Aetna 2011 Annual Report Download - page 22

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Annual Report- Page 16
Cash Flow Analysis
Cash flows provided by operating activities for Health Care and Group Insurance were approximately $2.7 billion
in 2011, $1.6 billion in 2010 and $2.7 billion in 2009. The increase in 2011 compared to 2010 is primarily
attributable to improved operating performance and lower voluntary contributions to the Aetna Pension Plan.
Effective December 31, 2010, our employees no longer earn future pension service credits in the Aetna Pension
Plan (i.e., the plan was "frozen"). The Aetna Pension Plan will continue to operate and account balances will
continue to earn annual interest credits. The decrease in our pension cost for 2011 compared to 2010 was caused by
this freezing of the Aetna Pension Plan. We expect our future pension expense to continue to be lower than 2010.
Our current funding strategy is to fund an amount at least equal to the minimum funding requirement as determined
under applicable regulatory requirements with consideration of factors such as the maximum tax deductibility of
such amounts. In the fourth quarter of 2011, we elected the 15 year amortization period for funding minimum
required contributions which is allowed under the Preservation of Access to Care for Medicare Beneficiaries and
Pension Relief Act of 2010. We do not have any mandatory contribution requirements for 2012; however, we may
make a voluntary contribution of approximately $60 million to the Aetna Pension Plan in 2012. During 2011, 2010
and 2009, we made $60 million, $505 million and $45 million, respectively, in voluntary cash contributions to the
Aetna Pension Plan.
Cash flows from investing activities decreased in 2011 compared to 2010 primarily due to $1.6 billion in
acquisitions we completed during 2011, which increased membership, enhanced our capabilities and contributed to
service fee and other revenue growth, and lower proceeds from sales and maturities of investments. Cash flows
from investing activities increased in 2010 compared to 2009 primarily as a result of higher proceeds from sales and
maturities of investments. Also in 2009, we spent approximately $70 million on an acquisition we expect will
enhance our existing product capabilities and future growth opportunities in behavioral health products. There were
no acquisitions in 2010. Refer to Note 3 and 7 of Notes to Consolidated Financial Statements beginning on pages
74 and 77, respectively, for additional information.
Cash flows used for financing activities in 2011 primarily reflect share repurchases, net repayments of long-term
debt and dividend payments, partially offset by the issuance of short-term debt in 2011. Refer to page 17 for
additional information about debt issuance and repayments.
During the last three years, we repurchased our common stock under various repurchase programs authorized by
our Board. In 2011, 2010 and 2009, we repurchased approximately 45 million, 52 million and 29 million shares of
common stock at a cost of $1.8 billion, $1.6 billion and $773 million, respectively. At December 31, 2011, the
capacity remaining under our Board-approved share repurchase program was approximately $422 million. On
February 24, 2012, our Board approved a new share repurchase program that authorizes us to repurchase up to $750
million of our common stock.
In February 2011, we announced that our Board increased our cash dividend to shareholders to $.15 per share and
moved us to a quarterly dividend payment cycle. On December 2, 2011, our Board increased our quarterly cash
dividend to shareholders to $.175 per common share. Prior to February 2011, our policy had been to pay an annual
dividend of $.04 per share. During 2011 our Board declared the following cash dividends:
Date Declared
February 3, 2011
May 20, 2011
September 23, 2011
December 2, 2011
Dividend Amount
Per Share
$ .15
.15
.15
.175
Stockholders of
Record Date
April 14, 2011
July 14, 2011
October 13, 2011
January 13, 2012
Date Paid/
To be Paid
April 29, 2011
July 29, 2011
October 28, 2011
January 27, 2012
Total Dividends
(Millions)
$ 57.0
55.9
54.3
61.2