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HUMANA BOARD CONFIRMS INTENT TO CREATE TWO COMPANIES; COMPANY REPORTS SPECIAL CHARGES FOR 1992 AND LOWER THAN ANTICIPATED EARNINGS FOR THE YEAR

 HUMANA BOARD CONFIRMS INTENT TO CREATE TWO COMPANIES;
 COMPANY REPORTS SPECIAL CHARGES FOR 1992
 AND LOWER THAN ANTICIPATED EARNINGS FOR THE YEAR
 LOUISVILLE, Ky., Aug. 27 /PRNewswire/ -- The board of directors of Humana Inc. (NYSE: HUM) determined today that it is in the best interests of the company and its shareholders to divide the company's hospitals and health plans into two separate public companies through a spin-off arrangement.
 Under the proposed arrangement, a company to own and operate Humana hospitals would be spun off from Humana. Humana would own and operate Humana Health Care Plans.
 The board authorized Humana's management to proceed with implementing this arrangement, subject to final board action.
 "Today's board action is a significant step forward in Humana's response to changing marketplace conditions," said David A. Jones, chairman of the board and chief executive officer of Humana. "Based on the work done by management over the past several weeks, the board determined that the two separate companies would better serve the needs and values of patients, physicians, employers and consumers by permitting each new company to focus on its separate business."
 It is expected that the arrangement also will be subject to a favorable ruling as to the tax-free nature of the spin-off to Humana and its shareholders, as well as to shareholder approval. Shareholder approval will be sought at a shareholder meeting planned for February 1993. If shareholders approve, it is expected that the transaction would be consummated shortly thereafter.
 Humana also announced that it expects to record in the fourth quarter after-tax charges of between $175 million and $225 million. The charges primarily result from the proposed spin-off and a decline in operating results. The company also stated that it will adopt Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which will increase 1992 income after taxes by approximately $50 million.
 The company reported that it expects operating results for the fourth quarter and fiscal year ended August 31, excluding the effects of the special items above, will be down from the year-earlier periods. The decline in earnings reflects lower profitability in both the hospital and health plan businesses. The company estimates that earnings per share, excluding the special items, for the fourth quarter will range from $0.34 to $0.36 compared with $0.58 earned in the fourth quarter of 1991, and for the fiscal year will range from $1.84 to $1.86 compared with $2.26 earned last year. Audited financial results are expected to be released in late October.
 Humana, based in Louisville, owns and operates 78 hospitals in the United States and Europe and has 1.7 million members in health benefit plans for employer groups and Medicare beneficiaries.
 -0- 8/27/92
 /CONTACT: (Investor Contact) Tyree G. Wilburn, Humana Inc., 502-580-1222/
 (HUM) CO: Humana Inc. ST: Kentucky IN: HEA SU: RCN


CM -- CH007 -- 4002 08/27/92 14:18 EDT
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Publication:PR Newswire
Date:Aug 27, 1992
Words:485
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