Humana 2010 Annual Report Download - page 67

Military services base receivables consist of estimated claims owed from the federal government for health
care services provided to beneficiaries and underwriting fees. The claim reimbursement component of military
services base receivables is generally collected over a three to four month period. The timing of claim
reimbursements resulted in the $26.5 million decrease in base receivables for 2010 as compared to 2009 and the
$15.2 million and $31.4 million increase in base receivables for 2009 as compared to 2008 and 2008 as compared
to 2007, respectively.
Medicare receivables are impacted by the timing of accruals and related collections associated with the
CMS risk-adjustment model.
Commercial and other receivables for 2010 include $108.6 million of patient services receivables acquired
with the acquisition of Concentra in December 2010. Excluding the receivables acquired with Concentra, the
timing of reimbursements from the Puerto Rico Health Insurance Administration for our Medicaid business
resulted in the increase in commercial and other receivables for 2010 as compared to 2009.
In addition to the timing of receipts for premiums and payments of benefit expenses, other working capital
items impacting operating cash flows over the past three years primarily resulted from the timing of payments for
the Medicare Part D risk corridor provisions of our contracts with CMS as well as changes in the timing of
collections of pharmacy rebates.
Cash Flow from Investing Activities
We reinvested a portion of our operating cash flows in investment securities, primarily fixed income
securities, totaling $827.0 million in 2010, $1,975.2 million in 2009, and $685.5 million in 2008. Our ongoing
capital expenditures primarily relate to our information technology initiatives and administrative facilities
necessary for activities such as claims processing, billing and collections, wellness solutions, care coordination,
regulatory compliance and customer service. Total capital expenditures, excluding acquisitions, were $222.3
million in 2010, $185.5 million in 2009, and $261.6 million in 2008. Increased capital spending in 2008 included
expenditures associated with constructing a new data center building and mail-order pharmacy warehouse. We
expect total capital expenditures in 2011 of approximately $280 million reflecting increased spending due to the
Concentra acquisition. Cash consideration paid for acquisitions, net of cash acquired, of $832.5 million in 2010,
$12.4 million in 2009, and $422.9 million in 2008 primarily related to the Concentra acquisition in 2010 and the
SecureHorizons, OSF, and Cariten acquisitions in 2008.
Cash Flow from Financing Activities
Receipts from CMS associated with Medicare Part D claim subsidies for which we do not assume risk were
$237.2 million less than claims payments during 2010, $493.5 million higher than claim payments during 2009,
and $188.7 million higher than claims payments during 2008. See Note 2 to the consolidated financial statements
included in Item 8.-Financial Statements and Supplementary Data for further description.
During 2010, we repurchased 1.99 million shares for $100.0 million under the stock repurchase plan
authorized by the Board of Directors in December 2009. During 2009, there were no repurchases of common
shares under stock repurchase plans authorized by the Board of Directors. During 2008, we repurchased
2.10 million common shares for $92.8 million under a stock repurchase plan previously authorized by the Board
of Directors. We also acquired common shares in connection with employee stock plans for an aggregate cost of
$8.5 million in 2010, $22.8 million in 2009, and $13.3 million in 2008.
In 2009, net borrowings under our then existing credit agreement decreased $250.0 million primarily from
the repayment of amounts borrowed to fund the acquisition of Cariten. During 2008, the net repayment of $550
million under our credit agreement primarily related to amounts repaid from the issuance of $750 million in
senior notes offset by the $250 million financing of the Cariten acquisition.
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