<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K/A
Amendment No. 1 to
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 31, 1999
ADVANCE PARADIGM, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21447 75-2493381
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
545 E. John Carpenter Freeway, Suite 1570, Irving, Texas 75062
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (972) 830-6199
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 15, 1999, Advance Paradigm, Inc. (the "Company") filed a
Current Report on Form 8-K (the "Form 8-K") pertaining to its March 31, 1999
acquisition of Foundation Health Pharmaceutical Services, Inc. ("FHPS"), the
parent company of Foundation Health Systems, Inc.'s pharmacy benefit management
company, Integrated Pharmaceutical Services, Inc. At the time of the filing of
the Form 8-K, it was impractical for the Company to provide financial statements
for FHPS or pro forma financial information for the Company relative to the
acquisition of FHPS. Pursuant to the instructions for Item 7 of the Form 8-K,
the Company hereby amends Item 7 to the Form 8-K to include the previously
omitted information as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired
The financial statements of FHPS are submitted herewith as Exhibit 99.1.
(b) Pro Forma Financial Information
The pro forma combined financial statements are submitted herewith
as Exhibit 99.1.
(c) Exhibits
The following exhibits are filed as part of this report on Form 8-K:
Exhibit No. Exhibit
----------- -------
2.1 Purchase Agreement among Foundation Health Systems,
Inc., Foundation Health Corporation, Foundation
Health Pharmaceutical Services, Inc., Integrated
Pharmaceutical Services, Inc. and Advance Paradigm,
Inc., dated as of February 26, 1999, incorporated by
reference to Exhibit 2.1 of the Company's Current
Report on Form 8-K filed April 15, 1999.
4.1 Warrant Agreement by and between Advance Paradigm,
Inc. and Foundation Health Systems, Inc., dated as
of February 26, 1999, incorporated by reference to
Exhibit 4.1 of the Company's Current Report on Form
8-K filed April 15, 1999.
<PAGE> 3
10.1 Pharmacy Benefit Services Agreement by and between
Advance Paradigm, Inc., Foundation Health Systems,
Inc. and Integrated Pharmaceutical Services, Inc.,
effective as of April 1, 1999, incorporated by
reference to Exhibit 10.1 of the Company's Current
Report on Form 8-K filed April 15, 1999.
10.2 Credit Agreement among Advance Paradigm, Inc., the
Banks named in the Credit Agreement, NationsBanc
Montgomery Securities LLC and NationsBank, N.A.,
dated as of March 31, 1999, incorporated by
reference to Exhibit 10.2 of the Company's Current
Report on Form 8-K filed April 15, 1999.
10.3 Guaranty by each subsidiary of Advance Paradigm,
Inc., in favor of NationsBank, N.A., dated as of
March 31, 1999, incorporated by reference to Exhibit
10.3 of the Company's Current Report on Form 8-K
filed April 15, 1999.
99.1 Audited Financial Statements of Foundation Health
Pharmaceutical Services, Inc. as of December 31,
1998 and for the years ended December 31, 1998 and
1997, and Certain Unaudited Pro Forma Combined
Financial Data.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ADVANCE PARADIGM, INC.
Date: June 11, 1999 By: /s/ David D. Halbert
-----------------------------------
Name: David D. Halbert
Title: Chairman of the Board, Chief
Executive Officer and President
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit
----------- -------
<S> <C>
2.1 Purchase Agreement among Foundation Health Systems,
Inc., Foundation Health Corporation, Foundation
Health Pharmaceutical Services, Inc., Integrated
Pharmaceutical Services, Inc. and Advance Paradigm,
Inc., dated as of February 26, 1999, incorporated by
reference to Exhibit 2.1 of the Company's Current
Report on Form 8-K filed April 15, 1999.
4.1 Warrant Agreement by and between Advance Paradigm,
Inc. and Foundation Health Systems, Inc., dated as
of February 26, 1999, incorporated by reference to
Exhibit 4.1 of the Company's Current Report on Form
8-K filed April 15, 1999.
10.1 Pharmacy Benefit Services Agreement by and between
Advance Paradigm, Inc., Foundation Health Systems,
Inc. and Integrated Pharmaceutical Services, Inc.,
effective as of April 1, 1999, incorporated by
reference to Exhibit 10.1 of the Company's Current
Report on Form 8-K filed April 15, 1999.
10.2 Credit Agreement among Advance Paradigm, Inc., the
Banks named in the Credit Agreement, NationsBanc
Montgomery Securities LLC and NationsBank, N.A.,
dated as of March 31, 1999, incorporated by
reference to Exhibit 10.2 of the Company's Current
Report on Form 8-K filed April 15, 1999.
10.3 Guaranty by each subsidiary of Advance Paradigm,
Inc., in favor of NationsBank, N.A., dated as of
March 31, 1999, incorporated by reference to Exhibit
10.3 of the Company's Current Report on Form 8-K
filed April 15, 1999.
99.1 Audited Financial Statements of Foundation Health
Pharmaceutical Services, Inc. as of December 31,
1998 and for the years ended December 31, 1998 and
1997, and Certain Unaudited Pro Forma Combined
Financial Data.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
Report of Independent Public Accountants F-1
Combined Balance Sheets as of December 31, 1998 and 1997 F-2
Combined Statements of Operations and Comprehensive
Income for the Years Ended December 31, 1998 and 1997 F-3
Combined Statements of Parent Company Equity for
the Years Ended December 31, 1998 and 1997 F-4
Combined Statements of Cash Flows for the Years Ended
December 31, 1998 and 1997 F-5
Notes to Combined Financial Statements F-6-F-8
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
Unaudited Pro Forma Combined Financial Statements Headnote F-9
Unaudited Pro Forma Combined Statement of Operations
for the Year Ended March 31, 1999 F-10
Notes to Unaudited Pro Forma Combined Financial Statements F-11
</TABLE>
<PAGE> 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Advance Paradigm, Inc.:
We have audited the accompanying combined balance sheets of Foundation Health
Pharmaceutical Services, Inc. (the "Company" or "FHPS"), as defined in Note 1 to
the combined financial statements, as of December 31, 1998 and 1997, and the
related combined statements of operations and comprehensive income, parent
company equity (deficit), and cash flows for each of the two years then ended.
These financial statements are the responsibility of the Company'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 audits 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 financial position of Foundation Health
Pharmaceutical Services, Inc. as of December 31, 1998 and 1997, and the results
of its operations and cash flows for the years then ended in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
May 14, 1999
F-1
<PAGE> 3
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
COMBINED BALANCE SHEETS--DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
ACCOUNTS RECEIVABLE, net of allowance
for doubtful accounts of $22,000 and $0, respectively $ 37,836,936 $ 36,898,279
------------ ------------
Total assets $ 37,836,936 $ 36,898,279
============ ============
LIABILITIES AND PARENT COMPANY EQUITY
ACCOUNTS PAYABLE $ 45,893,879 $ 31,427,744
PARENT COMPANY (DEFICIT) EQUITY (8,056,943) 5,470,535
------------ ------------
Total liabilities and parent company equity $ 37,836,936 $ 36,898,279
============ ============
</TABLE>
The accompanying notes are an integral part of these
combined financial statements.
F-2
<PAGE> 4
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUES $80,988,185 $53,352,466
COST OF OPERATIONS:
Cost of revenues 71,472,651 49,255,224
Selling, general, and administrative expenses 2,421,770 2,276,545
Parent company allocations 30,170 1,199,552
----------- -----------
Total cost of operations 73,924,591 52,731,321
----------- -----------
NET INCOME BEFORE TAX 7,063,594 621,145
PROVISION FOR INCOME TAXES 3,007,336 268,956
----------- -----------
NET INCOME 4,056,258 352,189
OTHER COMPREHENSIVE INCOME -- --
----------- -----------
COMPREHENSIVE INCOME $ 4,056,258 $ 352,189
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
combined financial statements.
F-3
<PAGE> 5
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
COMBINED STATEMENTS OF PARENT COMPANY EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
<S> <C>
BALANCE, December 31, 1996 $ 3,101,664
Contributions from parent company 2,016,682
Net income 352,189
------------
BALANCE, December 31, 1997 5,470,535
Distributions to parent company (17,583,736)
Net income 4,056,258
------------
BALANCE, December 31, 1998 $ (8,056,943)
============
</TABLE>
The accompanying notes are an integral part of these
combined financial statements.
F-4
<PAGE> 6
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,056,258 $ 352,189
Adjustments to reconcile net income to net cash provided by
operating activities-
Accounts receivable (938,657) (7,296,892)
Accounts payable 14,466,135 4,928,021
--------------- ---------------
Net cash provided by (used in) operating activities 17,583,736 (2,016,682)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from parent company -- 2,016,682
Distributions to parent company (17,583,736) --
--------------- ---------------
Net cash (used in) provided by financing activities (17,583,736) 2,016,682
--------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS -- --
CASH AND CASH EQUIVALENTS, beginning of year -- --
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of year $ -- $ --
=============== ===============
</TABLE>
The accompanying notes are an integral part of these
combined financial statements.
F-5
<PAGE> 7
FOUNDATION HEALTH PHARMACEUTICAL SERVICES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
1. ORGANIZATION:
Foundation Health Pharmaceutical Services, Inc. (FHPS or the "Company") is a
pharmacy benefit management (PBM) company, incorporated in the state of
California which works with health plan sponsors to design and administer
pharmacy benefit programs for health plan members. The pharmacy programs include
formulary development and rebate claim services, and claims adjudication
services. The accompanying combined financial statements of FHPS include the
operations of FHPS, formerly a wholly owned subsidiary of Foundation Health
Systems, Inc. (FHS), and certain acquired assets of Integrated Pharmaceutical
Services, Inc. (IPS), a wholly owned subsidiary of FHPS, as defined in the
Purchase Agreement between FHS, FHPS, IPS, and Advance Paradigm, Inc. dated
February 26, 1999 (the "Acquired Operations").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
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 reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period.
Fair Value of Financial Instruments
The carrying values of receivables and payables approximate the fair values of
those instruments because of their short-term maturities.
Revenue Recognition
Revenues include amounts earned from formulary development, rebate claims
services, and claims adjudication services. Rebate revenues are recognized as
they are earned in accordance with contractual agreements. Certain of these
revenues are based on estimates which are subject to final settlement with the
contract party. Capitation revenues are recognized on a monthly basis based on
plan enrollment in accordance with contractual agreements. Claims processing
fees are recognized when the claims are adjudicated.
Cost of Revenues
Cost of revenues includes pharmacy claims costs associated with capitation
contracts and the health plan sponsor's share of the rebate revenues. Claims
processing expenses are recognized when the processing service is performed.
Certain of these costs are based on estimates which are subject to final
settlement with the contract party.
F-6
<PAGE> 8
Recent Accounting Pronouncements
The Company has adopted SFAS 130, "Reporting Comprehensive Income" effective
January 1, 1998. SFAS 130 established standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. Comprehensive income is defined as the total of net income
and all other non-owner changes in equity. The Company does not have any
non-owner changes in equity other than net income. Comprehensive income and the
cumulative other comprehensive income has been reported in the combined
statements of operations and comprehensive income.
The Company has adopted SFAS 131, "Disclosure about Segments of an Enterprise
and Related Information," effective January 1, 1998. This pronouncement changes
the requirements under which public businesses must report segment information.
The objective of the pronouncement is to provide information about a company's
different types of business activities and different economic environments. SFAS
131 requires companies to select segments based on their internal reporting
system. The Company provides integrated health benefit management services to
its customers, and these services account for all of the Company's revenues.
Therefore, the Company's operations will be reported in one segment.
3. RELATED-PARTY TRANSACTIONS:
Parent Company Equity
The parent company, FHS, maintains a consolidated treasury function. Cash is
advanced to FHPS by the parent to cover disbursements. The parent company
collects all cash received by FHPS. As a result, the intercompany advances to or
from FHPS and the parent company's equity in FHPS have been presented as "Parent
Company Equity (Deficit)" in the accompanying balance sheets.
Allocations
The Company has been charged for certain financial and operational support
services provided by FHS and IPS. IPS charges for such support services were
allocated on a reasonable basis using ratios including such factors as claims
processed, revenues and the level of effort required by employees to perform
tasks related to the Company. The amount of support service costs charged to the
Company for the years ended December 31, 1998 and 1997, and a description of the
related services provided is set forth below:
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
Cost of Revenues Allocations
- ----------------------------
Claims processing fees $ 715,541 $ 1,054,387
--------------- ---------------
Total cost of revenues allocations $ 715,541 $ 1,054,387
=============== ===============
Selling, General, and Administrative Allocations
- ------------------------------------------------
Commissions $ 702,350 $ 557,657
Marketing and sales 389,000 340,158
Accounting and management information processing 345,799 272,304
Data management 149,500 229,829
Other 835,121 876,597
--------------- ---------------
Total selling, general, and administrative allocations $ 2,421,770 $ 2,276,545
=============== ===============
</TABLE>
F-7
<PAGE> 9
Parent Company allocations are made at the discretion of FHS and no formal
written policy exists. In fiscal 1998 and 1997, allocations of $30,170 and
$1,199,522 were made to FHPS, respectively. These allocations are not intended
to represent actual historical or future costs of these services.
<TABLE>
<CAPTION>
Parent Company Allocations
- --------------------------
<S> <C> <C>
FHS legal, executive, and other corporate charges $ 30,170 $ 1,199,552
============ ===========
</TABLE>
4. INCOME TAXES:
The Company's operations are included in the consolidated income tax return of
FHS. The Company has recorded its provision for income taxes in the accompanying
combined financial statements on a separate company basis in accordance with the
asset/liability approach of SFAS No. 109, "Accounting for Income Taxes."
The Company made no income tax payments in 1997 and 1998. These payments were
provided by the Parent Company. Taxes payable and deferred income tax assets and
liabilities are recorded as changes in Parent Company Equity (Deficit). Deferred
taxes reflect the tax consequences on future years of temporary differences
between state taxes incurred and the date such taxes are paid, net of the
federal tax benefit.
The provision for income taxes for the years ended December 31, 1998 and 1997,
differed from the amounts computed by applying the U.S. federal tax rate of 34%
to pretax earnings as a result of the following:
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
Amount Rate Amount Rate
-------------- --------- -------------- ---------
<S> <C> <C> <C> <C>
Tax at U.S federal income tax rate $ 2,401,622 34% $ 211,189 34%
State income taxes, net of federal benefit 605,714 9 57,767 9
-------------- --------- -------------- ---------
Provision for income taxes $ 3,007,336 43% $ 268,956 43%
============== ========= ============== =========
</TABLE>
The income tax provision of $3,007,336 in 1998 and $235,113 in 1997 represents
$221,728 and $19,369 of deferred income tax benefit, respectively, and
$3,229,064 and $288,325 of current income tax expense, respectively.
5. CONCENTRATION OF BUSINESS:
A significant portion of the Company`s revenues result from contracts with
customers. One customer of the Company accounted for approximately 28% and 29%
of the Company's revenues for the years ended December 31, 1997 and 1998,
respectively. Another customer accounted for approximately 13% and 18% of the
Company's revenues for the years ended December 31, 1997 and 1998, respectively.
No other customer accounted for over 10% of the Company's revenues in fiscal
years 1997 or 1998.
6. SUBSEQUENT EVENT:
On March 31, 1999, FHS sold the common stock of FHPS and certain assets of IPS
to Advance Paradigm, Inc. ("API") for a purchase price of $65,000,000 in cash,
net of cash received, and warrants to purchase 200,000 shares of API stock at a
price of $35.50 per share.
F-8
<PAGE> 10
UNAUDITED COMBINED PRO FORMA FINANCIAL INFORMATION
The Unaudited Pro Forma Combined Statement of Operations for the year ended
March 31, 1999, gives effect to the 1999 acquisition of Foundation Health
Pharmaceutical Services, Inc. ("FHPS") as if such transaction had occurred on
April 1, 1998. The audited financial statements of FHPS are as of December 31,
1998, and the year then ended, the most recent fiscal year of FHPS. The
financial statements of FHPS are for a period within 93 days of the registrant's
financial statements and appropriately combined for purposes of these combined
pro forma statements in accordance with SEC Regulation S-X.
Operating income in the accompanying unaudited combined statement of operations
include approximately $2,451,940 of estimated costs allocated to FHPS from its
parent company for certain financial and operational support services. Advance
Paradigm, Inc. ("API") usually implements significant changes to the operations
of the entities that it acquires to enhance profitability. The expected benefits
and cost reductions anticipated by API have not been reflected in the following
unaudited pro forma financial statement. Accordingly, these pro forma financial
statements are not necessarily indicative of the operating results that would
have been achieved had the acquisition of the Acquired Company occurred on April
1, 1998.
The unaudited pro forma financial information is based on the historical
financial statements of Advanced Paradigm, Inc. and the historical financial
statements of FHPS. The pro forma adjustments are based upon available
information. These adjustments are directly attributable to the transaction
referenced above, and are expected to have a continuing impact on API's
business, results of operations, and financial position. The purchase of FHPS
will be accounted for using the purchase method of accounting, pursuant to which
the total cost of the acquisition will be allocated to the tangible and
intangible assets and liabilities acquired based upon their estimated fair
values. The final allocation of the purchase price will be determined upon the
receipt of final analysis of the acquired assets and a review for other
intangible assets, if any.
F-9
<PAGE> 11
ADVANCE PARADIGM, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Advance
Paradigm, Inc. FHPS Pro Forma
Historical Historical(A) Adjustments as Adjusted
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES $ 774,822,000 $ 80,988,185 -- $ 855,810,185
COST OF REVENUES 743,084,000 71,472,651 -- 814,556,651
SELLING, GENERAL AND
ADMINISTRATIVE 13,949,000 2,421,770 2,273,000(B) 18,643,770(F)
PARENT COMPANY ALLOCATIONS -- 30,170 -- 30,170(G)
--------------- --------------- --------------- ---------------
OPERATING INCOME 17,789,000 7,063,594 (2,273,000) 22,579,594
INTEREST INCOME 2,685,000 -- (675,000)(C) 2,010,000
INTEREST EXPENSE -- -- 3,450,000(D) 3,450,000
--------------- --------------- --------------- ---------------
INCOME BEFORE INCOME TAXES 20,474,000 7,063,594 (6,398,000) 21,139,594
PROVISION (BENEFIT) FOR INCOME
TAXES 7,780,000 3,007,336 (2,431,240)(E) 8,356,096
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ 12,694,000 $ 4,056,258 $ (3,966,760) $ 12,783,498
=============== =============== =============== ===============
BASIC:
Net income per share $ 1.24 -- -- $ 1.25
Weighted average shares
outstanding 10,252,145 -- -- 10,252,145
DILUTED:
Net income per share $ 1.09 -- -- $ 1.09
Weighted average shares
outstanding 11,688,101 -- -- 11,688,101(H)
</TABLE>
F-10
<PAGE> 12
ADVANCE PARADIGM, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
MARCH 31, 1999
(A) Reflects the historical revenues and operating expenses for the year
ended December 31, 1998. Operating Expenses include estimated costs
allocated from the parent of FHPS of $2,451,940.
(B) Represents (i) incremental amortization of goodwill of $68,200,000 for
the year ended March 31, 1999, based upon the Company's allocation of
purchase price as if the acquisition of FHPS was completed on April 1,
1998. Goodwill is being amortized over a 30-year period. This reflects a
preliminary allocation of the purchase price.
(C) Reflects the reduction in interest income that would have been foregone
due to the use of $15,000,000 in cash and investments to finance the
acquisition of FHPS.
(D) Reflects additional interest expense and amortization of deferred debt
issuance costs that would have been incurred had the debt incurred to
finance the acquisition of FHPS been outstanding from the beginning of
the period.
(E) Reflects the tax effects, at the Company's effective tax rate of 38%,
that would have been incurred as a result of the above pro forma
adjustments associated with the acquisition of FHPS.
(F) Selling, general, and administrative expenses of FHPS include costs
allocated by its parent company and affiliates for certain financial and
operational support services. API expects to realize cost reductions
associated with the acquisition which have not been reflected in this
statement.
(G) Parent Company allocations are made at the discretion of FHS and no
formal written policy exists. These allocations are not intended to
represent actual historic or future costs of these services.
(H) Does not include the issuance of warrants to purchase 200,000 shares of
common stock of Advance Paradigm, Inc. in connection with the sale of
FHPS because the effect of these shares would be antidilutive.
F-11
