AT&T Wireless 2009 Annual Report Download - page 80

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
78 AT&T 09 AR
NOTE 10. INCOME TAXES
Significant components of our deferred tax liabilities (assets)
are as follows at December 31:
2009 2008
Depreciation and amortization $ 18,796 $ 18,269
Intangibles (nonamortizable) 1,990 1,990
Employee benefits (14,220) (14,825)
Net operating loss and other carryforwards (1,846) (2,220)
Investment in wireless partnership 18,646 16,028
Other – net (2,019) (2,250)
Subtotal 21,347 16,992
Deferred tax assets valuation allowance 1,182 1,190
Net deferred tax liabilities $ 22,529 $ 18,182
Net long-term deferred tax liabilities $ 23,803 $ 19,196
Less: Net current deferred tax assets (1,274) (1,014)
Net deferred tax liabilities $ 22,529 $ 18,182
At December 31, 2009, we had combined net operating and
capital loss carryforwards (tax effected) for federal income tax
purposes of $362 and for state and foreign income tax
purposes of $1,125, expiring through 2028. Additionally, we
had federal credit carryforwards of $66 and state credit
carryforwards of $293, expiring primarily through 2026.
We recognize a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some
portion, or all, of a deferred tax asset will not be realized.
Our valuation allowances at December 31, 2008 and 2009,
relate primarily to state net operating loss carryforwards.
As required by GAAP, we recognize the financial statement
effects of a tax return position when it is more likely than not,
based on the technical merits, that the position will ultimately
be sustained. For tax positions that meet this recognition
threshold, we apply our judgment, taking into account
applicable tax laws, our experience in managing tax audits
and relevant GAAP, to determine the amount of tax benefits
to recognize in our financial statements. For each position,
the difference between the benefit realized on our tax return
and the benefit reflected in our financial statements is
recorded on our balance sheet as an unrecognized tax benefit
(UTB). We update our unrecognized tax benefits at each
financial statement date to reflect the impacts of audit
settlements and other resolution of audit issues, expiration
of statutes of limitation, developments in tax law and
ongoing discussions with taxing authorities. A reconciliation
of the change in our UTB balance from January 1, 2009
to December 31, 2009, and January 1, 2008 to
December 31, 2008, is as follows:
Following are our derivative instruments and their related
hedged items affecting our financial position and performance:
Fair Value of Derivatives in the Consolidated Balance Sheet
Derivatives designated as hedging instruments and reflected
as other assets, other liabilities and, for a portion of interest
rate swaps, accounts receivable.
Asset Derivatives December 31, 2009
Interest rate swaps $ 399
Cross-currency swaps 635
Interest rate locks 150
Foreign exchange contracts 2
Total $1,186
Liability Derivatives December 31, 2009
Cross-currency swaps $ (390)
Interest rate locks (6)
Foreign exchange contracts (7)
Total $ (403)
The balance of the unrealized derivative gain (loss) in
accumulated OCI was $142 at December 31, 2009, and
$(483) at December 31, 2008.
Effect of Derivatives on the
Consolidated Statement of Income
Year ended
Fair Value Hedging Relationships December 31, 2009
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps $(216)
Gain (Loss) on long-term debt 216
In addition, the net swap settlements that accrued and settled
in the year ended December 31, 2009, were also reported as
reductions of interest expense.
Year ended
Cash Flow Hedging Relationships December 31, 2009
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI $738
Other income (expense) reclassified
from accumulated OCI into income —
Interest rate locks:
Gain (Loss) recognized in accumulated OCI 203
Interest income (expense) reclassified
from accumulated OCI into income (23)
Foreign exchange contracts:
Gain (Loss) recognized in accumulated OCI (2)
Other income (expense) reclassified
from accumulated OCI into income —
Non-designated Hedging Instruments
Foreign exchange contracts (Other income) $ (1)