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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) 10/5/98
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WellPoint Health Networks Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 001-13803 95-4635504
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
21555 Oxnard Street, Woodland Hills, California 91367
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (818) 703-4000
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Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On October 5, 1998, WellPoint Health Networks Inc., a Delaware
corporation (the "Company"), issued a press release announcing that it had
received a private letter ruling from the Internal Revenue Service with
respect to the deductibility of certain payments made at the time of the
Company's Recapitalization in May 1996 with its former parent company, Blue
Cross of California. A complete copy of the press release is attached to
this Current Report on Form 8-K and the description of such press release
contained herein is qualified by reference to such exhibit.
Certain statements contained in this Current Report on Form 8-K
(including the exhibit attached hereto) may be considered forward-looking
statements (as such term is defined in the Securities Exchange Act of 1934,
as amended). Such statements involve a number of risks and uncertainties that
may cause actual events to differ from those projected or expected. Factors
that can cause actual results to differ materially include, but are not
limited to, those discussed in the Company's Annual Report on Form 10-K, the
other documents filed from time to time with the Securities and Exchange
Commission and the exhibit attached to this Current Report on Form 8-K.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof.
(c) EXHIBITS
Exhibit No. Exhibit
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99.1 Press Release dated October 5, 1998
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 13, 1998
WELLPOINT HEALTH NETWORKS INC.
By: /s/ Thomas C. Geiser
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Name: Thomas C. Geiser
Title: Executive Vice President
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EXHIBIT 99.1
FOR IMMEDIATE RELEASE OCTOBER 5, 1998
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INVESTOR AND MEDIA CONTACT: John Cygul
(818) 703-4231
WELLPOINT RECEIVES FAVORABLE IRS TAX RULING ON
THE COMPANY'S 1996 RECAPITALIZATION TRANSACTION
WOODLAND HILLS, CALIF. - WellPoint Health Networks Inc. (NYSE:WLP) today
announced that it has received a favorable private letter ruling dated
September 29, 1998 from the Internal Revenue Service regarding the
deductibility of a cash payment made by WellPoint's former parent company at
the time of WellPoint's Recapitalization on May 20, 1996. As a result of the
ruling, WellPoint intends to file amended tax returns for prior tax years
requesting a refund of approximately $200 million and anticipates that future
income taxes payable will be reduced by approximately $80 million.
For the quarter ended September 30, 1998, in accordance with generally
accepted accounting principles, WellPoint will reduce the remaining goodwill
of $195 million arising from the acquisition of certain assets and
liabilities of Blue Cross of California, WellPoint's former parent company,
at the time of the Recapitalization and will realize a reduction in its
income tax expense of approximately $85 million. As a result of this
reduction in goodwill, WellPoint's future results of operations will not
reflect the annual amortization expense of approximately $5.2 million.
As part of the Recapitalization, among other actions, WellPoint made a
cash payment of $800 million in the form of a dividend to Blue Cross of
California. The cash amount received by Blue Cross of California was then
paid over to one of two newly created charitable foundations. Thereafter,
Blue Cross of California converted from a non-profit corporation into a
for-profit corporation and was merged with WellPoint. The private letter
ruling received by WellPoint from the Internal Revenue Service allows for the
$800 million paid over by Blue Cross of California to one of the charitable
foundations to be deducted as an ordinary and necessary business expense.
WellPoint Health Networks Inc., one of the nation's largest publicly
traded managed care companies, serves the health care needs of 6.8 million
medical and over 23 million specialty members nationally through Blue Cross
of California in California, and UNICARE throughout other parts of the
country. WellPoint offers a broad spectrum of quality network-based health
products including HMO, PPO, POS and specialty managed care products.
Specialty products include pharmacy benefit management, dental, utilization
management, vision, mental health, life and disability insurance, flexible
spending accounts, COBRA administration, and Medicare supplements.
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CAUTIONARY STATEMENT: CERTAIN STATEMENTS CONTAINED IN THIS PRESS RELEASE ARE
FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY DUE TO,
AMONG OTHER THINGS, TIMING AND RECEIPT OF ESTIMATED TAX REFUNDS, THE
EFFECTIVE CORPORATE TAX RATE APPLIED TO WELLPOINT AND WELLPOINT'S RESULTS OF
OPERATIONS. ADDITIONAL RISK FACTORS ARE LISTED FROM TIME TO TIME IN
WELLPOINT'S VARIOUS REPORTS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING WELLPOINT'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1997.
