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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 14, 1997
PACIFICARE OPERATIONS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
000-14181 33-0064895
(Commission File No.) (IRS Employer Identification No.)
5995 PLAZA DRIVE
CYPRESS, CA 90630-5028
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (714) 952-1121
PACIFICARE HEALTH SYSTEMS, INC.
(Former name or former address if changed since last report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On February 14, 1997, pursuant to an Amended and Restated Agreement and
Plan of Reorganization dated as of November 11, 1996 (the "Agreement"), among
PacifiCare Health Systems, Inc., formerly named N-T Holdings, Inc., a
Delaware corporation ("PacifiCare Holding"), PacifiCare Operations, Inc.,
formerly named PacifiCare Health Systems, Inc., a Delaware corporation
("PacifiCare"), FHP International Corporation, a Delaware corporation
("FHP"), Neptune Merger Corp., a Delaware corporation and a wholly-owned
subsidiary of PacifiCare Holding ("PacifiCare Merger Sub"), and Tree
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
PacifiCare Holding ("FHP Merger Sub"), PacifiCare Merger Sub merged with and
into PacifiCare (the "PacifiCare Merger") and FHP Merger Sub merged with and
into FHP (the "FHP Merger"). The PacifiCare Merger and the FHP Merger shall
together be referred to herein as the "Mergers." The purpose of the Mergers
was, among other things, to provide for an acquisition transaction involving
PacifiCare and FHP. The Mergers, among other things, resulted in a technical
change of control of PacifiCare, although a majority of the directors of
PacifiCare Holding after the Mergers were directors of PacifiCare prior to
the Mergers.
The Mergers became effective at the time of filing of Certificates of
Merger with the Delaware Secretary of State on February 14, 1997 (the
"Effective Time"). At the Effective Time: (a) FHP Merger Sub and PacifiCare
Merger Sub ceased to exist; (b) FHP, as the surviving corporation in the FHP
Merger, and PacifiCare, as the surviving corporation in the PacifiCare
Merger, became wholly-owned subsidiaries of PacifiCare Holding; and (c) the
name of PacifiCare Holding was changed from "N-T Holdings, Inc." to
"PacifiCare Health Systems, Inc.," while the name of PacifiCare was changed
from "PacifiCare Health Systems, Inc." to "PacifiCare Operations, Inc."
Additionally, at the Effective Time, pursuant to Section 1.5 of the
Agreement, the following share conversions took place: (a) each outstanding
share of the Class A Common Stock, par value $0.01 per share, of PacifiCare
was exchanged for one share of the Class A Common Stock, par value $0.01 per
share, of PacifiCare Holding (the "PacifiCare Holding Class A Common"); (b)
each outstanding share of the Class B Common Stock, par value $0.01 per
share, of PacifiCare was exchanged for one share of the Class B Common Stock,
par value $0.01 per share, of PacifiCare Holding (the "PacifiCare Holding
Class B Common"); (c) each outstanding share of the Common Stock, par value
$0.05 per share, of FHP (the "FHP Common Stock") was exchanged for $17.50 in
cash, 0.056 shares of PacifiCare Holding Class A Common and 0.176 shares of
PacifiCare Holding Class B Common; and (d) each outstanding share of the
Series A Cumulative Convertible Preferred Stock, par value $0.05 per share,
of FHP (the "FHP Preferred Stock") was exchanged for $14.113 in cash and 0.50
shares of Series A Cumulative Convertible Preferred Stock, par value $0.01
per share, of PacifiCare Holding (the "PacifiCare Holding Preferred").
Further, as soon after the Effective Time as legally permitted, former
holders of FHP Common Stock and of FHP Preferred Stock will receive rights
(the "Talbert Rights") to acquire common stock of Talbert Medical Management
Holdings Corporation ("TMMHC"). Present expectations are that the offering of
the Talbert Rights will commence in April 1997, shortly after TMMHC's audited
1996 financial results become available.
The principles determining the conversion of shares pursuant to the
effectuation of the Mergers are set forth in the subsection entitled "Merger
Consideration" in the section entitled "The Mergers and Related Transactions"
2.
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of the prospectus filed by PacifiCare Holding with the Securities and
Exchange Commission on November 26, 1996 pursuant to Rule 424(b)(3)
promulgated under the Securities Act of 1933, as amended (the "Prospectus").
Such information set forth in such subsection is incorporated herein by
reference. An explanation of the Talbert Rights and the offering of such
Rights is set forth in the section entitled "The Offering" of the prospectus
included in the Registration Statement on Form S-1 (No. 333-17679), as
amended, filed by TMMHC, most recently filed on January 31, 1997 (the
"Talbert S-1"). Such information set forth in such section is incorporated
herein by reference.
To finance the Mergers in part, PacifiCare Holding borrowed funds from a
syndicate of financial institutions agented by Bank of America National Trust
and Savings Association, as set forth in the subsection entitled "Financing
of FHP Merger Consideration" of the section entitled "The Mergers and Related
Transactions" of the Prospectus. Such information set forth in such
subsection is incorporated herein by reference.
The number of shares of PacifiCare Holding Class A Common, PacifiCare
Holding Class B Common and PacifiCare Holding Preferred issued in the FHP Merger
was approximately 2,337,000, 7,346,000, and 10,517,000, respectively. The
aggregate amount of cash paid to former holders of FHP Common Stock and FHP
Preferred Stock in the FHP Merger was approximately $1,027,000,000. The number
of shares of PacifiCare Holding Class A Common and PacifiCare Holding Class B
Common issued in the PacifiCare Merger was approximately 12,385,000 and
18,931,000, respectively.
The Mergers are intended to be tax-free transactions under the Internal
Revenue Code of 1986, as amended, and will be accounted for as a purchase. A
copy of the press release announcing the consummation of the Mergers is filed
herewith as Exhibit 99.01.
As a result of the PacifiCare Merger, 100% of all equity securities
(including all voting securities) of PacifiCare are now owned directly by
PacifiCare Holding. Information regarding the persons who previously controlled
PacifiCare is set forth in the subsection entitled "PacifiCare" of the section
entitled "Ownership of PacifiCare, FHP and PacifiCare Holding" of the
Prospectus. Such information set forth in such subsection is incorporated herein
by reference.
Arrangements regarding election of directors of the Board of PacifiCare
Holding upon the consummation of the Mergers are set forth in the section
entitled "Management of PacifiCare Holding" of the Prospectus. Such information
set forth in such section is incorporated herein by reference. There are no
arrangements known to PacifiCare at this time which may at a subsequent date
result in a further change in control of PacifiCare.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
3.
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Exhibit No. Description
2.01 Amended and Restated Agreement and Plan of Reorganization, dated
as of November 11, 1996, among N-T Holdings, Inc., a Delaware
corporation, PacifiCare Health Systems, Inc., a Delaware
corporation, FHP International Corporation, a Delaware
corporation, Neptune Acquisition Corp., a Delaware corporation,
and Tree Acquisition Corp., a Delaware corporation. Incorporated
by reference herein from Appendix A of the Prospectus.
2.02 The subsection entitled "Merger Consideration" of the section
entitled "The Mergers and Related Transactions" of the
Prospectus, the subsection entitled "Financing of FHP Merger
Consideration" of the section entitled "The Mergers and Related
Transactions" of the Prospectus, the subsection entitled
"PacifiCare" of the section entitled "Ownership of PacifiCare,
FHP and PacifiCare Holding" of the Prospectus, and the section
entitled "Management of PacifiCare Holding" of the Prospectus.
Incorporated by reference herein from the Prospectus.
2.03 The section entitled "The Offering" of the prospectus included in
the Talbert S-1. Incorporated by reference herein from the
Talbert S-1.
99.01 Press Release of February 14, 1997.
4.
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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 hereunto duly authorized.
PACIFICARE OPERATIONS, INC.
Dated: February 14, 1997 By: /s/ Alan R. Hoops
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Alan R. Hoops
President and Chief Executive Officer
5.
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EXHIBIT INDEX
Exhibit No. Description
2.01 Amended and Restated Agreement and Plan of Reorganization, dated
as of November 11, 1996, among N-T Holdings, Inc., a Delaware
corporation, PacifiCare Health Systems, Inc., a Delaware
corporation, FHP International Corporation, a Delaware
corporation, Neptune Acquisition Corp., a Delaware corporation,
and Tree Acquisition Corp., a Delaware corporation. Incorporated
by reference herein from Appendix A of the Prospectus filed by
PacifiCare Holding with the Securities and Exchange Commission on
November 26, 1996 pursuant to Rule 424(b)(3) promulgated under
the Securities Act of 1933, as amended (the "Prospectus").
2.02 The subsection entitled "Merger Consideration" of the section
entitled "The Mergers and Related Transactions" of the
Prospectus, the subsection entitled "Financing of FHP Merger
Consideration" of the section entitled "The Mergers and Related
Transactions" of the Prospectus, the subsection entitled
"PacifiCare" of the section entitled "Ownership of PacifiCare,
FHP and PacifiCare Holding" of the Prospectus, and the section
entitled "Management of PacifiCare Holding" of the Prospectus.
Incorporated by reference herein from the Prospectus.
2.03 The section entitled "The Offering" of the prospectus included in
the Registration Statement on Form S-1 (No. 333-17679), as
amended, filed by Talbert Medical Management Holdings
Corporation, most recently filed on January 31, 1997 (the
"Talbert S-1"). Incorporated by reference herein from the
Talbert S-1.
99.01 Press Release of February 14, 1997.
6.
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[LETTERHEAD]
NEWS RELEASE
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Contact: Ben Singer David K. Erickson
Media Relations Investor Relations
(714)229-2825 (714)229-2636
FOR IMMEDIATE RELEASE
PACIFICARE HEALTH SYSTEMS ACQUIRES
FHP INTERNATIONAL CORPORATION
CYPRESS, CALIF., FEBRUARY 14, 1997 -- PacifiCare Health Systems, Inc.,
(Nasdaq: PHSYA and PHSYB) announced today that it has completed its $2.2
billion acquisition of FHP International Corporation (Nasdaq: FHPC and
FHPCA). The combined company will serve nearly 4 million commercial and
Medicare members in 15 states and Guam, making PacifiCare Health Systems the
nation's fifth largest HMO company. Revenue of the combined company is
expected to total more than $10 billion in 1997.
The transaction has received all necessary approvals from federal and
state regulators, including the United States Federal Trade Commission and
the California Department of Corporations. Shareholders of both companies
approved the transaction on December 31, 1996.
"We believe the combination of these two companies creates an extremely
strong operation with a solid leadership position in the western United
States," said Alan Hoops, PacifiCare's president and chief executive officer.
"Our goal will be to build a company that both members and physicians view
with confidence and trust."
According to Hoops, "The acquisition further solidifies PacifiCare's
position as the nation's leading Medicare risk plan, with nearly 1 million
members enrolled. Our combined skills, experience and efficiencies will help
address the complex issues confronting Medicare."
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2-2-2
PacifiCare
Terms of the transaction call for holders of FHP Common Stock to receive
a per share consideration of $17.50 in cash and 0.232 shares of Common Stock,
consisting of 0.056 shares of Class A Common Stock and 0.176 shares of Class
B Common Stock. Holders of FHP Preferred Stock will receive a per share
consideration of $14.113 in cash and 0.50 shares of Series A Cumulative
Convertible Preferred Stock. The PacifiCare Preferred Stock is convertible
into 0.374 shares of PacifiCare Class B Common Stock, has a 4 percent coupon,
and is callable commencing June 1998. The shares will be issued by a new
holding company, also called PacifiCare Health Systems, Inc., which will own
all of the outstanding stock of both PacifiCare (to be renamed PacifiCare
Operations, Inc.) and FHP. PacifiCare shareholders will exchange their Class
A and Class B Common Stock on a share for share basis. After closing, there
will be approximately 14,722,000 shares of Class A Common, approximately
26,276,000 shares of Class B Common, and approximately 10,517,000 shares of
Series A Preferred Stock outstanding. The common stock will temporarily trade
under the symbols PHYAD and PHYBD, respectively, before reverting to the
current PHSYA and PHSYB. The preferred stock will trade under the symbol
PHSYP.
Common and Preferred shareholders of FHP will also receive rights to
purchase FHP's stock ownership in Talbert Medical Management Holdings
Corporation ("TMMHC"). That rights offering will commence as soon as legally
permissible. Present expectations are that the TMMHC rights offering will
commence in April, shortly after TMMHC's audited 1996 results become
available.
IMPACT ON CALIFORNIA AND TEXAS
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PacifiCare announced that nearly 90 percent of FHP's total workforce
will be retained as the two companies merge. PacifiCare officials estimate
that up to 900 positions will be eliminated as a result of the acquisition.
This number includes 450 positions that were lost to attrition. Additionally,
400 FHP employees in California and 50 in Houston, Texas will be laid off due
to overlapping operations. The positions eliminated in FHP's California
health plan operations are primarily in marketing, sales and administration.
Layoffs will also occur at FHP's corporate headquarters in Santa Ana, where
senior management and administrative
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PacifiCare
positions overlap. There will be little, if any, short-term effect in FHP
states where PacifiCare does not presently operate.
"We have developed a tremendous respect for FHP and have had a very
cooperative relationship with them in preparing for the reductions in staff,"
Hoops added. "As a result, a number of layoffs have been avoided and some FHP
employees in California and Texas have found positions with our operations in
those states. We will also be providing support for those employees affected
by the layoffs, including outplacement services and severance."
PacifiCare currently operates in California, Florida, Oklahoma, Oregon,
Texas and Washington, and with the FHP transaction will expand operations to
include Arizona, Colorado, Illinois, Indiana, Kentucky, New Mexico, Nevada,
Ohio, Utah and Guam.
PacifiCare Health Systems is one of the nation's leading managed health
care services companies. Primary operations include managed care products for
employer groups, and Medicare and Medicaid beneficiaries in 15 states and
Guam serving nearly four million members. Other specialty managed care
operations include life and health insurance, behavioral health services,
workers' compensation, dental and vision services, pharmacy benefit
management and Medicare risk management services.
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