Health Net 2000 Annual Report Download - page 43

Notes to Consolidated Financial Statements HEALTH NET 41
NOTE 6– Notes Payable, Capital Leases
and Other Financing Arrangements
Notes payable, capital leases and other financing arrange-
ments comprised the following at December 31 (amounts
in thousands):
2000 1999
Revolving credit facility,
variable interest at
LIBOR plus 1.50% at
December 31, 2000,
unsecured $766,450 $1,039,250
Capital leases and
other notes payable 49 1,358
Total notes payable and
capital leases 766,499 1,040,608
Notes payable and
capital leases —
current portion 49 1,256
Notes payable and
capital leases —
noncurrent portion $766,450 $1,039,352
Revolving Credit Facility
The Company established in July 1997, a $1.5 billion
credit facility (the “Credit Facility”) with Bank of
America (as Administrative Agent for the Lenders thereto,
as amended in April, July, and November 1998, March
1999, and September 2000 (the “Amendments”)). All pre-
vious revolving credit facilities were terminated and
rolled into the Credit Facility. At the election of the
Company, and subject to customary covenants, loans are
initiated on a bid or committed basis and carry interest at
offshore or domestic rates, at the applicable LIBOR Rate
plus margin or the bank reference rate.Actual rates on
borrowings under the Credit Facility vary, based on com-
petitive bids and the Company’s unsecured credit rating
at the time of the borrowing.These rates were 7.56%
and 7.19% at December 31, 2000 and 1999, respectively.
Under the Amendments, the Company’s public issuer rat-
ing becomes the exclusive means of setting the facility
fee and borrowing rates under the Credit Facility. In
addition, certain covenants including financial covenants
were amended.The Credit Facility is available for five
years, until July 2002, but it may be extended under cer-
tain circumstances for two additional years.The weighted
average annual interest rate on the Company’s notes
payable and capital leases was approximately 7.92%,
6.78% and 6.30% for the years ended December 31,
2000, 1999 and 1998, respectively.The maximum amount
outstanding under the Credit Facility during 2000 was
$1.1 billion and the maximum commitment level is $1.36
billion at December 31, 2000.
As of December 31, 2000, the Company was in
compliance with the financial covenants of the Credit
Facility, as amended.
Scheduled principal repayments on notes payable,
capital leases and other financing arrangements are
$49,000 in 2001 and $766.5 million in 2002. No princi-
pal repayments are scheduled after 2002.
NOTE 7– Stock Option and
Employee Stock Purchase Plans
The Company has various stock option plans which
cover certain employees, officers and non-employee
directors, and an employee stock purchase plan under
which substantially all full-time employees of the
Company are eligible to participate.The stockholders
have approved these plans except for the 1998 Stock
Option Plan which was adopted by the Company’s
Board of Directors.
Under the 1989, 1990, 1991, 1992, 1993, 1997 and
1998 employee stock option plans and the non-employee
director stock option plan, the Company grants options
at prices at or above the fair market value of the stock on
the date of grant.The options carry a maximum term of
up to 10 years and in general vest ratably over three to
five years.The Company has reserved a total of 23.3 mil-
lion shares of its Class A Common Stock for issuance
under the stock option plans.
Under the Company’s Employee Stock Purchase
Plan, the Company provides employees with the oppor-
tunity to purchase stock through payroll deductions.
Eligible employees may purchase on a monthly basis the
Company’s Class A Common Stock at 85% of the lower
of the market price on either the first or last day of
each month.