Centene Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes Income Taxes (Tables)

Income Taxes Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

The consolidated income tax expense consists of the following for the years ended December 31:



	2012			2011		2010
Current provision:
Federal	$	15,852		$	59,641	$	46,259
State and local	(5,604		)	5,186		6,868
Total current provision	10,248			64,827		53,127
Deferred provision	(10,577		)	1,695		6,773
Total provision for income taxes	$	(329	)	$	66,522	$	59,900

Reconciliation Of The Tax Provision At The U.S. Federal Statutory Rate To The Provision For Income Taxes

The reconciliation of the tax provision at the U.S. Federal Statutory Rate to the provision for income taxes is as follows:



	2012			2011			2010
Earnings from continuing operations, before income tax expense	$	(11,624	)	$	174,885		$	154,282
Less flow through noncontrolling interest	(2,540		)	(2,855		)	3,435
Earnings from continuing operations, less noncontrolling interest, before income tax expense	(9,084		)	177,740			150,847

Tax provision at the U.S. federal statutory rate	(3,179		)	62,209			52,797
State income taxes, net of federal income tax benefit	(3,812		)	3,411			6,231
Nondeductible goodwill impairment	8,487			—			—
Other, net	(1,825		)	902			872
Income tax expense	$	(329	)	$	66,522		$	59,900

Tax Effects Of Temporary Differences Which Give Rise To Deferred Tax Assets And Liabilities

The tax effects of temporary differences which give rise to deferred tax assets and liabilities are presented below for the years ended December 31:



	2012			2011
Deferred tax assets:
Medical claims liability and other accruals	$	52,838		$	46,222
State net operating loss carry forward	9,055			8,761
Stock compensation	12,615			13,234
Other	20,573			8,723
Deferred tax assets	95,081			76,940
Valuation allowance	(8,325		)	(8,521		)
Net deferred tax assets	$	86,756		$	68,419

Deferred tax liabilities:
Intangible assets	$	12,441		$	10,756
Prepaid assets	4,767			4,508
Depreciation and amortization	31,742			31,398
Other	5,855			6,777
Deferred tax liabilities	$	54,805		$	53,439

Net deferred tax assets	$	31,951		$	14,980

Reserve For Uncertain Tax Positions

The Company maintains a reserve for uncertain tax positions that may be challenged by a tax authority. A roll-forward of the reserve is as follows:



	2012			2011
Gross unrecognized tax benefits, beginning of period	$	13,552		$	3,036
Gross increases:
Current year tax positions	4,107			10,863
Prior year tax positions	451			—
Gross decreases:
Prior year tax positions	(9,925		)	(347		)
Settlements	(53		)	—
Statute of limitation lapses	(262		)	—
Gross unrecognized tax benefits, end of period	$	7,870		$	13,552

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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