Washington Post 2013 Annual Report Download - page 70

market-related value of assets (10% corridor). The amortization
component is equal to that excess divided by the average remaining
service period of active employees expected to receive benefits
under the plan. At the end of 2010, the Company had no net
unamortized actuarial gains or losses in accumulated other
comprehensive income potentially subject to amortization that were
outside the 10% corridor, and, therefore, no amortized gain or loss
amounts were included in the pension credit in 2011. During 2011,
there was a decrease in the discount rate, offset by pension asset
gains that resulted in net unamortized actuarial losses in accumulated
other comprehensive income subject to amortization outside the
corridor, and, therefore, an amortized loss amount of $9.0 million is
included in the pension cost for 2012. During 2012, there were
pension asset gains offset by a further decrease in the discount rate
that resulted in net unamortized actuarial losses in accumulated other
comprehensive income subject to amortization outside the corridor,
and, therefore, an amortized loss amount of $5.6 million is included
in the pension cost for the first nine months of 2013. As a result of
the sale of the newspaper publishing businesses, the Company
remeasured the accumulated and projected benefit obligation as of
October 1, 2013, and recorded a curtailment gain and settlement
loss. During the first nine months of 2013, there were significant
pension asset gains and an increase in the discount rate, which
resulted in net unamortized actuarial gains in accumulated other
comprehensive income subject to amortization outside the corridor as
of the remeasurement date, and therefore, an amortized gain
amount of $2.8 million is included in the pension cost for the last
three months of 2013. Overall, the Company recorded an
amortized loss amount of $2.8 million for 2013.
During the last three months of 2013, there were additional
pension asset gains. Primarily as a result of the actual return on
plan assets exceeding the estimated return for 2013, the Company
currently estimates that there will be net unamortized actuarial
gains in accumulated other comprehensive income subject to
amortization outside the corridor, and, therefore, an amortized
gain amount of $28.2 million is included in the estimated pension
cost for 2014.
Overall, the Company estimates that it will record a net pension
credit of approximately $65.0 million in 2014.
Note 14 to the Company’s Consolidated Financial Statements
provides additional details surrounding pension costs and related
assumptions.
Income Tax Valuation Allowances. Deferred income taxes arise
from temporary differences between the tax and financial statement
recognition of assets and liabilities. In evaluating its ability to
recover deferred tax assets within the jurisdiction from which they
arise, the Company considers all available positive and negative
evidence, including scheduled reversals of deferred tax liabilities,
projected future taxable income, tax planning strategies and recent
financial operations. These assumptions require significant judgment
about forecasts of future taxable income.
As of December 31, 2013, the Company had state income tax net
operating loss carryforwards of $597.1 million, which will expire
at various dates from 2014 through 2032. Also at December 31,
2013, the Company had $112.1 million of non-U.S. income tax
loss carryforwards, of which $101.3 million may be carried
forward indefinitely; $3.5 million of losses that, if unutilized, will
expire in varying amounts through 2018; and $7.3 million of losses
that, if unutilized, will start to expire after 2018. At December 31,
2013, the Company has established approximately $72.8 million
in valuation allowances against deferred state tax assets, net of
U.S. Federal income taxes, and non-U.S. deferred tax assets, as the
Company believes that it is more likely than not that the benefit from
certain state and non-U.S. net operating loss carryforwards and
other deferred tax assets will not be realized. The Company has
established valuation allowances against state income tax benefits
recognized, without considering potentially offsetting deferred tax
liabilities established with respect to prepaid pension cost and
goodwill. Prepaid pension cost and goodwill have not been
considered a source of future taxable income for realizing deferred
tax benefits recognized since these temporary differences are not
likely to reverse in the foreseeable future. The valuation allowances
established against state and non-U.S. income tax benefits recorded
may increase or decrease within the next 12 months, based on
operating results, the market value of investment holdings or
business and tax planning strategies; as a result, the Company is
unable to estimate the potential tax impact, given the uncertain
operating and market environment. The Company will be
monitoring future operating results and projected future operating
results on a quarterly basis to determine whether the valuation
allowances provided against state and non-U.S. deferred tax assets
should be increased or decreased, as future circumstances warrant.
Recent Accounting Pronouncements. See Note 2 to the Company’s
Consolidated Financial Statements for a discussion of recent
accounting pronouncements.
52 GRAHAM HOLDINGS COMPANY