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Notes to Consolidated Financial Statements
The following table is a summary of the significant components
of the Company’s deferred tax assets and liabilities as of
December 31:
in millions 2009 2008
Deferred tax assets:
Lease and rents $ 334 $ 318
Inventory 55 73
Employee benefits 250 241
Allowance for bad debt 130 95
Retirement benefits 94 98
Net operating losses 8 13
Other 287 241
Total deferred tax assets 1,158 1,079
Deferred tax liabilities:
Depreciation and amortization (4,330) (4,346)
Net deferred tax liabilities $ (3,172) $ (3,267)
Net deferred tax assets (liabilities) are presented on the
consolidated balance sheets as follows as of December 31:
in millions 2009 2008
Deferred tax assets – current $ 506 $ 435
Deferred tax liabilities – noncurrent (3,678) (3,702)
Net deferred tax liabilities $ (3,172) $ (3,267)
The Company believes it is more likely than not the deferred
tax assets will be realized during future periods.
The following table is a summary of the Company’s stock option activity for the year-ended December 31, 2009:
Weighted Average Aggregate
Weighted Average Remaining Intrinsic
shares in thousands Shares Exercise Price Contractual Term Value
Outstanding at December 31, 2008 59,374 $ 28.21 – –
Granted 17,436 $ 28.63 – –
Exercised (8,419) $ 20.72 – –
Forfeited (1,085) $ 36.48 – –
Expired (1,037) $ 28.34 – –
Outstanding at December 31, 2009 66,269 $ 29.14 4.39 $ 345,068,000
Exercisable at December 31, 2009 35,858 $ 25.84 3.30 $ 279,462,000
Note 11 Income Taxes
The income tax provision consisted of the following for the
respective years:
in millions 2009 2008 2007
Current: Federal $ 1,766 $ 1,680 $ 1,251
State 397 365 241
2,163 2,045 1,492
Deferred: Federal 38 133 206
State 4 15 24
42 148 230
Total $ 2,205 $ 2,193 $ 1,722
The following table is a reconciliation of the statutory income
tax rate to the Company’s effective income tax rate for the
respective years:
2009 2008 2007
Statutory income tax rate 35.0% 35.0% 35.0%
State income taxes,
net of federal tax benefit 4.5 4.1 4.2
Other 0.6 0.5 0.3
Federal and net State
reserve release (2.8) – –
Effective income tax rate 37.3% 39.6% 39.5%
CVS Caremark
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