PART II ITEM 8 Financial Statements and Supplementary Data The following table summarizes the effect of these rollover awards for former HealthSpring employees. Purchase price allocation. In accordance with GAAP, the total purchase price has been allocated to the tangible and intangible net assets acquired based on management’s estimates of their fair values. Subsequent to the segment reporting changes in 2012, goodwill has been allocated to the Government operating segment as of December 31, 2012 and is not deductible for federal income tax purposes. The condensed balance sheet of HealthSpring at the acquisition date was as follows: In accordance with debt covenants, HealthSpring’s debt obligation was paid immediately following the acquisition. This repayment is reported as a financing activity in the statement of cash flows for the year ended December 31, 2012. The estimated fair values and useful lives for intangible assets are as follows: The fair value of the customer relationship and the amortization method were determined using an income approach that relies on projected future net cash flows including key assumptions for the customer attrition rate and discount rate. The estimated weighted average useful life reflects the time period and pattern of use that Cigna expects for over 90% of the projected benefits. Accordingly, amortization was recorded on an accelerated basis in 2012 and will decline in subsequent years. The results of HealthSpring have been included in the Company’s Consolidated Financial Statements from the date of the acquisition. Revenues of HealthSpring included in the Company’s results for the year ended December 31, 2012 were approximately $5.4 billion. During 2012, the Company recorded $53 million pre-tax ($40 million after-tax) of acquisition-related costs in other operating expenses. Pro forma information. The following table presents selected unaudited pro forma information for the Company assuming the acquisition of HealthSpring had occurred as of January 1, 2011. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of the date indicated or what such results would be for any future periods. Compensation Number of Average exercise/ Fair value Included in expense (Awards in thousands, dollars in millions, except per share amounts) awards award price of awards purchase price post-acquisition Vested options 589 $ 14.04 $ 18 $ 18 $ - Unvested options 1,336 $ 16.21 37 28 9 Restricted stock 786 $ 44.43 35 19 16 TOTAL 2,711 $ 90 $ 65 $ 25 (In millions) Investments $ 612 Cash and cash equivalents 492 Premiums, accounts and notes receivable 320 Goodwill 2,541 Intangible assets 795 Other 96 TOTAL ASSETS ACQUIRED 4,856 Insurance liabilities 505 Deferred income taxes 214 Debt 326 TOTAL LIABILITIES ACQUIRED 1,045 NET ASSETS ACQUIRED $ 3,811 Estimated Estimated Useful Life (Dollars in millions) Fair Value (In Years) Customer relationships $ 711 8 Other 84 3-10 TOTAL OTHER INTANGIBLE ASSETS $ 795 Year Ended December 31, (In millions, except per share amounts) 2012 2011 Total revenues $ 29,608 $ 27,461 Shareholders’ net income $ 1,633 $ 1,456 Earnings per share: Basic $ 5.73 $ 5.11 Diluted $ 5.63 $ 5.02 CIGNA CORPORATION -  2012 Form  10-K 79