PART II ITEM 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations (In millions) 2012 2011 2010 Segment loss $ (329) $ (184) $ (211) Less: special items (after-tax) included in segment loss: Cost associated with HealthSpring acquisition (See Note 3 to the Consolidated Financial Statements) (33) (28) - Resolution of Federal Tax Matter (See Note 20 to the Consolidated Financial Statements) - - 4 Loss on early extinguishment of debt (See Note 16 to the Consolidated Financial Statements) - - (39) Charges related to litigation matters (See Note 24 to the Consolidated Financial Statements) (68) - - Completion of IRS examination (See Note 20 to the Consolidated Financial Statements) - 14 - ADJUSTED LOSS FROM OPERATIONS $ (228) $ (170) $ (176) Financial Summary In 2012, segment loss for Corporate was significantly higher than in 2011,  primarily  reflecting: Corporate’s segment loss was lower in 2011 compared with 2010 primarily reflecting a tax benefit from completing the IRS examination and absence of the 2010 loss on debt extinguishment, partially offset by costs associated with the HealthSpring acquisition, all of which were reported as special items. Corporate’s adjusted loss from operations was lower in 2011 compared with 2010 primarily reflecting decreased pension expense and lower tax adjustments related to postretirement benefits and compensation resulting from Health Care Reform. These factors were partially offset by increased net interest expense due to higher average borrowings outstanding in 2011. higher interest expense due to the $2.1 billion of long-term debt issued in the fourth quarter of 2011 to fund the HealthSpring acquisition; GLYPH<127> charges associated with litigation matters due primarily to recent developments. See Note 24 to the Consolidated Financial Statements for additional information; GLYPH<127> the absence of a tax benefit; and GLYPH<127> estimated penalties for terminating a service contract. GLYPH<127> claim and benefit payments to policyholders; GLYPH<127> operating expense requirements, primarily for employee compensation and benefits; and GLYPH<127> dividends and federal tax payments to the parent company. GLYPH<127> maintaining appropriate levels of cash, cash equivalents and short-term investments; GLYPH<127> using cash flows from operating activities; GLYPH<127> selling investments; GLYPH<127> matching investment durations to those estimated for the related insurance and contractholder liabilities; and GLYPH<127> borrowing from its parent company. GLYPH<127> debt service and dividend payments to shareholders; GLYPH<127> pension plan funding; and GLYPH<127> federal tax payments. GLYPH<127> maintaining appropriate levels of cash, cash equivalents and short-term investments; GLYPH<127> collecting dividends and federal tax payments from its subsidiaries; GLYPH<127> using proceeds from issuance of debt and equity securities; and GLYPH<127> borrowing from its subsidiaries. GLYPH<127> Liquidity and Capital Resources Liquidity The Company maintains liquidity at two levels: the subsidiary level and the parent company level. Liquidity requirements at the subsidiary level generally consist of: The Company’s subsidiaries normally meet their operating requirements by: Liquidity requirements at the parent level generally consist of: The parent normally meets its liquidity requirements by: CIGNA CORPORATION -  2012 Form  10-K 51 (In millions) 2012 2011 2010 Short-term investments $ 154 $ 225 $ 174 Cash and cash equivalents $ 2,978 $ 4,690 $ 1,605 Short-term debt $ 201 $ 104 $ 552 Long-term debt $ 4,986 $ 4,990 $ 2,288 Shareholders’ equity $ 9,769 $ 7,994 $ 6,356 Financial Summary