Humana 2002 Annual Report Download - page 45

Total net premium and ASO receivables increased to $416.9 million, or 27.8%, during 2002 primarily
related to TRICARE, as presented in the following table:
December 31, Change
2002 2001 Dollars Percentage
(in thousands)
TRICARE:
Base receivable .................................. $197,544 $166,763 $ 30,781 18.5%
Bid price adjustments (BPAs) ...................... 104,044 — 104,044 100.0%
Changeorders ................................... 57,630 18,423 39,207 212.8%
359,218 185,186 174,032 94.0%
Less: long-term portion of BPAs .................... (86,471) — (86,471) 100.0%
TRICARE subtotal ........................... 272,747 185,186 87,561 47.3%
Commercial and other ................................. 174,309 179,621 (5,312) (3.0)%
Allowance for doubtful accounts ........................ (30,178) (38,539) 8,361 (21.7)%
Total net receivables .......................... $416,878 $326,268 $ 90,610 27.8%
TRICARE receivables increased primarily due to change orders and bid price adjustments previously
discussed. We collect the TRICARE base receivables monthly in the ordinary course of business. The timing of
BPA collections occurs at contractually specified intervals, typically in excess of 6 months after the end of a
contract year for our largest regions. We classified a portion of the total BPA receivables associated with our
Regions 3 and 4 TRICARE contract as long-term because the federal government is not obligated to pay us the
amounts until January 2004. We also have a BPA amount payable within one year under the Regions 3 and 4
contract of approximately $23 million at December 31, 2002, which is classified in trade accounts payable and
accrued expenses in our consolidated balance sheets. Change orders may be negotiated and settled at any time
throughout the year. We expect to collect the change order receivable balance of $57.6 million no later than the
second quarter of 2003. Due to the build-up of military personnel and other items previously discussed, we
expect TRICARE receivables to increase from the $359 million level at December 31, 2002 to a range of
$415 million to $465 million at December 31, 2003.
The allowance for doubtful accounts of $30.2 million at December 31, 2002, which relates entirely to
commercial and other receivables, decreased from $38.5 million at December 31, 2001. This decline resulted
from a reduction in past due accounts, improved collections and operating efficiencies related to the billing and
enrollment system.
Capital Expenditures
Our ongoing capital expenditures relate primarily to our technology initiatives and administrative facilities
necessary for activities such as claims processing, billing and collections, medical utilization review and
customer service. Total capital expenditures, excluding acquisitions, were $112.1 million in 2002, $115.5 million
in 2001, and $135.1 million in 2000. Excluding acquisitions, we expect our total capital expenditures in 2003 to
be approximately $105 million, most of which will be used for our technology initiatives and improvement of
administrative facilities.
Stock Repurchase Plan
In July 2002, the Board of Directors authorized the use of up to $100 million in total for the repurchase of
our common shares. The shares may be purchased from time to time at prevailing prices in the open-market, by
block purchases, or in privately-negotiated transactions. We have engaged Lehman Brothers Inc. and Banc of
America Securities, LLC to broker these transactions. As of December 31, 2002, we had purchased 6.4 million
shares for an aggregate purchase price of $74.0 million, or $11.56 per share. Since December 31, 2002 and
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