Humana 2003 Annual Report Download - page 84

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
result in equitable revenue adjustments through the change order and bid price adjustment process. As a result of
the above contract provisions, the impact of changes in estimates for prior year TRICARE medical claims
payable on our results of operations is reduced substantially, whether positive or negative.
7. INCOME TAXES
The provision for income taxes consisted of the following for the years ended December 31, 2003, 2002
and 2001:
2003 2002 2001
(in thousands)
Current provision (benefit):
Federal ................................... $ 69,643 $ (5,157) $ 527
States and Puerto Rico ....................... 13,888 22,775 9,278
Total current provision ................... 83,531 17,618 9,805
Deferred provision:
Federal ................................... 29,025 44,605 50,494
States and Puerto Rico ....................... 3,226 4,956 5,610
Total deferred provision .................. 32,251 49,561 56,104
Provision for income taxes ................ $115,782 $67,179 $65,909
The provision for income taxes was different from the amount computed using the federal statutory rate for
the years ended December 31, 2003, 2002 and 2001 due to the following:
2003 2002 2001
(in thousands)
Income tax provision at federal statutory rate ........ $120,650 $ 73,477 $ 64,078
States and Puerto Rico income taxes, net of federal
benefit .................................... 13,365 10,666 1,225
Tax exempt investment income ................... (10,546) (10,460) (14,687)
Amortization expense .......................... (641) (641) 17,960
Capital loss on sale of workers’ compensation
business ................................... — — 3,545
Capital loss valuation allowance .................. (9,492) 24,528 (3,545)
Examination settlements ........................ — (32,610) —
Other, net .................................... 2,446 2,219 (2,667)
Provision for income taxes .................. $115,782 $ 67,179 $ 65,909
Changes in the capital loss valuation allowance resulted as we reevaluated probable capital gain realization
in the allowable carryforward period given our recent and historical capital gain experience beginning in
2000 and consideration of alternative tax planning strategies. During 2002, the Internal Revenue Service
completed their audit of all open years prior to 2000 which resulted in an adjustment to the estimated accrual for
income taxes.
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