Anthem Blue Cross 2002 Annual Report Download - page 80

NOTES
to Consolidated Financial Statements (Continued)
Anthem, Inc. 2002 Annual Report 75
At December 31, 2002, the Company had unused
federal tax net operating loss carryforwards of approxi-
mately $132.3 to offset future taxable income. The loss
carryforwards expire in the years 2003 through 2021.
During 2002, 2001 and 2000 federal income taxes paid
totaled $151.2, $74.1 and $26.3, respectively.
13. Accumulated Other Comprehensive Income
A reconciliation of the components of accumulated
other comprehensive income at December 31 is as follows:
2002 2001
Investments available-for-sale:
Gross unrealized gains $253.7 $ 90.4
Gross unrealized losses (46.4) (18.4)
Total pretax net unrealized gains 207.3 72.0
Deferred tax liability (73.6) (25.4)
Net unrealized gains 133.7 46.6
Restricted investments:
Gross unrealized gains 1.8 —
Gross unrealized losses (0.5) —
Total pretax net unrealized gains 1.3 —
Deferred tax liability (0.5) —
Net unrealized gains 0.8 —
Additional minimum pension liability:
Gross additional minimum
pension liability (18.2) (6.5)
Deferred tax asset 6.4 2.3
Net additional minimum
pension liability (11.8) (4.2)
Accumulated other
comprehensive income $122.7 $ 42.4
A reconciliation of the change in unrealized and
realized gains (losses) on investments included in accu-
mulated other comprehensive income is as follows:
2002 2001 2000
Change in pretax net unrealized
gains on investments $167.0 $ 15.5 $ 83.1
Less change in deferred taxes (58.3) (5.3) (28.4)
Less net realized gains on
investments, net of income
taxes (2002, $9.6; 2001, $21.3;
2000, $8.0), included
in net income (20.8) (39.5) (17.9)
Change in net unrealized gains
(losses) on investments $ 87.9 $(29.3) $ 36.8
14. Leases
The Company leases office space and certain com-
puter equipment using noncancelable operating leases.
Related lease expense for 2002, 2001 and 2000 was $47.3,
$45.2, and $64.0, respectively.
At December 31, 2002, future lease payments for
operating leases with initial or remaining noncancelable
terms of one year or more consisted of the following:
2003, $43.5; 2004, $37.0; 2005, $32.9; 2006, $27.2; 2007,
$23.5; and thereafter $117.0.
A subsidiary of the Company acquired with the
Trigon acquisition is a fifty percent limited partner in a
partnership that owns a property occupied by the
Company’s subsidiary. Under an operating lease with the
limited partnership, the Company incurred lease expense
of $0.8 during 2002.
15. Retirement Benefits
Anthem Insurance, Anthem Health Plans of New
Hampshire, Inc. and Anthem Southeast, Inc. sponsor
defined benefit pension plans.
The Anthem Insurance plan is a cash balance
arrangement where participants have an account balance
and will earn a pay credit equal to three to six percent
of compensation, depending on years of service. The
Anthem Insurance plan covers part-time and temporary
employees as well as full-time employees who have com-
pleted one year of continuous service and attained the
age of twenty-one. In addition to the pay credit, partici-
pant accounts earn interest at a rate based on 10-year
Treasury notes.
Anthem Health Plans of New Hampshire, Inc. spon-
sors a plan that is also a cash balance arrangement where
participants have an account balance and will earn a pay
credit equal to five percent of compensation. This plan
generally covers all full-time employees who have com-
pleted one year of continuous service and have attained
the age of twenty-one. The participant accounts earn
interest at a rate based on the lesser of the 1-year Treasury
note or 7%. Effective January 1, 2002, participant
accounts earn interest at a rate based on 10-year Treasury
notes. This plan merged into the Anthem Insurance plan
effective December 31, 2002.