Windstream 2006 Annual Report Download - page 163
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Income Taxes:
Income tax expense was as follows for the years ended December 31:
(Millions) 2006 2005 2004
Current:
Federal $172.7 $215.5 $155.0
State and other 10.4 55.9 37.2
183.1 271.4 192.2
Deferred:
Federal 63.0 11.5 57.1
State and other 30.2 (15.0) 10.1
93.2 (3.5) 67.2
$276.3 $267.9 $259.4
Deferred income tax expense for all three years primarily resulted from temporary differences between
depreciation expense for income tax purposes and depreciation expense recorded in the consolidated financial
statements. Deferred income tax expense for all periods also included the effects of amortizing indefinite-lived
intangible assets for income tax purposes. Those assets are not amortized for financial statement purposes in
accordance with SFAS No. 142.
Differences between the federal income tax statutory rates and effective income tax rates, which include both
federal and state income taxes, were as follows for the years ended December 31:
2006 2005 2004
Statutory federal income tax rates 35.0% 35.0% 35.0%
Increase (decrease):
State income taxes, net of federal benefit 3.7 4.1 4.8
Reversal of income tax contingency reserves (0.5) - -
Costs associated with spin off of Company 0.7 1.7 -
Other items, net (0.6) 0.5 0.4
Effective income tax rates 38.3% 41.3% 40.2%
The significant components of the net deferred income tax liability (asset) were as follows at December 31:
(Millions) 2006 2005
Property, plant and equipment $ 728.9 $509.1
Goodwill and other intangible assets 500.5 160.6
Operating loss carryforward (107.1) -
Postretirement and other employee benefits (80.8) (21.4)
Unrealized holding loss on interest swaps (15.1) -
Deferred compensation (11.8) -
Deferred debt costs (9.0) -
Other, net (25.4) 17.4
980.2 $665.7
Valuation allowance 10.6 -
Deferred income taxes, net $ 990.8 $665.7
Current deferred tax assets $ - $ (10.6)
Noncurrent deferred income tax liabilities 990.8 676.3
Deferred income taxes, net $ 990.8 $665.7
At December 31, 2006 and 2005, total deferred tax assets were $294.4 million and $36.3 million, respectively,
and total deferred tax liabilities were $1,285.2 million and $702.0 million, respectively.
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