Medtronic 2015 Annual Report Download - page 120

Medtronic plc
Notes to Consolidated Financial Statements (Continued)
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 income. 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. 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 on the Company’s tax return but has not yet been recognized as an expense in the consolidated statements of income.
Tax assets (liabilities), shown before jurisdictional netting of deferred tax assets (liabilities), are comprised of the following:
(in millions) April 24, 2015 April 25, 2014
Deferred tax assets:
Net operating loss, capital loss, and credit carryforwards $ 5,912 $ 487
Other accrued liabilities 585 205
Accrued compensation 330 201
Pension and post-retirement benefits 449 194
Stock-based compensation 418 171
Other 303 171
Inventory 171 118
Federal and state benefit on uncertain tax positions 296 79
Gross deferred tax assets 8,464 1,626
Valuation allowance (5,607) (397)
Total deferred tax assets 2,857 1,229
Deferred tax liabilities:
Intangible assets (5,393) (652)
Basis impairment (204) (225)
Realized loss on derivative financial instruments (112) (110)
Other (96) (24)
Accumulated depreciation (217) (20)
Unrealized gain on available-for-sale securities and derivative financial instruments (160) —
Total deferred tax liabilities (6,182) (1,031)
Prepaid income taxes 427 320
Income tax receivables 188 113
Tax (liabilities)/assets, net $ (2,710) $ 631
Reported as (after valuation allowance and jurisdictional netting):
Tax assets $ 1,335 $ 736
Long-term tax assets 774 300
Deferred tax liabilities (119) (19)
Long-term deferred tax liabilities (4,700) (386)
Tax (liabilities)/assets, net $ (2,710) $ 631
At April 24, 2015, the Company had approximately $26.794 billion of net operating loss carryforwards in certain non-U.S.
jurisdictions, of which $20.827 billion have no expiration, and the remaining $5.967 billion will expire in future years through
2035. Included in these net operating loss carryforwards are $17.058 billion of net operating losses related to a subsidiary of the
Company, substantially all of which were recorded in fiscal 2008 as a result of the receipt of a favorable tax ruling from certain
non-U.S. taxing authorities. The Company has recorded a full valuation allowance against these net operating losses as
management does not believe that it is more likely than not that these net operating losses will be utilized. Certain of the
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