Health Net 2014 Annual Report Download - page 92

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Customer funds administered include pass-through items and items accounted for under deposit accounting and
are comprised of health care cost payments and reimbursements for the T-3 contract, catastrophic reinsurance subsidy,
low-income member cost sharing subsidy and the coverage gap discount under the Medicare Part D program, and pass-
through items related to our Medicaid program, including inter-governmental transfers, and the ACA premium
stabilization program. See Note 2 to our consolidated financial statements for more information.
Year Ended December 31, 2013 Compared to Year Ended December 31, 2012
Net cash provided by financing activities decreased by $93.3 million for the year ended December 31, 2013 as
compared to the year ended December 31, 2012 primarily due to a $47.7 million decrease in checks outstanding and a
$38.1 million decrease in cash from customer funds administered.
Capital Structure
Our debt-to-total capital ratio was 22.6 percent as of December 31, 2014 compared with 23.5 percent as of
December 31, 2013. This decrease is due to an increase in stockholders' equity primarily resulting from net income, an
increase in additional paid-in capital due to stock option exercises, the vesting of certain equity awards and share-based
compensation expense, and a decrease in accumulated other comprehensive loss, partially offset by an increase in
treasury stock due to shares repurchased under the Company’s stock repurchase program and shares withheld in
connection with the exercise and vesting of equity awards.
Stock Repurchase Program
On May 2, 2011, our Board of Directors authorized our stock repurchase program pursuant to which a total of
$300 million of our outstanding common stock could be repurchased. On March 8, 2012, our Board of Directors
approved a $323.7 million increase to our stock repurchase program. During the year ended December 31, 2014, we
repurchased 3.0 million shares of our common stock for aggregate consideration of $137.8 million under our stock
repurchase program.
On December 16, 2014, our Board of Directors approved another increase to our stock repurchase program,
which, when taken together with the remaining authorization at that time, brought our total authorization up to $400.0
million. As of December 31, 2014, the remaining authorization under our stock repurchase program was $400.0 million.
As of January 31, 2015, we had repurchased 1.1 million shares of our common stock for aggregate consideration
of $57.7 million. We primarily funded these repurchases through our revolving credit facility. For additional
information on our stock repurchase program, see "—Revolving Credit Facility" below and Note 9 to our consolidated
financial statements.
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). As of February 23, 2015, we had $165 million in borrowings
outstanding under our revolving credit facility. This increase in outstanding borrowings was primarily driven by draws
on our revolving credit facility to fund repurchases of our common stock through our stock repurchase program.
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