Health Net 2011 Annual Report Download - page 122

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
connection with the then pending Northeast Sale. We also classified the Acquired Companies’ assets and
liabilities as held for sale; therefore, we were required to measure these assets and liabilities at the lower of
carrying value or fair value less cost to sell. As a result, in the year ended December 31, 2009, we recorded
goodwill impairment of $137.0 million, impairments of other intangible assets of $6.3 million and impairments
of property and equipment of $31.6 million.
The carrying amount of goodwill by reporting unit is as follows:
Western
Region
Operations
Northeast
Operations Total
(Dollars in millions)
Balance as of December 31, 2009 ........................................... $605.9 $ 6.0 $611.9
Impairment related to Northeast Operations ................................... — (6.0) (6.0)
Balance as of December 31, 2010 ........................................... $605.9 $— $605.9
Balance as of December 31, 2011 ........................................... $605.9 $— $605.9
The intangible assets that continue to be subject to amortization using the straight-line method over their
estimated lives are as follows:
Gross
Carrying
Amount
Accumulated
Amortization
Net
Balance
Weighted
Average Life
(in years)
(Dollars in millions)
As of December 31, 2011:
Provider networks ........................................ $40.5 $(33.6) $ 6.9 19.4
Customer relationships and other ............................ 29.5 (15.7) 13.8 11.1
$70.0 $(49.3) $20.7
As of December 31, 2010:
Provider networks ........................................ $40.5 $(32.6) $ 7.9 19.4
Customer relationships and other ............................ 29.5 (13.2) 16.3 11.1
$70.0 $(45.8) $24.2
The amortization expense was $3.5 million, $3.8 million and $10.7 million for the years ended
December 31, 2011, 2010 and 2009, respectively.
Estimated annual pretax amortization expense for other intangible assets for each of the next five years
ending December 31 is as follows (dollars in millions):
Year Amount
2012...................................................................... $3.4
2013...................................................................... 3.4
2014...................................................................... 2.8
2015...................................................................... 2.6
2016...................................................................... 2.0
Policy Acquisition Costs
Policy acquisition costs are those variable costs that relate to the acquisition of new and renewal commercial
health insurance business. Such costs include broker commissions, costs of policy issuance and underwriting, and
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