Humana 2002 Annual Report Download - page 79

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
10. EARNINGS PER COMMON SHARE COMPUTATION
Detail supporting the computation of basic and diluted earnings per common share follows:
For the year ended December 31,
2002 2001 2000
(in thousands, except per share results)
Net income available for common stockholders .................... $142,755 $117,171 $ 90,052
Weighted average outstanding shares of common stock used to
compute basic earnings per common share ...................... 163,489 164,071 166,225
Dilutive effect of:
Employeestockoptions ................................... 999 811 331
Restricted stock awards ................................... 3,313 2,426 376
Shares used to compute diluted earnings per common share ........... 167,801 167,308 166,932
Basic earnings per common share ............................... $ 0.87 $ 0.71 $ 0.54
Diluted earnings per common share .............................. $ 0.85 $ 0.70 $ 0.54
Stock options to purchase 5,050,396 shares in 2002, 5,993,473 shares in 2001, and 11,676,093 shares in
2000, were not dilutive and, therefore, were not included in the computations of diluted earnings per common
share.
11. STOCKHOLDERS’ EQUITY
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.
Stockholders’ Rights Plan
We have a stockholders’ rights plan designed to deter takeover initiatives not considered to be in the best
interests of our stockholders. The rights are redeemable by action of the Board of Directors at a price of $0.01 per
right at any time prior to their becoming exercisable. Pursuant to the plan, under certain conditions, each share of
stock has a right to acquire 1/100th of a share of Series A Participating Preferred Stock at a price of $145 per
share. This plan expires in 2006.
Regulatory Requirements
Certain of our subsidiaries operate in states that regulate the payment of dividends, loans or other cash
transfers to Humana Inc., our parent company, require minimum levels of equity, and limit investments to
approved securities. The amount of dividends that may be paid to Humana Inc. by these subsidiaries, without
prior approval by state regulatory authorities, is limited based on the entity’s level of statutory income and
statutory capital and surplus. In most states, prior notification is provided before paying a dividend even if
approval is not required.
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