Aetna 2012 Annual Report Download - page 24

Annual Report- Page 18
Cash flows used for investing activities decreased in 2012 compared to 2011 reflecting reduced cash used for
acquisitions. Cash flows from investing activities decreased in 2011 compared to 2010 primarily due to the $1.6
billion in acquisitions we completed during 2011 and lower proceeds from sale and maturities of investments. Our
2011 acquisitions increased membership, enhanced our capabilities and contributed to service fee and other revenue
growth. There were no acquisitions completed in 2010. Refer to Note 3 and 7 of Notes to Consolidated Financial
Statements beginning on pages 90 and 93, respectively, for additional information.
Cash flows provided by financing activities in 2012 primarily reflect an aggregate $2.7 billion of cash provided by
our November 2012 long-term debt financing for the proposed acquisition of Coventry as well as our May 2012
long-term debt financing, partially offset by share repurchases, net repayments of long-term and short-term debt and
dividend payments. Refer to Note 14 of Notes to Consolidated Financial Statements on page 120 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 2012, 2011 and 2010, we repurchased approximately 32 million, 45 million and 52 million shares of
common stock at a cost of $1.4 billion, $1.8 billion and $1.6 billion, respectively. At December 31, 2012, the
capacity remaining under our Board-approved share repurchase program was approximately $505 million.
Long-Term Debt
In November 2012, we issued $500 million of 1.50% senior notes due 2017, $1.0 billion of 2.75% senior notes due
2022 and $500 million of 4.125% senior notes due 2042 (collectively, the “2012 Coventry-related senior notes”), in
connection with the proposed acquisition of Coventry which is projected to be completed in mid-2013. In the
period from August 2012 through October 2012, prior to issuing the 2012 Coventry-related senior notes, we entered
into 16 interest rate swaps with an aggregate notional value of $2.0 billion and designated these swaps as cash flow
hedges against interest rate exposure related to the forecasted future issuance of fixed-rate debt. We terminated the
swaps prior to issuing the 2012 Coventry-related senior notes and paid an aggregate of $4.8 million to the swap
counterparties upon termination of the swaps. The related $4.8 million pretax loss is recorded in accumulated other
comprehensive loss net of tax and is being amortized as an increase to interest expense over the first 10, 20 and 60
semi-annual interest payments associated with the respective 2012 Coventry-related senior notes.
In May 2012, we issued $250 million of 1.75% senior notes due in 2017 and $500 million of 4.5% senior notes due
in 2042 (collectively, the “2012 senior notes”), which provided us with cash proceeds of $720.4 million after
underwriting fees and other offering expenses, and being issued at a discount. Prior to issuing the 2012 senior notes
we terminated two interest rate swaps related to the forecasted future issuance of fixed-rate debt and paid an
aggregate of $7.5 million to the swap counterparties upon that termination.
In 2012, we repurchased approximately $200 million of our outstanding senior notes and recorded a loss on that
extinguishment of long-term debt of $55.2 million ($84.9 million pretax) during 2012.
During 2011, we repaid the $450 million aggregate principal amount of our 7.875% senior notes due March 2011.
We also issued $500 million of 4.125% senior notes due 2021 and used the majority of the proceeds to repay the
entire $450 million aggregate principal amount of our 5.75% senior notes due June 2011. In August 2010, we
issued $750 million of 3.95% senior notes due 2020 in anticipation of the 2011 scheduled maturity of certain of our
senior notes.