Quest Diagnostics 2010 Annual Report Download - page 83

A reconciliation of the federal statutory rate to the Company’s effective tax rate for 2010, 2009 and 2008
was as follows:
2010 2009 2008
Tax provision at statutory rate ................................................... 35.0% 35.0% 35.0%
State and local income taxes, net of federal benefit . . ............................. 4.0 4.0 4.6
Impact of foreign operations..................................................... (0.7) (0.7) (1.1)
Tax credits ..................................................................... (0.3) (0.9) —
Non-deductible expenses, primarily meals and entertainment expenses . . ........... 0.2 0.2 0.5
Impact of noncontrolling interests. ............................................... (1.2) (1.2) (1.2)
Other, net ...................................................................... (1.1) 1.1 (1.0)
Effective tax rate ............................................................. 35.9% 37.5% 36.8%
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
(liabilities) at December 31, 2010 and 2009 were as follows:
2010 2009
Current deferred tax assets:
Accounts receivable reserves. . . ............................................ $ 70,608 $ 72,076
Liabilities not currently deductible ......................................... 71,862 59,724
Total current deferred tax assets ......................................... $ 142,470 $ 131,800
Non-current deferred tax assets (liabilities):
Liabilities not currently deductible ......................................... $ 142,043 $ 124,296
Stock-based compensation ................................................. 73,661 72,248
Net operating loss carryforwards, net of valuation allowance ................ 37,012 36,354
Depreciation and amortization . ............................................ (438,617) (421,335)
Total non-current deferred tax liabilities, net . . . .......................... $(185,901) $(188,437)
At December 31, 2010, non-current deferred tax assets of $7 million are recorded in other long-term assets
and non-current deferred tax liabilities of $193 million are recorded in other long-term liabilities in the
consolidated balance sheet. At December 31, 2009, non-current deferred tax liabilities of $188 million are
included in other long-term liabilities in the consolidated balance sheet.
As of December 31, 2010, the Company had estimated net operating loss carryforwards for federal and state
income tax purposes of $10 million and $660 million, respectively, which expire at various dates through 2030.
Estimated net operating loss carryforwards for foreign income tax purposes of $38 million at December 31, 2010
can be carried forward indefinitely. As of December 31, 2010 and 2009, deferred tax assets associated with net
operating loss carryforwards of $50 million and $48 million, respectively, have each been reduced by a valuation
allowance of $13 million and $12 million, respectively.
Income taxes payable including those classified in other long-term liabilities in the consolidated balance
sheets at December 31, 2010 and 2009, were $128 million and $100 million, respectively.
The total amount of unrecognized tax benefits as of and for the years ended December 31, 2010, 2009 and
2008 consists of the following:
2010 2009 2008
Balance, beginning of year . . . ...................................... $126,454 $ 70,877 $107,943
Additions:
For tax positions of current year ................................. 20,904 69,219 3,775
For tax positions of prior years .................................. 28,140 22,462 3,916
Reductions:
Changes in judgment ............................................ (13,467) (11,551) (32,684)
Expirations of statutes of limitations. . ............................ (10,477) (4,926) (2,724)
Settlements ..................................................... — (19,627) (9,349)
Balance, end of year............................................... $151,554 $126,454 $ 70,877
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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(dollars in thousands unless otherwise indicated)