Humana 2009 Annual Report Download - page 60

Receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were
$493.5 million higher than claims payments during 2009, $188.7 million higher than claim payments during
2008, and $185.1 million less than claims payments during 2007. See Note 2 to the consolidated financial
statements included in Item 8.-Financial Statements and Supplementary Data for further description.
In exchange for terminating interest-rate swap agreements in 2008, we received cash of $93.0 million.
The remainder of the cash used in or provided by financing activities in 2009, 2008, and 2007 primarily
resulted from the change in the securities lending payable, common stock repurchases, proceeds from stock
option exercises, and the excess tax benefit from stock compensation. The decrease in securities lending since
2007 resulted from lower margins earned under the program. During 2009, there were no repurchases of common
shares under the stock repurchase plan authorized by the Board of Directors. During 2008, we repurchased
2.1 million common shares for $92.8 million under the stock repurchase plan authorized by the Board of
Directors. We also acquired common shares in connection with employee stock plans for an aggregate cost of
$22.8 million in 2009, $13.3 million in 2008, and $27.4 million in 2007.
Future Sources and Uses of Liquidity
Stock Repurchase Plan
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. No shares were repurchased in 2008 or 2009 under the July 2008
authorization. The July authorization was set to expire on December 31, 2009. On December 10, 2009
(announced December 11, 2009), the Board of Directors renewed its $250 million authorization through
December 31, 2011. Under this authorized share repurchase program, 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. We have not yet repurchased any shares under the December
2009 authorization.
Senior Notes
During 2008, we issued $500 million of 7.20% senior notes due June 15, 2018 and $250 million of 8.15%
senior notes due June 15, 2038. The 7.20% and 8.15% senior notes are subject to an interest rate adjustment if the
debt ratings assigned to the notes are downgraded (or subsequently upgraded) and contain a change of control
provision that may require us to purchase the notes under certain circumstances. We also previously issued $300
million of 6.30% senior notes due August 1, 2018 and $500 million of 6.45% senior notes due June 1, 2016. All
four series of our senior notes, which are unsecured, may be redeemed at our option at any time at 100% of the
principal amount plus accrued interest and a specified make-whole amount. Concurrent with the senior notes
issuances, we entered into interest-rate swap agreements to exchange the fixed interest rate under these senior
notes for a variable interest rate based on LIBOR. During 2008, we terminated all of our swap agreements. We
may re-enter into swap agreements in the future depending on market conditions and other factors. Our senior
notes and related swap agreements are more fully discussed in Notes 11 and 12 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
50