Time Warner Cable 2006 Annual Report Download - page 138
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The components of the provision for income taxes are as follows (in millions):
2006 2005 2004
Year Ended December 31,
Federal:
Current ................................................ $(324) $(471) $ 35
Deferred . . . ............................................ (196) (158) (383)
State:
Current ................................................ (56) (77) (45)
Deferred . . . ............................................ (44) 553 (61)
Total income tax provision ................................ $(620) $(153) $(454)
The difference between income taxes expected at the U.S. federal statutory income tax rate of 35% and income
taxes provided is detailed below (in millions):
2006 2005 2004
Year Ended December 31,
Taxes on income at U.S. federal statutory rate ..................... $(545) $(456) $(380)
State and local taxes, net of federal tax benefits .................... (69) (73) (71)
State tax law change, deferred tax impact
(a)
....................... — 205 —
State ownership restructuring and methodology changes, deferred tax
impact
(b)
............................................... — 174 —
Other.................................................... (6) (3) (3)
Reported income tax provision ............................... $(620) $(153) $(454)
(a)
Represents changes to the method of taxation in Ohio. The income tax is being phased out and replaced with a gross receipts tax.
(b)
Represents the restructuring of the Company’s partnership interests in Texas and certain other state methodology changes.
The Company has recorded a tax provision in shareholders’ equity of $1 million in 2006 and a tax benefit in
shareholders’ equity of $3 million and $2 million in 2005 and 2004, respectively, in connection with the exercise of
certain stock options.
Significant components of TWC’s net deferred tax liabilities are as follows (in millions):
2006 2005
As of December 31,
Cable franchise costs and customer relationships ...................... $(10,806) $(10,037)
Fixed assets ................................................. (1,837) (1,354)
Investments ................................................. (552) (334)
Other ...................................................... (92) (184)
Deferred tax liabilities ....................................... (13,287) (11,909)
Stock-based compensation ...................................... 138 139
Other ...................................................... 247 139
Deferred tax assets .......................................... 385 278
Net deferred tax liabilities ..................................... $(12,902) $(11,631)
133
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)