PALMETTO GBA 2010 ANNUAL REPORT

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4 0 Fair value measurements The Company’s financial assets carried at fair value have been classified, for disclosure purposes, based on a hierarchy defined by FASB. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). The levels of the fair value hierarchy are as follows: Level 1 - Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date. Level 2 – Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves. Level 3 – Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Fair Value of assets and liabilities measured on a recurring basis at December 31, 2010, are as follows: December 31, 2010 Level 1 Level 2 Level 3 Total Held-to-maturity securities: Corporate bonds $ — $ 1,554,000 $ — $ 1,554,000 Available-for-sale securities: Common stocks 2,664,000 — — 2,664,000 Total $ 2,664,000 $ 1,554,000 $ — $ 4,218,000 The Company measures certain assets at fair value on a nonrecurring basis. These assets are recognized at fair value when they are deemed to be other-than-temporarily impaired. During the year ended December 31, 2010, the Company did not record any other-than-temporary impairments on those assets required to be measured at fair value on a nonrecurring basis.
NOTE 4 INCOME TAXES 41 The Company’s operations are included in the consolidated federal income tax return of BCBSSC. Under a written tax-sharing agreement, BCBSSC allocates the tax provision to each company within the consolidated group based upon the company’s proportionate share of the consolidated federal income tax liability computed on a stand-alone basis, multiplied by the total consolidated federal income tax return liability. The Company had income tax payables to BCBSSC of $1,870,000 and $239,000 at December 31, 2010 and 2009, respectively, which are included in net payables to the parent. The Company made payments to BCBSSC for income taxes of $2,072,000 and $1,321,000 during the years ended December 31, 2010 and 2009, respectively. The Company recognized a provision for income taxes as follows (in thousands): Year ended December 31, 2010 2009 Deferred tax assets and liabilities are classified as current and long-term based on the classification of the related asset or liability, as follows (in thousands): Year ended December 31, 2010 2009 Deferred tax assets: Current $ 3,505 $ 2,116 Long-term 286 346 3,791 2,462 Deferred tax liabilities: Current 208 218 Long-term 68 — 276 218 Net deferred tax asset $ 3,515 $ 2,244 Current $ 3,343 $ 720 Deferred (1,339) 143 Provision for income taxes / continuing operations 2,004 863 Provision for income taxes / discontinued operations — 193 Total income taxes incurred $ 2,004 $ 1,056 Unrealized gains on investments credited directly to equity have been reduced by deferred income tax expense of $68,000 for the year ended December 31, 2010. The provision for income taxes differs from the amount computed by applying the federal statutory tax rate of 35% to income before income taxes primarily due to changes in the tax contingency reserve, investment in subsidiaries, the dividends received deduction, and benefits derived from filing on a consolidated basis versus separate company basis. The temporary differences that give rise to deferred tax assets and liabilities are primarily related to accrued expenses, fixed assets, and prepaid expenses. There was no valuation allowance at December 31, 2010 and 2009.
Page 1: PA L M E T T O G B A 2 0 1 0 A N N
Page 5 and 6: table of contents President’s Let
Page 7 and 8: COMPANY OVERVIEW 4 Palmetto GBA is
Page 9 and 10: Medicare Integrity Program J1 A/B M
Page 11 and 12: RISING ACCOMPLISHMENTS 6 Growth, di
Page 13 and 14: obbie cassel Systems and Support
Page 15 and 16: kathy bounds Medicare Integrity Pro
Page 17 and 18: RISING CORPORATE RESPONSIBILIT Y 12
Page 19 and 20: artley boswell Projects and Plannin
Page 21 and 22: ick newton Document Control timothy
Page 23 and 24: 17 leadership Jean Catalano........
Page 25 and 26: 19 Q: How do you think our key stra
Page 27 and 28: 2 1 Q: What represents Palmetto GBA
Page 29 and 30: 23 Q: Our core values are Communica
Page 31 and 32: 25 Q: How do we demonstrate resilie
Page 33 and 34: 27 Q: How does Palmetto GBA communi
Page 35 and 36: CORPORATE OFFICERS 29 TOP ROW Ann A
Page 37 and 38: 3 1 Board of Directors Palmetto GBA
Page 39 and 40: STATEMENTS OF OPERATIONS (IN T HOUS
Page 41 and 42: STATEMENTS OF CASH FLOWS (CONTINUED
Page 43 and 44: 37 Investment in affiliate The Comp
Page 45: 39 NOTE 2 FIXED ASSETS Fixed assets
Page 49 and 50: 4 3 NOTE 7 EMPLOYEE BENEFIT PLANS N

PALMETTO GBA 2010 ANNUAL REPORT

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