Washington Post 2011 Annual Report Download - page 89

The Company has approximately $17.9 million of U.S. Federal
income tax loss carryforwards obtained as a result of prior stock
acquisitions. U.S. Federal income tax loss carryforwards are
expected to be fully utilized as follows:
(in millions)
2012 ......................................... $ 5.2
2013 ......................................... 5.2
2014 ......................................... 0.9
2015 ......................................... 0.7
2016 ......................................... 0.7
2017 and after .................................. 5.2
Total .......................................... $17.9
The Company has established at December 31, 2011 approximately
$6.3 million in deferred U.S. Federal tax assets with respect to these
U.S. Federal income tax loss carryforwards.
The Company has approximately $53.9 million of non-U.S. income
tax loss carryforwards, as a result of operating losses and prior stock
acquisitions, that are available to offset future non-U.S. taxable income,
and has recorded with respect to these losses, approximately $14.9
million in deferred non-U.S. income tax assets. The Company has
established approximately $13.3 million in valuation allowances
against the deferred tax assets recorded for the portion of non-U.S. tax
losses that may not be fully utilized to reduce future non-U.S. taxable
income. The $53.9 million of non-U.S. income tax loss carryforwards
consist of $46.9 million in losses that 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.
Deferred tax valuation allowances and changes in deferred tax
valuation allowances were as follows:
(in thousands)
Balance at
Beginning
of Period
Additions –
Charged
to
Costs and
Expenses Deductions
Balance at
End of
Period
Year ended
December 31, 2011 .. $41,359 $17,820 —$59,179
January 2, 2011 ..... $26,239 $16,777 $(1,657) $41,359
January 3, 2010 ..... $13,197 $13,042 —$26,239
The Company has established $45.2 million in valuation
allowances against deferred state tax assets recognized, net of U.S.
Federal tax. As stated above, approximately $31.9 million of the
valuation allowances, net of U.S. Federal income tax, relate to state
income tax loss carryforwards. The Company has established
valuation allowances against state income tax assets 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 assets
recognized since these temporary differences are not likely to
reverse in the foreseeable future. The valuation allowances
established against state income tax assets recorded may increase
or decrease within the next 12 months, based on operating
results or the market value of investment holdings; as a result, the
Company is unable to estimate the potential tax impact, given the
uncertain operating and market environment.
The Company has not established valuation allowances against any
U.S. Federal deferred tax assets.
The Company has established $14 million in valuation allowances
against non-U.S. deferred tax assets, and, as stated above, $13.3
million of the non-U.S. valuation allowances relate to non-U.S.
income tax loss carryforwards.
Deferred U.S. Federal and state income taxes are recorded with
respect to undistributed earnings of investments in non-U.S.
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
non-U.S. subsidiaries are recorded net of foreign tax credits
estimated to be creditable against future U.S. Federal tax liabilities.
At December 31, 2011, about $0.7 million of net deferred U.S.
Federal income tax assets were recorded since it is apparent that a
portion of the temporary differences described below reverse in the
subsequent year. At January 2, 2011, no net deferred U.S. Federal
or state income tax asset or liability was recorded with respect to
undistributed earnings of investments in non-U.S. subsidiaries
based on the year-end position.
Deferred U.S. Federal and state income taxes have not been
recorded for the full book value and tax basis differences related to
investments in non-U.S. subsidiaries because such investments are
expected to be indefinitely held. The book value exceeded the tax
basis of investments in non-U.S. subsidiaries by approximately $60.6
million and $60.7 million at December 31, 2011 and January 2,
2011, respectively; these differences would result in approximately
$13.4 million and $12.7 million of net additional U.S. Federal and
state deferred tax liabilities, net of foreign tax credits related to
undistributed earnings and estimated to be creditable against future
U.S. Federal tax liabilities, at December 31, 2011 and January 2,
2011, respectively. If investments in non-U.S. subsidiaries were held
for sale instead of expected to be held indefinitely, additional U.S.
Federal and state deferred tax liabilities would be required to be
recorded, and such deferred tax liabilities, if recorded, may exceed
the above estimates.
The Company does not currently anticipate that within the next 12
months there will be any events requiring the establishment of any
valuation allowances against U.S. Federal net deferred tax assets, or
any events requiring significant increases or decreases in valuation
allowances established against non-U.S. net deferred tax assets.
The Company files income tax returns with the U.S. Federal
government and in various state, local and non-U.S. governmental
jurisdictions, with the consolidated U.S. Federal tax return filing
considered the only major tax jurisdiction. The statute of limitations
has expired on all consolidated U.S. Federal corporate income tax
returns filed through 2007, and the Internal Revenue Service is not
currently examining any of the post-2007 returns filed by the
Company.
The Company endeavors to comply with tax laws and regulations
where it does business, but cannot guarantee that, if challenged,
the Company’s interpretation of all relevant tax laws and regulations
will prevail and that all tax benefits recorded in the financial
2011 FORM 10-K 77