Windstream 2010 Annual Report Download - page 168
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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) 2010 2009 2008
Current:
Federal $ 71.3 $ 120.2 $ 136.8
State and other (0.8) 10.8 30.4
70.5 131.0 167.2
Deferred:
Federal 103.5 57.4 98.9
State and other 20.4 22.7 17.1
123.9 80.1 116.0
Income tax expense $194.4 $ 211.1 $ 283.2
Deferred income tax expense for all three years primarily resulted from temporary differences between
depreciation and amortization expense for income tax purposes and depreciation and amortization expense
recorded in the consolidated financial statements. Goodwill is not amortized for financial statement purposes in
accordance with authoritative guidance on goodwill and other intangible assets.
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:
2010 2009 2008
Statutory federal income tax rates 35.0% 35.0% 35.0%
Increase (decrease)
State income taxes, net of federal benefit 2.5 2.4 2.3
Adjustment of deferred taxes for legal entity restructuring - - 2.0
Adjust deferred taxes for state net operating loss carryforward - 1.6 -
Nondeductible transaction costs 1.2 0.4 -
Other items, net (0.2) (0.7) 0.1
Effective income tax rates 38.5% 38.7% 39.4%
The significant components of the net deferred income tax liability (asset) were as follows at December 31:
(Millions) 2010 2009
Property, plant and equipment $ 985.8 $ 890.4
Goodwill and other intangible assets 1,104.2 747.2
Operating loss carryforward (194.7) (95.8)
Postretirement and other employee benefits (124.6) (144.6)
Unrealized holding loss and interest swaps (39.1) (42.0)
Deferred compensation (5.6) (12.9)
Deferred debt costs (7.2) (9.2)
Other, net (24.8) (7.2)
1,694.0 1,325.9
Valuation allowance 28.8 24.4
Deferred income taxes, net $ 1,722.8 $ 1,350.3
Deferred tax assets $ 498.2 $ 381.3
Deferred tax liabilities 2,221.0 1,731.6
Deferred income taxes, net $ 1,722.8 $ 1,350.3
At December 31, 2010 and 2009, the Company had federal net operating loss carryforwards of approximately
$356.4 million and $137.7 million, respectively, which expire in varying amounts through 2029. These loss
carryforwards were initially acquired in conjunction with the Company’s merger with Valor. The 2010 increase
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