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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1997
REGISTRATION NO. 333-31599
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
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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DELAWARE 95-4635504
(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:
Barry Homer, 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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AMENDMENT FILED PURSUANT TO RULE 414(d) OF THE SECURITIES ACT OF 1933.
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On June 10, 1997, the shareholders of WellPoint Health Networks Inc., a
California corporation ("Wellpoint California"), approved the reincorporation of
such company in Delaware (the "Reincorporation"). The Reincorporation was
effected via a merger involving WellPoint Health Networks Inc., a Delaware
corporation (the "Company") which was wholly owned by Wellpoint California
prior to such merger, and a wholly owned subsidiary of the Company organized
solely for purposes of effecting such merger ("Merger Subsidiary"). As a result
of the merger, Merger Subsidiary was merged into Wellpoint California, Merger
Subsidiary disappeared and WellPoint California became the surviving entity and
a wholly owned subsidiary of the Company. The merger was effected on August 4,
1997. By this amendment, the Company hereby adopts this Registration Statement
No. 333-31599 on Form S-3 as its own for all purposes of the Securities Act of
1933 and the Securities Exchange Act of 1934. This adoption is made pursuant to
Rule 414(d) as promulgated under the Securities Act of 1933.
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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 August 4, 1997, the closing sale price of
the Company's Common Stock was $52 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.
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The date of this Prospectus is August 5, 1997
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company's predecessor, WellPoint
California (as defined below), 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); and
(iv) definitive Proxy Statement on Schedule 14A filed May 8, 1997.
The following documents of the Company filed with the Commission (File
No. 001-13803) are incorporated herein by reference:
(i) Registration Statement on Form 8-B filed June 12, 1997; and
(ii) Current Report on Form 8-K filed August 5, 1997.
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
Reincorporation ...................................................... 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
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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.
REINCORPORATION
The Company was incorporated in Delaware effective August 4, 1997 (the
"Reincorporation"). The Reincorporation was effected via a merger (the
"Merger") involving the Company, WellPoint Health Networks Inc., a California
company ("WellPoint California"), which was the parent of the Company prior to
such merger, and a wholly owned subsidiary of the Company organized solely for
purposes of effecting the Merger ("Merger Subsidiary"). As a result of the
Merger, Merger Subsidiary was merged into WellPoint California, Merger
Subsidiary disappeared and WellPoint California is the surviving entity and a
wholly owned subsidiary of the Company, which became substantially a holding
company. As a further result of the Merger, the shareholders of WellPoint
California became the stockholders of the Company. As used in this Prospectus,
the "Company" means WellPoint Health Networks Inc., a Delaware corporation, on
or after August 4, 1997, and WellPoint Health Networks Inc., a California
corporation (and its predecessors) prior to August 4, 1997.
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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 and indemnity 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 Delaware. The
Company's principal executive offices are located at 21555 Oxnard Street,
Woodland Hills, California 91367 and its telephone number is (818) 703-4000.
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.
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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.
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<TABLE>
<CAPTION>
HIGH LOW
---- ---
<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 August 4, 1997) . . . . . . . . . . 54 46 1/4
</TABLE>
On August 4, 1997, the closing price on the New York Stock Exchange for
the Company's Common stock was $52 per share. As of August 1, 1997, there
were approximately 1,137 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 one or
more eligible persons as determined by the Committee in its sole discretion.
The Company currently anticipates that no grants of restricted share
rights will be made under the Plan prior to January 15, 1999. On such date, the
Company expects to make restricted share right grants to certain persons
performing agent and broker services for certain of the Company's affiliates in
the California individual and small group health plan market based upon certain
criteria. In order to be eligible for a grant on such date, an agent must have
had a minimum of 10 medical subscribers in force as of November 30, 1997 (and
for which such agent is considered to be the "agent of record") and must have an
agent agreement in force, must be in compliance with all material terms and
conditions of such agent agreement and must be a California resident. Grants
made on January 15, 1999 are expected to be made to such persons based upon the
growth of in-force subscribers over the one-year period ending November 30,
1998. The Company expects that certain agents or brokers, including persons or
entities serving as general agents, brokers with special commission arrangements
and employees of the Company or its affiliates, will be ineligible for such
grants. The Company may impose additional conditions or restrictions on the
receipt of grants or eligibility therefor.
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.
The Company anticipates that any grants made on January 15, 1999 will
vest over the immediately following two-year period, 50% on January 15, 2000
and 50% on January 15, 2001. In order for a grant to vest, a recipient agent
must maintain the number of medical subscribers that such agent had on
November 30, 1998. In addition, on the vesting date such agent must continue
to have an agent agreement in force, be in compliance with all material terms
and conditions of such agreement and continue to be a California resident. It
is expected that the notice of grant evidencing each restricted share rights
award will contain special provisions dealing with the death or retirement of an
agent or with the transfer of business subject to a restricted share right
grant. The Company may impose additional vesting conditions on restricted share
right grants made.
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.
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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.
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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
Registrant is a Delaware corporation. Section 145 of the General
Corporation Law of the state of Delaware (the "Delaware Law") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation), by reason of the fact
that such person was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation or enterprise. The indemnity may include expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, provided that such officer or director acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests, and, for criminal proceedings, had no reasonable
cause to believe his conduct was illegal. A Delaware corporation may indemnify
officers and directors in an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation in the performance of his duty. Where an officer or director is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses which such
officer or director actually and reasonably incurred.
The Company's certificate of incorporation provides that the liability
of the Company's directors to the Company or the Company's stockholders for
monetary damages for breach of fiduciary duty will be eliminated to the fullest
extent permissible under Delaware law except for (i) breaches of the duty of
loyalty; (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of the law; (iii) the payment of unlawful
dividends or unlawful stock repurchases or redemptions; or (iv) transactions in
which a director received an improper personal benefit.
The effect of these provisions is to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in certain limited situations.
These provisions do not limit or eliminate the rights of the Company or any
stockholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. These provisions will not
alter the liability of directors under federal securities law.
The Company's bylaws provide that the Company will indemnify each
present and former director and officer of the Company or a predecessor company
and each of their respective subsidiaries, as such companies exist or have
existed, and such agents of the Company as the Board of Directors shall
determine, to the fullest extent provided by Delaware law.
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 Restated Certificate of Incorporation of the Company
(incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K filed on August 5, 1997).
4.2 Bylaws of the Company (incorporated by reference from Appendix B to
WellPoint California's Schedule 14A filed May 8, 1997,
File No. 333-03292-01).
4.3 Agreement and Plan of Reorganization dated as of July 22, 1997 by and
among WellPoint Health Networks, Inc., a California corporation, WLP
Acquisition Corp., a California corporation, and the Company
(incorporated by reference from Exhibit 99.1 to the Company's Current
Report on Form 8-K filed on August 5, 1997).
4.4 Agreement of Merger (incorporated by reference from Exhibit 3.3 to the
Company's Current Report on Form 8-K filed on August 5, 1997).
4.5 Specimen of Common Stock Certificate (incorporated by reference from
Exhibit 4.4 to the Company's Registration Statement No. 001-13083 on
Form 8-B).
5.1 Opinion of Thomas C. Geiser, Esq.
9.1 Amended and Restated Voting Agreement (incorporated by reference from
Exhibit 99.3 to the Company's Current Report on Form 8-K filed August 5,
1997).
9.2 Amended and Restated Voting Trust Agreement (incorporated by reference
from Exhibit 99.2 to the Company's Current Report on Form 8-K filed on
August 5, 1997).
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 (previously filed).
</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 Amendment
No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, California, on the 4th day of
August, 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
Amendment No. 1 has been signed by the following persons in the
capacities indicated on the 4th day of August, 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>
<S> <C>
4.1 Restated Certificate of Incorporation of the Company
(incorporated by reference from Exhibit 3.1 to the Company's
Current Report on Form 8-K filed on August 5, 1997).
4.2 Bylaws of the Company (incorporated by reference from Appendix B to
WellPoint California's Schedule 14A filed May 8, 1997,
File No. 333-03292-01).
4.3 Agreement and Plan of Reorganization dated as of July 22, 1997 by and
among WellPoint Health Networks, Inc., a California corporation, WLP
Acquisition Corp., a California corporation, and the Company
(incorporated by reference from Exhibit 99.1 to the Company's Current
Report on Form 8-K filed on August 5, 1997).
4.4 Agreement of Merger (incorporated by reference from Exhibit 3.3 to the
Company's Current Report on Form 8-K filed on August 5, 1997).
4.5 Specimen of Common Stock Certificate (incorporated by reference from
Exhibit 4.4 to the Company's Registration Statement No. 001-13083 on
Form 8-B).
5.1 Opinion of Thomas C. Geiser, Esq.
9.1 Amended and Restated Voting Agreement (incorporated by reference from
Exhibit 99.3 to the Company's Current Report on Form 8-K filed August 5,
1997).
9.2 Amended and Restated Voting Trust Agreement (incorporated by reference
from Exhibit 99.2 to the Company's Current Report on Form 8-K filed on
August 5, 1997).
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 (previously filed).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
August 5, 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 Post-Effective Amendment No. 1 to Form S-3
(File No. 333-31599) 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 to our firm under the caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
July 31, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 1 to the Registration Statement (Form S-3 No. 333-31599) 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
August 1, 1997
