# Humana Inc: Form 10-Q for the period ended Sep 30, 2010

- Company: [Humana Inc](/companies/hum.md) (CIK 49071)
- Form: 10-Q
- Filed: 2010-11-01
- Accepted by EDGAR: Nov 1, 2010, 16:36 ET
- Period: 2010-09-30
- Accession: 0001193125-10-242671
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/49071/000119312510242671/d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/49071/000119312510242671/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2010-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2010-07-01 to 2010-09-30 | $8.42bn | us-gaap:Revenues |
| Revenue | 9 months, 2010-01-01 to 2010-09-30 | $25.52bn | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2010-07-01 to 2010-09-30 | $1.07bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2010-01-01 to 2010-09-30 | $3.36bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2010-07-01 to 2010-09-30 | $648.4m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2010-01-01 to 2010-09-30 | $1.65bn | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2010-07-01 to 2010-09-30 | $26.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2010-01-01 to 2010-09-30 | $78.7m | us-gaap:InterestExpense |
| Income tax | 3 months, 2010-07-01 to 2010-09-30 | $229.1m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2010-01-01 to 2010-09-30 | $583.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2010-07-01 to 2010-09-30 | $393.2m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2010-01-01 to 2010-09-30 | $992.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2010-07-01 to 2010-09-30 | $2.32 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2010-01-01 to 2010-09-30 | $5.84 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2010-07-01 to 2010-09-30 | $2.35 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2010-01-01 to 2010-09-30 | $5.90 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2010-07-01 to 2010-09-30 | 169,582,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2010-01-01 to 2010-09-30 | 169,964,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2010-01-01 to 2010-09-30 | $2.29bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2010-01-01 to 2010-09-30 | $152.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2010-01-01 to 2010-09-30 | $108.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2010-09-30 | $2.92bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2010-09-30 | $11.38bn | us-gaap:AssetsCurrent |
| Total assets | at 2010-09-30 | $16.39bn | us-gaap:Assets |
| Current liabilities | at 2010-09-30 | $6.26bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2010-09-30 | $9.45bn | us-gaap:Liabilities |
| Long-term debt | at 2010-09-30 | $1.67bn | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2010-09-30 | $6.94bn | us-gaap:StockholdersEquity |
| Shares outstanding | at 2010-09-30 | 168,318,547 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 1,407 characters.

(a) None.

(b) N/A

(c) The following table provides information about purchases by us during the three months ended September 30, 2010 of equity securities that are registered by us pursuant to Section 12 of the Exchange Act:

| Period | Total Number of Shares Purchased(1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)(2) | Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1) |
| --- | ---: | ---: | ---: | ---: |
| July 2010 | 0 | $0 | 0 | $200,052,918 |
| August 2010 | 0 | 0 | 0 | 200,052,918 |
| September 2010 | 968,000 | 51.6641 | 968,000 | 150,071,119 |
| Total | 968,000 | $51.6641 | 968,000 | $150,071,119 |

(1) As announced on December 11, 2009, in December 2009, the Board of Directors authorized the repurchase of up to $250 million of our common stock shares exclusive of shares repurchased in connection with employee stock plans. Under this share repurchase authorization, 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. As of November 1, 2010 the remaining authorized amount totaled $150.0 million and the authorization expires on December 31, 2011.

(2) Excludes 6,092 shares repurchased in connection with employee stock plans.

## Market risk

As filed, 3,574 characters.

Our earnings and financial position are exposed to financial market risk, including those resulting from changes in interest rates.

The level of our pretax earnings is subject to market risk due to changes in interest rates and the resulting impact on investment income and interest expense. Until October 7, 2008, we exchanged the fixed interest rate under all of our senior notes for a variable interest rate based on LIBOR using interest rate swap agreements. As a result, changes in interest rates generally resulted in an increase or decrease to investment income partially offset by a corresponding decrease or increase to interest expense, partially hedging our exposure to interest rate risk. However, due to extreme volatility in the securities and credit markets, LIBOR increased while the interest rate we would earn on invested assets like cash and cash equivalents decreased. As a result, we terminated all of our interest rate swap agreements, fixing the average interest rate under our senior notes at 6.08%. In exchange for terminating our rights under the interest rate swap agreements, we received $93.0 million in cash from the counterparties representing the fair value of the swap assets. We may re-enter into interest rate swap agreements in the future depending on market conditions and other factors. Amounts borrowed under the revolving credit portion of our $1.0 billion unsecured revolving credit agreement bear interest at either a fixed rate or floating rate based on LIBOR plus a spread. There were no borrowings outstanding under our credit agreement at September 30, 2010.

Interest rate risk also represents a market risk factor affecting our consolidated financial position due to our significant investment portfolio, consisting primarily of fixed maturity securities of investment-grade quality with an average S&P credit rating of AA at September 30, 2010. Our net unrealized position improved $341.8 million from a net unrealized gain position of $71.4 million at December 31, 2009 to a net unrealized gain position of $413.2 million at September 30, 2010. As of September 30, 2010, we had gross unrealized losses of $16.2 million on our investment portfolio primarily due to an increase in market interest rates and tighter liquidity conditions in the current markets than when the securities were purchased, and as such, there were no material other-than-temporary impairments during the nine months ended September 30, 2010. While we believe that these impairments are temporary and we currently do not have the intent to sell such securities, given the current market conditions and the significant judgments involved, there is a continuing risk that future declines in fair value may occur and material realized losses from sales or other-than-temporary impairments may be recorded in future periods.

Duration is the time-weighted average of the present value of the bond portfolio’s cash flow. Duration is indicative of the relationship between changes in fair value and changes in interest rates, providing a general indication of the sensitivity of the fair values of our fixed maturity securities to changes in interest rates. However, actual fair values may differ significantly from estimates based on duration. The average duration of our investment portfolio, including cash and cash equivalents, was approximately 3.3 years as of September 30, 2010. Based on the duration including cash equivalents, a 1% increase in interest rates would generally decrease the fair value of our securities by approximately $375 million.

## Controls and procedures

As filed, 1,265 characters.

Under the supervision and with the participation of our Chief Executive Officer, or CEO, our Chief Financial Officer, or CFO, and our Principal Accounting Officer, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures for the quarter ended September 30, 2010.

Based on our evaluation, our CEO, CFO, and Principal Accounting Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information the Company is required to disclose in its reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, including, without limitation, ensuring that such information is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 1,197 characters.

Except as set forth below, there have been no changes to the risk factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, filed with the SEC on February 19, 2010, as modified by the changes to those risk factors included in other reports we filed with the SEC subsequent to February 19, 2010:

- *On October 5, 2010, we were notified that the Department of Defense TRICARE Management Activity intends to negotiate with us for an extension of our administration of the TRICARE South Region contract, comprised of a one year option period from April 1, 2011 through March 31, 2012. As a result, we no longer expect that an impairment of certain assets associated with our military services business, primarily consisting of goodwill, will occur during 2010. There can be no assurance, however, that the contract will be extended.*

This list of important factors is not intended to be exhaustive, and should be read in conjunction with the more detailed description of these risks that may be found in our reports filed with the SEC from time to time, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Filed Nov 1, 2010.
Source: SEC EDGAR, the filing index for accession 0001193125-10-242671. Last ingested by Listed: Nov 10, 2026, 18:12 ET. No prices; not investment advice.