- - In conjunction with the redemption of our $500 million convertible preferred stock, we paid a $20 million redemption premium. This premium is added to 1998's net loss to arrive at net loss applicable to common shareholders.
store basis, UnitedHealthcare's commercial health plan and Medicare products accounted for $1.8 billion of premium revenue growth during 1998.
INVESTMENT AND OTHER INCOME Investment and other income increased to $231 million in 1997 from $185 million in 1996. The increase of $46 million is primarily attributable to an increase in average cash and investments from $3.2 billion in 1996 to $3.6 billion in 1997. Additionally, 1997 investment and other income included net capital gains of $26 million compared with $4 million in 1996.
Cash generated from operating activities and proceeds received from our 1998 financing activities were used to redeem outstanding preferred stock, repurchase common stock, and for other general corporate purposes, including acquisitions. We expect our available cash and investment resources, operating cash flows, and financing capability to be sufficient to meet our current operating requirements and other corporate development initiatives.
In the second quarter of 1998, we recognized special charges to operations of $725 million associated with the implementation of our operational realignment plan. We believe our after-tax cash outlay associated with these charges will be in the range of $75 million to $100 million over the next 12 months.
On January 19, 1999, we received a consolidated amended complaint (In re United HealthCare Corporation Securities Litigation, No. 98-1888 in the United States District Court for the District of Minnesota) for the six suits, which essentially restates the allegations made in the earlier complaints.
On March 22, 1999, two actions were filed in the United States District Court for the District of Minnesota by two pension funds against United, certain current and former officers and directors, and other individuals yet to be identified. The pension funds wish to "opt-out" of the aforementioned purported class action suits. These individual actions essentially restate the allegations made in the purported class actions and claim violations of Sections 10(b), 18(a) and 20 of the Securities Exchange Act. In addition, both actions assert a claim of negligent misrepresentation and securities claims under state law. In the aggregate, the plaintiff pension funds seek compensatory damages totaling approximately $12.1 million.
Our accounting policies for our business segment operations are the same as those described in the Summary of Significant Accounting Policies (see Note 2). Transactions between business segments are recorded at their estimated fair value, as if they were purchased from or sold to third parties. All intersegment transactions are eliminated in consolidation. Generally accepted accounting principles provide for the combined reporting of segments with similar economic characteristics. Accordingly, the financial results of UnitedHealthcare and Ovations have been combined to form the Health Care Services segment in the tables presented below (in millions):
The following is a summary of unaudited quarterly results of operations for the years ended December 31, 1998 and 1997 (in millions, except per share data):
(1) Includes $725 million of operational realignment and other charges and $175 million of charges related to contact losses associated with certain Medicare markets and other increases to commercial and Medicare medical costs payable estimates. Excluding these charges, net earnings applicable to common shareholders would have been $132 million, or $0.66 diluted net earnings per common share.