UnitedHealth Group (UNH)

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $22.1 billion at September 30, 2007. Total cash and investments increased by $1.5 billion since December 31, 2006, primarily due to strong operating cash flows, funds received from Centers for Medicare and Medicaid Services (CMS) under the Medicare Part D program in advance of required benefit payments and the issuance of debt, partially offset by share repurchases, repayments of debt and capital expenditures.

As further described under Regulatory Capital and 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. At September 30, 2007, approximately $1.5 billion of our $22.1 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash flows from operating activities were $4.8 billion for the nine months ended September 30, 2007, representing a decrease over the comparable 2006 period of $119 million, or 2%, due to a reduction in working capital cash flows of $851 million partially offset by increases of $454 million in net income and $278 million in noncash items. The decrease in working capital cash flows was driven by lower medical cost payable growth in 2007 primarily related to Ovations Medicare programs as the 2006 operating cash flows benefited from the initial establishment of the medical costs payable balance related to the Medicare Part D program.

As a result of our announcement in November 2006 that our previously issued financial statements should no longer be relied upon, we were unable to issue shares registered under the Securities Act of 1933 (1933 Act), under our employee stock plans and we temporarily suspended any exercise of stock options until we became current in our Securities and Exchange Commission (SEC) filings in March 2007. To address the impact to holders of options that would expire or terminate during the suspension period, the Company offered cash settlement of the affected awards. This resulted in additional stock compensation expense for the fourth quarter of 2006 of $31 million. This amount was paid in full during the first quarter of 2007.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $24.5 billion at June 30, 2007. Total cash and investments increased by $3.9 billion since December 31, 2006, primarily due to strong operating cash flows, funds received from CMS under the Medicare Part D program in advance of required benefit payments and the issuance of debt, partially offset by share repurchases, repayments on debt and capital expenditures.

As further described under Regulatory Capital and 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. At June 30, 2007, approximately $2.9 billion of our $24.5 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

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Cash flows from operating activities were $4.3 billion for the six months ended June 30, 2007, representing a decrease over the comparable 2006 period of $321 million, or 7%, due to a reduction in working capital cash flows of $855 million partially offset by an increase of $534 million in net income excluding depreciation, amortization and other noncash items. The decrease in working capital cash flows resulted primarily from growth in the Medicare Part D business and the related risk-share receivables in the first half of 2007. Additionally, first quarter 2006 operating cash flows benefited from the initial establishment of the medical costs payable balance related to this program. Operating cash flows for the six months ended June 30, 2007 and 2006 included $1.6 billion and $1.5 billion, respectively, of advance receipts related to the July Medicare premium payments from CMS.

As a result of our announcement in November 2006 that our previously issued financial statements should no longer be relied upon, we were unable to issue shares registered under the Securities Act of 1933, as amended, under our employee stock plans and we temporarily suspended any exercise of stock options until we became current in our SEC filings in March 2007. To address the impact to holders of options that would expire or terminate during the suspension period, the Company offered cash settlement of the affected awards. This resulted in additional stock compensation expense for the fourth quarter of 2006 of $31 million. This amount was paid in full during the first quarter of 2007.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $22.9 billion at March 31, 2007. Total cash and investments increased by $2.3 billion since December 31, 2006, primarily due to strong operating cash flows and funds received from CMS under the Medicare Part D program in advance of required benefit payments, partially offset by share repurchases, repayments on debt and capital expenditures.

As further described under Regulatory Capital and 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. At March 31, 2007, approximately $1.5 billion of our $22.9 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash flows from operating activities were $2.6 billion in the first quarter of 2007, representing a decrease over the comparable 2006 period of $302 million, or 10%, due to a reduction in working capital of $633 million partially offset by an increase of $331 million in net income excluding depreciation, amortization and other noncash items. The decrease in working capital resulted primarily from growth in the Medicare Part D business and the related risk-share receivables in the first quarter of 2007. Additionally, first quarter 2006 operating cash flows benefited from the initial establishment of the medical costs payable balance related to this program. First quarter 2007 and 2006 operating cash flows included $1.5 billion and $1.3 billion, respectively, of advanced receipts related to the April Medicare premium payments from CMS.

As a result of our announcement in November 2006 that our previously issued financial statements should no longer be relied upon, we were unable to issue shares registered under the Securities Act of 1933, as amended, under our employee stock plans and we temporarily suspended any exercise of stock options until we became current in our SEC filings. To address the impact to holders of options that would expire or terminate during the suspension period, the Company offered cash settlement of the affected awards. This resulted in additional stock compensation expense for the fourth quarter of 2006 of $31 million. This amount was paid in full during the first quarter of 2007.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $19.1 billion at September 30, 2006. Total cash and investments increased by $4.1 billion since December 31, 2005, primarily due to strong operating cash flows, decreased cash used in acquisitions, increased debt levels and the temporary suspension of repurchasing shares under our common stock repurchase program, partially offset by decreased issuances of common stock, and net purchases of investments.

As further described under Regulatory Capital and 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. At September 30, 2006, approximately $956 million of our $19.1 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash flows from operating activities were $4.9 billion for the nine months ended September 30, 2006, representing an increase over the comparable 2005 period of $1.4 billion, or 40%. The increase in operating cash flows resulted primarily from an increase of $772 million in net income excluding depreciation, amortization and other noncash items. Additionally, operating cash flows increased by $632 million due to cash generated by changes in working capital balances.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $17.6 billion at March 31, 2006. Total cash and investments increased by $2.6 billion since December 31, 2005, primarily due to strong operating cash flows, increased debt levels and funds received from CMS under the Medicare Part D program in advance of required benefit payments, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At March 31, 2006, approximately $290 million of our $17.6 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash flows from operating activities were $2.9 billion in the first quarter of 2006, representing an increase over the comparable 2005 period of $1.8 billion, or 154%. The increase in operating cash flows resulted primarily from an increase in unearned premiums due to the receipt of the $1.3 billion April 2006 Medicare premium payment from the CMS in March 2006. The remainder of the increase was due to other working capital improvements and an increase of $65 million in net income excluding depreciation, amortization and other noncash items.

Cash and Investments

Cash flows from operating activities were $6.5 billion in 2006, an increase over $4.1 billion in 2005. The increase in operating cash flows resulted primarily from an increase of $1.3 billion in net income prior to

depreciation, amortization and other noncash items as well as an increase of approximately $1.1 billion in cash flows generated from working capital changes. We generated operating cash flows from working capital changes of $1.6 billion in 2006 and $412 million in 2005. The year-over-year increase primarily resulted from the Company receiving twelve monthly Medicare premium payments during 2006 from CMS rather than the eleven monthly payments received in 2005, positively impacting the change in reported operating cash flows by $275 million, along with growth in medical payables during 2006 compared to 2005 primarily driven by overall growth of the insured business. Additionally, there was an increase in accrued taxes payable due largely to an increase in pre-tax earnings.

We maintained a strong financial condition and liquidity position, with cash and investments of $20.6 billion at December 31, 2006. Total cash and investments increased by $5.6 billion since December 31, 2005, primarily due to strong operating cash flows, cash received from debt and common stock issuances, and cash and investments acquired through businesses acquired since the beginning of 2006, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At December 31, 2006, approximately $1.9 billion of our $20.6 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $19.0 billion at June 30, 2006. Total cash and investments increased by $4.0 billion since December 31, 2005, primarily due to strong operating cash flows, increased debt levels and funds received from CMS under the Medicare Part D program in advance of required benefit payments, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At June 30, 2006, approximately $750 million of our $19.0 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

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Cash flows from operating activities were $4.6 billion for the six months ended June 30, 2006, representing an increase over the comparable 2005 period of $2.2 billion, or 94%. The increase in operating cash flows resulted primarily from an increase in unearned premiums due to the receipt of the $1.5 billion July 2006 Medicare premium payment from CMS in June 2006. The remainder of the increase was due to $407 million in other working capital improvements and an increase of $311 million in net income excluding depreciation, amortization and other noncash items.

Cash and Investments

We maintained a strong financial condition and liquidity position, with cash and investments of $17.6 billion at March 31, 2006. Total cash and investments increased by $2.6 billion since December 31, 2005, primarily due to strong operating cash flows, increased debt levels and funds received from CMS under the Medicare Part D program in advance of required benefit payments, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At March 31, 2006, approximately $290 million of our $17.6 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

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Cash flows from operating activities were $2.9 billion in the first quarter of 2006, representing an increase over the comparable 2005 period of $1.8 billion, or 154%. The increase in operating cash flows resulted primarily from an increase in unearned premiums due to the receipt of the $1.3 billion April 2006 Medicare premium payment from the Centers for Medicare and Medicaid Services (CMS) in March 2006. The remainder of the increase was due to other working capital improvements and an increase of $70 million in net income excluding depreciation, amortization and other noncash items.

Cash and Investments

Cash flows from operating activities were $4.3 billion in 2005, an increase over $4.1 billion in 2004. The increase in operating cash flows resulted primarily from an increase of $834 million in net income prior to depreciation, amortization and other noncash items partially offset by a decrease of $643 million in cash flows generated from working capital changes. We generated operating cash flows from working capital changes of $406 million in 2005 and $1,049 million in 2004. The year-over-year decrease primarily resulted from the Company receiving only eleven monthly Medicare premium payments during 2005 from the Centers for Medicare and Medicaid Services (CMS) rather than the twelve monthly payments received in 2004, negatively impacting the change in reported operating cash flows by $375 million. Additionally, there was reduced growth in medical payables during 2005 compared to 2004 due in part to an increase in electronic claim submissions and other disbursement process efficiencies.

We maintained a strong financial condition and liquidity position, with cash and investments of $15.0 billion at December 31, 2005. Total cash and investments increased by $2.7 billion since December 31, 2004, primarily due to cash and investments acquired through businesses acquired since the beginning of 2005, strong operating cash flows and cash received from debt issuances, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At December 31, 2005, approximately $270 million of our $15.0 billion of cash and investments was held by non-regulated subsidiaries and available for general corporate use, including acquisitions and share repurchases.

Cash and Investments

Cash flows from operating activities were $3.7 billion in the nine months ended September 30, 2005, representing an increase over the comparable 2004 period of $809 million, or 28%. This increase in operating cash flows resulted primarily from an increase of $682 million in net income excluding depreciation, amortization and other noncash items. Additionally, operating cash flows increased by $127 million due to cash generated by working capital changes.

We maintained a strong financial condition and liquidity position, with cash and investments of $13.7 billion at September 30, 2005. Total cash and investments increased by $1.5 billion since December 31, 2004, primarily due to strong operating cash flows and to a lesser extent increased debt levels, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures. Additionally, we have begun to accumulate funds that will be used to retire PacifiCare debt of approximately $900 million at closing of the acquisition.

As further described under Regulatory Capital and 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. At September 30, 2005, approximately $470 million of our $13.7 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash and Investments

Cash flows from operating activities were $2.5 billion in the six months ended June 30, 2005, representing an increase over the comparable 2004 period of $570 million, or 30%. This increase in operating cash flows resulted primarily from an increase of $522 million in net income excluding depreciation, amortization and other noncash items. Additionally, operating cash flows increased by $48 million due to cash generated by working capital changes.

We maintained a strong financial condition and liquidity position, with cash and investments of $12.8 billion at June 30, 2005. Total cash and investments increased by $520 million since December 31, 2004, primarily due to strong operating cash flows and increased debt levels, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At June 30, 2005, approximately $305 million of our $12.8 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash and Investments

Cash flows from operating activities were $1.2 billion in the first quarter of 2005, representing an increase over the comparable 2004 period of $296 million, or 33%. This increase in operating cash flows resulted primarily from an increase of $246 million in net income excluding depreciation, amortization and other noncash items. Additionally, operating cash flows increased by $50 million due to cash generated by working capital changes, driven largely by increases in medical costs payable. As premium revenues and related medical costs increase, we typically generate incremental operating cash flows because we collect premium revenues in advance of the claim payments for related medical costs.

We maintained a strong financial condition and liquidity position, with cash and investments of $12.6 billion at March 31, 2005. Total cash and investments increased by $310 million since December 31, 2004, primarily due to strong operating cash flows and increased debt levels, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At March 31, 2005, approximately $180 million of our $12.6 billion of cash and investments was held by non-regulated subsidiaries and was available for general corporate use, including acquisitions and share repurchases.

Cash and Investments

Cash flows from operating activities were $4.1 billion in 2004, representing an increase over 2003 of $1.1 billion, or 38%. This increase in operating cash flows resulted primarily from an increase of $871 million in net income excluding depreciation, amortization and other noncash items. Additionally, operating cash flows increased by $261 million due to cash generated by working capital changes, driven in part by improved cash collections leading to decreases in accounts receivable and increases in unearned premiums, and an increase in medical costs payable. As premium revenues and related medical costs increase, we generate incremental operating cash flows because we collect premium revenues in advance of the claim payments for related medical costs.

We maintained a strong financial condition and liquidity position, with cash and investments of $12.3 billion at December 31, 2004. Total cash and investments increased by $2.8 billion since December 31, 2003, primarily due to $2.4 billion in cash and investments acquired in the Oxford and MAMSI acquisitions and strong operating cash flows, partially offset by common stock repurchases, cash paid for business acquisitions and capital expenditures.

As further described under Regulatory Capital and 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. At December 31, 2004, approximately $227 million of our $12.3 billion of cash and investments was held by non-regulated subsidiaries. Of this amount, approximately $37 million was segregated for future regulatory capital needs and the remainder was available for general corporate use, including acquisitions and share repurchases.