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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________________ to ____________________
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Commission File Number 0-14181
PACIFICARE HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0064895
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
5995 Plaza Drive, Cypress, California 90630-5028
(Address of principal executive offices, including zip code)
(Registrant's telephone number, including area code) (714) 952-1121
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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As of July 31, 1996, there were 12,370,758 shares of the Registrant's Class A
Common Stock, par value $0.01 per share, outstanding and 18,812,953 shares of
Class B Common Stock, par value $0.01 per share, outstanding.
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could arise upon completion of the audits by OPM of the health plans, would not
materially affect the Company's consolidated financial position, results of
operations or cash flows.
NOTE 7 - CONTINGENCIES
The Company is involved in legal actions in the normal course of business,
some of which seek substantial monetary damages, including claims for punitive
damages which are not covered by insurance. Additionally, the Company's
programs, including services provided to government employees, in the normal
course of its business, are subject to retrospective audits by the respective
regulating agencies. After review, including consultation with counsel,
management believes any ultimate liability in excess of amounts accrued which
could arise from audits or legal actions would not materially affect the
Company's consolidated financial position, results of operations or cash flows.
NOTE 8 - SUBSEQUENT EVENTS
On August 4, 1996, the Company entered into a definitive agreement and plan
of reorganization with FHP International Corporation ("FHP"), the Fountain
Valley-based health care services company, in which the Company will acquire FHP
for a total purchase price expected to be approximately $2.1 billion. FHP is a
diversified health care services company which, through its HMO subsidiaries,
serves more than 1.9 million members in 11 states and Guam. FHP reported
revenues of $3.1 billion and net income of $22.7 million for the nine-month
period ended March 31, 1996. FHP also operates a health and life indemnity
insurer, a workers' compensation insurer, and a national preferred provider
organization. FHP is one of the largest providers of health care services for
Medicare beneficiaries in the United States. The transaction is subject to
various federal and state regulatory approvals, approval of the stockholders of
both companies and other customary conditions and is expected to close by the
end of the calendar year. The transaction will be accounted for as a purchase
and is designed to qualify as a tax-free exchange for the stock portion.
Terms of the transaction call for holders of FHP common stock to receive a
package of consideration equal, at present market prices, to approximately
$35.00 per share of the FHP common stock held, of which $17.50 per FHP share of
the total consideration will be paid in cash. PacifiCare will also issue to
holders of FHP common stock a total of approximately 2,350,000 shares of
PacifiCare's Class A Common Stock, with the remainder being paid in shares of
PacifiCare's Class B Common Stock. Holders of FHP's Series A Preferred Stock
will receive approximately $14.11 in cash per FHP share, as well as one-half
share of a new PacifiCare convertible series A Preferred Stock with terms
similar to those of the existing FHP Series A Preferred Stock. PacifiCare has
received a commitment letter from Bank of America to provide financing for the
transaction. Common and Preferred shareholders of FHP will also receive rights
to purchase FHP's ownership of the stock of Talbert Medical Management
Corporation, to be distributed following the completion of the merger.
The current operations of PacifiCare in California, Florida, Oklahoma,
Oregon, Texas and Washington will be expanded to include operations in Arizona,
Colorado, Illinois, Indiana, Kentucky, New Mexico, Nevada, Ohio, Utah and Guam.
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SIGNATURES
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 thereunto duly authorized.
PACIFICARE HEALTH SYSTEMS, INC.
(Registrant)
Date: August 16, 1996 By: /s/ Alan Hoops
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Alan Hoops
President,
Chief Executive Officer
and Director
Date: August 16, 1996 By: /s/ Wayne Lowell
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Wayne Lowell
Executive Vice President,
Chief Administrative Officer and
Chief Financial Officer
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