Health Net 2011 Annual Report Download - page 87

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Net cash used in financing activities decreased by $507.2 million primarily due to a $222.7 million increase
in stock repurchases, a $201.5 million increase in customer funds administered, 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.
Capital Structure
Our debt-to-total capital ratio was 26.2 percent as of December 31, 2011 compared with 19.0 percent as of
December 31, 2010. This increase was driven by a decrease in stockholders’ equity as a result of share
repurchases and an increase in debt due to increased borrowings under our revolving credit facility.
See “—Stock Repurchase Program” and “—Revolving Credit Facility” below for additional information.
Stock Repurchase Program
On March 18, 2010, our Board of Directors authorized our 2010 stock repurchase program pursuant to
which a total of $300 million of our common stock could be repurchased. We completed our 2010 stock
repurchase program in April 2011. During the year ended December 31, 2011, we repurchased 4.9 million shares
of our common stock for aggregate consideration of approximately $149.8 million under our 2010 stock
repurchase program. As of December 31, 2011, we had repurchased an aggregate of 10.8 million shares of our
common stock under our 2010 stock repurchase program since its inception in March 2010 at an average price of
$27.80 per share for aggregate consideration of $300 million.
On May 4, 2011, our Board of Directors authorized our 2011 stock repurchase program pursuant to which a
total of $300 million of our outstanding common stock could be repurchased. During the year ended
December 31, 2011, we repurchased 8.7 million shares of our common stock for aggregate consideration of
approximately $223.7 million under our 2011 stock repurchase program. The remaining authorization under our
2011 stock repurchase program as of December 31, 2011 was $76.3 million. For additional information on our
stock repurchase programs, see Note 9 to our consolidated financial statements.
Revolving Credit Facility
In October 2011, we entered into a new $600 million unsecured revolving credit facility with Bank of
America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer and the other lenders party thereto
due in October 2016. This new credit facility replaced our previous $900 million five-year unsecured revolving
credit facility, which was scheduled to mature on June 25, 2012. The new facility includes a $400 million
sublimit for the issuance of standby letters of credit and a $50 million sublimit for swing line loans (which
sublimits may be increased in connection with any increase in the credit facility described below). In addition,
we have the ability from time to time to increase the new credit facility by up to an additional $200 million in the
aggregate, subject to the receipt of additional commitments. We utilized proceeds of the initial borrowing on the
closing date of the new credit facility to refinance our obligations under our previous revolving credit facility. As
of December 31, 2011, $112.5 million was outstanding under our new revolving credit facility and the maximum
amount available for borrowing under the new revolving credit facility was $428.1 million (see “—Letters of
Credit” below).
The interest rate payable on the new credit facility is based on the consolidated leverage ratio of the
Company as defined in the new credit facility; however, until the Company delivers a compliance certificate for
the fiscal quarter ending March 31, 2012, the Company will pay, at the Company’s option, either (a) the base rate
(which is a rate per annum equal to the greatest of (i) the federal funds rate plus one-half of one percent, (ii) Bank
of America, N.A.’s “prime rate” and (iii) the Eurodollar Rate (as such term is defined in the new credit facility)
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