Charter 2010 Annual Report Download - page 117

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F- F-PB
CHARTER COMMUNICATIONS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2010, 2009, AND 2008
(dollars in millions, except share or per share data or where indicated)
e tax effects of these temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at
December 31, 2010 and 2009 which are included in other long-term liabilities accompanying consolidated balance sheets are presented below.
Successor
December 31,
2010
December 31,
2009
Deferred tax assets:
Goodwill $ 192 $ 194
Deferred financing 31 214
Investment in partnership 450 400
Loss carryforwards 2,643 2,428
Accrued and other 148 131
Total gross deferred tax assets 3,464 3,367
Less: valuation allowance (2,275) (1,955)
Deferred tax assets $ 1,189 $ 1,412
Deferred tax liabilities:
Indefinite life intangibles $ (575) $ (123)
Other intangibles (489) (705)
Property, plant and equipment (626) (642)
Other (1) --
Indirect corporate subsidiaries:
Indefinite life intangibles (117) (114)
Other (143) (134)
Deferred tax liabilities (1,951) (1,718)
Net deferred tax liabilities $ (762) $(306)
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or
all of the deferred tax assets will be realized. Due to the Company’s
history of losses and the limitations imposed under Section 382
of the Code, discussed below, on Charter’s ability to use existing
loss carryforwards in the future, valuation allowances have been
established except for future taxable income that will result from
the reversal of existing temporary differences for which deferred tax
liabilities are recognized. e 2010 increase in valuation allowance
includes an increase of $50 million related to Charter’s investment
in partnership interest and an increase of $22 million related to
adjustments to cash flow hedges included in other comprehensive
income.
As of December 31, 2010, Charter and its indirect corporate
subsidiaries had approximately $6.9 billion of federal tax net
operating and capital loss carryforwards, resulting in a gross deferred
tax asset of approximately $2.4 billion, expiring in the years 2014
through 2030. ese losses resulted from the operations of Charter
Holdco and its subsidiaries. In addition, as of December 31, 2010,
Charter and its indirect corporate subsidiaries had state tax net
operating losses, resulting in a gross deferred tax asset (net of federal
tax benefit) of approximately $228 million, generally expiring in
years 2011 through 2030.
Upon emergence from bankruptcy, Charter experienced an
“ownership change” as defined in Section 382 of the Code.
erefore, the use of Charter’s tax loss carryforwards is subject to
certain limitations under Section 382. As of December 31, 2010,
$1.3 billion of federal tax loss carryforwards are unrestricted and
available for Charter’s immediate use, while approximately $5.6
billion of federal tax loss carryforwards are still subject to Section
382 restrictions. Pursuant to these restrictions, an aggregate of $2.1
billion, in varying amounts from 2011 to 2014, and an additional
$176 million annually over each of the next 18 years of federal tax
loss carryforwards, should become unrestricted and available for
Charter’s use. ose limitation amounts accumulate for future use
to the extent they are not utilized in a given year. Charter’s state loss