Health Net 2010 Annual Report Download - page 91

However, these securities may be negatively impacted by illiquidity in the market. The recent disruptions in the
credit markets have negatively impacted the liquidity of investments. However, such disruptions did not have a
material impact to the liquidity of our investments. A worsening of credit market function or sustained market
downturns could have negative effects on the liquidity and value of our investment assets.
Borrowings under our revolving credit facility, which there were none as of December 31, 2010, are subject
to variable interest rates. For additional information regarding our revolving credit facility, see “—Management’s
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”
Our floating rate borrowings, if any, are presumed to have equal book and fair values because the interest rates
paid on these borrowings, if any, are based on prevailing market rates.
The fair value of our fixed rate borrowing, which consists of only our Senior Notes, as of December 31,
2010 was approximately $401.2 million, which was based on quoted market prices. Where quoted market prices
were not readily available, fair values were estimated using valuation methodologies based on available and
observable market information. Such valuation methodologies include reviewing the value ascribed to the most
recent financing, comparing the security with securities of publicly traded companies in a similar line of
business, and reviewing the underlying financial performance including estimating discounted cash flows. The
following table presents the expected cash outflows relating to market risk sensitive debt obligations as of
December 31, 2010. These cash outflows include expected principal and interest payments consistent with the
terms of the outstanding debt as of December 31, 2010.
2011 2012 2013 2014 2015 Thereafter Total
(Amounts in millions)
Fixed-rate borrowing:
Principal .............................. $— $— $— $— $— $400.0 $400.0
Interest ............................... 25.5 25.5 25.5 25.5 25.5 35.2 162.7
Cash outflow on fixed-rate borrowing ........... $25.5 $25.5 $25.5 $25.5 $25.5 $435.2 $562.7
Item 8. Financial Statements and Supplementary Data.
The financial statements listed on the accompanying Index to Consolidated Financial Statements set forth on
page F-1 and covered by the Report of Independent Registered Public Accounting Firm are incorporated in this
Item 8 by reference and filed as part of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports we
file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
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