-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Eu8swlOjTNDbwzvqEC1dnu6cJE/96YNCuTaywH6j5nUSIXsq3QGcLAbp1forzqoT pC2CNPKyt/GoRMjjm6MdqQ== 0000950103-96-000996.txt : 19960717 0000950103-96-000996.hdr.sgml : 19960717 ACCESSION NUMBER: 0000950103-96-000996 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960716 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S HEALTHCARE INC CENTRAL INDEX KEY: 0000711405 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 232229683 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10819 FILM NUMBER: 96595470 BUSINESS ADDRESS: STREET 1: 980 JOLLY RD STREET 2: PO BOX 1109 CITY: BLUE BELL STATE: PA ZIP: 19422 BUSINESS PHONE: 2156284800 FORMER COMPANY: FORMER CONFORMED NAME: UNITED STATES HEALTH CARE SYSTEMS INC DATE OF NAME CHANGE: 19861202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AETNA LIFE & CASUALTY CO CENTRAL INDEX KEY: 0000002648 STANDARD INDUSTRIAL CLASSIFICATION: ACCIDENT & HEALTH INSURANCE [6321] IRS NUMBER: 060843808 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-05704 FILM NUMBER: 96595471 BUSINESS ADDRESS: STREET 1: 151 FARMINGTON AVE CITY: HARTFORD STATE: CT ZIP: 06156 BUSINESS PHONE: 8602730123 MAIL ADDRESS: STREET 1: 151 FARMINGTON AVE STREET 2: FINANCIAL YF8H CITY PLACE CITY: HARTFORD STATE: CT ZIP: 06156 DEFA14A 1 ADDITIONAL DEFINITIVE PROXY MATERIALS SCHEDULE 14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Definitive Proxy Statement [X] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 AETNA LIFE AND CASUALTY COMPANY AND U.S. HEALTHCARE, INC. (Name of Registrant as Specified In Its Charter) AETNA LIFE AND CASUALTY COMPANY AND U.S. HEALTHCARE, INC. (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): [ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: Aetna Life and Casualty Company Common Capital Stock without par value U.S. Healthcare, Inc. Common Stock, par value $0.005 per share U.S. Healthcare, Inc. Class B Stock, par value $0.005 per share (2) Aggregate number of securities to which transaction applies: 115,187,158 shares of Aetna Life and Casualty Company Common Capital Stock 139,512,162 shares of U.S. Healthcare, Inc. Common Stock 14,429,867 shares of U.S. Healthcare, Inc. Class B Stock (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 $71.3125 per share of Aetna Life and Casualty Company Common Capital Stock $51.9375 per share of U.S. Healthcare, Inc. Common Stock and per share of U.S. Healthcare, Inc. Class B Stock (4) Proposed maximum aggregate value of transaction: $16,209,648,336(1) - ------------ (1) For purposes of calculating the filing fee only. Upon consummation of the Mergers, (i) each outstanding share of Aetna Life and Casualty Company Common Capital Stock without par value will be converted into the right to receive one share of Aetna Inc. Common Stock, par value $0.01 per share, together with one right (a "Parent Right") issued pursuant to a Rights Agreement effective as of the date of the consummation of the Mergers, and (ii) each outstanding share of U.S. Healthcare, Inc. Common Stock, par value $0.005 per share, and U.S. Healthcare, Inc. Class B Stock, par value $0.005 per share, will be converted into the right to receive (a) 0.2246 shares of Aetna Inc. Common Stock, par value $0.01 per share, together with 0.2246 Parent Rights, (b) 0.0749 shares of Aetna Inc. 6.25% Class C Voting Preferred Stock, par value $0.01 per share, and (c) $34.20 in cash. The proposed maximum aggregate value of the transactions described in the preliminary proxy materials is equal to $16,209,648,336 (calculated based on the sum of (i)(a) the number of shares of Aetna Life and Casualty Company Common Capital Stock outstanding as of March 31, 1996 times (b) the average of the high and low reported prices of Aetna Life and Casualty Company Common Capital Stock on April 17, 1996, plus (ii)(a) the number of shares of U.S. Healthcare, Inc. Common Stock plus the number of shares of U.S. Healthcare, Inc. Class B Stock outstanding as of March 31, 1996 times (b) the average of the high and low reported prices of U.S. Healthcare, Inc. Common Stock on April 17, 1996. [X] 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: $3,241,929.67 (2) Form, Schedule or Registration Statement No.: Schedule 14A (3) Filing Party: Aetna Life and Casualty Company and U.S. Healthcare, Inc. (4) Date filed: April 22, 1996 AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Aetna is Predominately a Healthcare Company Graphics - Pie chart illustrating HEALTH-Aetna & U.S. Healthcare 68% INT'L - 9% ARS 23% HEALTH 68% broken out U.S. Healthcare - 22% Aetna Health Plans - 46% 1995 Combined Revenue of $16.6 billion AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Aetna and U.S. Healthcare are an Excellent Strategic Fit Aetna's Strengths o National Presence o Strong National Brand Name o Servicing Multi-Site National Commercial Customers o Diverse Product Portfolio o Large National Account Retiree Base US Healthcare's Strengths o Medical Management o Retail Marketing o Clinical Information Systems o Competitive Price and Strong Operating Margins o Quality Measurement and Analysis o Strong Medicare Growth Results Combined Strengths o Quality of Healthcare o Geographic Diversification and Critical Mass o Strong Management Talent o Revenue and Expense Synergies o Strong Medicare Growth Opportunity AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Graphic - Time Line Transaction Closing Within 90 Working Days
April May June-July 7/18 7/19 o Aetna/U.S. Hart-Scott-Rodino Waiting o CT Hearing Shareholder Transaction Healthcare Period Expired (6/7) Meetings expected to Merger (5/13) close Announced o GA Hearing (4/1) (6/11) o Hart-Scott o Proxy Rodino Filed Prospectus (4/12) Declared Effective by o State SEC (6/12) Regulatory Filings Made o Proxy Prospectus Distributed (6/13) o All State Approvals Granted
AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Integration Ready to Begin Graphic - Time Line 4/1 April May - July Integration Begins Aetna/U.S. o First Integration o Finalized Expanded Healthcare Merger Team Meeting Held Organization Announced Structure o Core Team and o Finalized Synergy Subteams Formed Assessment and Action Plan o Began training for 400 sales and 100 medical delivery jobs o Completed full integration plan AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO After-Tax Enhancements of $300 Million are Achievable GRAPHIC CHART 0-300 1996 - 1998 1996 1997 1998 Medicare 12 50 National/Commerc 1 10 30 Cross Sell 20 20 Medical 9 23 60 Overlap Markets 2 23 60 Sales & Back Offc 1 60 70 Other/IT 1 20 40 Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previsouly filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Core Team Established Chairman, CEO & President Ron Compton Co-Presidents Mike Cardillo Joe Sebastianelli Core Functions Core Functions Jim Dickerson - CFO Frolly Boyd - Group Insurance Daniel Messina - Rich Wolfson - Financial Pharmacy Tom McInerney - Bruce Campbell - National Accounts Specialty Products/Healthways Abbie Leibowitz - Scott Striegel - Medical Operations Nick Hanchak - USQA Tim Nolan - Sales/Marketing David Simon - Legal Max Gould - Information Technology AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Marketplace is Shifting to Managed Care Expanded Organizational Structure Announced CORE Core Team o Sets strategy, policy and business standards REGIONS Medical Region Operations o Delivers (6) Managers (6) (6) healthcare and customer service o Northeasto Dr. Robert Roy o Sal Uglietta o Mary Moriconi o Mid-Atlantico Dr. Jay Krakovitz o Chuck Scott o Nancy Cocozza o Southeasto Dr. Sharon Lewis o Scott Murphy o Al Austin o Mid-Westo Dr. Harold Zarkowski o Ed Dulik o Susan Sullivan o West Centralo Dr. Jim Tucci o John Coyle o Laurie Brubaker o Western o Dr. Howard Arkans o Tom Williams o Dan Hoffman LOCAL o Focuses on functions General Managers that need to be close to the customer: o 33 general managers sales and provider announced contracting and relations AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Americans Aged 64 and under 223 million Graphic - Two pie charts illustrating 1995 and 1998 Total Population 89,000,000 1995 - 70% Managed Care 30% Traditional Indemnity Plan 2000 - 88% Managed Care 12% Traditional Indemnity Plan 40 Million Shift AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Medicare is Shifting to Managed Care Graphic - Two pie charts illustrating 1995 and 1998 Medicare Population 37 million 1995 - 10% HMOs 90% Traditional Fee for Service 2000 - 50% HMOs 50% Traditional Fee for Service 15 Million Shift AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO $100 Million of Revenue Synergies Graphic - Bar graph: 1998 Medicare 50 National/Commerc 30 Cross Sell 20 Medical 60 Overlap Markets 30 Sales & Back Offic 70 Other/IT 40 Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Leading Health Care Benefits Company As of March 31, 1996 (Millions) Non-Risk Risk Total ---------- ------ ------- HMO 0.3 2.6 2.9 POS 2.6 1.1 3.7 PPO 2.3 1.4 3.7 Indemnity 3.2 0.6 3.8 ---------- ------ ------- Total Health 8.4 5.7 14.1 ========== ====== ======= 60% 40% 100% ========== ====== ======= Specialty Health 22.3 5.0 27.3 ========== ====== ======= Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Overall at Risk Membership Goals are Conservative Graphic Chart illustrating 1996 - 1998 Annualized Growth 9.0% Base Growth 1.3% Medicare Synergies 2.7% Commercial Synergies 13.0% Total Base Plan Assumes - Flat Membership for Aetna Health - Mid Teens for USHC Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Commercial Risk HMO/POS Growth will Accelerate Graphic Chart illustrating 1996 - 1998 Annualized Growth 9.0% Base Plan 1.3% Medicare Synergies 2.7% Commercial Synergies 13.0% Total o Minimize Large Account Seepage o Use Direct Sales Force in non-overlapped markets Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Medicare Risk Growth is a Key Component of Revenue Synergies Graphic Chart illustrating 1996 - 1998 Annualized Growth 9.0% Base Growth 1.3% Medicare Synergies 2.7% Commercial Synergies 13.0% Total o Entry into 24 Markets by the end of 1998 o Large Account Opportunity o Assume 3% Market Penetration AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Cross Selling Opportunities o Life and Disability Group Products o Pharmacy o Other Specialty Health (Dental, Behavioral Science) AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO 24 HMO States in 6 Geographic Regions Graphic Chart - Map of the 48 contiguous states divided into regions illustrating Aetna, U.S. Healthcare and their overlap Western - Tom Williams West Central - John Coyle Mid-West - Ed Dulik Northeast - Sal Uglietta Mid-Atlantic - Chuck Scott Southeast - Scott Murphy AETNA US HEALTHCARE OVERLAP CA RI NY AZ MA CT TX NH MO LA VA SC GA AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Expansion into 7 States in December 1996 Graphic Chart - Map of the 48 contiguous states divided into regions illustrating Aetna, U.S. Healthcare and their overlap, and the 1996 Expansion States Western - Tom Williams West Central - John Coyle Mid-West - Ed Dulik Northeast - Sal Uglietta Mid-Atlantic - Chuck Scott Southeast - Scott Murphy AETNA US HEALTHCARE OVERLAP CA RI NY AZ MA CT TX NH MO LA VA SC GA 1996 Expansion MI, CO, OK, KS, MO, AK, NV AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Expansion into 19 States December 1997 Graphic Chart - Map of the 48 contiguous states divided into regions illustrating Aetna, U.S. Healthcare and their overlap, the 1996 Expansion and the 1997 Expansion. Western - Tom Williams West Central - John Coyle Mid-West - Ed Dulik Northeast - Sal Uglietta Mid-Atlantic - Chuck Scott Southeast - Scott Murphy AETNA US HEALTHCARE OVERLAP CA RI NY AZ MA CT TX NH MO LA VA SC GA 1996 Expansion MI, CO, OK, KS, MO, AK, NV 1997 Expansion - VT, ME, AL, MS, WI, OH, NM, VT, WY, ND,SD, NB, IW, MN, Wa, OR, ID, VT AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO $60 Million of Medical Synergies is Achievable Graphic Chart 1998 Medicare 50 National/Commerc 30 Cross Sell 20 Medical 60 Overlap Markets 30 Sales & Back Offic 70 Other/IT 40 Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Patient Management o Clinical Information Systems o Expanded Information Systems o Utilization Rationalization AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Contracting o Excess Provider Capacity o Expanded Full Risk Contracts o Provider Payment Levels AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Aetna's Committed to Quality o 11 of our HMOs have achieved full NCQA accreditation status o 3 of our HMOs have achieved one-year accreditation status o USQA assures high quality cost effective care AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO $140 Million of SG&A Synergies 1998 Medicare 50 National/Commerc 30 Cross Sell 20 Medical 60 Overlap Markets 30 Sales & Back Offic 70 Other/IT 40 Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO SG&A Savings Combined SG&A Expenses $ 2.2 Billion Benchmark Range 10 - 20 % Potential After Tax Savings $ 143 - 286 million Aetna Projected After Tax SG&A Savings $ 140 million Note: Please see "Factors For Forward Looking Information" in merger proxy, and please see other SEC documents previously filed by Aetna and U.S. Healthcare AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Sales and Back Office -- Consolidating Aetna Operations Centers Graphic chart of the United States and the Commonwealth of Puerto Rico broken down in to 8 sections listing Operations Centers AK1 LA1 CT1 WA1 WI1 PA4 OR1 MI7 DE2 CA4 IL3 VA1 ND1 IN7 NC1 MN2 OH3 GA2 KS1 KY1 FL1 OK1 TN2 MA1 TX4 NY1 PR1 Aetna (41) and USHC (3) Service Centers -- 8 to 13 AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Overlap Markets and Other/IT Overlap Markets Other/IT o Offices o IT Development o Finance/Administration o IT Operations/System o Sales Consolidations o Network Management o Headquarter o Medical Management Redundancies AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Healthcare Application Transition Plan Business Current # of Future # of Application Platforms Platforms - --------------------------- -------------- -------------- Marketing/Sales 15 8 Pricing 10 2 Employer Services 32 3 Member Services 21 3 Provider Services 34 10 Health Management 7 3 Provider Payments 11 2 Specialty Health 10 8 AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO Aetna should Create Significant Cash Flow from Operations $ Millions 1995 Combined Operating Earnings $855 Revenue Enhancements and Expense Opportunities 300 Additional Interest Expense (65) Adjusted Operating Earnings 1,090 Mandatorily Convertible Preferred Stock (55) Dividends (10-20% Payout) (120)-(125) Pro-Forma Cash Flow from Operations $910 -$915 AETNA LIFE AND CASUALTY US HEALTHCARE, INC. LOGO COMPANY LOGO -----END PRIVACY-ENHANCED MESSAGE-----