<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
October 29, 1993
RAMSAY HEALTH CARE, INC.
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 0-13849 63-0857352
----------------- ----------- ------------------
<S> <C> <C>
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
One Poydras Plaza
639 Loyola Avenue, Suite 1700
New Orleans, Louisiana 70113
---------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (504) 525-2505
(Not Applicable)
--------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The registrant, through a wholly-owned subsidiary, acquired all of the
capital stock of Florida Psychiatric Management, Inc. ("FPM") on October 29,
1993. This acquisition marked the entry of the registrant into the direct
provision of managed mental health care services. FPM is headquartered in Winter
Park, Florida. FPM was founded, and is continuing its operation, based on the
concept that clinically oriented managed care can control costs and curb
reimbursement abuses while assuring that each patient receives the most
appropriate level of treatment in a quality manner. The consideration for the
acquisition was a combination of $4,000,000 in cash, $2,500,000 of Debentures
(described below) issued by FPM and a contingent earn-out payment based on the
attainment of certain earnings and revenue levels over the ensuing two years.
The aggregate earn-out payment is an amount (in no event to exceed $2,000,000 in
the aggregate) equal to the product of (i) 25%, multiplied by (ii) the positive
excess, if any, of the average consolidated gross revenues of FPM and its
subsidiaries for the fiscal years ending June 30, 1994 and June 30, 1995 over
$6,800,000, multiplied by (iii) the change in operating income factor, a
formula-based factor which will increase or decrease the aggregate earn-out
payment based upon the increase or decrease in the average operating margin
(consolidated net income or loss divided by consolidated gross revenues) of FPM
and its subsidiaries for the fiscal years ending June 30, 1994 and June 30, 1995
over the 1993 operating margin.
The Debentures issued by FPM in connection with the registrant's
acquisition of FPM in the aggregate principal amount of $2,500,000 (the
"Debentures") were issued to the selling stockholders of FPM, including Martin
Lazoritz, Robert W. Pollack and I. Paul Mandelkern. Interest accrues on the
Debentures at a fixed rate of 7% per annum and is payable quarterly, in arrears,
together with installments of principal, until the Debentures mature on October
31, 1996. The Debentures are secured pursuant to a Stock Pledge Agreement dated
October 29, 1993, pursuant to which the Debenture holders have a first priority
lien on all of the common stock of FPM. Pursuant to the Stock Pledge Agreement,
upon a default under the Debentures, the holders thereof have the right to
foreclose upon the common stock of FPM.
The consideration paid for the common stock of FPM was determined in
arms-length negotiations between the registrant and the former stockholders of
FPM.
The cash portion of the purchase price for the common stock of FPM was
funded out of the registrant's cash generated from operations.
2
<PAGE>
All information in this report is given as of October 29, 1993 and
does not reflect any events or circumstances arising after October 29, 1993.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
A. FINANCIAL STATEMENTS
PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma statements of operations are based
on the historical consolidated statements of operations of Ramsay Health Care,
Inc. ("RHCI"), adjusted to give effect to the acquisition of Florida Psychiatric
Management, Inc. (FPM), assuming this acquisition occurred as of July 1, 1992.
The acquisition and the related adjustments are described in the notes thereto.
The following unaudited pro forma condensed balance sheet as of
September 30, 1993 gives effect to the acquisition of FPM as if the acquisition
of FPM occurred on September 30, 1993.
The pro forma financial statements should be read in conjunction with
RHCI's June 30, 1993 consolidated financial statements included in the Annual
Report on Form 10-K and RHCI's September 30, 1993 consolidated financial
statements included on Form 10-Q. The pro forma statements of operations are
presented for informational purposes only and do not purport to represent what
RHCI's results of operations would have been had the acquisition occurred as of
July 1, 1992 and do not purport to represent RHCI's results of operations for
any future period or date, nor do they give effect to any matters other than
those described in the notes thereto.
3
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1993
<TABLE>
<CAPTION>
Pro Forma
RHCI FPM Subtotal Adjustments Pro Forma
------------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net revenues $136,354,000 $6,893,000 $143,247,000 $ 0 $143,247,000
Operating expenses:
Salaries, wages and benefits 63,810,000 2,079,000 65,889,000 0 65,889,000
Other operating expenses 40,454,000 4,358,000 44,812,000 0 44,812,000
Provision for doubtful accounts 8,148,000 0 8,148,000 0 8,148,000
Depreciation and amortization 6,605,000 137,000 6,742,000 431,000(a) 7,173,000
Interest and other financing charges 9,494,000 31,000 9,525,000 165,000(b) 9,690,000
Loss on sales and closure of
facilities 7,524,000 0 7,524,000 0 7,524,000
Restructuring and other charges 1,367,000 0 1,367,000 0 1,367,000
------------ ---------- ------------ --------- ------------
TOTAL OPERATING EXPENSES 137,402,000 6,605,000 144,007,000 596,000 144,603,000
INCOME (LOSS) BEFORE MINORITY
INTERESTS AND INCOME TAXES (1,048,000) 288,000 (760,000) (596,000) (1,356,000)
Minority interests 1,126,000 0 1,126,000 0 1,126,000
------------ ---------- ------------ --------- ------------
INCOME (LOSS) BEFORE INCOME TAXES (2,174,000) 288,000 (1,886,000) (596,000) (2,482,000)
Provision (benefit) for income taxes 159,000 104,000 263,000 (149,000) 114,000
------------ ---------- ------------ --------- ------------
INCOME (LOSS) FROM CONTINUING $ (2,333,000) $ 184,000 $ (2,149,000) $(447,000) $ (2,596,000)
OPERATIONS ============ ========== ============ ========= ============
Income (loss) from continuing operations
per common share:
Primary ($0.29) ($0.33)
Fully diluted ($0.29) ($0.33)
Weighted average number of shares
outstanding:
Primary 7,932,000 7,932,000
Fully diluted 7,932,000 7,932,000
</TABLE>
4
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
Pro Forma
RHCI FPM(c) Subtotal Adjustments Pro Forma
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net revenues $31,983,000 $2,548,000 $34,531,000 $ 0 $34,531,000
Operating expenses:
Salaries, wages and benefits 15,460,000 673,000 16,133,000 0 16,133,000
Other operating expenses 9,318,000 1,928,000 11,246,000 0 11,246,000
Provisions for doubtful accounts 1,715,000 0 1,715,000 0 1,715,000
Depreciation and amortization 1,580,000 47,000 1,627,000 108,000(a) 1,735,000
Interest and other financing charges 2,276,000 11,000 2,287,000 33,000(a) 2,320,000
----------- ---------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 30,349,000 2,659,000 33,008,000 141,000 33,149,000
INCOME (LOSS) BEFORE MINORITY
INTERESTS AND INCOME TAXES 1,634,000 (111,000) 1,523,000 (141,000) 1,382,000
Minority interests 790,000 0 790,000 0 790,000
----------- ---------- ----------- --------- -----------
INCOME (LOSS) BEFORE INCOME TAXES 844,000 (111,000) 733,000 (141,000) 592,000
Provision (benefit) for income taxes 236,000 (11,000) 225,000 (44,000) 181,000
----------- ---------- ----------- --------- -----------
NET INCOME (LOSS) $ 608,000 $ (100,000) $ 508,000 $ (97,000) $ 411,000
=========== ========== =========== ========= ===========
Income per common share:
Primary $0.06 $0.04
Fully diluted $0.06 $0.04
Weighted average number of shares
outstanding:
Primary 9,646,000 9,646,000
Fully diluted 9,757,000 9,757,000
</TABLE>
5
<PAGE>
PRO FORMA CONDENSED BALANCE SHEET
SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
Pro Forma
RHCI FPM(c) Subtotal Adjustments Pro Forma
------------ ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Current assets $ 53,509,000 $1,122,000 $ 54,631,000 ($4,641,000)(d) $ 49,990,000
Cost in excess of net asset value of
purchased businesses 4,664,000 28,000 4,692,000 3,279,000(e) 7,971,000
Other intangible assets 0 0 0 3,190,000(e) 3,190,000
Other assets 13,540,000 98,000 13,638,000 0 13,638,000
Property and equipment, net 114,796,000 316,000 115,112,000 0 115,112,000
------------ ---------- ------------ ---------- ------------
Total assets $186,509,000 $1,564,000 $188,073,000 $1,828,000 $189,901,000
============ ========== ============ ========== ============
Current liabilities $ 22,714,000 $ 857,000 $ 23,571,000 $ 625,000(f) $ 24,196,000
Liabilities for unpaid self-insurance
claims, less current portion 1,631,000 0 1,631,000 0 1,631,000
Long-term debt, less current portion 74,175,000 35,000 74,210,000 1,875,000(f) 76,085,000
Deferred income taxes 6,168,000 0 6,168,000 0 6,168,000
Minority interests 1,413,000 0 1,413,000 0 1,413,000
Stockholders' equity 80,408,000 672,000 81,080,000 (672,000) 80,408,000
------------ ---------- ------------ ---------- ------------
Total liabilities and stockholders'
equity $186,509,000 $1,564,000 $188,073,000 $1,828,000 $189,901,000
============ ========== ============ ========== ============
</TABLE>
6
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(a) The adjustment to depreciation and amortization relates to the additional
amortization arising from the excess of costs over net asset value of
Florida Psychiatric Management, Inc. (FPM) as if FPM was acquired as of
July 1, 1992. The calculation of the adjustment to depreciation and
amortization is as follows:
<TABLE>
<CAPTION>
Amortization Amortization
Amortization 7/1/92- 7/1/93-
Amount(1) Period (2) 6/30/93 9/30/93
---------- ------------ -------- --------
<S> <C> <C> <C> <C>
Cost in excess of net asset value $3,279,000 15 years $218,600 $ 54,650
Other intangible assets 3,190,000 15 years 212,667 53,167
---------- -------- --------
Total 6,469,000 431,267 107,817
========== ======== ========
</TABLE>
(1) Actual amounts recorded as a result of the acquisition of FPM.
(2) Fifteen-year amortization period is utilized as a composite average
of the lives assigned to the intangible assets purchased.
(b) The adjustment to interest expense reflects the additional interest expense
that would have been incurred had the consideration paid by RHCI in
connection with its acquisition of FPM in the form of debentures been paid
on July 1, 1992. The debentures bear interest at 7% per annum, payable in
quarterly installments of $208,333, beginning six months after the
acquisition date.
(c) Pro forma amounts shown as relating to FPM as of and for the quarter ended
September 30, 1993 actually represent amounts as of and for the four months
ended October 31, 1993. The operating results and changes in financial
condition of FPM for the month of October 1993 were not material.
(d) Includes cash consideration paid for the acquisition of FPM of $4,000,000
and costs paid in connection with the acquisition.
(e) Represents cost in excess of net asset value and other intangible assets of
FPM as of the date of the acquisition.
7
<PAGE>
(f) Includes three-year debentures issued in connection with the acquisition.
The debentures are payable in quarterly installments of $208,333, beginning
six months from the acquisition date.
8
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1992 AND 1993
AND FOUR MONTHS ENDED OCTOBER 31, 1993
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors..................... 1
Audited Consolidated Financial Statements
Consolidated Balance Sheets...................... 2
Consolidated Statements of Operations............ 4
Consolidated Statements of Stockholders' Equity.. 5
Consolidated Statements of Cash Flows............ 6
Notes to Consolidated Financial Statements.... 9
</TABLE>
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Florida Psychiatric Management, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Florida
Psychiatric Management, Inc. and subsidiaries ("FPM") as of June 30, 1992 and
1993 and October 31, 1993, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years ended June 30,
1992 and 1993 and the four months ended October 31, 1993. These financial
statements are the responsibility of the FPM'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 consolidated financial position of Florida
Psychiatric Management, Inc. and subsidiaries at June 30, 1992 and 1993 and
October 31, 1993, and the consolidated results of their operations and their
cash flows for the years ended June 30, 1992 and 1993 and the four months ended
October 31, 1993 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Orlando, Florida
October 6, 1994
F-1
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30 OCTOBER 31
1992 1993 1993
---------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 74,799 $ 370,366 $ 550,606
Accounts receivable, less
allowance for doubtful
accounts of $6,300 at June
30, 1992, $12,932 at June
30, 1993 and $90,432 at
October 31, 1993 305,992 236,803 173,364
Income tax receivable (Note 7) - - 158,218
Other receivables 268,768 21,834 1,320
Prepaid expenses 152,512 112,176 89,052
Deferred income taxes (Note 7) 38,964 84,231 149,467
---------- ---------- ----------
Total current assets 841,035 825,410 1,122,027
Property, plant, and
equipment, net (Note 3) 538,650 465,894 315,756
Deferred income taxes (Note 7) - - 78,421
Goodwill 91,717 29,021 28,278
Notes receivable from
stockholders (Note 12) 123,177 39,525 -
Notes receivable from related
party (Note 12) 128,698 87,021 -
Other assets 150,737 21,162 19,038
---------- ---------- ----------
Total assets $1,874,014 $1,468,033 $1,563,520
========== ========== ==========
</TABLE>
F-2
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (continued)
<TABLE>
<CAPTION>
JUNE 30 OCTOBER 31
1992 1993 1993
---------- ---------- ----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Current maturities of long-term debt and amounts due
under line of credit borrowings (Note 4 and 5) $ 197,454 $ 308,548 $ 38,922
Accounts payable 886,233 420,565 207,932
Reserve for claims of health
care providers (Note 8) 125,000 100,000 250,000
Due to related party (Note 12) 67,221 36,750 -
Accrued liabilities 152,033 222,724 359,911
---------- ---------- ----------
Total current liabilities 1,427,941 1,088,587 856,765
Long-term debt, net of
current maturities (Notes 4 and 5) 245,976 96,379 35,151
Deferred income taxes
(Note 7) 16,994 29,951 -
Minority interest in
subsidiary 24,384 - -
Commitments and contingencies
(Note 8)
Stockholders' equity (Note 11):
Common stock, Class A, $.10
par value:
Authorized shares - 200,000
Issued and outstanding
shares - 101,850 at
June 30, 1992 and
1993 and 105,550 at
October 31, 1993 10,185 10,185 10,555
Common stock, Class B, $.10
par value:
Authorized shares -
200,000
Issued and outstanding
shares - 0 - - -
Additional paid-in capital 124,239 48,219 564,818
Retained earnings 24,295 194,712 96,231
---------- ---------- ----------
Total stockholders' equity 158,719 253,116 671,604
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,874,014 $1,468,033 $1,563,520
========== ========== ==========
</TABLE>
See accompanying notes.
F-3
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Four months
Year ended June 30 ended October
1992 1993 31, 1993
---------- ---------- ---------------
<S> <C> <C> <C>
Revenues:
Managed care revenues:
From related party (Note 12) $ 422,009 $ 220,137 $ 60,000
Other (Note 13) 5,319,470 6,518,756 2,394,072
Other revenues:
From related party (Note 12) - 127,200 -
Other (Note 9) 1,798,732 7,018 93,588
Equity in earnings from
unconsolidated partnerships
(Note 2) - 19,706 -
---------- ---------- ----------
Total revenue 7,540,211 6,892,817 2,547,660
Operating expenses:
Contracted provider services:
From related party (Note 12) 1,617,000 1,542,000 633,197
Other 2,244,752 1,550,658 410,187
Salaries and wages (Note 10) 3,120,798 2,079,183 673,230
Other operating expenses:
From related party (Note 12) 88,694 104,287 37,476
Other 655,236 932,606 843,244
Depreciation and amortization 134,403 136,654 47,432
Equity in losses from
unconsolidated partnerships
(Note 2) 12,897 228,055 3,458
Interest 42,129 31,119 10,613
---------- ---------- ----------
Total operating expenses 7,915,909 6,604,562 2,658,837
---------- ---------- ----------
Income (loss) from continuing
operations, before income
taxes (375,698) 288,255 (111,177)
Income taxes (benefit) (Note 7) (109,436) 104,458 (11,143)
---------- ---------- ----------
Income (loss) from continuing
operations (266,262) 183,797 (100,034)
Discontinued operations
(Note 15):
Loss on discontinued
operations, net of current
income tax benefit of
$17,685 and deferred income
tax expense of $16,582 (44,742) - -
Gain on disposal of
discontinued operations,
net of current income tax
expense of $47,586 151,470 - -
---------- ---------- ----------
Net income (loss) $ (159,534) $ 183,797 $ (100,034)
========== ========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Additional Retained Total
Stock Paid-In Earnings
Capital
------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Balance at July 1, 1991 $ 98 $ 19,165 $ 190,656 $ 209,919
Net loss for the year
ended June 30, 1992 - - (159,534) (159,534)
Stock sale, September
1991 2 17,426 - 17,428
Stock split, 100 for 1,
February 1, 1992 9,925 - (9,925) -
Stock sale, May 1992 160 87,648 - 87,808
Transfer of retained
earnings of terminated
partnership - - 3,666 3,666
Minority interest in
FPC (Notes 1 and 16) - - (568) (568)
------- -------- --------- ---------
Balance at June 30,
1992 $10,185 $124,239 $ 24,295 $ 158,719
Net income for the year
ended June 30, 1993 - - 183,797 183,797
Cash dividend (Note 11) - - (10,185) (10,185)
Equity of previously
related affiliate
(FPASF) at date of
acquisition by FPM
(Note 17) - (76,020) - (76,020)
Other - - (3,195) (3,195)
------- -------- --------- ---------
Balance at June 30,
1993 $10,185 $ 48,219 $ 194,712 $ 253,116
Net loss for the four
months ended October
31, 1993 - - (100,034) (100,034)
Issuance of stock for
services provided,
October 1993 (Note 11) 370 227,484 - 227,854
Net tax benefit
resulting from sales
transaction (Note 11) - 289,115 - 289,115
Other - - 1,553 1,553
------- -------- --------- ---------
Balance at October 31,
1993 $10,555 $564,818 $ 96,231 $ 671,604
======= ======== ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED JUNE 30 ENDED OCTOBER
1992 1993 31, 1993
--------- --------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $(159,534) $ 183,797 $(100,034)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 134,403 136,654 47,432
Undistributed partnership
losses, net of gains 55,775 208,349 -
Gain on disposal of
discontinued operations (199,057) - -
Issuance of stock for services
provided (Note 11) - - 227,354
Net tax benefit resulting from
sales transaction (Note 11) - - 289,115
Loss on disposal of property 13,308 2,077 42,879
Loss on sale of subsidiary
stock - 51,038 -
Undistributed gain from
subsidiary sold during 1993 - (26,914) -
Decrease (increase) in
accounts receivable (18,206) 79,531 63,439
Increase in income tax
receivable - - (158,218)
Decrease (increase) in other
receivables (163,385) 194,477 20,514
Decrease (increase) in prepaid
expenses and other assets (125,254) 37,175 23,124
Decrease (increase) in
deferred income taxes 20,422 (47,490) (143,657)
Decrease (increase) in other
assets 4,120 (725) 2,124
Increase (decrease) in
accounts payable and accrued
liabilities 646,739 (535,092) (112,196)
Increase (decrease) in
deferred income taxes
payable (18,218) 12,986 (29,951)
Increase (decrease) in reserve
for claims of health care
providers 80,000 (25,000) 150,000
Other - - (13)
--------- --------- ---------
Net cash provided by operating
activities 271,113 270,863 321,912
</TABLE>
F-6
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS-(CONTINUED)
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED JUNE 30 ENDED OCTOBER
1992 1993 31, 1993
--------- --------- --------------
<S> <C> <C> <C>
INVESTING ACTIVITIES
Purchases of property, plant,
and equipment (172,012) (62,684) (20,183)
Proceeds from disposal of
property, plant, and
equipment 36,841 - 82,319
Payments received on note for
sale of property 8,895 - -
Proceeds from disposal of
discontinued operations 237,266 - -
Investment in partnerships (152,500) (52,786) -
Partnership distribution - 36,215 -
Withdrawals from partnerships 36,333 20,000 -
Purchase of minority interest
in Mainstream, Inc. (73,317) - -
Advances on notes receivable,
other (331,589) (109,453) -
Collections on notes
receivable, other 355,342 84,643 87,021
Loans to shareholders (35,166) (35,808) -
Payments received on notes
receivable from shareholders 17,489 119,461 39,525
Other - (2,515) -
-------- -------- -------
Net cash provided by (used in)
investing activities (72,418) (2,927) 188,682
</TABLE>
F-7
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS-(CONTINUED)
<TABLE>
<CAPTION>
FOUR MONTHS
YEAR ENDED JUNE 30 ENDED OCTOBER
1992 1993 31, 1993
--------- --------- --------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Withdrawals on line of credit 743,832 695,000 -
Payments on line of credit (771,000) (598,032) (269,800)
Payments of installment notes (148,727) (85,136) (43,885)
Payments on loans from
shareholders (38,185) (3,363) -
Payments on capital lease
obligations (15,211) (24,742) (17,169)
Dividends paid (1,690) - -
Sale of common stock 61,333 - 500
Collection on note from sale
of common stock - 43,904 -
--------- --------- ---------
Net cash provided by (used in)
financing activities (169,648) 27,631 (330,354)
Net increase in cash and cash
equivalents 29,047 295,567 180,240
Cash and cash equivalents at
beginning of period 45,752 74,799 370,366
--------- --------- ---------
Cash and cash equivalents at
end of period $ 74,799 $ 370,366 $ 550,606
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOWS INFORMATION
Cash paid during period for:
Interest $ 55,372 $ 33,342 $ 12,046
========= ========= =========
Taxes $ 174,850 $ 24,000 $ -
========= ========= =========
SCHEDULE OF NONCASH INVESTING
ACTIVITIES
Capital lease obligation
incurred for office
equipment $ 15,312 $ 31,700 $ -
========= ========= =========
SCHEDULE OF NONCASH FINANCING
ACTIVITIES
Note receivable for sale of
common stock $ 43,904 $ - $ -
========= ========= =========
Notes and accounts receivable
exchanged for redemption of
stock owned in subsidiary $ - $ 83,986 $ -
========= ========= =========
Current liabilities assumed
related to redemption of
stock owned in subsidiary $ - $ 13,778 $ -
========= ========= =========
Liability incurred for
dividends declared $ - $ 10,185 $ -
========= ========= =========
</TABLE>
See accompanying notes.
F-8
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1992 AND 1993
AND FOUR MONTHS ENDED OCTOBER 31, 1993
1. ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The consolidated financial statements include the accounts of Florida
Psychiatric Management, Inc., a Florida corporation founded in 1990, and its
subsidiaries (collectively, "FPM"). FPM manages the delivery of mental health
and substance abuse care given by independent providers on behalf of its clients
- insurance carriers, health maintenance organizations, and self-insured
employers. FPM also provides financial management and other nonclinical
administrative services to certain Florida professional service corporations,
which operate multi-specialty group psychiatric medical practices. In addition,
FPM provides clinical administrative services to mental health facilities.
Effective October 31, 1993, FPM's stockholders sold 100% of their shares in FPM
to Ramsay Managed Care, Inc. The accompanying consolidated financial statements
were prepared on the basis of historical cost.
AFFILIATES
Mainstream, Inc. ("Mainstream"), a Florida corporation incorporated in 1986, has
a 30% partnership interest in American Day Treatment Centers of Florida
("ADTC/Florida"), which operates partial hospitalization programs (day treatment
centers). Mainstream is a wholly owned subsidiary of FPM. Mainstream was
reorganized in September 1991 and certain of its operations were discontinued as
described in Note 15.
Florida Psychiatric Consultants, Inc. ("FPC"), a Florida corporation
incorporated in 1982, provides non-clinical administrative services to certain
psychiatric medical practices. On June 8, 1993, FPM's 80% stock ownership in
FPC was redeemed as further described in Note 16.
Florida Psychiatric Associates - South Florida, Inc. ("FPASF"), a Florida
corporation incorporated in 1991, provides clinical services to patients covered
by FPM managed care contracts. All outstanding stock of FPASF was acquired by
FPM in June 1993 as further described in Note 17.
F-9
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
All of FPM's business activities are with customers located within the state of
Florida.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of FPM and its
subsidiaries. Significant intercompany accounts and transactions have been
eliminated in consolidation.
REVENUES
Revenues consist primarily of managed care and administrative services revenue.
Managed care revenue represents capitated amounts received for behavioral health
services provided to patients covered by certain managed care contracts.
Managed care revenue is recognized during the period in which enrolled lives are
covered for capitated payments received. Administrative services revenue
represents amounts received for case management, utilization review and quality
assurance oversight on the delivery of behavioral health services given by
independent providers on behalf of clients. Administrative services revenue is
recognized as services are provided.
CONTRACTED PROVIDER SERVICES
FPM contracts with various health care providers for the provision of mental
health and substance abuse services. The costs of contracted provider services
are accrued in the period in which they are incurred.
GOODWILL
The excess cost of purchased companies over the fair market value of their net
assets at the date of acquisition is recorded as goodwill. Goodwill is
amortized on the straight-line basis over 40 years.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment is stated at cost. Depreciation is computed
principally by the double declining balance method for financial reporting
purposes. Amortization of assets under capital leases is included in
depreciation expense.
CASH EQUIVALENTS
FPM considers all highly liquid investments with a maturity of three months or
less when purchased to be cash equivalents.
F-10
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
1. ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
FPM recognizes deferred income tax on significant temporary differences between
financial statement and income tax reporting.
2. INVESTMENTS IN PARTNERSHIPS
During the two years ended June 30, 1992 and 1993 and the four months ended
October 31, 1993, FPM owned capital interests in two general partnerships.
Partnership investments are adjusted for FPM's portion of the undistributed
earnings or losses of those partnerships. For the year ended June 30, 1992,
undistributed losses from partnerships were $12,897. For the year ended June
30, 1993, undistributed gains from partnerships were $19,706 and undistributed
losses from partnerships were $228,055. For the four months ended October 31,
1993, undistributed losses from partnerships were $3,458.
3. PROPERTY, PLANT AND EQUIPMENT
Major categories of property, plant and equipment at June 30, 1992 and 1993 and
October 31, 1993 are as follows:
<TABLE>
<CAPTION>
June 30 October 31,
1992 1993 1993
-------- -------- -----------
<S> <C> <C> <C>
Land $ 4,724 - -
Building and improvements 99,090 - -
Leasehold improvements 12,702 $ 13,622 $ 13,622
Furniture and fixtures 103,086 132,122 132,158
Vehicles and equipment 585,114 651,767 514,383
Assets under capital lease 90,447 122,147 98,067
-------- -------- --------
895,163 919,658 758,230
Less accumulated depreciation
and amortization 356,513 453,764 442,474
-------- -------- --------
$538,650 $465,894 $315,756
======== ======== ========
</TABLE>
F-11
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
4. CREDIT ARRANGEMENTS
During 1992 and 1993, FPM had a line-of-credit arrangement with a bank, under
which FPM could borrow up to $200,000 at the lender's prime rate. At June 30,
1992 and 1993, FPM had $80,000 and $200,000, respectively, outstanding on the
line-of-credit. The line-of-credit arrangement was cancelled as of October 31,
1993 and no principal or interest remain outstanding.
In addition, Mainstream, during 1992 and 1993, had a line of credit arrangement
with a bank, under which Mainstream could borrow up to $260,000 at the lender's
prime rate plus one-half percent. At June 30, 1992 and 1993, Mainstream had
$92,832 and $69,800, respectively, outstanding on this line-of-credit. The
line-of-credit arrangement was cancelled as of October 31, 1993 and no principal
or interest remain outstanding.
Outstanding balances under both lines of credit are included in notes payable
under long-term debt.
5. LONG-TERM DEBT
Long-term debt at June 30, 1992 and 1993 and October 31, 1993 consists of the
following:
<TABLE>
<CAPTION>
June 30 October 31,
1993 1992 1993
-------- ------- -----------
<S> <C> <C> <C>
Notes payable and line of
credit borrowings $258,733 $311,531 $22,460
Mortgage payable 77,018 - -
Unsecured loans 45,828 24,617 -
Capital leases payable 61,851 68,779 51,613
-------- -------- -------
443,430 404,927 74,073
Less current portion 197,454 308,548 38,922
-------- -------- -------
$245,976 $ 96,379 $35,151
======== ======== =======
</TABLE>
Notes payable are secured by the property to which the notes relate. Interest
rates on notes range from 7.34% to 11.37%.
Maturities of notes payable, line of credit borrowings, unsecured loans payable
and capital leases payable are $38,922 for the eight months ended June 30, 1994
and $35,151 for the year ending June 30, 1995.
F-12
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
6. OPERATING LEASES
FPM leases certain equipment and office space under noncancelable operating
leases that expire in various years through 2003. Future minimum payments under
noncancelable operating leases with initial terms of one year or more consists
of the following at June 30, 1993:
<TABLE>
<CAPTION>
YEAR ENDING JUNE 30
<S> <C>
1994 $ 97,718
1995 78,849
1996 62,471
1997 62,471
1998 62,471
Thereafter 322,768
--------
Total minimum lease payments $686,748
========
</TABLE>
FPM has operating lease agreements with a related party for building, office and
parking space for which minimum future lease payments total $644,127. These
payments are included in the total future minimum lease payments of $686,748
(see Note 12). Total lease and rental expense for operating leases included in
operations for the years ended June 30, 1992 and 1993 and the four months ended
October 31, 1993 amounted to $112,467, $126,033 and $53,695, respectively.
7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of FPM's deferred tax assets and liabilities are as follows:
F-13
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
7. INCOME TAXES (CONTINUED)
<TABLE>
<CAPTION>
JUNE 30 OCTOBER 31
1992 1993 1993
---------- -------- -----------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforwards - $ 65,034 $ 92,566
Accrued incurred-but-not-reported
claims $ 38,038 5,009 88,997
Accrued employee benefits 13,787 23,320 44,351
Allowance for doubtful accounts 1,914 4,862 32,336
Investment in partnership - - 21,537
Other 10,094 - 1,474
--------- -------- ---------
Total deferred assets 63,833 98,225 281,261
Deferred tax liabilities:
Tax over book amortization 35,296 32,906 35,783
Investments in partnership - 7,541 -
Other 6,567 3,498 17,590
--------- -------- ---------
Total deferred tax liabilities 41,863 43,945 53,373
--------- -------- ---------
Net deferred tax assets $ 21,970 $ 54,280 $ 227,888
========= ======== =========
</TABLE>
Income tax expense (benefit) from continuing operations consists of the
following:
<TABLE>
<CAPTION>
FOUR
MONTHS
ENDED
YEAR ENDED JUNE 30 OCTOBER 31
1992 1993 1993
--------- -------- ----------
<S> <C> <C> <C>
Income taxes currently payable:
Federal $ (87,795) $127,272 $ 130,897
State (7,184) 11,482 -
Deferred income taxes:
Federal (5,816) (39,855) (108,075)
State (8,641) 5,559 (33,965)
--------- -------- ---------
$(109,436) $104,458 $ (11,143)
========= ======== =========
</TABLE>
F-14
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
7. INCOME TAXES (CONTINUED)
Income taxes currently payable for the four months ended October 31, 1993 do not
include the benefit of $289,115 related to the tax effect of the exercise of
certain options (see Note 11), as such benefit was credited to additional paid-
in capital.
Income tax expense (benefit) is reported in the consolidated statements of
operations as follows:
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED
YEAR ENDED JUNE 30 OCTOBER 31
1992 1993 1993
--------- -------- -----------
<S> <C> <C> <C>
Income taxes (benefit) $(109,436) $104,458 $(11,143)
Discontinued operations 46,483 - -
--------- -------- --------
$ (62,953) $104,458 $(11,143)
========= ======== ========
</TABLE>
Income tax expense (benefit) included in the consolidated statements of
operations differs from the amounts computed by applying the statutory rate to
income (loss) from continuing operations, before income taxes, as follows:
<TABLE>
<CAPTION>
FOUR MONTHS
ENDED
YEAR ENDED JUNE 30 OCTOBER 31
1992 1993 1993
--------- -------- -----------
<S> <C> <C> <C>
Income (loss) from continuing
operations before income taxes $(375,698) $288,255 $(111,177)
Federal statutory rate 34% 34% 34%
--------- -------- ---------
(127,737) 98,007 (37,800)
Loss on sale of assets to related
party - - 16,415
Other, net 18,301 6,451 10,242
--------- -------- ---------
$(109,436) $104,458 $ (11,143)
========= ======== =========
</TABLE>
At October 31, 1993, net operating loss carryforwards of approximately $203,000
for federal income tax purposes, which expire from 2005 to 2008, and
approximately $496,000 for state income tax purposes, which expire from 2005 to
2008, are available to reduce future taxable income.
F-15
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
8. COMMITMENTS AND CONTINGENCIES
RESERVE FOR CLAIMS OF HEALTH CARE PROVIDERS
FPM has established a reserve for the liability from claims of health care
providers. This reserve which has been charged to contracted provider services
has been estimated to be $125,000 at June 30, 1992, $100,000 at June 30, 1993
and $250,000 at October 31, 1993.
RESERVE FOR CLAIMS UNDER SELF-INSURED HEALTH INSURANCE PLAN
FPM provides health insurance coverage to its eligible employees through a self
funded insurance plan. FPM maintains a stop loss contract with an outside
insurance company, which limits FPM's annual liability to $17,500 per each
covered dependent, with the aggregate annual total not to exceed $216,265 for
the plan year beginning June 1993. Based on FPM's experience, the expected
liability for claims for services performed but not yet reported, has been
estimated to be $30,589, $35,000 and $48,091 at June 30, 1992 and 1993 and
October 31, 1993, respectively, and is included in accounts payable.
9. TERMINATION OF CLINICAL SERVICES AGREEMENT
Effective August 7, 1991, FPM terminated its Clinical Services Agreement with
West Lake Hospital, a Florida joint venture. As consideration for the
termination of this contract, FPM received a lump sum payment of $1,700,000
which is included in fiscal 1992 other revenues (see Note 10).
10. BONUS PAYMENTS
At its meeting on August 29, 1991, FPM's Board of Directors approved bonuses to
certain related employees in recognition of their substantial services performed
on behalf of FPM under the Clinical Services Agreement with West Lake Hospital
(see Note 9). These bonuses aggregated $1,310,000, and are included in salaries
and benefits for the year ended June 30, 1992.
At its meeting on June 30, 1993, FPM's Board of Directors approved bonuses to
certain related employees in recognition of their substantial services performed
on behalf of FPM during the year ended June 30, 1993. In aggregate, these
bonuses amounted to $334,250 and are included in salaries and benefits for the
year ended June 30, 1993.
F-16
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
11. STOCKHOLDERS' EQUITY
TRANSACTIONS WITH STOCKHOLDERS
In October 1993, a stockholder exercised an option acquired in connection with
professional services provided and acquired 3,700 shares of FPM common stock
with a value of $227,854. The $227,854 was charged to operations during the
four months ended October 31, 1993. In addition, in October 1993, certain key
employees exercised options to acquire shares of FPM common stock from certain
stockholders who collectively had previously held a majority of FPM's
outstanding common stock. As a result of this sale of shares by FPM's
stockholders, a tax benefit of $289,115 accrued to FPM. This tax benefit is
included in the consolidated statements of stockholders' equity as an addition
to additional paid-in capital.
VOTING RIGHTS
Class A common stockholders are entitled to one vote per share. On May 18,
1992, the Board of Directors authorized 200,000 shares of Class B common stock.
While there are currently no Class B common stockholders, any future holders of
Class B common stock would not be entitled to voting rights.
DIVIDEND
On June 30, 1993, the Board of Directors authorized the payment of a dividend of
$.10 per share payable to stockholders of FPM as of June 30, 1993. Dividends
payable of $10,185 are included in accrued liabilities at June 30, 1993.
12. RELATED PARTY TRANSACTIONS
FPM leases land and building (see Note 6) from Minnesota Properties II, a
Florida general partnership, in which certain stockholders of FPM have a 75%
ownership interest. Rental expense related to this lease for the years ended
June 30, 1992 and 1993 and the four months ended October 31, 1993 was $42,340,
$54,330 and $20,824, respectively.
FPM also leases office space from Minnesota Properties, a Florida general
partnership in which certain stockholders of FPM have a 56% ownership interest,
on a month-to-month basis. Rental expense for this office space for the years
ended June 30, 1992 and 1993 and the four months ended October 31, 1993, was
$17,129, $18,007 and $6,002, respectively.
FPM leases a boat from Lazoritz - Dahl Joint Venture, in which certain
stockholders of FPM have a 100% ownership interest. Rental expenses related to
this lease for the years ended June 30, 1992 and 1993 and
F-17
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
12. RELATED PARTY TRANSACTIONS-(CONTINUED)
the four months ended October 31, 1993 were $29,225, $31,950 and $10,650,
respectively.
FPM provides financial management and other nonclinical administrative services
to Florida Psychiatric Associates, P.A. ("FPA"), a Florida professional service
corporation, which was 86% owned by stockholders of FPM until June 1, 1994.
Income included in managed care revenues for the years ended June 30, 1992 and
1993 and the four months ended October 31, 1993 from FPA was $244,675, $220,137
and $60,000, respectively.
Additionally FPA is one of the providers FPM contracts with to provide
psychiatric services to patients enrolled in health plans managed by FPM.
Included in contracted provider services for the years ended June 30, 1992 and
1993 and the four months ended October 31, 1993 is approximately $1,600,000,
$1,520,000 and $633,000, respectively, for such services provided by FPA.
At June 30, 1992 and 1993 and October 31, 1993, FPM owed FPA $67,221, $36,750
and $0, respectively, for intercompany transactions which is included in
accounts payable. At June 30, 1993 and October 31, 1993, FPA owed FPM $83,009
and $0, respectively, in notes and accounts receivable which were assigned to
FPM by FPC upon FPC's purchase of FPM's 80% stock ownership in FPC.
Prior to the repurchase of its stock held by FPM on June 8, 1993, FPC provided
nonclinical administrative services to FPA. For the year ended June 30, 1993,
fees for such services were $159,000. FPM's proportionate share of such fees is
included in other revenues. For the year ended June 30, 1992, managed care
revenues included $177,334 for services performed for FPA.
FPASF, one of the providers FPM contracts with to provide psychiatric services
to patients enrolled in health plans managed by FPM, became a wholly-owned
subsidiary of FPM on June 18, 1993 (see Note 17). Prior to that date, FPASF was
100% owned by certain stockholders of FPM. For the year ended June 30, 1992 and
the period July 1, 1992 to June 18, 1993, approximately $17,000 and $22,000 of
such expense is included in contracted provider services, respectively.
F-18
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
13. MAJOR CUSTOMERS
For the year ended June 30, 1992, approximately 74% of revenue was earned from
three customers. Walt Disney World Co. comprised approximately $2,303,000 or
41% of revenue. The School Board of Orange County, Florida, Inc. and
Metropolitan Life Insurance Co., Inc. comprised approximately $1,003,000 or 18%
of revenue, and $550,000 or 15% of revenue, respectively.
For the year ended June 30, 1993, approximately 74% of revenue was earned from
three customers. Walt Disney World Co. comprised approximately $2,980,000 or
44% of revenue. The School Board of Orange County, Florida, Inc. and
Metropolitan Life Insurance Company, Inc. comprised approximately $1,040,000 and
$1,030,000, or approximately 15% each of revenue.
For the four months ended October 31, 1993, approximately 71% of revenue was
earned from three customers. Walt Disney World Co. comprised approximately
$1,061,000, or 45% of revenue. The School Board of Orange County, Florida, Inc.
and Health Options, Inc. customers comprised approximately $348,000 or 15% of
revenue, and $268,000 or approximately 11% of revenue, respectively.
14. PROFIT SHARING PLAN
FPM participates in a profit sharing plan which also covers Mainstream, FPC and
several other unconsolidated affiliates. Contributions by FPM are
discretionary. Plan contributions for the years ended June 30, 1992 and 1993
and the four months ended October 31, 1993 were approximately $29,000, $0 and
$7,316, respectively.
15. DISCONTINUED OPERATIONS
Mainstream, Inc., a Florida corporation incorporated in 1986, owned and operated
a partial hospitalization program (day treatment center) in Winter Park,
Florida. FPM owned 81.67% of Mainstream, Inc. prior to September 16, 1991, at
which time FPM purchased the stock owned by the minority stockholders. As a
result, Mainstream, Inc. became a wholly owned subsidiary of FPM. During the
year ended June 30, 1992, FPM made a decision to discontinue operating its day
treatment center business segments. Revenue from discontinued operations of
Mainstream, Inc. in fiscal year 1992 was $144,199 for the period prior to
disposal of the segment and is included in loss from discontinued operations.
F-19
<PAGE>
FLORIDA PSYCHIATRIC MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
16. SALE OF SUBSIDIARY'S STOCK
On June 8, 1993, FPM's 80% stock ownership in FPC was redeemed. FPM recognized
its equity in the earnings of FPC during the period July 1, 1992 to June 8,
1993, in the amount of $15,648 after taxes. In exchange for the FPC stock, FPM
was assigned accounts and notes receivable of $83,987 and assumed liabilities of
$25,045, which resulted in a loss to FPM of $51,038 on the stock sale. The loss
is included in other operating expenses in the accompanying consolidated
statements of operations.
17. ACQUISITION OF SUBSIDIARY'S STOCK UNDER COMMON CONTROL
On June 18, 1993, FPM acquired one hundred percent of the outstanding common
stock of Florida Psychiatric Associates - South Florida, P.A. ("FPASF"). The
stock was received as a capital contribution from FPM's three major
stockholders. The consolidated statement of operations for the year ended June
30, 1993 includes the results of operations of FPASF from the date of
acquisition through June 30, 1993. The assets and liabilities transferred from
FPASF are accounted for at their historical cost because they represent a
transfer of net assets under common control.
F-20
<PAGE>
SIGNATURE
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.
Dated: September 20, 1995
RAMSAY HEALTH CARE, INC.
/s/ Gregory H. Browne
By:_______________________
Gregory H. Browne
Chief Executive Officer
and President
<PAGE>
B. EXHIBITS
2.1 Agreement dated as of October 12, 1993 among FPM, the stockholders of
FPM, the registrant and a subsidiary of the registrant (incorporated by
reference to Exhibit 2.1 to the Registration Statement on Form S-1 of
Ramsay Managed Care, Inc., File No. 33-89514).
23.1 Consent of Ernst & Young LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Forms S-8 No. 33-52991, No. 33-47997, No. 33-44697 and No. 33-39260) of Ramsay
Health Care, Inc. of our report dated October 6, 1994, with respect to the
consolidated financial statements of Florida Psychiatric Management, Inc.,
included in Ramsay Health Care, Inc.'s Form 8-K dated October 29, 1993.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Orlando, Florida
September 13, 1995
