LifeLock 2013 Annual Report Download - page 53

Other expense for the year ended December 31, 2013 was $0.3 million compared with other expense of $3.3 million for the year ended December 31,
2012. The decrease in other expense from 2012 to 2013 resulted primarily from an unrealized gain on warrant liabilities of $3.1 million, partially offset by an
unrealized loss on the convertible redeemable preferred stock embedded derivative of $2.8 million recognized in 2012. Additionally, interest expense decreased
as we carried no debt during the year ended December 31, 2013.
Other expense for the year ended December 31, 2012 was $3.3 million compared with $8.9 million for the year ended December 31, 2011. The
decrease in our other expense from 2011 to 2012 resulted primarily from an unrealized gain on warrant liabilities of $3.1 million, compared to an unrealized
loss of $8.7 million in 2011, partially offset by an unrealized loss on the convertible redeemable preferred stock embedded derivative of $2.8 million, an
increase in interest expense of $2.0 million related to the term loan used to acquire ID Analytics, and the write off of debt issuance costs of $1.4 million when
the term loan was paid off with proceeds from our IPO .
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Income tax (benefit) expense $ (39,109) $ (13,730) $ 214 184.8% NM
Effective tax rate -293.1% -140.5% -5.3%
Income tax benefit for the year ended December 31, 2013 was $39.1 million compared with income tax benefit of $13.7 million for the year ended
December 31, 2012. In consideration of all available positive and negative evidence, including our historical operating results, current financial condition, and
potential future taxable income, we released substantially all of our valuation allowance on deferred tax assets in the fourth quarter of 2013. As a result, we
recorded an income tax benefit of $39.1 million for the year ended December 31, 2013 compared with income tax benefit of $13.7 million for the year ended
December 31, 2012.
Income tax benefit for the year ended December 31, 2012 was $13.7 million compared with income tax expense of $0.2 million for the year ended
December 31, 2011. As a result of our acquisition of ID Analytics, we recorded a deferred tax liability related to the book and tax basis differen ce resulting
from our purchase accounting. The increase in our deferred tax liability resulted in a reduction of our valuation allowance for net deferred tax assets, which is
recorded as an income tax benefit of $14.2 million. This benefit was offset by a $0.5 million income tax expense that related to federal alternative minimum tax
expenses and gross receipts and minimum state income taxes, which are due regardless of whether we have taxable income.
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As of December 31, 2013, we had $123.9 million in cash and cash equivalents, which consisted of cash, money market funds, and open commercial
paper, and $48.7 million in marketable securities, which consisted of corporate bonds, municipal bonds, and certificates of deposit. We classify our
marketable securities as short-term regardless of contractual maturity based on our ability to liquidate such investments for use in current
operations. Additionally, we have an $85 million revolving line of credit, although we made no draws on the line of credit during the year ended December 31,
2013. As of December 31, 2013, we had not outstanding debt. We believe that our existing cash and cash equivalents and marketable securities together with
cash generated from operations will be sufficient to fund our operations for at least the next 12 months.
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For the year ended December 31, 2013, operating activities generated $76.8 million in cash as a result of net income of $52 .5 million, adjusted by
non-cash items such as depreciation and amortization of $12.8 million, share-based compensation of $14.7 million, and an income tax benefit of $39.2
million which resulted from the release of the majority of our valuation allowance on deferred tax assets. In addition, an increase in deferred revenue related to
the overall growth of our business provided operating cash of $28.1 million and positive net operating cash flows of $7.9 million from other operating assets
and liabilities.
For the year ended December 31, 2012, operating activities generated $48.4 million in cash as a result of net income of $23.5 million, adjusted by
non-cash items such as depreciation and amortization of $10.4 million, the write off of $1.4 million in debt issuance costs due to the early repayment of ou r
term loan, share-based compensation of $6.8 million, a deferred income tax benefit of $14.2 million, a gain on warrant liabilities of $3.1 million, and a loss
of $2.8 million on the convertible redeemable preferred stock embedded derivative. An increase in deferred revenue related to the overall growth of our business
provided operating cash of $20.8 million.
For the year ended December 31, 2011, operating activities generated $24.3 million in cash as a result of a net loss of $4.3 million, adjusted by non-
cash items such as depreciation and amortization of $3.7 million, share-based compensation of $3.3 million, and a change in fair value of warrant liabilities
of $8.7 million. In addition, deferred revenue increased by $13.4 million as a result of the ove rall growth of our business, partially offset by changes in other
operating assets and liabilities of $0.5 million.
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