Health Net 2002 Annual Report Download - page 51

HEALTH NET, INC. | 49
Report of Independent Auditors
To the Board of Directors and Stockholders of
Health Net, Inc.
Woodland Hills, California
We have audited the accompanying consolidated balance sheets of Health Net, Inc. and subsidiaries (the “Company”) as of
December 31, 2002 and 2001, and the related consolidated statements of operations, stockholders’ equity, and cash flows
for each of the three years in the period ended December 31, 2002. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of
Health Net, Inc. and subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for
goodwill and other intangible assets upon adoption of the provisions of Statement of Financial Accounting Standards No.
142, “Goodwill and Other Intangible Assets.”
Los Angeles, California
February 13, 2003
Report of Management
The management of Health Net, Inc. (the “Company”) is responsible for the integrity and objectivity of the consolidated
financial information contained in this Annual Report. The consolidated financial statements and related information were
prepared in accordance with accounting principles generally accepted in the United States of America and include certain
amounts that are based on management’s best estimates and judgments.
The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s
disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15-14(c) under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”) as of a date within 90 days prior to the filing date of this Annual Report (the
“Evaluation Date”)). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s
disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the
Company (including its consolidated subsidiaries) required to be included in the Company’s reports filed or submitted under
the Exchange Act. Since the Evaluation Date, there have not been any significant changes in the Company’s internal controls
or in other factors that could significantly affect such controls.
The Company engaged Deloitte & Touche LLP as its independent auditors to audit the Company’s consolidated finan-
cial statements and to express their opinion thereon. Their audits include reviews and tests of the Company’s internal
controls to the extent they believe necessary to determine and conduct the audit procedures that support their opinion.
Members of that firm also have the right of full access to each member of management in conducting their audits. The
report of Deloitte & Touche LLP appears below.
The Company’s Board of Directors has an Audit Committee composed solely of independent directors. The Audit Committee
meets periodically with management, the internal auditors and Deloitte & Touche LLP to oversee and monitor the work of each
and to inquire of each as to their assessment of the performance of the others in their work relating to the Company’s financial
statements. Both the independent and internal auditors have, at all times, the right of full access to the Audit Committee, without
management present, to discuss any matter they believe should be brought to the attention of the Audit Committee.
Jay Gellert Marvin P. Rich
President and Chief Executive Officer Executive Vice President, Finance and Operations