Health Net 2005 Annual Report Download - page 61

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We recorded a $1.7 million pretax charge for lease termination expenses associated with the exit of certain
properties as part of the transition from our old TRICARE contracts to the TRICARE contract for the North
Region.
See Note 14 to our consolidated financial statements for further information on severance and related
benefit costs, asset impairments and lease termination costs.
2003 Charges
We recognized a pretax loss of $2.6 million related to the sales of corporate facility buildings for the year
ended December 31, 2003.
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 our noncurrent assets as of December 31, 2005.
See Note 14 to our consolidated financial statements for further information on asset impairments.
Net Gain on Sales of Businesses and Properties
The gains and (losses) recognized from divestitures made during the years ended December 31, 2005, 2004
and 2003 are summarized in the following table.
2005 2004 2003
(Dollars in millions)
Subacute subsidiaries .................................... $— $1.8 $—
Florida health plan ...................................... — (0.4) —
Dental and vision subsidiaries ............................. — (0.3) 7.8
Workers’ compensation services subsidiaries ................. — — 11.1
Net gain on sales of businesses and properties ............ $— $1.1 $18.9
2005 Divestitures
Effective February 28, 2005, we completed the sale of our wholly-owned subsidiaries Gem Holding
Corporation and Gem Insurance Company (the Gem Companies), to SafeGuard Health Enterprises, Inc. (the
Gem Sale). In connection with the Gem Sale, we received a promissory note of approximately $3.1 million,
which was paid in full in cash on March 1, 2005. We did not recognize any pretax gain or loss but did recognize
a $2.2 million income tax benefit related to the Gem Sale.
2004 Divestitures
On March 1, 2004, we completed the sale of two subacute subsidiaries, American VitalCare, Inc. and
Managed Alternative Care, Inc., to a subsidiary of Rehabcare Group, Inc. We received a payment of
approximately $11 million, subject to certain post-closing adjustments, and a $3 million subordinated promissory
note for which we recorded a full reserve.
Effective September 30, 2004, we entered into agreements (the Settlement Agreements) to settle certain
true-up adjustments under a stock purchase agreement and reinsurance agreement entered into in 2001 in
connection with the sale of our Florida health plan.
2003 Divestitures
On October 31, 2003, we completed the sales of our dental and vision subsidiaries, Health Net Dental and
Health Net Vision, to SafeGuard Health Enterprises, Inc. During the fourth quarter of 2004, we entered into a
settlement agreement to settle the true-up adjustments related to the sale of our dental and vision subsidiaries. In
connection with these sales, we received approximately $14.8 million in cash.
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