UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-16751
ANTHEM, INC.
(Exact name of registrant as specified in its charter)
| INDIANA | 35-2145715 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification Number) |
| 120 MONUMENT CIRCLE INDIANAPOLIS, INDIANA |
46204-4903 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (317) 488-6000
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| Title of Each Class | Outstanding at July 26, 2004 | |
| Common Stock, $0.01 par value | 139,611,447 shares |
Quarterly Report on Form 10-Q
For the Period Ended June 30, 2004
Table of Contents
| Page | ||
| PART I. FINANCIAL INFORMATION |
||
| ITEM 1. FINANCIAL STATEMENTS |
||
| Consolidated Balance Sheets as of June 30, 2004 (Unaudited) and December 31, 2003 |
1 | |
| 2 | ||
| 3 | ||
| Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003 (Unaudited) |
4 | |
| 5 | ||
| ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
16 | |
| ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
45 | |
| ITEM 4. CONTROLS AND PROCEDURES |
45 | |
| PART II. OTHER INFORMATION |
||
| ITEM 1. LEGAL PROCEEDINGS |
46 | |
| ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES |
46 | |
| ITEM 3. DEFAULTS UPON SENIOR SECURITIES |
46 | |
| 47 | ||
| ITEM 5. OTHER INFORMATION |
47 | |
| ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K |
47 | |
| 48 | ||
| 49 | ||
Consolidated Balance Sheets
| (In Millions, Except Share Data) | June 30, 2004 |
December 31, 2003 |
||||||
| (Unaudited) | ||||||||
| Assets |
||||||||
| Current assets: |
||||||||
| Investments available-for-sale, at fair value: |
||||||||
| Fixed maturity securities |
$ | 6,241.9 | $ | 6,721.5 | ||||
| Equity securities |
200.4 | 193.7 | ||||||
| 6,442.3 | 6,915.2 | |||||||
| Cash and cash equivalents |
1,090.4 | 464.5 | ||||||
| Premium and self-funded receivables |
1,112.8 | 1,068.4 | ||||||
| Reinsurance receivables |
99.2 | 96.9 | ||||||
| Other receivables |
247.4 | 254.0 | ||||||
| Income tax receivables |
47.2 | 8.6 | ||||||
| Other current assets |
103.6 | 57.4 | ||||||
| Total current assets |
9,142.9 | 8,865.0 | ||||||
| Restricted cash and investments |
59.1 | 58.3 | ||||||
| Property and equipment |
499.0 | 510.5 | ||||||
| Goodwill |
2,446.9 | 2,450.1 | ||||||
| Other intangible assets |
1,204.6 | 1,227.0 | ||||||
| Prepaid pension benefits |
238.8 | 258.3 | ||||||
| Other noncurrent assets |
67.2 | 69.4 | ||||||
| Total assets |
$ | 13,658.5 | $ | 13,438.6 | ||||
| Liabilities and shareholders’ equity |
||||||||
| Liabilities |
||||||||
| Current liabilities: |
||||||||
| Policy liabilities: |
||||||||
| Unpaid life, accident and health claims |
$ | 1,882.8 | $ | 1,866.8 | ||||
| Future policy benefits |
370.4 | 372.6 | ||||||
| Other policyholder liabilities |
503.4 | 505.0 | ||||||
| Total policy liabilities |
2,756.6 | 2,744.4 | ||||||
| Unearned income |
384.7 | 411.1 | ||||||
| Accounts payable and accrued expenses |
354.5 | 493.4 | ||||||
| Bank overdrafts |
428.6 | 401.7 | ||||||
| Income taxes payable |
16.8 | 147.6 | ||||||
| Other current liabilities |
456.4 | 573.3 | ||||||
| Total current liabilities |
4,397.6 | 4,771.5 | ||||||
| Long term debt, less current portion |
1,664.6 | 1,662.8 | ||||||
| Postretirement benefits |
185.1 | 188.4 | ||||||
| Deferred income taxes |
487.8 | 524.8 | ||||||
| Other noncurrent liabilities |
360.3 | 291.2 | ||||||
| Total liabilities |
7,095.4 | 7,438.7 | ||||||
| Shareholders’ equity |
||||||||
| Preferred stock, without par value, shares authorized – 100,000,000; |
– | – | ||||||
| Common stock, par value $0.01, shares authorized – 900,000,000; |
1.4 | 1.4 | ||||||
| Additional paid in capital |
4,829.3 | 4,708.7 | ||||||
| Retained earnings |
1,687.8 | 1,154.3 | ||||||
| Unearned restricted stock compensation |
(2.4 | ) | (3.2 | ) | ||||
| Accumulated other comprehensive income |
47.0 | 138.7 | ||||||
| Total shareholders’ equity |
6,563.1 | 5,999.9 | ||||||
| Total liabilities and shareholders’ equity |
$ | 13,658.5 | $ | 13,438.6 | ||||
See accompanying notes.
-1-
Consolidated Statements of Income
(Unaudited)
| (In Millions, Except Per Share Data) | Three Months Ended June 30 |
Six Months Ended June 30 | |||||||||||
| 2004 |
2003 |
2004 |
2003 | ||||||||||
| Revenues |
|||||||||||||
| Premiums |
$ | 4,150.4 | $ | 3,736.2 | $ | 8,242.2 | $ | 7,431.9 | |||||
| Administrative fees |
336.3 | 289.9 | 666.7 | 582.0 | |||||||||
| Other revenue |
45.6 | 33.1 | 91.3 | 61.2 | |||||||||
| Total operating revenue |
4,532.3 | 4,059.2 | 9,000.2 | 8,075.1 | |||||||||
| Net investment income |
70.7 | 65.6 | 143.9 | 137.1 | |||||||||
| Net realized gains (losses) on investments |
1.5 | (10.4 | ) | 34.5 | 2.5 | ||||||||
| 4,604.5 | 4,114.4 | 9,178.6 | 8,214.7 | ||||||||||
| Expenses |
|||||||||||||
| Benefit expense |
3,399.4 | 3,017.3 | 6,759.3 | 6,053.9 | |||||||||
| Administrative expense |
798.5 | 773.9 | 1,576.6 | 1,490.3 | |||||||||
| Interest expense |
32.2 | 32.8 | 64.5 | 65.7 | |||||||||
| Amortization of other intangible assets |
11.2 | 11.8 | 22.4 | 23.7 | |||||||||
| 4,241.3 | 3,835.8 | 8,422.8 | 7,633.6 | ||||||||||
| Income before income taxes and minority interest |
363.2 | 278.6 | 755.8 | 581.1 | |||||||||
| Income taxes |
124.8 | 99.9 | 220.7 | 209.7 | |||||||||
| Minority interest |
0.5 | 1.4 | 1.6 | 2.4 | |||||||||
| Net income |
$ | 237.9 | $ | 177.3 | $ | 533.5 | $ | 369.0 | |||||
| Net income per share |
|||||||||||||
| Basic |
$ | 1.72 | $ | 1.28 | $ | 3.86 | $ | 2.66 | |||||
| Diluted |
$ | 1.66 | $ | 1.25 | $ | 3.74 | $ | 2.61 | |||||
See accompanying notes.
-2-
Consolidated Statements of Shareholders’ Equity
(Unaudited)
|
(In Millions, |
Common Stock |
Additional Paid in Capital |
Retained Earnings |
Unearned Restricted Stock Compensation |
Accumulated Other Comprehensive Income |
Total Shareholders’ Equity |
||||||||||||||||||||
| Number of Shares |
Par Value |
|||||||||||||||||||||||||
| Balance at |
137,641,034 | $ | 1.4 | $ | 4,708.7 | $ | 1,154.3 | $ | (3.2 | ) | $ | 138.7 | $ | 5,999.9 | ||||||||||||
| Net income |
– | – | – | 533.5 | – | – | 533.5 | |||||||||||||||||||
| Change in net unrealized losses on investments |
– | – | – | – | – | (112.5 | ) | (112.5 | ) | |||||||||||||||||
| Change in fair value of cash flow hedge |
– | – | – | – | – | 20.8 | 20.8 | |||||||||||||||||||
| Comprehensive income |
441.8 | |||||||||||||||||||||||||
| Issuance of common stock for stock incentive plan and employee stock purchase plan |
1,810,855 | – | 120.6 | – | 0.8 | – | 121.4 | |||||||||||||||||||
| Balance at June 30, 2004 |
139,451,889 | $ | 1.4 | $ | 4,829.3 | $ | 1,687.8 | $ | (2.4 | ) | $ | 47.0 | $ | 6,563.1 | ||||||||||||
| Balance at |
139,332,132 | $ | 1.4 | $ | 4,762.2 | $ | 481.3 | $ | (5.3 | ) | $ | 122.7 | $ | 5,362.3 | ||||||||||||
| Net income |
– | – | – | 369.0 | – | – | 369.0 | |||||||||||||||||||