EFTA01378088.pdf

2013 2014 (In thousands) Deferred tax assets: Accrued expenses $ 5,772 $ 6,936 Net operating loss carryforwards 31.985 32,147 Stock-based compensation 7,524 13.142 Fair value investments 2.936 3.708 Other 4,450 3,172 Total deferred tax assets 52,667 59,105 Less valuation allowance (23,202) (24,805) Net deferred tax assets 29,465 34,300 Deferred tax liabilities: Intangible and other assets (67,554) (69,131) Other (4,682) (6,028) Total deferred tax liabilities (72,236) (75,159) Net deferred tax liabilities $ (42,771) $ (40,859) At December 31, 2014, the Company has federal and stale net operating losses ('NOLs") of $24.4 million and $8.3 million, respectively. If not utilized, the federal NOLs will expire at various times between 2031 and 2034, and the state NOLs win expire at various times between 2015 and 2034. Utilization of federal and slate NOLs will be subject to limitations under Section 382 of the Internal Revenue Code, and applicable state law. At December 31, 2014, the Company has foreign NOLs of $78.3 million available to offset future income. Of these foreign NOLs. $75.4 million can be carded forward indefinitely and $2.9 million will expire at various times between 2015 and 2034. During 2014. the Company recognized tax benefits related to NOLs of $0.8 million. During 2014. the Company's valuation allowance increased by $1.6 million unmanly due to an increase in federal NOLs. At December 31. 2014. the Company has a valuation allowance of $24.8 million related to the portion of NOLs and other items for which it is more likely than riot that the tax benefit will not be realized. F-36 Table of Contents A reconciliation of the income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings before income taxes is shown as follows: Yearn ended December 31, 2012 2013 2014 (In thousands) Income tax provision at the federal statutory rate of 35% $ 52,400 $ 65.535 $ 75,472 Change in tax reserves, net 1,970 (4,524) (283) State income taxes, net of effect of federal tax benefit 2,433 2.814 3,826 Foreign income taxed at a different statutory rate (205) (976) (975) Non-taxable contingent consideration lair value adjustments — (4439) Non-taxable foreign currency exchange gains — (4,107) Non-deductible impairment of long-term marketable security 3,040 Other, net (206) (2,233) (2.217) Income lax provision $ 59,432 $ 60.616 $ 67.277 No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries aggregating $360.8 million at December 31, 2014. The estimated amount of the unrecognized deferred income tax liability with respect to such earnings would be $66.0 A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest, is as follows: December 31, 2012 2013 2014 (In thousands) Balance at January 1 $ 12,833 $ 16,788 $ 11,215 Additions based on tax positions related to the current year 1.780 1,188 201 Additions for tax positions of prior years 2.517 665 490 Reductions for tax positions of prior years (14) (12) (60) Settlements (328) (4,724) Expiration of applicable statute of limitations — (2.690) (911) Balance at December 31 $ 16,788 $ 11,215 $ 10,935 The Company recognizes interest and. if applicable, penalties related to unrecognized tax benefits in the income tax provision. At both December 31. 2013 and 2014, the Company has accrued $1.2 million, respectively, for the payment of interest. At December 31, 2013 and 2014, the Company has accrued $2.3 million and $2.4 million, respectively. for penalties. Match Group. Inc. is routinely under audit by federal, state, local and foreign authorities in the area of income tax as a result of previously filed separate company and consolidated tax retums with IAC. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various tax jurisdictions. The Internal Revenue Service is currently auditing IAC's federal income tax returns for the years ended December 31, 2010 through 2012, which includes the operations of Match Group. Inc. Various other jurisdictions are open to examination for various hoe: sec.gov An:lives 'eds.,' daW1575189,0001047469150064311222645Rn-Iahtm(I U972013 911:17 AIM CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0075248 CONFIDENTIAL SONY GM_00221432 EFTA01378088