Medtronic 2016 Annual Report Download - page 109

Table of Contents
Medtronic plc
Notes to Consolidated Financial Statements (Continued)
106
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 income. 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. 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 consolidated statements of income. Tax assets (liabilities), shown before
jurisdictional netting of deferred tax assets (liabilities), are comprised of the following:
(in millions) April 29, 2016 April 24, 2015
Deferred tax assets:
Net operating loss, capital loss, and credit carryforwards $ 7,568 $ 5,912
Other accrued liabilities 619 585
Accrued compensation 358 330
Pension and post-retirement benefits 530 449
Stock-based compensation 316 418
Other 341 303
Inventory 225 171
Federal and state benefit on uncertain tax positions 308 296
Unrealized loss on available-for-sale securities and derivative financial instruments 107 —
Gross deferred tax assets 10,372 8,464
Valuation allowance (7,032)(5,607)
Total deferred tax assets 3,340 2,857
Deferred tax liabilities:
Intangible assets (5,173)(5,393)
Basis impairment (230)(204)
Realized loss on derivative financial instruments (112)(112)
Other (179)(96)
Accumulated depreciation (189)(217)
Unrealized gain on available-for-sale securities and derivative financial instruments — (160)
Total deferred tax liabilities (5,883)(6,182)
Prepaid income taxes 365 427
Income tax receivables 529 188
Tax liabilities, net $(1,649) $ (2,710)
Reported as (after valuation allowance and jurisdictional netting):
Tax assets $ 697 $ 1,335
Long-term tax assets 1,383 774
Deferred tax liabilities — (119)
Long-term deferred tax liabilities (3,729)(4,700)
Tax liabilities, net $(1,649) $ (2,710)
At April 29, 2016, the Company had approximately $26.6 billion of net operating loss carryforwards in certain non-U.S.
jurisdictions, of which $22.4 billion have no expiration, and the remaining $4.2 billion will expire in future years through 2036.
Included in these net operating loss carryforwards are $18.0 billion of net operating losses related to a subsidiary of the Company,
substantially all of which were recorded in fiscal 2008 as a result of the receipt of a favorable tax ruling from certain non-U.S.
taxing authorities. The Company has recorded a full valuation allowance against these net operating losses as management does
not believe that it is more likely than not that these net operating losses will be utilized. Certain of the remaining non-US net