Health Net 2004 Annual Report Download - page 62

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Contractual Obligations
Our significant contractual obligations as of December 31, 2004 and their impact on our cash flows and liquidity are
summarized below for the years ending December 31:
Operating Leases
Total
2005
2006
2007
2008
2009
There-
after
(Dollars in Millions)
Long-term debt
$400.0
—
—
—
$400.0
Operating leases
260.4
$43.6
$42.2
$39.4
$32.0
$27.3
75.9
Other purchase obligations
35.7
22.0
11.4
2.1
0.2
Deferred compensation
37.8
2.7
4.6
2.3
1.9
1.5
24.8
Estimated future payments for pension and other
benefits
17.8
1.2
1.3
1.3
1.4
1.4
11.2(a)
(a) Represents estimated future payments from 2010 through 2014.
We lease office space under various operating leases. Certain leases are cancelable with substantial penalties. See “Item 2.
Properties” for additional information regarding our leases.
Other Purchase Obligations
Other purchase obligations include payments due under agreements for goods or services that are enforceable and legally
binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or
variable price provisions; and the approximate timing of the transaction. We have included in the table set forth under the heading
“Contractual Obligations” above, obligations related to a three-year pharmacy benefit services agreement, a five-year agreement for a
nurse advice line and other related services, and a five-year agreement for a disease and condition management services.
We have excluded from such table amounts already recorded in our current liabilities on our consolidated balance sheet as of
December 31, 2004. We have also excluded from such table various contracts we have entered into with our health care providers,
health care facilities, the federal government and other contracts that we have entered into for the purpose of providing health care
services. We have excluded those contracts that allow for cancellation without significant penalty, obligations that are contingent
upon achieving certain goals and contracts for goods and services that are fulfilled by vendors within a short time horizon and within
the normal course of business.
The future contractual obligations in the contractual obligations table are estimated based on information currently available.
The timing of and the actual payment amounts may differ based on actual events.
Off-Balance Sheet Arrangements
As of December 31, 2004, we had no off-balance sheet arrangements as defined under Regulation S-K 303(a)(4).
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of
America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. Principal areas requiring the use of estimates
include revenue
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