Health Net 2005 Annual Report Download - page 76

The fair value of our fixed rate borrowing as of December 31, 2005 was approximately $464 million, which
was based on mark-to-market quotations from a third-party provider. The following table presents the expected
cash outflows relating to market risk sensitive debt obligations as of December 31, 2005. These cash outflows
include both expected principal and interest payments consistent with the terms of the outstanding debt as of
December 31, 2005 prior to entering into the Swap Contracts.
2006 2007 2008 2009 2010 Thereafter Total
(Amounts in millions)
Fixed-rate borrowing:
Principal .............................. $— $— $— $— $— $400.0 $400.0
Interest ............................... 39.5 39.5 39.5 39.5 39.5 19.8 217.3
Valuation of interest rate swap contracts (a) . . 2.3 2.0 2.1 2.5 2.5 1.3 12.7
Cash outflow on fixed-rate borrowing ........... $41.8 $41.5 $41.6 $42.0 $42.0 $421.1 $630.0
(a) Expected cash outflow from Swap Contracts as of the most recent practicable date of January 26, 2006 is
$2.4 million, $2.3 million, $2.4 million, $2.7 million, $3.0 million and $1.5 million for 2006, 2007, 2008,
2009, 2010 and thereafter, respectively.
Item 8. Financial Statements and Supplementary Data.
The financial statements listed on the accompanying Index to Consolidated Financial Statements set forth on
page F-1 and covered by the Report of Independent Registered Public Accounting Firm are incorporated in this
Item 8 by reference and filed as part of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) that are designed to ensure that information required to be disclosed in the reports we
file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control objectives, and management
necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and
procedures.
As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision
and with the participation of our management, including our Chief Executive Officer and our Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of
the period covered by this report. Based upon the evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by this report, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the
reasonable assurance level as of the end of such period.
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