<PAGE> 1
CONFORMED COPY
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 28, 1997
-----------------
CIGNA CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 1-8323 06-1059331
-------- ------ ----------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
ONE LIBERTY PLACE, 1650 MARKET STREET, P.O. BOX 7716
PHILADELPHIA, PENNSYLVANIA 19192-1550
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(215) 761-1000
--------------
NOT APPLICABLE
------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events.
On February 27, 1997, CIGNA Corporation ("CIGNA") and Healthsource,
Inc. ("Healthsource") entered into an Agreement and Plan of Merger (the "Merger
Agreement") among CIGNA, Healthsource and CHC Acquisition Corp., a wholly-owned
subsidiary of CIGNA ("CHC Acquisition"), providing for the transactions that
will result in Healthsource becoming a subsidiary of CIGNA. Under the terms of
the Merger Agreement, CHC Acquisition will commence a cash tender offer on or
before March 6, 1997 for all outstanding shares of common stock, par value $.10
per share, of Healthsource (the "Healthsource Common Stock") at a price of
$21.75 per share. Consummation of the tender offer is subject to, among other
things, at least a majority of the shares of Healthsource Common Stock,
determined on a fully-diluted basis, being validly tendered and not withdrawn
prior to the expiration of the tender offer and the receipt of all applicable
regulatory approvals. A copy of the press release of CIGNA announcing the
transaction is filed herewith as Exhibit 99 and is incorporated by reference
herein.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements not dealing with historical results are forward-looking and
are based on estimates, assumptions and projections. CIGNA cautions the reader
that actual results could differ materially from those expected by CIGNA
depending on the outcome of certain factors including: (i) successful offering
of CIGNA managed care products to existing Healthsource corporate customers and
cross-selling of CIGNA's ancillary coverages (such as mental health and
pharmacy coverages); (ii) timely elimination of redundant expenses and timely
integration of management and information systems; (iii) achievement of medical
cost reductions through effective medical cost management; (iv) renegotiation
of provider contracts at less cost-effective rates or terms of payment; and (v)
in order to secure the requisite antitrust and other approvals for the merger,
CIGNA may be required to divest or hold separate certain assets which would
render the merger less beneficial than expected. Finally, CIGNA and
Healthsource face intense competition in their markets and there is,
accordingly, no guarantee that after consummation of the merger CIGNA will
achieve the expected financial and operating results and synergies. The reader
is also directed to other important factors that are noted in CIGNA's annual,
quarterly and current reports filed with the Securities and Exchange
Commission.
Item 7. Financial Statements and Exhibits.
(c) The exhibit accompanying this report is listed in the Index to
Exhibits below.
<PAGE> 3
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.
CIGNA CORPORATION
Date: February 28, 1997 By: /s/Gary A. Swords
------------------------
Gary A. Swords
Vice President and
Chief Accounting Officer
Index to Exhibits
<TABLE>
<CAPTION>
Number Description Method of Filing
- ------ ----------- ----------------
<S> <C> <C>
99 CIGNA Corporation Filed herewith.
news release dated
February 28, 1997
</TABLE>
-2-
<PAGE> 1
NEWS RELEASE
IMMEDIATE [CIGNA LOGO]
CIGNA: MICHAEL J. MONROE, MEDIA RELATIONS - 215.761.6133
ROBERT W. SULLIVAN, FINANCIAL RELATIONS - 215.761.6130
HEALTHSOURCE: TRACEY TURNER, CORPORATE COMMUNICATIONS -
603.268.7516
CIGNA CORPORATION AGREES TO PURCHASE
HEALTHSOURCE FOR $21.75 PER SHARE
----------
Purchase Offers Significant Strategic and Operational Benefits
PHILADELPHIA, PA, February 28, 1997 -- CIGNA Corporation (NYSE: CI) and
Healthsource Inc. (NYSE: HS), an HMO company based in New Hampshire, announced
today that they have signed a definitive agreement under which CIGNA has agreed
to tender $21.75 per share in cash for all outstanding shares of Healthsource.
It is expected that the purchase price of this acquisition will be
approximately $1.7 billion, including the payment of approximately $250 million
of outstanding Healthsource long-term debt. CIGNA expects to commence a tender
offer for all outstanding Healthsource shares within five business days.
"Health care is our largest and most profitable business, and this transaction
will further strengthen our operation to the benefit of our shareholders," said
Wilson H. Taylor, CEO of CIGNA. "Healthsource provides us with access to new
markets, enhances our competitive position in others and fits well with our
managed care and indemnity businesses.
"We expect this acquisition to contribute to increased earnings upon full
integration, which is
<PAGE> 2
Page 2
targeted for 1998. We believe there are potential pre-tax cost savings of more
than $75 million associated with the integration. We also expect revenue and
earnings growth through efficiencies generated by combining operations and by
taking advantage of the core competencies of both businesses."
CIGNA is one of the country's leading health care companies, offering a
complete range of group medical, dental, disability and life insurance
products. It markets them in all 50 states and operates managed care networks
in 43 states, the District of Columbia and Puerto Rico.
Healthsource has approximately 1.1 million members in HMOs operating in 15
states. In addition, it maintains national medical and dental indemnity books
of business; medical covers approximately 2 million people and dental
approximately 2.5 million people. The indemnity business primarily provides
self-insured products to customers in the middle and large segments of the
market.
According to Norman C. Payson, M.D., President and CEO of Healthsource, "We
hold CIGNA Corporation in the highest regard, and believe it will be able to
utilize the culture and resources of Healthsource to further its national
leadership position in health care."
Once the acquisition is completed, CIGNA HealthCare would operate medical HMOs
with total membership of 5.3 million members. CIGNA's medical indemnity
business would cover 7 million lives.
The completion of the transaction is subject to regulatory approvals.
In 1996, CIGNA's Employee Life and Health Benefits segment, of which CIGNA
HealthCare is a
<PAGE> 3
Page 3
part, had premium and premium equivalents of approximately $18 billion and
operating income of $500 million. Healthsource's 1996 net loss was $5 million,
including after-tax special charges of $35 million. It had premium and premium
equivalents of approximately $3.8 billion.
CIGNA Corporation, with 1996 assets of $99 billion and revenues of $19 billion,
is a leading provider of health care, insurance and related financial services
throughout the United States and internationally. CIGNA ranks among the largest
investor-owned insurance organizations in the U.S., with shareholders' equity
of $7.2 billion.
Statements not dealing with historical results are forward-looking and are
based on estimates, assumptions and projections. CIGNA cautions the reader that
actual results could differ materially from those expected by CIGNA depending
on the outcome of certain factors including: (i) successful offering of CIGNA
managed care products to existing Healthsource corporate customers and
cross-selling of CIGNA's ancillary coverages (such as mental health and
pharmacy coverages); (ii) timely elimination of redundant expenses and timely
integration of management and information systems; (iii) achievement of medical
cost reductions through effective medical cost management; (iv) renegotiation
of provider contracts at less cost-effective rates or terms of payment; and (v)
in order to secure the requisite antitrust and other approvals for the merger,
CIGNA may be required to divest or hold separate certain assets which would
render the merger less beneficial than expected. Finally, CIGNA and
Healthsource face intense competition in their markets and there is,
accordingly, no guarantee that after consummation of the merger CIGNA will
achieve the expected financial and operating results and synergies. The reader
is also directed to other important factors that are noted in CIGNA's annual,
quarterly and current reports filed with the Securities and Exchange
Commission.
# # #
<PAGE> 4
CIGNA AND HEALTHSOURCE HMO STATE PRESENCE
Image of a map of the United States of America coded to show the presence in
each state of CIGNA and Healthsource, and both CIGNA and Healthsource HMOs.
