# Humana Inc: Form 10-Q for the period ended Sep 30, 2011

- Company: [Humana Inc](/companies/hum.md) (CIK 49071)
- Form: 10-Q
- Filed: 2011-10-31
- Accepted by EDGAR: Oct 31, 2011, 16:33 ET
- Period: 2011-09-30
- Accession: 0001193125-11-288752
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/49071/000119312511288752/d228857d10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/49071/000119312511288752/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2011-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2011-07-01 to 2011-09-30 | $9.30bn | us-gaap:Revenues |
| Revenue | 9 months, 2011-01-01 to 2011-09-30 | $27.78bn | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2011-07-01 to 2011-09-30 | $1.36bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2011-01-01 to 2011-09-30 | $3.81bn | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2011-07-01 to 2011-09-30 | $725.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2011-01-01 to 2011-09-30 | $2.00bn | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2011-07-01 to 2011-09-30 | $27.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2011-01-01 to 2011-09-30 | $82.0m | us-gaap:InterestExpense |
| Income tax | 3 months, 2011-07-01 to 2011-09-30 | $254.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2011-01-01 to 2011-09-30 | $701.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2011-07-01 to 2011-09-30 | $444.8m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2011-01-01 to 2011-09-30 | $1.22bn | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2011-07-01 to 2011-09-30 | $2.67 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2011-01-01 to 2011-09-30 | $7.24 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2011-07-01 to 2011-09-30 | $2.71 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2011-01-01 to 2011-09-30 | $7.34 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2011-07-01 to 2011-09-30 | 166,580,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2011-01-01 to 2011-09-30 | 168,558,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2011-01-01 to 2011-09-30 | $3.88bn | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2011-01-01 to 2011-09-30 | $215.9m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2011-01-01 to 2011-09-30 | $41.5m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2011-01-01 to 2011-09-30 | $540.2m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2011-09-30 | $4.02bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2011-09-30 | $13.63bn | us-gaap:AssetsCurrent |
| Total assets | at 2011-09-30 | $19.90bn | us-gaap:Assets |
| Current liabilities | at 2011-09-30 | $8.52bn | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2011-09-30 | $12.04bn | us-gaap:Liabilities |
| Long-term debt | at 2011-09-30 | $1.66bn | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2011-09-30 | $7.86bn | us-gaap:StockholdersEquity |
| Shares outstanding | at 2011-09-30 | 163,503,806 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 1,539 characters.

(a) None.

(b) N/A

(c) The following table provides information about purchases by us during the three months ended September 30, 2011 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 2011 | 0 | $0 | 0 | $799,947,644 |
| August 2011 | 3,381,216 | 70.62 | 3,381,216 | 561,274,880 |
| September 2011 | 0 | 0 | 0 | 561,274,880 |
| Total | 3,381,216 | $70.62 | 3,381,216 | $561,274,880 |

(1) As announced on April 26, 2011, in April 2011, the Board of Directors replaced its previously approved share repurchase authorization of up to $250 million with a new authorization for repurchases of up to $1 billion of our common shares exclusive of shares repurchased in connection with employee stock plans. The new authorization will expire June 30, 2013. 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 regulatory restrictions on volume, pricing, and timing. As of October 31, 2011, the remaining authorized amount under the new authorization totaled $561.3 million.

(2) Excludes 9,364 shares repurchased in connection with employee stock plans.

## Market risk

As filed, 2,122 characters.

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

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 a weighted average S&P credit rating of AA at September 30, 2011. Our net unrealized gain position increased $251.1 million from a net unrealized gain position of $196.5 million at December 31, 2010 to a net unrealized gain position of $447.6 million at September 30, 2011. At September 30, 2011, we had gross unrealized losses of $35.8 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 three and nine months ended September 30, 2011. 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 3.1 years as of September 30, 2011. Based on the duration including cash equivalents, a 1% increase in interest rates would generally decrease the fair value of our securities by approximately $418 million.

## Controls and procedures

As filed, 1,284 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, 2011.

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 Securities Exchange Act of 1934 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, 2011 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

## Risk factors

As filed, 3,584 characters.

Except as set forth below, there have been no changes to the risk factors included in our 2010 Form 10-K, as modified by the changes to those risk factors included in other reports we filed with the SEC subsequent to February 17, 2011:

- On February 25, 2011, the Department of Defense TRICARE Management Activity, or TMA, awarded the TRICARE South Region contract to us. On March 7, 2011, the competing bidder filed a protest of the award with the Government Accountability Office, or GAO. Also on March 7, 2011, as provided in the Federal Acquisition Regulations, TMA issued a stop work order to us in connection with the award. On June 14, 2011, the GAO upheld the award of the contract to us and TMA subsequently lifted the stop work order. On June 21, 2011, the competing bidder filed a complaint in the United States Court of Federal Claims objecting to the award of the contract to us. On October 14, 2011, the Court upheld the award of the contract to us, and the competing bidder has until December 13, 2011 to appeal it in the Court of Appeals for the Federal Circuit. As a result of the award of the TRICARE South Region contract to us, we no longer expect a goodwill impairment to occur during the second half of 2011. Ultimate disposition of the contract award is, however, subject to the resolution of any additional actions the unsuccessful bidder may take.
- ***As a government contractor, we are exposed to risks that may materially adversely affect our business or our willingness or ability to participate in government health care programs.***

A significant portion of our revenues relates to federal and state government health care coverage programs, including the Medicare, Military, and Medicaid programs. These programs accounted for approximately 77% of our total premiums and services revenue for the nine months ended September 30, 2011. These programs involve various risks, as described in our 2010 Form 10-K and supplemented as follows:

- The Budget Control Act of 2011, enacted on August 2, 2011, increased the United States debt ceiling in connection with deficit reductions over the next ten years. The Budget Control Act of 2011 also establishes a twelve-member joint committee of Congress known as the Joint Select Committee on Deficit Reduction to propose legislation to reduce the United States federal deficit by $1.5 trillion for fiscal years 2012-2021. Reductions in Medicare and Medicaid spending could be included as part of these deficit reduction measures. Moreover, if such legislation is not enacted by December 23, 2011, approximately $1.2 trillion in domestic and defense spending reductions will automatically begin January 1, 2013, split evenly between domestic and defense spending. Payments to Medicare providers would be subject to these automatic spending reductions, subject to a 2% cap. At this time it is unclear how this automatic reduction may be applied to various Medicare healthcare programs. We expect that if such reductions were to occur, there would be a corresponding substantial reduction in our obligations to providers, however there can be no assurances that this would completely offset any reductions to the Medicare healthcare programs applied by the Budget Control Act of 2011.

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 report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K.

Filed Oct 31, 2011.
Source: SEC EDGAR, the filing index for accession 0001193125-11-288752. Last ingested by Listed: Nov 10, 2026, 18:12 ET. No prices; not investment advice.