Aetna 2013 Annual Report Download - page 99

Annual Report- Page 93
The transaction has been accounted for using the acquisition method of accounting which requires, among other
things, the assets acquired and liabilities assumed to be recognized at their fair values at the Effective Date. The
following table summarizes the estimated fair values of major classes of assets acquired and liabilities assumed as
part of the Merger, reconciled to the total consideration transferred:
At May 7,
(Millions) 2013
Cash and cash equivalents $ 2,195.6
Investments 2,156.4
Premiums and other receivables, net 1,141.1
Intangible assets acquired 1,490.0
Property and equipment 174.8
Other assets 128.7
Total assets acquired 7,286.6
Health care costs payable 1,440.1
Long-term debt 1,803.8
Net deferred tax liabilities (1) 272.9
Other liabilities 888.5
Total liabilities assumed 4,405.3
Total identifiable net assets 2,881.3
Goodwill acquired 4,014.8
Total consideration transferred $ 6,896.1
(1) Includes $521.5 million of deferred tax liabilities on identifiable intangible assets acquired and $75.8 million of deferred tax assets on
the fair value adjustment to Coventry's outstanding debt.
The estimate of fair value results from judgments about future events which reflect a number of uncertainties and
relies on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each
class of assets acquired and liabilities assumed, as well as intangible asset lives, can materially impact our operating
results. We will finalize the Coventry purchase accounting for the various preliminary items as soon as reasonably
possible during the measurement period. The finalization of our purchase accounting assessment could result in
changes in the valuation of assets and liabilities acquired which could be material.
As of the Effective Date, the expected fair value of premiums receivable and other receivables approximated their
historical cost. The gross contractual receivable for premiums receivable was $485.5 million, of which $12.5
million is not expected to be collectible. The gross contractual receivable for other receivables was $682.2 million,
of which $14.1 million is not expected to be collectible.
In connection with the acquisition of Coventry, all of Coventry's outstanding debt remained outstanding. Debt is
required to be measured at fair value under the acquisition method of accounting. As a result of this fair value
adjustment, the carrying value of Coventry's debt increased by approximately $217 million; this increase is being
amortized as a reduction to interest expense over the remaining life of the debt.