Humana 2003 Annual Report Download - page 54

paper. The $265 million, 364-day revolving credit agreement supports the conduit commercial paper financing
program of up to $265 million.
We also maintain and may issue short-term debt securities under a commercial paper program when market
conditions allow. The program is backed by our credit agreements described above. Under the terms of our credit
agreements, aggregate borrowings under both the credit agreements and commercial paper program cannot
exceed $530 million.
At December 31, 2003, we had no direct or indirect (conduit) commercial paper borrowings outstanding.
Other Borrowings
Other borrowings of $4.9 million at December 31, 2003 and $5.5 million at December 31, 2002 represent
financing for the renovation of a building, bear interest at 2% per annum, are collateralized by the building, and
are payable in various installments through 2014.
Shelf Registration
On April 1, 2003, our universal shelf registration became effective with the Securities and Exchange
Commission. This allows us to register debt or equity securities, from time to time, with the amount, price and
terms to be determined at the time of the sale. After the issuance of our $300 million, 6.30% senior notes in
August 2003, we have up to $300 million remaining from a total of $600 million under the universal shelf
registration. The universal shelf registration allows us to use the net proceeds from any future sales of our
securities for our operations and for other general corporate purposes, including repayment or refinancing of
borrowings, working capital, capital expenditures, investments, acquisitions, or the repurchase of our outstanding
securities.
Contractual Obligations
We are contractually obligated to make payments for years subsequent to December 31, 2003 as follows:
Payments Due by Period
Total
Less than
1 Year 1–3 Years 3–5 Years
More than
5 Years
(in thousands)
Debt(1) ....................................... $642,638 $ 635 $327,163 $ 1,080 $313,760
Operating leases(2) ............................. 257,222 63,392 93,070 54,969 45,791
Purchase and other obligations(3) .................. 48,983 24,344 18,235 4,651 1,753
Total ..................................... $948,843 $88,371 $438,468 $60,700 $361,304
(1) Debt payments could be accelerated upon violation of debt covenants. We believe the likelihood of a debt
covenant violation is remote.
(2) We lease facilities, computer hardware, and other equipment under long-term operating leases that are
noncancelable and expire on various dates through 2017. We sublease facilities or partial facilities to third
party tenants for space not used in our operations which partially mitigates our operating lease
commitments. An operating lease is a type of off-balance sheet arrangement. Assuming we acquired the
asset, rather than leased, we would have recognized a liability for the financing of these assets. See also
Note 13 to the consolidated financial statements.
(3) Purchase and other obligations include agreements to purchase services, primarily information technology
related services, or to make improvements to real estate that are enforceable and legally binding on us and
that specify all significant terms, including: fixed or minimum levels of service to be purchased; fixed,
minimum or variable price provisions; and the appropriate timing of the transaction. Purchase obligations
exclude agreements that are cancelable without penalty.
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