United Healthcare 2004 Annual Report Download - page 52

50 UNITEDHEALTH GROUP
On December 10, 2004, our Uniprise business segment acquired Definity Health Corporation (Definity).
Definity is the national market leader in consumer-driven health benefit programs. This acquisition
strengthened our position in the emerging consumer-driven health benefits marketplace. We paid
$305 million in cash in exchange for all of the outstanding stock of Definity. The purchase price and
costs associated with the acquisition exceeded the preliminary estimated fair value of the net tangible
assets acquired by approximately $263 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 $60 million and
associated deferred tax liabilities of $21 million, and goodwill of $224 million. The finite-lived intangible
assets consist primarily of member lists, with an estimated weighted-average useful life of 15 years. The
acquired goodwill is not deductible for income tax purposes. The results of operations and financial
condition of Definity have been included in our consolidated financial statements since the acquisition
date. The pro forma effects of the Definity acquisition on our consolidated financial statements were not
material. Our preliminary estimate of the acquired net tangible assets of $42 million, which is subject
to further refinement, consisted mainly of cash, cash equivalents, accounts receivable, property and
equipment and other assets partially offset by current liabilities.
For the year ended December 31, 2004, aggregate consideration paid or issued for smaller acquisitions
accounted for under the purchase method was $158 million. These acquisitions were not material to our
consolidated financial statements.
4 Cash, Cash Equivalents and Investments
As of December 31, the amortized cost, gross unrealized gains and losses, and fair value of cash, cash
equivalents and investments were as follows (in millions):
Amortized Gross Unrealized Gross Unrealized Fair
2004 Cost Gains Losses Value
Cash and Cash Equivalents $ 3,991 $ – $ – $ 3,991
Debt Securities — Available for Sale 7,723 205 (9) 7,919
Equity Securities — Available for Sale 199 10 (2) 207
Debt Securities — Held to Maturity 136 – – 136
Total Cash and Investments $12,049 $ 215 $ (11) $12,253
2003
Cash and Cash Equivalents $2,262 $–$–$2,262
Debt Securities — Available for Sale 6,737 229 (6) 6,960
Equity Securities — Available for Sale 173 9 (1) 181
Debt Securities — Held to Maturity 74 – – 74
Total Cash and Investments $9,246 $238 $(7) $9,477
As of December 31, 2004 and 2003, respectively, debt securities consisted of $1,551 million and $1,221 million
in U.S. Government and Agency obligations, $2,932 million and $2,617 million in state and municipal
obligations, and $3,572 million and $3,196 million in corporate obligations. At December 31, 2004, we
held $619 million in debt securities with maturities of less than one year, $2,431 million in debt securities
with maturities of one to five years, $2,734 million in debt securities with maturities of five to 10 years and
$2,271 million in debt securities with maturities of more than 10 years.
As of December 31, 2004, we had no investments in a continuous unrealized loss position for 12 months
or greater. Gross unrealized losses of $11 million were largely due to interest rate increases and relate to
debt securities with an aggregate fair value of $1.8 billion at December 31, 2004.