Medtronic 2008 Annual Report Download - page 81

Restricted Stock Awards The following table summarizes restricted stock award activity during fiscal years 2008, 2007 and 2006:
Fiscal Year
2008 2007 2006
Awards
(in thousands)
Wtd. Avg.
Grant Price
Awards
(in thousands)
Wtd. Avg.
Grant Price
Awards
(in thousands)
Wtd. Avg.
Grant Price
Nonvested, beginning balance
3,982 $ 50.16 2,008 $ 51.64 1,062 $ 48.52
Granted 2,200 47.74 2,188 48.19 1,063 54.62
Assumed from Kyphon acquisition 402 46.88 — — — —
Reinvested dividend equivalent units 4 49.53 4 50.33 3 54.62
Vested (492) 47.60 (112) 47.57 (41) 49.96
Forfeited (307) 49.88 (106) 51.16 (79) 50.68
Nonvested at year-end
5,789
$ 49.24
3,982
$ 50.16
2,008
$ 51.64
Unrecognized compensation expense related to restricted stock
awards as of April 25, 2008 was $178, pre-tax, is expected to be
recognized over a weighted average period of 2.5 years and will be
adjusted for any future changes in estimated forfeitures.
12. Income Taxes
The provision for income taxes is based on earnings before income
taxes reported for financial statement purposes. The components of
earnings before income taxes are:
Fiscal Year
2008 2007 2006
U.S. $ 713 $ 1,579 $ 1,581
International 2,172 1,936 1,580
Earnings before income taxes
$ 2,885
$ 3,515
$ 3,161
The provision for income taxes consists of:
Fiscal Year
2008 2007 2006
Current tax expense:
U . S . $ 458 $ 712 $ 471
International 267 239 11
Total current tax expense 725 951 482
Deferred tax expense (benefit):
U . S . (40) (216) 159
International (31) (22) (27)
Net deferred tax expense (benefit) (71) (238) 132
Total provision for income taxes
$ 654
$ 713
$ 614
Deferred taxes arise because of the different treatment of transactions
for financial statement accounting and income tax accounting, known
as “temporary differences.” The Company records the tax effect of these
temporary differences as “deferred tax assets” and “deferred tax
liabilities.” Deferred tax assets generally represent items that can be
used as a tax deduction or credit in a tax return in future years for which
the Company has already recorded the tax benefit in the consolidated
statements of earnings. The Company establishes valuation allowances
for deferred tax assets when the amount of expected future taxable
income is not likely to support the use of the deduction or credit. The
Company has established valuation allowances related to tax benefits
from certain acquisitions that, if not ultimately required, will result in a
reduction to goodwill; these allowances were $15 and $16 at April 25,
2008 and April 27, 2007, respectively. The Company has established
valuation allowances for capital loss carryforwards and deferred taxes
which are capital in nature in the amount of $122 and $35 at April 25,
2008 and April 27, 2007, respectively. The capital loss carryforwards
expire within five years. In addition, the Company has state loss and
credit carryforwards and non-U.S. tax losses of approximately $40
available at both April 25, 2008 and April 27, 2007. These carryforwards
are offset by valuation allowances and expire at various points in time,
from within three years to no expiration date. These additional
allowances would result in a reduction to the provision for income taxes
in the consolidated statement of earnings, if they are ultimately not
required. Deferred tax liabilities generally represent tax expense
recognized in the consolidated financial statements for which payment
has been deferred or expense has already been taken as a deduction
77Medtronic, Inc.