Health Net 2009 Annual Report Download - page 125

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following table presents information about our assets and liabilities measured at fair value on a
recurring basis at December 31, 2009, and indicate the fair value hierarchy of the valuation techniques utilized by
us to determine such fair value (dollars in millions):
Level 1
Level 2-
current
Level 2-
noncurrent Level 3 Total
Assets:
Investments—available-for-sale
Asset-backed securities .......................... $— $ 544.0 $20.9 $ — $ 564.9
U.S. government and agencies .................... 26.7 99.5 — — 126.2
Obligations of states and other political subdivisions . . — 385.3 — 10.0 395.3
Corporate debt securities ......................... — 310.5 — — 310.5
Other securities ................................ 0.1 — — — 0.1
26.8 1,339.3 20.9 10.0 1,397.0
Amounts receivable from UnitedHealth (see Note 3) ...... — — — 128.0 128.0
Interest rate swap net asset ........................... — 4.5 — — 4.5
Total assets at fair value ............................. $26.8 $1,343.8 $20.9 $138.0 $1,529.5
The changes in the balances of Level 3 financial assets for the year ended December 31, 2009 were as
follows (dollars in millions):
2009
Beginning balance ........................................................... $ 10.2
Total gains and losses
Realized in net income .................................................... —
Unrealized in accumulated other comprehensive income ......................... —
Purchases, sales, issuances and settlements ........................................ 127.8
Transfers into Level 3 ........................................................ —
Ending balance .............................................................. $138.0
Change in unrealized gains (losses) included in net income related to assets still held ...... $ —
During the year ended December 31, 2009, certain auction rate securities experienced “failed” auctions. As
a result, these securities’ fair values were determined to be equal to their par values due to the short time periods
between coupon resets and the issuers’ credit worthiness.
Note 8—Long-Term Equity Compensation
For the year ended December 31, 2009, the compensation cost that has been charged against income under
our various stock option and long-term incentive plans (the Plans) was $11.7 million. The total income tax
benefit recognized in the income statement for share-based compensation arrangements was $4.5 million (See
Note 2).
The Plans permit the grant of stock options and other equity awards, including but not limited to restricted
stock, restricted stock units (RSUs) and performance share units (PSUs) to certain employees, officers and
non-employee directors. The grant of RSUs and PSUs under our 2006 Long-Term Incentive Plan reduces the
number of shares of common stock available for issuance under that Plan by 1.75 shares of common stock for
each award and is deemed to be an award of 1.75 shares of common stock for each share subject to the award.
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