Health Net 2014 Annual Report Download - page 142

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-32
In connection with the Cognizant Transaction, we classified certain software system assets as held-for-sale. As of
December 31, 2014, we had classified software systems assets with a total net book value of $130.2 million as assets
held for sale. See Note 3 for more information regarding assets held for sale and the Cognizant Transaction.
Our depreciation expense was $27.1 million, $35.6 million and $27.9 million for the years ended December 31,
2014, 2013 and 2012, respectively.
Note 6—Financing Arrangements
Revolving Credit Facility
In October 2011, we entered into a $600 million unsecured revolving credit facility due in October 2016, which
includes a $400 million sublimit for the issuance of standby letters of credit and a $50 million sublimit for swing line
loans (which sublimits may be increased in connection with any increase in the credit facility described below). In
addition, we have the ability from time to time to increase the credit facility by up to an additional $200 million in the
aggregate, subject to the receipt of additional commitments. As of December 31, 2014, $100.0 million was outstanding
under our revolving credit facility and the maximum amount available for borrowing under the revolving credit facility
was $491.4 million (see "—Letters of Credit" below).
Amounts outstanding under our revolving credit facility bear interest, at the Company’s option, at either (a) the
base rate (which is a rate per annum equal to the greatest of (i) the federal funds rate plus one-half of one percent,
(ii) Bank of America, N.A.’s “prime rate” and (iii) the Eurodollar Rate (as such term is defined in the credit facility) for
a one-month interest period plus one percent) plus an applicable margin ranging from 45 to 105 basis points or (b) the
Eurodollar Rate plus an applicable margin ranging from 145 to 205 basis points. The applicable margins are based on
our consolidated leverage ratio, as specified in the credit facility, and are subject to adjustment following the
Company’s delivery of a compliance certificate for each fiscal quarter.
Our revolving credit facility includes, among other customary terms and conditions, limitations (subject to
specified exclusions) on our and our subsidiaries’ ability to incur debt; create liens; engage in certain mergers,
consolidations and acquisitions; sell or transfer assets; enter into agreements that restrict the ability to pay dividends or
make or repay loans or advances; make investments, loans, and advances; engage in transactions with affiliates; and
make dividends. In addition, we are required to be in compliance at the end of each fiscal quarter with a specified
consolidated leverage ratio and consolidated fixed charge coverage ratio. As of December 31, 2014, we were in
compliance with all covenants under the revolving credit facility.
Our revolving credit facility contains customary events of default, including nonpayment of principal or other
amounts when due; breach of covenants; inaccuracy of representations and warranties; cross-default and/or cross-
acceleration to other indebtedness of the Company or our subsidiaries in excess of $50 million; certain ERISA-related
events; noncompliance by the Company or any of our subsidiaries with any material term or provision of the HMO
Regulations or Insurance Regulations (as each such term is defined in the credit facility) in a manner that could
reasonably be expected to result in a material adverse effect; certain voluntary and involuntary bankruptcy events;
inability to pay debts; undischarged, uninsured judgments greater than $50 million against us and/or our subsidiaries
that are not stayed within 60 days; actual or asserted invalidity of any loan document; and a change of control. If an
event of default occurs and is continuing under the revolving credit facility, the lenders thereunder may, among other
things, terminate their obligations under the facility and require us to repay all amounts owed thereunder.
Letters of Credit
Pursuant to the terms of our revolving credit facility, we can obtain letters of credit in an aggregate amount of
$400 million and the maximum amount available for borrowing is reduced by the dollar amount of any outstanding
letters of credit. As of December 31, 2014 and 2013, we had outstanding letters of credit of $8.6 million and $7.5
million, respectively, resulting in a maximum amount available for borrowing of $491.4 million and $492.5 million,
respectively. As of December 31, 2014 and 2013, no amounts had been drawn on any of these letters of credit.