Page 18 - RosboroAR2017

The recorded deferred tax assets and liabilities generally relate to the tax e ects of net operating losses and temporary di erences in nancial and income tax reporting of depreciation, amortization, and various payroll and payroll-related costs. At December 31, 2017, the Company had net operating loss carryforwards for federal and state income tax purposes of $3,816,000, which will begin expiring in 2036 if not utilized.
The Company’s 2017 consolidated statement of income includes the impact of the enactment of the Tax Cuts and Jobs Act (“Tax Reform”), which was signed into law on December 22, 2017. The new Tax Reform law included a reduction of the corporate federal income tax rate from 35% to 21%. The Company applied the newly enacted corporate federal income tax rate of 21% in calculating its net deferred tax liability as of December 31, 2017, which had the e ect of reducing its deferred tax expense and increasing net income by approximately $570,000.
The provision for income taxes generally di ers from the amount computed by applying the statutory federal income tax rate to earnings before taxes primarily due to the e ects of the Tax Reform rate change described above, state taxes and non-deductible expenses.
The Company les income tax returns in the U.S. federal jurisdiction, and various state jurisdictions. As of December 31, 2017, there are no income tax-related accrued interest or penalties recorded in the consolidated nancial statements.
NOTE 8
The Company is a participant in a multiemployer de ned contribution plan. The Company’s collective bargaining agreement requires employer contributions to the plan at a rate between $.80 to $.95 per hour worked, increasing by $.05 per year through the duration of the agreement. Company contributions were approximately $278,000 for the year ended December 31, 2017.
The Company also maintains a separate 401(k) and pro t-sharing plan that covers all eligible full-time salaried employees. The plan requires employer matching contributions equal to 100% of the employee’s elective deferrals up to a maximum of 6% of their
salary. Company matching contributions were approximately $277,000 for the year ended December 31, 2017. The plan also allows for employer discretionary contributions. The Company accrued discretionary contributions of $266,000 for the year ended December 31, 2017 and has been included with accounts payable and accrued expenses.
NOTE 9 COMMITMENTS & CONTINGENCIES
LOG SUPPLY AGREEMENT - The Company has entered into a two year log supply agreement with Franklin-Clarkson LogCo, Inc. to purchase logs. For 2018, the Company
is committed to purchase 12,000 MBF of Douglas Fir and White Wood logs, plus or minus 5% with no more than 25% of the total volume being White Wood logs, at a price to be negotiated and mutually agreed upon quarterly that prices logs based on grade, sort, length and diameter. The agreement can be extended for one-year extension terms with notice by either party at least 6-months prior to the termination date of the initial or extended term, subject to 30-day period for the counterparty to decline the extension.
LITIGATION - The Company is involved in various legal and environmental proceedings encountered in the normal course of business. While any litigation or environmental matter has an element of uncertainty, the Company believes that the resolution of any of these matters or all of them combined will not have a materially adverse e ect on its nancial condition or operations.
NOTE 10 STOCKHOLDERS’ EQUITY
The Company is authorized to issue 100,000 shares of common stock with a par value of $0.01 per share. The common stock is divided into two classes: voting common stock and non-voting common stock. A maximum of 80,000 shares of voting common stock and a maximum of 20,000 shares of non-voting common stock may be issued. The Company
is also authorized to issue 10,000 shares of preferred stock with a par value of $0.01 per share. The Board of Directors has designated a series of preferred stock to be known
as “Series A Preferred Stock”, which series consists of a maximum of 7,500 shares. The common and preferred stock balances reported on the consolidated balance sheets include related additional paid-in capital amounts.
The Company has 5,100 voting common shares issued and outstanding at December 31, 2017 and 2016. The Company may be required to purchase shares of the Corporation in the event of certain voluntary and/or involuntary acts. The Company would be obligated to purchase shares at a fair value mutually agreed to per terms of the amended and restated stockholders agreement.
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RETIREMENT & PROFIT SHARING PLANS