Health Net 2001 Annual Report Download - page 17

EMPLOYEES
We currently employ approximately 9,800 employees, excluding temporary employees. These
employees perform a variety of functions, including provision of administrative services for employers,
providers and members; negotiation of agreements with physician groups, hospitals, pharmacies and
other health care providers; handling of claims for payment of hospital and other services; provision of
data processing services. Our employees are not unionized and we have not experienced any work
stoppage since our inception. We consider our relations with our employees to be very good.
OTHER INFORMATION/RECENT DEVELOPMENTS
DEBT OFFERING. On April 12, 2001, we completed our offering of $400 million aggregate
principal amount of 8.375 percent Senior Notes due in April 2011. The net proceeds of $395.1 million
from the Senior Notes were used to repay outstanding borrowings under our then-existing revolving
credit facility. On October 4, 2001, we completed an exchange offer for the Senior Notes in which the
outstanding Senior Notes were exchanged for an equal aggregate principal amount of new
8.375 percent Senior Notes due in 2011 that have been registered under the Securities Act of 1933, as
amended.
FLORIDA OPERATIONS. Effective August 1, 2001, we sold our Florida health plan, known as
Foundation Health, a Florida Health Plan, Inc., to Florida Health Plan Holdings II, L.L.C. In
connection with the sale, we received approximately $49 million, consisting of $23 million in cash and
approximately $26 million in the form of a secured six-year note bearing interest at a rate of eight
percent per annum. We also sold the corporate facility building used by our Florida health plan to
DGE Properties, LLC for $15 million, payable by a secured five-year note bearing interest at a rate of
eight percent per annum. We estimated and recorded a $76.1 million pretax loss on the sales of our
Florida health plan and the related corporate facility building during the second quarter ended June 30,
2001. Under the terms of the Florida sale agreement and certain reinsurance and indemnification
obligations of the Company, there will be a series of true-up processes that will take place through
2002 that could result in additional loss or gain recognition which was not able to be estimated as of
December 31, 2001.
CREDIT AGREEMENTS. We have two credit facilities with Bank of America, N.A., as
administrative agent, each governed by a separate credit agreement dated as of June 28, 2001. The
credit facilities, providing for an aggregate of $700 million in borrowings, consist of:
• a $175 million 364-day revolving credit facility; and
• a $525 million five-year revolving credit and competitive advance facility.
We established the credit facilities to refinance our then-existing credit facility and to finance any
lawful general corporate purposes, including acquisitions and working capital. The credit facilities allow
us to borrow funds:
• by obtaining committed loans from the group of lenders as a whole on a pro rata basis;
• by obtaining under the five-year facility loans from individual lenders within the group by way of
a bidding process;
• by obtaining under the five-year facility swingline loans in an aggregate amount of up to
$50 million that may be requested on an expedited basis; and
• by obtaining under the five-year facility letters of credit in an aggregate amount of up to
$200 million.
Repayment. The 364-day credit facility expires on June 27, 2002. We must repay all borrowings
under the 364-day credit facility by June 27, 2004. The five-year credit facility expires in June 2006, and
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