Humana 2006 Annual Report Download - page 88

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Gross realized investment gains were $82.0 million in 2006, $21.8 million in 2005, and $36.6 million in
2004. Gross realized gains included gains from the sale of venture capital investments of $76.2 million in 2006,
$5.7 million in 2005, and $16.0 million in 2004.
Gross realized investment losses were $13.6 million in 2006, $3.5 million in 2005, and $8.4 million in 2004.
There were impairment losses of $0.2 million in 2006, and none in 2005 or 2004.
We participate in a securities lending program where we loan certain investment securities for short periods
of time in exchange for collateral, consisting of cash or U.S. Government securities, initially equal to at least
102% of the fair value of the investment securities on loan. As of December 31, 2006, investment securities with
a fair value of $618.3 million were on loan. Net investment income earned on securities lending transactions was
$1.1 million in 2006 and $0.2 million in 2005 and 2004.
5. MEDICARE PART D
As discussed in Note 2, on January 1, 2006, we began covering prescription drug benefits in accordance
with Medicare Part D under multiple contracts with CMS. Other current assets and trade accounts payable and
accrued expenses in the accompanying consolidated balance sheets include the following amounts associated
with Medicare Part D as of December 31, 2006:
Risk Corridor
Settlement
CMS
Subsidies
(in thousands)
Other current assets ..................................................... $ 18,365 $ 449,984
Trade accounts payable and accrued expenses ................................ (757,084) (327,718)
Net (liability) asset ................................................. $(738,719) $ 122,266
6. PROPERTY AND EQUIPMENT, NET
Property and equipment was comprised of the following at December 31, 2006 and 2005:
2006 2005
(in thousands)
Land ................................................................. $ 15,912 $ 16,699
Buildings ............................................................. 291,437 278,405
Equipment and computer software ......................................... 1,080,093 936,463
Assets held for sale ..................................................... 3,645 9,786
1,391,087 1,241,353
Accumulated depreciation ................................................ (846,083) (756,941)
Property and equipment, net .......................................... $ 545,004 $ 484,412
Depreciation expense was $128.6 million in 2006, $105.1 million in 2005, and $107.3 million in 2004.
Depreciation expense in 2004 included the impact of accelerating depreciation related to abandoned software
more fully described below.
Accelerated Depreciation in 2004
After finalizing plans during the third quarter of 2004 to abandon some enrollment software by
December 31, 2004, we reduced the estimated useful life of the software effective July 1, 2004. Accordingly, we
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