Aetna 2013 Annual Report Download - page 101

Annual Report- Page 95
The following table presents supplemental pro forma information as if the Merger had occurred on January 1, 2012
for the years ended December 31, 2013 and 2012. The pro forma consolidated results are not necessarily indicative
of what our consolidated results would have been had the Merger been completed on January 1, 2012. In addition,
the pro forma consolidated results do not purport to project the future results of the combined company nor do they
reflect the expected realization of any cost savings associated with the Merger.
Year Ended December 31,
(Millions, except per common share data) 2013 2012
Total revenue $ 52,089.3 $ 50,282.6
Net income attributable to Aetna 2,144.6 2,115.1
Earnings per share:
Basic 5.75 5.39
Diluted 5.69 5.33
We incurred transaction-related costs of $77.6 million ($95.8 million pretax) and $22.7 million ($28.4 million
pretax) during the years ended December 31, 2013 and 2012, respectively, related to the acquisition of Coventry.
Transaction costs include advisory, legal and other professional fees and transaction-related payments that are
reflected in our GAAP Consolidated Statements of Income in general and administrative expenses, as well as the
cost of the bridge credit agreement that was in effect prior to the Coventry acquisition, which is reflected in the
GAAP Consolidated Statements of Income in interest expense. Transaction costs also include transaction-related
payments as well as expenses related to the negative cost of carry associated with the permanent financing that we
obtained in November 2012 for the acquisition of Coventry. The components of the negative cost of carry are
reflected in our GAAP Consolidated Statements of Income in interest expense, net investment income, and general
and administrative expenses.
The unaudited pro forma consolidated results for the years ended December 31, 2013 and 2012 reflect the following
pro forma adjustments:
• Elimination of intercompany transactions between Aetna and Coventry, primarily related to network rental
fees.
• Foregone interest income associated with cash and cash equivalents and investments assumed to have been
used to partially fund the Merger.
• Foregone interest income associated with adjusting the amortized cost of Coventry's investment portfolio to
fair value as of the completion of the Merger.
• Elimination of historical Coventry intangible asset amortization expense and capitalized internal-use
software amortization expense and addition of intangible asset amortization expense relating to intangibles
valued as part of the acquisition.
• Additional interest expense from the long-term debt Aetna issued in November 2012 as well as the interest
expense on short-term debt Aetna issued in March and April 2013. Interest expense was also reduced for the
amortization of the fair value adjustment to long-term debt.
• Elimination of transaction-related costs incurred by Aetna and/or Coventry during 2013 and 2012.
• Adjustment of the modifications above for the applicable tax impact.
• Conforming adjustments to align Coventry's presentation to Aetna's accounting policies.
• Elimination of revenue and directly identifiable costs related to the sale of Aetna's Missouri Medicaid
business, Missouri Care, Incorporated (“Missouri Care”), to WellCare Health Plans, Inc. on March 31,
2013.
Completed Disposition
In connection with the acquisition of Coventry, on March 31, 2013, we completed the sale of Missouri Care to
WellCare Health Plans, Inc. The sale price was not material and did not have a material impact on our financial
position or operating results.