UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 1-5975
A. Full Title of Plan: Humana Retirement and Savings Plan
B. Name of Issuer of the Securities held Pursuant to the Plan and
the Address of its Principal Executive Office:
Humana Inc.
500 West Main Street
Louisville, Kentucky 40202
1 of 23
I N D E X
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Pages
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Report of Independent Accountants 3
Financial Statements:
Statement of Net Assets Available for Benefits,
December 31, 1997 and 1996 4
Statement of Changes in Net Assets Available for
Benefits for the years ended December 31, 1997 and 1996 5
Notes to Financial Statements 6-17
Supplemental Schedules:
Schedule of Assets Held for Investment Purposes,
December 31, 1997 (Item 27a of Form 5500) 18-19
Schedule of Reportable Transactions for the year ended
December 31, 1997 (Item 27d of Form 5500) 20
Signature Page 21
Exhibit Index 22
Exhibit 23 - Consent of Coopers & Lybrand L.L.P. 23
2
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Retirement and Savings Plan Committee
Humana Inc.
We have audited the accompanying statements of net assets available for
benefits of the Humana Retirement and Savings Plan (the "Plan") as of
December 31, 1997 and 1996, and the related statements of changes in net
assets available for benefits for the years ended December 31, 1997 and 1996.
These financial statements are the responsibility of the Plan's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for
benefits for the years ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed on
page 2 are presented for the purpose of additional analysis and are not a
required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
COOPERS & LYBRAND L.L.P.
Louisville, Kentucky
June 5, 1998
3
HUMANA RETIREMENT AND SAVINGS PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 1997 and 1996
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<S> <C> <C>
ASSETS
1997 1996
Investments:
At fair value:
Common stocks $ 345,775,677 $ 257,027,353
NC Capital Preservation Fund
Armada Money Market Fund 2,654,772
Armada Government Fund 334,745 1,323,112
Investment contracts 11,452,180 9,803,627
Participant notes receivable 8,627,127 7,530,998
Bonds and asset-backed securities 25,705
366,189,729 278,365,567
At contract value:
Investment contracts 73,963,585 72,900,699
Total investments 440,153,314 351,266,266
Cash 208,170 888
Due from brokers for securities sold 728,828 19,489,023
Receivable from participating
employers for participant withholdings
and employers' contributions 16,478,914 16,230,206
Accrued interest and dividends 1,235,105 590,110
Total assets 458,804,331 387,576,493
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Due to brokers for securities purchased 1,074,627
Accrued expenses 609,498 412,293
Forfeited employers' contributions
available to reduce future
employers' contributions 107,691 57,345
Total liabilities 717,189 1,544,265
Net assets available for benefits $ 458,087,142 $ 386,032,228
The accompanying notes are an integral
part of the financial statements.
4
HUMANA RETIREMENT AND SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the years ended December 31, 1997 and 1996
Additions to net assets: 1997 1996
Investment income:
Net appreciation(depreciation) in
fair value of investments $ 52,332,678 $ (19,030,790)
Interest 6,833,711 6,055,957
Dividends 2,283,229 1,675,018
61,449,618 (11,299,815)
Contributions:
Participants 25,394,574 23,043,766
Employers 26,025,246 25,377,619
Forfeited employers' contributions (793,811) (228,177)
Transfer from EMPHESYS Financial
Group Inc.'s Plans (Note 3) 92,358,212
Transfer from Med-Pay, Inc.
Employee 401(K) Plan (Note 3) 234,410
Total additions 112,310,037 129,251,605
Deductions from net assets:
Benefits paid to participants 39,608,578 24,218,255
Administrative expenses 646,545 418,907
Total deductions 40,255,123 24,637,162
Net increase 72,054,914 104,614,443
Net assets available for benefits:
Beginning of period 386,032,228 281,417,785
End of period $ 458,087,142 $ 386,032,228
</TABLE>
The accompanying notes are an integral
part of the financial statements.
5
NOTES TO FINANCIAL STATEMENTS
1. Summary of Plan:
The Humana Retirement and Savings Plan (the "Plan") is a qualified,
trusteed plan established for the benefit of the employees of Humana Inc. and
its subsidiaries ("Humana") and is subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"). The Plan maintained two accounts, the Thrift
Account and the Retirement Account, prior to January 1,
1994. No further contributions were accepted into the Thrift Account
subsequent to December 31, 1993, as a new Pretax Savings Account was added
to the Plan effective January 1, 1994. All Thrift Account balances as of
December 31, 1993 remained in the Plan.
The Plan's Sponsor, Humana Inc., offers managed health care products that
integrate medical management with the delivery of health care services through
a network of providers.
Any employee of Humana who is employed with a sponsoring employer is eligible
to participate in the Plan's Pretax Savings Account. A participant, through
payroll deductions, may contribute not less than 1% nor more than 6% of the
participant's compensation per pay period. An amount equal to 50% of the
participant's contributions is contributed by Humana for any participating
employee who has completed at least one year of service with at least 1,000
hours of service. The Board of Directors of Humana, at its option, may
increase this matching percentage up to 100%. Participants who contribute the
maximum 6% amount are eligible to make voluntary contributions of amounts
which do not exceed an additional 8% of their annual compensation. These
voluntary contributions are not subject to employer matching contributions.
After an employee completes two years of service with a sponsoring employer
and has complied with certain other service requirements, Humana makes annual
contributions to the Retirement Account of the Plan equal to 4% of each
participating employee's qualifying compensation earned during the Plan year,
plus 4% of any compensation that exceeds the Social Security taxable wage
base. Contribution amounts are computed as of the end of each Plan year and
are nonforfeitable.
Contributions to the Plan by or on behalf of employees may be restricted in
amount and as to timing so as to meet various requirements of the Internal
Revenue Code of 1986 ("IRC") as amended.
Each participant's account is credited with the participant's contributions
and the Company's contributions and the allocations of Plan earnings and
charged with an allocation of administrative expenses. Allocations are based
on participants' account balances. Forfeited balances of terminated
participants' nonvested accounts are used to reduce future Company
contributions. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
Contributions to the Plan are invested by National City Trust Company (the
"Trustee") in nine separate participant directed investment funds as follows:
Interest Income Fund: In obligations of the United States and United States
Government agencies, debentures, notes or other evidences of indebtedness,
shares of preferred stock and any other property, the rate of return from
which is established by the instruments evidencing the investments, including
principal and interest contracts.
Continued
6
NOTES TO FINANCIAL STATEMENTS, Continued
1. Summary of Plan, continued:
Stock Index Fund: In units of the State Street Flagship Domestic Index
Commingled Trust Fund which invests exclusively in securities which attempt
to match the return of the Standard and Poor's 500 Index.
Humana Common Stock Fund: In Humana common stock, or in U.S. Treasury Bills,
commercial paper, certificates of deposit and money market funds as determined
by the Trustee. All employer contributions to the Pretax Savings Account are
invested in this fund. Employer contributions may be made in cash, in shares
of Humana common stock, or a combination thereof. At December 31, 1997 and
1996, this fund included $57,226,125 and $51,466,809, respectively, of
non-participant directed funds related to the 401(k) employer match.
Aggressive Growth Fund: In shares of Fidelity Contrafund which invests in
common stocks and securities convertible into common stock which have market
values appearing low relative to underlying value or future earnings and
growth potential. The Fidelity Contrafund may also invest in, among other
investments, convertible securities, warrants, preferred stock, bonds, foreign
securities, covered call options, put options, repurchase agreements, and cash
equivalent securities.
Balanced Fund: In shares of Invesco Value Trust which invests in common and
preferred stocks, straight debt issues (including government securities) or
debt securities with equity conversion or purchase rights and in cash and cash
equivalents, the objective of which is to emphasize current income while
secondarily striving to attain capital growth.
International Fund: In shares of Harbor International Fund which invests in
equity securities, American Depositary Receipts, European Depositary Receipts,
securities convertible into common stock, government securities, and
non-convertible preferred stocks of issuers domiciled outside the United
States so as to achieve long-term growth of capital. The Harbor International
Fund may also invest in cash equivalent securities, such as Treasury bills,
commercial paper and certificates of deposit.
Small Capitalization Fund: In shares of Compass Small Cap Fund which invests
in equity securities consisting primarily of emerging growth companies and
companies selected for investment because of their unique situation. The
Compass Small Cap Fund may also invest in cash equivalent securities, such as
U.S. Treasury bills, commercial paper and certificates of deposit.
Long Term Bond Fund: In shares of Pimco Fund which invests primarily in fixed
income securities. These may include bonds issued by corporations and the
U.S. Government; mortgage-backed securities, certificates of deposit; foreign
securities; and other types of fund income investments.
Large Capitalization Fund: In shares of IDS New Dimensions Fund which invests
primarily in common stock of large U.S. companies whose stock prices tend to
vary less than those of small companies. The IDS New Dimensions Fund may also
invest in cash equivalent securities, such as Treasury bills, commercial paper
and certificates of deposit.
Continued
7
NOTES TO FINANCIAL STATEMENTS, Continued
1. Summary of Plan, continued:
A participant may allocate his/her contributions to the Pretax Savings Account
and Humana's contribution to the Retirement Account among the various funds in
increments of not less than 1%. In the absence of such allocation, these
contributions are invested in the Interest Income Fund. In connection with a
change in allocation of a participant's or Humana's future contributions among
the nine Plan funds and a change in the investment of existing accounts
("Transfers"), the value of Transfers to or from the Humana Common Stock Fund
will reflect the price or prices at which all shares are purchased, sold or
transferred before, on or after the participant's monthly election rather than
transferring strictly based on the value at the monthly closing price.
The value of a participant's interest, including employer contributions, is
generally payable upon the occurrence of one of the following events:
(1) the participant's retirement on or after the date he/she attains age 65;
(2) the participant's early retirement after attaining age 55 and having been
credited with two years of service; (3) a determination by Humana upon
competent medical or other evidence that, by reason of permanent and total
disability, the participant is incapable of performing the duties of his/her
work; or (4) the participant's death.
Employee contributions are nonforfeitable. Participants who withdraw from the
Pretax Savings Account prior to being credited with four years of
participation or five years of service with Humana are eligible to receive
generally the value of employer contributions at the withdrawal date,
exclusive of those made during the two years preceding withdrawal. Employer
contributions become totally nonforfeitable after the participant is credited
with four years of participation in the Plan or five years of service with
Humana.
Employer contributions forfeited as a result of withdrawal following
termination of employment will be available to reduce the amount of subsequent
employer contributions to the Pretax Savings Account. If a former participant
is re-employed prior to five consecutive one-year breaks in service and repays
the amount of his/her distribution, then any forfeited employer contributions
are restored to his/her account.
A participant may generally withdraw an amount from the Thrift Account equal
to the value of the participant's account as of the valuation date following
the date the withdrawal request is received by the Plan Administrator.
Effective January 1, 1994, in the event funds are needed because of extreme
financial hardship, as defined by law, the participant may be allowed to make
a withdrawal from his/her Pretax Savings Account. In addition, the Plan
contains restrictions relating to minimum withdrawals and the frequency of
withdrawals.
Benefits under the Plan are payable to withdrawing participants including
retirees as follows:
(a) A lump sum distribution in cash or, in the event of a distribution from
the Humana Common Stock Fund, partially or totally in Humana Common
Stock, or
(b) Monthly, quarterly or annual installments for a period of 5, 10, 15 or 20
years not to exceed the life expectancy of the participant, or the joint
and last survivor expectancy of the participant and designated
beneficiary, or
(c) A life annuity form of payment, or
(d) A life annuity with guaranteed payments.
Continued
8
NOTES TO FINANCIAL STATEMENTS, Continued
1. Summary of Plan, continued:
Administrative expenses of the Plan are paid by the Plan and allocated to the
participants' accounts.
There were approximately 18,500 and 17,800 participants at December 31, 1997
and 1996, respectively, who had allocated their contributions to one or more
funds as follows:
1997 1996
Interest Income Fund 14,204 14,554
Humana Common Stock Fund 13,917 13,616
Aggressive Growth Fund 8,776 7,914
Stock Index Fund 8,494 7,896
Small Capitalization Fund 6,478 5,898
Balanced Fund 5,585 5,415
International Fund 5,342 4,537
Large Capitalization Fund 1,727 -
Long Term Bond Fund 678 -
Effective January 1, 1994, participants may borrow from their fund accounts.
The aggregate of the loans to a participant shall not exceed the lesser of
$50,000 or 50% of the vested portion of his/her participant contribution
accounts, voluntary contribution accounts plus his/her employer thrift and
pretax savings accounts to which he/she would be entitled to if he/she
incurred a termination of employment. The minimum a participant may borrow
is $500. Loan transactions are treated as a transfer to (from) the investment
fund from (to) the Participant Notes Fund. Loan terms range from one to four
years or up to ten years for the purchase of a primary residence. The loans
are secured by the balance in the participant's account and bear interest at
a reasonable rate in accordance with Department of Labor rules and
regulations, as determined by the Plan Administrator. Principal and interest
are repaid ratably through payroll deductions.
Humana has the right, under the Plan, to discontinue its contribution at any
time and to terminate the Plan subject to the provisions of ERISA. If the
Plan is terminated, the interest of each participant would continue to be
nonforfeitable and would be distributed as determined by Humana.
2. Summary of Significant Accounting Policies:
The financial statements of the Plan are prepared under the accrual method of
accounting.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Continued
9
NOTES TO FINANCIAL STATEMENTS, Continued
2. Summary of Significant Accounting Policies, continued:
Certain reclassifications have been made to the 1996 financial statements in
order to conform to the 1997 classifications. The changes had no effect on
previously reported net assets available for benefits.
Benefits are recorded when paid.
The Plan presents in the accompanying Statement of Changes in Net Asset
Available for Benefits the net appreciation or depreciation in fair value of
investments which consists of both realized gains or losses and unrealized
appreciation or depreciation.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
Investments in securities traded on a national securities exchange are valued
at the last reported sales price on the last business day of the period;
securities traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued at the mean between the
last reported bid and asked prices.
The fair values of units in the Armada Government Funds and the Armada Money
Market Fund are determined by the Trustee based upon the securities comprising
the funds. The fair values for those securities represent the last recorded
sale of the year. In the absence of recorded sales, and for securities not
listed on a national securities exchange, the fair values represent the mean
of bid and asked prices obtained from certified investment brokers.
The Interest Income Fund investments include, among others, investment
contracts, collateralized mortgage obligations, bonds, asset-backed securities
and other fixed income obligations such as commercial paper.
Investment contracts with insurance companies are fully benefit-responsive and
are carried at contract value, which represents contributions plus interest
earned at specified rates less withdrawals and administrative expenses.
Investment contracts with banks are carried at fair value. Included in these
investment contracts are synthetic GIC's which are fully benefit-responsive
and are carried at contract value. The collateralized mortgage obligations,
bonds and asset-backed securities are recorded at fair value. These
securities are not listed on a national securities exchange. The fair values
represent the mean of bid and asked prices obtained from certified investment
brokers.
3. Merger:
Effective March 3, 1997, the assets of Med-Pay, Inc.'s, a wholly owned
subsidiary of Humana, Med-Pay, Inc. Employee 401(k) Plan were merged with
the Plan. The market value of the assets transferred was $234,410.
On April 1, 1996, June 30, 1996 and September 17, 1996, the assets of
Employers Health Insurance Profit Sharing Plan, Centerstone Insurance and
Financial Services Savings and Investment Plan, and The HMO California
Retirement Savings Plan, respectively, all wholly owned subsidiaries of
EMPHESYS Financial Group Inc., a wholly owned subsidiary of Humana, were
merged with the Plan.
Continued
10
NOTES TO FINANCIAL STATEMENTS, Continued
3. Merger, continued:
The market values of the assets at the time of transfer were as follows:
Employers Health Insurance Profit Sharing Plan $ 91,176,109
Centerstone Insurance and Financial Services Saving
and Investment Plan 1,102,134
The HMO California Retirement Savings Plan 79,969
$ 92,358,212
4. Investments:
The following table sets forth the fair value/contract value of investments
at December 31, 1997. Investments that represent 5% or more of the Plan's
net assets as well as investments in excess of $2,000,000 as of
December 31, 1997 have been separately identified:
<TABLE>
<S> <C> <C>
Par or Maturity
Value/Number of Fair Value/
Issuer Units or Shares Contract Value
Investments at Fair Value:
Common Stocks:
Humana Inc. Common Stock 5,276,576 $ 109,488,952
State Street Flagship Domestic Index Fund 444,439 70,779,636
Invesco Value Trustee Fund 878,433 25,553,625
Harbor International Fund 697,976 25,029,428
Compass Small Cap Fund 2,292,975 41,755,069
Fidelity Contrafund 1,507,523 70,295,782
Various 177,722 2,873,185
345,775,677
Obligations due within one year:
Other 334,745 334,745
Investment Contracts - Banks:
Bankers Trust Co. $ 3,000,000 3,000,000
Caisse Des Depots (CDC) $ 3,621,939 3,621,939
Various $ 4,830,241 4,830,241
11,452,180
Participant notes receivable:
Various $ 8,627,127 8,627,127
Continued
11
NOTES TO FINANCIAL STATEMENTS, Continued
4. Investments, continued:
Par or Maturity
Value/Number of Fair Value/
Issuer Units or Shares Contract Value
Investments at Contract Value:
Investment Contracts Insurance Company:
Allstate Life Insurance Co. $ 3,000,000 $ 3,346,960
Allstate Life Insurance Co. $ 4,000,000 4,443,573
Canada Life Assurance Co. $ 3,000,000 3,097,393
Commonwealth Life Insurance Co.,
Synthetic GIC $ 18,940,771 18,940,771
Commonwealth Life Insurance Co. $ 4,000,000 4,001,545
Continental Assurance Co. $ 3,000,000 3,056,333
Continental Assurance Co.,
Synthetic GIC $ 3,000,000 3,005,806
Jackson National Life GIC $ 3,000,000 3,170,179
Jackson National Life, Synthetic GIC $ 6,500,000 6,511,719
John Hancock Mutual Life $ 2,000,000 2,031,864
Life of Virginia $ 2,000,000 2,098,946
Metropolitan Life Insurance Co.,
Group Annuity $ 2,000,000 2,051,817
New York Life Insurance Co.,
Group Annuity $ 3,000,000 3,163,188
New York Life Insurance Co.,
Group Annuity $ 3,000,000 3,036,565
Prudential Insurance Co. $ 2,000,000 2,085,499
TransAmerica Accidental Life
Insurance Co. $ 3,000,000 3,182,795
United of Omaha Life Insurance Co. $ 3,000,000 3,006,767
Various $ 2,723,334 3,731,865
73,963,585
$ 440,153,314
During the years ended December 31, 1997 and 1996, the Plan's investments
(including investments bought, sold, and held during the period) appreciated
(depreciated) in value as follows:
1997 1996
Common stocks $ 52,332,615 $(19,031,380)
Bonds and asset-backed securities 63 590
$ 52,332,678 $(19,030,790)
</TABLE>
The fair value of the investments carried at contract values at
December 31, 1997 and 1996 was $71,164,105 and $68,814,499, respectively.
The average yield and crediting interest rate approximated 6.7% and 6.4% for
1997 and 1996, respectively.
The per share closing price of Humana common stock was $20.75 on
December 31, 1997. On June 5, 1998, the per share closing price of Humana
common stock was $30.25.
Continued
12
NOTES TO FINANCIAL STATEMENTS, Continued
5. Reconciliation of Financial Statements to Form 5500:
The following is a reconciliation of net assets available for benefits per the
accompanying financial statements to the Form 5500:
<TABLE>
<S> <C> <C>
December 31, 1997 December 31, 1996
Net assets available for benefits per the
financial statements $ 458,087,142 $ 386,032,228
Amount allocated to withdrawing
participants (6,967,433) (1,484,772)
Net assets available for benefits per the
Form 5500 $ 451,119,709 $ 384,547,456
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
For the year ended For the year ended
December 31,1997 December 31, 1996
Benefits paid to participants per the
financial statements $ 39,608,578 $ 24,218,255
Add: Amounts allocated to
withdrawing participants at end of year 6,967,433 1,484,772
Less: Amounts allocated to withdrawing
participants at beginning of year (1,484,772) (756,251)
Benefits paid to participants per the
Form 5500 $ 45,091,239 $ 24,946,776
</TABLE>
Amounts allocated to withdrawing participants are recorded on the Form 5500
for benefit claims that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
6. Income Tax Status:
The Internal Revenue Service has determined, and informed Humana by a letter
dated May 19, 1994, that the Plan and related trust are designed in accordance
with applicable sections of the IRC. The Plan has been amended since receiving
the determination letter. However, the Plan Administrator and the Plan's
tax counsel believe that the Plan is designed and is currently being operated
in compliance with the applicable requirements of the IRC.
7. Subsequent Events:
On May 28, 1998, United HealthCare Corporation and Humana reached a definitive
agreement to merge. The proposed merger will be accounted for as a pooling of
interest in which one United HealthCare share will be exchanged for every two
Humana shares. The transaction will require shareholder and regulatory
approvals and is expected to close in the third quarter of 1998.
Continued
13
NOTES TO FINANCIAL STATEMENTS, Continued
7. Net Assets by Fund at December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Participant Directed
Interest Humana Small
Income Stock Index Common Aggressive Balanced International Capitalization
Fund Fund Stock Fund Growth Fund Fund Fund Fund
ASSETS
Investments:
At fair value:
Common Stock $70,779,636 $52,155,136 $70,295,782 $25,553,625 $25,029,428 $41,755,069
Armada Government Fund 238,656 11,582 84,212
Investment Contracts $11,452,180
Participant Loans
11,452,180 70,779,636 52,393,792 70,307,364 25,553,625 25,029,428 41,839,281
At contract value:
Investment Contracts: 73,963,585
Total Investments 85,415,765 70,779,636 52,393,792 70,307,364 25,553,625 25,029,428 41,839,281
Cash 242,638 (459,735) 128,463 140,276 65,979 58,041 (8,347)
Due from Broker for
Securities Sold 546,645 182,183
Receivable from
participating employers
for participant
withholding and
employers' contributions 9,607,019 1,825,680 1,547,203 1,429,124 374,040 577,657 819,583
Accrued interest and
dividends 1,230,411 1,098 2,262 250 234 31 635
Total assets 96,495,833 72,693,324 54,253,903 71,877,014 25,993,878 25,665,157 42,651,152
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Accrued expenses 66,673 88,771 173,495 108,279 75,989 35,819 56,944
Forfeited employers'
contributions
and employers'
contributions
Total Liabilities 66,673 88,771 173,495 108,279 75,989 35,819 56,944
Net asset available
for benefits $96,429,160 $72,604,553 $54,080,408 $71,768,735 $25,917,889 $25,629,338 $42,594,208
</TABLE>
Continued
NOTES TO FINANCIAL STATEMENTS, Continued
7. Net Assets by Fund at December 31, 1997 (Cont.):
<TABLE>
<S> <C> <C> <C> <C> <C>
Non-Participant
Participant Directed Directed
Large Participant Humana
Long Term Capitalization Notes Common
Fund Fund Fund Stock Fund Total
ASSETS
Investments:
At fair value:
Common Stock $ 1,092,973 $ 1,780,212 $57,333,816 $345,775,677
Armada Government Fund 295 334,745
Investment Contracts 11,452,180
Participant Loans $8,627,127 8,627,127
1,093,268 1,780,212 8,627,127 57,333,816 366,189,729
At contract value:
Investment Contracts: 73,963,585
Total Investments 1,093,268 1,780,212 8,627,127 57,333,816 440,153,314
Cash 6,185 32,803 1,867 208,170
Due from Broker for
Securities Sold 728,828
Receivable from
participating employers
for participant
withholding and
employers' contributions 104,137 191,329 3,142 16,478,914
Accrued interest and
dividends 60 124 1,235,105
Total assets 1,203,650 2,004,468 8,632,136 57,333,816 458,804,331
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Accrued expenses 750 2,778 609,498
Forfeited employers'
contributions
and employers'
contributions 107,691 107,691
Total Liabilities 750 2,778 107,691 717,189
Net asset available
for benefits $1,202,900 $2,001,690 $8,632,136 $57,226,125 $458,087,142
</TABLE>
Continued
NOTES TO FINANCIAL STATEMENTS, Continued
8. Net Assets by Fund at December 31, 1996:
<TABLE>
Participant Dircected
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Stock Humana Small Capi-
Income Index Common Aggressive Balanced International talization Participant
Fund Fund Stock Fund Growth Fund Fund Fund Fund Notes Fund
ASSETS
Investments:
At fair value:
Common Stock $51,483,806 $49,581,705 $55,519,719 $19,857,202 $29,060,767
NC Capital
Preservation
Fund
Armada Money
Market Fund $ 2,654,772
Armada Government
Fund 112,997 671,514 225,547 $ 108,049 87,450 117,555
Investment
Contracts 9,803,627
Participant Loans $7,530,998
Bonds and asset-
backed securities 25,705
12,484,104 51,596,803 50,253,219 55,745,266 108,049 19,944,652 29,178,322 7,530,998
At contract value:
Investment
Contracts 72,900,699
Total
Investments 85,384,803 51,596,803 50,253,219 55,745,266 108,049 19,944,652 29,178,322 7,530,998
Cash 578 310
Due from Broker
for Securities
Sold 19,489,023
Receivable from
participating
employers
for participant
withholdings and
employers'
contributions 10,239,896 1,849,217 1,466,240 1,202,046 359,035 458,186 643,786 11,800
Accrued interest and
dividends 587,243 228 1,695 365 250 166 163
Total Assets 96,211,942 53,446,248 51,721,732 56,947,677 19,956,357 20,403,004 29,822,271 7,543,108
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Due to Broker for
Securities
Purchased 112,997 531,078 225,547 87,450 117,555
Accrued expenses 87,937 68,716 82,633 74,122 27,727 27,615 43,543
Forfeited employer's
contributions and
employers'
contributions
Total Liabilities 87,937 181,713 613,711 299,669 27,727 115,065 161,098
Net assets
available
for benefits $96,124,005 $53,264,535 $51,108,021 $56,648,008 $19,928,630 $20,287,939 $29,661,173$7,543,108
</TABLE>
8. Net Assets by Fund at December 31, 1996 (Cont.):
<TABLE>
<S> <C> <C>
Non-Participant
Directed
Humana
Common
Stock Fund Total
ASSETS
Investments:
At fair value:
Common Stock $51,524,154 $257,027,353
NC Capital
Preservation Fund
Armada Money
Market Fund 2,654,772
Armada Government
Fund 1,323,112
Investment Contracts 9,803,627
Participant Loans 7,530,998
Bonds and asset-
backed securities 25,705
51,524,154 278,365,567
At contract value:
Investment Contracts 72,900,699
Total Investments 51,524,154 351,266,266
Cash 888
Due from Broker
for Securities Sold 19,489,023
Receivable from
participating employers
for participant
withholdings and
employers' contributions 16,230,206
Accrued interest and
dividends 590,110
Total Assets 51,524,154 387,576,493
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Due to Broker for
Securities Purchased 1,074,627
Accrued expenses 412,293
Forfeited employer's
contributions and
employers'
contributions 57,345 57,345
Total Liabilities 57,345 1,544,265
Net assets available
for benefits $51,466,809 $386,032,228
</TABLE>
Continued
NOTES TO FINANCIAL STATEMENTS, Continued
9. Activity by Fund for the Year Ended December 31, 1997:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Participant Directed
Interest Humana Small
Income Stock Index Common Aggressive Balanced International Capitalization
Fund Fund Stock Fund Growth Fund Fund Fund Fund
Additions to
net assets:
Investment income:
Net appreciation
in fair value
of investments $ 63 $17,749,070 $ (212,167) $12,685,663 $ 4,520,216 $ 2,529,095 $10,525,557
Interest 6,021,727 4,597 35,172 102,665 11,534 2,107 4,854
Dividends 485,641 626,280 665,712 342,745
6,021,790 17,753,667 (176,995) 13,273,969 5,158,030 3,196,914 10,873,156
Contributions:
Participants 2,557,679 3,388,965 4,400,375 6,118,863 2,621,897 2,314,066 3,356,064
Employers 9,562,500 1,810,816 1,468,370 1,393,957 409,009 564,498 803,715
Forfeited employers'
contributions (88,500) (283,448)
Transfers from
Med-Pay, Inc.
Employee 401(k)
Plan 69,781 28,528 16,167 23,194 5,276 23,263 16,635
Total
additions 18,123,250 22,981,976 5,424,469 20,809,983 8,194,212 6,098,741 15,049,570
Deductions from
net assets:
Benefits paid
to participants 12,393,820 4,992,886 1,059,270 5,284,852 2,350,900 1,682,131 3,126,004
Administrative
expenses 179,138 118,199 167,646 77,296 27,610 28,667 43,413
Interfund
transfers 5,245,137 (1,469,127) 1,225,166 327,108 (173,557) (953,456) (1,052,882)
Total
deductions 17,818,095 3,641,958 2,452,082 5,689,256 2,204,953 757,342 2,116,535
Net increase 305,155 19,340,018 2,972,387 15,120,727 5,989,259 5,341,399 12,933,035
Net assets
available
for benefits:
Beginning of
period 96,124,005 53,264,535 51,108,021 56,648,008 19,928,630 20,287,939 29,661,173
End of
period $96,429,160 $72,604,553 $54,080,408 $71,768,735 $25,917,889 $25,629,338 $42,594,208
</TABLE>
9. Activity by Fund for the Year Ended December 31, 1997 (Cont.):
<TABLE>
Non-Participant
Participant Directed Directed
<S> <C> <C> <C> <C> <C>
Large Participant Humana
Long Term Capitalization Notes Common
Bond Fund Total Fund Stock Fund Total
Additions to
net assets:
Investment income:
Net appreciation
in fair value
of investments $ 36,562 $ 59,574 $ 4,439,045 $ 52,332,678
Interest 4,641 1,084 $ 645,330 6,833,711
Dividends 35,496 127,355 2,283,229
76,699 188,013 645,330 4,439,045 61,449,618
Contributions:
Participants 167,972 468,693 25,394,574
Employers 85,420 237,611 9,689,350 26,025,246
Forfeited employers'
contributions (421,863) (793,811)
Transfers from
Med-Pay, Inc.
Employee 401(k)
Plan 105 51,461 234,410
Total
additions 330,196 945,778 645,330 13,706,532 112,310,037
Deductions from
net assets:
to participants 6,651 38,578 728,620 7,944,866 39,608,578
Administrative
expenses 901 1,377 2,298 646,545
Interfund
transfers (880,256) (1,095,867) (1,172,318) 52
Total
deductions (872,704) (1,055,912) (443,698) 7,947,216 40,255,123
Net increase 1,202,900 2,001,690 1,089,028 5,759,316 72,054,914
Net assets
available
for benefits:
Beginning of
period 7,543,108 51,466,809 386,032,228
End of
period $1,202,900 $2,001,690 $8,632,136 $57,226,125 $458,087,142
</TABLE>
Continued
NOTES TO FINANCIAL STATEMENTS, Continued
10. Activity by Fund for the Year Ended December 31, 1996:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Participant Directed
Interest Humana Small
Income Stock Index Common Aggressive Balanced International Capitalization Participant
Fund Fund Stock Fund Growth Fund Fund Fund Fund Notes Fund
Additions to
net assets:
Investments income:
Net appreciation
(depreciation)
in fair value
of investments $ 590 $ 8,723,491 $(20,975,861) $ 7,557,450 $ 961,084 $ 2,578,207 $ 3,691,856
Interest 5,464,301 7,297 28,735 49,917 17,511 1,730 5,619 $ 480,847
Dividends 478,562 782,290 247,189 166,977
5,464,891 8,730,788 (20,947,126) 8,085,929 1,760,885 2,827,126 3,864,452 480,847
Contributions:
Participants 2,732,690 2,612,590 4,751,152 5,463,606 2,641,309 1,917,783 2,924,636
Employers 10,239,100 1,849,781 1,477,166 1,201,908 356,479 460,326 643,909
Forfeited employers'
contributions
Transfer from
EMPHESYS Financial
Group Inc.'s
Plans
(see note 3) 16,626,084 12,370,967 6,394,357 25,710,528 6,991,771 8,017,039 14,119,530 2,127,936
Total
additions 35,062,765 25,564,126 (8,324,451) 40,461,971 11,750,444 13,222,274 21,552,527 2,608,783
Deductions from
net assets:
Benefits paid
to participants 8,801,953 1,944,439 1,738,409 2,952,501 1,122,442 761,639 1,541,135 296,839
Administrative
expenses 142,120 62,280 119,412 41,283 15,545 14,613 21,310
Interfund
Transfers 8,546,414 (887,120) (121,428) (2,734,593) 285,597 (1,215,682) (2,331,159) (1,532,919)
Total
deductions 17,490,487 1,119,599 1,736,393 259,191 1,423,584 (439,430) (768,714) (1,236,080)
Net increase
(decrease) 17,572,278 24,444,527 (10,060,844) 40,202,780 10,326,860 13,661,704 22,321,241 3,844,863
Net assets
available for
benefits:
Beginning of
period 78,551,727 28,820,008 61,168,865 16,445,228 9,601,770 6,626,235 7,339,932 3,698,245
End of period $96,124,005 $53,264,535 $51,108,021 $56,648,008 $19,928,630 $20,287,939 $29,661,173 $7,543,108
</TABLE>
Continued
10. Activity by Fund for the Year Ended December 31, 1996(Cont.):
<TABLE>
<S> <C> <C>
Non-Participant
Directed
Humana
Common
Stock
Fund Total
Additions to
net assets:
Investments income:
Net appreciation
(depreciation)
in fair value
of investments $(21,567,607) $(19,030,790)
Interest 6,055,957
Dividends 1,675,018
(21,567,607) (11,299,815)
Contributions:
Participants 23,043,766
Employers 9,148,950 25,377,619
Forfeited employers'
contributions (228,177) (228,177)
Transfer from
EMPHESYS Financial
Group Inc.'s
Plans (see note 3) 92,358,212
Total additions (12,646,834) 129,251,605
Deductions from net assets:
Benefits paid
to participants 5,058,898 24,218,255
Administrative
expenses 2,344 418,907
Interfund
Transfers (9,110)
Total deductions 5,052,132 24,637,162
Net increase
(decrease) (17,698,966) 104,614,443
Net assets
available for
benefits:
Beginning of
period 69,165,775 281,417,785
End of period $51,466,809 $386,032,228
</TABLE>
HUMANA RETIREMENT AND SAVINGS PLAN
PLAN #002 EIN #61-0647538
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
(Item 27a of Form 5500)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Par or Maturity
Stated Value/Number of Fair Value/
Issuer Issuer Rate Maturity Date Units or Shares Cost Contract Value
Investments at Fair Value:
Common Stocks:
Humana Inc. Common Stock 5,276,576 $ 77,120,397 $109,488,952
State Street Flagship Domestic Index Fund 444,439 37,132,955 70,779,636
Primco Funds 103,111 1,083,475 1,092,973
Invesco Value Trustee Fund 878,433 21,676,319 25,553,625
IDS New Dimensions Fund Inc. 74,611 1,725,906 1,780,212
Harbor International Fund 697,976 20,424,125 25,029,428
Compass Small Cap Fund 2,292,975 35,418,467 41,755,069
Fidelity Contrafund 1,507,523 57,938,960 70,295,782
252,520,604 345,775,677
Obligations due within one year:
Armada Money Market Fund 334,745 334,745 334,745
Investment Contracts - Banks:
Bankers Trust Co. 8.83% 06/1999 $ 1,810,870 1,810,870 1,810,870
Bankers Trust Co. 6.88% 03/2007 $ 3,000,000 3,000,000 3,000,000
Caisse Des Depots (CDC) 6.56% 01/1999 $ 1,814,949 1,814,949 1,814,949
Caisse Des Depots (CDC) 6.42% 12/2000 $ 1,204,422 1,204,422 1,204,422
Caisse Des Depots (CDC) 6.44% 08/2001 $ 3,621,939 3,621,939 3,621,939
11,452,180 11,452,180
Participant notes receivable 7.00%-10.00% $ 8,627,127 8,627,127 8,627,127
Continued
HUMANA RETIREMENT AND SAVINGS PLAN
PLAN #002 EIN #61-0647538
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES, Continued
December 31, 1997
(Item 27a of Form 5500)
Par or Maturity
Stated Value/Number of Fair Value/
Issuer Issuer Rate Maturity Date Units or Shares Cost Contract Value
Investment at Contract Value:
Investment Contracts Insurance Company:
Allstate Life Insurance Co. 6.92% 05/2001 $ 3,000,000 $ 3,000,000 $ 3,346,960
Allstate Life Insurance Co. 6.38% 02/2002 $ 4,000,000 4,000,000 4,443,573
Canada Life Assurance Co. 5.71% 09/1998 $ 3,000,000 3,000,000 3,097,393
Commonwealth Life Insurance Co.,
Synthetic GIC 6.44% 03/2007 $ 18,940,771 18,940,771 18,940,771
Commonwealth Life Insurance Co. 7.30% 12/1999 $ 4,000,000 4,000,000 4,001,545
Confederation Life Insurance Co.,
Group Annuity Contract 8.72% 08/1994 $ 1 1 8,014
Confederation Life Insurance Co.,
Group Annuity Contract 9.44% 05/1995 $ 1 1 68,278
Confederation Life Insurance Co.,
Group Annuity Contract 8.30% 01/1996 $ 1 1 10,685
Confederation Life Insurance Co.,
Group Annuity Contract 8.46% 05/1996 $ 1 1 47,457
Confederation Life Insurance Co.,
Group Annuity Contract 8.30% 08/1996 $ 1 1 16,313
Continental Assurance Co. 7.66% 09/1999 $ 3,000,000 3,000,000 3,056,333
Continental Assurance Co., Synthetic GIC 6.73% 10/2000 $ 3,000,000 3,000,000 3,005,806
Jackson National Life GIC 6.24% 12/2000 $ 3,000,000 3,000,000 3,170,179
Jackson National Life, Synthetic GIC 6.91% 06/2007 $ 6,500,000 6,500,000 6,511,719
John Hancock Mutual Life 6.33% 05/2007 $ 2,000,000 2,000,000 2,031,864
Life of Virginia 6.20% 12/1998 $ 2,000,000 2,000,000 2,098,946
Lincoln National Life Insurance Co. 8.12% 05/1999 $ 1,000,000 1,000,000 1,000,678
Metropolitan Life Insurance Co.,
Group Annuity Contract 8.55% 01/1998 $ 15,556 15,556 376,744
Metropolitan Life Insurance Co.,
Group Annuity Contract 8.30% 01/1998 $ 11,752 11,752 194,934
Metropolitan Life Insurance Co.,
Group Annuity Contract 6.22% 05/2000 $ 645,045 645,045 777,266
Metropolitan Life Insurance Co.,
Group Annuity Contract 6.25% 07/2000 $ 2,000,000 2,000,000 2,051,817
New York Life Insurance Co.,
Group Annuity Contract 7.22% 03/2000 $ 3,000,000 3,000,000 3,163,188
New York Life Insurance Co.,
Group Annuity Contract 6.64% 04/2001 $ 3,000,000 3,000,000 3,036,565
Principal Mutual Life Insurance Co. 8.62% 05/1998 $ 1,050,976 1,050,976 1,231,496
Prudential Insurance Co. 5.12% 02/1999 $ 2,000,000 2,000,000 2,085,499
TransAmerica Accidental Life Insurance Co. 7.31% 02/2000 $ 3,000,000 3,000,000 3,182,795
United of Omaha Life Insurance Co. 5.75% 05/2001 $ 3,000,000 3,000,000 3,006,767
71,164,105 73,963,585
$ 344,098,761 $ 440,153,314
</TABLE>
<TABLE>
HUMANA RETIREMENT AND SAVINGS PLAN
PLAN #002 EIN #61-0647538
SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1997
(Item 27d of Form 5500)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expense Current Value
Identity of Purchase Selling Lease Incurred With Cost of Asset on Net Gain/
Party Involved Description of Asset Price Price Rental Transaction of Asset Transaction Date (Loss)
Single transactions in
excess of 5% of plan assets:
Jackson National Life GIC $ 19,533,904 -- -- $19,533,904
Invesco Value Trust Mutual Fund 19,371,659 -- -- 19,371,659
Armada Gov. Fund - Disc Money Market 19,371,659 -- -- 19,371,659
Armada Gov. Fund - Disc Money Market $19,371,659 -- -- $19,371,659 19,371,659
A series of transactions in
excess of 5% of plan assets:*
Armada Money Market Fund Money Market 39,477,804 -- -- 39,477,804
Armada Money Market Fund Money Market 42,132,577 -- -- 42,132,577 42,132,577
Invesco Value Trust Mutual Fund 23,341,804 -- -- 23,341,804
Armada Gov. Fund - Disc Money Market 88,644,718 -- -- 88,644,718
Armada Gov. Fund - Disc Money Market 89,633,086 -- -- 89,633,086 89,633,086
*Note: Single transaction items may be included with a series of transactions.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Humana Retirement and Savings Plan has duly caused this report to be signed
by the undersigned thereunto duly authorized.
HUMANA RETIREMENT AND SAVINGS PLAN
BY:
/s/James E. Murray
___________________________
James E. Murray
Chief Financial Officer
June 29, 1998
21
Exhibit Index
Exhibit 23 Consent of Coopers & Lybrand L.L.P.
22
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement of the Humana Retirement and Savings Plan on Form S-8
(File No. 33-49305), of our report dated June 5, 1998 on our audits
of the financial statements and supplemental schedules of the Humana
Retirement and Savings Plan as of December 31, 1997 and 1996, and for
the years ended December 31, 1997 and 1996, which report is included in
this Annual Report on Form 11-K.
COOPERS & LYBRAND L.L.P.
Louisville, KY
June 29, 1998
