Humana 2005 Annual Report Download - page 57

During 2004 and 2003, proceeds from the sale of property and equipment relate primarily to consolidating
our service centers in Jacksonville and San Antonio, including the sale of the Jacksonville office tower in 2004
for $14.8 million and a San Antonio office building for $5.9 million in 2003.
Cash Flow from Financing Activities
During 2005, we borrowed $494 million under our credit agreement. This amount included $294 million
which we borrowed temporarily to finance the CarePlus acquisition. Additional borrowings related primarily to
the anticipation of funding additional capital into certain subsidiaries during 2006 in conjunction with anticipated
growth in revenues.
During 2003, we issued $300 million in 6.3% senior notes due August 1, 2018 in order to repay our short-
term debt and take advantage of historically low interest rates. In addition, during 2003 we received proceeds of
$31.6 million in exchange for new swap agreements. See Note 9 to the consolidated financial statements included
in Item 8.—Financial Statements and Supplementary Data for more detailed information regarding our
borrowings and swap agreements.
The remainder of the cash provided by financing activities in 2005, 2004 and 2003 resulted primarily from
the change in the book overdraft, proceeds from stock option exercises, and the change in the securities lending
payable. During 2005, we acquired approximately 68,300 of our common shares in connection with employee
stock plans at an aggregate cost of $2.4 million, or an average of $34.62 per share. In 2004, we repurchased
3.6 million common shares in open market transactions and 0.2 million common shares in connection with
employee stock plans for $67.0 million at an average price of $17.83 per share. In 2003, we repurchased
2.3 million common shares in open market transactions and 1.4 million common shares in connection with
employee stock plans for $44.1 million at an average price of $12.03 per share. The Board of Directors’
authorization for open market transactions expired in January 2005.
Senior Notes
We issued in the public debt capital markets, $300 million aggregate principal amount of 7.25% senior
unsecured notes that mature on August 1, 2006 and $300 million aggregate principal amount of 6.30% senior
unsecured notes that mature on August 1, 2018. We have entered into interest rate swap agreements to exchange
the fixed interest rate under these senior notes for a variable interest rate based on LIBOR, as more fully
discussed in Note 9 to the consolidated financial statements included in Item 8.—Financial Statements and
Supplementary Data.
Credit Agreement
Our 5-year $600 million unsecured revolving credit agreement expires in September 2009. Under the
agreement, at our option, we can borrow on either a competitive advance basis or a revolving credit basis. The
revolving credit portion of the agreement bears interest at either a fixed rate or floating rate based on LIBOR plus
a spread. The spread, which varies depending on our credit ratings, ranges from 50 to 112.5 basis points. We also
pay an annual facility fee regardless of utilization. This facility fee, currently 15 basis points, may fluctuate
between 12.5 and 37.5 basis points, depending upon our credit ratings. In addition, a utilization fee of 12.5 basis
points is payable for any day in which borrowings under the facility exceed 50% of the total $600 million
commitment. The competitive advance portion of any borrowings will bear interest at market rates prevailing at
the time of borrowing on either a fixed rate or a floating rate basis, at our option.
The 5-year $600 million credit agreement contains customary restrictive and financial covenants as well as
customary events of default, including financial covenants regarding the maintenance of net worth, minimum
interest coverage, and maximum leverage ratios. At December 31, 2005, we were in compliance with all
applicable financial covenant requirements. The terms of this credit agreement also include standard provisions
related to conditions of borrowing, including a customary material adverse effect clause which could limit our
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