Health Net 2005 Annual Report Download - page 134

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HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2003 Charges
During 2002, we recorded a pretax $2.4 million estimated loss on assets held for sale related to a corporate
facility building in Trumbull, Connecticut consisting entirely of non-cash write-downs of a building and building
improvements. On January 26, 2004, we sold these assets for $6.9 million in cash and recognized a pretax loss of
$0.7 million as an asset impairment charge in our consolidated statement of operations for the year ended
December 31, 2003.
During 2003, we recognized a pretax $1.9 million impairment on a corporate facility building in
Carmichael, California consisting entirely of non-cash write-downs of building and building improvements. The
carrying value of this facility was $1.1 million as of December 31, 2003. On April 12, 2004, we sold these assets
for $1.3 million in cash and recognized a pretax gain of $0.2 million in our consolidated statement of operations
for the year ended December 31, 2004.
During 2003, we recognized a pretax $13.8 million impairment on an investment we had in a company that
provides online solutions connecting health plans, physicians and hospitals. The carrying value of this investment
after the impairment is $1.2 million and is included in noncurrent assets on our consolidated balance sheet as of
December 31, 2005.
Note 15—Segment Information
We currently operate within two reportable segments: Health Plan Services and Government Contracts. Our
Health Plan Services reportable segment includes the operations of our health plans in the states of Arizona,
California, Connecticut, New Jersey, New York and Oregon, the operations of our health and life insurance
companies and our behavioral health and pharmaceutical services subsidiaries.
Our Government Contracts reportable segment includes government-sponsored managed care plans through
the TRICARE program and other health care-related government contracts. Our Government Contracts segment
administers one large, multi-year managed health care government contract and other health care related
government contracts.
We evaluate performance and allocate resources based on segment pretax income. The accounting policies
of the reportable segments are the same as those described in the summary of significant accounting policies (see
Note 2), except that intersegment transactions are not eliminated. We include investment and other income and
expenses associated with our corporate shared services and other costs in determining Health Plan Services
segment’s pretax income to reflect the fact that these revenues and expenses are primarily used to support Health
Plan Services reportable segment. Amounts for 2004 and 2003 have been reclassified to conform to this 2005
presentation.
Litigation, severance and related benefits, asset impairments and net gain on sale of businesses and
properties are excluded from our measurement of segment performance since they are not managed within either
of our reportable segments.
F-46