Humana 2008 Annual Report Download - page 102

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
14. EARNINGS PER COMMON SHARE COMPUTATION
Detail supporting the computation of basic and diluted earnings per common share was as follows for the
years ended December 31, 2008, 2007 and 2006:
2008 2007 2006
(in thousands, except per share results)
Net income available for common stockholders ..... $647,154 $833,684 $487,423
Weighted-average outstanding shares of common
stock used to compute basic earnings per common
share ..................................... 167,172 166,871 164,137
Dilutive effect of:
Employee stock options .................... 1,173 2,251 3,542
Restricted stock .......................... 842 698 317
Shares used to compute diluted earnings per common
share ..................................... 169,187 169,820 167,996
Basic earnings per common share ................ $ 3.87 $ 5.00 $ 2.97
Diluted earnings per common share ............... $ 3.83 $ 4.91 $ 2.90
Restricted stock and stock options to purchase 3,243,933 shares in 2008, 1,017,381 shares in 2007, and
854,379 shares in 2006 were anti-dilutive and, therefore, were not included in the computations of diluted
earnings per common share.
15. STOCKHOLDERS’ EQUITY
On February 22, 2008, the Board of Directors authorized the repurchase of up to $150 million of our
common shares exclusive of shares repurchased in connection with employee stock plans. During the year ended
December 31, 2008, we repurchased 2.1 million shares in open market transactions for $92.8 million at an
average price of $44.19. On July 28, 2008 (announced August 4, 2008), the Board of Directors increased the
authorized amount to $250 million, excluding the $92.8 million used prior to that time in connection with the
initial February 2008 authorization. The shares may be purchased from time to time at prevailing prices in the
open market, by block purchases, or in privately-negotiated transactions, subject to certain restrictions on
volume, pricing and timing. Due to continued volatility and turmoil in the financial markets, we have not yet
repurchased any shares under the July 2008 authorization. The presently-authorized share repurchase program
expires on December 31, 2009.
In connection with employee stock plans, we acquired 0.2 million common shares for $13.3 million and
0.4 million common shares for $27.4 million during the year ended December 31, 2008 and 2007, respectively.
Regulatory Requirements
Certain of our subsidiaries operate in states that regulate the payment of dividends, loans, or other cash
transfers to Humana Inc., our parent company, and require minimum levels of equity as well as limit investments
to approved securities. The amount of dividends that may be paid to Humana Inc. by these subsidiaries, without
prior approval by state regulatory authorities, is limited based on the entity’s level of statutory income and
statutory capital and surplus. In most states, prior notification is provided before paying a dividend even if
approval is not required.
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