FINANCIAL HIGHLIGHTS
UNITED HEALTHCARE
Financial Highlights should be read together with the accompanying Financial
Review and Consolidated Financial Statements and notes.
(1) Excluding the nonoperating merger costs associated with the acquisition of
HealthWise of America, Inc. of $15 million ($9 million after tax, or $0.05
diluted net earnings per common share) and the provision for future losses on
two large multiyear contracts of $45 million ($27 million after tax, or $0.15
diluted net earnings per common share), 1996 earnings from operations and net
earnings would have been $641 million and $392 million, or $1.96 diluted net
earnings per common share.
(2) Excluding restructuring charges associated with the acquisition of The
MetraHealth Companies, Inc., of $154 million ($97 million after tax, or $0.55
diluted net earnings per common share), 1995 earnings from operations and net
earnings would have been $615 million and $383 million, or $2.12 diluted net
earnings per common share.
(3) Excluding the nonoperating merger costs associated with the acquisitions
of Complete Health Services, Inc. and Ramsay-HMO, Inc., of $36 million ($22
million after tax, or $0.13 diluted net earnings per common share), 1994 net
earnings before extraordinary gain would have been $310 million, or $1.77
diluted net earnings per common share.
(4) In May 1994, the Company sold Diversified Pharmaceutical Services, Inc.
for $2.3 billion in cash and recognized an extraordinary gain after
transaction costs and income tax effects of $1.4 billion, or $7.86 diluted
net earnings per common share.
14
FINANCIAL REVIEW
UNITED HEALTHCARE
United HealthCare ("we," "us," "our") has completed several transactions
affecting the year-to-year comparisons of our consolidated financial position
and results of operations. The most significant transaction was our October 2,
1995, acquisition of The MetraHealth Companies, Inc. (MetraHealth). MetraHealth
was formed in January 1995, when the group health care operations of
Metropolitan Life Insurance Company and The Travelers Insurance Group were
combined. At the time of acquisition, MetraHealth served over 10 million
people, including 5.9 million in network-based care programs, 469,000 of whom
were health plan members.
We acquired two other companies with health plan operations during 1996.
- On April 12, 1996, we acquired HealthWise of America, Inc. (HealthWise), a
health care management company that owned or operated health plans in Maryland,
Kentucky, Tennessee and Arkansas. HealthWise served 154,000 members at the time
of acquisition.
- On March 29, 1996, we acquired PHP, Inc. (PHP), a North Carolina-based
health plan. PHP served 132,000 members at the time of acquisition.
We accounted for the acquisition of HealthWise as a pooling of interests;
however, we did not restate our consolidated financial results because the
effects of the acquisition on our consolidated financial statements were not
material. We accounted for the MetraHealth and PHP acquisitions as purchase
transactions and, accordingly, only the post-acquisition results of these
companies are included in our consolidated financial statements.
This Financial Review should be read together with the accompanying
Consolidated Financial Statements and notes.
SUMMARY OPERATING INFORMATION
(1) Amounts and percents include post-acquisition operating results of
HealthWise and PHP. For comparability purposes, amounts and percents exclude
merger costs associated with the acquisition of HealthWise of $15 million ($9
million after tax) and the provision for future losses on two large multiyear
contracts of $45 million ($27 million after tax).
(2) For comparability purposes, amounts and percents exclude the self-funded
other network-based and indemnity lives served by United HealthCare
Administrators, Inc., of 666,000 in 1996 and 674,000 in 1995. We sold United
HealthCare Administrators, Inc. on June 30, 1997.
(3) Amounts and percents include post-acquisition operating results of
MetraHealth. For comparability purposes, amounts and percents exclude
restructuring charges of $154 million ($97 million after tax) associated with
the MetraHealth acquisition.
15
RESULTS OF OPERATIONS
PREMIUM REVENUES
Premium revenues in 1997 totaled $10.1 billion. This represents an increase of
$1.6 billion, or 19%, compared to 1996 premium revenues. Excluding the effects
of the HealthWise and PHP acquisitions, premium revenues in 1997 increased by
17% over 1996.
The increase in premium revenues primarily is due to growth in year-over-year
same-store health plan premium revenues of $1.5 billion, or 25%, in 1997. The
increase in health plan premium revenues reflects same-store enrollment growth
of 13% and an average year-over-year premium rate increase on renewing
commercial groups exceeding 5%. Growth in our Medicare programs also
contributed to the increase in premium revenues. Included in the total health
plan same-store enrollment growth of 13% is a year-over-year same-store
increase of 53% in Medicare enrollment. Significant growth in Medicare
enrollment affects year-over-year comparability of premium revenues. The
Medicare product generally has per member premium rates three to four times
higher than average commercial premium rates because this population uses
proportionately more medical care services.
The year-over-year increase in premium revenues from health plan operations
was partially offset by an expected decrease in premium revenues from fully
insured non-network-based indemnity products of $218 million. Nearly $60
million of this decrease is because we discontinued our relationship with a
broker who sold and administered small group indemnity business on our behalf,
which led to the loss of 30,000 indemnity members effective July 1, 1997. The
remaining decrease is from declining enrollment in these products, due to
average 10% to 20% rate increases that started in 1996 and continued into 1997,
as well as other business factors. We expect enrollment in the non-network-
based indemnity products will continue to decline through 1998. To the extent
possible, we will try to convert these enrollees to our network-based managed
care products.
Premium revenues in 1996 totaled $8.5 billion. This was an increase of $3.6
billion, or 72%, over 1995 premium revenues. Excluding the effects of the
MetraHealth, HealthWise and PHP acquisitions, the increase in 1996 premium
revenues over 1995 was 28%. Total same-store health plan enrollment grew 30%,
and year-over-year premium rate increases on renewing commercial groups were 1%
to 2% on average.
Because of changes in our customer mix, we did not realize the full effect of
same-store enrollment growth and average year-over-year premium rate increases
in the percentage increase in 1996 premium revenues. This is because much of
the enrollment growth in 1996 had been in health plan small group products,
which generally have lower benefits (and therefore lower premiums) than other
commercial health plan products.
MEDICAL COSTS
The combination of our pricing strategy and medical management efforts is
reflected in the medical care ratio (the percent of premium revenues expensed
as medical costs). We generally set new and renewal commercial health plan
premium rates based on anticipated health care costs. Our health care cost
trend was in the 3% to 4% range throughout 1996 and 1997, an increase over our
1995 trend of 1% to 2%. We have been increasing premium rates in excess of 5%
on average for new and existing commercial health plan business beginning in
the second half of 1996, throughout 1997 and into 1998.
The medical care ratio increased from 84.0% in 1996 (before nonrecurring
charges) to 84.3% in 1997. The increase in the medical care ratio is the result
of several factors.
- A few health plan markets had medical care ratios substantially higher
than our other health plans in the aggregate. The reasons varied from plan to
plan, but generally, medical cost controls and provider contracting initiatives
were not being fully implemented and commercial premium yields were
insufficient compared to corresponding medical costs. We expect performance
will improve in these markets; however, we believe these health plans will
continue to moderate our overall results through 1998.
- Several markets had recently introduced Medicare products, which have been
well received and are growing rapidly. We generally experience higher medical
care ratios during the early stage of Medicare product introductions.
- Medicaid premiums did not increase and, in fact, decreased in several
markets. Further Medicaid premium reductions are possible in certain markets in
1998, which may inhibit our ability to improve the overall medical care ratio
in the near term.
The medical care ratio increased from 79.7% in 1995 to 84.0% in 1996
(before nonrecurring charges). A portion of the increase in the medical care
ratio was because of former MetraHealth products (included in the 1996
results, but only in one quarter of 1995), which historically have had a
higher
16
medical care ratio when compared to our other products. Had the MetraHealth
products been included in our financial results for all of 1995, the medical
care ratio would have been approximately 81.0%. The 1996 medical care ratio
also reflects the increasing health care cost trend of 3% to 4% as previously
discussed. In addition, in the second quarter of 1996, we recorded a provision
of $45 million to cover estimated losses we expect to incur through the
remaining terms of two large multiyear contracts in our St. Louis health plan.
Including the contract loss provision, the 1996 medical care ratio was 84.6%.
MANAGEMENT SERVICES AND FEE REVENUES
Management services and fee revenues in 1997 totaled $1.4 billion. This
represents an increase of $30 million, or 2%, over management services and fee
revenues in 1996. These revenues are primarily generated from self-funded
products where we receive a fee for administrative services and generally
assume no financial responsibility for health care costs associated with these
products. In addition, we generate fee revenues from administrative services we
perform on behalf of managed health plans and for services provided by our
specialty businesses.
The overall increase in management services and fee revenues is attributable
to enrollment growth within the managed health plans and an increase in
individuals served by our specialty services operations, most notably in United
Behavioral Health and Optum-Registered Trademark-, our telephone- and Internet-
based health information and personal care management business. Offsetting
these increases, fee revenues from self-funded products decreased $15 million
because of declining enrollment in these products. In addition, the June 30,
1997, sale of our subsidiary, United HealthCare Administrators, Inc., resulted
in a $24 million decrease in these revenues in 1997 compared to 1996.
Management services and fee revenues in 1996 of $1.4 billion were two times
greater than the comparable 1995 revenues. Excluding the effect of the
MetraHealth, HealthWise and PHP acquisitions, we generated management services
and fee revenues in 1996 of $409 million, a 42% increase over 1995. Managed
health plans, United Behavioral Health and Optum-Registered Trademark- again
accounted for the most notable increases.
OTHER OPERATING EXPENSES
Selling, general and administrative expenses as a percent of total revenues
(the SG&A ratio) increased from 18.2% in 1995 to 21.5% in 1996. As expected,
the MetraHealth acquisition had a significant impact on SG&A expenses (in total
dollars as well as a percentage of revenue) because a greater proportion of the
former MetraHealth business consisted of fee-based, self-funded products rather
than products that generate full premium revenue. Since the MetraHealth
acquisition, we have decreased the SG&A ratio from 24.2% in the fourth quarter
of 1995 to 20.0% in 1997.
The improvement in the SG&A ratio reflects ongoing operating efficiencies as
well as our diligence in managing these expenses. On an absolute dollar basis,
selling, general and administrative costs increased $199 million in 1997, or
9%, over 1996. This increase reflects the additional infrastructure needed to
support the corresponding $1.6 billion increase in premium-based business, as
well as the additional investment in new Medicare markets and increased support
for our growing specialty businesses.
Depreciation and amortization was $146 million in 1997, $133 million in 1996,
and $94 million in 1995. Depreciation and amortization increased each year
because of higher levels of capital expenditures to support business growth and
amortization of goodwill and other intangible assets related to recent
acquisitions.
With the MetraHealth acquisition, we developed a comprehensive plan to
integrate the business activities of the combined companies. The plan included,
among other things, the disposition, discontinuance and restructuring of
certain businesses and product lines, and the recognition of certain asset
impairments. In the fourth quarter of 1995, we recorded $154 million in
restructuring charges associated with the plan. The restructuring charges did
not cover all integration costs. Such things as new information systems,
anticipated operating losses from businesses to be discontinued, employee
relocation, and training were not included. These costs are being recognized as
they are incurred.
MERGER COSTS
In connection with the April 1996 acquisition of HealthWise, we recorded
nonoperating merger costs of
$15 million, consisting primarily of professional fees and other direct costs
associated with the acquisition.
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GOVERNMENT REGULATION
Our primary business, offering health care coverage and health care management
services, is heavily regulated at the federal and state levels. We strive to
comply in all respects with applicable regulations and may need to make changes
from time to time in our services, products, marketing methods or
organizational or capital structure.
Regulatory agencies generally have broad discretion to issue regulations and
interpret and enforce laws and rules. Changes in applicable laws and
regulations are continually being considered, and the interpretation of
existing laws and rules also may change from time to time. These changes could
affect our operations and financial results.
Certain proposed changes in Medicare and Medicaid programs may improve
opportunities to enroll people under products developed for these populations.
Other proposed changes could limit available reimbursement and increase
competition in those programs, with adverse effects on our financial results.
Also, it could be more difficult for us to control medical costs if federal and
state bodies continue to consider and enact significant and onerous managed
care laws and regulations.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) may
represent the most significant federal reform of employee benefit law since the
enactment of the Employee Retirement Income Security Act (ERISA) in 1974. Some
of HIPAA's significant provisions include guaranteeing the availability of
health insurance for certain employees and individuals, limits on the use of
preexisting condition exclusions, prohibitions against discriminating on a
basis of health status, and requirements which make it easier to continue
coverage in cases where a person is terminated or changes employers. Under
HIPAA and other similar state laws, medical cost control through amended
provider contracts and improved preventive and chronic care management may
become more important. We believe our experience in these areas will allow us
to compete effectively.
Health care fraud and abuse has become a top priority for the nation's law
enforcement entities and has focused on participants in federal government
health care programs such as Medicare, Medicaid and the Federal Employees
Health Benefits Program (FEHBP). We participate extensively in these programs.
We also are subject to governmental investigations and enforcement actions.
Included are actions relating to ERISA, which regulates insured and self-
insured health coverage plans offered by employers; the FEHBP; federal and
state fraud and abuse laws; and laws relating to care management and health
care delivery. Government actions could result in assessment of damages, civil
or criminal fines or penalties, or other sanctions, including exclusion from
participation in government programs. We are currently involved in various
government investigations and audits, but we do not believe the results will
have a material adverse effect on our financial position or results of
operations.
INFLATION
Although the general rate of inflation has remained relatively stable and
health care cost inflation has stabilized in recent years, the national health
care cost inflation rate still exceeds the general inflation rate. We use
various strategies to mitigate the negative effects of health care cost
inflation, including setting commercial premiums based on anticipated health
care costs, risk-sharing arrangements with various health care providers, and
other health care cost containment measures. Specifically, health plans try to
control medical and hospital costs through contracts with independent providers
of health care services. Through these contracted care providers, our health
plans emphasize preventive health care and appropriate use of specialty and
hospital services.
While we currently believe our strategies to mitigate health care cost
inflation will continue to be successful, competitive pressures, new health
care product introductions, demands from health care providers and customers,
applicable regulations or other factors may affect our ability to control the
impact of health care cost increases. In addition, certain non-network-based
products do not have health care cost containment measures similar to those in
place for network-based products. As a result, there is added health care cost
inflation risk with these products.
FINANCIAL CONDITION AND LIQUIDITY
Our cash and investments increased from $3.5 billion at December 31, 1996, to
$4.0 billion at December 31, 1997. The increase in cash and investments is
primarily the result of cash generated from operations of $683 million, offset
by purchases of property and equipment and capitalized software of $187
million.
Under applicable government regulations, several subsidiaries are required to
maintain specific capital levels to support their operations. After taking
these regulations and certain business considerations into account, we had $960
million in cash and investments available for general corporate use at December
31, 1997. From these cash reserves, we recently established a $100 million
capital fund designated for strategic investments in new and promising
businesses.
18
The National Association of Insurance Commissioners has an effort underway
that would require new minimum capitalization limits for health care coverage
provided by insurance companies, HMOs and other risk-bearing health care
entities. The requirements would take the form of risk-based capital rules.
Depending on the nature and extent of the new minimum capitalization
requirements ultimately adopted, there could be an increase in the capital
required for certain of our subsidiaries. Any increase would be funded from our
corporate usable cash reserves. The new requirements are expected to be
effective December 31, 1998.
We continue to focus on expanding health care programs to the Medicare
population. In the past 12 months, the number of sites offering a Medicare
health plan product increased from 18 to 27 sites. Over the same period, health
plan Medicare enrollment grew 53%. We continue to invest in new markets and
expect to have 39 sites offering Medicare programs by year-end 1998.
Significant expenses are associated with introducing a Medicare health plan
product. Start-up expenses include a lengthy and detailed regulatory approval
process, product-specific provider contracting and network configuration, high
up-front sales and marketing costs, and staffing of service areas in advance of
product sales. We expect to incur operating losses from Medicare products in
start-up markets, usually for the first 12 to 18 months. Once Medicare
enrollment targets are met, we expect corresponding administrative costs to be
covered.
In November 1997, we announced a significant realignment of our operations,
designed to take full advantage of opportunities to grow and succeed as we
expand into the broad health and well-being marketplace. We have aligned our
operations into six independent but strategically linked businesses, each
focused on performance, growth and shareholder value.
The realignment is dramatically changing the way we manage our business. We
are realigning our resources and activities to more directly support the
operations of our businesses. We are assessing the effectiveness of our core
management processes and transaction processing systems. We are also evaluating
each of our businesses for strategic fit, growth potential and operating
performance and will be taking actions on business units that do not fit our
new direction.
Our realignment efforts will take several months to complete. Despite the
vast undertaking, we do not expect our realignment efforts to negatively affect
our product offerings, provider relations, billing and collection disciplines,
and claims processing and payment activities. These efforts, however, may make
it appropriate for us to absorb certain restructuring charges. While we
anticipate such efforts could be significant, we cannot yet estimate the size
of any restructuring charges.
We are in the process of modifying our computer systems to accommodate the
year 2000. We currently expect these modifications to be completed well in
advance of the year 2000 with no adverse effect on our operations. We expect to
incur associated expenses of approximately $20 million in 1998 and $15 million
in 1999 to complete this effort. Our inability to complete year 2000
modifications on a timely basis or the inability of other companies with which
we do business to complete their year 2000 modifications on a timely basis
could adversely affect our operations.
In February 1997, we completed a contract to deliver Medicare and hospital
supplement insurance and develop an array of new products for the American
Association of Retired Persons (AARP) beginning in January 1998. Under the
terms of the 10-year contract, our portion of the AARP insurance offerings
represents over $3.5 billion in anticipated annual premium revenue from over 4
million enrolled members.
In November 1997, the board of directors authorized a stock repurchase
program. Up to 10% of our outstanding common stock may be repurchased under the
program. Purchases may be made from time to time at prevailing prices in the
open market, subject to certain restrictions relating to volume, pricing and
timing. The repurchased shares will be available for reissuance through
employee stock option and purchase plans and for other corporate purposes.
Repurchase activity in 1997 was not significant.
In January 1998, we filed a shelf registration statement with the Securities
and Exchange Commission to sell as much as $200 million of debt securities,
preferred or common shares. The shelf filing registers the securities and
allows us to sell them from time to time in the event we need financing.
Proceeds from sales of these securities may be used for a variety of general
corporate purposes, including working capital, securities repurchases and
acquisitions.
We expect our available cash resources will be sufficient to meet our current
operating requirements and internal development and realignment initiatives. In
addition, based on our current financial condition and results of operations,
we should be able to finance additional cash requirements in the public or
private markets, if necessary.
Currently, we do not have any other material definitive commitments that
require cash resources; however, we continually evaluate opportunities to
expand our operations. This includes internal development of new products and
programs and may include acquisitions.
19
CONSOLIDATED STATEMENTS OF OPERATIONS
UNITED HEALTHCARE
See notes to consolidated financial statements.
20
CONSOLIDATED BALANCE SHEETS
UNITED HEALTHCARE
See notes to consolidated financial statements.
21
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
UNITED HEALTHCARE
See notes to consolidated financial statements.
22
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNITED HEALTHCARE
See notes to consolidated financial statements.
23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNITED HEALTHCARE
(1) DESCRIPTION OF BUSINESS
United HealthCare Corporation (United HealthCare, or "we," "us," "our") is a
national leader in offering health care coverage and related services to help
people achieve improved health and well-being through all stages of life. We
provide a broad spectrum of products and services and operate in all 50 states,
the District of Columbia and Puerto Rico, as well as internationally. Our
products and services reflect a number of core capabilities, including medical
information management, health benefit administration, risk assessment and
pricing, health benefit design, and provider contracting and risk sharing. With
these capabilities, we provide comprehensive health care management services
through organized health systems and insurance products, including health
maintenance organizations (HMOs), point-of-service plans (POS), preferred
provider organizations (PPOs) and managed indemnity programs. We also offer
specialized health care management services and products such as behavioral
health services, workers' compensation and disability services, utilization
review services, specialized provider networks, employee assistance programs,
knowledge and information services, and administrative services.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION
We have prepared the consolidated financial statements according to generally
accepted accounting principles and have included the accounts of United
HealthCare and its subsidiaries. We have eliminated all significant inter-
company accounts and transactions.
These consolidated financial statements include some amounts that are based
on our best estimates and judgments. The most significant estimates relate to
medical costs payable and other policy liabilities, intangible asset valuations
and integration reserves relating to recent acquisitions. These estimates may
be adjusted as more accurate information becomes available, and any adjustment
could be significant.
REVENUE RECOGNITION
Premium revenues are recognized in the period enrolled members are entitled to
receive health care services. Premium payments received from our customers
prior to such period are recorded as unearned premiums. Management services and
fee revenues are recognized in the period the related services are performed.
Premium revenues related to Medicare and Medicaid programs as a percentage of
total premium revenues were 22% in 1997, 19% in 1996, and 22% in 1995.
MEDICAL COSTS
Medical costs include claims paid, claims in process and pending, and estimated
unreported claims. Medical costs also include per member charges by physicians,
hospitals and other health care providers for services provided to enrolled
members during the period. Medical cost adjustments to prior period estimates
are reflected in the current period.
CASH AND CASH EQUIVALENTS AND INVESTMENTS
Cash and cash equivalents are highly liquid investments with an original
maturity of three months or less. The fair value of cash and cash equivalents
approximates carrying value because of the short maturity of the instruments.
Investments with a maturity of less than one year are classified as short-term.
Investments held by trustees or agencies according to state regulatory
requirements are classified as held to maturity based on our ability and intent
to hold these investments to maturity. Such investments are reported at
amortized cost. All other investments are classified as available for sale and
are reported at fair value based on quoted market prices. Unrealized gains and
losses on investments available for sale are excluded from earnings and
reported as a separate component of shareholders' equity, net of income tax
effects. To calculate realized gains and losses on the sale of investments
available for sale, we use the amortized cost of each investment sold. We have
no investments classified as trading securities.
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ASSETS UNDER MANAGEMENT
In connection with the 1995 acquisition of The MetraHealth Companies, Inc.
(MetraHealth) (see Note 3), we are administering certain aspects of the health
care operations of MetraHealth's predecessor companies related to business we
expect to be transferred to United HealthCare according to agreements made
during the initial formation of MetraHealth. As this business transfers to
United HealthCare, associated assets are invested in marketable securities
according to our investment policy.
OTHER POLICY LIABILITIES
Other policy liabilities principally relate to experience-rated indemnity
products and primarily include retrospective rate credit reserves and customer
balances.
Retrospective rate credit reserves represent premiums we received in excess
of claims and expenses charged under eligible contracts. Reserves established
for closed policy years are based on actual experience, while reserves for open
years are based on estimates of premiums, claims and expenses incurred.
Customer balances consist principally of deposit accounts and reserves that
have accumulated under certain experience-rated contracts. At the customer's
option, these balances may be returned to the customer or may be used to pay
future premiums or claims under eligible contracts.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful life of the respective assets,
ranging from 3 years to 30 years.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill represents the purchase price and transaction costs associated with
businesses we acquired in excess of the estimated fair value of the net assets
of these businesses. To the extent possible, a portion of the excess purchase
price and transaction costs is assigned to certain identifiable intangible
assets, primarily employer group contracts. Goodwill and other intangible
assets are being amortized on a straight-line basis over useful lives ranging
from 3 years to 40 years.
The useful lives of goodwill and other intangible assets have been assigned
based on our best judgment. We periodically evaluate whether certain
circumstances may affect the estimated useful lives or the recoverability of
the unamortized balance of goodwill or other intangible assets.
The most significant components of goodwill and other intangible assets are
comprised of goodwill of $1.2 billion in 1997 and $1.1 billion in 1996, and
employer group contracts of $900 million in 1997 and $939 million in 1996, net
of accumulated amortization.
LONG-LIVED ASSETS
We review long-lived assets for events or changes in circumstances that would
indicate we may not recover their carrying value. We consider a number of
factors, including estimated future undiscounted cash flows associated with the
long-lived asset, to make this decision. We record assets held for sale at the
lower of the carrying amount or fair value, less any costs associated with the
final settlement.
INCOME TAXES
Deferred income tax assets and liabilities are recognized for the differences
between the financial and income tax reporting bases of assets and liabilities
based on enacted tax rates and laws. The deferred income tax provision or
benefit generally reflects the net change in deferred income tax assets and
liabilities during the year. The current income tax provision reflects the tax
consequences of revenues and expenses currently taxable or deductible on
various income tax returns for the year reported.
STOCK-BASED COMPENSATION
We use the intrinsic value method for determining stock-based compensation
expenses. Under the intrinsic value method, we do not recognize compensation
expense when the exercise price of an employee stock option equals or exceeds
the fair market value of the stock on the date the option is granted.
Information on what our stock-based compensation expenses would have been had
we calculated those expenses using fair market values of outstanding stock
options is included in Note 8.
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NET EARNINGS PER COMMON SHARE
In 1997, we adopted a new accounting standard that changes the way we determine
earnings per share (SFAS No. 128). Under this new standard, basic net earnings
per common share is computed by dividing net earnings applicable to common
shareholders by the weighted-average number of common shares outstanding during
the period. Diluted net earnings per common share is determined using the
weighted-average number of common shares outstanding during the period,
adjusted for the dilutive effect of outstanding stock options. We do not
consider convertible preferred stock a common stock equivalent when calculating
diluted net earnings per share because the result would be anti-dilutive.
RECLASSIFICATIONS
Certain 1996 and 1995 amounts in the consolidated financial statements have
been reclassified to conform with the 1997 presentation. These
reclassifications have no effect on net earnings or shareholders' equity as
previously reported.
(3) ACQUISITIONS
On December 31, 1997, we acquired Medicode, Inc. (Medicode), a leading provider
of health care information products. We issued 2.4 million shares of common
stock and 507,000 common stock options with a total fair value of $140 million
in exchange for all outstanding shares of Medicode. We accounted for the
acquisition using the purchase method of accounting, which means the purchase
price was allocated to assets and liabilities based on estimated fair values at
the date of acquisition. The purchase price and costs associated with the
acquisition exceeded the estimated fair value of net assets acquired by $135
million and have been assigned to goodwill. The pro forma effects of the
Medicode acquisition on our consolidated financial statements were not
material.
On April 12, 1996, we completed the acquisition of HealthWise of America,
Inc. (HealthWise). HealthWise owned or operated health plans in Maryland,
Kentucky, Tennessee and Arkansas that served 154,000 members at the time of
acquisition. We issued 4.3 million shares of common stock in exchange for all
outstanding shares of HealthWise. We accounted for the acquisition as a pooling
of interests; however, we did not restate our historical consolidated financial
results because the effects of this acquisition on our consolidated financial
statements were not material. In connection with the HealthWise acquisition, we
incurred nonoperating merger costs of $15 million.
On March 29, 1996, we completed the acquisition of PHP, Inc. (PHP), a North
Carolina-based health plan that served 132,000 members at the time of
acquisition. We issued 2.3 million shares of common stock, with a fair value of
$140 million, in exchange for all outstanding shares of PHP. We accounted for
the acquisition using the purchase method of accounting. The purchase price and
costs associated with the acquisition exceeded the estimated fair value of net
assets acquired by $115 million and have been assigned to goodwill. The pro
forma effects of the PHP acquisition on our consolidated financial statements
were not material.
We acquired MetraHealth on October 2, 1995. MetraHealth was formed in January
1995 by combining the group health care operations of Metropolitan Life
Insurance Company and The Travelers Insurance Group. At the time of
acquisition, MetraHealth served over 10 million individuals, including 5.9
million in network-based care programs, 469,000 of whom were health plan
members. We accounted for the acquisition using the purchase method of
accounting. Based on estimates made at the date of acquisition, the purchase
price and costs associated with the acquisition exceeded the estimated fair
value of net assets acquired by $992 million.
26
The total purchase price of the acquisition was $1.1 billion in cash and $500
million of convertible preferred stock, for a total amount at closing of $1.6
billion. In addition, the former owners of MetraHealth were eligible to receive
up to an additional $350 million if MetraHealth achieved certain 1995 operating
results, as defined. In 1996, we paid $105 million in cash, including interest,
as full settlement of the 1995 earnout. This earnout payment has been reflected
in the accompanying consolidated financial statements as additional goodwill.
With the settlement of the 1995 earnout and certain revisions to estimates made
in connection with the acquisition, goodwill and other intangible assets
associated with the MetraHealth acquisition totaled $1.2 billion.
In addition, certain of MetraHealth's former owners were eligible to receive
up to an additional $175 million in cash for each of 1996 and 1997 if our post-
acquisition combined net earnings for each of those years reached certain
specified levels. Based on combined operating results for those years, no
payment related to these earnouts was required.
Had the MetraHealth acquisition occurred on January 1, 1995, combined
unaudited pro forma results for the year ended December 31, 1995, would have
been: revenues-$8.7 billion; net earnings before restructuring charges- $450
million; and net earnings per common share before restructuring charges-$2.53.
After considering 1995 restructuring charges, net earnings would have been $353
million in 1995 ($1.98 per common share).
(4) RESTRUCTURING CHARGES
In connection with our acquisition of MetraHealth, we developed a comprehensive
plan to integrate the business activities of the combined companies (the Plan).
The Plan included, among other things, the disposition, discontinuance and
restructuring of certain businesses and product lines, and the recognition of
certain asset impairments. In the fourth quarter of 1995, we recorded $154
million in restructuring charges associated with the Plan.
In conjunction with ongoing integration efforts, we modified the Plan during
1996. The restructuring reserves established with the original Plan were an
accurate estimation of the costs incurred; however, we needed to reallocate the
reserve estimates among the associated activities as the original Plan evolved.
A reconciliation of restructuring activities during 1997, 1996 and 1995 is as
follows (in millions):
(5) PROVISION FOR FUTURE LOSSES
In the second quarter of 1996, we recorded a provision to medical costs of $45
million to cover estimated losses we expect to incur through the remaining
terms of two large multiyear contracts in our St. Louis health plan. Through
December 31, 1997, losses under these contracts of $26 million have been
applied against the established reserve. We believe the remaining balance in
the reserve will be sufficient to cover any future losses from these contracts.
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(6) CASH AND INVESTMENTS
As of December 31, 1997 and 1996, the amortized cost, gross unrealized holding
gains and losses, and fair value of cash and investments were as follows (in
millions):
As of December 31, 1997, the contractual maturities of cash and cash
equivalents and investments were as follows (in millions):
Mortgage-backed securities that do not have a single maturity date have been
presented in the above tables based on their estimated maturity dates.
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Under applicable government regulations, several United HealthCare
subsidiaries are required to maintain specific capital levels to support their
operations. In addition, at December 31, 1997, trustees or state regulatory
agencies held investments of $65 million to ensure adequate financial reserves
exist as required by state regulatory agencies. After taking these regulations
and certain business considerations into account, we had $960 million in cash
and investments available for general corporate use at December 31, 1997.
Investment income earned on all investments accrues to United HealthCare.
(7) CONVERTIBLE PREFERRED STOCK
We have 10 million shares of $0.001 par value preferred stock authorized for
issuance. With our acquisition of MetraHealth, we designated a series of
500,000 shares as 5.75% Series A Convertible Preferred Stock (Preferred Stock).
This Preferred Stock was issued to certain former shareholders of MetraHealth
as a portion of the total consideration of the MetraHealth acquisition (see
Note 3).
Preferred Stock dividends are fully cumulative and payable quarterly at the
rate of 5.75% annually from available funds.
At the option of the Preferred shareholders, each share of Preferred Stock
may be converted into 20.21 shares of United HealthCare common stock. At our
option, we may redeem the Preferred Stock, in whole or in part, anytime after
October 1, 1998, at certain defined redemption rates. The Preferred Stock must
be redeemed no later than October 1, 2005. Holders of Preferred Stock do not
have voting rights, but do have preference upon liquidation or dissolution of
United HealthCare.
(8) SHAREHOLDERS' EQUITY
STOCK REPURCHASE PROGRAM
In November 1997, the board of directors authorized a stock repurchase program
under which up to 10% of our outstanding common stock may be repurchased. These
repurchases may be made from time to time at prevailing prices in the open
market, subject to certain restrictions on volume, pricing and timing. The
repurchased shares will be available for reissuance for the employee stock
option and purchase plans and for other corporate purposes. Repurchase activity
in 1997 was not significant.
DIVIDENDS
On February 10, 1998, the board of directors approved an annual dividend for
1998 of $0.03 per share to holders of common stock. Dividends will be paid on
April 15, 1998, to shareholders of record at the close of business on April 1,
1998.
REGULATORY REQUIREMENTS
Regulated United HealthCare subsidiaries must comply with certain minimum
capital or tangible net equity requirements in each of the states in which they
operate. As of December 31, 1997, all regulated subsidiaries were in compliance
in all material respects with these requirements.
STOCK-BASED COMPENSATION PLANS
We have stock and incentive plans (Stock Plans) for the benefit of eligible
employees. As of December 31, 1997, the Stock Plans allowed for the future
granting of up to 1,033,000 shares as incentive or non-qualified stock options,
stock appreciation rights, restricted stock awards, and performance awards to
employees.
In 1995, we adopted the Non-employee Director Stock Option Plan (the 1995
Plan) to benefit members of the board of directors who are not employees. Up to
350,000 shares of common stock may be issued under the terms of the 1995 Plan.
As of December 31, 1997, 74,000 shares were available for future grants of non-
qualified stock options under the 1995 Plan.
Options generally are granted at an exercise price not less than the fair
market value of the common stock at the date of grant. They may be exercised
over varying periods up to 10 years from the date of grant.
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A summary of the activity under our Stock Plans and the 1995 Plan during
1997, 1996 and 1995 is presented in the table below (shares in thousands):
The following table summarizes information about stock options outstanding at
December 31, 1997 (shares in thousands):
We increased additional paid-in capital $37 million in 1997, $15 million in
1996, and $29 million in 1995 to reflect the tax benefit we received upon the
exercise of non-qualified stock options.
We do not recognize compensation expense in connection with stock option
grants related to the Stock Plans and the 1995 Plan because we grant stock
options at exercise prices that equal or exceed the fair market value of the
stock at the time options are granted. If we had determined compensation
expense using fair market values for the stock, net earnings and diluted net
earnings per common share would have been reduced to the following pro forma
amounts:
To determine compensation cost under the fair value method, the fair value of
each option grant is estimated on the date of grant using the Black-Scholes
option-pricing model.
Principal assumptions used in applying the Black-Scholes model were as
follows:
Because we did not apply the fair value method of accounting to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of what can be expected in future years.
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EMPLOYEE STOCK OWNERSHIP PLAN
We have an unleveraged Employee Stock Ownership Plan (ESOP) for the benefit of
all eligible employees. Company contributions to the ESOP are made at the
discretion of the board of directors. We made contributions to the ESOP of $4
million in 1997, $3 million in 1996, and $1 million in 1995.
EMPLOYEE STOCK PURCHASE PLAN
The Employee Stock Purchase Plan (ESPP) allows all eligible employees to
purchase shares of common stock on semiannual offering dates at a price that is
the lesser of 85% of the fair market value of the shares on the first day or
the last day of the semiannual period. Employee contributions to the ESPP were
$17 million for 1997, $16 million for 1996, and $7 million for 1995. Through
the ESPP, we issued employees 422,000 shares in 1997, 392,000 shares in 1996,
and 216,000 shares in 1995. As of December 31, 1997, 3.2 million shares were
available for future issue.
(9) INCOME TAXES
Components of the Provision for Income Taxes
Reconciliation of Statutory to Effective Income Tax Rate
Components of Deferred Income Tax Assets and Liabilities
We paid income taxes of $124 million in 1997, $96 million in 1996, and $190
million in 1995.
Consolidated income tax returns for fiscal years 1995 and 1994 are being
examined by the Internal Revenue Service. We do not believe any adjustments
that may result will have a significant impact on consolidated operating
results or financial position.
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(10) COMMITMENTS AND CONTINGENCIES LEASES
We lease facilities, computer hardware and other equipment under long-term
operating leases that are non-cancelable and expire on various dates through
2011. Rent expense under all operating leases was $104 million in 1997, $114
million in 1996, and $61 million in 1995.
At December 31, 1997, future minimum annual lease payments under all
noncancelable operating leases were as follows (in millions):
SERVICE AGREEMENTS
On June 1, 1996, and November 16, 1995, we entered into separate 10-year
contracts with nonaffiliated third parties for information technology services.
Under the terms of the contracts, the third parties assumed responsibility for
certain data center operations and support. On September 19, 1996, we entered
into a 10-year contract with a third party for certain data network and voice
communication services. Future payments under all of these contracts are
estimated to be $1.5 billion; however, the actual timing and amount of payments
will vary based on usage. Expenses incurred in connection with these agreements
were $125 million in 1997, $70 million in 1996, and $6 million in 1995.
LEGAL PROCEEDINGS
We are involved in legal actions that arise in the ordinary course of business.
Although we cannot predict the outcomes of legal actions, it is our opinion
that the resolution of any currently pending or threatened actions will not
have an adverse effect on our consolidated financial position or results of
operations.
BUSINESS RISKS
Certain factors relating to the health care industry and our business should be
carefully considered. Companies offering health care coverage and health care
management services are heavily regulated at federal and state levels. While we
cannot predict regulatory changes or their impact, it is possible that
operations and financial results could be negatively affected.
After several years of moderate increases in health care costs and
utilization, the industry experienced a pronounced increase during 1996.
Although these increases appear to have stabilized, there is no assurance that
health care costs and utilization will not continue to increase at a more rapid
pace. If they do, we may not be able to meet our objective of maintaining price
increases at least sufficient to cover health care cost increases.
Additionally, the health care industry is highly competitive and has seen
significant consolidation over the past few years. The current competitive
markets in certain areas may limit our ability to price products at appropriate
levels. These competitive factors may adversely affect the consolidated
financial results.
CONCENTRATIONS OF CREDIT RISK
Investments in financial instruments such as marketable securities and
commercial premiums receivable may subject United HealthCare to concentrations
of credit risk. Our investments in marketable securities are managed by
professional investment managers within guidelines established by the board of
directors. As a matter of policy, these guidelines limit the amounts that may
be invested in any one issuer. Concentrations of credit risk with respect to
commercial premiums receivable are limited due to the large number of employer
groups that comprise our customer base. As of December 31, 1997, there were no
significant concentrations of credit risk.
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(11) RECENTLY ISSUED ACCOUNTING STANDARDS
In 1998, we will adopt a new accounting standard (SFAS No. 130) that will
require us to report comprehensive income and its components, defined in the
standard as changes in the equity of our business during a reporting period
excluding changes resulting from investments by and distributions to our
shareholders. This new standard will not affect net earnings or shareholders'
equity as previously reported.
In 1998, we also will adopt a new accounting standard (SFAS No. 131) that
will require us to report financial and descriptive information about our
reportable operating segments. Generally, financial information will be
required to be reported on the basis that it is used internally to evaluate
segment performance and to allocate resources to segments. This new standard
will only affect financial statement disclosures and will not affect how we
determine net earnings or shareholders' equity.
(12) QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of unaudited quarterly results of operations for the
years ended December 31, 1997 and 1996 (in millions, except per share data):
33
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE SHAREHOLDERS AND DIRECTORS OF UNITED HEALTHCARE CORPORATION:
We have audited the accompanying consolidated balance sheets of United
HealthCare Corporation (a Minnesota Corporation) and Subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of United HealthCare Corporation
and Subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
February 12, 1998
REPORT OF MANAGEMENT
The management of United HealthCare Corporation is responsible for the
integrity and objectivity of the consolidated financial statements and other
financial information contained in this annual report. The consolidated
financial statements and related information were prepared according to
generally accepted accounting principles and include some amounts that are
based on management's best estimates and judgements.
To meet its responsibility, management depends on its accounting systems and
related internal accounting controls. These systems are designed to provide
reasonable assurance, at an appropriate cost, that financial records are
reliable for use in preparing financial statements and that assets are
safeguarded. Qualified personnel throughout the organization maintain and
monitor these internal accounting controls on an ongoing basis. Internal
auditors review the accounting practices, systems of internal control, and
compliance with these practices and controls.
The Audit Committee of the Board of Directors, composed entirely of directors
who are not employees of the Company, meets periodically and privately with the
Company's independent public accountants and its internal auditors, as well as
management, to review accounting, auditing, internal control, financial
reporting and other matters.
William W. McGuire, M.D.
President, Chairman and Chief Executive Officer
David P. Koppe
Chief Financial Officer
34
CORPORATE AND BUSINESS SEGMENT LEADERS
OFFICE OF THE CHAIRMAN
----------------------
WILLIAM W. MCGUIRE, M.D.
President, Chairman and Chief Executive Officer
TRAVERS H. WILLS
Chief Operating Officer and Chief Executive Officer, Health Plans
STEPHEN J. HEMSLEY
Senior Executive Vice President
HEALTH PLANS
------------
JAMES G. CARLSON
President
JEANNINE M. RIVET
Chief Operating Officer
LEE N. NEWCOMER, M.D.
Chief Medical Officer
WILLIAM A. MUNSELL
Chief Financial Officer
DAVID G. DEVEREAUX
Western Coach
FRED C. DUNLAP
Florida and Puerto Rico Coach
HENRY R. LOUBET
Pacific Coach
MARSHALL V. ROZZI
North Central Coach
ROBERT J. SHEEHY
Midwest Coach
BARBARA A. WAHLROBE
Sales and Marketing
R. CHANNING WHEELER
Northeast Coach
JOHN A. WICKENS
Southeast Coach
RICHARD C. ZORETIC
Mid-Atlantic Coach
INSURANCE SERVICES
------------------
RONALD B. COLBY
United HealthCare Insurance Company
STEPHEN H. MATHESON
Developing Markets Group
STRATEGIC BUSINESS SERVICE
--------------------------
THOMAS P. MCDONOUGH
Chief Executive Officer
JAMES E. MCGARRY
Chief Operating Officer
RETIREE & SENIOR SERVICES
-------------------------
LOIS QUAM
AARP Division
LEONARD A. FARR
AARP Division
MARCIA E. SMITH
EverCare-Registered Trademark-
SPECIALIZED CARE SERVICES
-------------------------
SAUL FELDMAN, D.P.A.
United Behavioral Health
R. EDWARD BERGMARK, PH.D.
Optum-Registered Trademark-
DAVID J. MCLEAN, PH.D.
United Resource Networks
JAMES T. BRAUN
Activ!-SM-
NANCY I. CONNAWAY
ProAmerica
KNOWLEDGE & INFORMATION
-----------------------
SHEILA T. LEATHERMAN
Center for Health Care Policy and Evaluation
KEVIN H. ROCHE
Applied HealthCare Informatics
SIDNEY W. STOLZ
Global Consulting
CORPORATE FUNCTION LEADERS
--------------------------
ROBERT J. BACKES
Human Resources
DAVID P. KOPPE
Chief Financial Officer
PAUL F. LEFORT
Chief Information Officer
DAVID J. LUBBEN
Corporate Secretary and General Counsel
ELIZABETH A. MALKERSON
Communications
BERNARD F. MCDONAGH
Investor Relations
JOSEPH D. SAVONA
Corporate Audit
35
BOARD OF DIRECTORS
WILLIAM C. BALLARD, JR.
Of Counsel, Greenbaum, Doll & McDonald
Louisville, Kentucky, law firm
RICHARD T. BURKE
Chief Executive Officer and Governor Phoenix Coyotes
National Hockey League Team
JAMES A. JOHNSON
Chairman and Chief Executive Officer Fannie Mae
Diversified financial services company
THOMAS H. KEAN
President, Drew University
DOUGLAS W. LEATHERDALE
Chairman and Chief Executive Officer
The Saint Paul Companies, Inc.
Insurance and related services
WALTER F. MONDALE
Partner, Dorsey & Whitney LLP
Minneapolis, Minnesota, law firm
WILLIAM W. MCGUIRE, M.D.
President, Chairman and Chief Executive Officer
United HealthCare Corporation
MARY O. MUNDINGER
Dean and Professor, School of Nursing, and Associate Dean, Faculty of Medicine
Columbia University
ROBERT L. RYAN
Senior Vice President and Chief Financial Officer
Medtronic, Inc.
Medical devices company
KENNETT L. SIMMONS
Retired
WILLIAM G. SPEARS
Chairman of the Board
Spears, Benzak, Salomon & Farrell, Inc.
New York City-based investment counseling and management firm
GAIL R. WILENSKY
Senior Fellow
Project HOPE
International health foundation
AUDIT COMMITTEE
---------------
JAMES A. JOHNSON
DOUGLAS W. LEATHERDALE
WALTER F. MONDALE
GAIL R. WILENSKY
COMPENSATION AND STOCK OPTION COMMITTEE
---------------------------------------
WILLIAM C. BALLARD, JR.
THOMAS H. KEAN
MARY O. MUNDINGER
ROBERT L. RYAN
WILLIAM G. SPEARS
EXECUTIVE COMMITTEE
-------------------
WILLIAM C. BALLARD, JR.
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE, M.D.
KENNETT L. SIMMONS
WILLIAM G. SPEARS
NOMINATING COMMITTEE
--------------------
WILLIAM C. BALLARD, JR.
DOUGLAS W. LEATHERDALE
WILLIAM W. MCGUIRE, M.D.
WILLIAM G. SPEARS
36
CORPORATE PROFILE
United HealthCare Corporation is a diversified health care management company
that provides a broad spectrum of resources and services to help people achieve
improved health and well-being through all stages of life. United HealthCare
is organized into six business segments: Health Plans, Retiree and Senior
Services, Strategic Business Services, Insurance Services, Specialized Care
Services, and Knowledge and Information Services.
United HealthCare operates in all 50 states, the District of Columbia and
Puerto Rico, as well as internationally. The Company offers organized health
systems, including HMOs, point-of-service plans, PPOs and managed indemnity
programs. The Company also offers a variety of related health care management
services and products such as Medicare supplemental insurance programs, managed
Medicaid services, behavioral health services, workers' compensation and
disability services, utilization review services, disease management programs
and specialized provider networks, health information and employee assistance
programs, knowledge and information services and administrative services.
INVESTOR INFORMATION
CORPORATE HEADQUARTERS
United HealthCare Corporation
300 Opus Center
9900 Bren Road East
Minnetonka, Minnesota 55343
(612) 936-1300
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
Minneapolis, Minnesota
CORPORATE COUNSEL
Dorsey & Whitney LLP
Minneapolis, Minnesota
TRANSFER AGENT & REGISTRAR
Norwest Bank Minnesota, N.A.
Minneapolis, Minnesota
FORM 10-K
The Company has filed an annual report with the Securities and Exchange
Commission on Form 10-K. Shareholders may obtain a copy of this report, without
charge, by writing:
Investor Relations
United HealthCare
P.O. Box 1459, Route MN008-W213
Minneapolis, Minnesota 55440-1459
ANNUAL MEETING
The annual meeting of shareholders will be held at the Lutheran Brotherhood
Building, 625 Fourth Avenue South, Minneapolis, Minnesota, on Wednesday,
May 13, 1998, at 10 a.m.
STOCK LISTING
United HealthCare's common stock is traded on the New York Stock Exchange under
the symbol UNH.
The following table shows the range of high and low sales prices for the
Company stock as reported on the New York Stock Exchange Composite Tape for the
calendar periods indicated through February 28, 1998. These prices do not
include commissions or fees associated with the purchase or sale of this
security.
As of February 28, 1998, the Company had 13,660 shareholders of record.
DIVIDEND POLICY
The Company's dividend policy, established by its board of directors in August
1990, requires the board to review the Company's audited consolidated financial
statements following the end of each fiscal year and make a determination as to
the advisability of declaring a dividend on the corporation's outstanding
shares of common stock.
Shareholders of record on April 3, 1996, received an annual dividend for 1996
of $0.03 per share, and shareholders of record on April 3, 1997, received an
annual dividend for 1997 of $0.03 per share. On February 10, 1998, the
Company's board of directors approved an annual dividend for 1998 of $0.03 per
share to holders of the Company's common stock. This dividend will be paid on
April 15, 1998, to shareholders of record at the close of business on April 1,
1998.
INTERNET ADDRESS
To access information about United HealthCare, including news releases and
product and service information, visit our homepage via the Internet. Our
address is www.unitedhealthcare.com.
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