Windstream 2008 Annual Report Download - page 162
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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) 2008 2007 2006
Current:
Federal $ 136.8 $ 198.1 $ 172.7
State and other 30.4 23.7 10.4
167.2 221.8 183.1
Deferred:
Federal 98.9 46.7 63.0
State and other 17.1 (17.0) 30.2
116.0 29.7 93.2
Income tax expense $ 283.2 $ 251.5 $ 276.3
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. Indefinite-lived intangible assets are not amortized for financial
statement purposes in accordance with SFAS No. 142.
The Company completed internal reorganizations of its legal entity structure in both 2008 and 2007. The 2008
reorganization was the primary driver of the increase in income tax expense through deferred income taxes. The
2007 reorganization was the primary driver of the decrease in income tax expense through deferred income taxes
in 2007, along with a reduction in the Kentucky state income tax.
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:
(Millions) 2008 2007 2006
Statutory federal income tax rates 35.0% 35.0% 35.0%
Increase (decrease)
State income taxes, net of federal benefit 2.3 1.5 3.7
Adjustment of deferred taxes for legal entity restructuring 2.0 (1.1) -
Reversal in income tax contingency reserves - - (0.5)
Nontaxable gain on sale of publishing business - (13.5) -
Costs associated with spin off of Company - - 0.7
Other items, net 0.1 (0.3) (0.6)
Effective income tax rates 39.4% 21.6% 38.3%
F-74