Health Net 2001 Annual Report Download - page 21

(the ‘‘2001 Plan’’). Under the 2001 Plan, we decided on enterprise-wide staff reductions and
consolidations of certain administrative, financial and technology functions. We recorded pretax
restructuring charges of $79.7 million in connection with the 2001 Plan during the third quarter ended
September 30, 2001 (the ‘‘2001 Charge’’).
The 2001 Charge included severance and benefits related costs of $43.3 million in connection with
the enterprise-wide staff reductions. These reductions include the elimination of 1,517 positions
throughout all of our functional groups, divisions and corporate offices within the Company.
The 2001 Charge also included asset impairment charges of $27.9 million consisting entirely of
non-cash write downs of equipment, building improvements and software application and development
costs; charges of $5.1 million related to the termination of lease obligations and non-cancelable lease
costs for excess office space resulting from streamlined operations and consolidation efforts; and
charges of $3.4 million related to costs associated with consolidating certain information technology
systems and functions and other activities which are expected to be completed in the first quarter of
2002. No changes to the 2001 Plan are expected.
We plan on funding the expected future cash outlays with cash flows from operations. We expect
the 2001 Plan to be substantially completed by September 30, 2002. As of December 31, 2001, 916 of
the 1,517 positions have been eliminated. It is anticipated that elimination of the remaining 601
positions will be completed by September 30, 2002.
FHC MERGER. Effective January 1, 2001, Health Net, Inc. merged its wholly-owned subsidiary,
Foundation Health Corporation, with and into Health Net, Inc., thereby terminating the separate
existence of Foundation Health Corporation.
CAUTIONARY STATEMENTS
In connection with the ‘‘safe harbor’’ provisions of the Private Securities Litigation Reform Act of
1995, we are hereby filing cautionary statements identifying important risk factors that could cause our
actual results to differ materially from those projected in ‘‘forward-looking statements’’ of the Company
made by or on behalf of the Company, within the meaning of Section 21E of the Securities Exchange
Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. All statements
other than statements of historical information provided or incorporated by reference herein may be
deemed to be forward-looking statements. Without limiting the foregoing, the words ‘‘believes’’,
‘‘anticipates’’, ‘‘plans’’, ‘‘expects’’, and similar expressions are intended to identify forward-looking
statements. Factors that could cause actual results to differ materially from those reflected in the
forward-looking statements include, but are not limited to, the factors set forth below and the risks
discussed in our other filings with the SEC.
We wish to caution readers that these factors, among others, could cause our actual financial or
enrollment results to differ materially from those expressed in any projected, estimated or forward-
looking statements relating to the Company. The following factors should be considered in conjunction
with any discussion of operations or results by us or our representatives, including any forward-looking
discussion, as well as comments contained in press releases, presentations to securities analysts or
investors, or other communications by us. You should not place undue reliance on these forward-
looking statements, which reflect management’s analysis, judgment, belief or expectation only as of the
date hereof.
In making these statements, we are not undertaking to address or update each factor in future
filings or communications regarding our business or results, nor are we undertaking to address how any
of these factors may have caused changes to matters discussed or information contained in previous
filings or communications. In addition, certain of these factors may have affected our past results and
may affect future results.
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