Eli Lilly 2010 Annual Report Download - page 74

FORM 10-K
Significant components of our deferred tax assets and liabilities as of December 31 are as follows:
2010 2009
Deferred tax assets
Compensation and benefits ........................................................ $ 890.4 $ 1,153.2
Tax credit carryforwards and carrybacks ............................................ 503.1 457.8
Tax loss carryforwards and carrybacks .............................................. 414.0 425.8
Intercompany profit in inventories .................................................. 316.7 270.6
Asset purchases ................................................................. 275.1 253.4
Debt ........................................................................... 114.6 45.9
Sale of intangibles ............................................................... 112.8 119.6
Contingencies ................................................................... 106.6 81.1
Asset disposals .................................................................. 13.0 173.6
Other .......................................................................... 434.4 552.3
Total gross deferred tax assets .................................................. 3,180.7 3,533.3
Valuation allowances ............................................................. (473.1) (524.0)
Total deferred tax assets ........................................................ 2,707.6 3,009.3
Deferred tax liabilities
Intangibles ...................................................................... (954.9) (818.4)
Unremitted earnings ............................................................. (741.8) (442.9)
Inventories ..................................................................... (525.6) (544.4)
Property and equipment .......................................................... (505.2) (623.8)
Financial instruments ............................................................ (160.9) 0.0
Other .......................................................................... (19.1) (68.6)
Total deferred tax liabilities ...................................................... (2,907.5) (2,498.1)
Deferred tax assets (liabilities)—net .................................................. $ (199.9) $ 511.2
At December 31, 2010, no individually significant items were classified as “Other” deferred tax assets or liabilities.
The deferred tax asset and related valuation allowance amounts for U.S. and state net operating losses and tax
credits shown above have been reduced for differences between financial reporting and tax return filings. At
December 31, 2010, based on filed tax returns we had net operating losses and other carryforwards for international
and U.S. income tax purposes of $858.0 million: $129.2 million will expire within 5 years; $649.5 million will expire
between 5 and 20 years; and $79.3 million of the carryforwards will never expire. The remaining balance of the
deferred tax asset for tax loss carryforwards and carrybacks is related to net operating losses for state income tax
purposes that are substantially reserved.
Based on filed tax returns, we also have tax credit carryforwards and carrybacks of $795.9 million available to
reduce future income taxes; $268.7 million will be carried back; $67.6 million of the tax credit carryforwards will
expire between 10 and 20 years; and $17.8 million of the tax credit carryforwards will never expire. The remaining
portion of the tax credit carryforwards is related to federal tax credits of $94.6 million and state tax credits of $347.2
million, both of which are fully reserved.
Domestic and Puerto Rican companies contributed approximately 45 percent and 39 percent in 2010 and 2009,
respectively, to consolidated income before income taxes and generated the entire consolidated loss before income
taxes in 2008. 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, 2010, we had an aggregate of $19.90 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 distributed,
would result in additional income tax expense at approximately the U.S. statutory rate.
Cash payments (refunds) of income taxes totaled $861.0 million, $1.14 billion, and $(52.0) million in 2010, 2009, and
2008, respectively.
62