Eli Lilly 2015 Annual Report Download - page 87

F75
FINANCIAL REPORT
Significant components of our deferred tax assets and liabilities as of December 31 are as follows:
2015 2014
Deferred tax assets:
Compensation and benefits $ 1,034.6 $ 976.3
Purchases of intangible assets 637.2 473.3
Tax credit carryforwards and carrybacks 294.2 279.4
Tax loss carryforwards and carrybacks 247.8 265.5
Contingent consideration 214.6 —
Product return reserves 212.1 241.8
Other comprehensive loss on hedging transactions 129.7 115.3
Debt 111.3 176.0
Other 628.6 623.2
Total gross deferred tax assets 3,510.1 3,150.8
Valuation allowances (590.3) (601.1)
Total deferred tax assets 2,919.8 2,549.7
Deferred tax liabilities:
Inventories (771.3) (684.6)
Intangibles (756.3) (582.6)
Property and equipment (411.6) (424.7)
Prepaid employee benefits (317.8) (275.8)
Unremitted earnings (218.8) (737.1)
Financial instruments (152.6) (276.8)
Total deferred tax liabilities (2,628.4) (2,981.6)
Deferred tax assets (liabilities) - net $ 291.4 $ (431.9)
The deferred tax asset and related valuation allowance amounts for U.S. federal and state net operating
losses and tax credits shown above have been reduced for differences between financial reporting and tax
return filings.
Based on filed tax returns, we have tax credit carryforwards and carrybacks of $668.5 million available to
reduce future income taxes; $180.5 million, if unused, will expire by 2021. The remaining portion of the tax
credit carryforwards is related to federal tax credits of $93.4 million, international tax credits of $100.6 million,
and state tax credits of $294.0 million, all of which are substantially reserved.
At December 31, 2015, based on filed tax returns we had net operating losses and other carryforwards for
international and U.S. federal income tax purposes of $462.0 million: $38.0 million will expire by 2020;
$354.0 million will expire between 2020 and 2035; and $70.0 million of the carryforwards will never expire.
Net operating losses and other carryforwards for international and U.S. federal income tax purposes are
partially reserved. Deferred tax assets related to state net operating losses of $93.2 million and other state
carryforwards of $8.8 million are fully reserved.
Domestic and Puerto Rican companies contributed approximately 35 percent, 20 percent, and 60 percent for
the years ended December 31, 2015, 2014, and 2013, respectively, to consolidated income before income
taxes. We have a subsidiary operating in Puerto Rico under a tax incentive grant effective through the end of
2016. A similar, new tax incentive grant will begin in 2017 and will be in effect for 15 years.
At December 31, 2015, U.S. income taxes have not been provided on approximately $26.5 billion of
unremitted earnings of foreign subsidiaries as we consider these unremitted earnings to be indefinitely
invested for continued use in our foreign operations. Additional tax provisions will be required if these
earnings are repatriated in the future to the U.S. Due to complexities in the tax laws and assumptions that we
would have to make, it is not practicable to determine the amount of the related unrecognized deferred
income tax liability.
Cash payments of income taxes were as follows:
2015 2014 2013
Cash payments of income taxes $ 969.0 $ 729.7 $ 1,255.6