Medtronic 2013 Annual Report Download - page 115

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Table of Contents
Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
13. Income Taxes
The provision for income taxes is based on earnings before income taxes reported for financial statement purposes. The components
of earnings from continuing operations before income taxes, based on tax jurisdiction, are as follows:
Fiscal Year
(in millions) 2013 2012 2011
U.S. $ 1,806 $ 1,620 $ 1,391
International 2,445 2,525 2,273
Earnings from continuing operations before income taxes $ 4,251 $ 4,145 $ 3,664
The provision for income taxes from continuing operations consists of the following:
Fiscal Year
(in millions) 2013 2012 2011
Current tax expense:
U.S. $ 509 $ 664 $ 360
International 219 231 188
Total current tax expense 728 895 548
Deferred tax expense (benefit):
U.S. 46 (138) 51
International 10 (27) 10
Net deferred tax expense (benefit) 56 (165) 61
Total provision for income taxes $ 784 $ 730 $ 609
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 for federal, state, and foreign net
operating losses, credit carryforwards, capital loss carryforwards, and deferred tax assets which are capital in nature of $313 million
and $258 million at April 26, 2013 and April 27, 2012, respectively. These carryover attributes expire at various points in time,
from within a year to no expiration date. These valuation allowances would result in a reduction to the provision for income taxes
in the consolidated statements 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 on the Company’s tax return but has not yet been recognized as an expense in the consolidated statements
of earnings. Tax assets (liabilities), shown before jurisdictional netting of deferred tax assets (liabilities), are comprised of the
following:
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