Danaher 2011 Annual Report Download - page 98

Table of Contents
Net current deferred income tax assets are reflected in prepaid expenses and other current assets and net long-term deferred income tax liabilities are included in
other long-term liabilities in the accompanying Consolidated Balance Sheet. Deferred income tax assets and liabilities as of December 31 consist of the
following ($ in millions):
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Deferred Tax Assets:
Allowance for doubtful accounts $ 70.9 $ 46.1
Inventories 154.5 74.5
Pension and postretirement benefits 382.0 173.7
Environmental and regulatory compliance 35.5 30.8
Other accruals and prepayments 338.1 300.3
Stock compensation expense 114.6 97.9
Tax credit and loss carryforwards 864.0 787.1
Other 2.8 15.2
Valuation allowance (316.6) (283.9)
Total deferred tax asset 1,645.8 1,241.7
Deferred Tax Liabilities:
Property, plant and equipment (258.5) (69.5)
Insurance, including self – insurance (108.9) (55.3)
Basis difference in LYONs (118.6) (151.3)
Goodwill and other intangibles (2,016.4) (1,098.1)
Deferred service income (174.7) (180.9)
Unrealized gains on marketable securities (56.8) (42.5)
Total deferred tax liability (2,733.9) (1,597.6)
Net deferred tax liability $(1,088.1) $(355.9)
Deferred taxes associated with temporary differences resulting from timing of recognition for income tax purposes of fees paid for services rendered between
consolidated entities are reflected as deferred service income in the above table. These fees are fully eliminated in consolidation and have no effect on reported
revenue, income or reported income tax expense. The Company evaluates the future realizability of tax credits and loss carryforwards considering the
anticipated future earnings of the Company’s subsidiaries as well as tax planning strategies in the associated jurisdictions. Deferred taxes associated with U.S.
entities consist of net deferred tax liabilities of approximately $1,075 million and $528 million as of December 31, 2011 and 2010, respectively. Deferred
taxes associated with non-U.S. entities consist of net deferred tax liabilities of approximately $13 million and net deferred tax assets of $172 million as of
December 31, 2011 and 2010, respectively.
The effective income tax rate for the years ended December 31 varies from the statutory federal income tax rate as follows:
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  
Statutory federal income tax rate 35.0% 35.0% 35.0%
Increase (decrease) in tax rate resulting from:
State income taxes (net of Federal income tax benefit) 1.0 1.4 1.6
Foreign income taxed at lower rate than U.S. statutory rate (12.8) (10.5) (12.7)
Resolution of uncertain tax positions/statute expirations (2.4) (0.6) (7.3)
Acquisition costs 0.4 — 0.6
Research and experimentation credits and other (0.3) (0.3) 0.8
Joint venture formation — (2.1) —
Effective income tax rate 20.9% 22.9% 18.0%
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Source: DANAHER CORP /DE/, 10-K, February 24, 2012 Powered by Morningstar® Document Research℠
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