Humana 2009 Annual Report Download - page 101

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Deferred income tax balances reflect the impact of temporary differences between the tax bases of assets or
liabilities and their reported amounts in our consolidated financial statements, and are stated at enacted tax rates
expected to be in effect when the reported amounts are actually recovered or settled. Principal components of our
net deferred tax balances at December 31, 2009 and 2008 were as follows:
Assets (Liabilities)
2009 2008
(in thousands)
Compensation and other accrued expenses .................. $122,395 $ 117,037
Future policy benefits payable ............................ 103,941 121,259
Net operating loss carryforward ........................... 97,398 60,342
Benefits payable ....................................... 36,996 1,543
Unearned premiums .................................... 25,528 25,203
Capital loss carryforward ................................ 13,169 9,272
Professional liability risks ............................... 6,751 10,331
Investment securities ................................... — 113,854
Total deferred income tax assets .................. 406,178 458,841
Valuation allowance ............................ (30,093) (28,063)
Total deferred income tax assets, net of valuation
allowance .................................. 376,085 430,778
Depreciable property and intangible assets .................. (213,291) (211,012)
Prepaid expenses and other ............................... (69,104) (68,612)
Investment securities ................................... (25,077) —
Total deferred income tax liabilities ................ (307,472) (279,624)
Total net deferred income tax assets ........... $ 68,613 $ 151,154
Amounts recognized in the consolidated balance sheets:
Other current assets ................................ $ 32,206 $ 96,349
Other long-term assets .............................. 36,407 54,805
Total net deferred income tax assets ........... $ 68,613 $ 151,154
At December 31, 2009, we had approximately $265.9 million of net operating losses to carry forward
related to prior acquisitions. These net operating loss carryforwards, if not used to offset future taxable income,
will expire from 2010 through 2026. A significant portion of these losses are in a subsidiary that will not be
included in the Humana Inc. consolidated tax return until 2013, and, therefore, may not be used until that point.
Due to limitations and uncertainty regarding our ability to use some of the carryforwards, a valuation allowance
was established on $82.2 million of net operating loss carryforwards related to prior acquisitions. For the
remainder of the net operating loss carryforwards, based on our historical record of producing taxable income
and profitability, we have concluded that future operating income will be sufficient to give rise to tax expense to
recover all deferred tax assets.
We file income tax returns in the United States and certain foreign jurisdictions. In 2009, the Internal
Revenue Service (IRS) completed its examination of our U.S. income tax returns for 2005 and 2006 which did
not result in any material adjustments. With few exceptions, which are immaterial in the aggregate, we are no
longer subject to state, local and foreign tax examinations by tax authorities for years before 2007.
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