United Healthcare 2008 Annual Report Download - page 54

Capital Resources
As of December 31, 2008 and December 31, 2007, we had commercial paper and long-term debt outstanding of
$12.8 billion and $11.0 billion, respectively.
The availability of financing in the form of debt or equity is influenced by many factors, including our
profitability, operating cash flows, debt levels, credit ratings, debt covenants and other contractual restrictions,
regulatory requirements and economic and market conditions. For example, a significant downgrade in our credit
ratings or conditions in the capital markets may increase the cost of borrowing for us or limit our access to
capital. We have therefore adopted strategies and actions toward maintaining financial flexibility to mitigate the
impact of such factors on our ability to raise capital.
Cash, Cash Equivalents and Investments. We maintained a highly liquid position, with cash, cash equivalents
and investments of $21.6 billion as of December 31, 2008. As further described under “Dividend Restrictions,”
many of our subsidiaries are subject to various government regulations that restrict the timing and amount of
dividends and other distributions that may be paid to their parent companies. As of December 31, 2008,
approximately $865 million of our $21.6 billion of cash and investments was held by non-regulated subsidiaries
and was available for general corporate use, including acquisitions and share repurchases.
Shelf Registration. In February 2008, we filed a universal S-3 shelf registration statement with the U.S.
Securities and Exchange Commission (SEC) registering an unlimited amount of debt securities.
Credit Ratings. Our credit ratings at December 31, 2008 were as follows:
Moody’s Standard & Poor’s Fitch
Ratings Outlook Ratings Outlook Ratings Outlook
Senior Unsecured Debt ........................ Baa1 Stable A- Negative A- Negative
Commercial Paper ............................ P-2 n/a A-2 n/a F1 n/a
See Item 1A, “Risk Factors,” for a discussion of our risks related to downgrades in our credit ratings.
Debt Covenants. Our debt arrangements and credit facilities contain various covenants, the most restrictive of
which require us to maintain a debt-to-total-capital ratio below 50%. Our debt-to-total-capital ratio (calculated as
the sum of commercial paper and debt divided by the sum of commercial paper, debt and shareholders’ equity)
was 38.1% and 35.4% as of December 31, 2008 and December 31, 2007, respectively. We were in compliance
with the requirements of all debt covenants as of December 31, 2008. In August 2006, we received a purported
notice of default from persons claiming to hold our 5.8% Senior Unsecured Notes due March 15, 2036 alleging a
violation of the indenture governing those debt securities. This followed our announcement that we would delay
filing our quarterly report on Form 10-Q for the quarter ended June 30, 2006. See Note 15 of Notes to the
Consolidated Financial Statements for a discussion of the proceeding regarding the purported default.
Bank Credit Facilities. In November 2008, we entered into a $750 million 364-day revolving bank credit facility
which replaced our $1.5 billion 364-day revolving bank credit facility entered into in November 2007. The
interest rate is variable based on term and amount and is calculated based on LIBOR plus a spread. At
December 31, 2008, the interest rate ranged from 2.9% to 4.3%.
In May 2007, we amended and restated our $1.3 billion five-year revolving bank credit facility which included
increasing the capacity. There is currently $2.5 billion available under this credit facility which matures in May
2012. The interest rate is variable based on term and amount and is calculated based on LIBOR plus a spread. At
December 31, 2008, the interest rate ranged from 0.6% to 2.0%.
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