Medtronic 2014 Annual Report Download - page 114
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Medtronic, Inc.
Notes to Consolidated Financial Statements (Continued)
13. Income Taxes
The provision for income taxes is based on earnings before income taxes reported for financial statement purposes. The
components of earnings from continuing operations before income taxes, based on tax jurisdiction, are as follows:
Fiscal Year
(in millions) 2014 2013 2012
U.S. $ 1,690 $ 1,806 $ 1,620
International 2,015 2,445 2,525
Earnings from continuing operations before income taxes $ 3,705 $ 4,251 $ 4,145
The provision for income taxes from continuing operations consists of the following:
Fiscal Year
(in millions) 2014 2013 2012
Current tax expense:
U.S. $ 532 $ 509 $ 664
International 248 219 231
Total current tax expense 780 728 895
Deferred tax expense (benefit):
U.S. (175) 46 (138)
International 35 10 (27)
Net deferred tax expense (benefit) (140) 56 (165)
Total provision for income taxes $ 640 $ 784 $ 730
Deferred taxes arise because of the different treatment of transactions for financial statement accounting and income tax
accounting, known as “temporary differences.” The Company records the tax effect of these temporary differences as “deferred
tax assets” and “deferred tax liabilities.” Deferred tax assets generally represent items that can be used as a tax deduction or
credit in a tax return in future years for which the Company has already recorded the tax benefit in the consolidated statements
of earnings. The Company establishes valuation allowances for deferred tax assets when the amount of expected future taxable
income is not likely to support the use of the deduction or credit. The Company has established valuation allowances for federal,
state, and foreign net operating losses, credit carryforwards, capital loss carryforwards, and deferred tax assets which are capital
in nature of $397 million and $313 million at April 25, 2014 and April 26, 2013, respectively. These carryover attributes expire
at various points in time, from within a year to no expiration date. These valuation allowances would result in a reduction to the
provision for income taxes in the consolidated statements of earnings, if they are ultimately not required. Deferred tax liabilities
generally represent tax expense recognized in the consolidated financial statements for which payment has been deferred or
expense has already been taken as a deduction on the Company’s tax return but has not yet been recognized as an expense in the
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