-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Ti5kvywRt1mfXhHoGLOm2D9bBl/4PNPVSWUrAiQo2RPVLtwX5fRRnhZfvFAq/++R 6py8XaLLosf6UAx99r1aPA== 0000902595-94-000103.txt : 19940902 0000902595-94-000103.hdr.sgml : 19940902 ACCESSION NUMBER: 0000902595-94-000103 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940617 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19940831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FHP INTERNATIONAL CORP CENTRAL INDEX KEY: 0000793499 STANDARD INDUSTRIAL CLASSIFICATION: 8011 IRS NUMBER: 330072502 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-11329 FILM NUMBER: 94547527 BUSINESS ADDRESS: STREET 1: 9900 TALBERT AVE CITY: FOUNTAIN VALLEY STATE: CA ZIP: 92708 BUSINESS PHONE: 7149637233 FORMER COMPANY: FORMER CONFORMED NAME: FHP CORP DATE OF NAME CHANGE: 19870201 8-K/A 1 CURRENT REPORT AMENDMENT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________ FORM 8-K/A AMENDMENT NO. 2 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): June 17, 1994 FHP INTERNATIONAL CORPORATION (Exact Name of Registrant as Specified in Charter) Delaware 0-14796 33-0072502 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 9900 Talbert Avenue, Fountain Valley, California 92708 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (714) 963-7233 Not Applicable (Former Name or Former Address, if Changed Since Last Report) Item 7(b) of the Registrant's Current Report on Form 8-K, event date June 17, 1994 is amended to read in its entirety as follows: Item 7(b). Pro Forma Financial Information. Pro forma financial information that would be required pursuant to Article 11 of Regulation S-X. FHP INTERNATIONAL CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET March 31, 1994 (Unaudited) Assets Pro Forma Acquisition Adjustments FHP TakeCare Increase (Amounts in thousands) Historical Historical (Decrease) __________ __________ __________ Cash and cash equivalents $194,884 $91,896 ($100,000) Short-term investments 172,733 69,864 Accounts receivable 70,761 30,579 Other current assets 42,878 36,383 ________ ________ ________ Total current assets 481,256 228,722 (100,000) Property and equipment, net 368,657 16,720 Excess purchase price over net assets acquired 3,992 236,773 778,412 less accumulated amortization (286) (13,726) 13,726 ________ _________ ________ Excess purchase price over net assets acquired, net 3,706 223,047 792,138 Long-term investments 78,629 49,159 Restricted investments 75,418 Other assets, net 30,829 2,458 (858) ________ ________ ________ Total assets $1,038,495 $520,106 $691,280 ========== ======== ======== Liabilities and Stockholders' Equity Current portion of long-term obligations $150 $15,000 $35,000 Accounts payable 35,411 49,736 Medical claims payable 170,968 129,378 Accrued salaries and employee benefits 79,030 6,501 Deferred premiums 146,017 18,623 Income taxes payable and other current liabilities 16,839 5,617 10,500 ________ ________ ________ Total current liabilities 448,415 224,855 45,500 Long-term obligations 103,025 22,500 239,590 Other liabilities 81,958 7,517 ________ ________ ________ Total liabilities 633,398 254,872 285,090 ________ ________ ________ Stockholders' equity: Series A Cumulative Convertible Preferred Stock 516,480 Common Stock 1,658 1,291 (981) Paid-in capital 224,722 157,084 (2,450) Retained earnings 178,717 106,859 (106,859) ________ ________ _________ Total stockholders' equity 405,097 265,234 406,190 ________ ________ ________ Total liabilities and stockholders' equity $1,038,495 $520,106 $691,280 ========== ======== ======== Assets (cont'd) Pro Forma Note Condensed (Amounts in thousands) Reference Consolidated _________ ____________ Cash and cash equivalents 2 $186,780 Short-term investments 242,597 Accounts receivable 101,340 Other current assets 79,261 __________ Total current assets 609,978 Property and equipment, net 385,377 Excess purchase price over net assets acquired 1,019,177 less accumulated amortization (286) __________ Excess purchase price over net assets acquired, net 3 1,018,891 __________ Long-term investments 127,788 Restricted investments 75,418 Other assets, net 11 32,429 __________ Total assets $2,249,881 ========== Liabilities and Stockholders' Equity (cont'd) Current portion of long-term obligations 4 $50,150 Accounts payable 85,147 Medical claims payable 300,346 Accrued salaries and employee benefits 85,531 Deferred premiums 164,640 Income taxes payable and other current liabilities 11 32,956 __________ Total current liabilities 718,770 __________ Long-term obligations 4 365,115 Other liabilities 89,475 __________ Total liabilities 1,173,360 __________ Stockholders' equity: Series A Cumulative Convertible Preferred Stock 5 516,480 Common Stock 5 1,968 Paid-in capital 5 379,356 Retained earnings 5 178,717 __________ Total stockholders' equity 1,076,521 __________ Total liabilities and stockholders' equity $2,249,881 ========== See accompanying notes to historical and pro forma unaudited condensed consolidated financial statements. FHP INTERNATIONAL CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Nine Months Ended March 31, 1994 (Unaudited) Comprecare Historical Pro Forma (Amounts in Two Months Ended Adjustments thousands, FHP TakeCare August 31, Increase Note except earnings Historical Historical 1993 (Decrease) Reference per share) __________ __________ __________ __________ _________ Revenue $1,789,947 $817,649 $47,971 $ - Expenses: Cost of health care 1,498,337 661,420 36,745 General, admin- istrative and marketing 240,086 101,730 5,084 (830) 6 __________ __________ _______ ________ Total expenses 1,738,423 763,150 41,829 (830) __________ __________ _______ ________ Operating income 51,524 54,499 6,142 830 Interest income 14,552 4,846 202 Interest expense 3,879 2,065 259 (241) 8 __________ __________ _______ ________ Income before provision for income taxes 62,197 57,280 6,085 1,071 Provision for income taxes 23,885 24,781 2,215 118 10 __________ __________ _______ ________ Net income 38,312 32,499 3,870 953 Preferred Stock dividend __________ __________ _______ ________ Net income attributable to Common Stock $38,312 $32,499 $3,870 $953 ========== ========== ======= ======== Earnings per share attributable to Common Stock $1.14 $2.52 ========== ========== Weighted average shares of Common Stock and common stock equivalents outstanding 33,659 12,891 ========== ========== FHP INTERNATIONAL CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Nine Months Ended March 31, 1994 (Unaudited) (continued) Pro Forma (Amounts in Pro Forma Adjustments Pro Forma thousands, TakeCare Increase Note Condensed except earnings Consolidated (Decrease) Reference Consolidated per share) ____________ ___________ _________ ____________ Revenue $865,620 $ - $2,655,567 Expenses: Cost of health care 698,165 2,196,502 General, admin- istrative and marketing 105,984 13,797 6 359,867 ________ __________ __________ Total expenses 804,149 13,797 2,556,369 ________ __________ __________ Operating income 61,471 (13,797) 99,198 Interest income 5,048 (3,338) 7 16,262 Interest expense 2,083 10,206 8 16,168 ________ __________ __________ Income before provision for income taxes 64,436 (27,341) 99,292 Provision for income taxes 27,114 (2,346) 10 48,653 ________ __________ ___________ Net income 37,322 (24,995) 50,639 Preferred Stock dividend 19,368 9 19,368 ________ _________ __________ Net income attributable to Common Stock $37,322 ($44,363) $31,271 ======== ========= ========== Earnings per share attributable to Common Stock ($6.88) 9 $0.78 ========= ========== Weighted average shares of Common Stock and common stock equivalents outstanding 6,446 9 40,105 ========= ========== See accompanying notes to historical and pro forma unaudited condensed consolidated financial statements. FHP INTERNATIONAL CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Year Ended June 30, 1993 (Unaudited) Pro Forma (Amounts in Adjustments thousands, FHP TakeCare Comprecare Increase Note except earnings Historical Historical Historical (Decrease) Reference per share) __________ __________ __________ __________ _________ Revenue $2,005,854 $789,654 $254,547 $ - Expenses: Cost of health care 1,681,144 644,237 215,219 (2,612) 11 General, admin- istrative and marketing 269,645 92,869 30,859 (5,330) 6 __________ __________ _______ ________ Total expenses 1,950,789 737,106 246,078 (7,942) __________ __________ _______ ________ Operating income 55,065 52,548 8,469 7,942 Interest income 14,919 5,399 819 Interest expense 211 3,939 1,407 (1,309) 8 __________ __________ _______ ________ Income before provision for income taxes 69,773 54,008 7,881 9,251 Provision for income taxes 25,607 23,207 2,808 1,921 10 __________ __________ _______ ________ Net income 44,166 30,801 5,073 7,330 Preferred Stock dividend __________ __________ _______ ________ Net income attributable to Common Stock $44,166 $30,801 $5,073 $7,330 ========== ========== ======= ======== Earnings per share attributable to Common Stock $1.33 $2.80 ========== ========== Weighted average shares of Common Stock and common stock equivalents outstanding 33,270 10,982 ========== ========== FHP INTERNATIONAL CORPORATION AND SUBSIDIARIES HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME Year Ended June 30, 1993 (Unaudited) (continued) Pro Forma (Amounts in Pro Forma Adjustments Pro Forma thousands, TakeCare Increase Note Condensed except earnings Consolidated (Decrease) Reference Consolidated per share) ____________ ___________ _________ ____________ Revenue $1,044,201 $ - $3,050,055 Expenses: Cost of health care 856,844 2,537,988 General, admin- istrative and marketing 118,398 20,985 6 409,028 ________ __________ __________ Total expenses 975,242 20,985 2,947,016 ________ __________ __________ Operating income 68,959 (20,985) 103,039 Interest income 6,218 (4,670) 7 16,467 Interest expense 4,037 12,422 8 16,670 ________ __________ __________ Income before provision for income taxes 71,140 (38,077) 102,836 Provision for income taxes 27,936 (3,153) 10 50,390 ________ __________ __________ Net income 43,204 (34,924) 52,446 Preferred Stock dividend 25,824 9 25,824 ________ _________ __________ Net income attributable to Common Stock $43,204 ($60,748) $26,622 ======== ========= ========== Earnings per share attributable to Common Stock ($9.42) 9 $0.67 ========= ========== Weighted average shares of Common Stock and common stock equivalents outstanding 6,446 9 39,716 ========= ========== See accompanying notes to historical and pro forma unaudited condensed consolidated financial statements. FHP INTERNATIONAL CORPORATION NOTES TO HISTORICAL AND PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands, except per share data) 1. General The historical and pro forma unaudited condensed consolidated balance sheet of FHP International Corporation ("FHP" or "the Company") reflects the Merger as though it occurred on March 31, 1994. The historical and pro forma unaudited condensed consolidated statements of income of the Company reflect the Merger and the September 1993 acquisition of Comprecare, Inc. by TakeCare, Inc. ("TakeCare") as though both transactions occurred on July 1, 1992. The Merger will be accounted for as a purchase transaction. No effect has been given in the historical and pro forma unaudited condensed consolidated statements of income for operating and synergistic benefits that may be realized through the combination of the entities, including any increased enrollment of Medicare eligible persons in geographic areas principally served by TakeCare (Northern California, Colorado, Illinois, and Ohio). Certain minor reclassifications have been made to the TakeCare historical financial statements to conform them to FHP's presentation. TakeCare has agreed with FHP that if the expenses of TakeCare incurred in connection with the Merger, including financial advisory fees, accounting, legal and consulting fees, and costs in connection with any litigation relating to the Merger, exceed $3 million, such excess (the "Excess Expenses") will reduce pro rata the amount of cash or shares of Series B Adjustable Rate Cumulative Preferred Stock to be issued in the Merger upon conversion of each share of TakeCare Common Stock. For purposes of these pro forma financial statements, the Excess Expenses are assumed to be $8.0 million, resulting in a reduction of the cash consideration to $27.38 from $28.00 or of the Series B Preferred Stock from 1.12 shares to approximately 1.10 shares for each share of TakeCare Common Stock. Under the terms of the Merger Agreement, each outstanding share of TakeCare common stock (estimated to be 12,912 shares for purposes of these historical and pro forma unaudited condensed consolidated financial statements (pro forma financial statements)) will be converted into the right to receive, without interest, the following consideration (valued at an aggregate of $80.00 per share less the estimated impact of the Excess Expenses of approximately $0.62 per share for purposes of these pro forma financial statements): (1) 1.6 shares of Series A Cumulative Convertible Preferred Stock (Series A Preferred Stock); plus (2) 1.12 shares of Series B Adjustable Rate Cumulative Preferred Stock (Series B Preferred Stock), or at the specific election of the holder, cash of $28.00 per share of TakeCare Common Stock; plus (3) .48 of a share of FHP Common Stock, as provided in the Merger Agreement since FHP's stock traded at less than an average of $25 per share for 20 consecutive trading days ending on the third trading day prior to the effective date of the Merger. Holders of Series A Preferred Stock with stated value of $25 will be entitled to receive cumulative cash dividends of 5.0% per annum. Dividends will be payable quarterly in arrears when and if declared by FHP's Board of Directors. On or after the fourth anniversary of the Merger, FHP may, at its option, redeem all or part of the outstanding shares of Series A Preferred Stock, at fixed redemption prices per share plus an amount equal to any accrued and unpaid dividends. Each share of Series A Preferred Stock will be convertible at the option of the holder into FHP Common Stock at any time commencing six months after the Closing. The conversion price for the Series A Preferred Stock is $31.00 per share. Holders of Series B Preferred Stock with stated value of $25 will be entitled to receive cumulative cash dividends of not less than 5.0% per annum or greater than 11.0% per annum. The actual dividend rate will be determined quarterly based upon prevailing market rates as provided in the Merger Agreement. Dividends will be payable quarterly in arrears when and if declared by FHP's Board of Directors. Beginning nine months after June 17, 1994, FHP may, at its option, redeem all or part of the outstanding shares of Series B Preferred Stock, at $25.00 per share plus an amount equal to accrued and unpaid dividends. 2. Cash and Cash Equivalents Pro forma adjustments to cash and cash equivalents consist of the following: Proceeds of long-term borrowings (net of financing costs of $1,600) $310,490 Cash consideration paid in the Merger (353,531) Repayment of TakeCare long-term obligations, including current portion (37,500) Payment of estimated costs of the Merger (11,459) Payment of Excess Expenses of TakeCare (see Note 1) (8,000) _________ ($100,000) ========= The pro forma financial statements assume that the holders of TakeCare Common Stock will elect to receive cash of $27.38 per share as Merger Consideration in lieu of the Series B Preferred Stock. (See Note 9 for summary pro forma financial information assuming holders of TakeCare Common Stock elect to receive approximately 1.10 shares of Series B Preferred Stock as Merger Consideration.) The TakeCare long-term obligations are being retired immediately after the Closing as required by TakeCare's existing debt agreement upon a change in control of TakeCare. 3. Excess of Purchase Price Over Net Assets Acquired Pro forma adjustments to the excess of purchase price over net assets acquired consist of the following: Resulting from the Merger $1,015,185 Elimination of previously recorded excess of purchase price over net assets acquired of TakeCare (net of accumulated amortization of $13,726) (223,047) ___________ $792,138 =========== Management has not completed an allocation of the purchase price of TakeCare to the assets and liabilities that will be acquired. However, management believes that the amounts reflected on TakeCare's historical consolidated balance sheet as tangible assets and liabilities approximate the fair market values of such assets and liabilities and accordingly, such assets have not been adjusted in the accompanying pro forma financial statements. 4. Long-term Obligations Pro forma adjustments to long-term obligations consist of the following: Current Long-Term Portion Portion Total _______ _________ ________ Borrowings to finance the Merger $50,000 $262,090 $312,090 Repayment of TakeCare long-term obligations (15,000) (22,500) (37,500) ________ _________ _________ $35,000 $239,590 $274,590 ======== ========= ========= 5. Stockholders' Equity Pro forma adjustments to Series A Preferred Stock, FHP Common Stock, paid-in capital and retained earnings consist of the following: Total Series A Common Paid-in Retained Stockholders' Preferred Stock Stock Capital Earnings Equity _______________ _____ _______ ________ ___________ Series A Preferred Stock issued $516,480 $ - $ - $ - $516,480 Common Stock issued 310 154,634 154,944 Elimination of equity accounts of TakeCare (1,291) (157,084) (106,859) (265,234) _________ _______ ________ _________ ________ $516,480 ($981) ($2,450) ($106,859) $406,190 ========= ======= ========= ========== ========= 6. General, Administrative and Marketing Pro forma adjustments to general, administrative and marketing expense, principally amortization, consist of the following: TakeCare Consolidated TakeCare Consolidated Pro Forma Pro Forma Pro Forma Pro Forma Nine Nine Year Year Months Months Ended Ended Ended Ended June 30, June 30, March 31, March 31, 1993 1993 1994 1994 _________ ____________ _________ ____________ Amortization of excess purchase price over net assets acquired resulting from the Merger $ - $25,380 $ - $19,035 Elimination of amortization of excess of purchase price over net assets acquired previously recorded by TakeCare (4,395) (5,238) Elimination of amortization of excess purchase price over net assets acquired of Comprecare (5,330) (830) __________ _________ _________ __________ ($5,330) $20,985 ($830) $13,797 ========== ========= ========= ========== The excess purchase price over net assets acquired resulting from the Merger will be amortized on a straight-line basis over 40 years. 7. Interest Income Pro forma adjustments to interest income consist of the following: Pro Forma Consolidated ___________________________ Nine Months Year Ended Ended June 30, 1993 March 31, 1994 _____________ _______________ Elimination of interest income (computed based on historical rates of return on investment of cash) used to finance a portion of the purchase price (4.67% for the year ended June 30, 1993 and 4.45% for the nine months ended March 31, 1994) $4,670 $3,338 ============== =============== 8. Interest Expense Pro forma adjustments to interest expense consist of the following: Pro Forma Pro Forma Pro Forma Pro Forma TakeCare Consolidated TakeCare Consolidated Nine Nine Year Year Months Months Ended Ended Ended Ended June 30, June 30, March 31, March 31, 1993 1993 1994 1994 _________ ____________ _________ ____________ Interest expense on long-term obliga- tions to finance the Merger $ - $16,041 $ - $12,031 Elimination of interest expense on retired long- term obligations of TakeCare (3,463) (1,866) Amortization of debt financing costs resulting from the long- term borrowings to finance the Merger 320 240 Elimination of deferred debt financing costs of TakeCare (476) (199) Elimination of interest expense on long-term obliga- tions retired as a result of TakeCare's acquisition of Comprecare (1,309) (241) ____________ __________ ___________ _________ ($1,309) $12,422 ($241) $10,206 ============ ========== =========== ========= The interest rate on the long-term obligations incurred to finance the Merger is a floating rate based on the principal lender's prime rate in the London Interbank market plus 0.6% which, based upon current rates, would be approximately 5.1%. Each 1/4% increase in such floating rate would decrease annual pro forma consolidated net income by $398 and pro forma consolidated earnings per share attributable to Common Stock by $0.01 per annum. 9. Earnings Per Share Earnings per share is based on the weighted average shares of outstanding Common Stock and common stock equivalents during the respective periods. The pro forma financial statements assume the holders of TakeCare common stock will elect to receive cash in lieu of Series B Preferred Stock issued as of the effective date. The inclusion of additional common shares assuming the conversion of the Series A Preferred Stock would have been antidilutive for the year ended June 30, 1993 and the nine months ended March 31, 1994 for both the primary and fully diluted pro forma earnings per share computations. Accounting rules governing the computation of earnings per share require that dividends on cumulative preferred stock, whether declared or not, be deducted in the earnings per share computation. The shares used in the computation of primary earnings per share were as follows: Pro Forma Consolidated _________________________________ Year Ended Nine Months Ended June 30, 1993 March 31, 1994 _____________ _________________ Common and common stock equivalents prior to the Merger 33,270 33,659 Assumed Common and common stock equivalents issued as part of the Merger 6,446 6,446 ______ ______ 39,716 40,105 ====== ====== Pro forma adjustments to dividends related to Series A Preferred Stock consist of the following: Pro Forma Consolidated ___________________________ Nine Months Year Ended Ended June 30, 1993 March 31, 1994 _____________ ______________ Cash dividends on Series A Preferred Stock issued in the Merger (dividend at 5%) $25,824 $19,368 ======= ======= The pro forma financial statements have been prepared assuming that all Series A Preferred Stock is outstanding for the year ended June 30, 1993 and the nine months ended March 31, 1994. As stated above, the pro forma financial statements assume the holders of TakeCare Common Stock will elect to receive cash in lieu of the Series B Preferred Stock. Accordingly, earnings per share has been calculated assuming that no shares of Series B Preferred Stock will be issued. If all holders of TakeCare Common Stock were to elect to receive Series B Preferred Stock rather than cash, the principal changes to the historical and pro forma unaudited condensed consolidated statements of income would be as follows, assuming an interest rate equal to 93% of the thirty-year average yield published by the Federal Reserve Board as provided for in the Merger Agreement (approximately 6.9% for this pro forma calculation - see Note 1 for further explanation of range of possible dividends): Pro Forma Consolidated ___________________________ Nine Months Year Ended Ended June 30, 1993 March 31, 1994 _____________ ______________ Operating income $103,039 $99,198 Interest income 18,477 17,699 Interest expense (309) (3,897) Income taxes (59,392) (55,370) _________ ________ Net income 61,815 57,630 Series A Preferred Stock dividend (25,824) (19,368) Series B Preferred Stock dividend (24,264) (18,198) _________ ________ Net income attributable to Common Stock $11,727 $20,064 ========= ======= Earnings per share attributable to Common Stock $0.30 $0.50 ========= ======== Weighted average number of shares 39,716 40,105 ========= ======== 10. Income Taxes Pro forma adjustment to the provision for income taxes consist of the following: Pro Forma Pro Forma Pro Forma Pro Forma TakeCare Consolidated TakeCare Consolidated Nine Months Nine Months Year Ended Year Ended Ended Ended June 30, June 30, March 31, March 31, 1993 1993 1994 1994 __________ ____________ ___________ ___________ Income tax effect of: Decrease in interest income $ - ($2,288) $ - ($1,635) Elimination of TakeCare interest expense and debt financing costs 1,930 1,012 Increase in interest expense and debt financing costs from Merger financing (8,017) (6,013) Elimination of Comprecare interest expense 641 118 Estimated increase in effective tax rate to 49% 5,222 4,290 Decrease in cost of health care 1,280 __________ _____________ ___________ __________ $1,921 ($3,153) $118 ($2,346) ========== ============= =========== ========== 11. Other Other pro forma adjustments include the restructuring of an agreement with a physician group resulting in a reduction of pro forma cost of health care ($2,612), recognition of deferred debt financing costs ($1,600), elimination of deferred debt financing costs related to debt of TakeCare retired in the Merger ($2,458) and accrual of transaction expenses incurred by TakeCare ($3,000) and certain bonuses that TakeCare may authorize. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FHP INTERNATIONAL CORPORATION By /s/ Kenneth S. Ord Kenneth S. Ord Senior Vice President and Chief Financial Officer Date: August 30, 1994 -----END PRIVACY-ENHANCED MESSAGE-----