United Healthcare 2001 Annual Report Download - page 54

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PAGE 53 UnitedHealth Group
[1 0 ]INCOME TAXES
Components of the Provision (Benefit) for Income Taxes
Year Ended December 31, (in millions) 2 0 0 1 2000 1999
Current
Federal $ 524 $330 $264
State 45 38 36
Total Current 569 368 300
Deferred (10) 51 26
Total Provision $ 559 $419 $326
Reconciliation of the Tax Provision at the U.S. Federal Statutory Rate to the Provision for Income Taxes
Year Ended December 31, (in millions) 2 0 0 1 2000 1999
Tax Provision at the
U.S. Federal Statutory Rate $ 515 $404 $313
State Income Taxes, net of federal benefit 29 29 24
Tax-Exempt Investment Income (21) (17) (16)
Non-deductible Amortization 29 27 25
Charitable Contributions –(18) (16)
Other, net 7(6) (4)
Provision for Income Taxes $ 559 $419 $326
Components of Deferred Income Tax Assets and Liabilities
As of December 31, (in millions) 2 0 0 1 200 0
Deferred Income Tax Assets
Accrued Expenses and Allowances $ 198 $126
Unearned Premiums 65 74
Medical Costs Payable and
Other Policy Liabilities 84 84
Net Operating Loss Carryforwards 39 42
Other 30 10
Subtotal 416 336
Less: Valuation Allowances (53) (56)
Total Deferred Income Tax Assets 363 280
Deferred Income Tax Liabilities
Capitalized Software Development (128) (80)
Net Unrealized Gains on Investments
Available for Sale (31) (59)
Depreciation & Amortization (22) (12)
Total Deferred Income Tax Liabilities (181) (151)
Net Deferred Income Tax Assets $ 182 $129
Valuation allowances are provided when it is considered unlikely that deferred tax assets will be realized.
The valuation allowance primarily relates to future tax benefits on certain purchased domestic and foreign
net operating loss carryforwards.
We made cash payments for income taxes of $384 million in 2001, $352 million in 2000 and $214 million
in 1999. We increased additional paid-in capital and reduced income taxes payable by $133 million in 2001,
$116 million in 2000 and $23 million in 1999 to reflect the tax benefit we received upon the exercise of
non-qualified stock options.
The company, together with its wholly-owned subsidiaries, files a consolidated federal income tax
return. Tax returns for fiscal years 1998 and 1999 are currently being examined by the Internal Revenue
Service. We do not believe any adjustments that may result will have a significant impact on our consoli-