UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
____________ to ____________
Commission file number 1-13248 (Form S-8 No. 33-90608)
A. Full title of Plan and the address of the Plan, if different
from that of issuer named below:
THE TAX-FAVORED SAVINGS PROGRAM
B. Name of the issuer of the securities held pursuant to the
Plan and the address of its principal executive office:
RIGHTCHOICE MANAGED CARE, INC.
1831 Chestnut Street
St. Louis, MO 63103-2275
REQUIRED INFORMATION:
The Tax-Favored Savings Program is subject to ERISA and files the
attached Plan Financial Statement and Schedules (pages 9 through
25) prepared in accordance with financial reporting requirements
of ERISA.
EXHIBITS: Page Number
Consent of Independent Accountants - Coopers & Lybrand L.L.P. 3
Consent of Independent Accountants - Price Waterhouse L.L.P. 4
SIGNATURES:
Pursuant to the requirements of the Securities Exchange Act of
1934, the Administrators of the Plan have duly caused this annual
report to be signed on its behalf by the undersigned thereunto
duly authorized:
THE TAX-FAVORED SAVINGS PROGRAM
Date: June 25, 1998 By [s] SANDRA VAN TREASE
Sandra Van Trease
Chief Financial Officer,
Executive Vice President and
Chief Operating Officer
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-90608) of
RightCHOICE Managed Care, Inc. of our report on the Blue
Cross and Blue Shield of Missouri Tax-Favored Savings
Program dated June 20, 1998 appearing on page 7 of this
Form 11-K.
Coopers & Lybrand L.L.P.
June 26, 1998
St. Louis, Missouri
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-90608) of
RightCHOICE Managed Care, Inc. of our report on the
financial statements of the Blue Cross and Blue Shield of
Missouri Tax-Favored Savings Program dated April 4, 1997
appearing on page 8 of this Form 11-K.
Price Waterhouse LLP
June 26, 1998
St. Louis, Missouri
BLUE CROSS AND BLUE SHIELD OF MISSOURI
TAX-FAVORED SAVINGS PROGRAM
FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
Table of Contents
Reports of Independent Accountants 1-2
Statement of Net Assets Available for Benefits, With Fund
Information at December 31, 1997 3-4
Statement of Net Assets Available for Benefits, With Fund
Information at December 31, 1996 5-6
Statements of Changes in Net Assets Available for Benefits,
With Fund Information for the year ended December 31, 1997 7-8
Statements of Changes in Net Assets Available for Benefits,
With Fund Information for the year ended December 31, 1996 9-11
Notes to Financial Statements 12-17
Additional Information:
Schedule of Assets Held for Investment Purposes
at December 31, 1997 Schedule I
Schedule of Reportable Transactions (Transactions
Involving an Amount in Excess of 5% of the
Current Value of Program Assets) For the year
ended December 31, 1997 Schedule II
Report of Independent Accountants
To the Participants, Retirement Committee, and
National Employee Benefits Committee
as Administrator of the Blue Cross and
Blue Shield Tax-Favored Savings Program:
We have audited the accompanying statement of net assets
available for benefits of the Blue Cross and Blue Shield Tax-
Favored Savings Program (the "Program") as of December 31,
1997 and the related statement of changes in net assets
available for benefits for the year then ended. These
financial statements are the responsibility of the Program's
management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit of these statements in accordance
with generally accepted auditing standards which 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 audit provides a reasonable basis for our opinion.
In our opinion, the accompanying statement of net assets
available for benefits and the related statement of changes
in net assets available for benefits present fairly, in all
material respects, the net assets available for benefits of
the Program at December 31, 1997 and the changes in net
assets available for benefits for the year then ended, in
conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The additional information included in Schedules I and II is
presented for purposes of additional analysis and is not a
required part of the basic financial statements but is
additional information required by ERISA. The Fund
Information in the statement of net assets available for
benefits and the statement of changes in net assets
available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available
for benefits of each fund. Schedules I and II and the Fund
Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects
in relation to the basic financial statements taken as a
whole.
Coopers & Lybrand L.L.P.
St. Louis, Missouri
June 20, 1998
To the Participants, Retirement Committee,
and National Employee Benefits Committee as
Administrator of the Blue Cross and Blue
Shield Tax-Favored Savings Program
In our opinion, the accompanying statement of net assets
available for benefits and the related statement of changes
in net assets available for benefits present fairly, in all
material respects, the net assets available for benefits of
the Tax-Favored Savings Program (the Program) at December
31, 1996, and the changes in net assets available for
benefits for the year then ended, in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Program's
management; our responsibility is to express an opinion on
these financial statements based on our audit. We conducted
our audit of these statements in accordance with generally
accepted auditing standards which 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, assessing the accounting principles
used and significant estimates made by management, and
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the
opinion expressed above. We have not audited the financial
statements of the Tax-Favored Savings Program for any period
subsequent to December 31, 1996.
Our audit was performed for the purpose of forming an
opinion on the basic financial statements taken as a whole.
The additional information included in Schedules I and II is
presented for purposes of additional analysis and is not a
required part of the basic financial statements but is
additional information required by ERISA. The Fund
Information in the statement of net assets available for
benefits and the statement of changes in net assets
available for benefits is presented for purposes of
additional analysis rather than to present the net assets
available for benefits and changes in net assets available
for benefits of each fund. Schedules I and II and the Fund
Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects
in relation to the basic financial statements taken as a
whole.
Price Waterhouse LLP
St. Louis, Missouri
April 4, 1997
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information
December 31, 1997
Fund information
-------------------------------------------------------------------
Invesco ITC Invesco ITC
RightCHOICE Retirement Capital Retirement Common
Common Trust Equity Preservation Trust Flex Stock
Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $342,227 $12,089,211 $5,832,188 $11,001,982 $3,809,772
Contributions receivable
Participant 870 20,264 13,421 20,693 12,056
Employer 351 8,462 6,155 9,009 4,940
Net assets available for benefits $343,448 $12,117,937 $5,851,764 $11,031,684 $3,826,768
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
Invesco ITC ITC ITC
Retirement ITC Principal Intermediate Growth &
Trust Income 500 Index Protection Return Income
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $149,457 $2,278,656 $100,814 $159,355 $67,795
Contributions receivable
Participant 222 8,079 419 870 780
Employer 98 3,135 164 386 319
Net assets available for benefits $149,777 $2,289,870 $101,397 $160,611 $68,894
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
ITC Trust IIF Fidelity
Maximum Company Select SoGen Equity
Appreciation Style Neutral Income International Income II
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $330,496 $203,063 $50,081 $251,606 $694,706
Contributions receivable
Participant 2,380 1,371 455 1,334 3,182
Employer 928 502 156 516 1,232
Net assets available for benefits $333,804 $204,936 $50,692 $253,456 $699,120
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
IDF
Templeton Small Invesco
Foreign Company Dynamics Loans to
Fund Fund Fund Participants Total
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $221,995 $300,789 $977,608 $2,498,242 $41,360,043
Contributions receivable
Participant 1,525 1,414 3,679 93,014
Employer 637 565 1,427 38,982
Net assets available for benefits $224,157 $302,768 $982,714 $2,498,242 $41,492,039
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information
December 31, 1996
Fund information
-------------------------------------------------------------------
Invesco ITC Invesco ITC
RightCHOICE Retirement Capital Retirement Common
Common Trust Equity Preservation Trust Flex Stock
Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $469,216 $9,635,382 $6,040,882 $9,529,773 $3,366,455
Contributions receivable
Participant 2,469 23,442 21,575 27,654 15,123
Employer 938 10,330 9,834 12,393 6,876
Net assets available for benefits $472,623 $9,669,154 $6,072,291 $9,569,820 $3,388,454
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1996
Fund information
-------------------------------------------------------------------
Invesco ITC ITC ITC
Retirement ITC Principal Intermediate Growth &
Trust Income 500 Index Protection Return Income
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $179,657 $592,402 $81,292 $90,199 $38,055
Contributions receivable
Participant 134 3,353 378 455 315
Employer 68 1,313 147 189 152
Net assets available for benefits $179,859 $597,068 $81,817 $90,843 $38,522
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1996
Fund information
-------------------------------------------------------------------
ITC Trust IIF Fidelity
Maximum Company Select SoGen Equity
Appreciation Style Neutral Income International Income II
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $211,579 $113,992 $12,535 $248,998 $622,685
Contributions receivable
Participant 1,858 672 357 1,334 3,175
Employer 684 272 112 489 1,170
Net assets available for benefits $214,121 $114,936 $13,004 $250,821 $627,030
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Net Assets Available for Benefits, With Fund Information, Continued
December 31, 1996
Fund information
-------------------------------------------------------------------
IDF
Templeton Small Invesco
Foreign Company Dynamics Loans to
Fund Fund Fund Participants Total
<S> <C> <C> <C> <C> <C>
ASSETS
Investments at fair value $151,329 $181,330 $825,082 $2,351,603 $34,742,446
Contributions receivable
Participant 723 783 3,984 107,784
Employer 272 331 1,514 47,084
Net assets available for benefits $152,324 $182,444 $830,580 $2,351,603 $34,897,314
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information
December 31, 1997
Fund information
-------------------------------------------------------------------
Invesco ITC Invesco ITC
RightCHOICE Retirement Capital Retirement Common
Common Trust Equity Preservation Trust Flex Stock
Stock Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $67,319 $622,098 $388,953 $615,607 $352,940
Employer contributions 25,101 269,417 188,736 272,546 160,225
Rollover contributions 3,196 13,926 71,966 28,547 43,278
Dividends and interest 2,174 376,591
Net appreciation (depreciation) in fair value of investments (29,027) 3,054,539 2,378,480 763,656
Loan payments 6,729 318,614 279,501 292,008 121,666
75,492 4,278,594 1,305,747 3,587,188 1,441,765
Deductions from net assets attributed to:
Benefits paid to participants 36,000 1,206,222 1,369,202 1,289,193 422,640
Loan disbursements 13,588 449,023 284,858 409,862 102,435
Management fees and forfeitures 5,651 57,939 13,690 48,444 21,853
55,239 1,713,184 1,667,750 1,747,499 546,928
Net interfund transfers (149,428) (116,627) 141,476 (377,825) (456,523)
Net increase (decrease) (129,175) 2,448,783 (220,527) 1,461,864 438,314
Net assets, beginning of year 472,623 9,669,154 6,072,291 9,569,820 3,388,454
Net assets, end of year $343,448 $12,117,937 $5,851,764 $11,031,684 $3,826,768
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
Invesco ITC ITC ITC
Retirement ITC Principal Intermediate Growth &
Trust Income 500 Index Protection Return Income
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $5,585 $173,138 $11,662 $16,808 $24,696
Employer contributions 2,478 66,081 4,502 7,075 9,403
Rollover contributions 2,885 46,873 1,954 1,057
Dividends and interest
Net appreciation (depreciation) in fair value of investments 16,058 382,185 10,176 17,744 9,638
Loan payments 1,737 37,068 3,916 5,435 752
28,743 705,345 30,256 49,016 45,546
Deductions from net assets attributed to:
Benefits paid to participants 28,110 99,701 6,327 5,162 17,365
Loan disbursements 16,840 48,498 2,464 6,938 1,227
Management fees and forfeitures 704 4,470 397 594 386
45,654 152,669 9,188 12,694 18,978
Net interfund transfers (13,171) 1,140,126 (1,488) 33,446 3,804
Net increase (decrease) (30,082) 1,692,802 19,580 69,768 30,372
Net assets, beginning of year 179,859 597,068 81,817 90,843 38,522
Net assets, end of year $149,777 $2,289,870 $101,397 $160,611 $68,894
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
ITC Trust IIF Fidelity
Maximum Company Select SoGen Equity
Appreciation Style Neutral Income International Income II
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $63,823 $27,161 $8,597 $38,292 $103,170
Employer contributions 23,393 10,120 2,868 14,189 37,788
Rollover contributions 10,022 2,072 563 4,342 3,818
Dividends and interest 6,690 25,204 72,440
Net appreciation (depreciation) in fair value of investments 52,737 37,536 441 1,536 72,950
Loan payments 5,933 2,390 828 7,863 15,385
155,908 79,279 19,987 91,426 305,551
Deductions from net assets attributed to:
Benefits paid to participants 14,183 2,159 215 70,102 46,298
Loan disbursements 9,696 3,513 938 9,355 20,483
Management fees and forfeitures 1,374 1,155 129 360 1,307
25,253 6,827 1,282 79,817 68,088
Net interfund transfers (10,972) 17,548 18,983 (8,974) (165,373)
Net increase (decrease) 119,683 90,000 37,688 2,635 72,090
Net assets, beginning of year 214,121 114,936 13,004 250,821 627,030
Net assets, end of year $333,804 $204,936 $50,692 $253,456 $699,120
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1997
Fund information
-------------------------------------------------------------------
IDF
Templeton Small Invesco
Foreign Company Dynamics Loans to
Fund Fund Fund Participants Total
<S> <C> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $36,225 $36,623 $102,588 $2,695,285
Employer contributions 13,823 13,978 39,478 1,161,201
Rollover contributions 6,225 9,997 3,787 254,508
Dividends and interest 25,755 76,841 118,963 704,658
Net appreciation (depreciation) in fair value of investments (14,037) (22,764) 48,814 6,780,662
Loan payments 5,003 8,665 22,740 $(947,376) 188,857
72,994 123,340 336,370 (947,376) 11,785,171
Deductions from net assets attributed to:
Benefits paid to participants 34,101 8,402 30,317 4,685,699
Loan disbursements 4,912 8,551 45,318 (1,094,015) 344,484
Management fees and forfeitures 278 88 1,444 160,263
39,291 17,041 77,079 (1,094,015) 5,190,446
Net interfund transfers 38,130 14,025 (107,157) 0
Net increase (decrease) 71,833 120,324 152,134 146,639 6,594,725
Net assets, beginning of year 152,324 182,444 830,580 2,351,603 34,897,314
Net assets, end of year $224,157 $302,768 $982,714 $2,498,242 $41,492,039
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information
December 31, 1996
Fund information
-----------------------------------------------------
American Express Trust
RightCHOICE ---------------------------- IDS Cash
Common Research Collective Management
Stock Fund 150 Fund Income Fund II Fund
<S> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $70,701 $184,810 $100,780 $42,311
Employer contributions 26,468 73,548 45,091 34,163
Rollover contributions 789 28,789
Dividends and interest 1,880 19,612
Net appreciation (depreciation) in fair value of investments (57,207) 642,099 75,549
Loan payments 9,808 85,671 50,604 17,443
52,439 1,014,917 272,024 113,529
Deductions from net assets attributed to:
Benefits paid to participants 22,352 293,978 206,332 113,152
Loan disbursements 16,752 98,064 67,149 22,467
39,104 392,042 273,481 135,619
Net interfund transfers 270,851 (9,117,312) (5,105,832) (1,489,740)
Net increase (decrease) 284,186 (8,494,437) (5,107,289) (1,511,830)
Net assets, beginning of year 188,437 8,494,437 5,107,289 1,511,830
Net assets, end of year $472,623 $0 $0 $0
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1996
Fund information
-----------------------------------------------------
Invesco ITC
IDS IDS New Retirement Capital
Mutual Dimensions Trust Equity Preservation
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $191,320 $126,550 $500,684 $403,592
Employer contributions 78,785 48,743 202,214 216,126
Rollover contributions 28,000 26,642 17,083
Dividends and interest 90,850 253,350
Net appreciation (depreciation) in fair value of investments 151,982 228,043 1,111,498
Loan payments 81,608 39,780 230,619 182,904
594,545 471,116 2,071,657 1,073,055
Deductions from net assets attributed to:
Benefits paid to participants 293,284 145,728 675,659 473,049
Loan disbursements 111,948 26,702 289,159 250,531
405,232 172,430 964,818 723,580
Net interfund transfers (9,427,667) (3,738,217) 8,562,315 5,722,816
Net increase (decrease) (9,238,354) (3,439,531) 9,669,154 6,072,291
Net assets, beginning of year 9,238,354 3,439,531 0 0
Net assets, end of year $0 $0 $9,669,154 $6,072,291
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1996
Fund information
-----------------------------------------------------
Invesco ITC Invesco
Retirement Common Retirement ITC
Trust Flex Stock Trust Income 500 Index
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $529,643 $319,145 $2,227 $40,087
Employer contributions 223,257 122,230 1,023 15,419
Rollover contributions 4,110 44,723 14,660
Dividends and interest
Net appreciation (depreciation) in fair value of investments 937,583 287,789 2,875 65,334
Loan payments 219,859 114,295 579 6,675
1,914,452 888,182 6,704 142,175
Deductions from net assets attributed to:
Benefits paid to participants 546,479 299,368 26,458
Loan disbursements 319,224 108,157 533 5,536
865,703 407,525 533 31,994
Net interfund transfers 8,521,071 2,907,797 173,688 486,887
Net increase (decrease) 9,569,820 3,388,454 179,859 597,068
Net assets, beginning of year 0 0 0 0
Net assets, end of year $9,569,820 $3,388,454 $179,859 $597,068
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1996
Fund information
-----------------------------------------------------
ITC ITC ITC ITC
Principal Intermediate Growth & Maximum
Protection Return Income Appreciation
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $4,356 $5,902 $5,897 $17,496
Employer contributions 1,755 2,459 2,605 6,887
Rollover contributions 13,908
Dividends and interest
Net appreciation (depreciation) in fair value of investments 3,060 6,193 3,799 11,107
Loan payments 1,874 1,956 471 1,430
11,045 16,510 12,772 50,828
Deductions from net assets attributed to:
Benefits paid to participants 14,063 14,288 20,024
Loan disbursements 576 248 1,261
576 14,311 14,288 21,285
Net interfund transfers 71,348 88,644 40,038 184,578
Net increase (decrease) 81,817 90,843 38,522 214,121
Net assets, beginning of year 0 0 0 0
Net assets, end of year $81,817 $90,843 $38,522 $214,121
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1996
Fund information
-----------------------------------------------------
Trust IIF Fidelity
Company Select SoGen Equity
Style Neutral Income International Income II
Fund Fund Fund Fund
<S> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $7,989 $1,818 $16,916 $40,959
Employer contributions 3,175 647 6,872 14,893
Rollover contributions 1,912 3,293
Dividends and interest 498 17,537 32,423
Net appreciation (depreciation) in fair value of investments 11,675 358 (6,955) 13,276
Loan payments 808 270 4,922 6,775
25,559 3,591 39,292 111,619
Deductions from net assets attributed to:
Benefits paid to participants
Loan disbursements 507 974 655
0 507 974 655
Net interfund transfers 89,377 9,920 212,503 516,066
Net increase (decrease) 114,936 13,004 250,821 627,030
Net assets, beginning of year 0 0 0 0
Net assets, end of year $114,936 $13,004 $250,821 $627,030
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
<TABLE>
Statements of Changes in Net Assets Available for Benefits, with Fund Information, Continued
December 31, 1996
Fund information
-------------------------------------------------------------------
IDF
Templeton Small Invesco
Foreign Company Dynamics Loans to
Fund Fund Fund Participants Total
<S> <C> <C> <C> <C> <C>
ASSETS
Additions to net assets attributed to:
Participant contributions $8,344 $10,765 $50,448 $0 $2,682,740
Employer contributions 3,211 4,564 18,587 1,152,722
Rollover contributions 3,108 3,108 24,567 214,692
Dividends and interest 4,426 15,202 77,746 178,967 692,491
Net appreciation (depreciation) in fair value of investments 5,034 (5,819) (37,703) 3,449,570
Loan payments 1,469 3,452 5,321 (1,068,593) 0
25,592 31,272 138,966 (889,626) 8,192,215
Deductions from net assets attributed to:
Benefits paid to participants 9,763 29,233 206,360 $3,389,570
Loan disbursements 502 474 11,379 (1,332,798) 0
10,265 474 40,612 (1,126,438) 3,389,570
Net interfund transfers 136,997 151,646 732,226 0
Net increase (decrease) 152,324 182,444 830,580 236,812 4,802,645
Net assets, beginning of year 0 0 0 2,114,791 30,094,669
Net assets, end of year $152,324 $182,444 $830,580 $2,351,603 $34,897,314
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri
Tax-Favored Savings Program
Notes to Financial Statements
1. Description of the Program:
A. Overview: Following is a summary of the various
provisions of the Tax-Favored Savings Program (the
"Program"), copies of which are available to all
participants. Participants should refer to the Program
document for more detailed information.
The Program was established, effective June 1, 1987, for
the purpose of providing employees of Blue Cross and Blue
Shield of Missouri (the "Company or BCBSMo") the
opportunity to defer a portion of their annual base
compensation for federal income tax purposes in accordance
with Section 401(k) of the Internal Revenue Code (the
"Code"). The Program is subject to certain provisions of
the Employee Retirement Income Security Act of 1974
("ERISA") as amended.
Beginning in 1994, RightCHOICE Managed Care, Inc.
("RightCHOICE"), an approximately 80%-owned subsidiary of
BCBSMo, began serving as sponsor of the Program, and
BCBSMo became a participating employer. The Program
administrator is the National Employee Benefits Committee
of the Blue Cross and Blue Shield Association.
Contributions to the Program and investment earnings are
held in a common collective trust for the exclusive
benefit of participants and their beneficiaries in
accordance with the Tax-Favored Savings Program Agreement.
The Blue Cross and Blue Shield Association is responsible
for the National 401(k) Master Trust (the "Trust") at
INVESCO Trust Company (the "Trustee"). Contributions and
investment earnings are not commingled as in a master
trust, therefore, master trust financial statements are
not attached.
Participant accounts are valued daily and investment
selections may be changed on any business day.
Effective April 1, 1996, the Program appointed INVESCO
Trust Company, a trust company incorporated in the state
of Colorado, as Trustee of the Program. In addition,
effective April 1, 1996, the Program authorized certain
registered investment company funds managed by INVESCO
Trust Company as investment funds in the Program. In
connection with this action, the Program directed the
prior trustee, American Express Company, to transfer
participant investment accounts to INVESCO Trust Company
on April 1, 1996.
B. Participation/contributions: The Program, which is a
defined contribution plan qualified under section 401(k)
of the Code, covers all eligible full-time employees of
BCBSMo and its subsidiaries. Employees become eligible
after completing one year of service and attaining age 21.
Effective February 1, 1998, employees become eligible after
90 days of service and attaining age 21.
Participants may contribute from 1% to 10% of their annual
compensation up to a maximum dollar contribution amount
($9,500 in 1997 and 1996). Effective February 1, 1998,
participants may contribute from 1% to 15%. Employer matching
contributions are 60% of employee contributions on the
first 5% of annual compensation. No matching contribution
is provided on employee contributions in excess of 5% of
the employee's annual compensation.
In addition to matching contributions, the Company may
make a discretionary contribution out of its net profits,
if any, for each plan year. There were no discretionary
contributions made during 1997 and 1996.
The Program permits each participant to allocate their
account balance in multiples of 1% to one or more of the
following 18 investment funds:
RightCHOICE Common Stock Fund - Funds are invested in a
portfolio of RightCHOICE common stock.
Invesco Retirement Trust Equity Fund (Value Stock Fund) -
Funds are invested in a portfolio of "value" common stocks and
securities convertible into common stocks.
ITC Capital Preservation Fund (Income Fund) - Funds are
invested in a portfolio consisting primarily of investment
contracts with banks and insurance companies.
Invesco Retirement Trust Flex Fund (Balanced Fund) - Funds are
invested in a portfolio of fixed income investments and "value"
stocks.
ITC Common Stock Fund (Growth Stock Fund) - Funds are invested
in a portfolio of "growth" stocks of companies whose earnings are
expected to grow more quickly than the economy as a whole.
Invesco Retirement Trust Income Fund (Bond Fund) - Funds are
invested in a portfolio of high grade bonds with intermediate
maturity dates.
ITC 500 Index Fund (S&P Index Fund) - Funds are invested in a
portfolio of common stock index funds representing 400
industrial, 40 financial, 40 utility and 20 transportation
stocks.
ITC Principal Protection Fund (Stable Principal Fund) - Funds
are invested in a conservative portfolio for the investor with a
time horizon of five years or less.
ITC Intermediate Return Fund (Strategic Income Fund) - Funds
are invested in a moderately conservative portfolio for the
investor with a five to ten year horizon.
ITC Growth & Income Fund (Equity Income Fund) - Funds are
invested in a moderately aggressive portfolio for the investor
with a ten to fifteen year time frame.
ITC Maximum Appreciation Fund (Strategic Growth Fund) - Funds
are invested in an aggressive portfolio for the investor with a
time horizon of at least fifteen years.
Trust Company Style Neutral Fund (Core Stock Fund) - Funds are
invested in a portfolio of common stock balanced as to investment
options to include both high growth and blue chip "value"
companies.
IIF Select Income Fund - Funds are invested in a portfolio of
high quality and below investment grade bonds.
SoGen International Fund - Funds are invested in a portfolio
of global stocks and dollar denominated bonds with opportunistic
investments in gold-related securities.
Fidelity Equity Income II Fund - Funds are invested in a
portfolio of high dividend paying stocks and one or more of the
following: debt securities, foreign securities and stock index
futures.
Templeton Foreign Fund - Funds are invested in a portfolio of
foreign stocks and foreign government bonds.
IDF Small Company Fund - Funds are invested in a broadly
diversified portfolio of primarily over-the-counter stocks.
Invesco Dynamics Fund - Funds are invested in a portfolio
consisting of emerging growth stocks.
Net earnings of each fund, including unrealized
appreciation or depreciation of fund investments, are
allocated to each participant based on the ratio of the
participant's account value to total fund value at the end
of the preceding day.
Investment selections may be changed and past savings may
be transferred between funds at any time, and employees
may change contribution amounts four times per year and/or
discontinue contributions at any time.
Participants become vested in employer matching and
discretionary contributions and earnings thereon based on
their years of service as follows:
Plan Years of Service Vested Percentage
Less than three years 0%
Three years but less than four years 33-1/3%
Four years but less than five years 66-2/3%
Greater than five years 100%
Participants also become 100% vested in employer
contributions upon attaining age 65, become permanently
and totally disabled, or upon death.
C. Distributions/Loans: If a participant's employment with
BCBSMo or RightCHOICE is terminated due to retirement,
pursuant to the terms of the Program, the total amount of
a participant's account shall be distributed in cash to
the participant according to one of the options as
described in the Program and as elected by the
participant. If a participant's employment with BCBSMo or
RightCHOICE is terminated for any reason other than
retirement pursuant to the terms of the Program, the total
vested amount of the participant's account shall be
distributed in cash as soon as administratively feasible
after the participant terminates employment at the request
of the participant. Any forfeitures of terminated
participants' nonvested accounts are used to reduce
subsequent employer contributions. During 1997, $24,928,
($12,861 in 1996) of employer matching contributions were
forfeited by terminating employees before those amounts
became vested.
Participants may withdraw certain defined contributions
and related earnings thereon only in the event of a
financial hardship as defined by the Program and the Code.
Participants may also borrow against the balances of their
individual vested account balances. Any such borrowings
are treated as a direct investment of the Loan Fund. The
minimum loan amount is $500, and the maximum loan amount
is the lesser of $50,000 reduced by the excess of the
highest outstanding balance of loans during the one-year
period before the date the loan is made over the
outstanding balance of loans on the date the loan is made
or 50% of the vested account balance. Effective October
1, 1994, each participant is limited to two loans
outstanding at any time. The term of a loan may not
exceed 4 years and 9 months except for loans used to
purchase a principal residence which may be granted for up
to 30 years. Interest earned on loans and repayments of
loan principal are credited to the participant's selected
investment funds. During 1997 and 1996, the interest
rates on loans outstanding ranged from 9.25% to 9.5%.
D. Program Termination: It is the intention of RightCHOICE
to continue the Program indefinitely. However,
RightCHOICE reserves the right to discontinue its
contribution and to change or to terminate the Program at
any time by a majority vote of the Board of Directors. In
the event of Program termination, participant accounts
shall become nonforfeitable.
2. Summary of Significant Accounting Principles:
A. Basis of Accounting: The financial statements of the Blue
Cross and Blue Shield of Missouri Tax-Favored Savings
Program have been prepared on the accrual basis of
accounting. The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
B. Contributions: Participant contributions are recognized
when withheld from the participant's compensation. The
employer's matching contribution is recognized at that
time.
C. Investments: Investments are stated at current value
based on the latest quoted market price at December 31,
1997 and 1996 or at estimated fair value as determined by
the Trustee. Investment contracts are stated at contract
value, defined as cost plus accrued income.
D. Payment of Benefits: Benefits are recorded when paid.
E. Income: Interest is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
Net appreciation (depreciation) of investments is
comprised of the change in market value compared to the
cost of investments and realized gains or losses on
security transactions which represent the difference
between proceeds received and average cost.
F. Expenses: Program expenses are paid by the Program
sponsor, RightCHOICE, except for participant loan
processing fees which are paid by the individual
participant.
3. Tax Status:
The Company believes that the amended Program conforms
with the requirements of the Internal Revenue Code. The
Program has obtained a favorable determination letter
dated May 21, 1997 from the Internal Revenue Service
indicating that the Program is a qualified employee
benefit program exempt from federal income taxes.
4. Transactions with Parties-in-Interest:
At December 31, 1997, the Program held units of
participation in the Trust Equity Fund, Trust Capital
Preservation Fund, Trust Flex Fund, Trust Common Stock
Fund, Trust Income Fund, Trust 500 Index Fund, Trust
Principal Protection Fund, Trust Intermediate Return Fund,
Trust Growth & Income Fund, Trust Maximum Appreciation
Fund, Trust Style Neutral Fund, Trust Select Income Fund,
Trust Small Company Fund, and Dynamics Fund of INVESCO
Trust Company, the Program Trustee. These units had a
total aggregate cost of $29,701,475 and total aggregate
market value of $37,351,267. During the year,
transactions with these funds included in the aggregate
992 purchases and 997 sales totaling approximately
$30,462,000 and $41,801,000, respectively. These
transactions are allowable party-in-interest transactions
under Section 408(b)(8) of the ERISA regulations.
Blue Cross and Blue Shield of Missouri Schedule I
Tax-Favored Savings Program
<TABLE>
Line 27(a) Form 5500 - Schedule of Assets Held for Investment Purposes
December 31, 1997
<S> <C> <C> <C> <C> <C>
Current
Identity of Issue Trustee Investment Type Shares/Unit Cost Value
RightCHOICE Stock Fund INVESCO Trust Company Company Stock Fund 34,623 $442,899 $342,227
INVESCO Retirement Trust Equity Fund INVESCO Trust Company Registered Investment Company 344,520 8,550,049 12,089,211
ITC Capital Preservation Fund INVESCO Trust Company Registered Investment Company 5,832,188 5,832,189 5,832,188
INVESCO Retirement Trust Flex Fund INVESCO Trust Company Registered Investment Company 331,585 8,209,502 11,001,982
ITC Common Stock Fund INVESCO Trust Company Registered Investment Company 74,570 2,980,195 3,809,772
INVESCO Retirement Trust Income Fund INVESCO Trust Company Registered Investment Company 7,392 139,852 149,457
ITC 500 Index Fund INVESCO Trust Company Registered Investment Company 101,726 1,906,292 2,278,656
ITC Principal Protection Fund INVESCO Trust Company Registered Investment Company 6,919 90,316 100,814
ITC Intermediate Return Fund INVESCO Trust Company Registered Investment Company 9,741 142,745 159,355
ITC Growth & Income Fund INVESCO Trust Company Registered Investment Company 3,863 58,337 67,795
ITC Maximum Appreciation Fund INVESCO Trust Company Registered Investment Company 17,807 271,247 330,496
ITC Style Neutral Fund INVESCO Trust Company Registered Investment Company 9,660 160,585 203,063
IIF Select Income Fund INVESCO Trust Company Registered Investment Company 7,508 50,082 50,081
SoGen International Fund INVESCO Trust Company Registered Investment Company 9,886 267,099 251,606
Fidelity Equity Income II Fund INVESCO Trust Company Registered Investment Company 25,720 642,818 694,706
Templeton Foreign Fund INVESCO Trust Company Registered Investment Company 22,311 235,478 221,995
IDF Small Company Fund INVESCO Trust Company Registered Investment Company 25,730 343,012 300,789
INVESCO Dynamics Fund INVESCO Trust Company Registered Investment Company 70,029 967,072 977,608
Loans to Participants* INVESCO Trust Company Loans Other Than Mortgages 2,498,242 2,498,242 2,498,242
$33,788,011 $41,360,043
* Interest Rate on loans ranged from 9.25% to 9.50%
The accompanying notes are an integral part of the financial statements.
</TABLE>
Blue Cross and Blue Shield of Missouri Schedule II
Tax-Favored Savings Program
<TABLE>
Line 27(d) Form 5500 - Schedule of Reportable Transactions
(Transactions Involving an Amount in Excess of 5% of the Current Value of Program Assets)
for the year ended December 31, 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Number
Identity of Trustee/ Purchase Purchase of Sale Selling Cost of Net Gains
Party Involved Description of Asset Transactions Price** Transactions Price** Asset or (loss)
INVESCO Trust Company ITC Capital Preservation Fund* 173 $2,380,915 164 $2,589,607 $2,589,607 $0
INVESCO Trust Company INVESCO Retirement Trust 113 1,754,489 167 2,355,199 1,783,750 571,449
Equity Fund*
INVESCO Trust Company INVESCO Retirement Trust 164 2,590,370 2,100,396 489,974
Flex Fund*
* Party-in-interest
** Represents more than 5% of the Program's assets
The accompanying notes are an integral part of the financial statements.
</TABLE>
