Health Net 2005 Annual Report Download - page 68

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As a result of the above requirements and other regulatory requirements, certain subsidiaries are subject to
restrictions on their ability to make dividend payments, loans or other transfers of cash to their parent companies.
Such restrictions, unless amended or waived, or unless regulatory approval is granted, limit the use of any cash
generated by these subsidiaries to pay our obligations. The maximum amount of dividends which can be paid by
our insurance company subsidiaries without prior approval of the applicable state insurance departments is
subject to restrictions relating to statutory surplus, statutory income and unassigned surplus.
Contractual Obligations
Our significant contractual obligations as of December 31, 2005 and their impact on our cash flows and
liquidity are summarized below for the years ending December 31:
Total 2006 2007 2008 2009 2010 Thereafter
(Dollars in Millions)
Long-term debt .............. $630.0 $41.8 $41.5 $41.6 $42.0 $42.0 $421.1
Operating leases ............. 371.9 67.5 64.3 85.8 38.2 32.3 83.8
Other purchase obligations ..... 34.5 25.4 3.6 2.7 2.3 0.5 —
Deferred compensation ........ 39.5 5.4 2.7 2.4 2.4 2.2 24.4
Estimated future payments for
pension and other benefits . . . 22.8 1.4 1.4 1.5 1.7 1.8 15.0(a)
(a) Represents estimated future payments from 2011 through 2015.
Operating Leases
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.
On June 30, 2005, we entered into the Lease Agreement in connection with the Sale-Leaseback Transaction.
See “—Liquidity and Capital Resources—Liquidity—Investing Activities” for additional information regarding
the Lease Agreement.
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, 2005. 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.
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