Health Net 2013 Annual Report Download - page 91

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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, 2013 are summarized below for the years ending
December 31:
Total 2014 2015 2016 2017 2018 Thereafter
(Dollars in millions)
Fixed-rate borrowing principal (c)....... $400.0 $ — $ — $ — $400.0 $ — $ —
Fixed-rate borrowing interest............... 87.2 25.5 25.5 25.5 10.7 — —
Variable-rate borrowing principal........ 100.0 — — 100.0 — — —
Variable-rate borrowing interest.......... 6.4 1.7 2.2 2.5 — — —
Operating leases................................... 272.4 55.3 51.0 43.8 32.4 24.4 65.5
Long-term purchase obligations .......... 494.8 275.7 144.3 64.7 7.9 2.2 —
Uncertain tax positions liability,
including interest and penalties (b). 8.4 3.1 5.3 — — — —
Deferred compensation........................ 52.0 6.2 3.7 3.5 3.0 2.0 33.6 (a)
Estimated future payments for pension
and other benefits............................ 40.1 2.8 2.7 3.9 3.9 4.0 22.8 (a)
__________
(a) Represents estimated future payments from 2019 through 2023.
(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 $28.7 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, 2013.
We have entered into long-term agreements to receive services related to disease management, case management,
wellness, pharmacy benefit management, pharmacy claims processing services and health quality/risk scoring
enhancement services with external third-party service providers. The remaining terms are approximately from two to
three years for each of these contracts. Termination of these agreements is subject to certain termination provisions. As
of December 31, 2013, the total estimated future commitments under these agreements were $123.6 million and are
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.
We exercised our option to extend the contract for an additional year and as of December 31, 2013, the remaining term
of this contract was approximately one year, and total estimated future commitments under the agreement were
approximately $99.1 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. We exercised our option to extend the contract for an additional year and as of