United Healthcare 2006 Annual Report Download - page 45

respectively. We believe the prudent use of debt optimizes our cost of capital and return on shareholders’ equity,
while maintaining appropriate liquidity.
As of December 31, 2006, our outstanding commercial paper had interest rates of approximately 5.3% to 5.5%.
On December 1, 2006, our Health Care Services business segment acquired the Student Insurance Division
(Student Resources) of The MEGA Life and Health Insurance Company through an asset purchase agreement.
Under the terms of the asset purchase agreement, we issued a 10-year, 5.4% promissory note for approximately
$95 million and paid approximately $1 million in cash in exchange for the net assets of Student Resources.
On February 24, 2006, our Health Care Services business segment acquired John Deere Health Care, Inc.
(JDHC). Under the terms of the purchase agreement, we paid approximately $515 million in cash, including
transaction costs, in exchange for all of the outstanding equity of JDHC. We issued commercial paper to finance
the JDHC purchase price. JDHC has been renamed UnitedHealthcare Services Company of the River Valley, Inc.
On December 20, 2005, the Company acquired PacifiCare. Under the terms of the agreement, PacifiCare
shareholders received 1.1 shares of UnitedHealth Group common stock and $21.50 in cash for each share of
PacifiCare common stock they owned. Total consideration issued for the transaction was approximately
$8.8 billion, composed of approximately 99.2 million shares of UnitedHealth Group common stock (valued at
approximately $5.3 billion based upon the average of UnitedHealth Group’s share closing price for two days
before, the day of and two days after the acquisition announcement date of July 6, 2005), approximately
$2.1 billion in cash, $960 million in cash paid to retire PacifiCare’s existing debt and UnitedHealth Group vested
common stock options with an estimated fair value of approximately $420 million issued in exchange for
PacifiCare’s outstanding vested common stock options.
On September 19, 2005, our Health Care Services business segment acquired Neighborhood Health Partnership
(NHP). Under the terms of the purchase agreement, we paid approximately $185 million in cash in exchange for
all of the outstanding equity of NHP. We issued commercial paper to finance the NHP purchase price.
On October 16, 2006, we executed a $7.5 billion 364-day revolving credit facility in order to ensure the
Company’s immediate and continued access to additional liquidity, if necessary. The credit facility is available
for working capital purposes as well as to pay or repay any outstanding borrowings of the Company. We have
entered into amendments to this credit facility to provide us with additional time to deliver to the lenders this
10-K and our quarterly reports on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006 and
our annual report on Form 10-K for the year ended December 31, 2006. As of December 31, 2006, we had no
amounts outstanding under our $7.5 billion credit facility.
In March 2006, we refinanced outstanding commercial paper by issuing $650 million of floating-rate notes due
March 2009, $750 million of 5.3% fixed-rate notes due March 2011, $750 million of 5.4% fixed-rate notes due
March 2016 and $850 million of 5.8% fixed-rate notes due March 2036. The floating-rate notes due March 2009
are benchmarked to the London Interbank Offered Rate (LIBOR) and had an interest rate of 5.5% at
December 31, 2006.
In December 2005, we amended and restated our $1.0 billion five-year revolving credit facility supporting our
commercial paper program. We increased the credit facility to $1.3 billion and extended the maturity date to
December 2010. We entered into amendments to our $1.3 billion credit facility to provide us with additional time
to deliver to the lenders our quarterly reports on Form 10-Q for the quarters ended June 30, 2006 and
September 30, 2006 and our annual report on Form 10-K for the year ended December 31, 2006, to obtain our
lenders’ agreement and acknowledgement that the delivery of a notice of default or notice of acceleration under
any indenture or credit agreement that is being contested by the Company in good faith does not cause a default
or event of default under the credit agreement, and to obtain a waiver of any potential default that may arise as a
result of our determination that our historical financial information should not be relied upon and as a result of
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