United Healthcare 2015 Annual Report Download - page 83

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The Company’s long-term debt obligations also included $164 million and $150 million of other financing
obligations, of which $47 million and $34 million were current as of December 31, 2015 and 2014, respectively.
Maturities of commercial paper and long-term debt for the years ending December 31 are as follows:
(in millions)
2016 .............................................................................. $ 6,630
2017 .............................................................................. 3,491
2018 .............................................................................. 2,607
2019 .............................................................................. 1,024
2020 .............................................................................. 1,952
Thereafter .......................................................................... 16,432
Commercial Paper and Revolving Bank Credit Facilities
Commercial paper consists of short-duration, senior unsecured debt privately placed on a discount basis through
broker-dealers. As of December 31, 2015, the Company’s outstanding commercial paper had a weighted-average
annual interest rate of 0.7%.
The Company has $3.0 billion five-year, $2.0 billion three-year and $1.0 billion 364-day revolving bank credit
facilities with 23 banks, which mature in December 2020, December 2018, and November 2016, respectively.
These facilities provide liquidity support for the Company’s commercial paper program and are available for
general corporate purposes. As of December 31, 2015, no amounts had been drawn on any of the bank credit
facilities. The annual interest rates, which are variable based on term, are calculated based on the London
Interbank Offered Rate (LIBOR) plus a credit spread based on the Company’s senior unsecured credit ratings. If
amounts had been drawn on the bank credit facilities as of December 31, 2015, annual interest rates would have
ranged from 1.2% to 1.7%.
Debt Covenants
The Company’s bank credit facilities contain various covenants, including requiring the Company to maintain a
debt to debt-plus-stockholders’ equity ratio of not more than 55%. The Company was in compliance with its debt
covenants as of December 31, 2015.
Interest Rate Swap Contracts
The Company uses interest rate swap contracts to convert a portion of its interest rate exposure from fixed rates
to floating rates to more closely align interest expense with interest income received on its variable rate financial
assets. The floating rates are benchmarked to LIBOR. The swaps are designated as fair value hedges on the
Company’s fixed-rate debt. Since the critical terms of the swaps match those of the debt being hedged, they are
considered to be highly effective hedges and all changes in the fair values of the swaps are recorded as
adjustments to the carrying value of the related debt with no net impact recorded on the Consolidated Statements
of Operations. Both the hedge fair value changes and the offsetting debt adjustments are recorded in interest
expense on the Consolidated Statements of Operations. The following table summarizes the location and fair
value of the interest rate swap fair value hedges on the Company’s Consolidated Balance Sheet:
Type of Fair Value Hedge Notional Amount Fair Value Balance Sheet Location
(in billions) (in millions)
December 31, 2015
Interest rate swap contracts ........... $ 5.1 $ 93 Other assets
11 Other liabilities
December 31, 2014
Interest rate swap contracts ........... $ 10.7 $ 62 Other assets
55 Other liabilities
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