Income Statement — Excluding ‘Underfunded’ Medicare / Medicaid’ + One-Time
Charges, USA Inc. Shows 4% Median Net Margin Over 15 Years
USA Inc. Annual Net Income & Median Net Margin (Excluding Medicare / Medicaid & One-Time Charges), F1996 — F2010
oO & a —_ E SS : = s c 2 3 78200 © -- i 20% + = z < o S §A00 ao] ence aes er ee ee oes os en Gm eT gt Se Gn YS SG GU TG A me -- - -40% mas Net Income (ex. Medicare / Medicaid / One-Time Charges) ($B) -$600 um 60%
—— 15-Year Median Net Margin (%)
“$800 ~~ --- <= 22 ee oe eee ee ee ee ee ee eee 80% Fi996 = F1998 «= F2000.=«Ss«F2002.=«Ss«F2004.«=S ss F2006«=— ss F2008 «= F2010
Note: 1) Excludes both ‘dedicated’ revenue and spending for Medicare and Medicaid. USA federal fiscal year ends in KP September. Source: White House Office of Management and Budget. (@)E) www.kpcb.com USA Inc. | Income Statement Drilldown 57
Income Statement: USA Inc. Profit & Loss Statement Is Solid, Excluding
‘Underfunded’ Medicare / Medicaid Revenue and Spending + One-Time Charges
USA Inc. Profit & Loss Statement (ex. Medicare / Medicaid / One-Time Expense), F1995 / F2000 / F2005 / F2010 F1995 ...F2000 ... F2005 ... F2010 Comments
Revenue ($B) $1,256 $1,890 $1,988 $1,983 On average, revenue (ex. Medicare)
YY Growth _ 11% 15% 4% grew 3% Y/Y over past 15 years Individual Income Taxes* $590 $1,005 $927 $899 Largest driver of core revenue % of Revenue 47% 53% 47% 45% Social Insurance Taxes (ex. Medicare) $388 $517 $628 $685 Payroll tax on Social Security % of Revenue 31% 27% 32% 35% Corporate Income Taxes* $157 $207 $278 $191 Fluctuates significantly with % of Revenue 13% 11% 14% 10% economic conditions Other $120 $161 $154 $208 Includes estate & gift taxes / duties & % of Revenue 10% 9% 8% 10% fees; relatively stable Expense ($B) $1,248 $1,474 $1,992 $2,580 | “Expenses(ex. Medicare Medicaid) Y/Y Growth 5% 8% 7% grew 5% Y/Y over past 15 years Entitlement (ex. Medicare / Medicaid) $520 $622 $815 $1,259 Significant increase owing to aging % of Expense 42% 42% 41% 49% population Non-Defense Discretionary $223 $335 $497 $431 includ ducation /1 fs t % of Expense 18% 23%, 25% 17% ncludes education / law enforcemen / transportation... Defense $272 $294 $495 $694 oo . . % of Expense 22%, 20% 25% 27% Significant increase owing to on- going War on Terror Net Interest on Public Debt $232 $223 $184 $196 . an % of Expense 19% 15% 9% 8% Decreased owing to historic low
interest rates
Surplus / Deficit ($B) $8 $416 “$4 -$597 USA Inc. core operations were in
Net Margin (%) 1% 22% 0% -30% surplus 9 out of the past 15 years
Note: USA federal fiscal year ends in September; *individual & corporate income taxes include capital gains taxes. Non-defense discretionary includes KP federal spending on education, infrastructure, law enforcement, judiciary functions... Source: White House Office of Management and Budget. (@E) www.kpcb.com USA Inc. | Income Statement Drilldown 58
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