Enom 2011 Annual Report Download - page 65

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Income Tax (Benefit) Provision
2011 compared to 2010. During the year ended December 31, 2011, we recorded an income tax provision of $4.2 million compared to $3.9 million
during the same period in 2010, representing a $0.3 million or 7% increase. The increase was primarily due to the recognition of a full valuation allowance
against our state deferred tax assets during 2011. Our state deferred taxes reached a net deferred tax asset position during 2011, excluding the deferred tax
liability for tax deductible goodwill, which is excluded because the ultimate realization of which is uncertain and thus not available to assure the realization of
deferred tax assets. Our valuation allowance, which increased by $8.3 million from $14.4 million during the year ended December 31, 2010 to $22.7 million
in the same period in 2011 now applies to both federal and state deferred tax assets. In addition, the tax increase was also impacted by movement in the
company's state tax apportionment rates due to changes in state tax laws and the Company's state tax footprint during 2011, partially offset by a one-time
benefit of $0.7 million associated with a business acquisition during 2011.
2010 compared to 2009. During the year ended December 31, 2010, we recorded an income tax provision of $3.9 million compared to $2.8 million
during the same period in 2009, representing a $1.1 million or 41% year-over-year increase despite no significant changes in our year-over-year operating
losses before income taxes. The $1.1 million increase was largely due to a change in our valuation allowance, which increased by $3.0 million from
$11.4 million during the year ended December 31, 2009, to $14.4 million in the same period in 2010, primarily as a result of increases in net deferred tax
assets, which includes the impact of tax amortization of deductible goodwill, the ultimate realization of which is uncertain and thus not available to assure the
realization of deferred tax assets. In addition, the increase was also due to corresponding movements in state deferred tax balances as a result of changes in
state tax laws and the Company's state tax apportionment rates during 2010.
Quarterly Results of Operations
The following unaudited quarterly consolidated statements of operations for the quarters in the years ended December 31, 2010 and 2011, have been
prepared on a basis consistent with our audited consolidated annual financial statements, and include, in the opinion of management, all normal recurring
adjustments necessary for the fair statement of the financial information contained in those statements. The period-to-period comparison of financial results is
not necessarily indicative of future results and should be read in conjunction with our consolidated annual financial statements and the related notes included
elsewhere in this Annual Report on Form 10-K.
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