Travelers 2003 Annual Report Download - page 20

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18
Increase (Decrease)
Year ended
December 31, 2003
(in millions)
Unaudited Pro Forma Condensed Combined Income Statement
Revenues
q) Adjustment to recognize the amortization of fair value adjustments allocated to
investments using the interest method over the estimated remaining life of the
investments — See Note 6 $ (310)
Claims and Expenses
r) Adjustment to claims and claim adjustment expenses to reflect the accretion of
fair value — See Note 3 $ (57)
s) Adjustment to the amortization of deferred policy acquisition costs due to
conforming the accounting policy described in "c" above $ (375)
t) Adjustment to interest expense for the amortization of fair value adjustments
allocated to long-term debt, equity unit related debt and mandatorily redeemable
preferred securities, using the interest method over the remaining term to maturity $ (37)
u) General and administrative expenses —
i. Adjustment to amortization expense for the estimated value of identifiable
intangible assets with finite lives — See Note 4 $ 130
ii. Adjustment to the amortization of deferred policy acquisition costs after
conforming the accounting policy described in "c" above $ 384
v) To adjust income taxes for all pro forma adjustments except goodwill at the
statutory rate of 35% $ (124)
The pro forma adjustments do not include an anticipated restructuring charge in conjunction with the merger. The
preliminary estimate related to restructuring is approximately $300 million to $400 million and is subject to final
decisions by management of the combined company. These costs may include severance payments, asset write-offs
and other costs associated with the process of combining the companies. No determination has been made as to the
allocation of the restructuring reserve between SPC- and TPC-related expenditures for purposes of the preliminary
unaudited pro forma condensed combined financial statements.
Certain other assets and liabilities of SPC will also be subject to adjustment to their respective fair values at the time of
the merger. Pending further analysis, no pro forma adjustments are included herein for these assets and liabilities.