Humana 2003 Annual Report Download - page 52

in 2002, and $115.5 million in 2001. Excluding acquisitions, we expect our total capital expenditures in 2004 to
be approximately $100 million, most of which will be used for our technology initiatives and improvement of
administrative facilities.
Stock Repurchase Plan
For the year ended December 31, 2003, we acquired 3.7 million of our common shares at an aggregate cost
of $44.1 million, or an average of $12.03 per share. Of these shares, 1.4 million were acquired in connection with
employee stock plans at an aggregate cost of $23.3 million, or an average of $16.27 per share, and the remaining
2.3 million shares were acquired in open market transactions at an aggregate cost of $20.8 million, or an average
of $9.31 per share. In July 2003, the Board of Directors authorized an additional use of up to $100 million for the
repurchase of our common shares exclusive of shares repurchased in connection with employee stock plans. The
shares may be purchased from time to time at prevailing prices in the open market or in privately negotiated
transactions. As of February 24, 2004, $94.2 million of the July 2003 authorization remains available for share
repurchases.
Debt
Short-term and long-term debt outstanding was as follows at December 31, 2003 and 2002:
2003 2002
(in thousands)
Short-term debt:
Conduit commercial paper financing program ............. $ — $265,000
Long-term debt:
6.30% senior, unsecured notes due 2018, net of unamortized
discount of $838 at December 31, 2003 ................ $299,162 $ —
7.25% senior, unsecured notes due 2006, net of unamortized
discount of $376 at December 31, 2003 and $521 at
December 31, 2002 ................................ 299,624 299,479
Fair value of interest rate swap agreements ............... 12,754 34,889
Deferred gain from interest rate swap exchange ............ 26,175 —
Total senior notes ............................... 637,715 334,368
Other long-term borrowings ........................... 4,923 5,545
Total long-term debt ............................. $642,638 $339,913
Senior Notes
In order to term-out our short-term debt and take advantage of historically low interest rates, we issued
$300 million 6.30% senior notes due August 1, 2018 on August 5, 2003. Our net proceeds, reduced for the cost
of the offering, were approximately $295.8 million. The net proceeds were used for general corporate purposes,
including the funding of our short term cash needs.
In order to hedge the risk of changes in the fair value of our $300 million 6.30% senior notes and our
$300 million 7.25% senior notes attributable to fluctuations in interest rates, we entered into interest rate swap
agreements. Interest rate swap agreements, which are considered derivatives, are contracts that exchange interest
payments on a specified principal amount, or notional amount, for a specified period. The interest rate swap
agreements have the same critical terms as our 6.30% senior notes and our 7.25% senior notes. Changes in the
fair value of the 6.30% or 7.25% senior notes and the swap agreements due to changing interest rates are
assumed to offset each other completely, resulting in no impact to earnings from hedge ineffectiveness. Our swap
agreements are recognized in our consolidated balance sheet at fair value with an equal and offsetting adjustment
to the carrying value of our senior notes. The fair value of our interest rate swap agreements are estimated based
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