Humana 2012 Annual Report Download - page 122

Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The terms of the credit agreement include standard provisions related to conditions of borrowing, including
a customary material adverse effect clause which could limit our ability to borrow additional funds. In addition,
the credit agreement contains customary restrictive and financial covenants as well as customary events of
default, including financial covenants regarding the maintenance of a minimum level of net worth of $6.6 billion
at December 31, 2012 and a maximum leverage ratio of 3.0:1. We are in compliance with the financial
covenants, with actual net worth of $8.8 billion and actual leverage ratio of 1.1:1, as measured in accordance
with the credit agreement as of December 31, 2012. In addition, the credit agreement includes an uncommitted
$250 million incremental loan facility.
At December 31, 2012, we had no borrowings outstanding under the credit agreement. We have outstanding
letters of credit of $5 million secured under the credit agreement. No amounts have been drawn on these letters of
credit. Accordingly, as of December 31, 2012, we had $995 million of remaining borrowing capacity under the
credit agreement, none of which would be restricted by our financial covenant compliance requirement. We have
other customary, arms-length relationships, including financial advisory and banking, with some parties to the
credit agreement.
Other Long-Term Borrowings
In March 2012, we called, without penalty, junior subordinated debt of $36 million. Prior to repayment, the
junior subordinated debt bore a fixed annual interest rate of 8.02% payable quarterly until 2012, and then payable
at a floating rate based on LIBOR plus 310 basis points.
12. EMPLOYEE BENEFIT PLANS
Employee Savings Plan
We have defined contribution retirement savings plans covering eligible employees. Prior to 2011, our
contribution to these plans included contributions to our employees’ retirement accounts based on a percentage
of compensation as well as matching contributions based on the amount of our employees’ contributions to the
plans. Beginning in 2011, we ceased making retirement account contributions and increased our matching
contributions. The cost of these plans amounted to approximately $138 million in 2012, $126 million in 2011,
and $113 million in 2010, all of which was funded currently to the extent it was deductible for federal income tax
purposes. The Company’s cash match is invested pursuant to the participant’s contribution direction. Based on
the closing price of our common stock of $68.63 on December 31, 2012, approximately 11% of the retirement
and savings plan’s assets were invested in our common stock, or approximately 3.4 million shares, representing
2% of the shares outstanding as of December 31, 2012. At December 31, 2012, approximately 5.2 million shares
of our common stock were reserved for issuance under our defined contribution retirement savings plans.
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