NU Online News Service, Jan. 2, 7:21 p.m. – PacifiCare Health Systems Inc., Santa Ana, Calif., says it will take a $60 million charge for the fourth quarter of 2001 to restructure its operations and cut 1,300 jobs, or 15% of its work force.
PacifiCare says the charge will lead to a net loss for the quarter, but the managed care company is not saying how big the quarterly loss will be, or what full 2001 earnings will be.
PacifiCare has reported $45 million in net income for the first three quarters of 2001 on $9 billion in revenue, compared with $149 million in net income on $8.6 billion in revenue for the first three quarters of 2000.
PacifiCare has a 5-year-old, $800 million “senior credit facility” from a group of lenders led by Bank of America Corp., Charlotte, N.C.
The projected fourth-quarter loss should be small enough that PacifiCare will continue to be meet the terms of the senior credit facility, PacifiCare says.
But, because the $60 million charge will create a loss, “it is desirable though not necessary to obtain approval from a majority of the company’s bank syndicate to waive a requirement that PacifiCare retain a financial consultant,” PacifiCare says.