Humana 2002 Annual Report Download - page 77

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
A summary of amounts classified as current and non-current and their respective location in the
consolidated balance sheets at December 31, 2002 and 2001 follows:
December 31,
2002 2001
(in thousands)
Gross reserve included in:
Trade accounts payable and accrued expenses (current) ........... $ 53,461 $ 60,087
Other long-term liabilities (non-current) ........................ 209,302 241,431
Total gross reserve .................................... 262,763 301,518
Recoverables from insurance included in:
Other current assets (current) ................................ 34,290 42,322
Other assets (non-current) ................................... 108,305 144,651
Total recoverables from insurance ........................ 142,595 186,973
Total net reserve .................................. $120,168 $114,545
9. EMPLOYEE BENEFIT PLANS
Employee Savings Plan
We have defined contribution retirement and savings plans covering eligible employees. Our contribution to
these plans is based on various percentages of compensation, and in some instances, on the amount of our
employees’ contributions to the plans. The cost of these plans amounted to approximately $34.8 million in 2002,
$30.2 million in 2001, and $30.6 million in 2000, all of which was funded currently to the extent it currently was
deductible for federal income tax purposes. Based on the year end closing stock price of $10.00, approximately
18% of the retirement and savings plan’s assets were invested in our common stock representing less than 5% of
the shares outstanding as of December 31, 2002. The Company match is invested in the Humana common stock
fund. However, a participant may reinvest any fund, including the Company match, in any other plan investment
option at any time.
Stock Based Compensation
We have plans under which restricted stock awards and options to purchase our common stock have been
granted to officers, directors, key employees and consultants. We granted awards of restricted stock of 155,000
shares (125,000 from treasury) in 2001, and 4,785,000 shares (1,700,000 from treasury) in 2000. There were no
grants of restricted stock in 2002. Restricted stock forfeitures were 331,274 shares in 2002, 463,500 shares in
2001, and 94,500 shares in 2000. These awards generally vest three years from the date of grant. Unearned
compensation under the restricted stock award plans is amortized over the vesting periods. Compensation
expense recognized related to our stock award plans was $9.0 million in 2002, $9.5 million in 2001, and
$7.1 million in 2000.
Options are granted at the average market price on the date of grant. Exercise provisions vary, but most
options vest in whole or in part 1 to 5 years after grant and expire 10 years after grant. At December 31, 2002,
there were 12,500,228 shares reserved for employee and director stock option plans and there were 1,973,357
shares of common stock available for future grants. During the first quarter of 2003, a total of 1,935,500 options
were granted.
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