Progressive 2005 Annual Report Download - page 31

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THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
{Consolidated Statements of Cash Flows}
(millions)
For the years ended December 31, 2005 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,393.9 $ 1,648.7 $ 1,255.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 92.4 99.4 89.3
Amortization of fixed maturities 189.6 168.9 103.2
Amortization of restricted stock 33.7 23.8 11.0
Net realized (gains) losses on securities 37.9 (79.3) (12.7)
Changes in:
Unearned premiums 227.1 213.3 590.4
Loss and loss adjustment expense reserves 374.7 709.3 763.3
Accounts payable, accrued expenses and other liabilities 49.5 70.2 124.5
Prepaid reinsurance premiums 16.1 (5.1) (18.0)
Reinsurance recoverables (24.1) (110.3) (55.6)
Premiums receivable (213.5) (207.6) (336.8)
Deferred acquisition costs (12.6) (19.9) (48.8)
Income taxes (140.0) 98.5 (.1)
Tax benefits from exercise/vesting of stock-based compensation 41.2 44.3 44.0
Other, net (71.9) 8.3 (72.2)
Net cash provided by operating activities 1,994.0 2,662.5 2,436.9
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases:
Fixed maturities (9,154.4) (6,686.3) (9,491.6)
Equity securities (852.9) (678.3) (771.2)
Short-term investments – auction rate securities (7,935.3) (6,890.1) (4,044.4)
Sales:
Fixed maturities 7,068.6 5,885.7 7,189.3
Equity securities 152.3 876.3 337.8
Short-term investments – auction rate securities 8,053.4 6,552.4 3,907.6
Maturities, paydowns, calls and other:
Fixed maturities 572.6 639.7 779.2
Equity securities 114.4 78.2 91.7
Net sales (purchases) of short-term investments – other 491.8 (390.9) 56.6
Net unsettled security transactions 126.6 (43.2) (37.1)
Purchases of property and equipment (219.3) (192.0) (171.1)
Sale of property and equipment 36.1 — —
Net cash used in investing activities (1,546.1) (848.5) (2,153.2)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 44.2 51.7 50.0
Payments of debt — (206.0) —
Dividends paid to shareholders (23.7) (23.3) (21.7)
Acquisition of treasury shares (482.8) (1,628.5) (316.8)
Net cash used in financing activities (462.3) (1,806.1) (288.5)
Increase (decrease) in cash (14.4) 7.9 (4.8)
Cash, Beginning ofyear 20.0 12.1 16.9
Cash, End of year $ 5.6 $ 20.0 $ 12.1
See notes to the complete consolidated financial statements included in the Company’s 2005 Annual Report to Shareholders,
which is attached as an Appendix to the Company’s 2006 Proxy Statement.