Health Net 2005 Annual Report Download - page 45

(2) Includes litigation, severance and related benefits, asset impairments and net (gain) loss on sales of business
and properties of $83.3 million, $31.7 million, $(2.5) million, $65.3 million and $152.1 million for 2005,
2004, 2003, 2002 and 2001, respectively.
(3) Includes $169 million of expenses associated with provider settlements.
(4) No cash dividends were declared in each of the years presented.
(5) Includes loss on settlement from disposition of discontinued operations of $89.1 million, net of tax. See
Note 3 to the consolidated financial statements.
(6) Includes cumulative effect of a change in accounting principle, net of tax, of $8.9 million as a result of
adopting SFAS No. 142 “Goodwill and Other Intangible Assets.”
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
CAUTIONARY STATEMENTS
The following discussion and other portions of this Annual Report on Form 10-K contain “forward-looking
statements” within the meaning of Section 21E of the Exchange Act, and Section 27A of the Securities Act,
regarding our business, financial condition and results of operations. These forward-looking statements involve
risks and uncertainties. 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,” “may,” “should,” “could,” “estimate” and “intend” and other
similar expressions are intended to identify forward-looking statements. Managed health care companies operate
in a highly competitive, constantly changing environment that is significantly influenced by, among other things,
aggressive marketing and pricing practices of competitors and regulatory oversight. Factors that could cause our
actual results to differ materially from those reflected in forward-looking statements include, but are not limited
to, the factors set forth under “Item 1A. Risk Factors” and the risks discussed in our other filings from time to
time 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 projections, estimates or other forward-looking statements
relating to us. In addition, those 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 any forward-looking statements, which reflect management’s analysis, judgment, belief
or expectation only as of the date thereof. Except as may be required by law, we undertake no obligation to
publicly update or revise any forward-looking statements to reflect events or circumstances that arise after the
date of this report.
This Management’s Discussion and Analysis of Financial Conditions and Results of Operation should be
read in its entirety since it contains detailed information that is important to understanding Health Net, Inc. and
its subsidiaries’ results of operations and financial condition.
OVERVIEW
General
We are an integrated managed care organization that delivers managed health care services through health
plans and government sponsored managed care plans. We are among the nation’s largest publicly traded
managed health care companies. Our mission is to help people be healthy, secure and comfortable. Our health
maintenance organizations (HMOs), preferred provider organizations (PPOs) and point-of-service (POS) and
government contracts subsidiaries provide health benefits to approximately 6.3 million individuals in 27 states
and the District of Columbia through group, individual, Medicare, Medicaid, TRICARE and Veterans Affairs
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