8-K 1 a73944e8-k.htm FORM 8-K Pacificare Health Systems, Inc. Form 8-K
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UNITED STATES
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): July 12, 2001

 
 
 

PACIFICARE HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

 
 
         
Delaware
(State or other jurisdiction of
incorporation or organization)		 000-21949
(Commission
File Number) 		95-4591529
(IRS Employer
Identification Number)

3120 Lake Center Drive, Santa Ana, California 92704
(Address of principal executive offices, including zip code)

(Registrant’s telephone number, including area code): (714) 825-5200

 
 

 

ITEM 9. REGULATION FD DISCLOSURE.
CONSOLIDATING CONDENSED BALANCE SHEETS DECEMBER 31, 1998
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998
CONSOLIDATING CONDENSED BALANCE SHEETS DECEMBER 31, 1999
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1999
CONSOLIDATING CONDENSED BALANCE SHEETS DECEMBER 31, 2000
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2000
CONSOLIDATING CONDENSED BALANCE SHEETS MARCH 31, 2000
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000
CONSOLIDATING CONDENSED BALANCE SHEETS MARCH 31, 2001
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2001
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001
SIGNATURES

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ITEM 9. REGULATION FD DISCLOSURE.

PacifiCare Health Systems, Inc. (“PacifiCare” or the “Company”) expects to provide unaudited financial information concerning the Company, its domestic, unregulated subsidiaries referred to below and its other subsidiaries to certain parties. In connection with providing the information to these parties, PacifiCare is filing the information in this Form 8-K.

PacifiCare has prepared unaudited consolidating condensed financial statements to quantify the financial position, operations and cash flows of its domestic, unregulated subsidiaries referred to below as of and for the years ended December 31, 1998, 1999 and 2000, and the three-month periods ended March 31, 2000 and 2001. The following unaudited consolidating condensed balance sheets, consolidating condensed statements of operations and consolidating condensed statements of cash flows present financial information for:

PARENT — PacifiCare Health Systems, Inc. on a stand-alone basis (carrying investments in subsidiaries under the equity method); PacifiCare became the parent on February 14, 1997 effective with the acquisition of FHP International Corporation.

DOMESTIC, UNREGULATED SUBSIDIARIES — PacifiCare Health Plan Administrators, Inc., PacifiCare eHoldings, Inc., RxConnect Acquisition Corp., Senior Co, Inc., Rx Solutions, Inc., doing business as Prescription Solutions, PacifiCare Behavioral Health, Inc., Secure Horizons USA, Inc. and PacifiCare Ventures, Inc. on a stand-alone basis (carrying investments in subsidiaries under the equity method).

OTHER SUBSIDIARIES — Represents all other directly or indirectly wholly owned subsidiaries of the domestic, unregulated subsidiaries referred to above on a consolidated basis.

CONSOLIDATING ADJUSTMENTS — Entries that eliminate the investment in subsidiaries and intercompany balances and transactions.

THE COMPANY — The financial information for PacifiCare Health Systems, Inc. on a condensed consolidated basis.

PROVISION FOR INCOME TAXES — PacifiCare and its subsidiaries record the provision for income taxes in accordance with an intercompany tax-sharing agreement. Income tax benefits available to subsidiaries that arise from net operating losses can only be used to offset the subsidiaries’ taxable income in future periods. Accordingly, tax benefits are excluded from the results.

FORWARD-LOOKING STATEMENTS

This Form 8-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. In particular, the Company's stated expectation that it will provide the information filed in this Form 8-K to other parties independently of disclosing that information to those other parties by filing this Form 8-K is a forward-looking statement. The Company can give no assurance that any of the events anticipated by the forward-looking statements will occur or, if any of them do occur, what impact they will have on the Company's results of operations or financial condition.

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED BALANCE SHEETS UNREGULATED OTHER CONSOLIDATING
DECEMBER 31, 1998 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
ASSETS
Current assets:
Cash and equivalents
 $ — $ 54,186 $ 670,450 $ — $ 724,636
Marketable securities
 — 87,237 787,916 400 875,553
Receivables, net
 — 76,885 169,106 29,964 275,955
Intercompany
 (51,822 ) (267,094 ) 318,916 — —
Prepaid expenses and other current assets
 306 14,913 12,193 (2,433 ) 24,979
Deferred income taxes
 — 53,858 97,346 (18,752 ) 132,452
Total current assets
 (51,516 ) 19,985 2,055,927 9,179 2,033,575
Property, plant and equipment at cost, net
 — 68,407 110,113 — 178,520
Marketable securities — restricted
 — — 82,660 — 82,660
Investment in subsidiaries
 2,875,268 1,966,209 586,181 (5,427,658 ) —
Goodwill and intangible assets, net
 — 1,101,199 1,212,067 — 2,313,266
Other assets
 8,245 21,332 9,322 (15,976 ) 22,923
$ 2,831,997 $ 3,177,132 $ 4,056,270 $ (5,434,455 ) $ 4,630,944
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable
 $ — $ 40,915 $ 574,438 $ 29,947 $ 645,300
Accounts payable and accrued liabilities
 51,260 164,627 250,876 (2,593 ) 464,170
Unearned premium revenue
 — 37 509,822 — 509,859
Long-term debt due within one year
 — — 87 — 87
Total current liabilities
 51,260 205,579 1,335,223 27,354 1,619,416
Long-term debt due after one year
 550,000 100,000 6 — 650,006
Deferred income taxes
 — 20,152 126,055 (34,151 ) 112,056
Other liabilities
 — 11,015 — — 11,015
Minority interest
 — — 355 — 355
Intercompany notes payable (receivable)
 — (99,100 ) 99,100 — —
Stockholders’ equity:
Capital stock
 464 — — — 464
Additional paid-in capital
 1,624,619 — — — 1,624,619
Accumulated other comprehensive income
 — 792 6,567 — 7,359
Retained earnings
 649,608 — — — 649,608
Treasury stock
 (43,954 ) — — — (43,954 )
Equity in income of subsidiaries
 — 2,938,694 2,488,964 (5,427,658 ) —
Total stockholders’ equity
 2,230,737 2,939,486 2,495,531 (5,427,658 ) 2,238,096
$ 2,831,997 $ 3,177,132 $ 4,056,270 $ (5,434,455 ) $ 4,630,944

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 1998 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating revenue
 $ — $ 250,727 $ 9,593,080 $ (218,019 ) $ 9,625,788
Income from subsidiaries
 219,862 252,344 — (472,206 ) —
Total operating revenue
 219,862 503,071 9,593,080 (690,225 ) 9,625,788
Health care services
 — 148,393 8,058,560 (204,693 ) 8,002,260
Marketing, general and administrative expenses
 848 48,205 1,053,691 (13,326 ) 1,089,418
Amortization of goodwill and intangible assets
 — 29,674 46,919 — 76,593
Impairment, disposition, restructuring and other charges
 — — 15,644 — 15,644
Office of Personnel Management credits
 — — (4,624 ) — (4,624 )
Operating income
 219,014 276,799 422,890 (472,206 ) 446,497
Interest expense
 (53,067 ) (10,706 ) 2,850 (60,923 )
Income before income taxes
 165,947 266,093 425,740 (472,206 ) 385,574
Provision for income taxes
 (36,480 ) 14,092 205,535 — 183,147
Net income
 $ 202,427 $ 252,001 $ 220,205 $ (472,206 ) $ 202,427

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 1998 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating activities:
Net income
 $ 202,427 $ 252,001 $ 220,205 $ (472,206 ) $ 202,427
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries
 (219,862 ) (252,344 ) — 472,206 —
Amortization of goodwill and intangible assets
 — 29,674 46,919 — 76,593
Depreciation and amortization
 — 19,283 25,153 — 44,436
Deferred income taxes
 (1,323 ) 27,609 (45,585 ) — (19,299 )
Impairment, disposition, restructuring and other charges
 — — 15,644 — 15,644
Loss on disposal of property, plant and equipment and other
 — 5,923 6,624 — 12,547
Tax benefit realized for stock option exercises
 6,296 — — — 6,296
Office of Personnel Management credits
 — — (4,624 ) — (4,624 )
Provision for doubtful accounts
 — — 1,485 — 1,485
Other noncash items
 — (375 ) 375 — —
Changes in assets and liabilities, net of effects from acquisitions and dispositions
 403,881 (205,991 ) (77,808 ) — 120,082
Net cash flows provided by (used in) operating activities
 391,419 (124,220 ) 188,388 — 455,587
Investing activities:
Purchase of property, plant and equipment
 — (25,644 ) (15,987 ) — (41,631 )
Proceeds from the sale of property, plant and equipment
 — — 41,187 — 41,187
Sale (purchase) of marketable securities — restricted
 — 100 (18,080 ) — (17,980 )
Proceeds from dispositions
 — — 16,809 — 16,809
Sale (purchase) of marketable securities, net
 — 30,346 (46,892 ) — (16,546 )
Net cash paid for acquisitions
 — — (750 ) — (750 )
Net cash flows provided by (used in) investing activities
 — 4,802 (23,713 ) — (18,911 )
Financing activities:
Principal payments on long-term debt
 (390,000 ) (5 ) (1,290 ) — (391,295 )
Common stock repurchases
 (44,658 ) — — — (44,658 )
Proceeds from borrowings of long-term debt
 30,000 — — — 30,000
Proceeds from issuance of common and treasury stock
 18,908 — — — 18,908
Preferred dividends paid
 (5,259 ) — — — (5,259 )
Redemption of preferred stock
 (410 ) — — — (410 )
Intercompany activity:
Dividends received (paid)
 — 199,000 (199,000 ) — —
Capital infusions (paid) received
 — (78,767 ) 78,767 — —
Subordinated loans received (paid)
 — 38,250 (38,250 ) — —
Net cash flows (used in) provided by financing activities
 (391,419 ) 158,478   (159,773 ) — (392,714 )
Net increase in cash and equivalents
 — 39,060 4,902 — 43,962
Beginning cash and equivalents
 — 15,126 665,548 — 680,674
Ending cash and equivalents
 $ — $ 54,186 $ 670,450 $ — $ 724,636

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED BALANCE SHEETS UNREGULATED OTHER CONSOLIDATING
DECEMBER 31, 1999 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
   
ASSETS
Current assets:
Cash and equivalents
 $ (48,935 ) $ 121,235 $ 776,764 $ — $ 849,064
Marketable securities
 — 64,734 934,460 — 999,194
Receivables, net
 — 92,036 215,269 (653 ) 306,652
Intercompany
 64,617 (74,760 ) 10,143 — —
Prepaid expenses and other current assets
 196 45,410 5,758 (2,952 ) 48,412
Deferred income taxes
 — 67,738 108,529 (35,098 ) 141,169
Total current assets
 15,878 316,393 2,050,923 (38,703 ) 2,344,491
Property, plant and equipment at cost, net
 — 125,758 51,763 — 177,521
Marketable securities — restricted
 — 25 86,446 — 86,471
Deferred income taxes
 32,503 8,470 (40,973 ) —
Investment in subsidiaries
 2,854,951 2,068,015 27,697 (4,950,663 ) —
Goodwill and intangible assets, net
 — 1,062,295 1,181,948 — 2,244,243
Other assets
 10,410 19,300 1,646 (61 ) 31,295
$ 2,881,239 $ 3,624,289 $ 3,408,893 $ (5,030,400 ) $ 4,884,021
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable
 $ — $ 54,141 $ 741,036 $ 23 $ 795,200
Accounts payable and accrued liabilities
 4,124 270,499 153,904 (3,356 ) 425,171
Deferred income taxes
 26,636 8,463 (35,099 ) —
Unearned premium revenue
 — 206 565,609 — 565,815
Total current liabilities
 4,124 351,482 1,469,012 (38,432 ) 1,786,186
Long-term debt due after one year
 875,000 100,000 — — 975,000
Deferred income taxes
 — 52,273 116,168 (40,972 ) 127,469
Other liabilities
 — 17,147 167 — 17,314
Minority interest
 — — 333 — 333
Intercompany notes payable (receivable)
 — (102,100 ) 102,100 — —
Stockholders’ equity:
Capital stock
 468 — — —   468
Additional paid-in capital
 1,597,485 — — —   1,597,485
Accumulated other comprehensive loss
 — (2,255 ) (22,141 ) — (24,396 )
Retained earnings
 928,152 — — —   928,152
Treasury stock
 (523,990 ) — — — (523,990 )
Equity in income of subsidiaries
 —   3,207,742 1,743,254 (4,950,996 ) —  
Total stockholders’ equity
 2,002,115 3,205,487 1,721,113 (4,950,996 ) 1,977,719
$ 2,881,239 $ 3,624,289 $ 3,408,893 $ (5,030,400 ) $ 4,884,021

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 1999 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
   
Operating revenue
 $ — $ 336,566 $ 10,001,527 $ (264,953 ) $ 10,073,140
Income from subsidiaries
 315,610 422,192 — (737,802 ) —
Total operating revenue
 315,610 758,758 10,001,527 (1,002,755 ) 10,073,140
Health care services
 — 199,865 8,423,764 (254,939 ) 8,368,690
Marketing, general and administrative expenses
 1,656 216,633 897,541 (10,014 ) 1,105,816
Amortization of goodwill and intangible assets
 — 28,586 47,371 — 75,957
Impairment, disposition, restructuring and other (credits) charges
 — (7,187 ) 4,954 — (2,233 )
Operating income
 313,954 320,861 627,897 (737,802 ) 524,910
Interest expense
 (35,410 ) (12,265 ) 4,674 — (43,001 )
Income before income taxes
 278,544 308,596 632,571 (737,802 ) 481,909
Provision for income taxes
 — (41,416 ) 244,781 — 203,365
Net income
 $ 278,544 $ 350,012 $ 387,790 $ (737,802 ) $ 278,544

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 1999 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating activities:
Net income
 $ 278,544 $ 350,012 $ 387,790 $ (737,802 ) $ 278,544
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries
 (315,610 ) (422,192 ) — 737,802 —
Amortization of goodwill and intangible assets
 — 28,586 47,371 — 75,957
Depreciation and amortization
 — 31,659 10,481 — 42,140
Deferred income taxes
 — 14,755 11,913 — 26,668
Loss on disposal of property, plant and equipment and other
 — 3,834 5,449 — 9,283
Tax benefit realized for stock option exercises
 4,943 — — — 4,943
Impairment, disposition, restructuring and other (credits) charges
 — (7,187 ) 4,954 — (2,233 )
Provision for doubtful accounts
 — 1,012 622 — 1,634
Changes in assets and liabilities, net of effects from acquisitions and dispositions
 177,506 (152,436 ) 107,692 — 132,762
Net cash flows provided by (used in) operating activities
 145,383 (151,957 ) 576,272 —   569,698
Investing activities:
Sale (purchase) of marketable securities, net
 — 16,552 (191,920 ) — (175,368 )
Purchase of property, plant and equipment
 — (55,786 ) (10,425 ) — (66,211 )
Net cash acquired from (paid for) acquisitions
 — 6 (21,240 ) — (21,234 )
Proceeds from sale of property, plant and equipment
 — 15,765 — — 15,765
Purchase of marketable securities — restricted
 — (25 ) (3,786 ) — (3,811 )
Intercompany transfers of property, plant and equipment
 — (65,871 ) 65,871 — —
Net cash flows used in investing activities
 — (89,359 ) (161,500 ) — (250,859 )
Financing activities:
Common stock repurchases
 (480,036 ) — — — (480,036 )
Proceeds from borrowings of long-term debt
 400,000 — — — 400,000
Principal payments on long-term debt
 (75,000 ) — (93 ) — (75,093 )
Common stock reclassification payments to UniHealth Foundation
 (61,880 ) — — — (61,880 )
Proceeds from issuance of common and treasury stock
 22,598 — — — 22,598
Intercompany activity:
Dividends received (paid)
 — 374,561 (374,561 ) — —
Capital infusions (paid) received
 — (63,196 ) 63,196 — —
Subordinated loans (paid) received
 — (3,000 ) 3,000 — —
Net cash flows (used in) provided by financing activities
 (194,318 ) 308,365 (308,458 ) — (194,411 )
Net (decrease) increase in cash and equivalents
 (48,935 ) 67,049 106,314 — 124,428
Beginning cash and equivalents
 — 54,186 670,450 — 724,636
Ending cash and equivalents
 $ (48,935 ) $ 121,235 $ 776,764 $ — $ 849,064

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED BALANCE SHEETS UNREGULATED OTHER CONSOLIDATING
DECEMBER 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands  
   
ASSETS
Current assets:
Cash and equivalents
 $ — $ (12,754 ) $ 1,264,389 $ — $ 1,251,635
Marketable securities
 — 30,555 833,458 — 864,013
Receivables, net
 — 110,027 316,835 (16,168 ) 410,694
Intercompany
 (344,572 ) 270,706 73,866 — —
Prepaid expenses and other current assets
 208 33,077 13,001 (3,434 ) 42,852
Deferred income taxes
 — 89,233 82,508 (32,029 ) 139,712
Total current assets
 (344,364 ) 520,844 2,584,057 (51,631 ) 2,708,906
Property, plant and equipment at cost, net
 — 176,773 48,778 — 225,551
Marketable securities — restricted
 — 10 (10 ) — —
Deferred income taxes
 — 1,876 136,275 (43,749 ) 94,402
Investment in subsidiaries
 3,090,706 2,258,338 27,214 (5,376,258 ) —
Goodwill and intangible assets, net
 — 1,060,081 1,201,556 — 2,261,637
Other assets
 7,565 21,643 4,322 (590 ) 32,940
$ 2,753,907 $ 4,039,565 $ 4,002,192 $ (5,472,228 ) $ 5,323,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable
 $ — $ 32,186 $ 1,243,876 $ (5,262 ) $ 1,270,800
Accounts payable and accrued liabilities
 10,688 262,703 187,620 (14,930 ) 446,081
Deferred income taxes
 — 457 31,572 (32,029 ) —
Unearned premium revenue
 — 1,621 596,594 — 598,215
Long-term debt due within one year
 — — 161 — 161
Intercompany notes payable (receivable)
 — 99,259 (99,259 ) — —
Total current liabilities
 10,688 396,226 1,960,564 (52,221 ) 2,315,257
Long-term debt due after one year
 735,000 100,000 1,556 — 836,556
Deferred income taxes
 — 86,236 103,146 (43,749 ) 145,633
Other liabilities
 — 17,734 3,012 — 20,746
Minority interest
 1,684 — — — 1,684
Intercompany notes payable (receivable)
 — (77,306 ) 77,306 — —
Stockholders’ equity:
Capital stock
 470 — — —   470
Additional paid-in capital
 1,613,944 — — — 1,613,944
Accumulated other comprehensive loss
 — (870 ) (2,105 ) — (2,975 )
Retained earnings
 1,089,192 — — — 1,089,192
Treasury stock
 (697,071 ) — — — (697,071 )
Equity in income of subsidiaries
 — 3,517,545 1,858,713 (5,376,258 ) —
Total stockholders’ equity
 2,006,535 3,516,675 1,856,608 (5,376,258 ) 2,003,560
$ 2,753,907 $ 4,039,565 $ 4,002,192 $ (5,472,228 ) $ 5,323,436

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating revenue
 $ — $ 416,640 $ 11,492,420 $ (332,762 ) $ 11,576,298
Income from subsidiaries
 232,755 305,392 — (538,147 ) —
Total operating revenue
 232,755 722,032 11,492,420 (870,909 ) 11,576,298

Health care services
 — 257,845 9,972,496 (316,684 ) 9,913,657
Marketing, general and administrative expenses
 312 186,593 1,028,925 (12,257 ) 1,203,573
Amortization of goodwill and intangible assets
 — 29,666 53,551 — 83,217
Impairment, disposition, restructuring and other charges
 — 9,377 2,353 — 11,730
Office of Personnel Management credits
 — — (2,964 ) — (2,964 )
Operating income
 232,443 238,551 438,059 (541,968 ) 367,085
Interest expense
 (72,040 ) (9,710 ) (1,707 ) 3,821 (79,636 )
Minority interest in consolidated subsidiary
 637 — — — 637
Income before income taxes
 161,040 228,841 436,352 (538,147 ) 288,086
Provision for income taxes
 — (51,505 ) 178,551 — 127,046
Net income
 $ 161,040 $ 280,346 $ 257,801 $ (538,147 ) $ 161,040

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS UNREGULATED OTHER CONSOLIDATING
FOR THE YEAR ENDED DECEMBER 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
Operating activities:
Net income
 $ 161,040 $ 280,346 $ 257,801 $ (538,147 ) $ 161,040
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries
 (232,755 ) (305,392 ) — 538,147 —
Amortization of goodwill and intangible assets
 — 29,666 53,551 — 83,217
Depreciation and amortization
 — 38,026 9,320 — 47,346
Impairment, disposition, restructuring and other charges
 — 9,377 2,353 — 11,730
Loss on disposal of property, plant and equipment and other
 — 7,203 461 — 7,664
Deferred income taxes
 — 15,992 (9,885 ) — 6,107
Provision for doubtful accounts
 — 146 5,379 — 5,525
Office of Personnel Management credits
 — — (2,964 ) — (2,964 )
Tax benefit realized for stock option exercises
 1,801 — — — 1,801
Minority interest in consolidated subsidiary
 (637 ) — — — (637 )
Changes in assets and liabilities, net of effects from acquisitions and dispositions
 422,244 (453,060 ) 341,213 — 310,407
Net cash flows provided by (used in) operating activities
 351,693 (377,686 ) 657,229 — 631,236
Investing activities:
Sale of marketable securities, net
 — 36,488 141,110 — 177,598
Purchase of property, plant and equipment
 — (98,461 ) (6,795 ) — (105,256 )
Sale (purchase) of marketable securities — restricted
 — 15 (7,675 ) — (7,660 )
Net cash acquired from (paid for) acquisitions
 — (123,754 ) 127,852 — 4,098
Proceeds from the sale of property, plant and equipment
 — 3,596 — — 3,596
Net cash flows (used in) provided by investing activities
 — (182,116 ) 254,492 — 72,376
Financing activities:
Principal payments on long-term debt
 (400,000 ) — (200 ) — (400,200 )
Proceeds from borrowings of long-term debt
 260,000 — 1,917 — 261,917
Common stock repurchases
 (173,332 ) — — — (173,332 )
Cash received from minority stockholders
 8,108 — — — 8,108
Proceeds from issuance of common and treasury stock
 2,466 — — — 2,466
Intercompany activity:
Dividends received (paid)
 — 256,260 (256,260 ) — —
Royalty dividends & loans received (paid)
 — 216,259 (216,259 ) — —
Capital infusions (paid) received
 — (71,500 ) 71,500 — —
Subordinated loans received (paid)
 — 24,794 (24,794 ) — —
Net cash flows (used in) provided by financing activities
 (302,758 ) 425,813 (424,096 ) — (301,041 )
Net increase (decrease) in cash and equivalents
 48,935 (133,989 ) 487,625 — 402,571
Beginning cash and equivalents
 (48,935 ) 121,235 776,764 — 849,064
Ending cash and equivalents
 $ — $ (12,754 ) $ 1,264,389 $ — $ 1,251,635

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED BALANCE SHEETS UNREGULATED OTHER CONSOLIDATING
MARCH 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
   
ASSETS
Current assets:
Cash and equivalents
 $ — $ 45,091 $ 858,858 $ — $ 903,949
Marketable securities
 — 55,893 930,515 — 986,408
Receivables, net
 — 111,524 300,040 (594 ) 410,970
Intercompany
 (97,584 ) (4,967 ) 102,551 — —
Prepaid expenses and other current assets
 628 42,033 5,047 (3,157 ) 44,551
Deferred income taxes
 — 96,154 77,270 (34,860 ) 138,564
Total current assets
 (96,956 ) 345,728 2,274,281 (38,611 ) 2,484,442
Property, plant and equipment at cost, net
 — 130,472 50,314 — 180,786
Marketable securities — restricted
 — 25 91,183 — 91,208
Deferred income taxes
 — 767 40,205 (40,972 ) —
Investment in subsidiaries
 2,947,869 2,204,557 27,697 (5,180,123 ) —
Goodwill and intangible assets, net
 — 1,080,512 1,232,506 — 2,313,018
Other assets
 9,416 22,591 2,643 (110 ) 34,540
$ 2,860,329 $ 3,784,652 $ 3,718,829 $ (5,259,816 ) $ 5,103,994
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable
 $ — $ 66,580 $ 896,443 $ (23 ) $ 963,000
Accounts payable and accrued liabilities
 1,479 276,196 186,656 (3,627 ) 460,704
Deferred income taxes
 — 214 34,857 (35,071 ) —
Unearned premium revenue
 — 217 592,141 — 592,358
Long-term debt due within one year
 — — 146 — 146
Total current liabilities
 1,479 343,207 1,710,243 (38,721 ) 2,016,208
Long-term debt due after one year
 870,000 100,000 1,684 — 971,684
Deferred income taxes
 — 78,713 89,728 (40,972 ) 127,469
Other liabilities
 — 21,101 167 — 21,268
Intercompany notes payable (receivable)
 — (90,100 ) 90,100 — —
Stockholders’ equity:
Preferred stock
 — — — — —
Capital stock
 468 — — — 468
Additional paid-in capital
 1,603,923 — — — 1,603,923
Accumulated other comprehensive loss
 — (2,127 ) (19,358 ) — (21,485 )
Retained earnings
 1,002,787 — — — 1,002,787
Treasury stock
 (618,328 ) — — — (618,328 )
Equity in income of subsidiaries
 — 3,333,858 1,846,265 (5,180,123 ) —
Total stockholders’ equity
 1,988,850 3,331,731 1,826,907 (5,180,123 ) 1,967,365
$ 2,860,329 $ 3,784,652 $ 3,718,829 $ (5,259,816 ) $ 5,103,994

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS UNREGULATED OTHER CONSOLIDATING
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating revenue
 $ — $ 100,477 $ 2,805,862 $ (78,568 ) $ 2,827,771
Income from subsidiaries
 92,918 103,304 — (196,222 ) —
Total operating revenue
 92,918 203,781 2,805,862 (274,790 ) 2,827,771
Health care services
 — 61,863 2,370,422 (75,745 ) 2,356,540
Marketing, general and administrative expenses
 60 34,640 267,841 (2,823 ) 299,718
Amortization of goodwill and intangible assets
 — 7,354 13,102 — 20,456
Impairment, disposition, restructuring and other charges
 — 5,597 3 — 5,600
Office of Personnel Management credits
 — — (2,964 ) — (2,964 )
Operating income
 92,858 94,327 157,458 (196,222 ) 148,421
Interest expense
 (18,223 ) (1,717 ) (242 ) — (20,182 )
Income before income taxes
 74,635 92,610 157,216 (196,222 ) 128,239
Provision for income taxes
 — (7,410 ) 61,014 — 53,604
Net income
 $ 74,635 $ 100,020 $ 96,202 $ (196,222 ) $ 74,635

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS UNREGULATED OTHER CONSOLIDATING
FOR THE THREE MONTHS ENDED MARCH 31, 2000 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating activities:
Net income
 $ 74,635 $ 100,020 $ 96,202 $ (196,222 ) $ 74,635
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries
 (92,918 ) (103,304 ) — 196,222 —
Amortization of goodwill and intangible assets
 — 7,354 13,102 — 20,456
Depreciation and amortization
 — 8,477 2,183 — 10,660
Impairment, disposition, restructuring and other charges
 — 5,597 3 — 5,600
Office of Personnel Management credits
 — — (2,964 ) — (2,964 )
Deferred income taxes
 — 3,252 (2,233 ) — 1,019
Provision for doubtful accounts
 — 23 935 — 958
Loss on disposal of property, plant and equipment
 — 871 11 — 882
Other noncash items
 — — (333 ) — (333 )
Tax benefit realized for stock option exercises
 39 — — — 39
Changes in assets and liabilities, net of effects from acquisitions and dispositions
 166,035 (72,578 ) (70,846 ) — 22,611
Net cash flows provided by (used in) operating activities
 147,791 (50,288 ) 36,060 —   133,563
Investing activities:
Sale of marketable securities, net
 — 9,055 15,710 — 24,765
Purchase of property, plant and equipment
 — (14,163 ) (745 ) — (14,908 )
Net cash acquired from (paid for) acquisitions
 — (122,276 ) 133,791 — 11,515
Purchase of marketable securities — restricted
 — — (4,466 ) — (4,466 )
Proceeds from sale of property, plant and equipment
 — 1,442 — — 1,442
Net cash flows (used in) provided by investing activities
 — (125,942 ) 144,290 — 18,348
Financing activities:
Principal payments on long-term debt
 (265,000 ) — (82 ) — (265,082 )
Proceeds from borrowings of long-term debt
 260,000 — 1,912 — 261,912
Common stock repurchases
 (94,338 ) — — — (94,338 )
Proceeds from issuance of common and treasury stock
 482 — — — 482
Intercompany activity:
Royalty dividends & loans received (paid)
 — 98,000 (98,000 ) — —
Capital infusions (paid) received
 — (27,000 ) 27,000 — —
Dividends received (paid)
 — 17,086 (17,086 ) — —
Subordinated loans received (paid)
 — 12,000 (12,000 ) — —
Net cash flows (used in) provided by financing activities
 (98,856 ) 100,086 (98,256 ) — (97,026 )
Net increase (decrease) in cash and equivalents
 48,935 (76,144 ) 82,094 — 54,885
Beginning cash and equivalents
 (48,935 ) 121,235 776,764 — 849,064
Ending cash and equivalents
 $ — $ 45,091 $ 858,858 $ — $ 903,949

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED BALANCE SHEETS UNREGULATED OTHER CONSOLIDATING
MARCH 31, 2001 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
ASSETS
Current assets:
Cash and equivalents
 $ — $ 90,326 $ 1,135,707 $ — $ 1,226,033
Marketable securities
 — 19,434 916,153 — 935,587
Receivables, net
 — 105,482 314,987 (8,205 ) 412,264
Intercompany
 (368,345 ) 301,120 67,225 — —
Prepaid expenses and other current assets
 274 31,170 16,382 (3,430 ) 44,396
Deferred income taxes
 — 93,814 76,357 (32,028 ) 138,143
Total current assets
 (368,071 ) 641,346 2,526,811 (43,663 ) 2,756,423
Property, plant and equipment at cost, net
 — 172,547 58,638 — 231,185
Marketable securities — restricted
 — 7,000 109,818 — 116,818
Deferred income taxes
 — 1,876 41,517 (43,393 ) —
Investment in subsidiaries
 3,120,527 2,107,775 — (5,228,302 ) —  
Goodwill and intangible assets, net
 — 1,053,136 1,188,354 — 2,241,490
Other assets
 6,281 20,968 3,582 (937 ) 29,894
$ 2,758,737 $ 4,004,648 $ 3,928,720 $ (5,316,295 ) $ 5,375,810
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims and benefits payable
 $ — $ 37,807 $ 1,241,967 $ (4,374 ) $ 1,275,400
Accounts payable and accrued liabilities
 10,523 286,136 176,179 (8,198 ) 464,640
Deferred income taxes
 — 457 31,571 (32,028 ) —
Unearned premium revenue
 — 902 616,888 — 617,790
Long-term debt due within one year
 735,000 — 154 — 735,154
Intercompany notes payable (receivable)
 — 30,588 (30,588 ) — —
Total current liabilities
 745,523 355,890 2,036,171 (44,600 ) 3,092,984
Long-term debt due after one year
 — 100,000 1,376 — 101,376
Deferred income taxes
 — 88,517 100,293 (43,393 ) 145,417
Other liabilities
 — 16,169 3,021 — 19,190
Intercompany notes payable (receivable)
 — (106,306 ) 106,306 — —
Stockholders’ equity:
Preferred stock
 — — — —   —
Capital stock
 472 — — —   472
Unearned compensation
 (4,438 ) — — — (4,438 )
Additional paid-in capital
 1,611,911 — — —   1,611,911
Accumulated other comprehensive income (loss)
 — (571 ) 4,200 — 3,629
Retained earnings
 1,102,340 — —   —   1,102,340
Treasury stock
 (697,071 ) — — — (697,071 )
Equity in income of subsidiaries
 —   3,550,949 1,677,353 (5,228,302 ) —  
Total stockholders’ equity
 2,013,214 3,550,378 1,681,553 (5,228,302 ) 2,016,843
$ 2,758,737 $ 4,004,648 $ 3,928,720 $ (5,316,295 ) $ 5,375,810

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS UNREGULATED OTHER CONSOLIDATING
FOR THE THREE MONTHS ENDED MARCH 31, 2001 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
   
Operating revenue
 $ — $ 115,576 $ 3,006,738 $ (91,615 ) $ 3,030,699
Income from subsidiaries
 30,839 46,802 — (77,641 ) —
Total operating revenue
 30,839 162,378 3,006,738 (169,256 ) 3,030,699
Health care services
 — 75,679 2,682,233 (85,299 ) 2,672,613
Marketing, general and administrative expenses
 90 43,809 253,612 (4,592 ) 292,919
Amortization of goodwill and intangible assets
 — 7,491 13,426 — 20,917
Impairment, disposition, restructuring and other credits
 — (787 ) (141 ) — (928 )
Operating income
 30,749 36,186 57,608 (79,365 ) 45,178
Interest expense
 (17,601 ) (3,449 ) (809 ) 1,724 (20,135 )
Income before income taxes
 13,148 32,737 56,799 (77,641 ) 25,043
Provision for income taxes
 — (6,675 ) 18,570 — 11,895
Net income
 $ 13,148 $ 39,412 $ 38,229 $ (77,641 ) $ 13,148

 

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PACIFICARE HEALTH SYSTEMS, INC. DOMESTIC,
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS UNREGULATED OTHER CONSOLIDATING
FOR THE THREE MONTHS ENDED MARCH 31, 2001 (Unaudited) PARENT SUBSIDIARIES SUBSIDIARIES ADJUSTMENTS COMPANY
In thousands
 
Operating activities:
Net income
 $ 13,148 $ 39,412 $ 38,229 $ (77,641 ) $ 13,148
Adjustments to reconcile net income to net cash flows provided by (used in) operating activities:
Equity in income of subsidiaries
 (30,839 ) (46,802 ) — 77,641 —
Amortization of goodwill and intangible assets
 — 7,491 13,426 — 20,917
Depreciation and amortization
 — 12,722 2,408 — 15,130
Deferred income taxes
 — (4,178 ) 1,482 — (2,696 )
Provision for doubtful accounts
 — 15 1,476 — 1,491
Impairment, disposition, restructuring and other credits
 — (787 ) (141 ) — (928 )
Loss on disposal of property, plant and equipment
 — 751 118 — 869
Unearned compensation amortization
 347 — — — 347
Tax benefit realized for stock option exercises
 21 — — — 21
Changes in assets and liabilities, net of effects from acquisitions and dispositions
 26,103 54,071 (39,638 ) 40,536
Net cash flows provided by operating activities
 8,780 62,695 17,360 — 88,835
Investing activities:
Sale (purchase) of marketable securities, net
 — 11,619 (72,540 ) — (60,921 )
Purchase of marketable securities — restricted
 — (6,990 ) (15,426 ) — (22,416 )
Purchase of property, plant and equipment
 — (18,607 ) (3,060 ) — (21,667 )
Net cash paid for acquisitions
 — (500 ) — — (500 )
Proceeds from sale of property, plant and equipment
 — 34 — — 34
Net cash flows used in investing activities
 — (14,444 ) (91,026 ) — (105,470 )
Financing activities:
Purchase of minority interest in consolidated subsidiary
 (8,821 ) — — — (8,821 )
Principal payments on long-term debt
 — — (187 ) — (187 )
Proceeds from issuance of common and treasury stock
 41 — — — 41
Intercompany activity:
Royalty dividends & loans received (paid)
 — 64,329 (64,329 ) — —
Dividends received (paid)
 — 23,000 (23,000 ) — —
Subordinated loans (paid) received
 — (29,000 ) 29,000 — —
Capital infusions (paid) received
 — (3,500 ) 3,500 — —
Net cash flows (used in) provided by financing activities
 (8,780 ) 54,829 (55,016 ) — (8,967 )
Net increase (decrease) in cash and equivalents
 — 103,080 (128,682 ) — (25,602 )
Beginning cash and equivalents
 — (12,754 ) 1,264,389 — 1,251,635
Ending cash and equivalents
 $ — $ 90,326 $ 1,135,707 $ — $ 1,226,033

 

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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 HEALTH SYSTEMS, INC.
(Registrant)

       
Date: July 12, 2001 By: /s/       SUSAN L. BERKEL
Susan L. Berkel
Senior Vice President of Finance, Controller
(Principal Accounting Officer)