NOTE 10—INCOME TAXES

Current income tax expense represents the amounts expected to be reported on the Company’s income tax returns, and deferred tax expense or benefit represents the change in net deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Valuation allowances are recorded as appropriate to reduce deferred tax assets to the amount considered likely to be realized.

The Company evaluates its deferred tax assets each period to determine if a valuation allowance is required based on whether it is “more likely than not” that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods on a federal, state and foreign jurisdiction basis. The Company conducts its evaluation by considering all available positive and negative evidence, including historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. motion picture and broader economy, among others. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2024 for each taxing jurisdiction. Such objective evidence limits the ability to consider other subjective evidence, such as the Company’s projections of future taxable income. For the year ended December 31, 2024, the Company remained in a cumulative loss over the past three-year period for the U.S. and international jurisdictions except for Finland.

The Company maintains a valuation allowance against U.S. deferred tax assets as well as international jurisdictions in which it operates, with the exception of Finland.

The actual effective rate for the year ended December 31, 2024 was (0.6)%. The Company’s consolidated tax rate for the year ended December 31, 2024 differs from the U.S. statutory tax rate primarily due to the valuation allowances in U.S. and foreign jurisdictions, foreign tax rate differences, and federal and state tax credits, partially offset by permanent differences related to interest, compensation, and other discrete items. At December 31, 2024 and December 31, 2023, the Company has recorded net deferred tax liabilities of $33.9 million and of $32.4 million, respectively.

The income tax provision reflected in the consolidated statements of operations consists of the following components:

​

​

Pre-tax losses consisted of the following:

​

​

The difference between the effective tax rate on net loss from continuing operations before income taxes and the U.S. federal income tax statutory rate is as follows:

​

​

The significant components of deferred income tax assets and liabilities as of December 31, 2024 and December 31, 2023 are as follows:

​

​

​

​

A rollforward of the Company’s valuation allowance for deferred tax assets is as follows:

​

The Company has federal income tax net operating loss carryforwards of $1,742.0 million. Approximately $320.3 million will expire between 2025 and 2036 and will be limited annually due to certain change in ownership provisions of the Internal Revenue Code. Approximately $1,421.7 million can be used indefinitely. The Company’s foreign net operating losses of $945.4 million can be used indefinitely. The Company also has state income tax loss carryforwards of $2,688.1 million. Approximately $1,935.2 million may be used over various periods ranging from 1 to 20 years. Approximately $752.9 million can be used indefinitely.

A reconciliation of the change in the amount of unrecognized tax benefits was as follows:

​

​

There are currently $0.1 million of unrecognized tax benefits which the Company anticipates will be resolved in the next twelve months.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Generally, tax years beginning after December 31, 2004 are still open to examination by various taxing authorities. Additionally, as discussed above, the Company has net operating loss (“NOL”) carryforwards for tax years ended December 31, 2005 through December 31, 2024, in the U.S. and various state jurisdictions which have carryforwards of varying lengths of time. These NOLs are subject to adjustment based on the statute of limitations applicable to the return in which they are utilized, not the year in which they are generated. Various state, local and foreign income tax returns are also under examination by taxing authorities. The Company does not believe that the outcome of any examination will have a material impact on its consolidated financial statements.

Utilization of the Company’s net operating loss carryforwards, disallowed business interest carryforward and other tax attributes became subject to the Section 382 ownership change limitation due to changes in our stock ownership on January 29, 2021. Management believes the Company’s ability to utilize these tax attributes has not been significantly limited by this event.