Question-and-Answer Session
Operator
(Operator Instructions). The first question will come from Alex Blanton with Ingalls & Snyder.
Alex Blanton - Ingalls & Snyder
Just one, I have some clarification questions. The items you mentioned on page one of the press release $13.2 million in restructuring and severance. Where is that in the income statement, which lines?
Ken McCuskey
Alex this is Ken McCuskey. I can tell you what that is. About $6.1 million of that is in the cost to sales line. So, it was in gross profit.
Alex Blanton - Ingalls & Snyder
$6.1 million.
Ken McCuskey
Yes. $4.7 million is in SG&A so operating expenses. Another $1.5 million is part of the loss on sales of business and asset disposals, which we breakout as a separate line.
Alex Blanton - Ingalls & Snyder
$1.5 million in there.
Ken McCuskey
Then finally there is just a little over a million call it million one in other net.
Alex Blanton - Ingalls & Snyder
Other net. Okay.
Ken McCuskey
Okay?
Alex Blanton - Ingalls & Snyder
What about the tax deferral charge, the $28.5 million?
Ken McCuskey
Right.
Alex Blanton - Ingalls & Snyder
Where is that?
Ken McCuskey
That's on the tax line.
Alex Blanton - Ingalls & Snyder
So that's why you have a tax on a loss.
Ken McCuskey
That's correct.
Alex Blanton - Ingalls & Snyder
Okay.
Ken McCuskey
If you want to reconcile that’s the four year number, if you look at our year-to-date pretax income of just shy of $202 million Alex.
Alex Blanton - Ingalls & Snyder
Yes.
Ken McCuskey
Then you've seen we're reporting a tax expense of $59 million.
Alex Blanton - Ingalls & Snyder
Right.
Ken McCuskey
You take that $202 million and multiply it by kind of a blended rate around the world that you would expect of around 31.5%, you would expect a tax benefit of actually about $63 million.
Alex Blanton - Ingalls & Snyder
Right.
Ken McCuskey
Then the first thing you do is you got $50 million of goodwill impairment from the first quarter in there and we can't tax effect that. So that's a hit of about $18 million that you have to add back to the benefit or expense if you will. Then finally there's $109 million of deferred tax valuation allowance that are hitting negatively against it. Once you adjust with those two things you get down close to your $59 million of tax expense on a loss.
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