<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _____ to _____
Commission file number 0-11531
U.S. HEALTHCARE, INC. SAVINGS PLAN
(full title of the plan)
U.S. Healthcare, Inc.
980 Jolly Road
Blue Bell, Pennsylvania 19422
(Name of issuer of the securities held pursuant to
the plan and the address of its principal executive offices)
Registrant's telephone number, including area code (215) 628-4800
Notices and communications from the Securities and Exchange
Commission relative to this report should be forwarded to:
Don H. Liu, Esquire
U.S. Healthcare, Inc.
980 Jolly Road
Blue Bell, PA 19422
(215) 654-5642
This is the first of 18 pages. The Index to Exhibits is on page 17.
<PAGE> 2
FINANCIAL STATEMENTS AND SCHEDULES
U.S. HEALTHCARE, INC.
SAVINGS PLAN
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
<PAGE> 3
U.S. HEALTHCARE, INC.
SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
Years ended December 31, 1995 and 1994
CONTENTS
Report of Independent Auditors
Audited Financial Statements
Statements of Net Assets Available for Plan Benefits
Statements of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
Schedules
Schedule of Assets Held for Investment Purposes
Schedule of Reportable Transactions
<PAGE> 4
Report of Independent Auditors
To the Plan Administrator
U.S. Healthcare, Inc. Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of the U.S. Healthcare, Inc. Savings Plan as of December 31, 1995 and
1994, and the related statements of changes in net assets available for plan
benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1995 and 1994, and the changes in its net assets available for plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements as a whole. The accompanying supplemental schedules of assets held
for investment purposes as of December 31, 1995, and of reportable transactions
for the year then ended, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974, and are not a required part
of the financial statements. The supplemental schedules have been subjected to
the auditing procedures applied in our audit of the 1995 financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the 1995 financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Philadelphia, PA
June 14, 1996
<PAGE> 5
U.S. HEALTHCARE, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31, 1995
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE EQUITY-
STOCK RESERVE BOND INCOME MAGELLAN MATCHING
FUND FUND FUND FUND FUND FUND TOTAL
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $23,411,928 $3,612,671 $2,603,146 $4,661,273 $10,505,716 $21,037,005 $65,831,739
Receivables:
Contributions receivable - - - - - 74,666 74,666
Participant loans receivable 213,144 311,690 142,825 219,764 303,465 23,910 1,214,798
-----------------------------------------------------------------------------------------------
Total receivables 213,144 311,690 142,825 219,764 303,465 98,576 1,289,464
-----------------------------------------------------------------------------------------------
Total assets 23,625,072 3,924,361 2,745,971 4,881,037 10,809,181 21,135,581 67,121,203
-----------------------------------------------------------------------------------------------
LIABILITIES
Distributions payable 96,147 4,991 10,133 19,551 58,081 - 188,903
-----------------------------------------------------------------------------------------------
Net assets available for
Plan benefits $23,528,925 $3,919,370 $2,735,838 $4,861,486 $10,751,100 $21,135,581 $66,932,300
===============================================================================================
</TABLE>
See accompanying notes.
<PAGE> 6
U.S. HEALTHCARE, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
December 31, 1994
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE EQUITY-
STOCK RESERVE BOND INCOME MAGELLAN MATCHING
FUND FUND FUND FUND FUND FUND TOTAL
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at fair value $17,304,795 $2,994,445 $1,873,461 $2,862,613 $5,929,546 $16,396,261 $47,361,121
Receivables:
Contributions receivable - - - - - 64,093 64,093
Participant loans receivable 233,025 284,028 104,705 129,965 178,306 27,854 957,883
---------------------------------------------------------------------------------------------
Total receivables 233,025 284,028 104,705 129,965 178,306 91,947 1,021,976
---------------------------------------------------------------------------------------------
Total assets 17,537,820 3,278,473 1,978,166 2,992,578 6,107,852 16,488,208 48,383,097
LIABILITIES
Distribution payable 67,280 6,546 8,469 16,212 43,819 - 142,326
---------------------------------------------------------------------------------------------
Net assets available for
Plan benefits $17,470,540 $3,271,927 $1,969,697 $2,976,366 $6,064,033 $16,488,208 $48,240,771
=============================================================================================
</TABLE>
See accompanying notes.
<PAGE> 7
U.S. HEALTHCARE, INC.
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
Year Ended December 31, 1995
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE EQUITY-
STOCK RESERVE BOND INCOME MAGELLAN MATCHING
FUND FUND FUND FUND FUND FUND TOTAL
--------------------------------------------------------------------------------------------
Additions to net assets attributed to:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
in fair value of investments $ 3,115,717 $ - $ 123,544 $ 763,278 $ 1,818,449 $ 2,636,171 $ 8,457,159
Dividends and interest 521,077 186,416 145,536 264,981 616,236 440,885 2,175,131
--------------------------------------------------------------------------------------------
Total investment income 3,636,794 186,416 269,080 1,028,259 2,434,685 3,077,056 10,632,290
Participant contributions 3,505,950 609,646 598,198 1,078,422 2,422,665 - 8,214,881
Employer contributions - - - - - 2,259,626 2,259,626
--------------------------------------------------------------------------------------------
Total additions 7,142,744 796,062 867,278 2,106,681 4,857,350 5,336,682 21,106,797
Deduction from assets attributed to
withdrawals (619,668) (349,293) (82,586) (241,964) (432,448) (689,309) (2,415,268)
--------------------------------------------------------------------------------------------
Net increase prior to interfund
transfers 6,523,076 446,769 784,692 1,864,717 4,424,902 4,647,373 18,691,529
Interfund transfers (net) (464,691) 200,674 (18,551) 20,403 262,165 - -
--------------------------------------------------------------------------------------------
Net increase 6,058,385 647,443 766,141 1,885,120 4,687,067 4,647,373 18,691,529
Net assets available for plan
benefits:
Beginning of year 17,470,540 3,271,927 1,969,697 2,976,366 6,064,033 16,488,208 48,240,771
--------------------------------------------------------------------------------------------
End of year $23,528,925 $3,919,370 $2,735,838 $4,861,486 $10,751,100 $21,135,581 $66,932,300
============================================================================================
</TABLE>
See accompanying notes.
<PAGE> 8
U.S. HEALTHCARE, INC.
SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
Year Ended December 31, 1994
<TABLE>
<CAPTION>
GOVERNMENT INTERMEDIATE EQUITY-
STOCK RESERVE BOND INCOME MAGELLAN MATCHING
FUND FUND FUND FUND FUND FUND TOTAL
-----------------------------------------------------------------------------------------------
Additions to net assets attributed to:
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Net appreciation (depreciation)
in fair value of investments $ 986,244 $ - $ (154,484) $ (250,825) $ (302,802) $ 1,136,434 $ 1,414,567
Dividends and interest 308,707 104,990 116,391 255,371 212,723 290,853 1,289,035
-----------------------------------------------------------------------------------------------
Total investment income 1,294,951 104,990 (38,093) 4,546 (90,079) 1,427,287 2,703,602
Participant contributions 2,534,055 518,240 449,400 770,842 1,745,215 - 6,017,752
-----------------------------------------------------------------------------------------------
Total additions 3,829,006 623,230 411,307 775,388 1,655,136 1,427,287 8,721,354
Deduction from assets attributed
to withdrawals (516,014) (158,598) (55,592) (71,048) (253,142) (593,822) (1,648,216)
-----------------------------------------------------------------------------------------------
Net increase prior to interfund
transfers 3,312,992 464,632 355,715 704,340 1,401,994 833,465 7,073,138
Interfund transfers (net) (203,692) 165,320 (42,856) 38,932 42,296 - -
-----------------------------------------------------------------------------------------------
Net increase 3,109,300 629,952 312,859 743,272 1,444,290 833,465 7,073,138
Net assets available for plan
benefits:
Beginning of year 14,361,240 2,641,975 1,656,838 2,233,094 4,619,743 15,654,743 41,167,633
-----------------------------------------------------------------------------------------------
End of year $17,470,540 $3,271,927 $1,969,697 $ 2,976,366 $ 6,064,033 $ 16,488,208 $ 48,240,771
===============================================================================================
</TABLE>
See accompanying notes.
<PAGE> 9
U.S. HEALTHCARE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. DESCRIPTION OF PLAN
The following brief discussion of the U.S. Healthcare, Inc. Savings Plan (the
"Plan") is provided for general information only. Participants should refer to
the Plan document, as amended, for a more complete description of the Plan's
provisions.
GENERAL
The Plan is a defined contribution savings plan subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended. Each employee of
U.S. Healthcare, Inc. and its subsidiaries (the Employer) who has both attained
21 years of age and completed six months of service (as defined in the Plan) is
eligible to participate in the Plan. Employees may elect to participate in the
Plan as of the first day of any calendar quarter following their meeting such
eligibility requirements.
CONTRIBUTIONS AND VESTING
Each year, participants may contribute any amount from 1% to 16% of their annual
compensation, as defined in the Plan. The Employer contributes an amount equal
to one third of the participant's contribution, up to 2% of the participant's
compensation (as defined in the Plan). Contributions are generally funded every
two weeks. Employer and participant contributions are further subject to various
limitations under the Internal Revenue Code (IRC).
Participant contributions, as affected by investment results, are fully vested
at all times. Employer contributions, as similarly affected, are fully vested
upon termination of employment as a result of retirement, death or permanent
disability, or upon the Employer's termination of the Plan. In all other cases,
Employer contributions, as affected by investment results, vest after three full
years of service, as defined in the Plan. The unvested portion of a
participant's accrued benefit is forfeited on the date the participant receives
a distribution of the entire vested portion of his accrued benefit as a result
of termination of employment. If a terminated participant again becomes an
employee before incurring five consecutive one-year breaks in service, as
defined in the Plan, and the participant repays, in accordance with the
provisions of the Plan, the full amount of the distribution received, the
forfeited amount of the
<PAGE> 10
U.S. HEALTHCARE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF PLAN (CONTINUED)
CONTRIBUTIONS AND VESTING (CONTINUED)
participant's accrued benefit is restored. If a participant does not receive a
distribution of the entire vested portion of his accrued benefit, the unvested
portion is forfeited on the last day of the Plan year in which the participant
incurs his fifth consecutive one-year break in service following termination of
employment. Forfeitures, as affected by investment results, are applied to
reduce future Employer contributions. Employer contributions were so reduced by
$68,761 and $1,721,867 in 1995 and 1994, respectively.
ADMINISTRATIVE EXPENSES
All expenses related to the administration of the Plan are paid by the Employer.
INVESTMENT OPTIONS
The Plan offers participants five investment options for their contributions -
the common stock of the Employer (the Stock Fund) and four mutual funds of
Fidelity Management & Research Company, Massachusetts (Fidelity): Fidelity U.S.
Government Reserves (the Government Reserve Fund); Fidelity Intermediate Bond
Fund (the Intermediate Bond Fund); Fidelity Equity-Income Fund (the
Equity-Income Fund); and Fidelity Magellan Fund (the Magellan Fund).
In accordance with the Plan document, all funds contributed by the Employer are
invested in the common stock of the Employer and segregated in a separate fund
(the Matching Fund).
PARTICIPANT LOANS RECEIVABLE
Participants may borrow from their vested accrued benefit a minimum of $1,000 up
to a maximum of $50,000 or 50% of their vested accrued benefit, whichever is
less. Loan terms range from 1 to 5 years. The loans are secured by the balance
in the participant's account and bear interest at prevailing rates at the time
the loan is approved. Principal and interest are paid ratably through monthly
payroll deductions.
<PAGE> 11
U.S. HEALTHCARE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF PLAN (CONTINUED)
PAYMENT OF BENEFITS
All benefits are paid in lump-sum distributions.
PLAN TERMINATION
Although it has not expressed any intent to do so, the Employer has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
Employer contributions, as affected by investment results, become fully vested.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes
to financial statements. Actual results could differ from those estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. The fair value of the common
stock of the Employer is determined on the basis of the last reported sales
price on a national stock market on the last business day of the period. The
fair value of the Plan's investments in the mutual funds is as reported by
Fidelity. Gains and losses on investments sold are calculated on an average cost
basis. Participant notes receivable are valued at cost which approximates fair
value.
<PAGE> 12
U.S. HEALTHCARE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
Investments that represent 5% or more of the Plan's net assets are as follows.
<TABLE>
<CAPTION>
December 31
1995 1994
------------------
<S> <C> <C>
Investments at fair value:
Stock Fund $23,411,928 $17,304,795
Government Reserve Fund 3,612,671 2,994,445
Equity-Income Fund 4,661,273 2,862,613
Magellan Fund 10,505,716 5,929,546
Matching Fund 21,037,005 16,396,261
</TABLE>
4. DISTRIBUTIONS PAYABLE
Subsequent to the end of the 1995 and 1994 Plan year, the Plan determined that
the level of participants' contributions were in excess of allowable
"nondiscrimination" limitations prescribed by the IRC for those Plan years. The
"nondiscrimination" provisions establish limits for the deferral percentages of
"highly compensated" participants (as defined in the IRC) based on the deferral
percentage of the remaining participants. Excess participants' contributions and
the income through December 31, 1995 and 1994 attributed to these contributions
were distributed in 1996 and 1995 to affected participants. Amounts so
distributed have been recorded in the accompanying financial statements as a
liability at December 31, 1995 and 1994.
5. DIVIDENDS FROM EMPLOYER
The Plan received cash dividends on the common stock of the Employer totaling
$918,238 and $578,261 in 1995 and 1994, respectively.
<PAGE> 13
U.S. HEALTHCARE, INC.
SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAX STATUS
The Internal Revenue Service issued a determination letter dated September 20,
1995 indicating that the Plan qualifies under the appropriate section of the IRC
and, therefore, the related trust is not subject to tax under current income tax
law. Once qualified, the Plan is required to operate in conformity with the IRC
to maintain its qualification. The Plan Administrator is not aware of any course
of action or series of events that have occurred that would adversely affect the
Plan's qualified status.
7. SUBSEQUENT EVENT
U.S. Healthcare, Inc. and Aetna Life and Casualty Company entered into an
agreement (the Merger Agreement), dated as of March 30, 1996, pursuant to which
they have agreed to merge. The Merger Agreement, which has been approved by the
board of directors of each company, calls for the formation of a new holding
company, Aetna Inc. The consummation of the merger is subject to approval by
shareholders of both companies and federal and state regulators, and other
conditions. Under the terms of the agreement, U.S. Healthcare, Inc. shareholders
will receive $34.20 in cash, 0.2246 shares of Aetna Inc. common stock and 0.0749
shares of Aetna Inc. mandatorily convertible preferred stock for each share of
U.S. Healthcare, Inc. common stock and for each share of U.S. Healthcare, Inc.
Class B stock. Consideration received for U.S. Healthcare, Inc. common stock
held by the Plan will be credited to the account of each participant as
applicable.
<PAGE> 14
U.S. HEALTHCARE, INC.
SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1995
<TABLE>
<CAPTION>
MARKET
IDENTITY OF ISSUE DESCRIPTION COST VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Healthcare, Inc.* 955,891 shares of common stock $19,406,608 $ 44,448,933
Fidelity* U.S. Government Reserves 3,612,671 units 3,612,671 3,612,671
Fidelity* Intermediate Bond Fund 250,062 units 2,564,591 2,603,146
Fidelity* Equity-Income Fund 122,891 units 3,866,007 4,661,273
Fidelity* Magellan Fund 122,188 units 8,822,819 10,505,716
-------------------------------
38,272,696 65,831,739
Participant loans Bearing interest at 10.25% to
11.25% 1,214,798 1,214,798
-------------------------------
$39,487,494 $ 67,046,537
===============================
</TABLE>
*Party-in-interest.
<PAGE> 15
U.S. HEALTHCARE, INC.
SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
Year ended December 31, 1995
<TABLE>
<CAPTION>
NUMBER NUMBER NUMBER NUMBER
OF OF TOTAL OF OF TOTAL
DESCRIPTION OF ASSET* SHARES PURCHASES(1) PURCHASES(2) SHARES SALES(1) SALES(2) COST NET GAIN
- ----------------------------------------------------------------------- ----------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Category (iii) -- Aggregate transactions in excess of 5% of Plan assets
U.S. Healthcare, Inc.
common stock.............. 198,754 $7,255,995 59,858 $2,274,899 $1,094,276 $1,180,623
Fidelity Magellan Fund........ 45,480 3,859,146 12,058 1,112,299 968,933 143,366
</TABLE>
(1) Because of the flexibility afforded participants with respect to
payroll deductions, investment option elections, dividend reinvestment
and interfund transfers, determination of the number of purchases and
sales is not practicable.
(2) Current value was equal to purchase price at time of acquisition and
sales price at time of disposal.
*All transactions were executed by Fidelity Management Trust Company.
There were no category (i), (ii), or (iv) reportable transactions during the
year ended December 31, 1995.
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustee (or other persons who administer the Plan) have duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
U.S. HEALTHCARE, INC. SAVINGS PLAN
DATE: June 27, 1996 By: /s/ DON H. LIU
--------------------
Don H. Liu, Secretary
<PAGE> 17
Index to Exhibit
Exhibit No.
23 Consent of Ernst & Young, independent auditors
<PAGE> 1
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-36049) pertaining to the U.S. Healthcare, Inc. Savings Plan of our
report dated June 14, 1996, with respect to the financial statements and
schedules of the U.S. Healthcare, Inc. Savings Plan included in this Annual
Report (Form 11-K) for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
Philadelphia, Pennsylvania
June 27, 1996
