Health Net 2007 Annual Report Download - page 127

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
changed or 50% of the assets, cash flow or earning power of the Company is sold or otherwise transferred to any
other person, the Rights will “flip-over” and entitle each holder of a Right, other than an Acquiring Person or an
Adverse Person and such person’s affiliates and associates, to purchase, upon exercise at the then current
exercise price of such Right, such number of shares of common stock of the acquiring company which at the time
of such transaction would have a market value of two times such exercise price.
We may redeem the Rights at any time until the earlier of (i) 10 days following the date that any Acquiring
Person becomes the beneficial owner of 15% or more of the outstanding common stock and (ii) the date the
Rights expire at a price of $.01 per Right. In addition, at any time after a person becomes an Acquiring Person or
is determined to be and Adverse Person and prior to such person becoming (together with such person’s affiliates
and associates) the beneficial owner of 50% or more of the outstanding Common Stock, at the election of our
Board of Directors, the outstanding Rights (other than those beneficially owned by an Acquiring Person, Adverse
Person or an affiliate or associate of an Acquiring Person or Adverse Person) may be exchanged, in whole or in
part, for shares of Common Stock, or shares of preferred stock of the Company having essentially the same value
or economic rights as such shares.
Stock Repurchase Program
On October 26, 2007, our Board of Directors increased the size of our stock repurchase program by $250
million, bringing the total amount of the program to $700 million. Subject to Board approval, additional amounts
are added to the repurchase program from time to time based on exercise proceeds and tax benefits the Company
receives from the employee stock options. We repurchased 4,322,959 shares during the year ended December 31,
2007, for aggregate consideration of approximately $230 million.
We used net free cash available to fund the share repurchases. The remaining authorization under our stock
repurchase program as of December 31, 2007 was $346 million. As of December 31, 2007, we had repurchased
an aggregate of 29,771,752 shares of our common stock under our stock repurchase program at an average price
of $34.16 for aggregate consideration of approximately $1,017.0 million (which amount includes exercise
proceeds and tax benefits the Company had received from the exercise of employee stock options).
We may repurchase shares of our common stock under the stock repurchase program from time to time in
open market transactions, privately negotiated transactions, or through accelerated share repurchase programs, or
by any combination of such methods. The timing of any repurchases and the actual number of shares repurchased
will depend on a variety of factors, including our stock price, corporate and regulatory requirements, restrictions
under our debt obligations, and other market and economic conditions.
Our stock repurchase program does not have an expiration date. The stock purchase program may be
suspended or discontinued at any time. As of December 31, 2007, we have not terminated any repurchase
program prior to its expiration date.
Note 9—Employee Benefit Plans
Defined Contribution Retirement Plans
We and certain of our subsidiaries sponsor defined contribution retirement plans intended to qualify under
Section 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the Code). Participation in the
plans is available to substantially all employees who meet certain eligibility requirements and elect to participate.
Employees may contribute up to the maximum limits allowed by Sections 401(k) and 415 of the Code, with
Company contributions based on matching or other formulas. Our expense under these plans totaled
F-31