<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
AMENDMENT NO. 1 ON
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) 5/20/96
WellPoint Health Networks Inc.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
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<S> <C> <C>
California 1-14340 95-3760980
- -------------------------------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
21555 Oxnard Street, Woodland Hills, California 91367
- ------------------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (818) 703-4000
Not applicable
- -------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
EXPLANATORY NOTE
On May 20, 1996, WellPoint Health Networks Inc., a California
corporation (the "Company), concluded a series of transactions to recapitalize
its publicly traded, majority-owned subsidiary, WellPoint Health Networks Inc.,
a Delaware corporation ("Old WellPoint"). The Company's Current Report on Form
8-K dated May 20, 1996 (the "Form 8-K") was filed with the Securities and
Exchange Commission on June 3, 1996 to report the completion of such
transaction (the "Recapitalization"). This Amendment No. 1 on Form 8-K/A is
being filed in order to provide certain pro forma financial information under
Item No. 7 that was unavailable at the time of the filing of the Form 8-K.
Except as specifically amended by this Form 8-K/A, the Form 8-K shall remain
unchanged.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Historical financial information as of and for the
period ended December 31, 1995 was previously reported in Old
WellPoint's Annual Report on Form 10-K (SEC File No. 1-11628)
for the fiscal year ended December 31, 1995, at pages F-2 to
F-24, and is incorporated herein by this reference.
Historical financial information as of and for the
period ended March 31, 1996 is being provided herewith and is
attached hereto at pages F-6 to F-13.
(B) PRO FORMA FINANCIAL INFORMATION
Pro forma financial information as of and for the
period ended December 31, 1995 was previously reported in Old
WellPoint's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, at pages 32 to 38, and is
incorporated herein by this reference.
Pro forma financial information as of and for the
period ended March 31, 1996 is being provided herewith and is
attached hereto as pages F-1 to F-5.
(C) EXHIBITS
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<CAPTION>
Exhibit No. Exhibit
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<S> <C>
3.1 Amended and Restated Articles of Incorporation of WellPoint Health Networks Inc., a
California corporation (the "Company") (Filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
</TABLE>
2
<PAGE> 3
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<S> <C>
3.2 Bylaws of the Company (Filed as Exhibit 3.2 to the Company's Current Report on Form 8-K
dated May 20, 1996 and incorporated herein by this reference).
3.3 Agreement of Merger dated as of May 20, 1996 by and among the Company, WellPoint Health
Networks Inc., a Delaware corporation, Western Health Partnerships and Western Foundation
for Health Improvement (Filed as Exhibit 3.3 to the Company's Current Report on Form 8-K
dated May 20, 1996 and incorporated herein by this reference).
99.1 Amended and Restated Recapitalization Agreement dated as of March 31, 1995, by and among
WellPoint Health Networks Inc., a Delaware corporation, the Company, Western Health
Partnerships and Western Foundation for Health Improvement (Filed as Exhibit 99.1 to Old
WellPoint's Current Report on Form 8-K (File No. 1-11628) dated February 20, 1996 and
incorporated herein by this reference).
99.2 Voting Trust Agreement dated as of May 20, 1996 by and between the Company, Western Health
Partnerships and Wilmington Trust Company (Filed as Exhibit 99.2 to the Company's Current
Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.3 Voting Agreement dated as of May 8, 1996 by and among the Company and Western Health
Partnerships (Filed as Exhibit 99.3 to the Company's Current Report on Form 8-K dated May
20, 1996 and incorporated herein by this reference).
99.4 Share Escrow Agent Agreement dated as of May 20, 1996 by and between the Company and U.S.
Trust Company of California, N.A. (Filed as Exhibit 99.4 to the Company's Current Report on
Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.5 Registration Rights Agreement dated as of May 20, 1996 by and between the Company and
Western Health Partnerships (Filed as Exhibit 99.5 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this reference).
99.6 Blue Cross License Agreement effective as of May 20, 1996 by and among the Blue Cross and
Blue Shield Association and the Company (Filed as Exhibit 99.6 to the Company's Current
Report
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3
<PAGE> 4
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<S> <C>
on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.7 California Blue Cross License Addendum effective as of May 20, 1996 by and between the Blue
Cross and Blue Shield Association and the Company (Filed as Exhibit 99.7 to the Company's
Current Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.8 Blue Cross Affiliated License Agreement effective as of May 20, 1996 by and between the Blue
Cross and Blue Shield Association and CaliforniaCare Health Plans (Filed as Exhibit 99.8 to
the Company's Current Report on Form 8-K dated May 20, 1996 and incorporated herein by this
reference).
99.9 Indemnification Agreement dated as of May 17, 1996 by and among the Company, WellPoint
Health Networks Inc., a Delaware corporation, and Western Health Partnerships (Filed as
Exhibit 99.9 to the Company's Current Report on Form 8-K dated May 20, 1996 and incorporated
herein by this reference).
99.10 Credit Agreement dated as of May 15, 1996 by and among the Company, Bank of America National
Trust and Savings Association, as Administrative Agent, NationsBank of Texas, N.A., as
Syndication Agent, Chemical Bank, as Documentation Agent, and the other financial
institutions named therein (Filed as Exhibit 99.10 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this reference).
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4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: June 24, 1996
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Howard G. Phanstiel
-----------------------------------
Name: Howard G. Phanstiel
Title: Executive Vice President, Finance
and Information Services
5
<PAGE> 6
EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
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<S> <C>
3.1 Amended and Restated Articles of Incorporation of WellPoint Health Networks Inc., a
California corporation (the "Company") (Filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
3.2 Bylaws of the Company (Filed as Exhibit 3.2 to the Company's Current Report on Form 8-K
dated May 20, 1996 and incorporated herein by this reference).
3.3 Agreement of Merger dated as of May 20, 1996 by and among the Company, WellPoint Health
Networks Inc., a Delaware corporation, Western Health Partnerships and Western Foundation
for Health Improvement (Filed as Exhibit 3.3 to the Company's Current Report on Form 8-K
dated May 20, 1996 and incorporated herein by this reference).
99.1 Amended and Restated Recapitalization Agreement dated as of March 31, 1995, by and among
WellPoint Health Networks Inc., a Delaware corporation, the Company, Western Health
Partnerships and Western Foundation for Health Improvement (Filed as Exhibit 99.1 to Old
WellPoint's Current Report on Form 8-K (File No. 1-11628) dated February 20, 1996 and
incorporated herein by this reference).
99.2 Voting Trust Agreement dated as of May 20, 1996 by and between the Company, Western Health
Partnerships and Wilmington Trust Company (Filed as Exhibit 99.2 to the Company's Current
Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.3 Voting Agreement dated as of May 8, 1996 by and among the Company and Western Health
Partnerships (Filed as Exhibit 99.3 to the Company's Current Report on Form 8-K dated May
20, 1996 and incorporated herein by this reference).
99.4 Share Escrow Agent Agreement dated as of May 20, 1996 by and between the Company and U.S.
Trust Company of California, N.A. (Filed as Exhibit 99.4 to the Company's Current Report on
Form 8-K dated May 20, 1996 and incorporated herein by this reference).
</TABLE>
6
<PAGE> 7
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<S> <C>
99.5 Registration Rights Agreement dated as of May 20, 1996 by and between the Company and
Western Health Partnerships (Filed as Exhibit 99.5 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this reference).
99.6 Blue Cross License Agreement effective as of May 20, 1996 by and among the Blue Cross and
Blue Shield Association and the Company (Filed as Exhibit 99.6 to the Company's Current
Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.7 California Blue Cross License Addendum effective as of May 20, 1996 by and between the Blue
Cross and Blue Shield Association and the Company (Filed as Exhibit 99.7 to the Company's
Current Report on Form 8-K dated May 20, 1996 and incorporated herein by this reference).
99.8 Blue Cross Affiliated License Agreement effective as of May 20, 1996 by and between the Blue
Cross and Blue Shield Association and CaliforniaCare Health Plans (Filed as Exhibit 99.8 to
the Company's Current Report on Form 8-K dated May 20, 1996 and incorporated herein by this
reference).
99.9 Indemnification Agreement dated as of May 17, 1996 by and among the Company, WellPoint
Health Networks Inc., a Delaware corporation, and Western Health Partnerships (Filed as
Exhibit 99.9 to the Company's Current Report on Form 8-K dated May 20, 1996 and incorporated
herein by this reference).
99.10 Credit Agreement dated as of May 15, 1996 by and among the Company, Bank of America National
Trust and Savings Association, as Administrative Agent, NationsBank of Texas, N.A., as
Syndication Agent, Chemical Bank, as Documentation Agent, and the other financial
institutions named therein (Filed as Exhibit 99.10 to the Company's Current Report on Form
8-K dated May 20, 1996 and incorporated herein by this reference).
</TABLE>
7
<PAGE> 8
WELLPOINT HEALTH NETWORKS INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
Following is the unaudited pro forma combined balance sheet for the Company as
of March 31, 1996, and the unaudited pro forma combined income statement for the
three months ended March 31, 1996. Such unaudited pro forma combined balance
sheet includes the historical amounts for Old WellPoint, which includes the
historical amounts for the Life and Health Benefits Management Division of
Massachusetts Mutual Life Insurance Company, which will do business under the
name UniCARE Life and Health Insurance Company ("UL&H"), as reported in Old
WellPoint's Form 10-Q for the quarter ended March 31, 1996, and adjusted to
reflect the Recapitalization including the acquisition of the commercial
operations of Blue Cross of California (the "BCC Commercial Operations"). The
acquisition of UL&H was completed on March 31, 1996. For the purposes of
presenting the unaudited pro forma combined balance sheet, such transactions are
considered to have occurred on March 31, 1996. Such unaudited pro forma combined
income statement includes the historical amounts of Old WellPoint, as reported
in Old WellPoint's Form 10-Q for the quarter ended March 31, 1996, adjusted for
(a) the acquisition of UL&H and (b) the Recapitalization including the
acquisition of BCC Commercial Operations, on the basis that such transactions
occurred at the beginning of the period presented.
The UL&H and BCC Commercial Operations acquisitions have been accounted for
using the purchase method of accounting in the unaudited pro forma combined
financial statements, whereby the respective assets and liabilities of UL&H and
BCC Commercial Operations are recorded at their estimated fair value.
Certain data and notes normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The unaudited pro forma combined condensed financial statements do not
purport to present the financial condition and results of operations of the
Company had the Recapitalization and the UL&H acquisition actually been
completed as of the dates indicated. In addition, the unaudited pro forma
combined financial statements are not necessarily indicative of the future
results of the operations of the Company.
F-1
<PAGE> 9
WELLPOINT HEALTH NETWORKS INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
The following are the Notes to Unaudited Pro Forma Combined Financial
Statements:
(a) In connection with the Recapitalization, Old WellPoint purchased the BCC
Commercial Operations for $235.0 million in cash. In addition, Old
WellPoint distributed an aggregate of $995.0 million by means of a special
dividend of $10.00 per share to the holders of Old WellPoint Common Stock.
(b) The net increase in the intangible assets is the result of the excess of
the cost over the fair value of the BCC Commercial Operations (cash
purchase price of $235.0 million less the book value of the BCC Commercial
Operations of $42.2 million, plus estimated deferred taxes of $78.1
million associated with identifiable intangible assets).
(c) Reflects the estimated deferred income taxes of $78.1 million associated
with identifiable intangible assets.
(d) The change in equity reflects the cash dividends Old WellPoint paid to its
Class A and Class B common stockholders of $995.0 million and the
elimination of the net equity of $42.2 million of the BCC Commercial
Operations acquired.
(e) Reflects the quarterly amortization of intangible assets of $194.2 million
created as a result of the UL&H acquisition amounting to $1.6 million on a
straight-line basis using a 30-year life.
(f) Reflects interest expense at an assumed rate of 5.72% on the issuance of
$84.4 million of indebtedness incurred by Old WellPoint, subsequently the
Company, plus interest expense at an assumed rate of 7.25% on an
additional $318.0 million of long-term debt incurred by the Company in
connection with the UL&H acquistion.
(g) Reflects the quarterly amortization of intangible assets of $270.8 million
created as a result of the acquisition of the BCC Commercial Operations
amounting to $1.7 million on a straight-line basis using a 40-year life.
(h) Reflects interest expense at an assumed rate of 7.25% on the issuance of
$412.0 million of indebtedness incurred by Old WellPoint, subsequently the
Company, in connection with the special dividend and the acquisition of
the BCC Commercial Operations.
(i) Reflects the tax effect of the pro forma adjustments to effect the UL&H
and the BCC Commercial Operations transactions, respectively.
F-2
<PAGE> 10
WELLPOINT HEALTH NETWORKS INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(j) The reduction of investment income for the first quarter of 1996 reflects
the foregone interest income at 5.5% per annum on the $818.0 million of
cash and investments used to fund the special dividend and the acquisition
of the BCC Commercial Operations.
F-3
<PAGE> 11
WELLPOINT HEALTH NETWORKS INC.
PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands)
BCC COMMERCIAL PRO FORMA PRO FORMA WELLPOINT
OLD WELLPOINT (1) OPERATIONS ADJUSTMENTS HEALTH NETWORKS INC.
----------------- -------------- ----------- --------------------
<S> <C> <C> <C> <C>
ASSETS
Cash and investments $2,339,468 $207,456 $ (500,000)(a) $2,046,924
Receivables, net 380,800 54,462 435,262
Other current assets 80,208 11,751(2) 91,959
---------- --------- ----------- ----------
Total Current Assets 2,800,476 273,669 (500,000) 2,574,145
Intangible assets 317,937 -- 270,828 (b) 588,765
Other non-current assets 112,394 48,040 160,434
---------- --------- ----------- ----------
Total Assets $3,230,807 $321,709 $ (229,172) $3,323,344
========== ========= =========== ==========
LIABILITIES
Medical claims payable and loss reserves $ 720,022 $115,221 $ 835,243
Unearned premiums 136,321 7,146 143,467
Experience rated and other refunds 125,040 6,982 132,022
Other current liabilities 258,770 80,808(2) 339,578
---------- -------- ----------- ----------
Total Current Liabilities 1,240,153 210,157 -- 1,450,310
Long-term indebtedness 84,372 -- 730,000 (a) 814,372
Other non-current liabilities 194,574 69,312 78,068 (c) 341,954
---------- -------- ----------- ----------
Total Liabilities 1,519,099 279,469 808,068 2,606,636
Total Stockholders' Equity 1,711,708 42,240 (1,037,240)(d) 716,708
---------- -------- ----------- ----------
Total Liabilities and Stockholders' Equity $3,230,807 $321,709 $ (229,172) $3,323,344
========== ======== =========== ==========
</TABLE>
(1) The Old WellPoint balances include UL&H, which was acquired on March 31,
1996.
(2) Amounts due from Old WellPoint of $23.0 million have been reclassified from
"Other current assets" to "Other current liabilities" to offset and
eliminate intercompany payables.
See Notes to Unaudited Pro Forma Combined Financial Statements
F-4
<PAGE> 12
WELLPOINT HEALTH NETWORKS INC.
PRO FORMA COMBINED INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands, except earnings per share)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA OLD WELLPOINT BCC COMMERCIAL
OLD WELLPOINT UL&H ADJUSTMENTS AND UL&H OPERATIONS
------------- ---- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues:
Premium revenue $763,284 $175,724 $ $ 939,008 $ 110,359
Management services revenue 18,228 19,833 - 38,061 1,638
Investment income 36,070 6,492 - 42,562 4,054
-------- -------- -------- ---------- --------
817,582 202,049 - 1,019,631 116,051
Operating expenses:
Health care services and other benefits 571,785 147,380 - 719,165 107,917
Selling expense 49,466 - - 49,466 15
General and administrative expense 92,274 49,369 - 141,643 14,965
-------- -------- -------- ---------- --------
713,525 196,749 - 910,274 122,897
-------- -------- -------- ---------- --------
Operating Income 104,057 5,300 - 109,357 (6,846)
Other (income) expense, net 3,012 (879) 1,619 (e) 3,752 (521)
Interest expense - - 6,970 (f) 6,970 -
-------- -------- -------- ---------- --------
Income before Provision (Benefit) for Income Taxes 101,045 6,179 (8,589) 98,635 (6,325)
Provision (benefit) for income taxes 40,932 3,391 (4,376) (i) 39,947 (2,227)
-------- -------- -------- ---------- --------
Net Income $ 60,113 $ 2,788 $ (4,213) $ 58,688 $ (4,098)
======== ========== ======== ========== =========
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA WELLPOINT
ADJUSTMENTS HEALTH NETWORKS INC.
----------- --------------------
<S> <C> <C>
Revenues:
Premium revenue $ - $1,049,367
Management services revenue - 39,699
Investment income (11,248) (j) 35,368
-------- ----------
(11,248) 1,124,434
Operating expenses:
Health care services and other benefits - 827,082
Selling expense - 49,481
General and administrative expense - 156,608
-------- ----------
- 1,033,171
-------- ----------
Operating Income (11,248) 91,263
Other (income) expense, net 1,693 (g) 4,924
Interest expense 7,468 (h) 14,438
-------- ----------
Income before Provision (Benefit) for Income Taxes (20,409) 71,901
Provision (benefit) for income taxes (8,600) (i) 29,120
-------- ----------
Net Income $(11,809) $ 42,781
======== ==========
Primary and fully diluted earnings per share $ 0.64
=========
Assumed number of shares outstanding 66,367
=========
</TABLE>
See Notes to Unaudited Pro Forma Combined Financial Statements
F-5
<PAGE> 13
BLUE CROSS OF CALIFORNIA COMMERCIAL OPERATIONS
BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(In thousands)
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash and cash equivalents $ 82,523
Equity investment securities, at market value 2,050
Fixed maturity investment securities, at market value 122,883
Receivables, net 54,462
Due from WellPoint 23,041
Other current assets 11,751
--------
Total Current Assets 296,710
Mortgages held for investment 2,585
Property and equipment, net 16,001
FEP unearned premiums receivable 29,454
--------
Total Assets $344,750
========
LIABILITIES AND SUBSCRIBERS' RETENTION
Current Liabilities:
Medical claims payable $115,221
Unearned premiums 7,146
Accounts payable and accrued expenses 86,335
Experience rated refunds 6,982
Contracts settlements payable 11,282
Other current liabilities 6,232
--------
Total Current Liabilities 233,198
Accrued postretirement benefits 7,630
FEP unearned premiums 29,454
Long-term deferred tax liabilities 812
Other long-term liabilities 1,910
Deferred gain on building sale 29,506
--------
Total Liabilities 302,510
Subscribers' retention 42,240
--------
Total Liabilities and Subscribers' Retention $344,750
========
</TABLE>
F-6
<PAGE> 14
BCC COMMERCIAL OPERATIONS
INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<S> <C>
Revenues:
Premium revenue $110,359
Management services revenue 1,638
Investment income 4,054
--------
116,051
Operating expenses:
Health care services and other benefits 107,917
Selling expense 15
General and administrative expense 14,965
--------
122,897
--------
Operating Loss (6,846)
Other income, net 521
--------
Loss before Provision for Income Taxes (6,325)
Benefit for income taxes (2,227)
--------
Net Loss $ (4,098)
========
</TABLE>
F-7
<PAGE> 15
BLUE CROSS OF CALIFORNIA COMMERCIAL OPERATIONS
STATEMENT OF CHANGES IN SUBSCRIBERS' RETENTION
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<S> <C>
Balance at December 31, 1995 $48,441
Net loss (4,098)
Public benefit obligation, net of tax (211)
Unrealized valuation adjustment on
invesment securities, net of tax (1,892)
-------
Balance at March 31, 1996 $42,240
=======
</TABLE>
F-8
<PAGE> 16
BLUE CROSS OF CALIFORNIA COMMERCIAL OPERATIONS
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,098)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization, net of accretion 2,392
Loss on sales of assets, net 66
Benefit for deferred income taxes (380)
Amortization of deferred gain on building sale (1,106)
Increase in certain assets:
Receivables, net (3,369)
Due from WellPoint (8,334)
Other current assets (6,701)
Increase (decrease) in certain liabilities:
Medical claims payable 11,182
Unearned premiums 1,047
Accounts payable and accrued expenses 11,927
Experience rated refunds 852
Contract settlements payable (1,579)
Accrued postretirement benefits (42)
Other current liabilities (444)
Other liabilities (891)
---------
Net cash provided by operating activities 522
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments purchased (21,468)
Proceeds from investments sold 19,074
Property and equipment purchased (125)
---------
Net cash used in investing activities (2,519)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash paid for public health care program support (305)
---------
Net cash used in financing activities (305)
---------
Net decrease in cash and cash equivalents (2,302)
Cash and cash equivalents at beginning of period 84,825
---------
Cash and cash equivalents at end of period $ 82,523
=========
</TABLE>
F-9
<PAGE> 17
UNICARE LIFE AND HEALTH INSURANCE COMPANY
BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(In thousands)
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash and cash equivalents $ 28,125
Fixed maturity investment securities, at market value 313,117
Receivables, net 224,239
Other current assets 84
--------
Total Current Assets 565,565
Mortgages held for investment 7,410
Equity in preferred provider organizations 9,444
Property and equipment, net 4,266
--------
Total Assets $586,685
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Medical claims payable $216,575
Loss and loss adjustment expense reserves 82,964
Experience rated refunds 35,368
Other current liabilities 17,968
--------
Total Current Liabilities 352,875
Other long-term liabilities 12,745
--------
Total Liabilities 365,620
Stockholder's Equity 221,065
--------
Total Liabilities and Stockholder's Equity $586,685
========
</TABLE>
F-10
<PAGE> 18
UNICARE LIFE AND HEALTH INSURANCE COMPANY
INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
Revenues:
Premium revenue $175,724
Management services revenue 19,833
Investment income 6,492
--------
202,049
Operating expenses:
Health care services and other benefits 147,380
Selling, general and administrative expense 49,369
--------
196,749
--------
Operating Income 5,300
Other income, net 879
--------
Income before Provision for Income Taxes 6,179
Provision for income taxes 3,391
--------
Net Income $ 2,788
========
</TABLE>
F-11
<PAGE> 19
UNICARE LIFE AND HEALTH INSURANCE COMPANY
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
Balance at December 31, 1995 $222,959
Net income 2,788
Additional paid-in surplus 1,000
Unrealized valuation adjustment on
investment securities, net of tax (5,682)
--------
Balance at March 31, 1996 $221,065
========
</TABLE>
F-12
<PAGE> 20
UNICARE LIFE AND HEALTH INSURANCE COMPANY
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,788
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net of accretion 358
Gain on sales of assets, net (1,661)
Benefit for deferred income taxes (1,112)
(Increase) decrease in certain assets:
Receivables, net (101,375)
Other current assets 3,943
Increase (decrease) in certain liabilities:
Medical claims payable 10,532
Reserves for policy and contract benefits (9,382)
Experience rated refunds 815
Other current liabilities 2,654
Other liabilities 214
---------
Net cash used in operating activities (92,226)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments purchased (28,264)
Proceeds from investments sold or matured 54,843
Property and equipment purchased, net (4,152)
Equity in preferred provider organizations 288
---------
Net cash provided by investing activities 22,715
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional paid-in surplus 1,000
---------
Net cash provided by financing activities 1,000
---------
Net decrease in cash and cash equivalents (68,511)
Cash and cash equivalents at beginning of period 96,636
---------
Cash and cash equivalents at end of period $ 28,125
=========
</TABLE>
F-13
