Anthem Blue Cross 2002 Annual Report Download - page 73

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NOTES
to Consolidated Financial Statements (Continued)
68 Anthem, Inc. 2002 Annual Report
be used for general corporate purposes, including the
repayment of debt, investments in or extensions of credit
to Anthem’s subsidiaries or the financing of possible
acquisitions or business expansion.
On January 27, 2003, the Board of Directors author-
ized management to establish a $1,000.0 commercial
paper program. Proceeds from any future issuance of com-
mercial paper may be used for general corporate purposes,
including the repurchase of debt and common stock of
the Company.
Interest paid during 2002, 2001 and 2000 was $70.5,
$57.4 and $49.9, respectively.
Future maturities of debt are as follows: 2003,
$100.2; 2004, $1.4; 2005, $149.6; 2006, $222.8; 2007,
$0.7 and thereafter $1,284.9.
6. Fair Value of Financial Instruments
Considerable judgment is required to develop esti-
mates of fair value for financial instruments. Accordingly,
the estimates shown are not necessarily indicative of the
amounts that would be realized in a one time, current
market exchange of all of the financial instruments.
The carrying values and estimated fair values of cer-
tain financial instruments at December 31 are as follows:
2002 2001
Carrying Fair Carrying Fair
Value Value Value Value
Fixed maturity
securities $5,797.4 $5,797.4 $3,882.7 $3,882.7
Equity securities 150.7 150.7 189.1 189.1
Restricted
investments 48.4 48.4 38.7 38.7
Debt:
Equity Security
Units 222.2 357.3 220.2 294.4
Other 1,537.4 1,727.3 598.1 681.9
The carrying value of all other financial instruments
approximates fair value because of the relatively short
period of time between the origination of the instruments
and their expected realization. Fair values for securities,
restricted investments and Equity Security Units are based
on quoted market prices, where available. For securities not
actively traded, fair values are estimated using values
obtained from independent pricing services. The fair value
of other debt is estimated using discounted cash flow analy-
ses, based on the Company’s current incremental borrow-
ing rates for similar types of borrowing arrangements.
7. Property and Equipment
Property and equipment at December 31 is as follows:
2002 2001
Land and improvements $ 34.4 $ 21.8
Building and components 347.2 251.2
Data processing equipment,
furniture and other equipment 378.8 243.3
Computer software 262.2 189.4
Leasehold improvements 46.6 36.4
1,069.2 742.1
Less accumulated depreciation
and amortization 531.8 339.8
$ 537.4 $402.3
Property and equipment includes noncancelable
capital leases of $7.4 and $7.3 at December 31, 2002 and
2001, respectively. Total accumulated amortization on
these leases at December 31, 2002 and 2001 was $4.3 and
$3.9, respectively. The related lease amortization expense
is included in depreciation and amortization expense.
Depreciation and leasehold improvement amortization
expense for 2002, 2001 and 2000 was $108.1, $89.6 and
$75.3, respectively. Costs related to the development or
purchase of internal-use software of $116.4 and $91.4 at
December 31, 2002 and 2001, respectively, are reported
with computer software.