Windstream 2008 Annual Report Download - page 163
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. Income Taxes, Continued:
The significant components of the net deferred income tax liability (asset) were as follows at December 31:
(Millions) 2008 2007 (a)
Property, plant and equipment $ 773.3 $ 705.7
Goodwill and other intangible assets 652.0 606.8
Operating loss carryforward (114.0) (100.7)
Postretirement and other employee benefits (154.9) (32.5)
Unrealized holding loss and interest swaps (54.8) (30.4)
Deferred compensation (11.6) (11.5)
Deferred debt costs (9.2) (9.9)
Other, net (43.6) (37.4)
$ 1,037.2 $ 1,090.1
Valuation allowance 2.6 11.3
Deferred income taxes, net $ 1,039.8 $ 1,101.4
Deferred tax assets $ 436.9 $ 285.9
Deferred tax liabilities 1,476.7 1,387.3
Deferred income taxes, net $ 1,039.8 $ 1,101.4
(a) On November 21, 2008, Windstream completed the sale of its wireless business. In conjunction with the sale,
the Company classified corresponding assets and liabilities as held for sale, including deferred taxes (see
Note 16).
At December 31, 2008 and 2007, the Company had federal net operating loss carryforwards of approximately
$214.3 million and $248.1 million, respectively, which expire in varying amounts through 2025. These loss
carryforwards were acquired in conjunction with the Company’s merger with Valor. The decrease in 2008
represents the amount utilized for the year. At December 31, 2008 and 2007, the Company had state net operating
loss carryforwards of approximately $693.7 million and $347.0 million, respectively, which expire annually in
varying amounts through 2027. These loss carryforwards were initially acquired in conjunction with the
Company’s mergers with Valor and CTC. The 2008 increase is primarily driven by loss carryforwards generated
from the legal entity restructuring implemented in 2007. The Company is limited in its ability to use these federal
and state loss carryforwards on an annual basis due to the ownership change caused by the merger with Valor and
expected future taxable income. As a result, a portion of these loss carryforwards will not be utilized before they
expire. The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts
expected to be realized. As of December 31, 2008 and 2007, the Company recorded a valuation allowance of $2.6
million and $11.3 million, respectively, related to federal and state loss carryforwards, which are expected to
expire and not be utilized. The decrease in 2008 is due to a purchase accounting adjustment for a revision in the
limitation associated with the federal net operating loss carryforward acquired from the merger with Valor.
F-75