Humana 2010 Annual Report Download - page 112

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, 2010 and 2009 were as follows:
Assets (Liabilities)
2010 2009
(in thousands)
Future policy benefits payable .................... $153,293 $ 103,941
Net operating loss carryforward ................... 136,894 97,398
Compensation and other accrued expenses .......... 127,442 121,516
Benefits payable ............................... 88,617 36,996
Deferred acquisition costs ....................... 34,044 0
Capital loss carryforward ........................ 13,032 13,169
Unearned premiums ............................ 9,813 25,528
Other ........................................ 19,004 24,715
Total deferred income tax assets .......... 582,139 423,263
Valuation allowance .................... (28,063) (30,093)
Total deferred income tax assets, net of
valuation allowance .................. 554,076 393,170
Depreciable property and intangible assets .......... (275,569) (213,291)
Investment securities ........................... (65,921) (25,077)
Prepaid expenses ............................... (47,185) (47,290)
Deferred acquisition costs ....................... 0 (38,899)
Total deferred income tax liabilities ........ (388,675) (324,557)
Total net deferred income tax assets . . . $ 165,401 $ 68,613
Amounts recognized in the consolidated balance sheets:
Other current assets ........................ $ 76,598 $ 32,206
Other long-term assets ...................... 88,803 36,407
Total net deferred income tax assets . . . $ 165,401 $ 68,613
At December 31, 2010, we had approximately $373.7 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 2011 through 2030. 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 $76.6 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. 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 2008.
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