Washington Post 2010 Annual Report Download - page 92

I. INCOME TAXES
Income from continuing operations before income taxes consists of
the following:
(in thousands) 2010 2009 2008
Domestic .............. $504,076 $213,012 $160,330
Foreign ............... 19,348 (325) 42,578
$523,424 $212,687 $202,908
Foreign results for 2009 include losses of a foreign affiliate
associated with a $27.4 million impairment charge.
The provision for income taxes on income from continuing
operations consists of the following:
(in thousands) Current Deferred Total
2010
U.S. Federal ............ $136,121 $ 10,050 $146,171
State and local .......... 27,480 32,909 60,389
Foreign ................ 11,030 (990) 10,040
$174,631 $ 41,969 $216,600
2009
U.S. Federal ........... $ 64,054 $ 3,563 $ 67,617
State and local .......... 15,947 (13,216) 2,731
Foreign ............... 8,429 (2,377) 6,052
$ 88,430 $(12,030) $ 76,400
2008
U.S. Federal ........... $ 75,225 $ 8,962 $ 84,187
State and local .......... 14,374 (2,231) 12,143
Foreign ............... 12,781 (2,511) 10,270
$102,380 $ 4,220 $106,600
The provision for income taxes on continuing operations exceeds
the amount of income tax determined by applying the U.S. Federal
statutory rate of 35% to income from continuing operations before
taxes as a result of the following:
(in thousands) 2010 2009 2008
U.S. Federal taxes at statutory
rate .................. $183,198 $74,441 $ 71,018
State and local taxes (benefit),
net of U.S. Federal tax ..... 25,396 (5,638) (1,560)
Valuation allowance against
state tax benefits, net of U.S.
Federal tax ............. 13,856 7,414 9,453
Goodwill impairments and
disposition ............. 12,062 2,972 26,795
Tax provided on foreign
subsidiary earnings and
distributions at less than the
expected U.S. Federal
statutory tax rate ......... (4,327) (1,035) (4,501)
Other, net ................ (13,585) (1,754) 5,395
Provision for income taxes .... $216,600 $76,400 $106,600
Results for 2010 include $7.7 million in U.S. Federal tax benefits
from the U.S. manufacturing deduction (included in other, net
above). Results for 2009 include $3.1 million of prior-year tax
benefits, and results for 2008 include $4.6 million of prior-year
tax expenses.
In addition to the income tax provision presented above for
continuing operations, the Company also recorded tax benefits on
discontinued operations. Losses from discontinued operations have
been reclassified from previously reported income from operations
and reported separately as loss from discontinued operations, net of
tax. Tax benefits of $10.3 million, $18.8 million and $27.2 million
with respect to losses from discontinued operations were recorded
in 2010, 2009 and 2008, respectively. Also included in loss
from discontinued operations for 2010 is an $11.5 million loss,
including tax expense, on the disposal of the discontinued
operations. Tax expense provided on the loss on disposal totaled
$1.2 million, which resulted principally from nondeductible
goodwill associated with the sale of Newsweek.
Deferred income taxes at January 2, 2011 and January 3, 2010,
consist of the following:
(in thousands) 2010 2009
Accrued postretirement benefits ........... $ 27,012 $ 30,865
Other benefit obligations ............... 118,039 103,691
Accounts receivable ................... 33,853 35,030
State income tax loss carryforwards ....... 27,674 26,882
U.S. Federal income tax loss
carryforwards ...................... 8,120 8,771
Foreign income tax loss carryforwards ...... 10,827 8,882
Other ............................. 42,637 36,272
Deferred tax assets .................... 268,162 250,393
Valuation allowance .................. (41,359) (26,239)
Deferred tax assets, net ................ $226,803 $224,154
Property, plant and equipment ........... 187,934 149,529
Prepaid pension cost .................. 214,470 160,199
Unrealized gain on available-for-sale
securities ......................... 47,148 52,338
Affiliate operations .................... 3,113 8,672
Goodwill and other intangible assets ...... 265,225 261,621
Deferred tax liabilities .................. $717,890 $632,359
Deferred income tax liabilities, net ........ $491,087 $408,205
Deferred U.S. and state income taxes are recorded with respect to
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 with
respect to undistributed earnings of investments in foreign sub-
sidiaries are recorded net of foreign tax credits estimated to be
available. However, no deferred U.S. or state income tax liabilities
have been recorded at January 2, 2011 with respect to
undistributed earnings of investments in foreign subsidiaries
based on the year-end tax position.
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 $60.7 million
and $67.0 million at January 2, 2011 and January 3, 2010,
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 approxi-
mately $18.5 million and $16.4 million would have been recorded
at January 2, 2011 and January 3, 2010, respectively.
The Company has approximately $523.7 million of state income
tax loss carryforwards available to offset future state taxable income
76 THE WASHINGTON POST COMPANY