Progressive 2007 Annual Report Download - page 34

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33
THE PROGRESSIVE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(millions)
For the years ended December 31, 2007 2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,182.5 $ 1,647.5 $ 1,393.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 106.9 103.4 92.4
Amortization of fixed maturities 284.1 225.6 189.6
Amortization of stock-based compensation 26.5 27.6 33.7
Net realized (gains) losses on securities (106.3) 9.7 37.9
Net loss on disposition of property and equipment .4 .9 —
Changes in:
Premiums receivable 103.1 2.5 (213.5)
Reinsurance recoverables 98.7 (28.1) (24.1)
Prepaid reinsurance premiums 19.7 14.2 16.1
Deferred acquisition costs 14.7 3.8 (12.6)
Income taxes (30.3) 10.1 (140.0)
Unearned premiums (124.6) (.1) 227.1
Loss and loss adjustment expense reserves 217.7 64.7 374.7
Accounts payable, accrued expenses and other liabilities 2.4 7.1 49.5
Tax benefits from exercise/vesting of stock-based compensation1— — 41.2
Other, net (4.5) (64.3) (71.9)
Net cash provided by operating activities 1,791.0 2,024.6 1,994.0
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases:
Fixed maturities (8,184.6) (6,294.9) (9,154.4)
Equity securities (1,490.3) ( 1 ,1 3 1 .6) (852.9)
Short-term investments — auction rate securities (7,156.6) (2,999.3) (7,935.3)
Sales:
Fixed maturities 8,327.6 5,668.2 7,068.6
Equity securities 775.2 323.1 152.3
Short-term investments — auction rate securities 7,325.4 3,215.5 8,053.4
Maturities, paydowns, calls and other:
Fixed maturities 557.9 686.1 572.6
Equity securities 10.7 223.5 114.4
Net sales (purchases) of short-term investments — other 30.0 (22.3) 491.8
Net unsettled security transactions 35.1 (116.6) 126.6
Purchases of property and equipment (136.3) (334.3) (219.3)
Sale of property and equipment 2.0 15.4 36.1
Net cash provided by (used in) investing activities 96.1 (767.2) (1,546.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 30.8 43.3 44.2
Tax benefits from exercise/vesting of stock-based compensation115.5 38.8 —
Proceeds from debt21,021.7 — —
Payment of debt — (100.0) —
Dividends paid to shareholders (1,406.5) (25.0) (23.7)
Acquisition of treasury shares (1,548.4) (1,214.5) (482.8)
Net cash used in financing activities (1,886.9) (1,257.4) (462.3)
Increase (decrease) in cash .2 — (14.4)
Cash, Beginning ofyear 5.6 5.6 20.0
Cash, End of year $ 5.8 $ 5.6 $ 5.6
1Reclassified as required under SFAS 123(R).
2Includes a $34.4 million pretax gain received upon closing a forecasted debt issuance hedge. See Note 4— Debt in Progressive’s 2007Annual Report
to Shareholders, for further discussion.
See notes to the complete consolidated financial statements included in Progressive’s 2007 Annual Report to Shareholders, which is attached as an
Appendix to Progressive’s 2008 Proxy Statement.