Eli Lilly 2008 Annual Report Download - page 57

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FINANCIALS
55
Signifi cant components of our deferred tax assets and liabilities as of December 31 are as follows:
2008 2007
Deferred tax assets
Compensation and benefi ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,154.6 $ 654.8
Tax credit carryforwards and carrybacks . . . . . . . . . . . . . . . . . . . . 755.0 361.5
Intercompany profi t in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . 585.0 810.5
Tax loss carryforwards and carrybacks . . . . . . . . . . . . . . . . . . . . . 562.3 712.2
Contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345.2 49.3
Asset purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251.5 174.6
Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211.6 27.7
Sale of intangibles. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117.9 69.1
Product return reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.8 110.0
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313.6 302.1
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,397.5 3,271.8
Valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (845.4) (354.2)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,552.1 2,917.6
Deferred tax liabilities
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (860.2) (532.5)
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (620.7) (662.2)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (542.7) (432.4)
Unremitted earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (467.3) (65.3)
Prepaid employee benefi ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (675.9)
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (287.8) (133.0)
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,778.7) (2,501.3)
Deferred tax assets—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 773.4 $ 416.3
At December 31, 2008, we had net operating losses and other carryforwards for international and U.S. income
tax purposes of $1.24 billion: $84.3 million will expire within 10 years; $1.09 billion will expire between 10 and
20 years; and $63.1 million of the carryforwards will never expire. The primary component of the remaining por-
tion of the deferred tax asset for tax loss carryforwards and carrybacks is related to net operating losses for state
income tax purposes that are fully reserved. We also have tax credit carryforwards and carrybacks of $755.0 mil-
lion available to reduce future income taxes; $295.1 million will be carried back; $84.1 million of the tax credit
carryforwards will expire after 5 years; and $13.0 million of the tax credit carryforwards will never expire. The
remaining portion of the tax credit carryforwards is related to federal tax credits of $97.4 million and state tax
credits of $265.4 million, both of which are fully reserved.
Domestic and Puerto Rican companies generated the entire consolidated loss before income taxes in 2008 and
contributed approximately 7 percent and 18 percent in 2007 and 2006, respectively, to consolidated income before
income taxes. We have a subsidiary operating in Puerto Rico under a tax incentive grant. The current tax incentive
grant will not expire prior to 2017.
At December 31, 2008, we had an aggregate of $13.31 billion of unremitted earnings of foreign subsidiaries that
have been or are intended to be permanently reinvested for continued use in foreign operations and that, if distrib-
uted, would result in additional income tax expense at approximately the U.S. statutory rate.
Cash payments (refunds) of income taxes totaled $(52.0) million, $1.01 billion, and $864.0 million in 2008, 2007,
and 2006, respectively.