We reported a net loss of $12.3 million for the year ended December 31, 1999 which included a $3.0 million charge for loss contracts related to the Carolinas commercial line of business, a $5.5 million charge for management settlement costs and $4.1 million of other income from a litigation settlement, compared to a net loss of $27.5 million for 1998 which included a $12.5 million charge for loss contracts and divestiture costs related to health plans identified for disposition, a $2.0 million charge for litigation and a $2.0 million charge for provider insolvency/impairment related to certain of the Company's capitated provider arrangements. Net loss per common share was $3.42 for 1999 compared to a net loss per common share of $7.68 for 1998.
In 1999, we completed its restructuring program to exit unprofitable markets by asset sales or plan closings and concentrate on our continuing health care businesses in California, Indiana and Louisiana (the "continuing operations").
Prior to December 31, 2000 all of our operating subsidiaries were direct subsidiaries of MHP. The operating HMOs and MLH paid monthly fees to MHP pursuant to administrative services agreements for various management, financial, legal, computer and telecommunications services. On December 31, 2000, as part of a general reorganization and simplification of our corporate structure, MHP contributed the capital stock of MLH to our Indiana HMO and contributed the capital stock of our Indiana HMO to our California HMO. Our HMOs are federally qualified and are licensed in the states where they operate. MLH is licensed in 35 states as of December 31, 2000 including the states in which our HMOs operate. Our HMOs and MLH are subject to state regulations which require compliance with certain statutory deposit, dividend distribution and net worth requirements. To the extent the operating HMOs and MLH must comply with these regulations, they may not have the financial flexibility to transfer funds to MHP. MHP's proportionate share of net assets (after inter-company eliminations) which, at December 31, 2000 may not be transferred to MHP by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party is referred to as "Restricted Net Assets". Restricted Net Assets of these operating subsidiaries were $12.7 million at December 31, 2000, with deposit requirements representing $1.0 million and net worth requirements in excess of deposit requirements representing the remaining $11.7 million. In addition to the $4.9 million in cash, cash equivalents and marketable securities held by MHP, approximately $1.8 million in funds held by operating subsidiaries could be considered available for transfer to MHP at December 31, 2000 (collectively, the "Available Cash"). (See "Item 8. Financial Statements and Supplementary Data" and "Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K -- Schedule I").
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Maxicare Health Plans, Inc. at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
CONSOLIDATED STATEMENTS OF OPERATIONS (AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
Stock options are excluded from the calculation of diluted loss per share for 2000, 1999 and 1998 because the inclusion of stock options would have an anti-dilutive effect.
On September 15, 2000 the Company initiated a Rights Offering and the subscription period extended through October 6, 2000. Upon the completion of the subscription period, the Company accepted subscriptions (including over-subscriptions) for the purchase of approximately 21.9 million shares of common stock (before giving effect to the subsequent one-for-five reverse stock split) at $1.00 per share. Accordingly, the Company issued the shares to the subscribing shareholders and received gross proceeds of approximately $21.9 million.