Windstream 2014 Annual Report Download - page 191

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-75
11. Income Taxes, Continued:
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:
2014 2013 2012
Statutory federal income tax rate 35.0% 35.0% 35.0%
Increase (decrease)
State income taxes, net of federal benefit 4.7 3.3 2.0
Adjust deferred taxes for state net operating loss carryforward — (0.1)—
Transaction costs (8.0)— —
Tax refunds 7.3 — —
Valuation allowance (15.4)(0.3)—
Income tax reserves (0.4)(5.4)—
Research and development credit 12.1 (2.2)—
Disallowed loss (2.9)— —
Tax credits 2.2 — —
Other items, net 4.3 0.6 0.1
Effective income tax rate 38.9% 30.9% 37.1%
The significant components of the net deferred income tax liability (asset) were as follows at December 31:
(Millions) 2014 2013
Property, plant and equipment $ 1,146.7 $ 1,278.4
Goodwill and other intangible assets 1,312.8 1,322.5
Operating loss and credit carryforward (604.0)(677.8)
Postretirement and other employee benefits (121.8)(108.6)
Unrealized holding loss and interest rate swaps (5.3)(1.4)
Deferred compensation (5.7)(5.2)
Bad debt (32.1)(30.3)
Deferred debt costs (12.9)(17.7)
Restricted stock (8.5)(12.1)
Other, net 9.1 (35.9)
1,678.3 1,711.9
Valuation allowance 94.9 84.9
Deferred income taxes, net $ 1,773.2 $ 1,796.8
Deferred tax assets $ (898.0)$ (930.8)
Deferred tax liabilities 2,671.2 2,727.6
Deferred income taxes, net $ 1,773.2 $ 1,796.8
At December 31, 2014 and 2013, we had federal net operating loss carryforwards of approximately $1,304.2 million and $1,545.6
million, respectively, which expire in varying amounts from 2022 through 2031. The loss carryforwards at December 31, 2014
were primarily losses acquired in conjunction with our mergers with Valor Communications Group, Inc. (“Valor”), NuVox, Iowa
Telecom and PAETEC. The 2014 decrease is primarily associated with the amount utilized for the year. At December 31, 2014
and 2013, we had state net operating loss carryforwards of approximately $1,990.6 million and $2,001.2 million, respectively,
which expire annually in varying amounts from 2015 through 2033. The loss carryforwards at December 31, 2014 were primarily
losses acquired in conjunction with our mergers with Valor, CTC, D&E, Lexcom Inc. (“Lexcom”), NuVox, Iowa Telecom, Q-
Comm and PAETEC. Federal and state tax rules limit the deductibility of loss carryforwards in years following an ownership
change. As a result of these limitations or the expected lack of sufficient future taxable income, we believe that it is more likely
than not that the benefit from certain federal and state loss carryforwards will not be realized prior to their expiration.