Aetna 2011 Annual Report Download - page 107

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Annual Report- Page 101
Valuation allowances are provided when we estimate that it is more likely than not that deferred tax assets will not
be realized. A valuation allowance has been established on certain federal and state net operating losses and
acquired credits. We base our estimates of the future realization of deferred tax assets on historic and anticipated
taxable income. However, the amount of the deferred tax assets considered realizable could be adjusted in the future
if we revise our estimates of anticipated taxable income.
We participate in the Compliance Assurance Process (the “CAP”) with the IRS. Under the CAP, the IRS undertakes
audit procedures during the tax year and as the return is prepared for filing. The IRS has concluded its CAP audit of
our 2010 tax return as well as all the prior years. We expect the IRS will conclude its CAP audit of our 2011 tax
return in 2012.
We are also subject to audits by state taxing authorities for tax years from 2000 through 2010. Our 2011 income tax
provision reflects a non-recurring provision related to a legacy state tax matter. We believe we carry appropriate
reserves for any exposure to state tax issues.
At December 31, 2011 and 2010, we did not have material uncertain tax positions reflected in our consolidated
balance sheets.
We paid net income taxes of $899 million, $674 million and $634 million in 2011, 2010 and 2009, respectively.
14. Debt
The carrying value of our long-term debt at December 31, 2011 and 2010 was as follows:
(Millions)
Senior notes, 5.75%, due 2011 (1)
Senior notes, 7.875%, due 2011 (1)
Senior notes, 6.0%, due 2016
Senior notes, 6.5%, due 2018
Senior notes, 3.95%, due 2020
Senior notes, 4.125%, due 2021
Senior notes, 6.625%, due 2036
Senior notes, 6.75%, due 2037
Total long-term debt
2011
$ —
—
748.0
499.1
742.6
493.4
798.7
695.9
$ 3,977.7
2010
$ 450.0
449.9
747.6
498.9
741.7
—
798.7
695.7
$ 4,382.5
(1) The 5.75% senior notes and the 7.875% senior notes were repaid in June 2011 and March 2011, respectively. These were classified as
current in the consolidated balance sheet as of December 31, 2010.
In 2011, we entered into two interest rate swaps with an aggregate notional value of $250 million. We designated
these swaps as cash flow hedges against interest rate exposure related to the forecasted future issuance of fixed-rate
debt. At December 31, 2011, these interest rate swaps had an aggregate fair value loss of $6 million, which was
reflected in accumulated other comprehensive loss.
In May 2011, we issued $500 million of 4.125% senior notes due 2021 (the “2011 senior notes”) in anticipation of
the scheduled maturity of our 5.75% senior notes due June 2011. In the first half of 2011, prior to issuing the 2011
senior notes, we entered into two interest rate swaps with an aggregate notional value of $250 million and
designated those interest rate swaps as a hedge against interest rate exposure related to the forecast issuance of that
fixed-rate debt. We terminated the swaps concurrently with issuing the 2011 senior notes and upon termination of
the swaps, paid $9 million to the swap counterparty. The related $9 million loss is recorded in accumulated other
comprehensive income and is being amortized as interest expense over the ten-year life of the 2011 senior notes.