Health Net 2003 Annual Report Download - page 85

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The changes in the carrying amount of goodwill by reporting unit are as follows (amounts in millions):
Health
Plans
Behavioral
Health
Dental/
Vision Subacute
Employer
Services
Group Total
Balance as of January 1, 2002 .......................... $716.7 $ 3.5 $ 0.7 $5.9 $ 37.6 $764.4
Impairment losses ................................... — (3.5) — — (5.4) (8.9)
Reclassification from other intangible assets .............. 6.9 — — — — 6.9
Goodwill written off related to sale of business unit ......... — — — — (0.3) (0.3)
Balance as of December 31, 2002 ....................... $723.6 $ — $ 0.7 $5.9 $ 31.9 $762.1
Goodwill written off related to sale of business unit ......... — — (0.7) — (31.9) (32.6)
Balance as of December 31, 2003 ....................... $723.6 $ — $ — $5.9 $ — $729.5
As part of adopting SFAS No. 142, we transferred $6.9 million of other intangible assets to goodwill since they did
not meet the new criteria for recognition apart from goodwill. These other intangible assets were acquired through our
previous purchase transactions.
The intangible assets that continue to be subject to amortization using the straight-line method over their estimated
lives are as follows (amounts in millions):
Gross
Carrying
Amount
Accumulated
Amortization
Net
Balance
Amortization
Period (in
years)
As of December 31, 2003:
Providernetworks ......................................... $ 35.7 $ (17.6) $18.1 14-40
Employer groups .......................................... 92.9 (91.1) 1.8 11-23
$128.6 $(108.7) $19.9
As of December 31, 2002:
Providernetworks ......................................... $ 35.7 $ (15.9) $19.8 14-40
Employer groups .......................................... 92.9 (90.4) 2.5 11-23
$128.6 $(106.3) $22.3
Estimated annual pretax amortization expense for other intangible assets for each of the next five years ending
December 31 is as follows (amounts in millions):
Year Amount
2004 ..................................................................... $2.4
2005 ..................................................................... 2.4
2006 ..................................................................... 2.0
2007 ..................................................................... 1.6
2008 ..................................................................... 1.6
Insurance Programs
The Company is insured for our general and legal liability risks. The amounts in excess of the insured levels are
reserved for based on claims filed and an estimate for significant claims incurred but not reported.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash equivalents,
investments and premiums receivable. All cash equivalents and investments are managed within established guidelines
which limit the amounts which may be invested with one issuer. Concentrations of credit risk with respect to premiums
receivable are limited due to the large number of payers comprising our customer base. Our 10 largest employer group
premiums receivable balances within each of our plans accounted for 66%, 56% and 57% of our total premiums
receivable as of December 31, 2003, 2002 and 2001, respectively. Our 10 largest employer group premiums within each
of our plans accounted for 19%, 15% and 15% of our health plan services premiums for the years then ended
December 31, 2003, 2002 and 2001, respectively.
F-12