Health Net 2011 Annual Report Download - page 91

(b) The obligations shown above represent uncertain tax positions expected to be paid within the reporting
periods presented. In addition to the obligations shown above, approximately $49.7 million of unrecognized
tax benefits have been recorded as a liability, and we are uncertain as to if or when such amounts may be
settled or paid.
(c) These amounts are based on stated terms and expected payments. As such, they differ from the amounts
reported on our consolidated balance sheet and notes, which are reported consistently with the financial
reporting and classification requirements.
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.
Long-Term Purchase Obligations and Commitments
We have entered into long-term agreements to purchase various services, which may contain certain
termination provisions and have remaining terms in excess of one year as of December 31, 2011.
We have entered into long-term agreements to receive services related to pharmacy benefit management,
pharmacy claims processing services and health quality/risk scoring enhancement services with external third-
party service providers. As of December 31, 2011, the remaining terms were approximately one year for each of
these contracts, and termination of these agreements was subject to certain termination provisions. As of
December 31, 2011, the total estimated future commitments under these agreements was $20.1 million. In
January 2012, we amended these agreements to, among other things, extend these contracts through December
31, 2014. These amendments increase our estimated future commitments by approximately $13 million and are
not included in the table above.
We have entered into an agreement with International Business Machines Corporation (“IBM”) to outsource
our IT infrastructure management services including data center services, IT security management and help desk
support. The remaining term of this contract is approximately two years, and total estimated future commitments
under the agreement are approximately $141.7 million.
We have entered into an agreement with Cognizant Technology Solutions U.S. Corporation (“Cognizant”)
to outsource our software applications development and management activities to Cognizant. Under the terms of
the agreement, Cognizant will, among other things, provide us with: application development, testing and
monitoring services, application maintenance and support services, project management services and cross
functional services. The remaining term of this contract is approximately two years, and the total estimated future
commitments under the agreement are approximately $20.6 million.
We have also entered into another agreement with Cognizant to outsource a substantial portion of our claims
processing activities to Cognizant. Under the terms of the agreement, Cognizant will, among other things,
provide us with claims adjudication, adjustment, audit and process improvement services. The remaining term of
this contract is approximately three years, and the total estimated future commitments under the agreement are
approximately $18.6 million.
We have excluded from the table above amounts already recorded in our current liabilities on our
consolidated balance sheet as of December 31, 2011. We have also excluded from the table above 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.
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