United Healthcare 2005 Annual Report Download - page 58

December 2010. In October 2005, we executed a $3.0 billion 364-day revolving credit facility to support a $3.0
billion increase in our commercial paper program. As of December 31, 2005, we had no amounts outstanding
under either of these credit facilities.
PacifiCare had approximately $100 million par value of 3% convertible subordinated debentures (convertible
notes) which were convertible into approximately 5.2 million shares of UnitedHealth Group’s common stock and
$102 million of cash as of December 31, 2005. In December 2005, we initiated a consent solicitation to all of the
holders of outstanding convertible notes pursuant to which we offered to compensate all holders who elected to
convert their notes in accordance with existing terms and consent to an amendment to a covenant in the indenture
governing the convertible notes. The compensation consisted of the present value of interest through October 18,
2007, the earliest mandatory redemption date, plus a pro rata share of $1 million. On January 31, 2006,
approximately 91% of the convertible notes were tendered pursuant to the offer, for which we issued
approximately 4.8 million shares of UnitedHealth Group common stock and cash of $99 million.
Our debt arrangements and credit facilities contain various covenants, the most restrictive of which require us to
maintain a debt-to-total-capital ratio below 45% and to exceed specified minimum interest coverage levels. We
are in compliance with the requirements of all debt covenants.
Maturities of commercial paper and debt for the years ending December 31 are as follows: $3,261 million in
2006, $950 million in 2007, $500 million in 2008, $700 million in 2009, and $1,700 million thereafter.
We made cash payments for interest of $219 million, $100 million and $94 million in 2005, 2004 and 2003,
respectively.
8. Shareholders’ Equity
Regulatory Capital and Dividend Restrictions
We conduct a significant portion of our operations through companies that are subject to standards established by
the National Association of Insurance Commissioners (NAIC). These standards, among other things, require
these subsidiaries to maintain specified levels of statutory capital, as defined by each state, and restrict the timing
and amount of dividends and other distributions that may be paid to their parent companies. Generally, the
amount of dividend distributions that may be paid by a regulated subsidiary, without prior approval by state
regulatory authorities, is limited based on the entity’s level of statutory net income and statutory capital and
surplus. At December 31, 2005, approximately $270 million of our $15.0 billion of cash and investments was
held by non-regulated subsidiaries and available for general corporate use, including acquisitions and share
repurchases.
The agencies that assess our creditworthiness also consider capital adequacy levels when establishing our debt
ratings. Consistent with our intent to maintain our senior debt ratings in the “A” range, we maintain an aggregate
statutory capital and surplus level for our regulated subsidiaries that is significantly higher than the minimum
level regulators require. As of December 31, 2005, our regulated subsidiaries had aggregate statutory capital and
surplus of approximately $6.4 billion, which is significantly more than the aggregate minimum regulatory
requirements.
Stock Repurchase Program
Under our board of directors’ authorization, we maintain a common stock repurchase program. Repurchases may
be made from time to time at prevailing prices, subject to certain restrictions on volume, pricing and timing.
During 2005, we repurchased 53.6 million shares at an average price of approximately $48 per share and an
aggregate cost of approximately $2.6 billion. As of December 31, 2005, we had board of directors’ authorization
to purchase up to an additional 55.5 million shares of our common stock.
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