Humana 2013 Annual Report Download - page 119

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Humana Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Our Level 3 assets had a fair value of $37 million at December 31, 2013, or less than 0.4% of our total invested
assets. During the years ended December 31, 2013, 2012, and 2011, the changes in the fair value of the assets
measured using significant unobservable inputs (Level 3) were comprised of the following:
For the years ended December 31,
2013 2012 2011
Private
Placements
Auction
Rate
Securities Total
Private
Placements
Auction
Rate
Securities Total
Private
Placements
Auction
Rate
Securities Total
(in millions)
Beginning balance at January 1 ....... $25 $13 $38 $25 $16 $41 $14 $52 $66
Total gains or losses:
Realized in earnings ....... 0 0 0 0 0 0 1 1 2
Unrealized in other
comprehensive income . . . 0 0 0 0 0 0 0 1 1
Purchases .................... 0 0 0 0 0 0 17 0 17
Sales ........................ 0 0 0 0 (3) (3) (7) (38) (45)
Settlements .................. (1) 0 (1) 0 0 0 0 0 0
Balance at December 31 ............ $24 $13 $37 $25 $13 $38 $25 $16 $41
Financial Liabilities
Our long-term debt, recorded at carrying value in our consolidated balance sheets, was $2,600 million at
December 31, 2013 and $2,611 million at December 31, 2012. The fair value of our long-term debt was $2,751
million at December 31, 2013 and $2,923 million at December 31, 2012. The fair value of our long-term debt is
determined based on Level 2 inputs, including quoted market prices for the same or similar debt, or if no quoted
market prices are available, on the current prices estimated to be available to us for debt with similar terms and
remaining maturities.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
As disclosed in Note 3, we completed our acquisitions of American Eldercare, Metropolitan, SeniorBridge,
Arcadian, Anvita, and other companies during 2013, 2012, and 2011. The values of net tangible assets acquired and
the resulting goodwill and other intangible assets were recorded at fair value using Level 3 inputs. The majority of
the related tangible assets acquired and liabilities assumed were recorded at their carrying values as of the respective
dates of acquisition, as their carrying values approximated their fair values due to their short-term nature. The fair
values of goodwill and other intangible assets acquired in these acquisitions were internally estimated primarily
based on the income approach. The income approach estimates fair value based on the present value of the cash
flows that the assets are expected to generate in the future. We developed internal estimates for the expected cash
flows and discount rates in the present value calculations. Other than assets acquired and liabilities assumed in these
acquisitions, there were no assets or liabilities measured at fair value on a nonrecurring basis during 2013, 2012, or
2011.
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