Redbox 2013 Annual Report Download - page 84

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NOTE 12: INCOME TAXES FROM CONTINUING OPERATIONS
Components of Income Taxes
The components of income(loss) from continuing operations before income taxes were as follows:
Years Ended December 31,
Dollars in thousands 2013 2012 2011
U.S. operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 258,665 $ 262,695 $ 193,213
Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,097)(4,302) 4,644
Total income from continuing operations before income taxes . . . $ 242,568 $ 258,393 $ 197,857
Components of Income Tax Expense
The components of income tax expense from continuing operations were as follows:
Years Ended December 31,
Dollars in thousands 2013 2012 2011
Current:
U.S. Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 39,272 $ — $ —
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,159 4,142 9,845
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (424) 7 375
Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,007 4,149 10,220
Deferred:
U.S. Federal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,169) 87,375 63,453
State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,726) 7,938 612
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,635)(1,521) 638
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,530) 93,792 64,703
Total income tax expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,477 $ 97,941 $ 74,923
Rate Reconciliation
The income tax expense differs from the amount that would result by applying the U.S. statutory rate to income before income
taxes as follows:
Years Ended December 31,
2013 2012 2011
U.S Federal tax expense at statutory rates . . . . . . . . . . . . . . . . . . . . . . . 35.0 % 35.0 % 35.0 %
State income taxes, net of federal benefit. . . . . . . . . . . . . . . . . . . . 4.2 % 4.0 % 4.3 %
Federal and state credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.9)% (0.8)% (0.6)%
Recognition of Outside Basis Differences . . . . . . . . . . . . . . . . . . . (16.7)% — % — %
Valuation Allowance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 % — % — %
Non-taxable gain related to acquisition of ecoATM. . . . . . . . . . . . (10.0)% — % — %
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.2 % (0.3)% (0.9)%
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 % 37.9 % 37.8 %
During the fourth quarter of 2013, we reported a $16.7 million tax benefit related to the recognition of a worthless stock
deduction from an outside basis difference in a corporate subsidiary. During the third quarter of 2013, we reported a $24.3
million tax benefit related to the non-taxable gain upon the re-measurement of our previously held equity interest in ecoATM.
During the second quarter of 2013, we entered into an arrangement to sell certain NCR kiosks and a series of transactions to
reorganize Redbox related subsidiary structures through the sale of a wholly owned subsidiary. As a result of the series of
transactions we recorded a discrete one-time tax benefit of $17.8 million, net of a valuation allowance, through the realization
of capital and ordinary gains and losses. The combined impact of these three items was a 24.3 percentage point reduction in the
effective tax rate for the year ended December 31, 2013. In addition, our 2013 effective tax rate was increased by state income
taxes.