<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
UICI
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
UICI
4001 MCEWEN DRIVE, SUITE 200
DALLAS, TEXAS 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1998
The Annual Meeting of the Stockholders of UICI (the "Company"), a
Delaware corporation, will be held at The Renaissance Dallas North Hotel, 4099
Valley View Lane, LBJ @ Midway, Dallas, Texas, on Tuesday, May 5, 1998 at 1:00
o'clock P.M., Central Daylight Time, for the following purposes:
1. To elect eight (8) directors of the Company to hold office until
the next annual meeting of stockholders and until their
respective successors are chosen and qualified.
2. To ratify the appointment of Ernst & Young LLP as independent
public accountants to audit the accounts of the Company for the
fiscal year ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 12, 1998 as the record date for
the meeting. Holders of the Company's Common Stock of record at the close of
business on such date will be entitled to notice of and to vote at such meeting
or any adjournment thereof. The stock transfer books will not be closed.
The Company will supply, upon written request and without charge, a
copy of the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Requests for the report should be directed to Investor
Relations, UICI, 4001 McEwen Drive, Suite 200, Dallas, Texas 75244.
By order of the Board of Directors
Robert B. Vlach
Secretary
Date: April 7, 1998
____________________
IMPORTANT
UNLESS YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN
AND MAIL THE ENCLOSED PROXY WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOUR PROMPT RESPONSE WILL ASSURE A QUORUM AT THE MEETING, SAVING YOUR
COMPANY THE EXPENSE OF FURTHER SOLICITATION OF PROXIES.
<PAGE> 3
UICI
4001 MCEWEN DRIVE, SUITE 200
DALLAS, TEXAS 75244
_____________________________
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
_____________________________
This statement is furnished to the stockholders of UICI (the
"Company") in connection with the Board of Directors' solicitation of proxies
to be used at the Annual Meeting of Stockholders on May 5, 1998 at The
Renaissance Dallas North Hotel, 4099 Valley View lane, LBJ @ Midway, Dallas,
Texas, and at any adjournment thereof. All proxies delivered pursuant to this
solicitation are revocable at the option of the person executing the same at
any time before the proxy is voted. Proxies in the form enclosed, unless
previously revoked, will be voted at the meeting. Where a choice or
instruction is specified by the stockholder thereon, the proxy will be voted in
accordance with such specification. Where a choice or instruction is not
specified by such stockholder, the proxy will be voted as recommended by the
Board of Directors.
The Company's Common Stock trades on the Nasdaq National Market tier
of The Nasdaq Stock Market under the symbol: UICI. This proxy statement is
being mailed on or about April 7, 1998 to stockholders of record at the close
of business on March 12, 1998, who are the only stockholders entitled to
receive notice of and to vote at the meeting. At March 12, 1998 the Company
had outstanding 46,228,941 shares of common stock. Each share of the
outstanding common stock is entitled to one vote. A simple majority of the
total shares outstanding is required to elect directors and ratify or approve
the other items being voted on at this time.
1. ELECTION OF DIRECTORS
The Board of Directors (the "Board") has fixed the number of directors
for the ensuing year at eight (8). At the meeting, it is intended that such
number of directors will be elected to hold office until the next Annual
Meeting of Stockholders and until their respective successors are chosen and
qualified. It is intended that the proxies will be voted to elect as directors
the nominees listed below. Although the Board does not anticipate that any of
such nominees will be unable to serve as a director, in the event of such
occurrence, the proxy holders shall have the right to vote for such substitute,
if any, as the present Board of Directors may designate.
NOMINEES
The following table sets forth the name and age of each nominee for
director, his principal occupation for the past five years, the year he became
a director of the Company, the number of shares of common stock of the Company
which he beneficially owned as of March 12, 1998 and the percentage of the
outstanding shares of common stock which that number of shares represents.
1
<PAGE> 4
<TABLE>
<CAPTION>
YEAR FIRST SHARES OF COMMON
NOMINEE, PRINCIPAL OCCUPATION, AGE AND ELECTED STOCK BENEFICIALLY PERCENT
DIRECTORSHIPS DIRECTOR OWNED 3/12/98 OF CLASS
-------------------------------------- ---------- ------------------ ---------
<S> <C> <C> <C>
RONALD L. JENSEN has served as President and Chief 1983 8,258,986(1) 17.9%
Executive Officer ("CEO") of the Company since
September 1997 and as Chairman of the Board of
Directors and its predecessor Company since
December 1983. Mr. Jensen served as President of
the Company IN 1993 and 1994. Mr. Jensen is a
member of the Executive and Stock Option Committees
of the Board of Directors. Mr. Jensen is the sole
owner of United Group Association, Inc. ("UGA
Inc.").
Age: 67
1984 131,951(2)(3) (4)
GARY L. FRIEDMAN, has served as a Director of the
Company since 1984. He is a member of the Stock
Option Committee of the Board of Directors. Mr.
Friedman has served as Director and Treasurer of
UGA Inc. since 1985, and as Secretary of UGA Inc.
since 1990. From 1994 until 1997, Mr. Friedman
served as a Director and Secretary of Matrix
Telecom, Inc.
Age: 43 1989 26,075 (4)
J. MICHAEL JAYNES has served as a Director of the
Company since 1989. He is a member of the Audit
and Stock Option Committees of the Board of
Directors. Mr. Jaynes has been a sole practitioner
of law in Irving, Texas since 1974.
Age: 50 1989 76,711(5) (4)
RICHARD J. ESTELL has served as Executive Vice
President and Director of the Company since 1989.
He is a member of the Executive, Investment and
Audit Committees of the Board of Directors. Mr.
Estell has served as Chairman of the Board for Mid-
West National Life Insurance Company of Tennessee
("Mid-West") and The MEGA Life and Health Insurance
Company ("MEGA") and as President of MEGA since
1989. He has served as Chairman of the Board of
The Chesapeake Life Insurance Company
("Chesapeake") since 1991. He has also served as a
Director and President of National Managers Life
Insurance Company, Inc. ("National Managers") since
1992. He has served as a Director of Fidelity (4)
First Insurance Company ("Fidelity") since 1997. 1991 7,340
Age: 52
RICHARD T. MOCKLER has served as a Director of the
Company since 1991. Mr. Mockler is a member of the
Audit Committee of the Board of Directors. Mr.
Mockler retired as a partner with Ernst & Young,
LLP, CPAs, in 1989, after 27 years of service. He
has served as a member of the Board of Directors of
Georgetown Rail Equipment Company since 1994 and as
Treasurer since October 1996. Mr. Mockler served
as a Director of Snead Research Labs from 1995
until January 1998 and as Treasurer from October
1996 until January 1998.
Age: 60
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
YEAR FIRST SHARES OF COMMON STOCK
NOMINEE, PRINCIPAL OCCUPATION, AGE AND ELECTED BENEFICIALLY PERCENT OF
DIRECTORSHIPS DIRECTOR OWNED 3/12/98 CLASS
-------------------------------------- ---------- ---------------------- ----------
<S> <C> <C> <C>
VERNON R. WOELKE has served as a Director of the 1991 158,123(5) (4)
Company since 1991 and as Vice President and
Treasurer since 1985. Mr. Woelke is a member of
the Executive and Investment Committees of the
Board of Directors. He has served as a Director of
MEGA since 1988 and as Vice President since 1991;
and as President of Mid-West since 1988 and as a
Director since 1987. He has also served as a
Director and Executive Vice President of Chesapeake
since 1991. Mr. Woelke has served as a Director
and Treasurer of National Managers since 1992; as a
Manager of United Membership Marketing Group, Ltd.
Liability Co. since 1993; as a Director and
President of United Group Reinsurance, Inc. since
1995; as a Director of Fidelity since 1996; and as
a Director of United Credit National Bank since
1997.
Age: 49 1996 105,397(5) (4)
CHARLES T. PRATER has served as a Vice President of
the Company since 1993 and as a Director since
1996. Mr. Prater is Chairman of the Investment
Committee of the Board of Directors. Mr. Prater
has served as Vice President of Mid-West since
1987, Vice President of MEGA since 1991, Director
of MEGA and Mid-West since 1990 and Vice President
and Director of Chesapeake since 1991. He has
served as Chairman of the Board and President of
Fidelity since 1996. 1997 61,548(5)(6) (4)
Age: 46
JOHN E. ALLEN has served as a Director of the
Company since 1997. He has served as President and
Director of Amli Realty Co. since 1981 and as Vice-
Chairman of the Board of Trustees of Amli
Residential Properties Trust since 1994. Prior to
co-founding Amli Realty Co. in 1980, Mr. Allen was
a partner in the Chicago law firm of Mayer, Brown &
Platt.
Age: 61
</TABLE>
_________________________
(1) Does not include shares owned directly or indirectly by Mr. Jensen's
five adult children, or shares owned by the R.L. Jensen Foundation
Charitable Trust as to which Mr. Jensen disclaims beneficial
ownership. Mr. Jensen's adult children directly own in the aggregate
approximately 5.8% of the outstanding common stock. Mr. Jensen's
adult children are also the stockholders of Onward and Upward, Inc.,
which owns approximately 6.8% of the outstanding common stock.
(2) Includes shares of common stock held as of March 12, 1998 by the
Trustees of a retirement trust.
(3) Includes 1,200 shares indirectly owned by Mr. Friedman through his
interest in a partnership.
(4) Owns less than 1% of the outstanding common stock.
(5) Includes shares of common stock held as of March 12, 1998 by the
Trustees under the Company's Employee Stock Ownership and Savings
Plan. (The shares held under the Plan purchased with contributions
made by the Company are subject to the vesting requirements of the
Plan.)
(6) Includes 17,624 options under the Company's 1996 Special Stock Option
Plan; does not include shares owned directly by Mr. Allen's four adult
children as to which Mr. Allen disclaims beneficial ownership.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth the name and address of each person known by
management to own beneficially five percent or more of the Company's common
stock as of March 12, 1998, the number
3
<PAGE> 6
of shares beneficially owned by such person and the percent of the class so
owned and the amount of common stock beneficially owned by all directors and
officers as a group and the percent of the class so owned.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT
TITLE OF CLASS NAME & ADDRESS OWNED OF CLASS
- -------------- -------------- ------------ --------
<S> <C> <C> <C>
Common Stock Ronald L. Jensen 8,258,986(1) 17.9%
4001 McEwen Dr., Suite 200
Dallas Texas 75244
Common Stock Onward and Upward, Inc. 3,110,760 6.7%
2121 Precinct Line Road
Hurst, Texas 76054
Common Stock T. Rowe Price Associates 2,899,940 6.3%
100 East Pratt Street
Baltimore, Maryland 21202
Common Stock Fidelity Management & 2,629,100 5.7%
Research Co.
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock All officers and directors 8,865,299(1)(2)(3)(5)(6) 19.2%
as a group (10 individuals)
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive and certain officers, and any persons holding more than ten percent
of the Company's common stock are required to report their ownership of the
Company's common stock and any changes in that ownership to the Securities and
Exchange Commission (the "Commission") and, in the Company's case, the National
Association of Securities Dealers, Inc. Specific due dates for these reports
have been established and the Company is required to report in this proxy
statement any failure to file by these dates during 1997. All of these filing
requirements were satisfied by the Company's directors, officers and ten
percent holders. In making this statement, the Company has relied on the
written representations of its incumbent directors, officers and ten percent
holders and copies of the reports filed with the Commission.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the fiscal year ended December 31, 1997, the Board of Directors
of the Company met six times and took action on other occasions by unanimous
consent of its members.
The Audit Committee consists of three directors: namely, Richard J.
Estell, J. Michael Jaynes and Richard T. Mockler. The Committee held two
meetings during 1997. The Audit Committee recommends engagement of the
independent auditors, considers the fee arrangement and scope of the audit,
reviews the financial statements and the independent auditors' report, reviews
the activities and recommendations of the Company's internal financial and
accounting staff, considers comments made by the independent auditors with
respect to the Company's internal control structure, and reviews internal
accounting procedures and controls with the Company's financial and accounting
staff.
The Executive Committee consists of three directors: namely, Ronald
L. Jensen, Richard J. Estell and Vernon R. Woelke. The Committee did not meet
during 1997 but took action on numerous occasions by unanimous consent of its
members. The Executive Committee has all of the authority of the full Board of
Directors in the management of the business and affairs of the Company.
4
<PAGE> 7
The Investment Committee consists of three directors: namely, Richard
J. Estell, Vernon R. Woelke and Charles T. Prater, and one non-director member,
Mark D. Hauptman. The Committee met four times during 1997. The Investment
Committee oversees the Company's investments.
The Stock Option Plan Committee did not meet during 1997. Ronald L.
Jensen, Gary L. Friedman and J. Michael Jaynes have been committee members
since the last annual meeting. The Committee administers the Stock Option
Plan.
The Company does not have a Nominating Committee. Board of Director
nominees are proposed by existing Board members and Company management.
COMPENSATION OF DIRECTORS
The two outside directors of the Company, J. Michael Jaynes and
Richard T. Mockler, are entitled to receive compensation for each Board meeting
and each Audit Committee meeting attended. During 1997, Messrs. Jaynes and
Mockler received $1,500 for each Board meeting attended and $750 for each Audit
Committee meeting attended as compensation for their services.
EXECUTIVE COMPENSATION
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors is not directly involved in the executive
compensation policies of the Company. Mr. Jensen performs the duties of the
compensation committee and informs the Board of Directors of the proposed
compensation for the executive officers of the Company. The factors considered
by Mr. Jensen include the individual's contribution to the long-term financial
goals of the Company, his perception of the individual's potential to
contribute to the future of the Company, planned or actual changes in
functional responsibility, and other factors which he considers important.
Submitted by the Company's Board of Directors:
Ronald L. Jensen Gary L. Friedman
Richard J. Estell J. Michael Jaynes
Richard T. Mockler Vernon R. Woelke
John E. Allen Charles T. Prater
5
<PAGE> 8
The table below discloses compensation information for the CEO and the
four other most highly compensated executive officers for services rendered in
all capacities during the fiscal years ended December 31, 1997, 1996, and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation ------------ Compen-
Name and Principal ------------------------------------ Restricted Stock sation
Position Year Salary ($) Bonus($) Other ($) Awards(a)($) (b)(e)($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ronald L. Jensen, 1997 1 --- --- --- ---
President & CEO and 1996 1 --- --- --- ---
Director(c) 1995 1 --- --- --- ---
W. Brian Harrigan, 1997 228,303 143,719 --- --- 9,962
President & CEO and 1996 279,994 122,858 --- --- 9,000
Director(c) 1995 226,538 --- 65,359(d) 62,000 8,738
Richard J. Estell, 1997 223,078 273,001 --- --- 12,012
Executive Vice 1996 200,000 516,838 --- --- 9,000
President and Director 1995 200,000 282,009 --- --- 11,023
Charles T. Prater, 1997 119,995 199,323 --- --- 8,788
Vice President and 1996 119,995 80,970 --- --- 8,111
Director 1995 119,514 126,211 --- 62,000 10,140
Vernon R. Woelke, 1997 125,000 10,443 --- --- 10,127
Vice President, Treasurer 1996 106,769 41,548 --- --- 8,899
and Director 1995 95,000 35,269 --- --- 9,729
Robert B. Vlach, Vice 1997 120,769 10,443 --- --- 9,873
President, Secretary 1996 115,000 24,970 --- --- 8,309
and General Counsel 1995 115,284 21,211 --- --- 10,212
</TABLE>
Footnotes
(a) This column shows the market value of restricted stock issued on date
of grant less amount paid, if any, by the individuals listed in the
table. Dividends are paid, if any, to holders with respect to
restricted stock at the same rate paid to all stockholders. The
aggregate holdings/value of restricted stock, less amount paid, if
any, on December 31, 1997 by the individuals listed in this table,
are: Charles T. Prater, 17,600 shares/$551,400; and Vernon R. Woelke,
6,400 shares/$211,200.
(b) Includes Company contributions to its Employee Stock Ownership and
Savings Plan.
(c) W. Brian Harrigan resigned his positions as President and CEO
effective September 30, 1997. Mr. Jensen was elected to these
positions effective September 30, 1997 to fill the vacancies created
by Mr. Harrigan's resignation.
(d) The Company made payments on W. Brian Harrigan's behalf related to his
relocation.
(e) Includes funds contributed by the Company into its Medical Savings
Account Health Insurance Plan.
The Company did not grant any stock options to the named executive
officers during 1997 and there are no unexercised options at December 31, 1997.
During 1997, Mr. Vlach exercised 16,000 options with a value of $468,000.
FIVE-YEAR PERFORMANCE COMPARISON
THE GRAPH BELOW DEMONSTRATES A COMPARISON OF CUMULATIVE TOTAL RETURNS
FOR THE COMPANY AS COMPARED WITH THE NASDAQ STOCK MARKET INDEX AND THE NASDAQ
INSURANCE STOCKS INDEX.
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UICI 100 129 172 382 658 706
- --------------------------------------------------------------------------------
NASDAQ Stock Market Index 100 115 112 159 195 240
- --------------------------------------------------------------------------------
NASDAQ Insurance Stocks Index 100 107 101 143 163 239
- --------------------------------------------------------------------------------
</TABLE>
ASSUMES $100 INVESTED ON DECEMBER 31, 1992 IN UICI COMMON STOCK, THE NASDAQ
STOCK MARKET INDEX, AND THE NASDAQ INSURANCE STOCKS INDEX.
6
<PAGE> 9
EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN
The Company has an Employee Stock Ownership and Savings Plan which
permits the Company to make contributions on behalf of eligible employees
either in the form of Shares of the Company or in cash which is invested in
such Shares, thereby increasing the employees' ownership in the Company.
Shares contributed to the Plan or purchased with the Company's contributions
are allocated to the participant's account on a monthly basis and forfeitures
are allocated to employees who are participants on the last day of the Plan
Year based upon the ratio of each participant's annual credited compensation
(up to $40,000) to the total annual credited compensation of all participants
entitled to share in such contributions for such Plan Year. Each participant's
vested interest in the Plan is at all times nonforfeitable and is distributable
only upon hardship withdrawal, death, or termination of employment.
EMPLOYEE STOCK OPTION PLAN
UICI has a stock option plan which provides options on 1,600,000
shares of Common Stock for granting to officers, key employees and certain
eligible non-employees at fair market value at the date of grant. There were
no options outstanding under the plan as of December 31, 1997.
In connection with the acquisition of Amli Realty Co. ("ARC") in
November 1996, the Company established the 1996 Special Stock Option Plan. The
purpose of the Plan is to provide non-qualified stock options to those
employees of ARC surrendering their then current ARC non-qualified stock
options for cancellation pursuant to a stock exchange agreement entered into in
November 1996 by the Company and ARC. At December 31, 1997, the total number
of shares of Common Stock of the Company reserved for issuance under the plan
was 60,591.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective January 1, 1997, the Company acquired the agency force and
certain assets of UGA Inc. for a price equal to the net book value of the
tangible assets acquired and assumed certain agent commitments of $3.9 million.
UGA Inc. is owned 100% by Mr. Jensen. The tangible assets acquired consist
primarily of agent debit balances, a building, and related furniture and
fixtures having a net book value of $13.1 million, which approximates fair
market value of the tangible assets.
In 1997, UGA Inc. received commissions from insurance subsidiaries of
AEGON with respect to insurance policies that the Company coinsures. In 1997,
UGA Inc. received $34.1 million in such commissions. In 1997, through the
coinsurance agreements with AEGON, the amount of these commissions received by
UGA Inc. attributable to the Company was $20.4 million.
Prior to 1997, UGA Inc. marketed products which were directly
underwritten by insurance subsidiaries of the Company. During 1997, the
Company paid commissions of $9.2 million relating to such insurance.
Effective January 1, 1997, Core Marketing, Ltd., a company owned by
Mr. Jensen's five adult children, generated sales leads for agents of the
Company. Prior to January 1, 1997, these leads were provided by UGA Inc. In
1997, the Company paid $17.7 million for leads.
During 1993, the Company entered into an agreement with Mr. Jensen to
participate in an interest in a company which has developed a paperless claims
system. Until the long-term viability of that company is determined, the
Company has written off its investment of $6.1 million over the past four
years. The Company incurred losses of $1.4 million in 1997.
In November 1994, the Company extended a $10.0 million line of credit
to a related company of which Mr. Jensen has an ownership interest. The terms
of the line of credit were renegotiated in
7
<PAGE> 10
1997 so that the interest rate decreased to prime from prime plus four percent
(4%), maturing December 31, 1998 instead of September 30, 1998. The line of
credit is collateralized by certain common stock. During 1997, the related
company repaid $2.5 million leaving a balance of $7.5 million outstanding at
December 31, 1997. The collateral had a market value of $12.1 million at
December 31, 1997.
During 1997, the Company sold three subsidiaries and certain assets of a
subsidiary to Mr. Jensen for a price equal to the net book value of the tangible
assets totaling $1.2 million.
During 1995, the Company and UGA Inc. entered into an agreement whereby the
Company receives a 20% interest in the profits or losses relating to certain
lead activities of UGA Inc. The Company had profits of $1.1 million in 1997 on
these activities.
Mr. Jensen and his five adult children own a controlling interest in AVTEL
Communications, Inc. ("AVTEL"), a telephone company. The Company paid $2.1
million to AVTEL for long distance telephone services rendered in 1997.
Impact Productions ("Impact") is wholly-owned by one of Mr. Jensen's adult
children. The Company paid Impact $119,000 for marketing and advertising
services in 1997.
Netiquette Enterprises Technologies, Inc. ("Netiquette") provides computer
supplies and services to a subsidiary of the Company. One of the five adult
children of Mr. Jensen has an interest in Netiquette. In 1997, the Company paid
Netiquette $63,000.
Mr. Jensen and one of his five adult children own a majority interest in
Touchstone Motivation Group ("Touchstone"), a company which provides travel
related services. In 1997, the Company paid Touchstone $229,000 for travel
services.
Prior to 1997, the Company invested approximately $4.0 million for a 100%
Class A and a 40% Class B membership interest in Cash Delivery Systems, LLC
("CDS"), (formerly known as Sun Network Technologies ("SNT")). The remaining 60%
Class B membership interest was owned by a minority interest owner. CDS's
business was the ownership and placement of ATMs and ATM transaction processing.
CDS's performance was below the Company's expectations. In 1997, CDS (i)
transferred its ATM transaction processing business with a net book value of
assets of approximately $1.2 million to Sun Tech Processing System, LLC ("STP"),
which is majority owned by the Company; and (ii) the Company sold its Class A
and Class B membership interests in CDS to Mr. Jensen for $854,000, which
represented the net book value of CDS before the transfer of the ATM transaction
processing business to STP. The Company also contributed $2.0 million to STP. In
February 1998, the assets of STP were sold to an unrelated party for $17.5
million. A dispute has arisen between the Company, as owner of a majority
interest in STP, and the minority interest owner of STP, as to how the sales
proceeds are to be distributed and whether any sales proceeds are to be advanced
by STP to CDS pursuant to an Agreement among STP, CDS, the Company, Mr. Jensen
and the minority interest owner. Accordingly, no sales proceeds have been
distributed by STP to the Company, Mr. Jensen or the minority interest owner.
Onward and Upward, Inc. ("Onward and Upward") and the five adult children
of Mr. Jensen own a minority interest in two subsidiaries of the Company.
Onward and Upward and the five adult children of Mr. Jensen have granted the
Company a right of first refusal to purchase their ownership interests based on
a predetermined formula, and have the right to require the Company to purchase
their ownership in the subsidiaries' stock at prices based on the same
predetermined formula which approximates GAAP book value.
John E. Allen, a Director of the Company, has outstanding debt owed to a
subsidiary of the Company in the amount of $305,000 at December 31, 1997, which
was also the largest amount of debt owed by him to the Company's subsidiary
during 1997. The outstanding amount of the debt at March 15, 1998 was $213,000.
The debt was incurred in connection with the purchase of restricted stock of the
Company. The debt bears interest at a range of 4% to 6.25% and interest is due
quarterly.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors reappointed the firm of Ernst & Young LLP as the
Company's independent auditors to audit the financial statements of the Company
for the fiscal year ending December 31, 1998. In recommending ratification by
the stockholders of the appointment of Ernst & Young LLP, the Board of Directors
has satisfied itself as to that firm's professional competence and standing.
Representatives of Ernst & Young LLP are not expected to be present at the
Annual Meeting.
THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND THE STOCKHOLDERS
VOTE "FOR" THIS RATIFICATION.
9
<PAGE> 11
3. OTHER MATTERS
As of the date of this proxy statement, the Board of Directors is not
informed of any matters, other than those stated above, that may be brought
before the meeting. However, if any matter not known is presented at the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote with respect to any such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders to be held in 1999 must be received by the Company on
or before November 30, 1998 for inclusion in the Company's Proxy Statement and
form of proxy relating to that Annual Meeting.
EXPENSES OF SOLICITATION
The Company will bear the cost of solicitation of proxies. The
solicitation of proxies by mail may be followed by telephoning or other
personal solicitation of certain stockholders and brokers by some officers or
other employees of the Company. The Company will request banks and brokers or
other similar agents or fiduciaries to transmit the proxy material to the
beneficial owners for their voting instructions and will reimburse them for
their reasonable expenses in so doing.
By Order of the Board of Directors
Robert B. Vlach, Secretary
Date: April 7, 1998
__________
IT IS URGED THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY.
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<PAGE> 12
UICI
PROXY
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
Voting Instructions to ESOP Trustees
The undersigned participant in the UICI Employee Stock Ownership and
Savings Plan (the "ESOP") hereby instructs the Trustees of the ESOP to vote as
directed herein all shares of common stock of UICI held of record on March 12,
1998 by the Trustees for the undersigned participant's account under the ESOP.
Such shares are to be voted in person or by proxy by the Trustees at the annual
meeting of stockholders to be held on May 5, 1998 or any adjournment thereof.
The substance of the proxy solicited on behalf of the Board of Directors is set
forth below.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below (except as
marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all
nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Ronald L. Jensen, Gary L. Friedman, Richard J. Estell, J. Michael Jaynes,
Vernon R. Woelke, Richard T. Mockler, Charles T. Prater and John E. Allen:
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP as the independent
public accountants for the Company:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on other side)
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(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will direct the Trustees of the
Employee Stock Ownership Plan to vote in the manner directed herein. If no
direction is made by an ESOP participant, the shares so held by the ESOP for
such participant will be voted by the Trustees in the ratio of the results of
the Instructions received by the Trustees.
Please sign exactly as name appears on the label below.
Dated ,1998
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Signature
PLEASE MARK, SIGN, DATE AND
RETURN PROXY CARD PROMPTLY.
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UICI
PROXY
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Connie Palacios and Robert B. Vlach as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of common
stock of UICI held of record by the undersigned on March 12, 1998 at the annual
meeting of stockholders to be held on May 5, 1998 or any adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Ronald L. Jensen J. Michael Jaynes Vernon R. Woelke
Gary L. Friedman Richard T. Mockler Charles T. Prater
Richard J. Estell John E. Allen
2. PROPOSAL TO APPROVE THE APPOINTMENT OF ERNST & YOUNG LLP as the independent
public accountants for the Company:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued on other side)
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(Continued from other side)
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this Proxy will be
voted for Proposals 1 and 2. Please sign exactly as name appears on the label
below. When shares are held by joint tenants, both should sign. When signing
as attorney, as executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Dated , 1998
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Signature
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Signature
PLEASE MARK, SIGN, DATE AND RETURN PROXY CARD
PROMPTLY.
