Humana 2007 Annual Report Download - page 57

purchase of three medical centers which were previously leased in South Florida in the first quarter of 2007 for
approximately $20.4 million. The increased spending in 2006 and 2005 primarily resulted from our Medicare
expansion initiatives. Excluding acquisitions, we expect total capital expenditures in 2008 of approximately
$275 million.
During 2007, we paid $369.1 million to acquire CompBenefits, $156.3 million to acquire KMG, and $27.0
million to acquire DefenseWeb. These amounts include $58.9 million of cash acquired.
During 2006, we paid $65.8 million to acquire CHA Health, including $43.5 million of cash acquired, and
we paid $5.8 million to settle the purchase price contingencies associated with prior year acquisitions. During
2005, net of cash acquired, we paid $444.9 million to acquire CarePlus, and $54.0 million to acquire Corphealth.
These amounts include $96.1 million of cash acquired.
Cash Flow from Financing Activities
During 2007, our net borrowings of $350 million under our credit agreements related to the financing of the
CompBenefits and KMG acquisitions. 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 credit agreement related to the financing of the CarePlus
acquisition, a portion of which was repaid in 2005.
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.
Receipts from CMS associated with Medicare Part D claim subsidies were $185.1 million less than the
corresponding claim payments during 2007 and $122.3 million less than the corresponding claim payments
during 2006. See Note 2 to the consolidated financial statements included in Item 8.—Financial Statements and
Supplementary Data for further description.
The remainder of financing activities in 2007, 2006, and 2005 resulted primarily from the change in the
securities lending payable, proceeds from stock option exercises, the tax benefit from stock compensation, and
the change in the book overdraft. The increase in securities lending in 2007 and 2006 coincides with higher
average balances of investments to lend and a change in lending terms during 2006. In connection with employee
stock plans, we acquired common shares totaling 406,377 in 2007, 467,767 in 2006, and 68,296 in 2005 for an
aggregate cost of $27.4 million in 2007, $26.2 million in 2006, and $2.4 million in 2005. On February 21, 2008,
the Board of Directors authorized the use of up to $150 million for the repurchase of our common shares
exclusive of shares repurchased in connection with employee stock plans.
Senior Notes
We previously issued in the public debt capital markets, $300 million aggregate principal amount of 6.30%
senior unsecured notes that mature on August 1, 2018 and $500 million aggregate principal amount of 6.45%
senior unsecured notes that mature on June 1, 2016. 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. 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
Our 5-year $1.0 billion unsecured revolving credit agreement expires in July 2011. Under the credit
agreement, at our option, we can borrow on either a revolving credit basis or a competitive advance basis. The
revolving credit portion bears interest at either a fixed rate or floating rate based on LIBOR plus a spread. The
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