Health Net 2010 Annual Report Download - page 132

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
We may redeem the Rights at any time until the earlier of (i) 10 days following the date that any Acquiring
Person becomes the beneficial owner of 15% or more of the outstanding common stock and (ii) the date the
Rights expire at a price of $.01 per Right. In addition, at any time after a person becomes an Acquiring Person or
is determined to be an Adverse Person and prior to such person becoming (together with such person’s affiliates
and associates) the beneficial owner of 50% or more of the outstanding common stock, at the election of our
Board of Directors, the outstanding Rights (other than those beneficially owned by an Acquiring Person, Adverse
Person or an affiliate or associate of an Acquiring Person or Adverse Person) may be exchanged, in whole or in
part, for shares of common stock, or shares of preferred stock of the Company having essentially the same value
or economic rights as such shares.
Stock Repurchase Program
We completed the Completed Stock Repurchase Program in February 2010. During the three months ended
March 31, 2010, we repurchased 3,258,795 shares of our common stock for aggregate consideration of
approximately $79.4 million under our Completed Stock Repurchase Program. On March 18, 2010, our Board of
Directors authorized our New Stock Repurchase Program pursuant to which a total of $300 million of our
common stock can be repurchased. During the year ended December 31, 2010, we repurchased 5,875,757 shares
of our common stock for aggregate consideration of approximately $150.2 million under our New Stock
Repurchase Program. The remaining authorization under our New Stock Repurchase Program as of
December 31, 2010 was $149.8 million.
Subject to Board approval, we may repurchase our common stock under our New Stock Repurchase
Program from time to time in privately negotiated transactions, through accelerated share repurchase programs or
open market transactions, including pursuant to a trading plan in accordance with Rules 10b5-1 and 10b-18 of the
Securities Exchange Act of 1934, as amended. The timing of any repurchases and the actual number of share
repurchases will depend on a variety of factors, including the stock price, corporate and regulatory requirements,
restrictions under the Company’s debt obligations, and other market and economic conditions. The New Stock
Repurchase Program may be suspended or discontinued at any time.
As of December 31, 2010, we had repurchased a cumulative aggregate of 46,618,636 shares of our common
stock under our Completed Stock Repurchase Program (since its inception in 2002) and our New Stock
Repurchase Program (since its inception in March 2010) at an average price of $32.39 per share for aggregate
consideration of $1,510.0 million. We used net free cash available, including proceeds from the Northeast Sale
and cash at the parent company, Health Net, Inc., to fund the share repurchases.
Note 10—Employee Benefit Plans
Defined Contribution Retirement Plans
We and certain of our subsidiaries sponsor defined contribution retirement plans intended to qualify under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the Code). The plans were
amended and restated effective January 1, 2008 to comply with, among other things, Section 415 of the Code.
Participation in the plans is available to substantially all employees who meet certain eligibility requirements and
elect to participate. Employees may contribute up to the maximum limits allowed by Sections 401(k) and 415 of
the Code, with Company contributions based on matching or other formulas. Our expense under these plans
totaled $17.5 million, $18.1 million and $19.8 million for the years ended December 31, 2010, 2009 and 2008,
respectively, and is included in general and administrative expense in our consolidated statements of operations.
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