UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGON, 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, 1998
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
I N D E X
Pages
Report of Independent Accountants 2
Financial Statements:
Statements of Net Assets Available for Benefits,
December 31, 1998 and 1997 3
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1998 and 1997 4
Notes to Financial Statements 5-22
Supplemental Schedules:
Line 27a - Schedule of Assets Held for Investment Purposes,
December 31, 1998 23
Line 27d - Schedule of Reportable Transactions for the year
ended December 31, 1998 24
Signatures 25
Exhibit Index 26
Consent of Independent Accountants 27
Report of Independent Accountants
To the Retirement and Savings Plan Committee
Humana Inc.
In our opinion, the accompanying statements of net assets
available for benefits and the related statements of changes in
net assets available for benefits present fairly, in all
material respects, the net assets available for benefits of the
Humana Retirement and Savings Plan (the Plan) at December 31,
1998 and 1997 and the changes in net assets available for
benefits for the years then ended, in conformity with generally
accepted accounting principles. 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 of these statements in
accordance with generally accepted auditing standards which
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, assessing the accounting principles used
and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules of assets held for investment purposes
and of reportable transactions 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. The fund information in the notes to the statements of
net assets available for benefits and the statements of changes
in net assets available for benefits is presented for purposes
of additional analysis rather than to present the net assets
available for benefits and changes in net assets available for
benefits of each fund. These supplemental schedules and fund
information are the responsibility of the Plan's management.
The supplemental schedules and fund information 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.
/s/PricewaterhouseCoopers LLP
Louisville, Kentucky
May 14, 1999
Humana Retirement and Savings Plan
Statements of Net Assets Available for Benefits
December 31, 1998 and 1997
ASSETS 1998 1997
Investments:
At fair value:
Plan interest in Master Trust $ 474,899,722 -
Common stocks - $ 345,775,677
Armada Government Fund - 334,745
Investment contracts - 11,452,180
Participant notes receivable - 8,627,127
474,899,722 366,189,729
At contract value:
Investment contracts - 73,963,585
Total investments 474,899,722 440,153,314
Other assets allocated from Master Trust:
Cash 2,919,076 -
Due from brokers for securities sold 43,684 -
Receivable from participating employers
for participant withholdings and
employers' contributions 15,917,103 -
Accrued interest and dividends 8,793,823 -
Cash - 208,170
Due from brokers for securities sold - 728,828
Receivable from participating employers
for participant withholdings and
employers' contributions - 16,478,914
Accrued interest and dividends - 1,235,105
Total assets 502,573,408 458,804,331
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Liabilities allocated from Master Trust:
Accrued expenses 433,772 -
Forfeited employers' contributions
available to reduce future employers'
contributions 599,227 -
Accrued expenses - 609,498
Forfeited employers' contributions
available to reduce future employers'
contributions - 107,691
Total liabilities 1,032,999 717,189
Net assets available for benefits $ 501,540,409 $ 458,087,142
The accompanying notes are an integral part of the financial statements.
Statements of Changes in Net Assets Available for Benefits
for the years ended December 31, 1998 and 1997
1998 1997
Additions:
Investment income:
Plan interest in Master Trust
investment income:
Interest and dividend income $ 9,498,903 -
Net appreciation in fair value
of investments 29,861,241 -
Net appreciation in fair value
of investments - $ 52,332,678
Interest - 6,833,711
Dividends - 2,283,229
39,360,144 61,449,618
Contributions:
Contributions allocated from Master
Trust:
Participants 29,012,463 -
Employers 41,085,957 -
Forfeited employers' contributions (1,109,694) -
Transfer from ChoiceCare Plans
(Note 3) 13,438,023 -
Transfer from PCA 401(k)
Retirement Plan (Note 3) 17,348,163 -
Participants - 25,394,574
Employers - 26,025,246
Forfeited employers' contributions - (793,811)
Transfer from Med-Pay, Inc. Employee
401(k)Plan (Note 3) - 234,410
Total additions 139,135,056 112,310,037
Deductions:
Deductions allocated from Master Trust:
Benefits paid to participants 94,923,357 -
Administrative expenses 758,432 -
Benefits paid to participants - 39,608,578
Administrative expenses - 646,545
Total deductions 95,681,789 40,255,123
Net increase 43,453,267 72,054,914
Net assets available for benefits:
Beginning of year 458,087,142 386,032,228
End of year $ 501,540,409 $ 458,087,142
The accompanying notes are an integral part of the financial statements.
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 (the Company) and
is subject to the Employee Retirement Income Security Act of
1974 (ERISA). The Company is the sponsor of the Plan and offers
managed health care products that integrate medical management
with the delivery of health care services through a network of
providers.
a. Contributions: 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.
Any employee of the Company 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. Effective after
January 1, 1998 on the date the Company so elects, an automatic
contribution in the amount of 3% of the participant's
compensation shall be made beginning on the employee's date of
hire, unless the employee elects not to participate in the
Pretax Savings Account or elects a different percentage up to
6%. As of December 31, 1998, the Company had not elected to
begin this automatic contribution. An amount equal to 50% of the
participant's contribution is contributed by the Company 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 the Company, 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. All matching contributions
shall be invested in the Humana Common Stock Fund.
After an employee completes two years of service with a
sponsoring employer and has complied with certain other service
requirements, the Company 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.
On September 15, 1998 the Company announced a one time special
$1,000 contribution to each eligible employee of the Company,
tied to each associate's vesting, who was employed on September
15, 1998. The total employer cost for the special contribution
was $15,403,000.
Notes to Financial Statements, Continued
1. Summary of Plan, continued:
a. Contributions, continued: 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
(IRC) of 1986 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.
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: Invests primarily in contracts with banks
and insurance companies. The fund may also invest in cash and
cash equivalents.
Stock Index Fund: Invests primarily in units of the State
Street Flagship Domestic Index Commingled Trust Fund which
invests exclusively in securities which make up the Standard and
Poor's 500 Stock Price Index.
Humana Common Stock Fund: Invests primarily in the Company's
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 the Company's common stock, or a
combination thereof. At December 31, 1998 and 1997, this fund
included $61,138,490 and $57,226,125, respectively, of
nonparticipant directed funds related to the 401(k) employer
match.
Aggressive Growth Fund: Invests primarily in shares of Fidelity
Contrafund which invests in common stocks and securities
convertible into common stock which are undervalued in
comparison to their future growth potential. The Fidelity
Contrafund may also invest in preferred stocks, foreign
securities, covered call options, put options, repurchase
agreements, and cash equivalent securities.
Balanced Fund: Invests primarily in shares of Invesco Value
Trust which invests in a diversified mix of securities including
common and preferred stocks, corporate and U.S. Government
bonds, and cash and cash equivalents, the objective of which is
to emphasize current income while secondarily striving to attain
capital growth.
International Fund: Invests primarily 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
nonconvertible 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 U.S. Treasury bills, commercial paper and
certificates of deposit.
Notes to Financial Statements, Continued
1. Summary of Plan, continued:
a. Contributions, continued:
Small Capitalization Fund: Invests primarily in shares of
Blackrock Small Cap Fund which invests in equity securities
consisting primarily of emerging growth companies and companies
with high growth potential. The Blackrock Small Cap Fund may
also temporarily invest in cash and cash equivalents.
Long-Term Bond Fund: Invests primarily in shares of Pimco Fund
which invests primarily in fixed income securities with average
maturities of 9 to 12 years. These may include bonds issued by
corporations and the U.S. Government, mortgage-backed
securities, certificates of deposit, foreign securities and
other types of fixed income investments.
Large Capitalization Fund: Invests primarily in shares of IDS
New Dimensions Fund which invests primarily in common stocks of
U.S. companies that operate in fields where dynamic economic or
technological changes are taking place or that have excellent
technologies, marketing or management.
A participant may allocate his/her contributions to the Pretax
Savings Account and the Company'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 the Company'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.
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
the Company 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 the Company. 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.
Notes to Financial Statements, Continued
1. Summary of Plan, continued:
a. Contributions, continued: 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.
There were approximately 24,000 and 18,500 participants at
December 31, 1998 and 1997, respectively, who had allocated
their contributions to one or more funds as follows:
1998 1997
Interest Income Fund 15,449 14,204
Humana Common Stock Fund 20,242 13,917
Aggressive Growth Fund 10,400 8,776
Stock Index Fund 9,625 8,494
Small Capitalization Fund 7,151 6,478
Balanced Fund 6,377 5,585
International Fund 5,859 5,342
Large Capitalization Fund 3,710 1,727
Long-Term Bond Fund 1,617 678
b. Withdrawals: 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 after attaining age 55; (2) a determination by the
Company 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 (3) the participant's death.
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. In the event funds are
needed because of extreme financial hardship, as defined by law,
the participant may be allowed to make a withdrawal of his/her
vested account balance. In addition, the Plan contains
restrictions relating to minimum withdrawals and the frequency
of withdrawals.
Notes to Financial Statements, Continued
1. Summary of Plan, continued:
b. Withdrawals, continued: 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 paid monthly or quarterly, or
d. A life annuity with guaranteed payments for a period of 5,
10, 15 or 20 years.
The Plan permits the employee to roll over contributions from
another qualified plan. An employee must make a written request
to the Plan for a rollover contribution. These contributions
must comply with certain requirements before the Plan will
authorize the rollover contribution.
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 various investment funds 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 the Department of
Labor's Rules and Regulations for Reporting and Disclosure under
ERISA, as determined by the Plan Administrator. Principal and
interest are repaid ratably through payroll deductions.
2. Summary of Significant Accounting Policies:
a. Basis of Accounting: The financial statements of the Plan are
prepared under the accrual method of accounting. Benefits are
recorded when paid. 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.
Notes to Financial Statements, Continued
2. Summary of Significant Accounting Policies, continued:
b. Valuation of Investments: Investments in securities traded on
a national securities exchange are valued at the last reported
sales price on the last business day of the year; 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 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.
The Plan presents in the accompanying statements of changes in
net assets 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.
c. Management Estimates: 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 net assets available for benefits
and disclosure of contingent assets and liabilities at the dates
of the financial statements and the reported amounts of
additions to and deductions from net assets during the reporting
periods. Actual results could differ from those estimates.
Notes to Financial Statements, Continued
3. Merger:
On September 1, 1998, the assets of ChoiceCare Corporation's, a
wholly-owned subsidiary of Humana Inc., ChoiceCare Savings Plan
and ChoiceCare Money Purchase Pension Plan were merged with the
Plan. The market value of the assets transferred was as follows:
ChoiceCare Savings Plan $ 8,318,019
ChoiceCare Money Purchase Pension Plan 5,120,004
$ 13,438,023
On September 1, 1998, the assets of Physician Corporation of
America's, a wholly-owned subsidiary of Humana Inc., PCA 401(k)
Retirement Plan were merged with the Plan. The market value of
the assets transferred was $17,348,163.
Effective March 3, 1997, the assets of Med-Pay, Inc.'s, a
wholly-owned subsidiary of Humana Inc., Med-Pay, Inc. Employee
401(k) Plan were merged with the Plan. The market value of the
assets transferred was $234,410.
4. Investments:
Effective January 1, 1998, the Plan's investment assets are held
by the Humana Retirement and Savings Master Trust (Master
Trust). Earnings of the Master Trust are allocated between the
Plan and the Humana Puerto Rico 1165(e) Retirement Plan based on
each plan's investment balance to the total Master Trust
investment balance. Earnings are further allocated to the
respective participants based on each participant's respective
asset total to total plan assets.
Notes to Financial Statements, Continued
4. Investments, continued:
The following table presents the fair value/contract value of
investments at December 31, 1998 and 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, 1998 and
1997 have been separately identified.
December 31,
1998 1997
Par or Maturity Par or Maturity
Value/Number of Fair Value/ Value/Number of Fair Value/
Issuer Units or Shares Contract Value Units or Shares Contract Value
Investments
at fair value:
Plan interest
in Master Trust $ 474,899,722 -
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
474,899,722 345,775,677
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
Notes to Financial Statements, Continued
4. Investments, continued:
December 31,
1998 1997
Par or Maturity Par or Maturity
Value/Number of Fair Value/ Value/Number of Fair Value/
Issuer Units or Shares Contract Value Units or Shares Contract Value
Investments at
contract value:
Investment
contracts -
insurance
companies:
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
$ 474,899,722 $ 440,153,314
During the years ended December 31, 1998 and 1997, the Plan's
investments (including investments bought, sold, and held
during the year) appreciated in value as follows:
1998 1997
Plan interest in Master Trust $ 29,861,241 -
Common stocks - $ 52,332,615
Bonds and asset-backed securities - 63
$ 29,861,241 $ 52,332,678
Notes to Financial Statements, Continued
4. Investments, continued:
As of December 31, 1998, the Plan's interest in the Master Trust
was 99.77%. Investment income, administrative expenses and
realized gains or losses related to the Master Trust are
allocated monthly to the individual plans based upon the
beginning monthly balances invested by each plan.
The fair value of the investments carried at contract value
included in the Master Trust at December 31, 1998 was
$65,556,624 and the fair value of the investments carried at
contract value included in the Plan's investments at December
31, 1997 was $71,164,105. The average yield and crediting
interest rate approximated 6.7% for 1998 and 1997.
The per share closing price of the Company's common stock was
$17.813 and $20.75 on December 31, 1998 and 1997, respectively.
On May 14, 1999, the per share closing price of the Company's
common stock was $12.875.
The fair value of net assets available for benefits of the
Master Trust as of December 31, 1998 is described in the
following table:
ASSETS
Investments, at fair value:
Common stocks:
Humana Inc. Common Stock $ 105,495,230
State Street Flagship Domestic Index Fund 86,633,614
Pimco Funds 3,050,622
Invesco Value Trustee Fund 30,449,405
IDS New Dimensions Fund 8,702,265
Harbor International Fund 25,409,546
Blackrock Fund 38,262,087
Fidelity Contrafund 84,561,632
382,564,401
Obligations due within one year:
Armada Money Market Fund 3,059,358
Investment contracts - banks:
Bankers Trust Co. 5,837,296
Caisse Des Depots (CDC) 7,421,264
13,258,560
Participant notes receivable:
Various 8,850,022
407,732,341
Notes to Financial Statements, Continued
4. Investments, continued:
Investments, at contract value:
Investment contracts - insurance companies:
Allstate Life Insurance Co. $ 3,578,570
Allstate Life Insurance Co. 4,719,627
Continental Assurance Co. 3,056,333
Continental Assurance Co., Synthetic GIC 1,196,714
Jackson National Life GIC 3,365,280
Jackson National Life, Synthetic GIC 14,250,356
John Hancock Mutual Life 4,788,718
Lincoln National Life Insurance Co. 1,000,445
Metropolitan Life Insurance Co., Group Annuity 777,009
Metropolitan Life Insurance Co., Group Annuity 2,051,817
Monumental Life Insurance Co. 2,146,829
Monumental Life Insurance Co., Synthetic GIC 15,859,549
New York Life Insurance Co., Group Annuity 3,163,192
New York Life Insurance Co., Group Annuity 3,036,565
Prudential Insurance Co. 2,085,499
TransAmerica Accidental Life Insurance Co. 2,121,043
United of Omaha Life Insurance Co. 1,007,078
Various 5
68,204,629
Total investments 475,936,970
Cash 2,919,076
Due from brokers for securities sold 43,684
Receivable from participating employers for
participant withholdings and employers'
contributions 16,056,246
Accrued interest and dividends 8,803,833
Total assets 503,759,809
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Accrued expenses 433,908
Forfeited employers' contributions available
to reduce future employers' contributions 602,322
Total liabilities 1,036,230
Net assets available for benefits $ 502,723,579
Notes to Financial Statements, Continued
4. Investments, continued:
The changes in net assets available for benefits of the Master
Trust for the year ended December 31, 1998 are as follows:
Additions:
Investment income:
Net appreciation in fair value of investments $ 29,880,366
Interest 6,937,734
Dividends 2,562,800
39,380,900
Transfer from participating plans for contributions:
Participants 29,231,431
Employers 41,693,083
Forfeited employers' contributions (1,111,623)
Transfer from ChoiceCare Plans 13,438,023
Transfer from Merrill Lynch Trust 345,082
Transfer from PCA 401(k) Retirement Plan 17,348,163
Total additions 140,325,059
Deductions:
Transfer to participating plans for benefit payments 94,929,814
Administrative expenses 758,808
Total deductions 95,688,622
Net increase 44,636,437
Net assets available for benefits:
Beginning of year 458,087,142
End of year $ 502,723,579
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:
December 31,
1998 1997
Net assets available for benefits
per the financial statements $ 501,540,409 $ 458,087,142
Amount allocated to withdrawing
participants (3,599,673) (6,967,433)
Net assets available for benefits
per the Form 5500 $ 497,940,736 $ 451,119,709
The following is a reconciliation of benefits paid to
participants per the financial statements to the Form 5500:
For the Year Ended December 31,
1998 1997
Benefits paid to participants
per the financial statements $ 94,923,357 $ 39,608,578
Add: Amounts allocated to
withdrawing participants at
end of year 3,599,673 6,967,433
Less: Amounts allocated to
withdrawing participants at
beginning of year (6,967,433) (1,484,772)
Benefits paid to participants
per the Form 5500 $ 91,555,597 $ 45,091,239
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 (IRS) has determined, and informed
the Company 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.
Notes to Financial Statements, Continued
7. Plan Termination:
Although it has not expressed any intent to do so, the Company
has the right under the Plan to discontinue its contributions 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 the Company.
8. Related Party Transactions:
Administrative expenses of the Plan are paid by the Plan and
allocated to the participants' accounts.
NOTES TO FINANCIAL STATEMENTS, Continued
9. Net Assets by Fund at December 31, 1998:
<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:
Plan interest
in Master Trust: $83,429,854 $86,682,772 $44,807,665 $84,589,743 $30,410,507 $25,493,828 $38,241,590
Other assets allocated
from Master Trust:
Cash 2,953,125 (8,853)
Due from broker for 43,684
securities sold
Receivable from
participating employers
for participant
withholdings and
employers'
contributions 8,382,680 1,621,002 1,388,659 1,418,143 429,387 475,875 683,446
Accrued interest and
dividends 2,126,144 2,690 3,262 6,623,895 19,849 765 903
Total assets 96,935,487 88,306,464 46,190,733 92,631,781 30,859,743 25,970,468 38,925,939
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Liabilities allocated
from Master Trust:
Accrued expenses 71,549 67,688 86,482 91,001 36,268 27,502 39,906
Forfeited employers'
contributions avail-
able to reduce
future employers'
contributions 157,576
Total liabilities 229,125 67,688 86,482 91,001 36,268 27,502 39,906
Net asset available
for benefits $96,706,362 $88,238,776 $46,104,251 $92,540,780 $30,823,475 $25,942,966 $38,886,033
</TABLE>
NOTES TO FINANCIAL STATEMENTS, Continued
9. Net Assets by Fund at December 31, 1998 (Cont.):
<TABLE>
<S> <C> <C> <C> <C> <C>
Nonparticipant
Participant Directed Directed
Large Participant Humana
Long-Term Capitalization Notes Common
Bond Fund Fund Fund Stock Fund Total
ASSETS
Investments:
At fair value:
Plan interest
in Master Trust $ 3,028,208 $8,685,388 8,845,401 $60,684,766 $474,899,722
Other assets allocated
from Master Trust:
Cash (16,935) (11,017) 2,756 2,919,076
Due from broker for 43,684
securities sold
Receivable from
participating
employers for
participant with-
holdings and
employers'
contributions 150,149 352,924 119,463 895,375 15,917,103
Accrued interest and
dividends 16,119 196 8,793,823
Total assets 3,177,541 9,027,491 8,967,620 61,580,141 502,573,408
LIABILITIES AND NET ASSETS
AVAILABLE FOR BENEFITS
Liabilities allocated
from Master Trust:
Accrued expenses 4,911 8,465 433,772
Forfeited employers'
contributions available
to reduce future
employers' contributions 441,651 599,227
Total liabilities 4,911 8,465 - 441,651 1,032,999
Net asset available
for benefits $3,172,630 $9,019,026 $8,967,620 $61,138,490 $501,540,409
</TABLE>
NOTES TO FINANCIAL STATEMENTS, Continued
10. 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 Stocks $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 notes
receivable
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
withholdings 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 available
to reduce future
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>
NOTES TO FINANCIAL STATEMENTS, Continued
10. Net Assets by Fund at December 31, 1997 (Cont.):
<TABLE>
<S> <C> <C> <C> <C> <C>
Nonparticipant
Participant Directed Directed
Large Participant Humana
Long-Term Capitalization Notes Common
Bond Fund Fund Fund Stock Fund Total
ASSETS
Investments:
At fair value:
Common Stocks $ 1,092,973 $ 1,780,212 $57,333,816 $345,775,677
Armada Government Fund 295 334,745
Investment contracts 11,452,180
Participant notes
receivable $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
withholdings 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 available
to reduce future
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>
NOTES TO FINANCIAL STATEMENTS, Continued
11. Activity by Fund for the Year Ended December 31, 1998:
<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:
Investment income:
Plan interest in
Master Trust
investment income:
Interest and
dividend income $ 5,904,182 $ 10,783 $ 52,128 $ 627,941 $ 728,737 $ 374,151 $ 628,883
Net appreciation
(depreciation)
in fair value of
investments (1,267) 20,149,535 (10,605,789) 21,745,174 2,967,663 2,300,706 (3,250,955)
5,902,915 20,160,318 (10,553,661) 22,373,115 3,696,400 2,674,857 (2,622,072)
Contributions:
Contributions allo-
cated from Master
Trust:
Participants 2,441,217 4,391,521 4,481,394 6,752,489 2,815,365 2,453,979 3,557,836
Employers 8,314,110 1,435,397 3,420,182 1,158,383 338,602 393,055 580,760
Forfeited employers'
contributions (160,140) (69,220)
Transfers from
ChoiceCare Plans 4,994,067 1,819,701 98,593 714,734 1,138,743 1,937,800 806,157
Transfer from PCA
401(k) Retire-
ment Plan 8,239,409 2,846,900 364,598 439,056 1,127,715 1,584,594 512,901
Total additions 29,731,578 30,653,837 (2,258,114) 31,437,777 9,116,825 9,044,285 2,835,582
Deductions:
Deductions allo-
cated from
Master Trust:
Benefits paid
to partici-
pants 25,762,178 16,455,313 6,783,573 12,398,334 4,953,276 4,968,308 5,719,253
Administrative
expenses 170,419 148,418 191,728 109,755 39,896 35,409 51,476
Total
deductions 25,932,597 16,603,731 6,975,301 12,508,089 4,993,172 5,003,717 5,770,729
Interfund transfers (3,521,779) 1,584,117 1,257,258 1,842,357 781,933 (3,726,940) (773,028)
Net increase
(decrease) 277,202 15,634,223 (7,976,157) 20,772,045 4,905,586 313,628 (3,708,175)
Net assets
available for
benefits:
Beginning of
year 96,429,160 72,604,553 54,080,408 71,768,735 25,917,889 25,629,338 42,594,208
End of
year $96,706,362 $88,238,776 $46,104,251 $92,540,780 $30,823,475 $25,942,966 $38,886,033
</TABLE>
11. Activity by Fund for the Year Ended December 31, 1998 (Cont.):
<TABLE>
Nonparticipant
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:
Investment income:
Plan interest in
Master Trust
investment income:
Interest and
dividend income $ 125,017 $ 385,556 $ 661,525 $ 9,498,903
Net appreciation
(depreciation)
in fair value
of investments 68,092 1,288,549 $(4,800,467) 29,861,241
193,109 1,674,105 661,525 (4,800,467) 39,360,144
Contributions:
Contributions allo-
cated from Master
Trust:
Participants 407,897 1,710,765 29,012,463
Employers 129,747 271,789 25,043,932 41,085,957
Forfeited employers'
contributions (880,334) (1,109,694)
Transfers from
ChoiceCare Plans 263,199 1,416,607 248,422 13,438,023
Transfer from PCA
401(k) Retirement
Plan 331,787 1,178,879 722,324 17,348,163
Total additions 1,325,739 6,252,145 1,632,271 19,363,131 139,135,056
Deductions:
Deductions allocated
from Master Trust:
Benefits paid to
participants 542,716 729,426 1,170,734 15,440,246 94,923,357
Administrative
expenses 3,493 8,232 (394) 758,432
Total deductions 546,209 737,658 1,170,734 15,439,852 95,681,789
Interfund transfers 1,190,200 1,502,849 (126,053) (10,914) -
Net increase
(decrease) 1,969,730 7,017,336 335,484 3,912,365 43,453,267
Net assets available
for benefits:
Beginning of
year 1,202,900 2,001,690 8,632,136 57,226,125 458,087,142
End of
year $3,172,630 $9,019,026 $8,967,620 $61,138,490 $501,540,409
</TABLE>
NOTES TO FINANCIAL STATEMENTS, Continued
12. 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:
Investment income:
Net appreciation
(depreciation)
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:
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
Total
deductions 12,572,958 5,111,085 1,226,916 5,362,148 2,378,510 1,710,798 3,169,417
Interfund transfers (5,245,137) 1,469,127 (1,225,166) (327,108) 173,557 953,456 1,052,882
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
year 96,124,005 53,264,535 51,108,021 56,648,008 19,928,630 20,287,939 29,661,173
End of year $96,429,160 $72,604,553 $54,080,408 $71,768,735 $25,917,889 $25,629,338 $42,594,208
</TABLE>
12. Activity by Fund for the Year Ended December 31, 1997 (Cont.):
<TABLE>
Nonparticipant
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:
Investment income:
Net appreciation
(depreciation)
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:
Benefits paid
to participants 6,651 38,578 728,620 7,944,866 39,608,578
Administrative
expenses 901 1,377 2,298 646,545
Total deductions 7,552 39,955 728,620 7,947,164 40,255,123
Interfund transfers 880,256 1,095,867 1,172,318 (52) -
Net increase 1,202,900 2,001,690 1,089,028 5,759,316 72,054,914
Net assets available
for benefits:
Beginning of
year 7,543,108 51,466,809 386,032,228
End of year $1,202,900 $2,001,690 $8,632,136 $57,226,125 $458,087,142
</TABLE>
Humana Retirement and Savings Plan
Plan #002 EIN #61-0647538
Line 27a - Schedule of Assets Held for Investment Purposes
December 31, 1998
Description of Investment Including Fair Value/
Maturity Date, Rate of Interest, Contract
Issuer Collateral, Par or Maturity Value Cost Value
Investments at
fair value:
Plan interest
in Master
Trust Various $ 380,832,154 $ 474,899,722
Humana Retirement and Savings Plan
Plan #002 EIN #61-0647538
Line 27d - Schedule of Reportable Transactions
for the year ended December 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Expense Current Value
Identity of Description Purchase Selling Lease Incurred with Cost of of Asset on Net
Party Involved of Asset Price Price Rental Transaction Asset Transaction Date Gain (Loss)
No reportable 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 28, 1999
Exhibit Index
__________
Exhibit 23 Consent of Independent Accountants
Exhibit 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-49305) of Humana Inc.
of our report dated May 14, 1999 relating to the financial
statements and supplemental schedules of the Humana Retirement
and Savings Plan as of and for the years ended December 31, 1998
and 1997 which appears in this Form 11-K.
/s/ PricewaterhouseCoopers LLP
Louisville, Kentucky
June 28, 1999
