Humana 2006 Annual Report Download - page 59

in 2006, $165.8 million in 2005, and $114.1 million in 2004. The increased spending in 2006 and 2005 primarily
resulted from our Medicare expansion initiatives. Excluding acquisitions, we expect total capital expenditures in
2007 of approximately $200 million.
During 2006, we paid $22.3 million to acquire CHA Health, net of $43.5 million of cash acquired, and we
paid $5.8 million in contingent purchase price settlements related to prior years acquisitions. During 2005, we
paid $352.8 million to acquire CarePlus, net of $92.1 million of cash acquired, and we paid $50.0 million to
acquire Corphealth, net of $4.0 million of cash acquired. During 2004, we paid $141.8 million to acquire
Ochsner, net of $15.3 million of cash acquired.
During 2004, proceeds of $30.5 million 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.
Cash Flow from Financing Activities
During 2006, we issued $500 million of 6.45% senior notes due June 1, 2016. Our net proceeds, reduced for
the discount and cost of the offering were $494.3 million. We used the proceeds from the offering for the
repayment of the outstanding balance under our credit agreement, which at the time of the issuance was $200
million, and the repayment of our $300 million 7.25% senior notes which matured on August 1, 2006.
During 2006, our borrowings of $550 million and repayments of $300 million under our credit agreements
related to the timing of our senior notes issuance and repayment and funding of additional capital into certain
subsidiaries during 2006 in conjunction with growth in Medicare revenues. During 2005, we borrowed $494
million under our 5-year $600 million credit agreement. This amount included $294 million which we borrowed
temporarily to finance the CarePlus acquisition and repaid in 2005.
Subsidies from CMS associated with Medicare Part D claims for which we do not assume risk were $122.3
million less than the claim payments, as described in Note 2 to the consolidated financial statements included in
Item 8.—Financial Statements and Supplementary Data.
The remainder of financing activities in 2006, 2005, and 2004 resulted primarily from the change in the
securities lending payable, proceeds from stock option exercises, tax benefits of stock-based compensation, and
the change in the book overdraft. The increase in securities lending in 2006 coincides with a change in banking
vendors and higher average balances of investments to lend. In connection with employee stock plans, we
acquired common shares totaling 467,767 in 2006 and 68,296 in 2005 for an aggregate cost of $26.2 million in
2006 and $2.4 million in 2005. 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. The Board of Directors’ authorization for open market transactions expired in January 2005.
Senior Notes
In May 2006, we issued $500 million of 6.45% senior notes due June 1, 2016 as discussed previously. We
paid $300 million when our 7.25% senior notes matured on August 1, 2006. Our senior notes and related swap
agreements are more fully discussed in Note 10 to the consolidated financial statements included in Item 8.—
Financial Statements and Supplementary Data.
Credit Agreement
On July 14, 2006, we replaced our existing 5-year $600 million unsecured revolving credit agreement with a
5-year $1.0 billion unsecured revolving credit agreement. We entered into the credit agreement for general
corporate purposes. Under the credit agreement, at our option, we can borrow on either a competitive advance
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