Anthem Blue Cross 2002 Annual Report Download - page 79

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NOTES
to Consolidated Financial Statements (Continued)
74 Anthem, Inc. 2002 Annual Report
12. Income Taxes
The components of deferred income taxes at
December 31 are as follows:
2002 2001
Deferred tax assets:
Pension and postretirement benefits $ 107.2 $ 60.5
Accrued expenses 156.3 98.3
Alternative minimum tax
and other credits 120.1 133.5
Insurance reserves 58.3 47.8
Net operating loss carryforwards 46.3 66.2
Bad debt reserves 16.9 19.8
Other 35.3 41.0
Total deferred tax assets 540.4 467.1
Valuation allowance (138.0) (250.4)
Total deferred tax assets, net
of valuation allowance 402.4 216.7
Deferred tax liabilities:
Unrealized gains on securities 74.1 25.4
Acquisition related including
intangible assets 723.2 225.7
Other 99.2 29.2
Total deferred tax liabilities 896.5 280.3
Net deferred tax liability $(494.1) $ (63.6)
Deferred tax liability—current (reported
with other current liabilities) $(104.2) $ (8.4)
Deferred tax liability—noncurrent (389.9) (55.2)
Net deferred tax liability $(494.1) $ (63.6)
The net decrease in the valuation allowance for
2002 and 2001 was $112.4 and $88.3, respectively.
During 2002, $18.0 of the change in the valuation
allowance was recorded as a reduction to goodwill (see
Note 3). This postacquisition adjustment resulted from
recognition of deferred tax assets previously determined
to be unrealizable. During 2002 and 2001, because of
uncertainties including industry-wide issues regarding
both the timing and the amount of deductions, $57.2 and
$68.0 of the decrease was recorded as deferred tax liabili-
ties and $37.2 and $20.3 was recorded as a reduction to
income tax expense, respectively.
Significant components of the provision for income
taxes consist of the following:
2002 2001 2000
Current tax expense:
Federal $173.9 $101.1 $ 53.9
State and local 13.5 7.7 3.9
Total current tax expense 187.4 108.8 57.8
Deferred tax expense 67.8 74.6 44.4
Total income tax expense $255.2 $183.4 $102.2
A reconciliation of income tax expense recorded in the consolidated statements of income and amounts computed
at the statutory federal income tax rate is as follows:
2002 2001 2000
Amount % Amount % Amount %
Amount at statutory rate $282.7 35.0 $183.6 35.0 $115.4 35.0
State and local income taxes net of federal tax benefit 9.4 1.2 3.5 0.7 2.6 0.8
Amortization of goodwill —— 5.9 1.1 5.6 1.7
Dividends received deduction (0.6) (0.1) (1.4) (0.2) (1.2) (0.4)
Deferred tax valuation allowance change, net of net
operating loss carryforwards and other tax credits (37.2) (4.6) (20.3) (3.9) (20.0) (6.0)
Other, net 0.9 0.1 12.1 2.3 (0.2) (0.1)
$255.2 31.6 $183.4 35.0 $102.2 31.0