Aetna 2006 Annual Report Download - page 51

We utilized the modified-retrospective approach of adopting FAS 123R. Under this approach, beginning January 1,
2006, all prior period financial information was adjusted to reflect our stock-based compensation activity since
1995. The following table details the impact of FAS 123R on our previously reported results:
Retrospectively Previously Retrospectively Previously
(Millions, except per common share data) Applied Reported Applied Reported
Income from continuing operations before income taxes 2,453.3$ 2,547.4$ 1,760.0$ 1,898.9$
Income from continuing operations 1,573.3 1,634.5 1,124.8 1,215.1
Net income 1,573.3 1,634.5 2,154.8 2,245.1
Net income per common share:
Basic 2.72 2.82 3.56 3.71
Diluted 2.60 2.70 3.43 3.58
Net cash provided by operating activities 1,720.3 1,893.4 1,283.9 1,436.8
Net cash used for financing activities (1,213.6) (1,386.7) (1,388.7) (1,541.6)
2005 2004
Additionally, the balances in shareholders’ equity and net deferred income tax asset (liability) at December 31,
2005, 2004 and 2003 in our Consolidated Balance Sheets and Consolidated Statements of Shareholders’ Equity
reflect the following changes:
Net Deferred Common Stock
Income Tax and Additional Retained
(Millions) Asset (Liability) Paid In Capital Earnings
At December 31, 2005
Retrospectively applied 58.3$ 2,414.7$ 7,723.7$
Previously reported (25.5) 1,885.1 8,169.5
At December 31, 2004
Retrospectively applied 576.4 3,541.5 6,161.8
Previously reported 496.0 3,076.5 6,546.4
At December 31, 2003
Retrospectively applied 681.6 4,387.1 4,012.9
Previously reported 613.6 4,024.8 4,307.2
Refer to Note 12 for additional information on our stock-based compensation plans beginning on page 67.
Pensions and Other Postretirement Benefits
We adopted FAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” on
December 31, 2006. FAS 158 requires the recognition of an asset or liability for each of our pension and other
postretirement benefit (“OPEB”) plans equal to the difference between the fair value of plan assets and the benefit
obligation as of the latest measurement date, which we refer to as the plan’ s funded status. The difference between
each plan’ s funded status and its existing balance sheet position prior to the adoption of FAS 158 is recognized, net
of tax, as a component of accumulated other comprehensive income.
As described in greater detail in Note 12 beginning on page 67, we sponsor two pension plans (a tax-qualified plan
which we fund and an unfunded supplemental plan) and a partially-funded OPEB plan. Prior to the adoption of
FAS 158 at December 31, 2006, our balance sheet reflected a prepaid pension asset (included in other long-term
assets on our Consolidated Balance Sheets) of approximately $1.4 billion for our tax-qualified pension plan and an
accrued liability (included in other long-term liabilities on our Consolidated Balance Sheets) of approximately $526
million (excluding fourth quarter 2006 contributions) for our supplemental pension and OPEB plans. At September
30, 2006 (our measurement date), our tax-qualified pension plan was over funded by approximately $479 million,
while our supplemental pension and OPEB plans were under funded by approximately $586 million. In order to
reflect the funded status of our retirement plans on our balance sheet at December 31, 2006 in accordance with FAS
158, we reduced the prepaid pension asset by approximately $944 million and increased accrued liabilities by
approximately $60 million. These adjustments resulted in an after tax charge to accumulated other comprehensive
income of approximately $652 million and a deferred tax asset of approximately $351 million.
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