Enom 2012 Annual Report Download - page 108

F-25
2011 2012
Deferred tax assets
Accrued liabilities not currently deductible $ 5,648 $ 5,623
Intangible assets—excess of financial statement amortization over tax basis 12,923 13,192
Indirect federal impact of deferred state taxes 314 126
Deferred revenue 6,507 5,735
Net operating losses 19,448 21,527
Stock-based compensation 12,083 11,359
Other 601 265
57,524 57,827
Deferred tax liabilities
Deferred registration costs (19,410)(20,582)
Prepaid expenses (2,037)(1,797)
Goodwill not amortized for financial reporting (18,293)(21,098)
Intangible assets—excess of financial statement basis over tax basis (8,243)(5,483)
Property and equipment (5,125)(8,186)
(53,108)(57,146)
Valuation allowance (22,662)(21,124)
Net deferred tax liabilities $ (18,246) $ (20,443)
Current $ (18,288) $ (18,892)
Non-current 42 (1,551)
$(18,246) $ (20,443)
The Company had federal net operating loss ("NOL") carryforwards of approximately $54,000 and $66,000 as of
December 31, 2011 and 2012, respectively, which expire between 2020 and 2032. In addition, as of December 31, 2011 and
2012 the Company had state NOL carryforwards of approximately $12,000 and $13,000, which expire between 2013 and 2032.
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 $22,662 and $21,124 against its deferred taxes was required at December 31, 2011
and 2012, respectively. The change in the valuation allowance for the years ended December 31, 2010, 2011 and 2012 was an
increase of $2,985, $8,241 and a decrease of $(1,538) 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, 2012. As the Company has no sustained
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 2012
were $3,492. 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 $573 of cumulative
undistributed earnings of various non-U.S. subsidiaries. Such earnings are intended to be reinvested in the non-