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Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:
December 31
1996 1995
($ thousands)
Deferred tax liabilities:
Depreciation and basis differences
for property, plant and equipment $ 44,058 $ 52,834
Revenue recognition 1,405 837
Basis difference on asset and stock sale 3,281 3,190
Prepaid expenses 4,135 3,050
Other 1,356 2,087
Total deferred tax liabilities 54,235 61,998
Deferred tax assets:
Accrued expenses 19,946 25,619
Uniform capitalization of inventories 188 204
Postretirement benefits other than pensions 1,663 1,151
Net operating loss carryovers 21,597 13,985
Alternative minimum tax credit carryovers 5,629 4,900
Other 370 832
Total deferred tax assets 49,393 46,691
Valuation allowance for deferred tax assets (1,173) (1,173)
Net deferred tax assets 48,220 45,518
Net deferred tax liabilities $ 6,015 $ 16,480
Significant components of the provision for income taxes are as follows:
December 31
1996 1995 1994
($ thousands)
Current (credit):
Federal $ (16,400) $ (5,200) $ 12,595
State - - 2,148
Total current (credit) (16,400) (5,200) 14,743
Deferred (credit):
Federal (897) (6,751) 2,670
State (2,838) (2,244) 519
Total deferred (credit) (3,735) (8,995) 3,189
Total income tax expense (credit) $ (20,135) $ (14,195) $ 17,932
A reconciliation between the effective income tax rate, as computed on income before extraordinary item, and the statutory federal income tax rate is presented in the following table:
Year Ended December 31
1996 1995 1994
($ thousands)
Income tax (benefit) at the
statutory federal rate of 35% $ (19,858) $ (16,445) $ 12,824
Federal income tax effects of:
State income taxes 990 788 (933)
Nondeductible goodwill 2,548 1,680 1,031
Other nondeductible expenses 1,409 1,407 969
Minority interest (619) 454 1,233
Undistributed earnings of Treadco (99) 77 210
Rate difference for Treadco 53 (41) (108)
Resolution of tax contingencies (1,573) - -
Other (148) 130 39
Federal income taxes (benefit) (17,297) (11,950) 15,265
State income taxes (benefit) (2,838) (2,245) 2,667
$ (20,135) $ (14,195) $ 17,932
Effective tax rate (35.5)% (30.2)% 48.9%
No income taxes were paid in 1996, approximately $9,900,000 were paid in 1995, and $12,368,000 were paid in 1994. Income tax refunds amounted to $28,825,000 in 1996. As of December 31, 1996, the Company has federal net operating loss and state operating loss carryovers of approximately $40,870,000 and $140,000,000, respectively. The federal net operating loss carryovers expire beginning in 2010. State net operating loss carryovers expire generally in five to seven years. The Company has alternative minimum tax credits of approximately $5,629,000 at December 31, 1996 which carry over indefinitely. For financial reporting purposes, a valuation allowance of approximately $1,173,000 has been established for certain state net operating loss carryovers for which realization is uncertain. |
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