Gentek 2000 Annual Report Gentek 2000 Annual Report NYSE: GK
Communications Manufacturing Performance Products Gentek At a Glance Letter to Shareholders Financials NYSE: GK
 
Financials
Selected Financial Data
MD&A
Independent Auditors' Report
Statement of Operations
Balance Sheets
Cash Flows
Changes in Equity ( Deficit )
Notes
 
Notes To The Consolidated Financial Statements


Note 7: Income Taxes


Income from continuing operations before income taxes is as follows:

The components of the income tax provision are as follows:

A summary of the components of deferred tax assets and liabilities is as follows:

The Company has a deferred tax asset of $1,342 related to foreign tax credits, for which a full valuation allowance has been provided at December 31, 2000. Net operating loss carry forwards in the United States expire through 2013. Net operating loss carry forwards in Germany do not expire.

The difference between the Company’s effective income tax rate and the United States statutory rate is reconciled below:


Prior to its acquisition, Digital was a division of Prestolite, which is an S-Corporation and, consequently, is not subject to federal income taxes. The pro forma income tax provision (benefit) that would have been reported by the Company had Prestolite not been an S-Corporation prior to the acquisition, was $40,759, $33,445 and $(5,480) for the years ended December 31, 2000, 1999 and 1998, respectively.

On July 14, 2000, legislation was enacted in Germany reducing income tax rates beginning January 1, 2000. Accordingly, the Company recorded a charge of $2,800 to income tax expense reflecting the revaluation of deferred tax assets at the new, lower effective tax rates.

In connection with the Spinoff, GenTek entered into a tax sharing agreement with GCG which requires GenTek to indemnify and hold harmless GCG for consolidated tax liabilities attributable to periods before the Spinoff.

The IRS examinations of the Company’s federal income tax returns for 1990 and 1991 resulted in the issuance of a deficiency notice during 1995. The Company filed an administrative appeal with the IRS in 1995 contesting the items denoted in the deficiency notice. During 1998 the Company entered into a settlement agreement with the IRS settling all items denoted in the original deficiency notice. The settlement agreement binds the IRS for all years subsequent to 1989 on the items denoted in the original deficiency notice. In 1998, the Company recorded an income tax benefit of $19,527 in connection with the reversal of amounts previously accrued in connection with the deficiency notice settlement agreement.