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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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): February 1, 2000
AETNA INC.
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(Exact Name of Registrant as Specified in its Charter)
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Connecticut 1-11913 02-0488491
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(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
151 Farmington Avenue
Hartford, Connecticut 06156
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(Address of Principal Executive Offices) (Zip Code)
(860) 273-0123
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(Registrant's telephone number, including area code)
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. Other Events.
On February 1, 2000, Aetna Inc. (the "Company") announced that, following a
review by the staff of the Securities and Exchange Commission (the "SEC"), the
Company will amend previously issued financial statements and related
disclosures for 1998 as well as the first three quarters of 1999. The
restatements will have no impact on the Company's total net income in 1998. In
1999, the Company's net income will be reduced by approximately $10 million, or
$0.07 per share, for both the first and second quarter and increased by
approximately $30 million, or $0.20 per share, for the third quarter.
The restatements primarily relate to the classification and timing of
amounts earned by the Company following the sale of its behavioral health
business, Human Affairs International, Incorporated ("HAI") to Magellan Health
Services, Inc. ("Magellan") in December 1997. The Company also has agreed to
changes in certain aspects of the Prudential HealthCare accounting, which will
not materially impact the Company's previously reported results.
When the Company sold HAI, it also entered into a long-term agreement with
Magellan. The amounts earned under that agreement will be reclassified from
operating income to capital gains. As a result: (a) the Company's 1998 operating
earnings will be reduced by approximately $39 million after-tax, with a similar
increase to capital gains; (b) for each of the first three quarters of 1999, the
Company's operating earnings will be reduced by approximately $10 million
after-tax; (c) the Company will record an additional $39 million capital gain in
the third quarter of 1999; and (d) the Company's operating earnings are
projected to be reduced by approximately $10 million for the fourth quarter of
1999. To the extent that the Company earns future amounts during the remainder
of the term of the Magellan agreement (through 2002), those amounts also will be
reflected as capital gains.
The changes in the Prudential HealthCare accounting will increase the
Company's third quarter 1999 operating earnings by less than $1 million
after-tax and are projected to result in an approximately $7 million after-tax
reduction in operating earnings for the fourth quarter 1999.
The Company expects in the near future to file an amended Form 10-K for
1998 and an amended Form 10-Q for each of the first three quarters of 1999,
reflecting these changes and certain additional disclosures.
Certain information in this Current Report is forward looking, including
estimates of the amounts to be restated for 1998 and the first three quarters of
1999 and projections concerning the impact of accounting changes on the
Company's results for the fourth quarter of 1999. That information is based on
management's current estimates, assumptions and projections. The estimated
amounts of restatement are also subject to completion and audit of the Company's
restated financial statements. For further discussion of important risk factors
that may materially affect the Company and these forward-looking statements, see
the risk factors contained in the Company's Report on Form 10-Q for the third
quarter of 1999 filed with the SEC, which risk factors are incorporated herein
by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AETNA INC.
Dated: February 1, 2000 By /s/ Alan M. Bennett
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Name: Alan M. Bennett
Title: Vice President and
Corporate Controller
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