Health Net 2011 Annual Report Download - page 156

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2009
Western Region
Operations
Government
Contracts
Northeast
Operations
Corporate/
Other/
Eliminations Total
(Dollars in millions)
Revenues from external sources ........... $9,850.8 $3,104.7 $2,589.8 $ — $15,545.3
Intersegment revenues ................... 51.2 0.4 0.3 (51.9) —
Net investment income .................. 67.6 — 38.3 — 105.9
Administrative services fees and other
income ............................. 38.7 — 23.3 — 62.0
Interest expense ........................ 41.0 — (0.1) — 40.9
Depreciation and amortization ............ 36.7 — 16.3 — 53.0
Share-based compensation expense ........ 9.6 1.2 0.9 — 11.7
Segment pretax income (loss) ............. 270.3 168.6 (165.6) (298.5) (25.2)
Our health plan services premium revenue by line of business is as follows:
Year Ended December 31,
2011 2010 2009
(Dollars in millions)
Commercial premium revenue ..................................... $ 5,945.9 $5,663.9 $ 5,721.1
Medicare premium revenue ........................................ 2,922.7 3,028.5 3,060.7
Medicaid premium revenue ........................................ 1,493.3 1,233.3 1,069.0
Total Western Region Operations health plan services premiums ...... 10,361.9 9,925.7 9,850.8
Total Northeast Operations health plan services premiums ........... 2.4 71.2 2,589.8
Total health plan services premiums ................................. $10,364.3 $9,996.9 $12,440.6
Note 15—Variable Interest Entities
Effective January 1, 2010, we adopted the new accounting rules on consolidation of variable interest entities
(VIE). In order to determine if the Company is the primary beneficiary and must consolidate the entity, we
evaluate the following:
• the structure and purpose of the entity;
• the risks and rewards created by and shared through the entity; and
• the entity’s ability to direct the activities, receive its benefits and absorb its losses.
We are required to reconsider the initial determination of whether an entity is a VIE if certain types of
events (reconsideration events) occur. If one or more reconsideration events occur, the holder of a variable
interest in a previously determined VIE must reconsider whether that entity continues to be a VIE. Likewise, the
holder of a variable interest in an entity that previously was not a VIE must reconsider whether the entity has
become a VIE. The Company performs ongoing qualitative analyses of its involvement with these variable
interest entities to determine if consolidation is required.
The adoption of these new rules had no impact on our previous accounting for the variable interest entities
as described below.
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