownership changes.
The Company reduces the deferred tax asset resulting from future tax benefits by a valuation allowance if, based on the weight of the available
evidence, it is more likely than not that some portion or all of these deferred taxes will not be realized. The Company has determined it is more likely than not
that it will not realize the benefit of all its deferred tax assets and accordingly a valuation allowance of $ 14,421 and $22,662 against its deferred taxes was
required at December 31, 2010 and 2011, respectively. The change in the valuation allowance for the years ended December 31, 2009, 2010, and 2011 was an
increase of $8,743, $2,985 and $8,241 respectively. The valuation allowance is required as a result of the timing of the reversal of deferred tax liabilities
associated with tax deductible goodwill which is not certain and thus not available to assure the realization of deferred tax assets. After consideration of these
limitations associated with deferred tax liabilities, the Company has deferred tax assets in excess of deferred tax liabilities at December 31, 2011. As the
Company has no history of generating book income, the ultimate future realization of these excess deferred tax assets is not more likely than not and thus
subject to a valuation allowance.
Accounting standards related to stock-based compensation exclude tax attributes related to the exercise of employee stock options from being realized
in the financial statements until they result in a decrease to taxes payable. Therefore, we have not included unrealized stock option tax attributes in our
deferred tax assets. Cumulative tax attributes excluded through 2011 were $1,066. The benefit of these deferred tax assets will be recorded to equity when
they reduce taxes payable.
The Company has not provided for U.S. federal income and foreign withholding taxes on $226 of cumulative undistributed earnings of various non-
U.S. subsidiaries. Such earnings are intended to be reinvested in the non-
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