<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 18, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
WELLPOINT HEALTH NETWORKS INC.
(Exact name of Registrant as specified in its charter)
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CALIFORNIA 95-3760980
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
21555 OXNARD STREET
WOODLAND HILLS, CALIFORNIA 91367
(Address of principal executive offices) (zip code)
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THOMAS C. GEISER
Executive Vice President, General Counsel and Secretary
WELLPOINT HEALTH NETWORKS INC.
21555 Oxnard Street, Woodland Hills, California 91367
(Name and address of agent for service)
(818) 703-4000
(Telephone number, including area code, of agent for service)
Copies to:
William L. Hudson, Esq.
Brobeck, Phleger & Harrison LLP
One Market Plaza, Spear Street Tower
San Francisco, California 94105
(415) 442-0900
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after the effective date of this Registration Statement.
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If the only securities being registered on this Form are offered pursuant
to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM
SECURITIES TO BE REGISTERED TO BE AGGREGATE AMOUNT OF
REGISTERED OFFERING REGISTRATION
PRICE (1) FEE
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<S> <C> <C> <C>
Common Stock, par value $0.01 per share . . . . 50,000 $2,531,250 $768
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATIONS
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BE COME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE> 3
SUBJECT TO COMPLETION, DATED JULY 18, 1997
PROSPECTUS
WELLPOINT HEALTH NETWORKS INC.
COMMON STOCK
50,000 Shares
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This Prospectus relates to 50,000 shares of Common Stock, par value $0.01
per share (the "Common Stock"), of WellPoint Health Networks Inc. (the "Company"
or "WellPoint") issuable to eligible persons providing services to the Company
and any of its subsidiaries, pursuant to awards granted under the Company's
Agent and Broker Incentive Share Plan (the "Plan").
Quotations for the Common Stock are reported on the New York Stock
Exchange under the symbol "WLP." On July 17, 1997, the closing sale price of the
Company's Common Stock was $49-7/8 per share. See "Price Range of Common
Stock."
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE HOLDERS OF THE SECURITIES
OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH
THE OFFER CONTAINED HEREIN. IF ANY SUCH INFORMATION IS GIVEN OR MADE, IT MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY, NOR SHALL THERE BE ANY
OFFER, SOLICITATION OR SALE WITH RESPECT TO THE SECURITIES BY ANYONE, IN ANY
STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER, SOLICITATION OR SALE.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION SET FORTH
IN THIS PROSPECTUS IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.
-----------------------------
The date of this Prospectus is July 18, 1997
<PAGE> 4
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company filed with the Securities and
Exchange Commission (the "Commission") are incorporated herein by reference:
(i) Annual Report on Form 10-K (File No. 1-14340) for the year ended
December 31, 1996;
(ii) Quarterly Report on Form 10-Q for the quarter ended March 31, 1997;
(iii) Current Reports on Form 8-K filed January 2, 1997, and March 14,
1997 (as amended by Amendment No. 1 on Form 8-K/A filed May 14, 1997);
(iv) definitive Proxy Statement on Schedule 14A filed May 8, 1997; and
(v) Registration Statement on Form 8-B filed April 24, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") after the date of this Prospectus and prior to the termination of the
offering of the Common Stock offered hereby shall be deemed to be incorporated
in this Prospectus by reference and to be part hereof from the date of filing of
such documents. Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge to any person to whom a copy
of this Prospects is delivered, upon the written or oral request of such person,
a copy of any document incorporated by reference herein, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
in such document. Requests should be directed to 21555 Oxnard Street, Woodland
Hills, California 91367, Attention: Secretary. The Company's telephone number is
(818) 703- 4000.
TABLE OF CONTENTS
Documents Incorporated by Reference .................................. 2
Additional Information ............................................... 3
The Company .......................................................... 4
Risk Factors ......................................................... 4
Price Range of Common Stock .......................................... 5
Use of Proceeds ...................................................... 6
Agent and Broker Incentive Share Plan ................................ 6
Plan of Distribution ................................................. 8
Legal Matters ........................................................ 8
Experts .............................................................. 8
2
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ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy and information statements
and other information with the Commission. Reports, proxy and information
statements and other information filed by the Company with the Commission
pursuant to the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material also can be obtained from the Public Reference Branch of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
reports, proxy and information statement and other information can also be
inspected at the officers of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, the Chicago Stock Exchange, 440 South LaSalle Street,
Chicago, Illinois 60605, and the Pacific Stock Exchange, Inc., 301 Pine Street,
San Francisco, California 94104, or 233 South Beaudry Avenue, Los Angeles,
California 90012 or by way of the Commission's Internet address,
http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement') under the Securities Act of 1933. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are omitted as permitted by the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any agreement or other
document referred to herein are not necessarily complete, and reference is made
to the copy of such agreement or other document filed as an exhibit or schedule
to the Registration Statement and each such statement shall be deemed qualified
in its entirety by such reference. For further information, reference is made to
the Registration Statement and to the exhibits and schedules filed therewith,
which are available for inspection without charge at the public reference
facilities maintained by the Commission at room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of the material containing this information may
be obtained from the Commission upon payment of the prescribed fees.
3
<PAGE> 6
THE COMPANY
The Company is one of the nation's largest publicly traded managed health
care companies with approximately 5.9 million medical members, 12.9 million
pharmacy members and 3.0 million dental members as of March 31, 1997. The
Company offers a diversified mix of managed care products, including health
maintenance organizations ("HMOs"), preferred provider organizations ("PPOs")
and point-of-service ("POS") and other hybrid plans. The Company also provides a
broad array of specialty managed care products, including pharmacy, dental,
life, workers' compensation, preventive care, disability, behavioral health,
COBRA and flexible benefits account administration. In addition, the Company
offers managed care services for self-funded employers, including underwriting,
actuarial services, network access, medical cost management, claims processing
and administrative services.
The Company's operations, with the exception of specialty products, are
organized into two internal business units with a geographic focus. The Company
markets its products in California under the name Blue Cross of California and
outside of California under the name UNICARE. Historically, the Company's
primary market for managed care products has been California. The Company holds
the exclusive right in California to market its products under the Blue Cross
name and mark. The Company is diversified in its California customer base, with
extensive membership among small employer groups, individuals and large employer
groups, and a growing presence in the Medicare and Medicaid markets.
The Company is a corporation organized under the laws of California. The
Company's principal executive offices are located at 21555 Oxnard Street,
Woodland Hills, California 91367 and its telephone number is (818) 703-4000.
DELAWARE REINCORPORATION
At the Company's Annual Meeting of Shareholders held on June 10, 1997, the
Company's shareholders approved a proposal to reincorporate in Delaware (the
"Reincorporation") through the formation of a new holding company structure. The
Company intends to effect the Reincorporation, upon receipt of all regulatory
and other necessary approvals, through a merger involving WellPoint Health
Networks Inc., a Delaware corporation ("WellPoint Delaware"), and WLP
Acquisition Corp. (the "Merger Subsidiary"), a wholly owned subsidiary of
WellPoint Delaware. Merger Subsidiary will be merged with and into the
Company, and the outstanding shares of Company Common Stock will be converted
into shares of WellPoint Delaware Common Stock. As a result of such merger,
the Company will become a wholly owned subsidiary of WellPoint Delaware.
RISK FACTORS
In addition to the other information contained in this Prospectus and
incorporated by reference herein, the following risk factors should be
considered in evaluating the Company and its business and the risk of ownership
of the shares of Common Stock offered hereby. Additional risk factors are
discussed from time to time in the Company's various filings with the Securities
and Exchange Commission, including its Annual Report on Form 10-K for the year
ended December 31, 1996, which is incorporated by reference herein.
GEOGRAPHIC EXPANSION STRATEGY
As part of the Company's business strategy, the Company has recently
acquired substantial operations in new geographic markets. These businesses,
which include substantial indemnity-based insurance operations, have experienced
varying profitability or losses in recent periods. While the integration of
these businesses into the Company has begun, there can be no assurances
regarding the ultimate success of the Company's integration efforts or regarding
the ability of the Company to maintain or improve the results of operations of
these businesses as the Company pursues its strategy of motivating the acquired
members to select managed care products. In order to implement this strategy,
the Company will, among other things, need to develop satisfactory provider
networks and information systems, which will require considerable expenditures
by the Company in addition to the costs associated with the integration of these
acquisitions. A portion of these expenditures will be reflected in the
Company's results of operations. The Company's results of operations could be
adversely affected in the event that the Company fails to develop such provider
networks and information systems or is otherwise unable to implement fully its
expansion strategy.
HEALTH CARE REGULATIONS
The Company's operations are subject to substantial regulation by Federal,
state and local agencies in all jurisdictions in which the Company now operates.
Many of these agencies have increased their scrutiny of managed health care
companies in recent periods. Future regulatory actions by any such agencies may
have a material adverse effect on the Company's business. In addition, numerous
proposals related to health care reform are being considered at the Federal and
state levels. Many of these proposals related to mandated coverage or benefits
with respect to specified illnesses or procedures. There can be no assurance
that compliance with recently enacted or future legislation will not have a
material adverse effect on WellPoint's claims expense, its financial condition
or results of operations.
4
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HEALTH CARE COSTS AND PREMIUM PRICING PRESSURES
The Company's future results will depend in large part on accurately
predicting health care costs and upon the Company's ability to control future
health care costs through underwriting criteria, utilization management and
negotiation of favorable provider contracts. Changes in utilization rates,
demographic characteristics, health care practices, inflation, new technologies,
clusters of high-cost cases, the regulatory environment and numerous other
factors are beyond the control of any health plan and may adversely affect the
Company's ability to predict and control health care costs and claims, as well
as the Company's financial condition or results of operations. Additionally, the
Company faces competitive pressure to contain premium prices. Fiscal concerns
regarding the continued viability of government-sponsored programs such as
Medicare and Medicaid may cause decreasing reimbursement rates for these
programs. Any limitation on the Company's ability to increase or maintain its
premium levels may adversely affect the Company's financial condition or results
of operations.
COMPETITION
Managed care organizations, both inside and outside California, operate in
a highly competitive environment that has undergone significant change in recent
periods as a result of business consolidations, new strategic alliances,
aggressive marketing practices by competitors and other market pressures.
Additional increases in competition could adversely affect the Company's
financial condition or results of operations.
COMPETITIVE FACTORS IN INDIVIDUAL AND SMALL GROUP AND LARGE GROUP MARKETS
The Company's two primary products ([a] managed care products and [b]
management services products, including specialty managed care services) are
marketed through two internal business units which are organized on a geographic
basis, Blue Cross of California and UNICARE. The geographic business units are
divided further into individual and small group businesses versus larger
employers because of the distinctive differences in the focus needed in
targeting each of these markets. The combined cost ratios (medical costs and
expenses) for the small group and individual businesses and the large group
business vary due primarily to differing product mix between the managed care
and management services products and different distribution costs. A greater
percentage of small group and individual membership is comprised of higher risk
managed care products, which tend to be more profitable than the lower risk
managed care and management services products as a result of higher deductibles
and co-payments and increased profit margins generally associated with increased
underwriting risks. The group services membership is comprised primarily of
capitated managed care products and management services products which result in
lower margins as a result of the lower level of underwriting risk related to the
capitated products and the non-risk nature of the management services products.
However, over the past three years, margin erosion has been greater in the
individual and small group business than in the large group business primarily
as a result of slower growth in membership, product mix change and greater
competitive pressure on premium increases. The spread between the profitability
of the individual and small group business and large group business in
California was 8.4% and 10.4% for the quarter ended March 31, 1997
and 1996, respectively.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "WLP." The following table sets forth for the periods indicated the
high and low sale prices for the Common Stock. For periods prior to the
consummation of the recapitalization and merger of the Company's former wholly
owned subsidiary, WellPoint Health Networks Inc., a Delaware corporation ("Old
WellPoint"), with and into the Company on May 20, 1996 (the "Recapitalization"),
the information given below is with respect to Old WellPoint Class A Common
Stock without adjustment for the two-for-three exchange occurring as part of the
Recapitalization. In connection with the Recapitalization, Old WellPoint paid a
special dividend of $10.00 per share to its stockholders of record as of May 15,
1996.
5
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<TABLE>
<CAPTION>
HIGH LOW
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<S> <C> <C>
PRE-RECAPITALIZATION:
Year Ended December 31, 1995
First Quarter . . . . . . . . . . . . . . . . . . . . . . $37 $27
Second Quarter . . . . . . . . . . . . . . . . . . . . . . 34 3/8 27 3/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . 31 27 7/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . 33 3/8 29 1/8
Year Ended December 31, 1996
First Quarter . . . . . . . . . . . . . . . . . . . . . . $36 $31 7/8
Second Quarter (through May 20, 1996). . . . . . . . . . . 36 5/8 26
POST-RECAPITALIZATION:
Second Quarter (May 21, 1996 to June 30, 1996) . . . . . . 39 1/8 31 1/8
Third Quarter . . . . . . . . . . . . . . . . . . . . . . 33 3/4 23 3/8
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . 35 1/2 28 1/4
Year Ended December 31, 1997
First Quarter . . . . . . . . . . . . . . . . . . . . . . 45 7/8 32 1/2
Second Quarter . . . . . . . . . . . . . . . . . . . . . . 51 37 3/4
Third Quarter (through July 17, 1997). . . . . . . . . . . 51 46 1/4
</TABLE>
On July 17, 1997, the closing price on the New York Stock Exchange for the
Company's Common stock was $49-7/8 per share. As of July 11, 1997, there were
approximately 1,082 holders of record of the Common Stock.
USE OF PROCEEDS
The Company intends to use the net proceeds, if any, from the sale
of any Common Stock offered hereby for general corporate purposes.
AGENT AND BROKER INCENTIVE SHARE PLAN
In May 1997, the Company's Board of Directors adopted the Plan.
The principal purpose of the Plan is to enable the Company to provide
restricted share right awards to persons (including individuals and
corporations) providing selling or similar services generally referred to as
health plan agent or broker services to the Company or its affiliates.
Under the Plan, not more than 50,000 shares of Common Stock are authorized
for issuance. The shares available under the Plan may be either previously
unissued shares or shares that have been repurchased by the Company. The Plan
provides for appropriate adjustments to the maximum number and class of
securities issuable under the Plan and the number and class of securities and
price per share, if applicable, in effect under each outstanding award in the
event of any change to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without receipt of consideration.
If any outstanding award under the Plan is terminated, canceled or
forfeited for any reason before the whole number of shares governed by such
award are issued, the remaining shares will continue to be available for
issuance under the Plan.
The principal features under the Plan are summarized below, but this
summary is qualified in its entirety by reference to the Plan itself, which is
filed as an exhibit to the Registration Statement of which this Prospectus is a
part. Copies of the plan may be obtained by making written or oral request of
the Company's Secretary at 21555 Oxnard Street, Woodland Hills, California
91367.
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ELIGIBILITY
Under the terms of the Plan, any person or entity providing agent or
broker services to the Company is eligible for restricted share right grants
under the Plan. Any recipients of grants will be determined by the Committee in
its sole discretion.
ADMINISTRATION
The Plan is administered by a committee appointed by the Board of
Directors of the Company consisting of one or more members of the Board. The
Board has delegated administration of the Plan to the Compensation Committee of
the Board (the "Committee").
The Committee has been given authority to administer the Plan, including
authority to interpret and construe any relevant provisions and adopt rules and
regulations with respect to eligibility of various persons to receive awards
under the Plan. The Committee has also been given authority to determine the
amount and number of shares subject to awards and to determine the terms and
conditions of any award made under the Plan.
RESTRICTED SHARE RIGHT GRANTS
The Plan provides that the Committee may make restricted share right
grants under the Plan to receive one or more shares of Common Stock. The
Committee will determine the standards and conditions (which may include the
prior satisfaction of certain performance requirements) for the issuance of
restricted share right grants to any eligible person. Although the Company
reserves the right to alter any standards or other conditions to the receipt of
a grant, the Company anticipates that grant awards will initially be based upon
the growth (whether absolute or percentage) in the number of in-force
subscribers of the Company's (or any affiliate's) health plans generated by a
particular agent or broker over a specified period of time. The standards
applicable from time to time to the receipt of grants will be set forth in
greater detail in written notice to be provided by the Company to any or more
eligible persons as determined by the Committee in its sole discretion.
ISSUANCE OF SHARES PURSUANT TO RESTRICTED SHARE RIGHT GRANTS
Grants may be made subject to vesting requirements or any other terms,
conditions or restrictions (whether based on the maintenance of a minimum number
of in-force health subscribers generated by or otherwise attributable to the
award recipient, performance standards, periods of service or otherwise) as the
Committee shall deem appropriate. Such terms, conditions and restrictions may
vary from award to award. Any grants made under the Plan shall be evidenced by
such instruments (containing vesting requirements and other relevant terms,
conditions and restrictions) as the Committee shall deem appropriate. The
Committee also has the absolute discretion to determine whether any payment or
other consideration is to be received by the Company or its subsidiaries as a
condition precedent to the issuance of the restricted share right grant or of
shares of Common Stock upon the lapsing of any restrictions thereon.
AMENDMENT AND TERMINATION
The Board of Directors may amend, suspend or discontinue the Plan in whole
or in part at any time in its absolute discretion. Pursuant to delegated
authority, the Committee has full power to modify or waive any of the terms,
conditions or restrictions applicable to any outstanding restricted share right
award; provided, however, that no such modification or waiver shall, without the
consent of the relevant holder of the award, adversely affect such holder's
rights thereunder. In the event of the disposition of all or substantially all
of the assets or outstanding capital stock of the Company by means of a sale,
merger, reorganization or liquidation, each outstanding award under the Plan
will terminate unless assumed pursuant to written agreement by the successor
company or a parent or subsidiary thereof.
MISCELLANEOUS PROVISIONS
The Plan will become effective on December 1, 1997 and the Committee may
make awards under the Plan at any time after such date and before the Plan is
terminated by the Board.
The Company's obligation to issue shares under the Plan, in addition to
other requirements, is also subject to the satisfaction of any applicable tax
withholding requirements.
7
<PAGE> 10
The award of restricted share rights under the Plan will in no way limit
the ability or right of the Company to adjust, reclassify or otherwise change
its capital or business structure or to effect significant corporate events,
such as a merger, consolidation, dissolution, liquidation, sale or transfer of
all or any part of the Company's business or assets.
FEDERAL INCOME TAX CONSEQUENCES
Any person to whom a restricted share right grant is made will not have
taxable income upon issuance of such grant. However, when the relevant vesting
restrictions with respect to any grant lapse, such that the underlying shares
are issued to the grant recipient, the grant recipient will realize ordinary
income and the Company will be entitled to a business expense deduction in an
amount equal to the fair market value of the shares at the date such
restrictions lapse, less the purchase price paid therefor. Because the grant of
a restricted share right will constitute merely a contingent future right to
receive Common Stock, recipients will not be eligible to make an election under
Section 83(b) of the Internal Revenue Code at the time of receipt of a grant.
The Company recommends that any person receiving a grant award under the
Plan consult with such person's tax advisor with respect to the tax aspects of
restricted share right grants and the issuance of Common Stock thereunder.
PLAN OF DISTRIBUTION
The Common Stock offered by this Prospectus will be sold by the Company
from time to time upon the lapsing of any vesting restrictions or other
conditions to issuance on restricted share right grants.
LEGAL MATTERS
The validity of the Common Stock to be offered hereby will be passed upon
for the Company by Thomas C. Geiser, Esq., General Counsel to the Company.
EXPERTS
The audited consolidated financial statements of WellPoint Health Networks
Inc. and subsidiaries as of December 31, 1996 and 1995 and for each of the three
years in the period ended December 31, 1996, incorporated herein by reference,
have been audited by Coopers & Lybrand L.L.P., independent accountants, as
stated in their report with respect thereto and are incorporated herein by
reference in reliance upon the authority of such firm as experts in accounting
and auditing.
The combined financial statements of the Group Benefit Operations of John
Hancock Mutual Life Insurance Company and subsidiaries at December 31, 1996 and
1995 and for the years then ended, included in the Company's Amendment No. 1 on
Form 8-K/A to its Current Report on Form 8-K dated March 1, 1997 have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such combined
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
8
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
All dollar amounts in the following table are estimates except the
amount of the registration fee under the Securities Act of 1933:
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee . . . . . . . . . $ 768
Accounting fees and expenses . . . . . . . . . . . . . . . . . . 10,000
New York Stock Exchange listing fee . . . . . . . . . . . . . . 2,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . 10,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 2,232
Total . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICES
The Company is a California corporation. Reference is made to Section
317 of the California Corporations Code, which specifies the circumstances under
which a California corporation may indemnify a director, officer, employee or
agent, but further provides that a corporation's Articles of Incorporation may
authorize additional rights to indemnification. Section 204 of the California
Corporations Code generally limits the corporation's ability to provide for
indemnification rights for intentional misconduct, a knowing and culpable
violation of law, acts or omissions that involve the absence of good faith, an
unexcused pattern of inattention or reckless disregard for duty, transactions
from which the director or other indemnitee derives an improper personal
benefit, or improper shareholder distributions.
Article VI of the Bylaws of the Company provides that the Company
shall indemnify its directors and officers to the maximum extent permitted by
the California Corporations Code. In addition, the Company has entered into
indemnification agreements with its directors and certain officers that provide
for the maximum indemnification permitted by law.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Document Description
- ------ --------------------
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K filed on June 3, 1996).
4.2 Bylaws of the Company (incorporated by reference from Exhibit 3.2
to the Company's Current Report on Form 8-K filed on June 3, 1996).
4.3 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 (incorporated by reference from Exhibit 3.3 to the
Company's current Report on From 8-K filed on June 3, 1996).
4.4 Specimen of Common Stock Certificate (incorporated by reference from
Exhibit 4.4 to the Company's Registration Statement on Form S-3
(Registration No. 333-14885)).
5.1 Opinion of Thomas C. Geiser, Esq.
9.1 Voting Agreement (incorporated by reference from Exhibit 99.3 to the
Company's Current Report on Form 8-K filed June 3, 1996).
9.2 Voting Trust Agreement (incorporated by reference from Exhibit 99.2 to
the Company's Current Report on Form 8-K filed on June 3, 1996).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Thomas C. Geiser, Esq. (included in the Opinion
filed as Exhibit 5.1)
24.1 Powers of Attorney (see signature page included in Registration Statement).
99.1 Agent and Broker Incentive Share Plan.
</TABLE>
II-1
<PAGE> 12
ITEM 17. UNDERTAKINGS
The Company hereby undertakes:
(1) To file, during any period in which offerers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represents a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)
(ii) do not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Company pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Company's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities and Exchange
Act of 1934 that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the securities
offerer therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the provisions described in Item 15 or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company, will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by its
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The Company hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
II-2
<PAGE> 13
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial bona fide offering hereof.
II-3
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, California, on the 17th day of
July, 1997.
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Leonard D. Schaeffer
----------------------------------
Leonard D. Schaeffer
Chairman of the Board and Chief
Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints, jointly and severally, Leonard D.
Schaeffer and Thomas C. Geiser, and each of one of them, his true and lawful
attorneys-in-fact and agents, each with full power of substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming that each of said
attorneys-in-fact and agents or any of then, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
This Power of Attorney may be executed in multiple counterparts, each of
which shall be deemed an original, but which taken together shall constitute an
instrument.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 17th day of July, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ Leonard D. Schaeffer
- -------------------------------------- Chairman of the Board and Chief
Leonard D. Schaeffer Executive Officer (Principal
Executive Officer)
/s/ Howard G. Phanstiel
- -------------------------------------- Executive Vice President, Finance
Howard G. Phanstiel and Information Services
(Principal Financial Officer)
/s/ S. Louise McCrary
- -------------------------------------- Vice President, Chief Accounting
S. Louise McCrary Officer and Controller
(Principal Accounting Officer)
/s/ David R. Banks
- -------------------------------------- Director
David R. Banks
/s/ W. Toliver Besson
- -------------------------------------- Director
W. Toliver Besson
/s/ Roger E. Birk
- -------------------------------------- Director
Roger E. Birk
/s/ Sheila P. Burke
- -------------------------------------- Director
Sheila P. Burke
</TABLE>
II-4
<PAGE> 15
<TABLE>
<S> <C>
/s/ Stephen L. Davenport
- -------------------------------------- Director
Stephen L. Davenport
/s/ Julie A. Hill
- -------------------------------------- Director
Julie A. Hill
/s/ Elizabeth A. Sanders
- -------------------------------------- Director
Elizabeth A. Sanders
</TABLE>
II-5
<PAGE> 16
EXHIBIT
<TABLE>
<CAPTION>
Exhibit
Number Document Description
- ------ --------------------
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the Company
(incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K filed on June 3, 1996).
4.2 Bylaws of the Company (incorporated by reference from Exhibit 3.2
to the Company's Current Report on Form 8-K filed on June 3, 1996).
4.3 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 (incorporated by reference from Exhibit 3.3 to the
Company's current Report on From 8-K filed on June 3, 1996).
4.4 Specimen of Common Stock Certificate (incorporated by reference from
Exhibit 4.4 to the Company's Registration Statement on Form S-3
(Registration No. 333-14885)).
5.1 Opinion of Thomas C. Geiser, Esq.
9.1 Voting Agreement (incorporated by reference from Exhibit 99.3 to the
Company's Current Report on Form 8-K filed June 3, 1996).
9.2 Voting Trust Agreement (incorporated by reference from Exhibit 99.2 to
the Company's Current Report on Form 8-K filed on June 3, 1996).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Thomas C. Geiser, Esq. (included in the Opinion
filed as Exhibit 5.1)
24.1 Powers of Attorney (see signature page included in Registration Statement).
99.1 Agent and Broker Incentive Share Plan.
</TABLE>
<PAGE> 1
EXHIBIT 5.1
July 16, 1997
WellPoint Health Networks Inc.
21555 Oxnard Street
Woodland Hills, CA 91367
RE: Registration Statement on Form S-3
Ladies and Gentlemen:
I am the General Counsel of WellPoint Health Networks Inc. (the
"Company") and, in such capacity, have examined the Company's Registration
Statement on Form S-3 (the "Registration Statement") in connection with the
Registration under the Securities Act of 1933, as amended, of up to
50,000 shares of the Common Stock of the Company (the "Shares").
I have examined the proceedings heretofore taken and am familiar with
the procedures proposed to be taken by the Company in connection with the
authorization, issuance and sale of the Shares. Based upon the foregoing and in
reliance thereon, it is my opinion that the Shares will be, when issued, sold
and paid for pursuant to the terms of the Registration Statement and the
exhibits thereto, duly and validly issued, fully paid and non-assessable.
I consent to the use of this opinion as an Exhibit to the Registration
Statement and further consent to the use of my name under the caption "Legal
Matters" in the Registration Statement and the Prospectus that forms a part
thereof.
Very truly yours,
Thomas C. Geiser
General Counsel
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
WellPoint Health Networks Inc., on Form S-3 (File No. 333- ) of our report
dated February 14, 1997, on our audits of the consolidated financial statements
of WellPoint Health Networks Inc. We also consent to the reference our firm
under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Los Angeles, California
July 16, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of WellPoint Health
Networks Inc. for the registration of 50,000 shares of its common stock
pertaining to the WellPoint Health Networks Inc.'s Agent and Broker Incentive
Share Plan and to the incorporation by reference therein of our report dated
May 12, 1997, with respect to the combined financial statements of The Group
Benefits Operations of John Hancock Mutual Life Insurance Company and
subsidiaries included in Amendment No. 1 to WellPoint Health Networks Inc.'s
Current Report on Form 8-K/A dated March 1, 1997, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
Boston, Massachusetts
July 15, 1997
<PAGE> 1
EXHIBIT 99.1
WELLPOINT HEALTH NETWORKS INC.
AGENT AND BROKER INCENTIVE SHARE PLAN
ARTICLE ONE
GENERAL PROVISIONS
1.1 PURPOSE OF THE PLAN
This WellPoint Health Networks Inc. Agent and Broker Incentive Share
Plan (the "Plan") is implemented as of December 1, 1997 (the "Effective Date"),
to enable WellPoint Health Networks Inc. (the "Company") to offer restricted
share rights to the following eligible persons ("Eligible Persons"): persons
(including employees and corporations) providing selling or similar services
generally referred to as agent or broker services to the Company or to an
affiliate ("Affiliate") of the Company linked to the Company by a 50% or greater
chain of ownership. For these purposes, ownership means ownership of stock
possessing 50% or more of the total combined voting power of the owned entity.
1.2 ADMINISTRATION OF THE PLAN
A. Committee. The Plan will be administered by a committee or
committees appointed by the Board and consisting of one or more members of the
Board. If no committee is appointed, the Board will serve as the committee. The
Board may delegate responsibility for administration of the Plan with respect to
designated award recipients to different committees, subject to such limitations
as the Board deems appropriate, or an officer of the Company. The term
"Committee," when used in this Plan, refers to the committee or officer that has
been delegated authority with respect to a matter, or to the Board if no
committee has been delegated such authority. Members of a committee will serve
for such term as the Board may determine, and may be removed by the Board at any
time.
B. Authority. Each Committee has full authority to administer the Plan
within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan, to adopt rules and
regulations that it deems necessary, to determine which persons are Eligible
Persons and which Eligible Persons are to receive awards under the Plan, to
determine the amount and/or number of shares subject to such an award, and to
determine the terms of such an award made under the Plan (which terms need not
be identical). Decisions of a Committee made within the discretion delegated to
it by the Board are final and binding on all persons.
1.3 STOCK SUBJECT TO THE PLAN
A. Number of Shares. Shares of the Company's Common Stock ("Common
Stock") available for issuance under the Plan will be drawn from the Company's
authorized but unissued shares of Common Stock or from reacquired shares of
Common Stock, including
<PAGE> 2
shares repurchased by the Company on the open market. The number of shares of
Common Stock that may be issued under the Plan will not exceed 50,000, subject
to adjustment in accordance with the terms of the Plan.
B. Expired Awards. If any outstanding award under the Plan expires, is
terminated, is cancelled or is forfeited for any reason before the full number
of shares governed by the award are issued, those remaining shares will not be
charged against the limit in Paragraph A above and will become available for
subsequent awards under the Plan.
C. Adjustments. If any change is made to the Common Stock issuable
under the Plan by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments will be made to (i) the maximum number and/or class of
securities issuable under the Plan and (ii) the number and/or class of
securities and price per share, if applicable, in effect under each outstanding
award under the Plan. The purpose of these adjustments will be to preclude the
enlargement or dilution of rights and benefits under the awards.
ARTICLE TWO
RESTRICTED SHARE RIGHTS
2.1 RESTRICTED SHARE RIGHTS
A restricted share right awarded under the Plan shall consist of the
right, subject to such terms, conditions and restrictions (whether based on
performance standards or periods of service or otherwise), to receive one or
more shares of Company Stock (together with cash dividend equivalents if so
determined by the Committee) as the Committee shall determine and shall be
evidenced by instruments in such form as the Committee may from time to time
approve. The Committee shall have the absolute discretion to determine whether
any consideration (other than the services of the potential award holder) is to
be received by the Corporation or its subsidiaries as a condition precedent to
the issuance of shares pursuant to restricted share rights. The terms,
conditions and restrictions to which restricted share rights are subject may
vary from award to award.
2.2 CORPORATE TRANSACTIONS
A. Termination. In the event of the disposition of all or substantially
all of the assets or outstanding capital stock of the issuer of Common Stock by
means of a sale, merger, reorganization, or liquidation, each award under this
Plan will terminate unless assumed pursuant to a written agreement by the
successor corporation or a parent or subsidiary thereof.
B. Corporate Structure. The award of restricted share rights under this
Plan will in no way affect the right of the issuer of Common Stock to adjust,
reclassify, reorganize, or
2
<PAGE> 3
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
ARTICLE THREE
MISCELLANEOUS
3.1 AMENDMENT
A. Board Action. The Board may amend, suspend or discontinue the Plan
in whole or in part at any time.
B. Modification of Awards. The Committee has full power and authority
to modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding award under the Plan to the extent not
inconsistent with the Plan; provided, however, that no such modification or
waiver shall, without the consent of the holder of the award, adversely affect
the holder's rights thereunder.
3.2 TAX WITHHOLDING
The Company's obligation to deliver shares upon the settlement of
awards under the Plan is subject to the satisfaction of any applicable Federal,
State and local income and employment tax withholding requirements.
3.3 EFFECTIVE DATE AND TERM OF PLAN
A. Effective Date. This Plan will become effective on December 1, 1997,
the Effective Date.
B. Term. The Committee may make awards under the Plan at any time after
the Effective Date of the Plan and before the Plan is terminated by the Board.
3.4 REGULATORY APPROVALS
The implementation of the Plan, any awards under the Plan, and the
issuance of stock pursuant to any award is subject to the procurement by the
Company of all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, awards made under the Plan, and stock issued
pursuant to the Plan.
3
<PAGE> 4
3.5 USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares
pursuant to awards under the Plan will be used for general corporate purposes.
3.6 NO SERVICE RIGHTS
Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan will be construed to grant
any person the right to remain in the service of the Company (or any subsidiary
or parent of the Company) for any period of specific duration.
4
