Item 6—Selected Financial Data
Selected Historical Consolidated Financial Data
The selected consolidated financial data presented below should be read in conjunction with the audited consolidated financial statements of the Company and the related notes and Item 7—”Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this report.
The selected historical financial data presented below as of and for each of the five years ended December 31, 2005 have been derived from the audited consolidated financial statements of the Company, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
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| Year ended December 31, |
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| 2001 |
| 2002 |
| 2003 |
| 2004 |
| 2005 |
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| (millions, except per share data) |
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Statement of Operations Data |
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Total revenues |
| $ | 1,424 |
| $ | 1,735 |
| $ | 2,076 |
| $ | 2,275 |
| $ | 2,267 |
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Salaries and benefits (including share-based compensation of $7, $7, $10, $20, $18) |
| (743 | ) | (887 | ) | (1,086 | ) | (1,218 | ) | (1,384 | ) | |||||
Other operating expenses |
| (308 | ) | (341 | ) | (369 | ) | (391 | ) | (405 | ) | |||||
Regulatory settlements |
| — |
| — |
| — |
| — |
| (51 | ) | |||||
Depreciation expense and amortization of intangible assets |
| (68 | ) | (35 | ) | (39 | ) | (47 | ) | (54 | ) | |||||
Net gain on disposal of operations |
| 17 |
| 13 |
| 11 |
| 11 |
| 78 |
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Operating income |
| 322 |
| 485 |
| 593 |
| 630 |
| 451 |
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Interest expense, net |
| (82 | ) | (65 | ) | (53 | ) | (22 | ) | (30 | ) | |||||
Premium on redemption of subordinated notes |
| — |
| — |
| — |
| (17 | ) | — |
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Income before income taxes, equity in net income of associates and minority interest |
| 240 |
| 420 |
| 540 |
| 591 |
| 421 |
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Income taxes |
| (91 | ) | (150 | ) | (181 | ) | (197 | ) | (143 | ) | |||||
Equity in net income of associates, net of tax |
| 4 |
| 9 |
| 14 |
| 15 |
| 14 |
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Minority interest, net of tax |
| (19 | ) | (12 | ) | (8 | ) | (7 | ) | (11 | ) | |||||
Net income |
| $ | 134 |
| $ | 267 |
| $ | 365 |
| $ | 402 |
| $ | 281 |
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Earnings per share—basic |
| $ | 0.99 |
| $ | 1.82 |
| $ | 2.40 |
| $ | 2.56 |
| $ | 1.75 |
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Earnings per share—diluted |
| $ | 0.91 |
| $ | 1.64 |
| $ | 2.17 |
| $ | 2.42 |
| $ | 1.72 |
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Average number of shares outstanding |
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—basic |
| 136 |
| 147 |
| 152 |
| 157 |
| 161 |
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—diluted |
| 148 |
| 163 |
| 168 |
| 166 |
| 163 |
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Balance Sheet Data (as of year end) |
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Total assets(a) |
| $ | 8,926 |
| $ | 10,111 |
| $ | 10,914 |
| $ | 11,641 |
| $ | 12,194 |
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Net assets |
| 689 |
| 845 |
| 1,299 |
| 1,432 |
| 1,281 |
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Total long-term debt |
| 787 |
| 567 |
| 370 |
| 450 |
| 600 |
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Common shares and additional paid-in capital |
| 727 |
| 748 |
| 902 |
| 817 |
| 557 |
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Total stockholders’ equity |
| 673 |
| 820 |
| 1,280 |
| 1,412 |
| 1,256 |
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Other Financial Data |
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Capital expenditures |
| $ | 40 |
| $ | 47 |
| $ | 57 |
| $ | 49 |
| $ | 32 |
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Cash dividends declared per common share |
| $ | — |
| $ | — |
| $ | 0.58 |
| $ | 0.75 |
| $ | 0.86 |
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(a) As an intermediary, we hold funds in a fiduciary capacity for the account of third parties, typically as a result of premiums received from clients that are in transit to insurance carriers and claims due to clients that are in transit from insurance carriers. We report premiums, which are held on account of, or due from policyholders, as assets with a corresponding liability due to the insurance carriers. Claims held by, or due to, us which are due to clients are also shown as both assets and liabilities of ours. All those balances due or payable are included in accounts receivable and payable on the balance sheet. Investment income is earned on those funds during the time between the receipt of the cash and the time the cash is paid out. Fiduciary cash must be kept in certain regulated bank accounts subject to guidelines, which vary according to legal jurisdiction. These guidelines generally emphasize capital protection and liquidity. Fiduciary cash is not available to service our debt or for other corporate purposes.
