Washington Post 2011 Annual Report Download - page 73

than 120% of the market value of plan assets as of the relevant
measurement date. As a result, year-to-year increases or decreases
in the market-related value of plan assets impact the return on plan
assets component of pension (credit) cost for the year.
At the end of each year, differences between the actual return on
plan assets and the expected return on plan assets are combined
with other differences in actual versus expected experience to form
a net unamortized actuarial gain or loss in accumulated other
comprehensive income. Only those net actuarial gains or losses in
excess of the deferred realized and unrealized appreciation and
depreciation are potentially subject to amortization. The types of
items that generate actuarial gains and losses that may be subject
to amortization in net periodic pension (credit) cost include the
following:
• Asset returns that are more or less than the expected return on
plan assets for the year;
• Actual participant demographic experience different from
assumed (retirements, terminations and deaths during the year);
• Actual salary increases different from assumed; and
• Any changes in assumptions that are made to better reflect
anticipated experience of the plan or to reflect current market
conditions on the measurement date (discount rate, longevity
increases, changes in expected participant behavior and
expected return on plan assets).
Amortization of the unrecognized actuarial gain or loss is included
as a component of expense for a year if the magnitude of the net
unamortized gain or loss in accumulated other comprehensive
income exceeds 10% of the greater of the benefit obligation or the
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 2008, the Company had net
unamortized actuarial losses in accumulated other comprehensive
income potentially subject to amortization that were outside the 10%
corridor that resulted in amortized losses of $40,000 being
included in the 2009 pension cost. During 2009, there were
pension asset gains that resulted in no net unamortized actuarial
gains or losses in accumulated other comprehensive income subject
to amortization outside the 10% corridor, and therefore, no
amortized gain or loss amounts were included in the pension cost in
2010. During 2010, there were pension asset gains offset by a
decrease in the discount rate that resulted in no net unamortized
actuarial gains or losses in accumulated other comprehensive
income subject to amortization outside the 10% corridor, and
therefore, no amortized gain or loss amounts were included in the
pension credit in 2011.
During 2011, there were pension asset gains and a further decrease
in the discount rate. Primarily as a result of the decrease in the
discount rate, the Company currently estimates that there will be net
unamortized actuarial losses in accumulated other comprehensive
income subject to amortization outside the corridor, and therefore, an
amortized loss amount of $6.0 million is included in the estimated
pension expense for 2012.
Overall, the Company estimates that it will record a net pension
expense of approximately $9.0 million in 2012.
Note 13 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, 2011, the Company had state income tax net
operating loss carryforwards of $669 million, which will expire at
various dates from 2012 through 2031. Also at December 31,
2011, the Company had approximately $53.9 million of non-U.S.
income tax loss carryforwards, of which $46.9 million may be
carried forward indefinitely; $2.7 million of losses that, if unutilized,
will expire in varying amounts through 2015; and $4.3 million of
losses that, if unutilized, will start to expire after 2016. At
December 31, 2011, the Company has established approximately
$59.2 million in valuation allowances against deferred state and
non-U.S. income taxes, net of U.S. Federal income taxes, 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.
Recent Accounting Pronouncements. See Note 2 to the
Company’s Consolidated Financial Statements for a discussion of
recent accounting pronouncements.
2011 FORM 10-K 61