Humana 2004 Annual Report Download - page 93

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
12. EARNINGS PER COMMON SHARE COMPUTATION
Detail supporting the computation of basic and diluted earnings per common share was as follows for the
years ended December 31, 2004, 2003 and 2002:
2004 2003 2002
(in thousands, except per share results)
Net income available for common stockholders ..... $280,012 $228,934 $142,755
Weighted average outstanding shares of common
stock used to compute basic earnings per common
share ..................................... 160,421 158,968 163,489
Dilutive effect of:
Employee stock options .................... 1,999 1,240 999
Restricted stock awards .................... 36 1,752 3,313
Shares used to compute diluted earnings per common
share ..................................... 162,456 161,960 167,801
Basic earnings per common share ................ $ 1.75 $ 1.44 $ 0.87
Diluted earnings per common share ............... $ 1.72 $ 1.41 $ 0.85
Stock options to purchase 2,134,184 shares in 2004, 4,209,266 shares in 2003, and 5,050,396 shares in
2002, were anti-dilutive and, therefore, were not included in the computations of diluted earnings per common
share.
13. STOCKHOLDERS’ EQUITY
Stock Repurchase Plan
The Board of Directors had authorized the 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 could be purchased
from time to time at prevailing prices in the open market or in privately negotiated transactions. The
authorization expired in January 2005.
During 2004, we acquired 3.8 million of our common shares at an aggregate cost of $67.0 million, or an
average of $17.83 per share. Of these shares, 3.6 million were acquired in open market transactions at an
aggregate cost of $63.7 million, or an average of $17.52 per share, and the remaining 0.2 million shares were
acquired in connection with employee stock plans at an aggregate cost of $3.3 million, or an average of $26.87
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, as well as 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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