Earthlink 2010 Annual Report Download - page 126
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Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes the significant differences between the U.S. federal statutory tax rate and the Company's effective tax rate
for continuing operations for financial statement purposes for the years ended December 31, 2008, 2009 and 2010:
Deferred tax assets and liabilities from continuing operations include the following as of December 31, 2009 and 2010:
As a result of its acquisition of ITC^Deltacom Inc in the fourth quarter of 2010, EarthLink increased its net deferred tax assets by
$70.7 million. Included in this amount is $123.3 million of deferred tax assets
119
Year Ended December 31,
2008 2009 2010
(in thousands)
Federal income tax provision at statutory
rate
$
(58,077
)
$
(56,362
)
$
(48,362
)
State income taxes, net of federal benefit
(2,995
)
(5,757
)
(5,357
)
Nondeductible expenses
1,841
(269
)
(2,671
)
Goodwill and intangible asset impairment
(23,081
)
(8,362
)
—
Net change to valuation allowance
114,808
198,767
351
Change in state tax rate
—
—
(
657
)
Other
(312
)
(1,932
)
(108
)
Income tax benefit (provision)
$
32,184
$
126,085
$
(56,804
)
As of December 31,
2009
2010
(in thousands)
Current deferred tax assets:
Accrued liabilities and reserves
$
7,709
$
7,746
Net operating loss carryforwards
45,047
42,669
Other
911
5,025
Valuation allowance
(6,995
)
(6,549
)
Current deferred tax liabilities:
Other
(609
)
(3,230
)
Total net current deferred tax assets
46,063
45,661
Non
-
current deferred tax assets:
Net operating loss carryforwards
$
86,885
$
160,323
Accrued liabilities and reserves
2,078
2,490
Subscriber base and other intangible assets
66,144
53,071
Valuation allowance
(27,116
)
(32,650
)
Other
52,863
60,512
Non
-
current deferred tax liabilities:
Subscriber base and other intangible assets
(3,010
)
(54,393
)
Other
(22,912
)
(17,755
)
Indefinite lived intangible assets
(1,800
)
(1,385
)
Total net non
-
current deferred tax asset
153,132
170,213
Net deferred tax asset
$
199,195
$
215,874