Selling, general and administrative expenses, as a percentage of revenue, improved by 20 basis points over the prior year.
that are typically required of the PPO and POS members. Premium rates for our government programs, Medicare+Choice
to each market has helped us to expand our customer base. In particular, we have been able to a add
million at December 31, 2002. We also maintained reserves for doubtful accounts of approximately $1.4
recoveries on those contracts. These accruals are continually monitored and reviewed, and as settlements
industries or sectors and we intend to hold these investments for a period of time sufficient to allow
SFAS No. 133. Accordingly, a transition gain of $0.9 million, net of tax, was recorded in the first
organic growth and medical trend. Our total medical loss ratio (medical costs as a percentage of managed
commercial medical trend. Reported commercial medical trends, net of benefit buy downs, have been below
of revenue, selling general and administrative expense increased slightly by 0.2% to 12.2% for 2002.
offset by an increased amount of payments for acquisitions. Capital expenditures for the year ended
Principal ended their ownership of our common stock. We financed the stock and warrant repurchase with
RBC is a method of measuring the minimum amount of capital deemed appropriate for a managed care organization
250% of their RBC. Some states in which our regulated subsidiaries operate, require deposits to be maintained
operations we have, where possible, increased premium rates and implemented cost control measures in
result in earnings improvements in 2004, although realization is dependent upon a variety of factors,
our health plans could adversely affect our results of operations. Factors that could contribute to
our business. We can not predict the changes that government authorities will approve in the future
to various governmental reviews, audits and investigations to verify our compliance with the contracts
to holders of the senior notes upon a change of control.
prospects and our ability to collect or increase premiums. The state of the economy has also affected
is to express an opinion on these financial statements based on our audits. The financial statements
generally accepted in the United States. Also, in our opinion, the related financial statement schedule,
of Financial Accounting Standards (Statement) No. 142, Goodwill and Other Intangible Assets, which was
management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
fair value of its goodwill and other intangible assets: the market approach, the market capitalization
would have been reduced to the following pro-forma amounts (in thousands, except per share data):
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects (11,170) (7,503) (4,354)
Diluted earnings per share as reported $ 2.75 $ 1.58 $ 0.83
issuance under the Stock Incentive Plan were 1.8 million and 1.0 million as of December 31, 2003 and
Options generally become exercisable after one year in 25% increments per year and expire ten years
at a weighted-average fair value of $28.35. The Company recorded compensation expense related to restricted
stock grants of $9.6 million, $5.7 million and $1.5 million for the years ended December 31, 2003, 2002
and 2001, respectively. The deferred portion of the restricted stock as reported in additional paid
agent of the assets held under the terms of the Flexible Investment Annuity Contract with Coventry Health
(ii) receipt of the Internal Revenue Service determination letter approving the termination of the MAH
the Company has office equipment leases with terms of approximately three years.
in the alternative, to compel arbitration pursuant to the arbitration provisions which exist in the
the Company’s Pennsylvania HMO subsidiary, received audit reports from the OPM that questioned approximately
its operating segments and allocates resources based on gross margin. Assets are not allocated to specific