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10-K
GRAHAM HOLDINGS CO filed this Form 10-K on 02/23/2018
Entire Document
 



The (benefit from) provision for income taxes on income (loss) from continuing operations consists of the following:
(in thousands)
Current
 
Deferred
 
Total
Year Ended December 31, 2017
 
 
 
 
 
U.S. Federal
$
10,743

 
$
(153,217
)
 
$
(142,474
)
State and Local
5,930

 
3,306

 
9,236

Non-U.S.
10,079

 
3,459

 
13,538

 
$
26,752

 
$
(146,452
)
 
$
(119,700
)
Year Ended December 31, 2016
 
 
 
 
 
U.S. Federal
$
56,342

 
$
33,959

 
$
90,301

State and Local
6,325

 
(5,164
)
 
1,161

Non-U.S.
8,463

 
(18,725
)
 
(10,262
)
 
$
71,130

 
$
10,070

 
$
81,200

Year Ended December 31, 2015
 
 
 
 
 
U.S. Federal
$
5,728

 
$
20,890

 
$
26,618

State and Local
402

 
(10,749
)
 
(10,347
)
Non-U.S.
2,441

 
1,788

 
4,229

 
$
8,571

 
$
11,929

 
$
20,500

The provision for income taxes on continuing operations differs from the amount of income tax determined by applying the U.S. Federal statutory rate of 35% to the income (loss) from continuing operations before taxes as a result of the following:
 
Year Ended December 31
(in thousands)
2017
 
2016
 
2015
U.S. Federal taxes at 35% statutory rate
$
63,976

 
$
87,731

 
$
(42,311
)
State and local taxes, net of U.S. Federal tax
6,949

 
(2,965
)
 
(3,441
)
Valuation allowances against state tax benefits, net of U.S. Federal tax
(946
)
 
3,196

 
(3,285
)
Deferred taxes on future distributions of unremitted non-U.S. subsidiary earnings
1,606

 
1,993

 
2,688

Valuation allowances against other non-U.S. income tax benefits
(1,935
)
 
(12,688
)
 
431

Stock-based compensation
(6,023
)
 

 

Goodwill impairments and dispositions

 
(5,631
)
 
63,889

U.S. Federal Manufacturing Deduction tax benefits
(1,329
)
 
(6,012
)
 
(625
)
Write-off of deferred taxes related to intercompany loans

 
10,965

 

Deferred tax impact of U.S. Federal tax rate reduction to 21%, net of state tax impact
(153,336
)
 

 

Deferred tax benefit on unremitted non-U.S. subsidiary earnings related to the Tax Act
(28,324
)
 

 

Other, net
(338
)
 
4,611

 
3,154

(Benefit from) Provision for Income Taxes
$
(119,700
)
 
$
81,200

 
$
20,500

The Tax Act was enacted on December 22, 2017, making significant changes to the Internal Revenue Code. The SEC staff issued Staff Accounting Bulletin No. 118 (SAB 118) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act and allows the registrant to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. The Company has not recognized any provisional tax expense related to the one-time transition tax, and recognized provisional tax benefits on the revaluation of deferred tax balances and included these estimates in its Consolidated Financial Statements for the year ended December 31, 2017. The ultimate impact may materially differ from these provisional amounts, due to, among other things, additional analysis, changes in interpretations and assumptions the Company made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the Tax Act. In accordance with SAB 118, the Company has calculated a reasonable estimate of the impact of the Tax Act and recorded a provisional amount in its financial statements based on its understanding of the Tax Act and guidance available as of the date of this filing.
Changes as a result of the Tax Act include, but are not limited to, a reduction in the federal corporate income tax rate from 35% to 21% effective January 1, 2018; the imposition of a one-time transition tax on historic earnings of certain non-U.S. subsidiaries that were previously tax deferred; and the imposition of new U.S. taxes on certain non-U.S. earnings. The U.S. Federal corporate income tax rate change resulted in a one-time, non-cash benefit and corresponding reduction of our U.S. Federal deferred tax liabilities, net of the state tax impact, of $153.3 million, which was recorded in the fourth quarter of 2017, the period in which the legislation was enacted. The Company estimates that it will not incur, and did not record, any liability with respect to the one-time U.S. transition tax

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