Prudential 2002 Annual Report Download - page 137
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Please find page 137 of the 2002 Prudential annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.PRUDENTIAL FINANCIAL, INC.
Notes to Consolidated Financial Statements
18. INCOME TAXES (continued)
Deferred tax assets and liabilities at December 31, resulted from the items listed in the following table:
2002 2001
(in millions)
Deferred tax assets
Insurance reserves .................................................................. $1,189 $ 894
Policyholder dividends .............................................................. 721 210
Net operating and capital loss carryforwards ............................................. 426 366
Investments ....................................................................... 338 34
Litigation related reserves ............................................................ 92 88
Other ............................................................................ 142 120
Deferred tax assets before valuation allowance ........................................... 2,908 1,712
Valuation allowance ................................................................ (118) (77)
Deferred tax assets after valuation allowance ............................................. 2,790 1,635
Deferred tax liabilities
Net unrealized investment gains ....................................................... 2,700 890
Deferred policy acquisition costs ...................................................... 1,769 1,779
Employee benefits .................................................................. 286 90
Depreciation ...................................................................... 124 159
Deferred tax liabilities .............................................................. 4,879 2,918
Net deferred tax liability ................................................................. $(2,089) $(1,283)
Management believes that based on its historical pattern of taxable income, the Company will produce
sufficient income in the future to realize its deferred tax asset after valuation allowance. A valuation allowance
has been recorded primarily related to tax benefits associated with foreign operations and state and local deferred
tax assets. Adjustments to the valuation allowance will be made if there is a change in management’s assessment
of the amount of the deferred tax asset that is realizable. At December 31, 2002 and 2001, respectively, the
Company had federal net operating and capital loss carryforwards of $348 million and $109 million, which expire
between 2007 and 2018. At December 31, 2002 and 2001, respectively, the Company had state operating and
capital loss carryforwards for tax purposes approximating $4,182 million and $2,647 million, which expire
between 2005 and 2022. At December 31, 2002 and 2001, respectively, the Company had foreign operating loss
carryforwards for tax purposes approximating $341 million and $643 million, which expire between 2003 and
2007.
Deferred taxes are not provided on the undistributed earnings of foreign subsidiaries (considered to be
permanent investments), which at December 31, 2002 were $2,240 million. Determining the tax liability that
would arise if these earnings were remitted is not practicable.
The Internal Revenue Service (the “Service”) has completed all examinations of the consolidated federal
income tax returns through 1992, as well as 1996. The Service has examined the years 1993 through 1995 and the
Company is in the process of finalizing an agreement with the Service with respect to proposed adjustments for
those tax years. The Service has begun its examination of 1997 through 2001. Management believes sufficient
provisions have been made for potential adjustments.
Growing and Protecting Your Wealth136