Humana 2006 Annual Report Download - page 46

On December 20, 2005, our Commercial segment acquired Corphealth, Inc., a behavioral health care
management company, for cash consideration of approximately $54.0 million. This acquisition allows Humana
to integrate coverage of medical and behavior health benefits.
On February 16, 2005, we acquired CarePlus Health Plans of Florida, or CarePlus, as well as its affiliated 10
medical centers and pharmacy company for approximately $444.9 million in cash, adding approximately 50,400
Medicare Advantage members in Miami-Dade, Broward and Palm Beach counties. This acquisition enhances our
Medicare market position in South Florida.
On April 1, 2004, we acquired Ochsner Health Plan, or Ochsner, from the Ochsner Clinic Foundation for
$157.1 million in cash. Ochsner, a Louisiana health plan, added approximately 152,600 commercial medical
members, primarily in fully insured large group accounts, and approximately 33,100 members in the Medicare
Advantage program.
During 2006, we paid $5.8 million in contingent purchase price settlements related to the Corphealth,
CarePlus, and Ochsner acquisitions.
These transactions are more fully described in Note 3 to the consolidated financial statements included in
Item 8.—Financial Statements and Supplementary Data.
Recently Issued Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an
Interpretation of FASB Statement 109, or FIN 48. FIN 48 prescribes a comprehensive model for how a company
should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the
company has taken or expects to take on a tax return. FIN 48 also revises disclosure requirements and introduces
a prescriptive, annual, tabular roll-forward of the unrecognized tax benefits. FIN 48, which became effective for
us beginning January 1, 2007, requires the change in net assets that results from the application of the new
accounting model to be reflected as an adjustment to retained earnings. The adoption of FIN 48 did not have a
material impact on our financial position or results of operations.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans, or SFAS 158. We adopted SFAS 158
prospectively in the fourth quarter of 2006 for the year ending December 31, 2006. SFAS 158 requires an
employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a
multiemployer plan) as an asset or liability in its statement of financial position, and to recognize changes in that
funded status in the year in which the changes occur through comprehensive income. SFAS 158 also requires an
employer to measure the funded status of a plan as of the date of its year-end statement of financial position and
revises certain disclosure requirements. The benefit obligation is defined as the projected benefit obligation for
pension plans and as the accumulated postretirement benefit obligation for any other postretirement benefit plan,
such as a retiree health care plan. The adoption of SFAS 158 did not have a material impact on our financial
position.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, or SFAS 157. SFAS 157
defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value
measurements. SFAS 157 does not require new fair value measurements. We are required to adopt SFAS 157 in
the first quarter of 2008. We currently are evaluating the provisions of SFAS 157, however, we do not expect the
adoption of SFAS 157 will have a material impact on our financial position or results of operations.
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