Health Net 2010 Annual Report Download - page 80

Financing Activities
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Net cash used in financing activities increased by $305.7 million primarily due to a $222.7 million increase
in stock repurchases, an $81.8 million increase in amounts paid under our amortizing financing facility due to the
termination and payoff of that facility, and a $50.0 million increase in net repayments under our revolving credit
facility, partially offset by an increase in checks outstanding, net of deposits of $45.9 million.
Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
Net cash used in financing activities decreased by $14.2 million primarily due to a $229.0 million decrease
in cash used for share repurchases offset by a $208.7 million increase in net cash used in borrowings.
Capital Structure
Our debt-to-total capital ratio was 19.0 percent as of December 31, 2010 compared with 26.2 percent as of
December 31, 2009. This decrease was the result of lower borrowings under our revolving credit facility and the
repayment of our amortizing financing facility in May 2010. See “—Termination of Amortizing Financing
Facility” below for additional information.
Stock Repurchase Program
We completed our 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. As of December 31, 2010 we had repurchased
5,875,757 shares of our common stock for aggregate consideration of approximately $150.2 million under our
New Stock Repurchase Program. During January, 2011, we repurchased an additional 1,211,720 shares of our
common stock for aggregate consideration of $34.3 million under our New Stock Repurchase Program. The
remaining authorization under our New Stock Repurchase Program was $149.8 million as of December 31, 2010,
and $115.5 million as of January 31, 2011.
As of December 31, 2010, we had repurchased a cumulative aggregate of 46,618,636 shares of our common
stock under our stock repurchase programs at an average price of $32.39 per share for aggregate consideration of
$1.5 billion. We used net free cash available, including proceeds from the Northeast Sale and cash at Health Net,
Inc., to fund the share repurchases. For additional information on our Completed Stock Repurchase Program and
our New Stock Repurchase Program, see Note 9 of our consolidated financial statements.
Termination of Amortizing Financing Facility
On May 26, 2010, we terminated our five-year non-interest bearing, $175 million amortizing financing
facility with a non-U.S. lender that we entered into on December 19, 2007 by exercising our option to call the
facility. We paid a total of $116.8 million to retire the facility, which included the outstanding balance of $113.8
million and a $3.0 million call premium. We used a combination of a $100 million draw on our revolving credit
facility and operating cash to repay the financing facility. See Note 2 to our consolidated financial statements for
information on the termination of the interest rate swap agreement that we entered into in 2007 in connection
with the amortizing financing facility (“2007 Swap”). The 2007 Swap was terminated in connection with the
termination of our amortizing financing facility.
Senior Notes
We have issued $400 million in aggregate principal amount of 6.375% Senior Notes due 2017 (the “Senior
Notes”).
The indenture governing the Senior Notes limits our ability to incur certain liens, or consolidate, merge or
sell all or substantially all of our assets. In the event of the occurrence of both (1) a change of control of Health
Net, Inc. and (2) a below investment grade rating by any two of Fitch, Inc., Moody’s Investors Service, Inc. and
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