McKesson 2012 Annual Report Download - page 78
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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
74
The reconciliation between our effective tax rate on income from continuing operations and statutory tax rate is
as follows:
Years Ended March 31,
(In millions) 2012 2011 2010
Income tax provision at federal statutory rate $ 672 $ 572 $ 652
State and local income taxes net of federal tax benefit 57 33 25
Foreign income taxed at various rates (176) (105) (144)
Unrecognized tax benefits and settlements (18) 14 53
Tax credits (13) (16) (8)
Other, net (6) 7 23
Income tax provision $ 516 $ 505 $ 601
At March 31, 2012, undistributed earnings of our foreign operations totaling $3.3 billion were considered to be
permanently reinvested. No deferred tax liability has been recognized on the basis difference created by such
earnings since it is our intention to utilize those earnings in the foreign operations as well as to fund certain research
and development activities for an indefinite period of time. The determination of the amount of deferred taxes on
these earnings is not practicable because the computation would depend on a number of factors that cannot be
known until a decision to repatriate the earnings is made.
Deferred tax balances consisted of the following:
March 31,
(In millions) 2012 2011
Assets
Receivable allowances $ 44 $ 48
Deferred revenue 114 107
Compensation and benefit related accruals 447 409
AWP litigation accrual 175 97
Loss and credit carryforwards 400 494
Other 256 241
Subtotal 1,436 1,396
Less: valuation allowance (101) (99)
Total assets 1,335 1,297
Liabilities
Inventory valuation and other assets (1,635) (1,450)
Fixed assets and systems development costs (263) (221)
Intangibles (544) (532)
Other (53) (58)
Total liabilities (2,495) (2,261)
Net deferred tax liability $ (1,160) $ (964)
Current net deferred tax liability $ (1,092) $ (1,036)
Long-term deferred tax asset 20 72
Long-term deferred tax liability (88) —
Net deferred tax liability $ (1,160) $ (964)