2014 Annual Report

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Financial
Information

  • 2014
    Highlights
  • Financial &
    Membership Highlights
  • Balance
    Sheets
  • Statements
    of Income
  • Statements of
    Comprehensive Income
  • Statements of
    Cash Flow
  • Common
    Stock
 
Common Stock
Financial And Membership Highlights
(dollars in millions, except per share data) 2014 2013 2012
Operating Revenue
Total operating revenue $73,021.7 $70,191.4 $60,514.0
Total revenue 73,874.1 71,023.5 61,497.2
Net income 2,569.7 2,489.7 2,655.5
Earnings Per Share
Basic Net income $9.31 $8.34 $8.26
Diluted Net income 8.99 8.20 8.18
Dividends per share (in whole dollars) 1.75 1.50 1.15
Balance Sheet Information
Total assets $62,065.0 $59,574.5 $58,955.4
Total liabilities 37,813.7 34,809.3 35,152.7
Total shareholders' equity 24,251.3 24,765.2 23,802.7
Medical Membership (ooo's)
Commercial and Specialty Business $29,364 $28,307 $28,552
Government Business 8,135 7,346 7,578
Total medical membership 37,499 35,653 36,130
Customer Type
Local Group 15,137 14,725 14,681
Individual 1,793 1,755 1,855
National:
National Accounts 7,155 6,777 7,000
BlueCard 5,279 5,050 5,016
Total National 12,434 11,827 12,016
Medicare 1,404 1,441 1,538
Medicaid 5,193 4,378 4,520
FEP 1,538 1,527 1,520
Total medical membership by customer type 37,499 35,653 36,130
Funding Agreement
Self-Funded 22,800 20,294 20,176
Fully-Insured 14,699 15,359 15,954
Total medical membership by customer type 37,499 35,653 36,130
Other Memberships
Life and Disability Members 4,762 4,819 4,838
Dental Members 4,995 4,895 4,863
Dental Administration Members 4,918 4,886 4,103
Vision Members 5,096 4,743 4,519
Medicare Advantage Part D Members 690 628 734
Medicare Part D Standalone Members 467 474 574

Note 1: The information presented above should be read in conjunction with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in WellPoint’s 2013 Annual Report on Form 10—K.

Note 2: Certain prior year amounts have been reclassified to conform to current year presentation.
2014 Highlights
Balance Sheets
(In millions, except per share data) December 31, 2014 December 31, 2013
Current assets:
Cash and cash equivalents $2,151.7 $1,582.1
Investments available-for-sale, at fair value:
Fixed maturity securities (amortized cost of $17,120.4 and $16,826.7) 17,467.4 17,038.2
Equity securities (cost of $1,303.7 and $1,168.5) 1,906.6 1,735.5
Other invested assets, current 20.2 16.3
Accrued investment income 161.4 168.8
Premium and self-funded receivables 4,825.5 3,968.7
Other receivables 2,117.0 1,063.3
Income taxes receivable 308.9 235.7
Securities lending collateral 1,515.2 969.8
Deferred tax assets, net 280.4 383.0
Other current assets 1,474.6 1,677.5
Assets held for sale ‐ 906.9
Total current assets 32,228.9 29,745.8
Long-term investments available-for-sale, at fair value:
Fixed maturity securities (amortized cost of $500.7 and $455.9) 504.4 449.9
Equity securities (cost of $27.0 and $27.4) 31.5 31.3
Other invested assets, long-term 1,695.9 1,542.6
Property and equipment, net 1,944.3 1,801.5
Goodwill 17,082.0 16,917.2
Other intangible assets 7,958.1 8,441.0
Other noncurrent assets 619.9 645.2
Total assets $62,065.0 $59,574.5
Liabilities and shareholders’ equity
Liabilities:
Current liabilities:
Policy liabilities:
Medical claims payable $6,861.2 $6,127.2
Reserves for future policy benefits 68.1 63.1
Other policyholder liabilities 2,626.5 2,073.2
Total policy liabilities 9,555.8 8,263.5
Unearned income 1,078.1 822.7
Accounts payable and accrued expenses 3,651.8 3,426.3
Security trades pending payable 66.2 95.2
Securities lending payable 1,515.3 969.7
Short-term borrowings 400.0 400.0
Current portion of long-term debt 625.0 518.0
Other current liabilities 1,861.2 1,674.7
Liabilities held for sale – 181.4
Total current liabilities 18,753.4 16,351.5
Long-term debt, less current portion 14,127.2 13,573.6
Reserves for future policy benefits, noncurrent 671.3 723.0
Deferred tax liabilities, net 3,226.0 3,325.2
Other noncurrent liabilities 1,035.8 836.0
Total liabilities 37,813.7 34,809.3
Commitments and contingencies—Note 14
Shareholders’ equity
Preferred stock, without par value, shares authorized—100,000,000; shares issued and outstanding—none – –
Common stock, par value $0.01, shares authorized—900,000,000; shares issued and outstanding: 268,109,932 and 293,273,830 2.7 2.9
Additional paid-in capital 10,062.3 10,765.2
Retained earnings 14,014.4 13,813.9
Accumulated other comprehensive income 171.9 183.2
Total shareholders’ equity 24,251.3 24,765.2
Total liabilities and shareholders’ equity 62,065.0 59,574.5

The information presented above should be read in conjunction with the audited financial statements and accompanying notes included in Anthem’s 2014 Annual Report on Form 10-K.

Financial & Membership Highlights
Statements of Income
(In millions, except per share data) 2014 2013 2012
Revenues
Premiums $68,389.8 $66,119.1 $56,496.7
Administrative fees 4,590.6 4,031.9 3,934.1
Other revenue 41.3 40.4 83.2
Total operating revenue 73,0217 70,191.4 60,514.0
Net investment income 724.4 659.1 686.1
Net realized gains on investments 177.0 271.9 334.9
Other-than-temporary impairment losses on investments:
Total other-than-temporary impairment losses on investments (56.2) (100.6) (41.2)
Portion of other-than-temporary impairment losses recognized in other comprehensive income 7.2 1.7 3.4
Other-than-temporary impairment losses recognized in income (49.0) (98.9) (37.8)
Total revenues 73,874.1 71,023.5 61,497.2
Expenses
Benefit expense 56,854.9 56,237.1 48,213.6
Selling, general and administrative expense:
Selling expense 1,490.1 1,526.9 1,586.9
General and administrative expense 10,258.3 8,426.0 7,093.6
Total selling, general and administrative expense 11,748.4 9,952.9 8,680.5
Interest expense 600.7 602.7 511.8
Amortization of other intangible assets 220.9 245.3 233.0
Loss on extinguishment of debt 81.1 145.3 –
Total expenses 69,506.0 67,183.3 57,638.9
Income from continuing operations before income tax expense 4,368.1 3,840.2 3,858.3
Income tax expense 1,808.0 1,205.9 1,207.3
Income from continuing operations 2,560.1 2,634.3 2,651.0
Income (loss) from discontinued operations, net of tax 9.6 (144.6) 4.5
Net income $2,569.7 $2,489.7 $2,655.5
Basic net income (loss) per share:
Basic - continuing operations $9.28 $8.83 $8.25
Basic - discontinued operations 0.03 (0.49) 0.01
Basic net income per share $9.31 $8.34 $8.26
Diluted net income (loss) per share:
Diluted - continuing operations $8.96 $8.67 $8.17
Diluted - discontinued operations 0.03 (0.47) 0.01
Diluted net income per share $8.99 $8.20 $8.18
Dividends per share $1.75 $1.50 $1.15

The information presented above should be read in conjunction with the audited financial statements and accompanying notes included in Anthem’s 2014 Annual Report on Form 10-K.
Balance Sheets
Statements of Comprehensive Income
(In millions) 2014 2013 2012
Net income $2,569.7 $2,489.7 $2,655.5
Other comprehensive (loss) income, net of tax:
Change in net unrealized gains/losses on investments 118.6 (294.7) 189.9
Change in non-credit component of other-than-temporary impairment losses on investments (3.9) 1.7 4.5
Change in net unrealized gains/losses on cash flow hedges (3.6) 3.0 0.1
Change in net periodic pension and postretirement costs (118.1) 172.7 (10.9)
Foreign currency translation adjustments (4.3) 1.4 0.6
Other comprehensive (loss) income (11.3) (115.9) 184.2
Total comprehensive income $2,558.4 $2,373.8 $2,839.7

The information presented above should be read in conjunction with the audited financial statements and accompanying notes included in Anthem’s 2014 Annual Report on Form 10-K.
Statements of Income
Statements of Cash Flow
Operating activities
Net income $ 2,569.7 $ 2,489.7 $ 2,655.5
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized gains on investments (177.0) (271.9) (334.9)
Other-than-temporary impairment losses recognized in income 49.0 98.9 37.8
Loss on extinguishment of debt 81.1 145.3 ‐
(Gain) loss on disposal from discontinued operations (3.2) 221.8 ‐
(Gain) loss on disposal of assets (1.7) 3.9 4.7
Deferred income taxes 30.7 59.1 127.5
Amortization, net of accretion 744.5 800.9 633.6
Depreciation expense 106.5 107.9 107.1
Impairment of property and equipment 7.9 47.7 66.8
Share-based compensation 168.9 146.0 146.5
Excess tax benefits from share-based compensation (46.4) (30.1) (28.8)
Changes in operating assets and liabilities:
Receivables, net (1,899.7) (418.3) 189.9
Other invested assets (21.7) (15.1) (38.9)
Other assets 405.5 (33.6) 79.2
Policy liabilities 1,240.6 (345.8) (53.7)
Unearned income 255.1 (73.8) (193.7)
Accounts payable and accrued expenses (14.4) 303.6 (406.5)
Other liabilities (7.9) (154.6) (132.8)
Income taxes (34.0) 9.3 (73.9)
Other, net (84.2) (38.6) (40.8)
Net cash provided by operating activities 3,369.3 3,052.3 2,744.6
Investing activities
Purchases of fixed maturity securities (9,613.4) (13,704.5) (15,040.4)
Proceeds from fixed maturity securities:
Sales 8,066.0 10,977.9 13,675.9
Maturities, calls and redemptions 1,318.7 1,836.8 1,781.5
Purchases of equity securities (912.0) (820.3) (232.8)
Proceeds from sales of equity securities 746.5 721.0 422.7
Purchases of other invested assets (205.7) (251.5) (303.7)
Proceeds from sales of other invested assets 124.7 127.1 35.5
Settlement of non-hedging derivatives (67.4) (109.8) (59.8)
Changes in securities lending collateral (545.6) (405.1) 307.9
Purchases of subsidiaries, net of cash acquired ‐ ‐ (4,597.0)
Proceeds from sale of subsidiary, net of cash sold 740.0 ‐ ‐
Purchases of property and equipment (714.6) (646.5) (544.9)
Proceeds from sales of property and equipment 88.0 39.2 0.4
Other, net (0.1) 1.3 3.1
Net cash used in investing activities (974.9) (2,234.4) (4,551.6)
Financing activities
Net repayments of commercial paper borrowings (379.2) (191.7) (229.0)
Proceeds from long-term borrowings 2,700.0 1,250.0 6,468.9
Repayments of long-term borrowings (1,730.1) (1,801.9) (1,251.3)
Proceeds from short-term borrowings 2,050.0 1,100.0 642.0
Repayments of short-term borrowings (2,050.0) (950.0) (492.0)
Changes in securities lending payable 545.6 405.0 (307.8)
Changes in bank overdrafts 173.0 9.9 (17.6)
Premiums paid on equity options ‐ (25.8) ‐
Repurchase and retirement of common stock (2,998.8) (1,620.1) (2,496.8)
Cash dividends (480.7) (448.0) (367.1)
Proceeds from issuance of common stock under employee stock plans 301.3 524.7 110.8
Excess tax benefits from share-based compensation 46.4 30.1 28.8
Net cash (used in) provided by financing activities (1,822.5) (1,717.8) 2,088.9
Effect of foreign exchange rates on cash and cash equivalents (7.1) 2.2 1.1
Change in cash and cash equivalents 564.8 (897.7) 283.0
Cash and cash equivalents at beginning of year 1,586.9 2,484.6 2,201.6
Cash and cash equivalents at end of year 2,151.7 1,586.9 2,484.6
Less cash and cash equivalents of discontinued operations at end of year ‐ (4.8) (9.3)
Cash and cash equivalents of continuing operations at end of year $ 2,151.7 $ 1,582.1 $ 2,475.3

The information presented above should be read in conjunction with the audited financial statements and accompanying notes included in Anthem’s 2014 Annual Report on Form 10-K.
Statements of Comprehensive Income
Common Stock

Our common stock, par value $0.01 per share, is listed on the NYSE under the symbol “ANTM.” On February 5, 2015, the closing price on the NYSE was $137.23. As of February 5, 2015, there were 74,717 shareholders of record of our common stock. The following table presents high and low sales prices for our common stock on the NYSE for the periods indicated.
  High Low
2014
First Quarter $ 102.56 $ 81.84
Second Quarter 110.03 90.75
Third Quarter 124.58 106.52
Fourth Quarter 129.96 108.92
2013
First Quarter $ 66.62 $ 58.75
Second Quarter 82.33 65.82
Third Quarter 90.00 80.75
Fourth Quarter 94.36 83.13
Statements of Cash Flow
2014 Highlights
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