-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IJoO/w+8gYbxJdrNONI3QK+z+cYtROAcg3V9p2c39/DPb4+Z54ONnBfjtKfmoIvA PiZOXTc1vrw6HKA6gr1zSw== 0000950130-97-003026.txt : 19970701 0000950130-97-003026.hdr.sgml : 19970701 ACCESSION NUMBER: 0000950130-97-003026 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970630 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHYSICIANS HEALTH SERVICES INC CENTRAL INDEX KEY: 0000867098 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-HEALTH SERVICES [8000] IRS NUMBER: 061116976 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-21098 FILM NUMBER: 97633003 BUSINESS ADDRESS: STREET 1: 120 HAWLEY LANE STREET 2: 1243 BROADRICK DRIVE CITY: TRUMBULL STATE: CT ZIP: 06611 BUSINESS PHONE: 2033816400 11-K 1 FORM 11-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) X ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES ----------- EXCHANGE ACT OF 1934 [FEE REQUIRED]. For the FISCAL YEAR ENDED December 31, 1996 --------------------------------- OR ___ TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]. For the transition period from ______________to_______________ Commission file number 0-21098 --------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: Physicians Health Services, Inc. Pension Plan B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: Physicians Health Services, Inc. One Far Mill Crossing Shelton, CT 06484-0944 -2- REQUIRED INFORMATION Financial Statements and Exhibits Index Financial Statements: Page No. -------- 1. Financial Statements of the Physicians Health Services, Inc. Pension Plan: Independent Auditors' Report F-1 Statements of Net Assets Available for Plan Benefits F-2 Statements of Changes in Net Assets Available for Plan Benefits F-4 Notes to Financial Statements F-7 2. Schedules: Schedule I: Assets Held for Investment Purposes S-1 Schedule II: Schedule of Reportable Transactions S-2 Exhibit 1: Auditors' Consent Pursuant to the requirements of the Securities Exchange Act of 1934, the Trustees (or other persons who administer the Employee Benefit Plan) have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. Physicians Health Services, Inc. Pension Plan By:__________________________________ Craig S. Dupont Vice President, Finance Date: June 13, 1997 REPORT OF INDEPENDENT AUDITORS Physicians Health Services, Inc. Pension Committee We have audited the accompanying statements of net assets available for plan benefits of the Physicians Health Services, Inc. Pension Plan (the "Plan") as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for plan benefits for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1996, and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the financial statements. The Fund Information in the statement of net assets available for plan benefits and the statement of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, are fairly stated in all material respects in relation to the financial statements taken as a whole. ERNST & YOUNG LLP June 13, 1997 F-1 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION DECEMBER 31, 1996
PHS INT'L AGGRESSIVE SBS GOVERNMENT GUARANTEED STOCK EQUITY GROWTH BALANCED INCOME INV. CONTRACT TOTAL FUND FUND FUND FUND FUND FUND Investments: Common Stock of Physicians Health Services, Inc. at fair value: 26,227 shares (cost $695,506) $ 386,848 $386,848 International Equity Fund 299,474 $299,474 Aggressive Growth Equity Fund 2,019,344 $2,019,344 SBS Balanced Fund 1,367,564 $1,367,564 Government Income Fund 211,942 $211,942 Guaranteed Investment Contract Fund 1,284,393 $1,284,393 ---------------------------------------------------------------------------------- Total investments 5,569,565 386,848 299,474 2,019,344 1,367,564 211,942 1,284,393 Cash and cash equivalents 37 37 Employer contributions and interfund transfers receivable (payable) 209,730 214,913 83,357 409,000 293,516 49,531 (840,587) ---------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $5,779,332 $601,798 $382,831 $2,428,344 $1,661,080 $261,473 $ 443,806 ==================================================================================
See accompanying notes to financial statements. F-2 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION DECEMBER 31,1995
PHS INT'L AGGRESSIVE SBS GOVERNMENT GUARANTEED STOCK EQUITY GROWTH BALANCED INCOME INV. CONTRACT TOTAL FUND FUND FUND FUND FUND FUND Investments: Common Stock of Physicians Health Services, Inc. at fair value: 23,159 shares (cost $584,432) $ 857,171 $857,171 International Equity Fund 225,321 $225,321 Aggressive Growth Equity Fund 1,521,320 $1,521,320 SBS Balanced Fund 1,016,068 $1,016,068 Government Income Fund 214,110 $214,110 Guaranteed Investment Contract Fund 947,309 $ 947,309 -------------------------------------------------------------------------------------- Total investments 4,781,299 857,171 225,321 1,521,320 1,016,068 214,110 947,309 Cash and cash equivalents 14 14 Employer contributions and interfund transfers receivable (payable) 135,373 125,354 62,665 305,971 216,473 49,889 (624,979) -------------------------------------------------------------------------------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $4,916,686 $982,539 $287,986 $1,827,291 $1,232,541 $263,999 $ 322,330 ======================================================================================
See accompanying notes to financial statements. F-3 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1996
PHS INT'L AGGRESSIVE SBS GOVERNMENT GUARANTEED STOCK EQUITY GROWTH BALANCED INCOME INV. CONTRACT TOTAL FUND FUND FUND FUND FUND FUND Employer contributions $1,180,809 $ 223,479 $ 97,517 $ 402,242 $ 307,011 $ 64,490 $ 86,070 Investment income: Interest 275 177 98 Dividends -------------------------------------------------------------------------------------------------- 275 177 - - - - 98 -------------------------------------------------------------------------------------------------- Total additions 1,181,084 223,656 97,517 402,242 307,011 64,490 86,168 Withdrawals and distributions to (185,726) (33,526) (12,264) (72,242) (57,841) (2,013) (7,840) participants (34,399) (2,224) (2,408) (15,278) (10,210) (1,713) (2,566) Investment expenses -------------------------------------------------------------------------------------------------- Total deductions (220,125) (35,750) (14,672) (87,520) (68,051) (3,726) (10,406) Interfund transfers - 33,085 (7,627) 37,901 6,854 (71,217) 1,004 Net realized gain (loss) on securities sold or distributed 71,841 (20,335) 860 29,085 18,790 5,802 37,639 Changes in unrealized appreciation of investments (170,154) (581,397) 18,767 219,345 163,935 2,125 7,071 -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets available for plan benefits 862,646 (380,741) 94,845 601,053 428,539 (2,526) 121,476 Net assets available for plan benefits December 31, 1995 4,916,686 982,539 287,986 1,827,291 1,232,541 263,999 322,330 NET ASSETS AVAILABLE FOR -------------------------------------------------------------------------------------------------- PLAN BENEFITS, DECEMBER 31, 1996 $5,779,332 $ 601,798 $ 382,831 $2,428,344 $1,661,080 $261,473 $ 443,806 ==================================================================================================
See accompanying notes to financial statements. F-4 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1995
PHS INT'L AGGRESSIVE SBS GOVERNMENT GUARANTEED STOCK EQUITY GROWTH BALANCED INCOME INV. CONTRACT TOTAL FUND FUND FUND FUND FUND FUND Employer contributions $ 831,115 $154,369 $ 74,124 $ 284,678 $ 211,600 $ 56,756 $ 49,588 Investment income: Interest 387 276 111 Dividends ------------------------------------------------------------------------------------------------ 387 276 - - - - 111 ------------------------------------------------------------------------------------------------ Total additions 831,502 154,645 74,124 284,678 211,600 56,756 49,699 Withdrawals and distributions to participants (229,248) (9,889) (10,004) (44,988) (74,106) (78,122) (12,139) Investment expenses (26,695) (1,548) (2,548) (11,012) (7,310) (1,972) (2,305) ------------------------------------------------------------------------------------------------ Total deductions (255,943) (11,437) (12,552) (56,000) (81,416) (80,094) (14,444) Interfund transfers - 249,727 (129,601) (55,831) (30,522) (40,457) 6,684 Net realized gain (loss) on securities sold or distributed 70,323 895 (3,378) 24,746 21,641 7,368 19,051 Changes in unrealized appreciation of investments 764,035 224,016 12,109 292,390 193,603 22,969 18,948 ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets available for plan benefits 1,409,917 617,846 (59,298) 489,983 314,906 (33,458) 79,938 Net assets available for plan benefits, December 31, 1994 3,506,769 364,693 347,284 1,337,308 917,635 297,457 242,392 ------------------------------------------------------------------------------------------------ NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31, 1995 $4,916,686 $982,539 $ 287,986 $1,827,291 $1,232,541 $ 263,999 $ 322,330 ================================================================================================
See accompanying notes to financial statements. F-5 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION YEAR ENDED DECEMBER 31, 1994
PHS INT'L AGGRESSIVE SBS STOCK EQUITY GROWTH BALANCED TOTAL FUND FUND FUND FUND Employer contributions $ 679,137 $ 89,002 $ 93,815 $ 254,355 $ 166,776 Investment income: Interest 4,531 239 243 727 469 Dividends 28,737 ------------------------------------------------------------------ 33,268 239 243 727 469 ------------------------------------------------------------------ Total additions 712,405 89,241 94,058 255,082 167,245 Withdrawals and distributions to participants (78,976) (4,713) (1,835) (8,369) (9,030) Investment expenses (15,534) (564) (1,400) (4,384) (2,892) ------------------------------------------------------------------ Total deductions (94,510) (5,277) (3,235) (12,753) (11,922) Interfund transfers - 230,372 264,586 1,012,406 729,155 Net realized gain (loss) on securities sold or distributed (129,483) 1,634 39 7,176 2,568 Changes in unrealized appreciation (depreciation) of 194,693 48,723 (8,164) 75,397 30,589 investments ------------------------------------------------------------------ Net increase (decrease) in net assets available for 683,105 364,693 347,284 1,337,308 917,635 plan benefits Net assets available for plan benefits, December 31, 1993 2,823,664 - - - - ----------------------------------------------------------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, $3,506,769 $364,693 $ 347,284 $1,337,308 $ 917,635 DECEMBER 31, 1994 ================================================================== GOVERNMENT GUARANTEED MONEY WRIGHT GROWTH INCOME INV. MARKET BALANCED EQUITY FUND CONTRACT FUND FUND FUND FUND Employer contributions $ 53,601 $ 28,857 ($2,119) ($1,402) ($3,748) Investment income: Interest 226 302 416 912 997 Dividends 9,181 15,067 4,489 ----------------------------------------------------------------- 226 302 9,597 15,979 5,486 ----------------------------------------------------------------- Total additions 53,827 29,159 7,478 14,577 1,738 Withdrawals and distributions to participants (3,979) (11,967) (16,877) (5,052) (17,154) Investment expenses (651) (676) (1,443) (1,731) (1,793) ----------------------------------------------------------------- Total deductions (4,630) (12,643) (18,320) (6,783) (18,947) Interfund transfers 247,844 209,762 (640,528) (972,184) (1,081,413) Net realized gain (loss) on securities sold or (1) 229 - (43,202) (97,926) distributed Changes in unrealized appreciation (depreciation) of 417 15,885 - (8,170) 40,016 investments ----------------------------------------------------------------- Net increase (decrease) in net assets available for plan benefits 297,457 242,392 (651,370) (1,015,762) (1,156,532) Net assets available for plan benefits, December 31, 1993 - - 651,370 1,015,762 1,156,532 ----------------------------------------------------------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, DECEMBER 31, 1994 $ 297,457 $ 242,392 $ 0 $ 0 $ 0 =================================================================
See accompanying notes to financial statements. F-6 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 1. DESCRIPTION OF PLAN The following description of the Physicians Health Services, Inc. Pension Plan (the "Plan") provides general information. Participants should refer to their Summary Plan Description for a more complete description of the Plan's provisions. General: The Plan is a defined contribution plan which covers substantially all employees of Physicians Health Services, Inc. and its wholly owned subsidiaries (the "Employer") who have completed six months of service and have attained 20 1/2 years of age. The Plan provides for retirement, death and disability benefits. Contributions: The Employer has agreed to voluntarily contribute to the Plan up to 5% of total compensation of all eligible employees. The allocation of this contribution is required to meet the permitted disparity requirements of Section 401(1) of the Internal Revenue Code ("IRC") effective January 1, 1989. It is the Employer's policy to fund amounts as accrued. Forfeitures are used to reduce the contributions of the Employer for the Plan year in which such forfeitures occur. Vesting: Each participant's account is credited with the allocation of the Employer's contribution and Plan earnings. F-7 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. DESCRIPTION OF PLAN (CONTINUED) Participants vest in the plan benefits as follows: Years of Service Percentage ---------------- ---------- 2 or less 0% 3 50% 4 75% 5 100% A participant must be employed on the last day of the Plan year in order to be credited with an allocation of the Employer's contribution for that year. Investments: Upon enrollment, each participant shall direct that amounts contributed to their accounts be invested in one or more of the investment programs set forth below in 5% increments. The investment programs of the Plan effective as of July 1, 1994 are as follows: The Physicians Health Services, Inc. Stock Fund is invested in the Class A Common Stock of Physicians Health Services, Inc. The International Equity Fund is invested in a diversified portfolio of international equities as evidenced by American Depository Receipts, which are traded as U.S. share equivalents backed by specific shares of the underlying foreign currencies. The Aggressive Growth Fund is invested in a portfolio of high quality, smaller sized growth companies that are widely diversified as to industry and number of securities held. The SBS Balanced Fund is invested in a combination of high quality equity and near term bonds with a conservative mix range of 40% to 60% equities and 60% to 40% bonds of the total fund. The Government Income Fund is invested in U.S. Treasury Securities with a maximum average maturity of five years and none longer than 10 years. The Guaranteed Investment Contract ("GIC") Fund is invested in insurance investment contracts, alternative synthetic GICs and bank investment contracts issued by highly rated insurance investment companies and banks, and in cash equivalents designed to provide stable investment returns with a high degree of capital protection. F-8 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 1. DESCRIPTION OF PLAN (CONTINUED) Prior to July 1, 1994, participants in the Plan could elect to invest their contributions in 10% increments into the following funds: The Money Market Fund that invested in short-term liquid investments such as short-term money market instruments, certificates of deposit and U.S. Treasury Bills. The Wright Balanced Fund that invested in mutual funds including common and preferred stocks and bonds. The Growth Equity Fund that invested in a mutual fund of selected Blue Chip Equity Securities. At December 31, 1996, there was a total of 562 participants in the Plan. The number of participants in each fund was as follows:
Physicians Health Services, Inc. Stock Fund 349 International Equity Fund 221 Aggressive Growth Fund 474 SBS Balanced Fund 405 Government Income Fund 157 Guaranteed Investment Contract Fund 158
The total number of participants in the Plan is less than the sum of the number of participants shown above because many were participating in more than one fund. Withdrawals: Withdrawals can only be made under certain circumstances, including early or normal retirement, death, disability and termination of employment. Amounts allocated to the accounts of such participants which have not yet been paid at December 31, 1996 and 1995 amounted to $70,617 and $34,453 respectively. The Employer has the right under the Plan to terminate the Plan at any time. In the event of termination of the Plan, the net assets of the Plan are to be set aside first for the payment of vested benefits, and any remaining assets shall increase benefits otherwise payable on a proportionate basis. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting: The accompanying financial statements have been prepared on the accrual basis of accounting and present the net assets available for plan benefits and the changes in net assets available for plan benefits of the Plan. F-9 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Investment Valuation: The investment in the Physicians Health Services, Inc. Stock Fund is stated at fair value based upon the closing sales price on the National Association of Securities Dealers Automated Quotation National Market System. The closing price of Physicians Health Services, Inc. Class A Common Stock was $14.75 and $37.00 per share at December 31, 1996 and 1995, respectively. The investments in the International Equity Fund, the Aggressive Growth Fund, the SBS Balanced Fund and the Government Income Fund are stated at fair values based on the market values of the underlying securities in the respective portfolios plus investment income credited to the account. For the Guaranteed Investment Contract Fund, the fair value represents cost plus accrued interest income on the underlying contracts. Such accrued interest income is treated as unrealized until such time as units of the fund are sold or disposed of at which time the unrealized amounts are reported as realized. The change in the difference between fair value and the cost of investments is reported in the statement of changes in net assets available for plan benefits as unrealized appreciation (depreciation) of investments. Realized gains (losses) from the sale or distribution of investments represents the difference between the proceeds received and the cost of investments sold determined by the average cost method for the six month period ended December 31, 1994, and for the years ended December 31, 1995 and 1996. For the six month period ended June 30, 1994, the cost of investments sold was determined by the specific identification method. Interfund Transfers: Interfund transfers for 1994 include the transfer of funds from the Money Market, Wright Balanced and Growth Equity Funds into the new investment programs established effective July 1, 1994. Expenses of the Plan: All administrative expenses incurred by the Plan are paid by the Employer. Use of Estimates: The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. F-10 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. INVESTMENTS The unrealized appreciation (depreciation) of investments included in Plan net assets is as follows:
BALANCE AT 1994 BALANCE AT 1995 BALANCE AT 1996 BALANCE AT DEC 31, 1993 CHANGE DEC 31, 1994 CHANGE DEC 31, 1995 CHANGE DEC 31, 1996 ---------------------------------------------------------------------------------------------- PHS Stock Fund $ - $ 48,723 $ 48,723 $224,016 $272,739 $(581,397) $(308,658) International Equity Fund - (8,164) (8,164) 12,109 3,945 18,767 22,712 Aggressive Growth Fund - 75,397 75,397 292,390 367,787 219,345 587,132 SBS Balanced Fund - 30,589 30,589 193,603 224,192 163,935 388,127 Government Income Fund - 417 417 22,969 23,386 2,125 25,511 Guaranteed Investment Contract Fund - 15,885 15,885 18,948 34,833 7,071 41,904 Wright Balanced Fund 8,170 (8,170) - - - - - Growth Equity Fund (40,016) 40,016 - - - - - ---------------------------------------------------------------------------------------------- Total $(31,846) $194,693 $162,847 $764,035 $926,882 $(170,154) $ 756,728 ==============================================================================================
The net realized gain (loss) on securities sold or distributed was as follows:
1994 1995 ----------------------------------------------- ----------------------------------------- NET NET AMOUNT REALIZED AMOUNT REALIZED REALIZED COST GAIN(LOSS) REALIZED COST GAIN(LOSS) ----------------------------------------------- ----------------------------------------- PHS Stock Fund $ 27,780 $ 26,146 $ 1,634 $ 7,024 $ 6,129 $ 895 International Equity Fund 47,725 47,686 39 131,982 135,360 (3,378) Aggressive Growth Fund 127,527 120,351 7,176 137,685 112,939 24,746 SBS Balanced Fund 58,178 55,610 2,568 157,592 135,951 21,641 Government Income Fund 19,040 19,041 (1) 119,548 112,180 7,368 Guaranteed Investment Contract Fund 152,356 152,127 229 681,645 662,594 19,051 Wright Balanced Fund 964,999 1,008,201 (43,202) - - - Growth Equity Fund 1,055,622 1,153,548 (97,926) - - - ----------------------------------------------- ----------------------------------------- Total $2,453,227 $2,582,710 $(129,483) $1,235,476 $1,165,153 $70,323 =============================================== ========================================= 1996 ---------------------------------------------- NET AMOUNT REALIZED REALIZED COST GAIN(LOSS) ---------------------------------------------- PHS Stock Fund $ 43,848 $ 64,183 $(20,335) International Equity Fund 20,842 19,982 860 Aggressive Growth Fund 110,200 81,115 29,085 SBS Balanced Fund 76,449 57,659 18,790 Government Income Fund 62,525 56,723 5,802 Guaranteed Investment Contract Fund 814,388 776,749 37,639 Wright Balanced Fund - - - Growth Equity Fund - - - ---------------------------------------------- Total $1,128,252 $1,056,411 $ 71,841 ==============================================
F-11 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. INVESTMENTS (CONTINUED) The fair value of investments held which exceeded 5% of net assets available for plan benefits at December 31, were as follows:
AT DECEMBER 31, ------------------------ ISSUER DESCRIPTION 1996 1995 ------------------------ Physicians Health Services, Inc. Physicians Health Services, Inc. $ 386,848 $ 857,171 Stock Fund Smith Barney Corporate Trust International Equity Fund $ 299,474 $ 225,321 International Equity Fund 1 Smith Barney Corporate Trust Aggressive Growth Equity Small-Cap Equity Fund 5 Fund $2,019,344 $1,521,320 Smith Barney Corporate Trust Flexible Growth Balanced SBS Balanced Fund $1,367,564 $1,016,068 Fund 2 Smith Barney Corporate Trust Guaranteed Investment Guaranteed Investment Contract Fund $1,284,393 $ 947,309 Contract Income Fund 4
F-12 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 4. INCOME TAX STATUS The Internal Revenue Service ruled that the Plan qualifies under Section 401(a) of the Internal Revenue Code ("IRC") and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Pension Plan Committee of Physicians Health Services, Inc. is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 5. PARTY IN INTEREST TRANSACTIONS Transactions with parties in interest during 1996 were as follows:
SALES NET REALIZED DESCRIPTION OF TRANSACTIONS COST PROCEEDS (LOSS) - --------------------------- ---- -------- ------ Purchased 5,490 shares of Physicians Health Services, Inc. Class A Common Stock $175,257 $ - $ - Disposed of 2,422 shares of Physicians Health Services, Inc. Class A Common Stock $ 64,183 $43,848 ($20,335)
6. SUBSEQUENT EVENT (UNAUDITED) On May 8, 1997, Physicians Health Services, Inc. ("Parent Company") and Foundation Health Systems, Inc. ("FHS") executed a merger agreement pursuant to which FHS would acquire all of the shares of common stock of the Parent Company for $29.25 per share in cash, or a total consideration to the Parent Company's stockholders of approximately $280 million. FHS announced that it intends to finance the purchase with a combination of cash and bank debt. As part of the transaction, the Parent Company has entered into a voting trust agreement with the Greater Bridgeport Individual Practice Association ("GBIPA"), which owned at April 30, 1997 shares constituting approximately 61% of the voting power of the Parent Company. The agreement stipulates that such shares will be voted in favor of the transaction by GBIPA. The transaction is subject to certain closing conditions, including receipt of regulatory approvals and entering into certain agreements with Guardian Life Insurance Company of America. This transaction is expected to close by the end of 1997. F-13 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1996
NUMBER FAIR DESCRIPTION OF INVESTMENT OF UNITS COST VALUE - ------------------------- -------- ---- ----- PHS STOCK FUND - -------------- Physicians Health Services, Inc. Class A 26,227 $ 695,506 $ 386,848 Common Stock INTERNATIONAL EQUITY FUND - ------------------------- Diversified portfolio of equity investments Smith Barney Corporate Trust 26,860 276,762 299,474 International Equity Fund 1 AGGRESSIVE GROWTH FUND - ---------------------- Diversified portfolio of equity investments Smith Barney Corporate Trust Small Cap 23,635 1,432,212 2,019,344 Equity Fund 5 SBS BALANCED FUND - ----------------- Portfolio of equity investments and near term bonds Smith Barney Corporate Trust Flexible Growth Balanced Fund 2 22,557 979,437 1,367,564 GOVERNMENT INCOME FUND - ---------------------- Portfolio of U.S. Treasury Securities Smith Barney Corporate Trust Intermediate Government Income Fund 2 9,209 186,431 211,942 GUARANTEED INVESTMENT CONTRACT FUND - ----------------------------------- Portfolio of fixed interest rate contracts Smith Barney Corporate Trust Guaranteed Investment Contract Income Fund 4 97,996 1,242,489 1,284,393 ------------ -------------- $4,812,837 $5,569,565 ============ ==============
S-1 PHYSICIANS HEALTH SERVICES, INC. PENSION PLAN SCHEDULE OF REPORTABLE TRANSACTIONS YEAR ENDED DECEMBER 31, 1996
TOTAL NUMBER NUMBER PURCHASE SELLING COST OF NET GAIN ----------------- DESCRIPTION OF ASSETS * OF UNITS PRICE PRICE ASSET REALIZED PURCHASES SALES - ------------------------------------------------------------------------------------------------------------------------------------ CATEGORY (i) - INDIVIDUAL TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS Aggressive Growth Fund 4,137 $ 319,795 $ 319,795 1 Guaranteed Investment 298,869 298,869 1 Contract Fund 23,848 277,668 277,668 1 21,831 $ 795,788 758,745 $ 37,043 1 63,759 CATEGORY (iii) - A SERIES OF TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS Aggressive Growth Fund 4,641 359,794 359,794 3 1,345 110,200 81,115 29,085 16 SBS Balanced Fund 4,461 245,220 245,220 5 1,334 76,449 57,659 18,790 16 Guaranteed Investment Contract Fund 86,518 1,106,762 1,106,762 9 65,199 814,388 776,749 37,639 17
*All transactions conducted with Smith Barney Corporate Trust. There were no category (ii) or (iv) reportable transactions during 1996. S-2 PHYSICIANS HEALTH SERVICES, INC. Annual Report on Form 11-K for the Fiscal Year Ended December 31, 1996 Exhibit No. ----------- 1 Auditor's Consent EX-1 2 CONSENT OF ERNST & YOUNG LLP EXHIBIT 1 CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8, No. 33-81196) pertaining to the Physicians Health Services, Inc. Pension Plan of our report dated June 13, 1997, with respect to the financial statements and schedules of the Physicians Health Services, Inc. Pension Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1996. Ernst & Young LLP Stamford, Connecticut June 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----