(1) Other includes shared services that are utilized by both the life and annuity segments.
(A) Financial Data for 1997 includes the results for Delta, subsequent to the acquisition date of October 23, 1997 and the results for AAG, subsequent to the acquisition date of December 19, 1997. Financial data for 2001 includes the results for ILICO, subsequent to the acquisition date of May 18, 2001.
(B) Our predecessor, AMHC, was originally formed in 1996 as a mutual holding company and therefore, had no shares of common stock outstanding until its demutualization on September 20, 2000. On September 20, 2000, we distributed 17.4 million shares of common stock to our former members and exchanged our common stock for the 12.9 million shares of common stock held by the public in ALHI, our former subsidiary and another of our predecessor entities, on a one-for-one basis. Our operating income for the full fiscal years presented above primarily reflects the operating income of ALHI. Therefore, adjusted net operating income and net income from continuing operations per share was calculated based on the number of shares of stock we owned of ALHI from January 1, 1996 through September 20, 2000. Since then, adjusted net operating income and net income from continuing operations per share has been calculated based on the shares of our common stock actually outstanding.
We are a holding company whose subsidiaries are primarily engaged in the business of marketing, underwriting and distributing a broad range of individual life insurance and annuity products to individuals and businesses in all 50 states, the District of Columbia and the U.S. Virgin Islands. We have two reportable operating segments: life insurance and annuities. The life insurance segment's primary product offerings consist of whole life, interest-sensitive whole life, equity-indexed life, universal life and term life insurance policies. The primary product offerings of the annuity segment are individual fixed annuities.
Policyowner benefits including death benefits, represent our exposure to mortality risk and fluctuate from period to period based on the level of claims made by policyowners within our insurance retention limits. Our profitability is primarily affected by expense levels, interest spread results (the excess of investment earnings over interest credited to policyowners) during any measurement period, and fluctuations in mortality, persistency and other policyowner benefits. We have the ability to mitigate adverse experience through adjustments to credited interest rates, policyowner dividends or cost of insurance charges.
Our adjusted net operating income is not comparable to the adjusted net operating income of ALHI, our predecessor prior to our demutualization in 2000, which was the reporting entity in prior Securities and Exchange Commission filings. The principal difference is the reduction of our adjusted net operating income due to the minority interests' equity in earnings through September 20, 2000, when ALHI was reorganized to form our company. The minority interests' equity in earnings was $21.7 million, $28.1 million, $26.9 million and $16.2 million for the years ended December 31, 2000 through December 31, 1997, respectively.
(B) Represents amortization of deferred policy acquisition costs on the non-core realized gains or losses that are included in our product margins, adjusted for income taxes and minority interest on such amounts.
(C) Represents the net effect of Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," related accounting entries, adjusted for income taxes. The accounting entries consist of market value adjustments on trading securities, derivatives, certain annuity contracts, and the associated change in amortization of deferred acquisition costs resulting from such adjustments.
(D) For 2001 represents costs directly related to ILIC's demutualization. For 2000 and 1999 represents costs directly related to our demutualization and merger with ALHI, adjusted for minority interest on such amounts. The costs consist primarily of legal, actuarial and consulting expenses.
(E) Represents costs of restructuring our life insurance and annuity operations to eliminate duplicative functions, adjusted for income taxes. The costs consist primarily of severance and termination benefits.
(H) Our predecessor, AMHC, was originally formed in 1996 as a mutual holding company and, therefore, had no shares of common stock outstanding until the demutualization of our group on September 20, 2000. On September 20, 2000, we distributed 17.4 million shares of our common stock to our former members and exchanged our common stock for the 12.9 million shares of common stock held by the public in ALHI, our former subsidiary and another of our predecessor entities, on a one-for-one basis. Our operating income primarily reflects the operating income of ALHI. Therefore, adjusted net operating income per share was calculated based on the number of shares of stock we owned of ALHI from January 1, 1996 through September 20, 2000. Since then, adjusted net operating income per share has been calculated based on the shares of our common shares actually outstanding.
Adjusted net operating income was $114.0 million, or $3.05 per diluted share, for 2001 compared to $62.3 million, or $2.96 per diluted share, for 2000 and $49.1 million, or $2.81 per diluted share, for 1999. The increase in adjusted net operating income in 2001 compared to 2000 was primarily attributable to the acquisition of ILICO and the reduction in income applicable to the minority interests. In addition, adjusted net operating income in 2000 was impacted by some non-recurring items as explained in the following paragraph. The increase in adjusted net operating income in 2000 compared to 1999 was primarily attributable to the reduction in income applicable to the minority interest and the growth in invested assets. Adjusted net operating income is analyzed further in the operating segment discussion.
our 2000 adjusted net operating income to $58.1 million, or $2.76 per diluted share, as shown in the following table:
Effective January 1, 2001, we adopted the Accounting Standards Executive Committee's Statement of Position 00-3 "Accounting by Insurance Enterprises for Demutualizations and Formations of Mutual Holding Companies and for Certain Long-Duration Participating Contracts," (or SOP 00-3) The provisions of SOP 00-3 resulted in a modification of the presentation of the closed block in our consolidated financial statements to no longer show the operations of the closed block and the assets and liabilities of the closed block as single line items. In addition, SOP 00-3 required the reporting of unrealized gains and losses on closed block investments as a component of the closed block policyholder dividend obligation rather than accumulated other comprehensive income in total stockholders' equity. As a result, unrealized gains (losses) amounting to $6.0 million at December 31, 2000 and ($10.7) million at December 31, 1999 were reclassified from accumulated other comprehensive income to dividends payable to policyowners. There was no net income effect of adopting SOP 00-3.
Traditional life insurance premiums were $300.7 million in 2001 compared to $252.2 million in 2000 and $253.7 million in 1999. The acquisition of ILICO added traditional life insurance premiums of $96.7 million in 2001. Excluding these ILICO premiums, traditional life insurance premiums declined in 2001 and 2000 primarily as a result of the new reinsurance agreements entered into in 2000 which increased ceded premium for 2001 approximately $50.7 million compared to 2000. Approximately $11.1 million of additional premiums were ceded to reinsurers in 2000 compared to 1999. In addition, premiums decreased in both years due to the shift in sales focus from traditional life products to universal life products previously discussed. Partially offsetting the decline in first year premium and the increase in ceded premium was increased renewal premium. Open block renewal premium increased approximately $12.5 million in 2001 and $19.4 million in 2000 primarily due to the maturing of this block, while closed block renewal premium declined approximately $4.1 million in 2001 and $4.0 million in 2000 due to an increase in lapses. Total life insurance lapse rates, exclusive of ILICO, were 7.3% for 2001, 6.4% for 2000 and 7.3% for 1999. This increase in lapses followed the completion of our demutualization. The total life insurance lapse rate including ILICO was 7.7% for 2001.
Universal life product charges were $110.4 million in 2001 compared to $65.1 million in 2000 and $63.0 million in 1999. Approximately $42.8 million of the universal life product charges for 2001 were
Net investment income was $283.3 million in 2001 compared to $212.1 million in 2000 and $202.5 million in 1999. Approximately $71.0 million of net investment income for 2001 was attributable to the acquisition of ILICO. Excluding ILICO, net investment income increased $0.2 million primarily due to higher average invested assets (excluding market value adjustments) offset by lower effective yields as compared to the respective prior year. Average invested assets (excluding market value adjustments), exclusive of the ILICO acquisition increased approximately $94.7 million in 2001 compared to 2000 and $116.5 million in 2000 compared to 1999. The increases were primarily due to the growth of our life insurance business.
Core realized gains and losses on investments were a net gain of $8.7 million in 2001 compared to a net loss of $0.7 million in 2000 and a net loss of $0.4 million in 1999. Realized gains and losses from ILICO totaled a net gain of $5.4 million in 2001. These realized gains and losses are part of the closed block operation and are therefore included in the life segment operating income. The level of realized gains and losses will fluctuate from year to year depending on the prevailing interest rate and economic environment and the timing of our sales of investments.
Dividends to policyowners were $98.9 million in 2001 compared to $74.3 million in 2000 and $70.8 million in 1999. Dividends to policyowners, exclusive of ILICO, decreased $0.2 million in 2001 compared to 2000 and increased $3.6 million in 2000 compared to 1999. The increased levels in 2001 and 2000 as compared to 1999 were primarily due to the maturing of the closed block.
Adjusted pre-tax operating income from our life insurance operations was $94.0 million in 2001 compared to $59.1 million in 2000 and $51.3 million in 1999. The acquisition of ILICO contributed $32.6 million of adjusted pre-tax operating income to our life insurance segment in 2001. Exclusive of the impact of the ILICO acquisition, our life insurance operating income increased $2.3 million in 2001 compared to 2000 and increased $7.8 million in 2000 compared to 1999. Gross margins in our life insurance segment remained level in 2001 with the fluctuations in insurance expenses primarily impacting the overall results. The increase in 2000 was primarily due to increased investment income combined with decreased technology expenses, favorable mortality costs and a favorable impact of approximately $1.2 million from the market value adjustment in the third quarter of 2000.
Immediate annuity and supplementary contract premiums were $12.8 million in 2001, including $0.5 million for ILICO, compared to $21.8 million in 2000 and $25.1 million in 1999. A decrease in immediate annuity premiums was anticipated as a result of pricing adjustments made on these products.
Annuity product charges were $35.7 million in 2001 compared to $34.8 million in 2000 and $27.8 million in 1999. Annuity product charges from the acquisition of ILICO totaled $9.1 million for 2001. Excluding these ILICO amounts, annuity product charges declined $8.2 million in 2001 as compared to 2000 and increased $7.0 million in 2000 as compared to 1999. The decrease in product charges in 2001, exclusive of ILICO, was primarily due to decreased surrenders of annuity policies with surrender charges. Surrenders totaled approximately $884.7 million for 2001 compared to $1,258.6 million for 2000 and $1,014.0 million for 1999. The increase in product charges in 2000 was primarily due to increased surrender and expense charges resulting from the larger annuity block of business in force and increased surrender charges associated with an increase in withdrawals. Annuity withdrawal rates, exclusive of ILICO, averaged 10.7% in 2001 compared to 16.7% in 2000 and 14.7% for 1999. Excluding internal replacements, withdrawal rates decreased 4.8% to 9.2% for 2001 compared to 14.0% for 2000 and 13.4% for 1999. Annuity withdrawal rates, including ILICO from the acquisition date forward, averaged 12.5% for 2001. Surrenders at ILICO from the acquisition date through December 31, 2001 were approximately $337.9 million.
The effective yield on the investment portfolio was 6.38% in 2001 compared to 6.85% in 2000 and 6.65% in 1999. Excluding ILICO, 2001 yields increased to 7.01%. The increase in yields, exclusive of ILICO, primarily resulted from the market value adjustments we made to our assets in connection with our reorganization in the third quarter of 2000. The overall yield is lower including ILICO primarily due to the higher percentage of convertible securities ILICO carries in its investment portfolio. The convertible securities are associated with ILICO's total return strategy fixed annuity products. The effective yield on the deferred fixed annuity portfolio was 7.07% in 2001 compared to 6.98% in 2000 and 6.68% in 1999. The deferred fixed annuity portfolio yield was also positively impacted by the market value adjustments made in the third quarter of 2000.
There were no core realized gains and losses on investments in 2001 compared to a net loss of $16.6 million in 2000 and a net gain of $11.2 million in 1999. The convertible preferred stocks and bonds were moved to trading securities in 2001. Core realized gains and losses in 2000 and 1999 were primarily related to sales of convertible preferred stocks and bonds. Prior to 2001, the level of realized gains and losses fluctuated from period to period depending on the prevailing interest rate and economic environment and the timing of our sales of investments.
Other income primarily consists of third party annuity commissions received by wholly-owned IMOs and Corporate Owned Life Insurance (or COLI) income. Other income was $36.2 million for 2001 compared to $21.8 million for 2000 and $6.3 million for 1999. The increase in other income was due to increased revenue of independent marketing organizations purchased in the first quarter of 2001 and second quarter of 2000 and income on COLI investments made in the second quarter of 2001 of $50 million and fourth quarter of 2000 of $100 million. COLI is classified as an other asset so the income from this asset appears in other income instead of net investment income.
Amortization of deferred policy acquisition costs and value of business acquired amounted to $78.9 million in 2001 compared to $65.9 million in 2000 and $48.4 million in 1999. Exclusive of the impact of ILICO, amortization of deferred policy acquisition costs and VOBA increased $11.0 million in 2001 as compared to 2000 and increased $17.5 million in 2000 as compared to 1999. The increase in amortization was partially attributable to the general growth in the deferred policy acquisition cost asset associated with the continued growth in annuity sales. In addition, VOBA amortization was higher in 2001 and 2000 due to the additional VOBA established in connection with our market value adjustment in the third quarter of 2000.
(losses) on investments related to the fair value changes on the options that hedge the equity-indexed products and on the trading securities that back the total return strategy products.
Amortization of deferred policy acquisition costs and VOBA due to realized and unrealized gains (losses) on investments which are not considered part of the core business amounted to an expense reduction of $3.0 million in 2001 on net losses compared to an expense reduction of $8.7 million in 2000 on net losses and additional expense of $2.1 million in 1999 on net gains. The amortization fluctuates from period to period depending on the related non-core realized/unrealized gains and losses.
The 1999 and 2000 demutualization costs consist primarily of legal, actuarial and consulting expenses associated with our demutualization that was completed in the third quarter of 2000. The 2001 demutualization costs are associated with the demutualization of ILIC, which was completed when we acquired ILICO in May 2001. Since these costs are not ongoing, they have been excluded from our operating segment amounts.
We adopted SFAS No. 133 on January 1, 2001. In accordance with the provisions of the statement, we recorded the differences between the previous carrying amounts of our derivative instruments and the fair
value of our derivative instruments, as of this initial application date, as the effect of a change in accounting principle. The gross difference between carrying amounts and fair value amounts of our derivative instruments was a reduction of approximately $11.3 million. The deferred policy acquisition cost and VOBA amortization impact from the derivative adjustments was approximately $1.1 million and the income tax benefit was $4.2 million, resulting in the net cumulative effect of change in accounting for derivatives of $8.2 million.
As a holding company, AmerUs Group Co.'s cash flows from operations consist of dividends from subsidiaries, if declared and paid, interest from income on loans and advances to subsidiaries (including a surplus note issued to us by ALIC), investment income on our assets and fees which we charge our subsidiaries, offset by the expenses incurred for debt service, salaries and other expenses.
We have a $175 million revolving credit facility with a syndicate of lenders (or Revolving Credit Agreement), which replaced a similar $150 million revolving credit facility in December 2001. As of December 31, 2001, there was a $150 million outstanding loan balance under the facility. The Revolving Credit Agreement provides for typical events of default and covenants with respect to the conduct of business and requires the maintenance of various financial levels and ratios. Among other covenants, we (a) cannot have a leverage ratio greater than 0.35:1.0, (b) cannot have an interest coverage ratio less than 2.50:1.0 (c) are prohibited from paying cash dividends on common stock in excess of an amount equal to 3% of consolidated net worth as of the last day of the preceding fiscal year, and (d) must cause our life insurance subsidiaries to maintain certain levels of risk-based capital.
We take into account asset/liability management considerations in the product development and design process. Contract terms for the interest-sensitive products include surrender and withdrawal provisions which mitigate the risk of losses due to early withdrawals. These provisions generally do one or more of the following: limit the amount of penalty-free withdrawals, limit the circumstances under which withdrawals are permitted, or assess a surrender charge or market value adjustment relating to the underlying assets. The following table
summarizes liabilities for interest-sensitive life products and annuities by their contractual withdrawal provisions at December 31, 2001 (including liabilities in the closed blocks and the general account):
Through their respective memberships in the Federal Home Loan Banks (FHLB) of Des Moines and Topeka, ALIC and American are eligible to borrow under variable-rate short term fed funds arrangements to provide additional liquidity. These borrowings are secured and interest is payable at the current rate at the time of any advance. There were no borrowings under these arrangements outstanding at December 31, 2001. In addition, ALIC has long-term fixed rate advances from FHLB outstanding of $14.4 million at December 31, 2001.
The life insurance subsidiaries may also obtain liquidity through sales of investments. The investment portfolio as of December 31, 2001 had a carrying value of $15 billion, including closed block investments.
At December 31, 2001, the statutory surplus of the life insurance subsidiaries was approximately $690 million. Management believes that each life insurance company has statutory capital which provides adequate risk based capital that exceeds required levels.
Our contractual obligations primarily consist of amounts owed for debts, capital securities and operating lease commitments. See note 8 to the consolidated financial statements for further discussion about the debt
and capital securities and note 12 for additional information regarding leases. Maturities of debt and capital securities and lease obligations are as follows for each of the five years ending December 31, 2001:
We are party to financial instruments in the normal course of business to meet the financing needs of our customers having risk exposure not reflected in the balance sheet. These financial instruments include commitments to extend credit, guarantees and standby letters of credit primarily related to our commercial real estate portfolio. Commitments to extend credit are agreements to lend to customers. Commitments generally have fixed expiration dates and may require payment of a fee. Since many commitments expire without being drawn upon, the total amount of commitments does not necessarily represent future cash requirements. At December 31, 2001, outstanding commitments to extend credit totaled approximately $11.0 million and loan guarantees totaled approximately $6.3 million.
We maintain a diversified portfolio of investments which is supervised by an experienced in-house staff of investment professionals. Sophisticated asset/liability management techniques are employed in order to achieve competitive yields, while maintaining risk at acceptable levels. The asset portfolio is segmented by liability type, with tailored investment strategies for specific product lines. Investment policies and significant individual investments are subject to approval by the Board of Directors of each of the life insurance companies and are overseen by the Investment and Risk Management Committee of our Board of Directors. Management regularly monitors individual assets and asset groups, in addition to monitoring the overall asset mix. In addition, the insurance companies' boards and the Investment and Risk Management Committee review investment guidelines and monitor internal controls.
Our investment philosophy is to employ an integrated asset/liability management approach with separate investment portfolios for specific product lines, such as traditional life, universal life, equity-indexed life, deferred fixed annuities, multi-choice annuities, equity-indexed annuities, and variable annuities to generate attractive risk-adjusted returns on capital. Essential to this philosophy is coordinating investments in the investment portfolio with product strategies, focusing on risk-adjusted returns and identifying and evaluating associated business risks.
Investment policies and strategies have been established based on the specific characteristics of each product line. The portfolio investment policies and strategies establish asset duration, quality and other guidelines. Analytical systems are utilized to establish an optimal asset mix for each line of business. We seek to manage the asset/liability mismatch and the associated interest rate risk through active management of the investment portfolio. Financial, actuarial, investment, product development and product marketing professionals work together throughout the product development, introduction and management phases to jointly develop and implement product features, initial and renewal crediting strategies, and investment strategies based on extensive modeling of a variety of factors under a number of interest rate scenarios.
The fixed maturity securities portfolio consists primarily of investment grade corporate fixed maturity securities, high-quality mortgage-backed securities (or MBS) and United States government and agency obligations. As of December 31, 2001 fixed maturity securities were $13,212.5 million, or 87.7% of the carrying value of invested assets with public and private fixed maturity securities constituting $11,790.3 million, or 89.2%, and $1,422.2 million, or 10.8%, of total fixed maturity securities, respectively.
The following table summarizes fixed maturity securities by remaining maturity as of December 31, 2001:
Below-investment grade fixed maturity securities as of December 31, 2001, included the securities of 139 issuers representing 5.8% of total invested assets, with the largest being a $27.2 million investment.
MBS investments are mortgage-related securities including commercial mortgage-backed securities (or CMBS), collateralized mortgage obligations (or CMOs), and pass-through mortgage securities. Asset-backed securities are both residential and non-residential including exposure to home equity loans, home improvement loans, manufactured housing loans as well as securities backed by loans on automobiles, credit cards, and other collateral or collateral bond obligations. Residential mortgage pass-through and CMOs total $1,711.0 million or 11.4% of total invested assets. Asset-backed residential mortgages total $448.6 million or 3% of total invested assets. As of December 31, 2001, MBS were $2,129.8 million or 14.2%, of total invested assets of which $1,291.2 million or 60.6% of MBS were from government sponsored enterprises. Other MBS were $838.6 million or 39.4% of MBS as of December 31, 2001. Management believes that the quality of assets in the MBS portfolio is generally high, with 92.7% of such assets representing agency backed or "AAA" rated securities.
As of December 31, 2001, mortgage loans in the investment portfolio were $944.5 million, or 6.3% of the aggregate carrying value of invested assets. As of December 31, 2001, commercial mortgage loans and residential mortgage loans comprised 99% and 1%, respectively, of total mortgage loans. Commercial mortgage loans consist primarily of fixed-rate mortgage loans. As of December 31, 2001, we held 769 individual commercial mortgage loans with an average balance of $1.2 million.
We held $506.3 million of policy loans on individual insurance products as of December 31, 2001. Policy loans are permitted to the extent of a policy's contractual limits and are fully collateralized by policy cash values.
We have utilized a limited number of structured finance arrangements. The structures primarily consist of interests in collateralized bond obligations and special-purpose entities with principal protected limited partnership interests. Neither AmerUs Group nor any management members have operating control or management oversight of the entities and accordingly the entities are not consolidated but rather accounted for as available for sale debt securities or equity method investments. In addition, we do not have any continued obligation or commitment to provide additional financing to the entities. At December 31, 2001, approximately $600 million of such structured finance investments were included in invested assets.
We have developed an asset/liability management approach with separate investment portfolios for major product lines such as traditional life, universal life, equity-indexed life, deferred annuities, multi-choice annuities, equity-indexed annuities and variable annuities. Investment policies and strategies have been established based on the specific characteristics of each product line. The portfolio investment policies and strategies establish asset duration, quality and other guidelines. Analytical systems are utilized to establish an optimal asset mix for each line of business. We seek to manage the asset/liability mismatch and the associated interest rate risk through active management of the investment portfolio. Financial, actuarial, investment, product development and product marketing professionals work together throughout the product development, introduction and management phases to jointly develop and implement product features, initial and renewal crediting strategies, and investment strategies based on extensive modeling of a variety of factors under a number of interest rate scenarios.
AmerUs Group and our non-life subsidiaries file a consolidated federal income tax return. The life insurance subsidiaries file separate federal income tax returns. The separate return method is used to compute the provision for allocating federal income taxes. Deferred income tax assets and liabilities are determined based on differences among the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws.
We hold derivative financial instruments to hedge growth in policyowner liabilities for certain annuity products, to hedge the interest variability of a funding agreement and to hedge market risk for fixed income investments. These derivatives qualify for hedge accounting or are considered economic hedges as discussed in detail in note 4 to our consolidated financial statements. We do not participate in speculative derivatives trading.
We generally amortize our deferred policy acquisition costs based on a percentage of our expected gross margins (EGMs) over the life of the policies. Our estimated EGMs are computed based on assumptions related to the underlying policies written, including the lives of the underlying policies, growth rate of the assets supporting the liabilities, and level of expenses necessary to maintain the policies over their entire life. We amortize deferred policy acquisition costs by estimating the present value of the EGMs over the lives of the insurance policies and then calculate a percentage of the policy acquisition cost deferred as compared to the present value of the EGMs. That percentage is used to amortize the deferred policy acquisition cost such that the amount amortized over the life of the policies results in a constant percentage of amortization when related to the actual and future gross margins.
Because the EGMs are only an estimate of the profits we expect to recognize from these policies, the EGMs are adjusted at each balance sheet date to take into consideration the actual gross profits to date and any changes in the remaining expected future gross margins. When EGMs are adjusted, we also adjust the amortization of the deferred policy acquisition costs amount to maintain a constant percentage over the entire life of the policies.
Receivables and other assets -- reflected at replacement values or realizable values based on the present value of amounts to be received determined at appropriate interest rates less amounts considered uncollectible.
Value of business acquired -- actuarially determined the future profits from in force business calculated at a 15% risk discount rate using current best estimate assumptions.
Policyowner reserves and funds -- established at the present value of all future benefits and expenses associated with the policies using current best estimate assumptions.
Other liabilities and debt -- determined as the present value of amounts to be paid using appropriate interest rates.
Effective January 1, 2001, we adopted SFAS 133 which requires all derivative instruments be reported on the balance sheet at fair value. We recorded a transition adjustment as a decrease to net income as a cumulative effect of an accounting change amounting to $8.2 million after tax and an increase in accumulated other comprehensive income amounting to $2.7 million. See note 4 to the consolidated financial statements for additional information.
The life insurance subsidiaries adopted the NAIC's codified statutory accounting practices effective January 1, 2001 which resulted in an increase to statutory surplus of approximately $25 million, excluding ILICO.
In July 2001, the Financial Accounting Standards Board issued SFAS 141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of
At December 31, 2001, we had unamortized goodwill of $195.5 million. Amortization expense related to goodwill was $8.3 million for 2001. We do not anticipate a material impact to our consolidated financial statements as a result of adopting SFAS 141 and 142. We will have one year following adoption to determine the amount of any impairment.
Additional financial statement schedules begin on page S-1. Reference is made to the Index to Financial Statement Schedules on page S-1 herein.