Time Warner Cable 2010 Annual Report Download - page 118

Significant components of TWC’s deferred income tax liabilities, net, as of December 31, 2010 and 2009 are as
follows (in millions):
2010 2009
December 31,
Equity-based compensation ............................................. $ 175 $ 181
Investments ........................................................ 147 130
Other
(a)
............................................................ 369 351
Valuation allowances
(b)
................................................ (57) (88)
Deferred income tax assets ........................................... 634 574
Cable franchise rights and customer relationships
(c)
........................... (6,481) (6,136)
Property, plant and equipment ........................................... (3,587) (3,239)
Other ............................................................. (53) (17)
Deferred income tax liabilities ......................................... (10,121) (9,392)
Deferred income tax liabilities, net
(d)
.................................... $ (9,487) $ (8,818)
(a)
Other deferred income tax assets includes net operating loss carryforwards of $15 million as of December 31, 2010 and 2009 and tax credit
carryforwards of $20 million and $29 million as of December 31, 2010 and 2009, respectively. These net operating loss and tax credit
carryforwards expire in varying amounts through 2030.
(b)
The Company has recorded a valuation allowance for deferred income tax assets associated with equity-method investments, as well as certain
state net operating loss and credit carryforwards. The valuation allowance is based upon the Company’s assessment that it is more likely than not
that a portion of the deferred income tax asset will not be realized. The change in the valuation allowance during 2010 included a decrease of
$29 million primarily related to equity-method investments.
(c)
Cable franchise rights and customer relationships is comprised of deferred income tax assets (approximately $800 million) where the tax basis
exceeds the book basis primarily as a result of the impairment recorded in 2008 that are expected to be realized as the Company receives tax
deductions from the amortization, for tax purposes, of the intangible assets offset by deferred income tax liabilities (approximately $7.3 billion)
that are associated with intangible assets for which the book basis is greater than the tax basis.
(d)
Deferred income tax liabilities, net, includes current deferred income tax assets of $150 million and $139 million as of December 31, 2010 and
2009, respectively.
Changes in the Company’s deferred income tax liabilities, net, from January 1 through December 31 are presented
below (in millions):
2010 2009
Balance at beginning of year ............................................ $ (8,818) $ (8,037)
Deferred income tax provision........................................... (687) (676)
Recorded directly to TWC shareholders’ equity as a component of:
Additional paid-in capital:
Equity-based compensation ......................................... 45 (6)
Retained earnings (accumulated deficit):
Change in sabbatical leave benefit obligation ............................ — (2)
Accumulated other comprehensive loss, net:
Change in pension benefit obligation .................................. (25) (95)
Change in gains on derivative financial instruments ....................... (2) (2)
Balance at end of year ................................................ $ (9,487) $ (8,818)
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)