Washington Post 2012 Annual Report Download - page 93

acquisitions. U.S. Federal income tax loss carryforwards are
expected to be fully utilized as follows:
(in millions)
2013 .......................................... $0.7
2014 .......................................... 0.7
2015 .......................................... 0.7
2016 .......................................... 0.7
2017 .......................................... 0.7
2018 and after ................................... 4.6
Total ........................................... $8.1
The Company has established at December 31, 2012 approx-
imately $2.9 million in U.S. Federal deferred tax assets with respect
to these U.S. Federal income tax loss carryforwards.
The Company has approximately $27.8 million of U.S. Federal
capital loss carryforwards obtained mainly as a result of dispos-
itions during 2012 of the stock of former subsidiaries and an
affiliate. U.S. Federal capital loss carryforwards are expected to be
fully utilized for U.S. Federal tax purposes in the future, but will expire
at the end of 2017 if not utilized. The Company has recorded at
December 31, 2012 approximately $10.8 million of deferred tax
assets with respect to these U.S. Federal capital loss carryforwards.
For U.S. Federal income tax purposes, the Company has approx-
imately $6.8 million of foreign tax credits available to be credited
against future U.S. Federal income tax liabilities. These U.S. Federal
foreign tax credits are expected to be fully utilized in the future, but
will expire at the end of 2022 if not utilized. The Company has
established at December 31, 2012, approximately $6.8 million of
U.S. Federal deferred tax assets with respect to these U.S. Federal
foreign tax credit carryforwards.
The Company has approximately $93.0 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, approx-
imately $27.0 million in non-U.S. deferred income tax assets. The
Company has established approximately $25.2 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 $93.0 million of non-U.S. income tax
loss carryforwards consist of $84.6 million in losses that may be
carried forward indefinitely; $3.0 million of losses that, if unutilized,
will expire in varying amounts through 2017; and $5.4 million of
losses that, if unutilized, will start to expire after 2017.
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, 2012 .. $ 59,179 $ 18,930 — $ 78,109
December 31, 2011 . $41,359 $17,820 —$59,179
January 2, 2011 .... $26,239 $16,777 $(1,657) $41,359
The Company has established $48.2 million in valuation allowances
against deferred state tax assets recognized, net of U.S. Federal tax. As
stated above, approximately $34.6 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 con-
sidered 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 estab-
lished against state income tax assets are recorded at the newspaper
publishing division, the corporate office and the education division,
and 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 will be
monitoring future operating results and projected future operating results on
a quarterly basis to determine whether the valuation allowances
provided against deferred state tax assets should be increased or
decreased, as future circumstances warrant.
The Company has not established valuation allowances against any
U.S. Federal deferred tax assets.
The Company has established $29.9 million in valuation allow-
ances against non-U.S. deferred tax assets, and, as stated above,
$25.2 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 with
respect to such undistributed earnings estimated to be creditable
against future U.S. Federal tax liabilities. At December 31, 2012,
a net U.S. Federal and state deferred income tax liability of about
$1.7 million was recorded with respect to undistributed earnings of
investments in non-U.S. subsidiaries based on the year-end position.
At December 31, 2011, about $0.7 million of net deferred U.S.
Federal income tax assets were recorded since it was apparent that
a portion of the temporary differences would reverse in 2012.
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
$64.2 million and $60.6 million at December 31, 2012 and
2011, respectively; these differences would result in approximately
$14.7 million and $13.4 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, 2012 and 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.
2012 FORM 10-K 81