JP and most subsidiaries utilize space and personnel of JP Life. JP Life owns its home office consisting of a 20-story building and an adjacent 17-story building in downtown Greensboro, NC. These buildings house insurance operations and provide space for commercial leasing. JP Life also owns a supply and printing facility, a parking deck and a computer center, all located on nearby properties. JP Life leases office space in Lexington, KY for operation of the KCL business assumed, although these operations are being moved to Greensboro.
Corporate and Other contains the activities of the parent company and passive investment affiliates, surplus of the life insurance subsidiaries not allocated to other reportable segments including earnings thereon, financing expenses on Corporate debt and debt securities including Capital Securities, and federal and state income taxes not otherwise allocated to business segments.
JP's acquisition strategy is designed to enhance core business growth and deploy excess capital. The focus is to increase distribution, add products, add technology and provide economies of scale. On December 30, 1999, the Company acquired Guarantee using the purchase method of accounting. JP integrated Guarantee's life and annuity operations into the respective segments, while integrating its prior group life and disability operations of JP Life into Guarantee's Omaha, Nebraska life, disability and dental operations. During the first quarter 2000, Jefferson Pilot Securities Corporation, a broker/dealer subsidiary included in the AIP segment, completed the acquisition of Polaris Financial Services and Polaris Advisory Services. The discussion of these acquisitions and other significant transactions in Note 1 is incorporated by reference.
deferred acquisition costs and value of business acquired. Realized investment gains are included in the "Corporate and Other" segment. Reportable segment results is the basis used by management of the Company in assessing the performance of its business segments. Management believes that reportable segment results are relevant and useful information. Gains from sale of investments arise in majority from its Available for Sale equity and bond portfolios and may be realized in the sole discretion of management. Reportable segment results as described above may not be comparable to similarly titled measures reported by other companies.
Total reportable segment results per share increased 12.5% in 2000 and 13.3% in 1999, reflecting the increase in core business earnings and the share repurchases in 2000 and 1999. Earnings per share increased 11.4% in 2000 and 13.2% in 1999 and earnings per share assuming dilution increased 11.5% in 2000 and 13.0% in 1999 for the same reasons. Due to share repurchases net of stock plan issuances, the average number of diluted shares outstanding decreased 2.2% to 103.9 million shares in 2000 and decreased 0.8% to 106.2 million shares in 1999.
Reportable segments are determined in a manner consistent with the way management organizes for purposes of making operating decisions and assessing performance. Invested assets backing insurance liabilities are assigned to segments in relation to policyholder funds and reserves. Net deferred acquisition costs incurred, value of business acquired, reinsurance receivables and communications assets are assigned to the respective segments where those assets originate. Invested assets are also assigned to back capital allocated to each segment
The Individual Products segment offers a wide array of life insurance products to individuals through a career agency force, independent agents recruited through independent marketing organizations and a regional office network, home service agents, and financial institutions.
Individual Products reportable segment results increased 18.6% in 2000 due primarily to the acquisition of Guarantee along with growth of the business in force and increased 9.5% in 1999 due to the growth of business in force.
Policy benefits increased 18.0% and 1.3% in 2000 and 1999. The increase is due to the Guarantee acquisition and growth of business in force. Traditional policy benefits were 102.8% of premiums in 2000 versus 106.5% and 95.8% in 1999 and 1998. The decrease in 2000 was due primarily to favorable mortality and the Guarantee acquisition. The increase in 1999 was primarily a result of higher mortality. Policy benefits on UL-type products increased slightly to 7.1% of average policyholder funds and separate accounts in 2000 versus 6.8% and 7.6% in 1999 and 1998. Policy benefits include interest credited to policyholder accounts on UL-type products, whereas premium receipts on these products are credited directly to policyholder accounts and not recorded as revenues.
Average Individual Products assets grew 16.3% in 2000 and 10.0% in 1999. 2000's increase was due to the Guarantee acquisition, net receipts on UL-type products, new sales and growth in existing policyholder funds. 1999's growth was due to sales of UL-type products, and growth in existing policyholder funds from interest credited and equity returns. The return on average Individual Products assets for 2000 and 1999 was 1.9%.
Annuity revenues are derived from investment income on segment assets, policy charges, and concession income earned on investment product sales by Jefferson Pilot Securities Corporation (JPSC), a registered broker/dealer, and related entities. Revenues increased 22.9% in 2000 primarily due to the Guarantee acquisition, as well as higher concession income relating to the Polaris acquisition, an increase in surrender charges relating to an unusually high surrender rate and a general growth in average policyholder fund balances including separate accounts. The 1999 increase in revenues was in line with the increase in average policyholder funds and separate accounts. The increases in policyholder fund balances and average assets resulted from new receipts and interest credited less benefits and withdrawals paid, as well as the Guarantee acquisition. Fixed annuity receipts increased 48.4% and 128.2% in 2000 and 1999 due to significant sales increases through independent and career agents and financial institutions, of both older products and new products introduced in 1999. In total, fixed and variable annuity receipts increased by 42.3% in 2000 and 108.8% in 1999. Fixed annuity benefits and surrenders as a percentage of beginning fund balances rose to 21.2% in 2000 from 15.8% in 1999 and 1998. The surrender rate in the AIP segment is influenced by many factors, including the portion of the business that has low or no remaining surrender charges, and competition from annuity products which pay interest rate bonuses and from other investment products. JP maintains asset/liability management practices that reflect the characteristics of the AIP liabilities. Concession and other income increased 60.6% and 18.1% in 2000 and 1999, due to a higher utilization of JPSC for non-insurance transactions and the completion of the Polaris integration in 2000.
2.14% in 2000 and 1999 versus 2.11% in 1998. The increase in 2000 resulted from blending of the Guarantee acquisition and higher yields on new investments. Spreads on new products sold in 2000 averaged somewhat lower than on the existing block of business, in part due to one product's design with lower commission expenses and lower required spread.
AIP posted returns on average assets of 1.0% for 2000 and 1999 versus 1.1% in 1998.
The combined earnings of the broker/dealer and related entities which are included in the segment results were $6.3, $4.4 and $3.9 for 2000, 1999 and 1998. The increase relates primarily to the Polaris acquisition in 2000 and higher concession income.
The Benefit Partners segment offers group non-medical products such as term life, disability and dental insurance to the employer marketplace. These products are marketed primarily through a national distribution system of regional group offices. These offices develop business through employee benefit brokers, third party administrators and other employee benefit firms.
Benefit Partners reportable segment results increased $8.1 or 33.1% in 2000, primarily as a result of the Guarantee acquisition, and growth in this business. 1999 and 1998 reflect our decision to exit the group medical business in late 1997. The following table summarizes key information for Benefit Partners:
Total expenses, excluding interest expense, increased .3% and declined 2.6% in 2000 and 1999, respectively. Expenses as a percent of communication revenues were 65.4%, 66.9% and 70.4% for 2000, 1999 and 1998. The declines are attributable to expense management and a change in the mix of business away from lower margin sports products toward higher margin broadcast business.
Total assets increased $875 or 3.3% in 2000, reflecting growth in separate accounts, policyholder contract deposits and investments. In 1999, total assets increased $2,108 or 8.7% as a result of the Guarantee acquisition, increases in Separate Account assets and policyholder contract deposits, and cash provided by operating activities.
The Individual Products, AIP and Benefit Partners segments defer the costs of acquiring new business, including commissions, first year bonus interest, certain costs of underwriting and issuing policies plus agency office expenses (referred to as DAC). Amounts deferred were $1,219 and $1,091 at December 31, 2000 and 1999, an increase of 11.7%. The increase was due to strong sales of VUL and fixed annuity products net of the effect of changes in unrealized gains on Available for Sale securities.
Value of business acquired (VOBA) represents the actuarially-determined present value of future gross profits of each business acquired. VOBA was $740 at December 31, 2000, down 22.0% from 1999 due to amortization and the change in unrealized gains on Available for Sale securities. At December 31, 1999 VOBA was $949, which included $206 attributable to the Guarantee acquisition. Excluding Guarantee, VOBA decreased 0.4%, primarily as a result of amortization offset by changes in unrealized gains on Available for Sale securities. Note 6 contains rollforwards of DAC and VOBA, and is incorporated by reference.
Goodwill (cost of acquired businesses in excess of the fair value of net assets) was $323 and $303 at December 31, 2000 and 1999, with the net increase due to an adjustment to Guarantee's preliminary allocation of goodwill and the Polaris acquisition. Goodwill as a percentage of shareholders' equity was 10.2% and 11.0% at year-end 2000 and 1999.
Commercial paper outstanding was $405 and $361 at December 31, 2000 and 1999 with weighted average interest rates of 6.21% and 5.80%. The increase in commercial paper is due primarily to the retirement of ACES as noted below, and share repurchases. The maximum amount outstanding during 2000 and 1999 was $525 and $369.
JP insurance subsidiaries have sold U. S. Treasury obligations and collateralized mortgages under repurchase agreements involving various counterparties, accounted for as financing arrangements. Proceeds are used to purchase securities with longer durations as an asset/liability management strategy and to provide acquisition financing. The maximum amounts outstanding were $467 and $515 during 2000 and 1999 following a substantial increase in 1999 to help fund the Guarantee acquisition. The securities involved had a fair value and amortized cost of $415 and $404 at year end 2000 versus $530 and $531 at the end of 1999.
At December 31, 2000 and 1999, the Company had $139 and $290 of Exchangeable securities and other debt outstanding. This includes $139 and $137 at December 31, 2000 and 1999 of Mandatorily Exchangeable Debt Securities (MEDS) and $152 of Automatic Common Exchange Securities (ACES) at December 31, 1999. The ACES matured on January 21, 2000, and security holders were repaid in cash using commercial paper proceeds of $146. The Exchangeable Securities are further described in Notes 8 and 9 which are incorporated by reference. Additionally, $300 of guaranteed preferred beneficial interest in subordinated debentures (Capital Securities) remained outstanding at December 31, 2000.
Liquidity requirements are met primarily by positive cash flows from the operations of subsidiaries. Overall sources of liquidity are sufficient to satisfy operating requirements. Primary sources of cash from the insurance operations are premiums, other insurance considerations, receipts for policyholder accounts, investment sales and maturities and investment income. Primary uses of cash include purchases of investments, payment of insurance
In order to meet the parent company's dividend payments, debt servicing obligations and other expenses, internal dividends are received from subsidiaries. Total cash dividends paid by subsidiaries were $649 in 2000, $279 in 1999 and $235 in 1998. 2000 included extraordinary dividends of $200 from JP Life representing all its publicly traded equity securities and $100 from JP Financial in connection with the merger of AHL and Guarantee into JPFIC. JP Life, JPFIC and JPCC were the primary sources of dividends in 2000. The Company's life insurance subsidiaries are subject to laws in the states of domicile that limit the amount of dividends that can be paid without the prior approval of the respective State's Insurance Commissioner. The Company has no reason to believe that such approval will be withheld.
Cash and cash equivalents were $26, $62 and $21 at December 31, 2000, 1999 and 1998. Additionally, fixed income and equity securities held by the parent company and non-regulated subsidiaries were $549, $446 and $538. The increase reflects the extraordinary dividends mentioned above. These securities, including $139 (at December 31, 2000) of Bank of America Corporation common stock which supports the Exchangeable Securities, are considered to be sources of liquidity to support the Company's strategies.
Total debt and equity securities Available for Sale at December 31, 2000 and 1999 were $13,529 and $12,568.
JP's Investment Policy Statement requires an average quality fixed income portfolio (excluding mortgage loans) of "A" or higher. Currently, the average quality is "A1". The Policy also imposes limits on the amount of lower quality investments and requires diversification by issuer and asset type. The Company monitors "higher risk" investments for compliance with the Policy and for proper valuation. Securities that experience other than temporary declines in value are adjusted to net realizable values through a charge to earnings. Commercial mortgage loans in foreclosure are carried at the net present value of expected future cash flows.
As is typical in the industry, the Company's life and annuity products contain minimum rate guarantees regarding interest credited. For interest sensitive life products, the minimum rates range from approximately 2.5% to 6.0%, with an approximate weighted average of 4.4%. For annuity products, the minimum rates range from 3.0% to 6.0%, with the greatest concentration in the 3.5% to 4.0% range.
The Company employs various methodologies to manage its exposure to interest rate risks. The asset/liability management process focuses primarily on the management of interest rate risk of the Company's insurance operations. JP monitors the duration of insurance liabilities compared to the duration of assets backing the insurance lines, giving measurement to the optionality of cash flows. The Company's goal in such analysis is to prudently balance profitability and risk for each insurance product category, and for the Company as a whole. At December 31, 2000 and 1999, 88% and 87% of policy liabilities related to interest-sensitive portfolios.
changes in interest rates as of December 31, 2000 and 1999. The change in these estimates was due primarily to differences in the yield curves and in the sensitivities they introduced to the Company's model.
These estimates were derived by modeling estimated cash flows of the Company's market risk sensitive instruments and insurance portfolios. Changes in interest rates illustrated above assume parallel shifts in the yield curve graded pro-rata over four quarters. Incremental income or loss is net of taxes at 35%. Estimated cash flows produced in the model assume reinvestments representative of JP's current investment strategy, and calls/prepayments include scheduled maturities as well as those expected to occur when issuers can benefit financially based on the difference between prepayment penalties and new money rates under each scenario. Assumed lapse rates within insurance portfolios give consideration to relationships expected between crediting rates and market interest rates, as well as the level of surrender charges inherent in individual contracts. The illustrated incremental income or loss also includes the expected impact on amortization of DAC and VOBA. The model is based on the Company's existing business in force as of December 31, 2000 and does not consider new sales of life and annuity products or the potential impact (as discussed above) of interest rate fluctuations on sales.
Prescribed or permitted Statutory Accounting Principles (SAP) may vary between states and between companies. The NAIC has completed the process of codifying SAP to promote standardization of methods which must be implemented by January 1, 2001. The Company's preliminary calculations indicate that an immaterial increase in statutory capital will result from the application of these principles.
In recent years, the life insurance industry has experienced increased litigation in which large jury awards including punitive damages have occurred. See Note 19, which is incorporated by reference, for discussion of the Company's contingent liabilities.
JP is exposed to environmental regulation and litigation as a result of ownership of investment real estate and Communications subsidiaries. Actual loss experience has been minimal and exposure to environmental losses is considered to be insignificant.
You should note that this document and our other SEC filings reflect information that we believe was accurate as of the date the respective materials were made publicly available. Thus they do not reflect later developments.
As a matter of policy, Jefferson Pilot does not normally make projections or forecasts of future events or our performance. When we do, we rely on a safe harbor provided by the Private Securities Litigation Reform Act of 1995 for statements that are not historical facts, called forward looking statements. These may include statements relating to our future actions, sales and product development efforts, expenses, the outcome of contingencies such
as legal proceedings, or financial performance. An example would be our forecast of the anticipated earnings contribution over time from the Guarantee acquisition.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLAR AMOUNTS IN MILLIONS, EXCEPT SHARE INFORMATION) DECEMBER 31, 2000
On December 30, 1999, the Company acquired The Guarantee Life Companies Inc. and its subsidiaries, including Guarantee Life Insurance Company, collectively referred to as Guarantee. Guarantee's operations include group and worksite marketed non-medical products, including term life, disability, and dental products marketed through regional group offices. Guarantee's operations also include a substantial block of individual insurance products, principally universal life. The cost of the acquisition consisted of $298 cash paid plus other acquisition expenses. In addition, the Company assumed outstanding debt of $123. The Company financed the acquisition through the issuance of commercial paper and through proceeds from repurchase agreements. The acquisition was accounted for using the purchase method. Because the acquisition took place on December 30, none of Guarantee's results of operations are included in the consolidated income statement for 1999. In 2000, the final allocation of the purchase price to Guarantee's tangible and indentifiable intangible assets was completed, based on their fair values. The acquisition resulted in $105 of cost in excess of net assets acquired (i.e. goodwill) and $202 of value of business acquired. This goodwill is being amortized over 35 years.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP). The insurance subsidiaries also submit financial statements to insurance industry regulatory authorities. Those financial statements are prepared on the basis of statutory accounting practices (SAP) and are significantly different from financial statements prepared in accordance with GAAP. See Note 12.
The consolidated financial statements include the accounts of Jefferson-Pilot Corporation and all of its subsidiaries. All material intercompany accounts and transactions have been eliminated. JEFFERSON-PILOT CORPORATION AND SUBSIDIARIES
The preparation of financial statements requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates are asset valuation allowances, policy liabilities, deferred policy acquisition costs, value of business acquired and the potential effects of resolving litigated matters.
Amortization of premiums and accrual of discounts on investments in debt securities are reflected in earnings over the contractual terms of the investments in a manner that produces a constant effective yield. Realized gains and losses on dispositions of securities are determined by the specific-identification method.
Property and equipment, which is included in other assets, is stated at cost and depreciated principally by the straight-line method over estimated useful lives, generally 30 to 50 years for buildings and approximately 10 years for other property and equipment. Accumulated depreciation was $159 and $148 at December 31, 2000 and 1999.
Cost in excess of net assets acquired (goodwill) is amortized on a straight-line basis over periods of 25 to 40 years. Accumulated amortization was $39 and $29 at December 31, 2000 and 1999. Carrying amounts are regularly reviewed for indications of value impairment, with consideration given to financial performance and other relevant factors.
Separate account assets and liabilities represent funds segregated for the benefit of certain policyholders who bear the investment risk. The separate account assets and liabilities, which are equal, are recorded at fair value. Policyholder account deposits and withdrawals, investment income and realized investment gains and losses are excluded from the amounts reported in the Consolidated Statements of Income. Fees charged on policyholders' deposits are included in other considerations.
The Company and most of its subsidiaries file a consolidated life/nonlife federal income tax return. Currently, JP Financial files a separate consolidated return with its respective subsidiaries. Deferred income taxes are recorded on the differences between the tax bases of assets and liabilities and the amounts at which they are reported in the consolidated financial statements. Recorded amounts are adjusted to reflect changes in income tax rates and other tax law provisions as they become enacted.
Investments in debt and equity securities include 1,863 issuers, with one corporate issuer representing more than one percent of investments. Equity securities include investment in Bank of America Corporation (BankAmerica) of $382 and $417 as of December 31, 2000 and 1999. Debt securities considered less than investment grade approximated 4.8% and 5.1% of the total debt securities portfolio as of December 31, 2000 and 1999.
The Company's mortgage loan portfolio is comprised primarily of conventional real estate mortgages collateralized by retail (35%), apartment (17%), industrial (18%), office (18%) and hotel (12%) properties. Mortgage loan underwriting standards emphasize the credit status of a prospective borrower, quality of the underlying collateral and conservative loan-to-value relationships. Approximately 34% of stated mortgage loan balances as of December 31, 2000 are due from borrowers in South Atlantic states and approximately 23% are due from borrowers in West South Central states. No other geographic region represents as much as 10% of December 31, 2000 mortgage loans.
The Company's investment policy permits limited use of derivative financial instruments such as interest rate swaps in certain circumstances. The following summarizes open interest rate swaps:
Interest rate swaps are used to reduce the impact of interest rate fluctuations on specific floating-rate direct investments. Interest is exchanged periodically on the notional value, with the Company receiving the fixed rate and paying various short-term LIBOR rates on a net exchange basis. The net amount received or paid under these swaps is reflected as an adjustment to investment income. For hedges of investments classified as available for sale, net unrealized gains, net of the effects of income taxes and the impact on deferred policy acquisition costs and the value of business acquired, are not significant and are included in net unrealized gains on securities available for sale in stockholders' equity as of December 31, 2000 and 1999.
Interest rate swaps are used to modify the interest characteristics of certain blocks of annuity contract deposits. Interest is exchanged periodically on the notional value, with the Company receiving a fixed rate and paying various short-term LIBOR rates on a net exchange basis. The net amount received or paid under these swaps is reflected as an adjustment to insurance and annuity benefits.
On January 21, 2000, the Company repaid the ACES for $146.2 in cash, plus accrued interest.
Interest expense totaled $67 for 2000, $50 for 1999 and $46 for 1998.
Under a shareholders' rights plan, one common share purchase right is attached to each share of the Company's common stock. The plan becomes operative in certain events involving an offer for or the acquisition of 15% or more of the Company's common stock by any person or group. Following such an event, each right, unless redeemed by the Company's Board, entitles the holder (other than the acquiring person or group) to purchase for an exercise price of $235.00 an amount of common stock of the Company (or in the discretion of the Board, preferred stock, debt securities, or cash), or in certain circumstances stock of the acquiring company, having a market value of twice the exercise price. Approximately 103 million shares of common stock are currently reserved for the amended rights plan. The rights expire on February 8, 2009 unless extended by the Board, and are redeemable by the Board at a price of 0.44 cents per right at any time before they become exercisable.
The Company has 20,000,000 shares of preferred stock authorized (none issued) with the par value, dividend rights and other terms to be fixed by the Board of Directors, subject to certain limitations on voting rights.
Under the Non-Employee Directors' Stock Option Plan, 509,814 shares of the Company's common stock are reserved for issuance pursuant to outstanding or future awards as of December 31, 2000. Nonqualified stock
options are automatically awarded, at market prices on specified award dates. The options vest over a period of one to three years, and terminate ten years from the date of award, but are subject to earlier vesting or termination under certain circumstances. This plan will terminate as to further awards on March 31, 2003.
A comparison of net income and statutory capital and surplus of the life insurance subsidiaries (excluding Guarantee for 1999 and 1998) determined on the basis of SAP to net income and stockholder's equity of these life insurance subsidiaries (excluding Guarantee for 1999 and 1998) on the basis of GAAP is as follows:
At December 31, 1999, Guarantee had statutory capital and surplus of $157 and GAAP stockholder's equity of $426. Prior to its acquisition, Guarantee converted from a mutual form to a stock life company. In connection with that conversion, Guarantee agreed to segregate certain assets to provide for dividends on participating policies using dividend scales in effect at the time of the conversion, providing that the experience underlying such scales continued. The assets, including revenue therefrom, allocated to the participating policies will accrue solely to the benefit of those policies. The assets and liabilities relating to these participating policies amounted to $341 and $372 at December 31, 2000 and $332 and $371 at December 31, 1999. The excess of liabilities over the assets represents the total estimated future earnings expected to emerge from these participating policies.
Risk-Based Capital ("RBC") requirements promulgated by the NAIC require life insurers to maintain minimum capitalization levels that are determined based on formulas incorporating credit risk, insurance risk, interest rate risk and general business risk. As of December 31, 2000, the life insurance subsidiaries' adjusted capital and surplus exceeded their authorized control level RBC.
The insurance statutes of the states of domicile limit the amount of dividends that the life insurance subsidiaries may pay annually without first obtaining regulatory approval. Generally, the limitations are based on a combination of statutory net gain from operations for the preceding year, 10% of statutory surplus at the end of the preceding year, and dividends and distributions made within the preceding twelve months. Approximately $180 of dividends could be paid to the ultimate parent by the life insurance subsidiaries in 2001 without regulatory approval.
A reconciliation of the federal income tax rate to the Company's effective income tax rate follows:
Federal income tax returns for all years through 1994 are closed. The Internal Revenue Service has examined tax years 1995 and 1996, and assessments totaling $15.1 million have been proposed. The assessments pertain to issues related to timing differences between tax accounting and generally accepted accounting principles. The Company has contested the proposed assessments. Tax years 1997 and 1998 are currently under examination by the Internal Revenue Service, and no assessments have been proposed to date. In the opinion of management, recorded income tax liabilities adequately provide for these pending assessments as well as all remaining open years.
Reinsurance contracts do not relieve an insurer from its primary obligation to policyholders. Therefore, the failure of a reinsurer to discharge its reinsurance obligations could result in a loss to the subsidiaries. The subsidiaries regularly evaluate the financial condition of their reinsurers and monitor concentrations of credit risk related to reinsurance activities. No significant credit losses have resulted from the reinsurance activities of the subsidiaries during the three years ended December 31, 2000.
The fair values of commercial paper and revolving credit borrowings approximate their carrying amounts due to their short-term nature. Similarly, the fair value of the liability for securities sold under repurchase agreements approximates its carrying amount, which includes accrued interest. With respect to the Exchangeable Securities, the fair value of the ACES in 1999 was based on its nationally quoted market price. The fair value of the MEDS, which are not publicly traded, is estimated based on the value holders would have received had the MEDS been redeemable as of year end based on the market price of BankAmerica stock.
JPCC has commitments for purchases of syndicated television programming and commitments on other contracts, and future sports programming rights of approximately $459 as of December 31, 2000 payable through the year 2011. The company has commitments to sell a portion of the sports programming rights to other entities for approximately $247, over the same period. These commitments are not reflected as an asset or liability in the accompanying consolidated balance sheet because the programs are not currently available for use.