Washington Post 2009 Annual Report Download - page 81

H. INCOME TAXES
Income before income taxes consists of the following:
(in thousands) 2009 2008 2007
Domestic .............. $152,397 $103,750 $429,913
Foreign ............... (3,597) 41,446 51,552
$148,800 $145,196 $481,465
Foreign results for 2009 include losses of a foreign affiliate
associated with a $27.4 million impairment charge.
The provision for income taxes consists of the following:
(in thousands) Current Deferred Total
2009
U.S. Federal ............ $ 32,541 $ 7,229 $ 39,770
State and local .......... 16,623 (4,819) 11,804
Foreign ................ 8,403 (2,377) 6,026
$ 57,567 $ 33 $ 57,600
2008
U.S. Federal ............ $ 55,884 $ 2,006 $ 57,890
State and local .......... 14,540 (3,691) 10,849
Foreign ................ 13,172 (2,511) 10,661
$ 83,596 $ (4,196) $ 79,400
2007
U.S. Federal ............ $132,235 $32,673 $164,908
State and local .......... 16,963 (642) 16,321
Foreign ................ 10,261 1,010 11,271
$159,459 $33,041 $192,500
The provision for income taxes exceeds the amount of income tax
determined by applying the U.S. Federal statutory rate of 35% to
income before taxes as a result of the following:
(in thousands) 2009 2008 2007
U.S. Federal taxes at statutory rate . . . $52,080 $50,793 $168,387
State and local taxes (benefit), net of
U.S. Federal tax .............. (4,484) (2,401) 10,161
Valuation allowance against state tax
benefits, net of U.S. Federal tax . . . 12,157 9,453 448
Goodwill impairments ............ 2,972 26,795 —
Tax provided on foreign subsidiary
earnings and distributions at less
than the expected U.S. Federal
statutory tax rate .............. (1,035) (4,501) (1,777)
Tax provided on foreign affiliate
earnings at more than the expected
U.S. Federal statutory tax rate ..... —— 13,254
Other, net ..................... (4,090) (739) 2,027
Provision for income taxes ......... $57,600 $79,400 $192,500
Results for 2009 include $3.1 million of prior-year tax benefits.
Results for 2008 include a $4.6 million provision to return
adjustment from 2007. Results for 2007 include an additional
$12.9 million in income tax expense related to Bowater Mersey,
the Company’s 49% owned affiliate based in Canada. The
Company concluded that the 2008 provision to return adjustment
and the 2007 Bowater Mersey adjustment were not material to the
Company’s financial position or results of operations for 2008,
2007 and prior years, based on its consideration of quantitative
and qualitative factors. Results for 2007 also include a $6.3 million
income tax benefit related to a change in certain state income tax
laws enacted in the second quarter of 2007.
Deferred income taxes at January 3, 2010 and December 28,
2008, consist of the following:
(in thousands) 2009 2008
Accrued postretirement benefits ............ $ 30,865 $ 29,527
Other benefit obligations ................. 103,691 108,427
Accounts receivable .................... 35,030 31,100
State income tax loss carryforwards ......... 26,882 16,859
U.S. Federal income tax loss carryforwards .... 8,771 10,494
Foreign income tax loss carryforwards ....... 8,882 8,278
Other ............................... 36,272 27,844
Deferred tax assets ..................... 250,393 232,529
Valuation allowance .................... (26,239) (13,197)
Deferred tax assets, net .................. $224,154 $219,332
Property, plant and equipment ............. 149,529 137,935
Prepaid pension cost .................... 160,199 126,805
Unrealized gain on available-for-sale
securities ........................... 52,338 48,441
Affiliate operations ..................... 8,672 16,197
Goodwill and other intangible assets ........ 261,621 239,346
Deferred tax liabilities ................... $632,359 $568,724
Deferred income tax liabilities, net .......... $408,205 $349,392
Deferred U.S. and state income taxes have been recorded for
undistributed earnings of investments in foreign subsidiaries to the
extent taxable dividend income would be recognized if such
earnings were distributed. Deferred income taxes recorded for
undistributed earnings of investments in foreign subsidiaries are net
of foreign tax credits estimated to be available.
Deferred U.S. and state income taxes have not been recorded for
the full book value and tax basis differences related to investments
in foreign subsidiaries because such investments are expected to
be indefinitely held. The book value exceeded the tax basis of
investments in foreign subsidiaries by approximately $67.0 million
and $77.6 million at January 3, 2010 and December 28, 2008,
respectively. If the investments in foreign subsidiaries were held for
sale instead of expected to be held indefinitely, additional U.S.
and state deferred income tax liabilities, net of foreign tax credits
estimated to be available on undistributed earnings, of approx-
imately $16.4 million and $16.6 million would have been
recorded at January 3, 2010 and December 28, 2008,
respectively.
The Company has approximately $525.6 million of state income
tax loss carryforwards available to offset future state taxable income
and has established, with respect to these losses, approximately
$26.9 million in deferred state income taxes, net of U.S. Federal
income tax. The Company has also established approximately
2009 FORM 10-K 67