Eversource 2003 Annual Report Download - page 53

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51
Consolidated Statements of Income Taxes
For the Years Ended December 31,
(Thousands of Dollars) 2003 2002 2001
The components of the federal and state income tax provisions are:
Current income taxes:
Federal $ 143,349 $ 197,426 $244,501
State 37,116 34,204 46,155
Total current 180,465 231,630 290,656
Deferred income taxes, net:
Federal (82,518) (108,524) (80,968)
State (34,266) (14,210) (15,644)
Total deferred (116,784) (122,734) (96,612)
Investment tax credits, net (3,819) (26,592) (20,092)
Total income tax expense $ 59,862 $ 82,304 $173,952
Deferred income taxes are comprised of the tax effects of temporary differences as follows:
Deferred tax asset associated with net operating losses $— $ — $ 2,206
Depreciation 55,002 51,146 (8,956)
Net regulatory deferral (149,087) (141,567) (44,127)
Sale of generation assets —(20,500) (225,019)
Pension (3,467) (1,720) 24,183
Loss on bond redemptions (3,487) (1,084) 12,396
Contract termination costs, net of amortization (9,121) (9,500) 113,719
Change in fair value of energy contracts (12,310) 20,691 15,780
Other 5,686 (20,200) 13,206
Deferred income taxes, net $(116,784) $(122,734) $ (96,612)
A reconciliation between income tax expense and the expected
tax expense at the statutory rate is as follows:
Expected federal income tax $ 65,301 $ 83,990 $156,500
Tax effect of differences:
Depreciation 4,010 10,404 5,313
Amortization of regulatory assets 6,487 14,966 10,260
Investment tax credit amortization (3,819) (26,592) (20,092)
State income taxes, net of federal benefit 1,853 12,996 19,832
Dividends received deduction (1,370) (3,237) (3,382)
Tax asset valuation allowance/reserve adjustments (5,379) (111) (7,000)
Merger-related expenditures —— (4,589)
Nondeductible stock expenses —— 12,388
Other, net (7,221) (10,112) 4,722
Total income tax expense $ 59,862 $ 82,304 $173,952
NU and its subsidiaries file a consolidated federal income tax return. Likewise NU and its subsidiaries file state income tax returns, with some filing in more than one state.
NU and its subsidiaries are parties to a tax allocation agreement under which each taxable subsidiary pays a quarterly estimate (or settlement) of no more than it would have
otherwise paid had it filed a stand-alone tax return. Generally these quarterly estimated payments are settled to actual payments within three months after filing the associated
return. Subsidiaries generating tax losses are similarly paid for their losses when utilized.
The accompanying notes are also an integral part of these consolidated financial statements.