Health Net 2004 Annual Report Download - page 31

health care cost trends, pricing trends, competition, earning or membership reports of particular industry participants, and acquisition
activity. There can be no assurances regarding the level or stability of our share price at any time or the impact of these or any other
factors on our stock price.
Natural disasters, including earthquakes, fires and floods, could severely damage or interrupt our systems and operations and
result in a material adverse effect on our business, financial condition and results of operations.
Natural disasters such as fire, flood, earthquake, tornado, power loss, virus, telecommunications failure, break-in or similar
event could severely damage or interrupt our systems and operations, result in loss of data, and/or delay or impair our ability to
service our members and providers. We have in place a disaster recovery plan which is intended to provide us with the ability to
maintain fully redundant systems for our operations in the event of a natural disaster utilizing various alternate sites provided by a
national disaster recovery vendor. However, there can be no assurance that such adverse effects will not occur in the event of a
disaster. We have encountered certain operational issues in connection with the implementation of our disaster recovery plan. We are
in the process of addressing those issues, however, there can be no assurance that our disaster recovery plan will prevent damage or
interruption of our systems and operations if a natural disaster were to occur either before or after those issues are resolved. Any such
disaster or similar event could have a material adverse effect on our business, financial condition and results of operations.
Terrorist and other malicious activity could cause us to incur unexpected health care and other costs.
We have updated our procedures for dealing with potential terrorist-related activity such as the September 11, 2001 attacks, the
anthrax cases in 2001 and potential future events involving malicious activity. Even with such updated procedures, there can be no
assurance that future acts of terrorism or other malicious activity will not occur or that such events will not materially or negatively
affect us, including through adverse effects on general economic conditions, industry- and company-specific economic conditions, the
price and availability of products or services, the availability or morale of employees, our operations and/or our facilities, or the
demand for our products and services.
Item 2. Properties.
We lease office space for our principal executive offices in Woodland Hills, California. Our executive offices, comprising
approximately 115,448 square feet, are occupied under a lease that was renewed in 2004 with new terms and conditions. As part of
the lease renewal, we amended our existing lease, which was scheduled to expire on December 31, 2004, and entered into a new lease
with a ten-year term. The new lease commenced on January 1, 2005 and expires December 31, 2014. A significant portion of our
California HMO operations are also housed in Woodland Hills, in a separate 333,954 square foot leased facility. This new two-
building facility was occupied at the end of 2001, under a lease that expires December 31, 2011. Combined rent and rent related
obligations for our Woodland Hills facilities were approximately $13.1 million in 2004.
We also lease an aggregate of approximately 490,615 square feet of office space in Rancho Cordova, California for certain
Health Plan Services and Government Contract operations. Our aggregate rent and rent related obligations under these leases were
approximately $8.9 million in 2004. These leases expire at various dates. We also lease a total of approximately 96,682 square feet of
office space in San Rafael and Pointe Richmond, California for certain specialty services operations.
In addition to the office space referenced above, we lease approximately 102 sites in 26 states, totaling approximately 1,388,750
square feet of space.
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