Washington Post 2008 Annual Report Download - page 80

Activity related to the Company’s goodwill and other intangible
assets during 2007 was as follows: Goodwill, Net
(in thousands) Beginning of Year Acquisitions
Foreign
Currency
Exchange
Rate and
Other End of Year
Education ....................... $ 845,754 $155,299 $19,124 $1,020,177
Cable Television .................. 85,666 85,666
Newspaper Publishing ............. 79,739 472 958 81,169
Television Broadcasting ............. 203,165 203,165
Magazine Publishing ............... 25,015 25,015
Other Businesses and Corporate
Office ........................ 912 82,133 83,045
$1,240,251 $237,904 $20,082 $1,498,237
Indefinite-Lived Intangible Assets, Net
(in thousands) Beginning of Year Acquisitions Other End of Year
Education .................. $ 9,262 $ 9,262
Cable Television ............. 508,480 $3,804 $(641) 511,643
Newspaper Publishing ........
Television Broadcasting ........
Magazine Publishing ..........
Other Businesses and Corporate
Office ...................
$517,742 $3,804 $(641) $520,905
Amortized Intangible Assets, Net
(in thousands) Beginning of Year
Acquisitions
and
Additions
Foreign
Currency
Exchange
Rate and
Other Amortization End of Year
Education .............. $25,270 $25,691 $ 530 $(14,669) $36,822
Cable Television ......... 1,021 123 379 (442) 1,081
Newspaper Publishing ..... 5,508 (106) (1,162) 4,240
Television Broadcasting ....
Magazine Publishing ......
Other Businesses and
Corporate Office ....... 29,592 (1,298) 28,294
$31,799 $55,406 $ 803 $(17,571) $70,437
G. INCOME TAXES
Income before income taxes and cumulative effect of change in
accounting principle consists of the following:
(in thousands) 2008 2007 2006
Domestic ................................... $103,676 $429,555 $480,612
Foreign .................................... 41,446 51,552 38,522
$145,122 $481,107 $519,134
The provision for income taxes consists of the following:
(in thousands) Current Deferred Total
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
2006
U.S. Federal ................................ $193,261 $(19,681) $173,580
State and local .............................. 27,624 (17,465) 10,159
Foreign .................................... 6,949 (1,088) 5,861
$227,834 $(38,234) $189,600
In addition to the income tax provision presented above, in 2006,
the Company recorded a federal and state income tax benefit of
$3.1 million on the charge recorded as a cumulative effect of
change in accounting for Kaplan equity awards in connection with
the adoption of SFAS 123R.
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) 2008 2007 2006
U.S. Federal taxes at
statutory rate ........... $50,793 $168,387 $181,697
State and local taxes
(benefit), net of U.S.
Federal tax ............ (2,401) 10,161 6,603
Valuation allowance against
state tax benefits, net of
U.S. Federal tax ........ 9,453 448 —
Goodwill impairments ...... 26,795 — 573
Tax provided on foreign
subsidiary earnings and
distributions at (less) more
than the expected U.S.
Federal statutory tax
rate ................. (4,501) (1,777) 190
Tax provided on foreign
affiliate earnings at more
(less) than the expected
U.S. Federal statutory tax
rate ................. —13,254 (755)
Other, net .............. (739) 2,027 1,292
Provision for income taxes . . . $79,400 $192,500 $189,600
Results for 2008 include a $4.6 million provision to return
adjustment from 2007; the Company concluded that this adjustment
is not material to the Company’s financial positions or results of
operations for 2008 and 2007, based on its consideration of
quantitative and qualitative factors.
Results for 2007 included an additional $12.9 million in income
tax expense related to Bowater Mersey, the Company’s 49%
owned affiliate based in Canada. The Company previously
recorded deferred income taxes on the equity in earnings (losses) of
Bowater Mersey based on the 5% dividend withholding rate
provided in the tax treaty between the U.S. and Canada. In the
second quarter of 2007, the Company obtained additional
information related to Bowater Mersey’s Canadian tax position and
determined that deferred income taxes on the equity in earnings
(losses) of this affiliate investment should be recorded at a 35% tax
rate. The Company concluded that this charge was not material to
the Company’s financial positions or results of operations for 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. Both of these items
were non-cash items in 2007, impacting the Company’s long-term
net deferred income tax liabilities.
68 THE WASHINGTON POST COMPANY