— Approximately $40 million related to previously announced severance and facilities charge —
— Approximately $20 million to $25 million related to workforce reduction actions to be completed by end of first quarter 2010
HARTFORD, Conn.–(BUSINESS WIRE)–Aetna (NYSE: AET) today announced that it expects to incur a fourth-quarter 2009 charge of approximately $60 million to $65 million, after tax.1 This charge is due to the previously announced and completed reduction of approximately 625 positions and real estate consolidation that together are expected to result in a charge of approximately $40 million, after tax, and a similarly sized workforce reduction to be completed by the end of the first quarter of 2010 that is expected to result in a charge of approximately $20 million to $25 million, after tax.
These actions relate to Aetna’s previously announced plan to reduce its workforce based upon the company’s membership outlook for 2010 and in preparation for the impact that health care reform and regulatory changes may have on Aetna’s business. Once the company completes the additional job reductions in the first quarter of 2010, Aetna will have approximately 34,300 employees. Employees affected by the first quarter 2010 job reductions will be notified at a future date to be determined. Eligible employees will receive severance benefits based on length of service as well as outplacement and other support programs. The company is not exiting any markets as a result of this announcement.
Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 36.3 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, governmental units, government-sponsored plans, labor groups and expatriates. For more information, see www.aetna.com.
1 As Aetna believes this charge neither relates to the ordinary course of its business nor reflects underlying business performance, the company will reflect the charge as an “other item” and exclude it from 2009 operating earnings
CAUTIONARY STATEMENT — Certain information in this press release is forward looking, including our projections as to the number of positions to be eliminated from Aetna’s workforce, the timing of the anticipated future workforce reductions, the amount of severance and benefit costs, the amount of real estate lease consolidation costs, the amount of future cash expenditures and the timing and amount of charges. Forward-looking information is based on management’s estimates, assumptions and projections, and is subject to significant uncertainties and other factors, many of which are beyond Aetna’s control. Important risk factors could cause actual outcomes and results to differ materially from what is expressed in the information in this press release, including changes in Aetna’s actual tax rate compared to the rate assumed in estimating the charges, changes in the number of severed employees compared to the number assumed in estimating the charges, changes in the amounts payable to severed employees compared to the amounts assumed in estimating the charges, changes in the expenditures associated with vacating leased properties and/or our ability to sublease those properties compared to the amounts assumed in estimating the charges and changes in the timing of the anticipated future workforce reductions. For more discussion of important risk factors that may materially affect Aetna, please see the risk factors contained in Aetna’s 2008 Annual Report on Form 10-K and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, on file with the Securities and Exchange Commission (the “SEC”). You also should read Aetna’s 2008 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, on file with the SEC for a discussion of Aetna’s historical results of operations and financial condition.