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10-Q
KOPPERS HOLDINGS INC. filed this Form 10-Q on 08/03/2017
Entire Document
 

 

 

(a)

Operating loss for Corporate includes primarily general and administrative costs for Koppers Holdings Inc., the parent company of Koppers Inc.

The following table sets forth certain tangible and intangible assets allocated to each of the Company’s segments as of the dates indicated:

 

 

 

June 30,

2017

 

 

December 31,

2016

 

(Dollars in millions)

 

 

 

 

 

 

 

 

Segment assets:

 

 

 

 

 

 

 

 

Railroad and Utility Products and Services

 

$

260.2

 

 

$

264.2

 

Performance Chemicals

 

 

489.7

 

 

 

442.9

 

Carbon Materials and Chemicals

 

 

371.2

 

 

 

333.0

 

All other

 

 

47.3

 

 

 

47.4

 

Total

 

$

1,168.4

 

 

$

1,087.5

 

Goodwill:

 

 

 

 

 

 

 

 

Railroad and Utility Products and Services

 

$

10.4

 

 

$

9.9

 

Performance Chemicals

 

 

177.5

 

 

 

176.5

 

Total

 

$

187.9

 

 

$

186.4

 

 

 

10. Income Taxes

Effective Tax Rate

The income tax provision for interim periods is comprised of an estimated annual effective income tax rate applied to current year ordinary income and tax associated with discrete items. These discrete items generally relate to adjustments to uncertain tax positions and changes of estimated tax to the actual liability determined upon filing tax returns. To determine the annual effective tax rate, management is required to make estimates of annual pretax income in each domestic and foreign jurisdiction in which the Company conducts business. Entities that have historical pre-tax losses and current year estimated pre-tax losses that are not projected to generate a future benefit are excluded from the estimated annual effective income tax rate.     

The estimated annual effective income tax rate, excluding discrete items discussed above, was 24.6 percent and 31.1 percent for the six months ended June 30, 2017 and 2016, respectively. The estimated annual effective income tax rate differs from the U.S. federal statutory tax rate due to:

 

 

 

June 30,

2017

 

 

June 30,

2016

 

Federal income tax rate

 

 

35.0

%

 

 

35.0

%

State income taxes, net of federal tax benefit

 

 

2.1

 

 

 

1.6

 

Foreign earnings taxed at different rates

 

 

(15.7

)

 

 

(6.5

)

Change in tax contingency reserves

 

 

0.3

 

 

 

0.5

 

Nondeductible expenses

 

 

2.1

 

 

 

0.9

 

Tax credits

 

 

(0.3

)

 

 

(0.4

)

Other

 

 

1.1

 

 

 

0.0

 

Estimated annual effective income tax rate

 

 

24.6

%

 

 

31.1

%

          

Income taxes as a percentage of pretax income were 24.0 percent and 37.6 percent for the three months ended June 30, 2017 and 2016, respectively, principally because the estimated annual effective income tax rate is applied to pre-tax earnings excluding the results of our Chinese subsidiaries that are not expected to generate a future tax benefit. These results are excluded from the determination of the annual effective income tax rate as discussed above. Discrete items included in income taxes for the three months ended June 30, 2017 and 2016, respectively, were not material.

Income taxes as a percentage of pretax income were 22.9 percent for the six months ended June 30, 2017. This is lower than the estimated annual effective tax rate principally due to discrete items, but also because the estimated annual effective income tax rate is applied to pre-tax earnings excluding the results of our Chinese subsidiaries that are not expected to generate a future tax benefit. Discrete items included in income taxes for the six months ended June 30, 2017 were a net benefit of $0.3 million, which includes excess tax benefits for stock-based compensation of $0.9 million offset by additional accruals for uncertain tax positions of $0.6 million.

Income taxes as a percentage of pretax income were 41.4 percent for the six months ended June 30, 2016. This is higher than the estimated annual effective tax rate principally because the estimated annual effective income tax rate is applied to pre-tax earnings excluding the results of our Chinese subsidiaries that are not expected to generate a future tax benefit. Discrete items included in income taxes for the six months ended June 30, 2016 were not material.

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