United Healthcare 2003 Annual Report Download - page 51

UnitedHealth Group 49
The results of operations and financial condition of MAMSI have not been included in our
Consolidated Statements of Operations or Consolidated Balance Sheets since the acquisition closed
after December 31, 2003. The unaudited pro forma financial information presented below assumes that
the acquisition of MAMSI had occurred as of the beginning of each respective period. The pro forma
adjustments include the pro forma effect of UnitedHealth Group shares issued in the acquisition, the
amortization of finite-lived intangible assets arising from the preliminary purchase price allocation,
interest expense related to financing the cash portion of the purchase price and the associated income
tax effects of the pro forma adjustments. Because the unaudited pro forma financial information has
been prepared based on preliminary estimates of fair values, the actual amounts recorded as of the
completion of the purchase price allocation may differ materially from the information presented
below. The unaudited pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations that would have occurred had the MAMSI
acquisition been consummated at the beginning of the respective periods.
2003 2002
(in millions, except per share data) (Pro Forma Unaudited) (Pro Forma Unaudited)
Revenues $31,511 $27,348
Net Earnings $1,971 $1,427
Earnings Per Share:
Basic $3.15 $2.22
Diluted $3.02 $2.12
On November 13, 2003, our Health Care Services business segment acquired Golden Rule Financial
Corporation and subsidiaries (Golden Rule). Golden Rule offers a broad range of health and life
insurance and annuity products to the individual consumer market, and this acquisition provides
UnitedHealth Group with a dedicated business to serve this market. We paid $495 million in cash in
exchange for all of the outstanding stock of Golden Rule. The purchase price and costs associated with
the acquisition exceeded the preliminary estimated fair value of the net tangible assets acquired by
approximately $111 million. We have preliminarily allocated the excess purchase price over the fair
value of the net tangible assets acquired to finite-lived intangible assets of $53 million and associated
deferred tax liabilities of $17 million, and goodwill of $75 million. The finite-lived intangible assets
consist primarily of customer contracts and the present value of future operating profits from life
insurance contracts, with an estimated weighted-average useful life of 14 years. The acquired goodwill is
not deductible for income tax purposes. The results of operations for Golden Rule since the acquisition
date have been included in our consolidated financial statements. The pro forma effects of the Golden
Rule acquisition on our consolidated financial statements were not material. Our preliminary estimate
of the fair value of the tangible assets/(liabilities) as of the acquisition date is as follows:
(in millions)
Cash and Cash Equivalents $32
Accounts Receivable and Other Current Assets 98
Long-Term Investments 2,208
Property, Equipment and Capitalized Software 29
Medical Costs Payable (147)
Other Current Liabilities (200)
Future Policy Benefits for Life and Annuity Contracts (1,636)
Net Tangible Assets Acquired $ 384