Anthem Blue Cross 2002 Annual Report Download - page 68

NOTES
to Consolidated Financial Statements (Continued)
Anthem, Inc. 2002 Annual Report 63
In accordance with FAS 141, Business Combinations,
Anthem allocated the purchase price to the fair value of
assets acquired and liabilities assumed, including identifi-
able intangible assets. The excess of purchase price over
the fair value of net assets acquired resulted in $2,166.6 of
estimated non-tax deductible goodwill. Additional refine-
ment to the allocation of the purchase price may occur,
however, any adjustments are not expected to be material
to the consolidated financial statements.
The estimated fair values of Trigon assets acquired
and liabilities assumed at the date of acquisition are sum-
marized as follows:
Current assets $1,953.5
Goodwill 2,166.6
Other intangible assets 1,172.7
Other noncurrent assets 206.4
Total assets acquired 5,499.2
Current liabilities 932.4
Noncurrent liabilities 528.7
Total liabilities assumed 1,461.1
Net assets acquired $4,038.1
Of the $1,172.7 of acquired intangible assets, $706.4
was assigned to Blue Cross and Blue Shield trademarks,
which are not subject to amortization due to their indefi-
nite life. The remaining acquired intangible assets consist
of $453.7 of subscriber base with a weighted-average life
of 23 years, $8.4 of provider and hospital networks with a
20 year life, and $4.2 of non-compete agreements with a
26 month life.
The results of operations for Trigon are included in
Anthem’s consolidated income statement after the com-
pletion of the acquisition. The following unaudited pro
forma summary presents revenues, net income and per
share data of Anthem as if the Trigon acquisition had
occurred on January 1, 2001. The pro forma financial
information is presented for informational purposes only
and may not be indicative of the results of operations had
Trigon been owned by Anthem for the full years ended
December 31, 2002 and 2001, nor is it necessarily indica-
tive of future results of operations. The pro forma infor-
mation includes the results of operations for Trigon for
the periods prior to the acquisition, adjusted for interest
expense on long term debt and reduced investment
income related to the cash and investment securities used
to fund the acquisition, additional amortization and
depreciation associated with the purchase and the related
income tax effects.
Year Ended December 31
2002 2001
Revenues $15,254.5 $13,446.2
Net income 592.0 377.7
Pro forma earnings per share:
Basic $ 4.18 $ 2.65
Diluted 4.07 N/A
Pro forma shares outstanding:
Basic 141,517,000 142,267,000
Diluted 145,392,000 N/A
The diluted pro forma earnings per share for the year
ended December 31, 2001 were not calculated as such
amounts would not be meaningful as no stock or dilutive
securities existed prior to November 2, 2001, the effective
date of the demutualization. The pro forma basic earnings
per share for the year ended December 31, 2001 were cal-
culated using the weighted-average shares outstanding for
the period from November 2, 2001 to December 31, 2001.
Other Acquisitions
2002
During 2002, the Company completed two other
acquisitions plus made an additional contingent purchase
price payment on a 1999 acquisition, for an aggregate
purchase price of $22.1 as follows:
•PRO Behavioral Health, a Denver, Colorado-based
behavioral health care company;
•Remaining 50% ownership interest in Maine Partners
Health Plan, Inc.; and
•Matthew Thornton Health Plan, Inc. contingent pur-
chase price payment.
Goodwill recognized in these transactions amounted
to $14.1 of which $9.4 is expected to be deductible for tax
purposes. Goodwill was assigned to the East and Specialty
segments in the amounts of $10.7 and $3.4, respectively.
The pro forma effects of the acquisitions on results for
periods prior to the purchase dates are not material to the
Company’s consolidated financial statements.