SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 28, 2002
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UICI
(Exact name of registrant as specified in its charter)
Delaware 0-14320 75-2044750
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation or organization) Number) Identification No.)
4001 McEwen Drive, Suite 200, Dallas, Texas 75244
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 392-6700
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Not Applicable
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(Former name or former address, if changed since last report)
Item 5. OTHER EVENTS
On February 28, 2002, UICI completed the acquisition of STAR Human
Resources Group, Inc. and STAR Administrative Services, Inc. (collectively
"STAR"), a Phoenix, Arizona-based business specializing in the marketing
and administration of limited benefit plans for entry level, high turnover,
hourly employees. STAR currently serves over 550 corporate clients,
including 28 employers included among Fortune 500 companies, and the STAR
program currently provides affordable healthcare coverage to approximately
180,000 hourly employees throughout the United States.
Effective March 1, 2002, health insurance policies offered under
the STAR program will be issued by The MEGA Life and Health Insurance
Company, a wholly-owned subsidiary of UICI, and Timothy L. Cook, the former
Executive Vice President of STAR, will become the President of MEGA's newly
created STAR Division.
UICI acquired STAR for an initial cash purchase price of $25.0
million, plus additional contingent consideration based on the future
performance of STAR over the period ending May 31, 2003. The contingent
consideration will be in an amount not to exceed $15.0 million and will be
payable by delivery of UICI's 6.0% convertible subordinated notes due March
1, 2012. UICI currently believes that the operations of its newly created
STAR Division will be moderately accretive ($0.03 - $0.04 per fully diluted
share) to UICI's 2002 earnings.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:
Certain statements in this report are "forward-looking statements" within the
meaning of the Private Securities Litigation Act of 1995. Such statements
involve known and unknown risks, uncertainties and other factors that may cause
actual results to differ materially from those included in the forward-looking
statements. These forward-looking statements involve risks and uncertainties
including, but not limited to, the following: changes in general economic
conditions, including the performance of financial markets, and interest rates;
competitive, regulatory or tax changes that affect the cost of or demand for the
Company's products; health care reform; the ability to predict and effectively
manage claims related to health care costs; and reliance on key management and
adequacy of claim liabilities.
The Company's future results will depend in large part on accurately predicting
health care costs incurred on existing business and upon the Company's ability
to control future health care costs through product and benefit design,
underwriting criteria, utilization management and negotiation of favorable
provider contracts. Changes in mandated benefits, utilization rates, demographic
characteristics, health care practices, provider consolidation, inflation, new
pharmaceuticals/technologies, clusters of high-cost cases, the regulatory
environment and numerous other factors are beyond the control of any health plan
provider and may adversely affect the Company's ability to predict and control
health care costs and claims, as well as the Company's financial condition,
results of operations or cash flows. Periodic renegotiations of hospital and
other provider contracts coupled with continued consolidation of physician,
hospital and other provider groups may result in increased health care costs and
limit the Company's ability to negotiate favorable rates. Recently, large
physician practice management companies
have experienced extreme financial difficulties, including bankruptcy, which may
subject the Company to increased credit risk related to provider groups and
cause the Company to incur duplicative claims expense. In addition, the Company
faces competitive pressure to contain premium prices. Fiscal concerns regarding
the continued viability of government-sponsored programs such as Medicare and
Medicaid may cause decreasing reimbursement rates for these programs. Any
limitation on the Company's ability to increase or maintain its premium levels,
design products, implement underwriting criteria or negotiate competitive
provider contracts may adversely affect the Company's financial condition or
results of operations.
The Company's Academic Management Services Corp. business could be adversely
affected by changes in the Higher Education Act or other relevant federal or
state laws, rules and regulations and the programs implemented thereunder may
adversely impact the education credit market. In addition, existing legislation
and future measures by the federal government may adversely affect the amount
and nature of federal financial assistance available with respect to loans made
through the U.S. Department of Education. Finally the level of competition
currently in existence in the secondary market for loans made under the Federal
Loan Programs could be reduced, resulting in fewer potential buyers of the
Federal Loans and lower prices available in the secondary market for those
loans.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
Exhibit 99.1 Press release distributed on March 4, 2002 announcing
completion of acquisition of STAR Human Resources Inc. and
STAR Administrative Services, Inc.
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.
UICI
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(Registrant)
Date March 4, 2002 By /s/ Matthew R. Cassell
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Matthew R. Cassell
Vice President and Chief
Financial Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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99.1 Press release distributed on March 4, 2002 announcing
completion of acquisition of STAR Human Resources Inc. and
STAR Administrative Services, Inc.