<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from_____ to______
Commission file No. 0-13849
RAMSAY HEALTH CARE, INC.
(Exact name of registrant as specified in its charter)
Delaware 63-0857352
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
The number of shares of the Registrant's Common Stock
outstanding at February 12, 1996 follows:
Common Stock, par value $0.01 per share - 8,023,468 shares
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated balance sheets - December 31, 1995 and
June 30, 1995 (unaudited) ........................................... 1
Consolidated statements of operations - three and six months ended
December 31, 1995 and 1994 (unaudited) .............................. 3
Consolidated statements of cash flows - three months ended
December 31, 1995 and 1994 (unaudited) .............................. 4
Notes to consolidated financial statements - December 31, 1995
(unaudited) ......................................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................................... 8
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............. 14
Item 5. Other Information ............................................... 14
Item 6. Exhibits and Reports on Form 8-K ................................ 15
SIGNATURES .............................................................. 16
<PAGE>
PART I. FINANCIAL INFORMATION
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31 June 30
1995 1995
------------ ----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents.............................$ 5,390,000 $ 9,044,000
Patient accounts receivable, less allowances for
doubtful accounts of $3,545,000 and $3,886,000
at December 31, 1995 and June 30, 1995, respectively. 23,815,000 21,564,000
Amounts due from third-party contractual agencies..... 6,173,000 5,956,000
Receivable from affiliated company.................... 1,651,000 325,000
Other receivables..................................... 3,781,000 3,330,000
Other current assets.................................. 2,087,000 2,764,000
----------- -----------
TOTAL CURRENT ASSETS................................ 42,897,000 42,983,000
OTHER ASSETS
Cash held in trust.................................... 1,592,000 1,778,000
Cost in excess of net asset value of purchased
businesses........................................... 652,000 663,000
Unamortized preopening and loan costs................. 1,709,000 2,221,000
Receivable from affiliated company.................... 6,177,000 7,170,000
Deferred income taxes................................. 8,391,000 8,652,000
Other non-current assets.............................. 2,206,000 2,301,000
------------ -----------
20,727,000 22,785,000
PROPERTY AND EQUIPMENT
Land.................................................. 5,359,000 5,383,000
Building and improvements............................. 77,850,000 77,630,000
Equipment, furniture and fixtures..................... 20,063,000 19,611,000
------------------------
103,272,000 102,624,000
Less accumulated depreciation......................... 31,415,000 29,156,000
------------------------
71,857,000 73,468,000
----------- ------------
$135,481,000 $139,236,000
=========== ===========
See notes to consolidated financial statements.
1
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31 June 30
1995 1995
--------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .................................. $ 2,428,000 $ 3,868,000
Accrued salaries and wages ........................ 4,479,000 4,843,000
Other accrued liabilities ......................... 1,244,000 1,347,000
Amounts due to third-party contractual agencies ... 5,332,000 4,996,000
Current portion of long-term debt ................. 8,123,000 3,831,000
----------- -----------
TOTAL CURRENT LIABILITIES ....................... 21,606,000 18,885,000
LIABILITIES FOR SELF-INSURANCE CLAIMS, less
current portion .................................... 1,326,000 1,337,000
LONG-TERM DEBT, less current portion ............... 48,576,000 55,568,000
MINORITY INTERESTS ................................. 846,000 1,667,000
STOCKHOLDERS' EQUITY
Class B convertible preferred stock, Series C,
$1 par value--authorized 152,321 shares;
issued 142,486 shares (liquidation value of
$7,244,000)including accrued dividends
of $91,000 ...................................... 233,000 233,000
Common Stock, $.01 par value--authorized 20,000,000
shares; issued 8,594,251 at December 31, 1995 and
8,290,795 shares at June 30, 1995 ............... 86,000 83,000
Additional paid-in capital ........................ 100,048,000 99,147,000
Retained earnings (deficit) ....................... (33,341,000) (33,785,000)
Treasury Stock, at cost--581,550 shares at
December 31,1995 and June 30, 1995 .............. (3,899,000) (3,899,000)
------------ ------------
63,127,000 61,779,000
------------ ------------
$135,481,000 $139,236,000
============ ============
See notes to consolidated financial statements.
2
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Quarter Ended Six Months Ended
December 31 December 31
--------------------------------------------
1995 1994 1995 1994
--------------------------------------------
NET REVENUES $31,815,000 $35,634,000 $60,944,000 $71,457,000
Operating Expenses:
Salaries, wages and benefits... 16,194,000 18,212,000 32,433,000 35,946,000
Other operating expenses....... 10,190,000 11,232,000 19,746,000 22,243,000
Provision for doubtful accounts 1,070,000 1,297,000 2,026,000 2,582,000
Depreciation and amortization.. 1,291,000 1,970,000 2,626,000 3,810,000
Interest and other financing
charges...................... 1,783,000 2,144,000 3,509,000 4,311,000
----------------------------------------------
TOTAL OPERATING EXPENSES.. 30,528,000 34,855,000 60,340,000 68,892,000
----------------------------------------------
INCOME BEFORE MINORITY INTERESTS
AND INCOME TAXES............... 1,287,000 779,000 604,000 2,565,000
Minority interests.............. (49,000) 166,000 (101,000) 1,013,000
----------------------------------------------
INCOME BEFORE INCOME TAXES...... 1,336,000 613,000 705,000 1,552,000
Provision for income taxes...... 501,000 176,000 261,000 527,000
----------------------------------------------
NET INCOME ............... $ 835,000 $ 437,000 $ 444,000 $1,025,000
==============================================
Income per common and dilutive common equivalent share:
Primary........................ $0.09 $0.05 $0.05 $0.11
Fully diluted.................. $0.09 $0.05 $0.05 $0.11
Weighted average number of shares outstanding:
Primary........................ 9,378,000 9,515,000 9,262,000 9,512,000
Fully diluted.................. 9,438,000 9,527,000 9,438,000 9,529,000
See notes to consolidated financial statements.
3
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended December 31
1995 1994
----------------------------
Cash Flows from Operating Activities
Net income ...........................................$ 444,000 $ 1,025,000
Adjustments to reconcile net income to net
cash provided by(used in) operating activities:
Depreciation and amortization ....................... 3,035,000 4,204,000
Provision (benefit) for deferred income taxes ....... 261,000 (190,000)
Provision for doubtful accounts ..................... 2,026,000 2,582,000
Minority interests .................................. (101,000) 1,013,000
Cash flows from (increase) decrease in operating assets:
Accounts receivable .............................. (4,277,000) (3,371,000)
Amounts due from third-party contractual agencies (217,000) (2,895,000)
Other current assets ............................. 772,000 (1,671,000)
Receivable from affiliated company ............... (333,000) --
Other non-current assets ......................... 95,000 (537,000)
Cash flows from increase (decrease) in operating liabilities:
Accounts payable ................................. (1,440,000) 213,000
Accrued salaries, wages and other liabilities .... (467,000) (1,896,000)
Unpaid self-insurance claims ..................... (11,000) (130,000)
Amounts due to third-party contractual agencies .. 336,000 300,000
----------- -----------
Total adjustments ............................. (321,000) (2,378,000)
----------- -----------
Net cash provided by (used in) operating
activities ................................. 123,000 (1,353,000)
----------- -----------
Cash Flows from Investing Activities
Expenditures for property and equipment, net ........ (648,000) (1,506,000)
Preopening costs .................................... (22,000) (346,000)
Restricted cash used for debt payments .............. -- 3,055,000
Cash held in trust .................................. 186,000 (960,000)
----------- -----------
Net cash provided by (used in) investing
activities ................................ (484,000) 243,000
----------- -----------
Cash Flows from Financing Activities
Loan costs .......................................... (217,000) (230,000)
Payment of costs related to distribution of
subsidiary .......................................... -- (949,000)
Proceeds from exercise of stock options and stock
purchases ........................................... 526,000 157,000
Distributions to minority interests ................. (720,000) (1,656,000)
Proceeds from private placement of shares of former
subsidiary.......................................... -- 3,320,000
Proceeds from working capital facility .............. -- 2,500,000
Payments on debt ................................... (2,700,000) (4,749,000)
Payment of preferred stock dividends ............... (182,000) (182,000)
Purchase of treasury stock ......................... -- (44,000)
----------- ----------
Net cash used in financing activities ....... (3,293,000) (1,833,000)
----------- ----------
Net decrease in cash and cash equivalents ........... (3,654,000) (2,943,000)
Cash and cash equivalents at beginning of period .... 9,044,000 6,207,000
----------- ----------
Cash and cash equivalents at end of period ..........$ 5,390,000 $ 3,264,000
============ ==========
Supplemental Disclosures of Cash Flow Information
Cash paid during the period
for:
Interest ............................ .............. $ 2,672,000 $ 3,425,000
Income taxes ...................................... 89,000 1,316,000
See notes to consolidated financial statements.
4
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 1995
NOTE 1
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation of the interim information are, unless
otherwise discussed in this report, of a normal recurring nature and have been
included. The Company's business is seasonal in nature and subject to general
economic conditions and other factors. Accordingly, operating results for the
three and six months ended December 31, 1995 are not necessarily indicative of
the results that may be expected for the year. For further information, refer to
the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended June 30, 1995.
NOTE 2
At December 31, 1995, the Company's credit facilities included
$34,168,750 in senior secured notes and $2,076,924 in subordinated secured notes
(the 1990 Credit Facility), and approximately $20,000,000 in letters of credit,
which support the Company's variable rate demand revenue bonds (the 1993 Credit
Facility).
On May 1, 1995, the Company utilized a portion of the proceeds from a
sale/leaseback of two of its inpatient facilities and prepaid $7,500,000 of
principal due on the senior secured notes as follows: $3,531,250 in full
satisfaction of the amount due on September 30, 1995, $3,531,250 in full
satisfaction of the amount due on March 31, 1996, and $437,500 in partial
satisfaction of the $3,531,250 due on September 30, 1996. The senior secured
notes bear interest at 11.6% and are due in semi-annual installments that began
on March 31, 1993 and, after the May 1, 1995 prepayment, resume semi-annual
installments on September 30, 1996 through March 31, 2000. The subordinated
secured notes bear interest at 15.6% and are due in semi-annual installments
that began on March 31, 1994 and end on March 31, 2000.
The variable rate demand revenue bonds were issued in 1984 and 1985,
have terms of 30 years and require annual principal payments of $800,000
(through year 2000) and $900,000 to $1,300,000 (from years 2001 to maturity).
Effective September 15, 1995, the Company and the group of banks
supporting the 1993 Credit Facility agreed to an extension of the facility to
February 15, 1997. In connection with this extension, certain financial
covenants were modified and the Company agreed to reduce the banks' exposure by
$2.8 million on or before December 31, 1995 and an additional $3.0 million on or
before July 1, 1996. In December 1995, the Company fully paid down and
terminated a working capital facility originally issued in connection with the
5
<PAGE>
1993 Credit Facility, thereby achieving, along with regularly scheduled
principal payments made prior to December 31,1995, the $2.8 million reduction in
the banks' credit exposure.
A summary of the Company's debt obligations is as follows:
December 31 June 30
1995 1995
------------- -------------
11.6% senior secured notes ............ $ 34,169,000 $ 34,169,000
Variable rate demand revenue bonds .... 19,400,000 20,200,000
15.6% subordinated secured notes ...... 2,077,000 2,308,000
Capital lease obligation............... 707,000 919,000
Working capital facility............... --- 1,500,000
Other notes payable.................... 346,000 303,000
----------- ----------
56,699,000 59,399,000
Less amounts due within one year....... 8,123,000 3,831,000
----------- ----------
$ 48,576,000 $ 55,568,000
========== ==========
The Company has pledged as collateral substantially all of its land,
buildings and improvements.
NOTE 3
In April 1995, the Company sold and leased back the land, buildings and
fixed equipment of two of its inpatient facilities. The leases have a primary
term of 15 years (with three successive renewal options of 5 years each) and
require aggregate annual minimum rentals of $1.54 million, payable monthly.
Beginning April 1, 1996, the lease payments are subject to an upward adjustment
(not to exceed 3% annually) based upon any increase in the consumer price index
over the preceding twelve months. Effective April 1995, the Company agreed to
lease an 80-bed facility near Salt Lake City, Utah for four years, with an
option to renew for an additional three years. The lease requires annual base
rental payments of $456,000. In addition, the lease provides for percentage rent
payments to the lessor equal to 2% of the net revenues of the facility, payable
quarterly. The Company leases its corporate headquarters for a term of five
years ending in April 1999 and various other clinics and outpatient operations
over terms ranging from one to five years. Annual rent expense related to
noncancellable operating leases totals approximately $2.7 million.
NOTE 4
The provision for income taxes included in the consolidated statements
of income differs from the amounts computed by applying the normal statutory
rates to income before income taxes because such provision includes a) amounts
reportable as income for federal income tax purposes which are not income for
financial reporting purposes, b) amounts deducted for financial reporting
purposes that are not allowable deductions for federal and state income tax
purposes and c) amounts for state income taxes applicable to profitable
subsidiaries which do not utilize the operating losses generated by unprofitable
subsidiaries to offset taxable income. At December 31, 1995, the Company has
estimated operating loss carryforwards available to reduce future taxable income
of approximately $21,000,000, subject to significant annual limitations pursuant
to Section 382 of the Internal Revenue Code of 1986, as amended.
6
<PAGE>
NOTE 5
Effective April 24, 1995, the Company distributed, on a pro-rata basis
in the form of a dividend, the common stock of its subsidiary, Ramsay Managed
Care, Inc. ("RMCI"), held by the Company, to the holders of record on April 21,
1995 of the Company's common and preferred stock (the "RMCI Distribution").
RMCI, which was formed in October 1993, manages the delivery of mental health
and substance abuse care and provides employee assistance and mental health and
substance abuse treatment programs for and on behalf of self-insured employers,
health maintenance organizations ("HMOs"), insurance companies, government
agencies and other third-party payors. Subsequent to the RMCI Distribution, RMCI
ceased being a subsidiary of the Company.
For the three months ended December 31, 1994, net revenues, operating
expenses and income before income taxes of RMCI were $3,492,000, $3,403,000 and
$89,000, respectively. For the six months ended December 31, 1994, net revenues,
operating expenses and income before income taxes of RMCI were $6,955,000,
$6,804,000 and $151,000, respectively. Inclusion of RMCI in the Company's
consolidated results of operations for the three and six months ended December
31, 1994 increased earnings per share reported in those periods by $0.01 per
share.
At December 31, 1995, total net cash advances made by the Company to or on
behalf of RMCI, including for purposes of partially funding acquisitions and for
working capital and other corporate purposes, totalled approximately $7,800,000.
The Company anticipates the current portion of this receivable will be paid
prior to fiscal yar end or otherwise in accordance with the payment terms as
described below. Of the $7,800,000 currently outstanding, $6 million is
represented by an unsecured, interest-bearing (8%), subordinated promissory note
due from RMCI and issued on October 25, 1994. Interest on the subordinated
promissory note commenced June 30, 1995 and is payable on a quarterly basis.
Principal on the subordinated promissory note is payable over a four-year period
in 17 equal quarterly installments commencing September 30, 1996.
In addition to the subordinated promissory note and pursuant to a
Distribution Agreement between RHCI and RMCI which governed the RMCI
Distribution, RMCI agreed to pay amounts owed to RHCI as of April 24, 1995 (the
"Distribution Date") totalling approximately $1,100,000. Pursuant to the
Distribution Agreement, $600,000 of this amount was payable by RMCI on or before
October 21, 1995 or on such other date and on such other terms and conditions as
mutually agreed to by RHCI and RMCI. RMCI paid $275,000 to RHCI on June 30, 1995
in partial satisfaction of the amount due on October 21, 1995 and the parties
are currently discussing deferred payment terms on the remaining $325,000. The
balance of the amount outstanding on the Distribution Date, approximately
$500,000, is payable on or before December 31, 1996, together with interest at
7% per annum accruing from October 21, 1995, or on such other date and on such
other terms and conditions as shall be mutually agreed to between RHCI and RMCI.
Subsequent to the RMCI Distribution, RHCI paid additional amounts incurred
by RMCI prior to the Distribution Date and has provided certain administrative
services to RMCI pursuant to certain agreements entered into in connection with
the RMCI Distribution. RHCI will be paid for these amounts which, which at
December 31, 1995, totalled approximately $855,000.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The Company pursues business expansion opportunities which are
consistent with its overall strategic plan and disposes of operations no longer
considered viable or consistent with this plan. The following significant
events, which occurred subsequent to December 31, 1994, impact the comparison of
revenues and operating expenses of the Company between the periods presented.
* The RMCI Distribution.
* Virtual elimination (due to statutory changes effective July
1, 1995) of disproportionate share payments to the Company.
Disproportionate share was a funding mechanism designed to
adequately reimburse facilities serving a disproportionately
high volume of Medicaid patients, relative to other providers.
The majority of disproportionate share payments were received
at the Company's Three Rivers facility, which was operated as
a limited partnership in which the Company had a 55% interest
and limited partners maintained a 45% interest. Due to the
virtual elimination of disproportionate share payments
effective July 1, 1995, as well as significantly more
restrictive admission criteria imposed by the State of
Louisiana on behavioral health providers treating adolescents
in the State, the Three Rivers facility was closed in June
1995. See Part II. Item 5 - "Other Information".
* Commencement of operations in April 1995 at an 80-bed leased
facility near Salt Lake City, Utah.
* The closure of several day treatment centers and outpatient
clinics during fiscal 1995 due to negative operating margins.
* Expansion of the Company's contract services division during
the latter part of fiscal 1995.
8
<PAGE>
Results of Operations
The following table sets forth, for the periods indicated, certain
items of the Company's Consolidated Statements of Operations as a percentage of
the Company's net revenues. The prior year percentages have been adjusted to
exclude the operations of RMCI.
Percentage of Net Revenues
Quarter Ended Six Months Ended
December 31 December 31
----------------------------------
1995 1994 1995 1994
----------------------------------
Net revenues ....................... 100.0% 100.0% 100.0% 100.0%
Operating expenses:
Salaries, wages and benefits .. 50.9 51.5 53.2 51.0
Other operating expenses ...... 32.0 30.5 32.4 29.7
Provision for doubtful accounts 3.4 4.1 3.3 4.0
Depreciation and amortization . 4.1 5.3 4.3 5.1
Interest expense .............. 5.6 6.5 5.8 6.5
----- ----- ----- -----
Total operating expenses ........... 96.0 97.9 99.0 96.3
----- ----- ----- -----
Income before minority interests and
income taxes .................. 4.0 2.1 1.0 3.7
Minority interests ................. (0.2) 0.5 (0.1) 1.6
----- ----- ----- -----
Income before income taxes ......... 4.2 1.6 1.1 2.1
===== ===== ===== =====
Quarter Ended December 31, 1995 Compared to
Quarter Ended December 31, 1994
Net revenues in the quarter ended December 31, 1995 were $31.8 million,
compared to $35.6 million in the comparable quarter of the prior fiscal year.
The material changes in net revenues between these periods consisted of a) a
$1.1 million decrease in same facility net inpatient revenues between periods,
b) a $0.7 million decrease in same facility net outpatient revenues between
periods, c) a decrease in net patient revenues of $2.7 million (of which $0.6
million was disproportionate share revenues) due to the closure of the Three
Rivers facility, d) an increase in net patient revenues of $1.7 million related
to the opening of an additional facility near Salt Lake City, Utah ("Benchmark
South"), e) a $1.9 million increase in net patient revenues related to the
Company's subacute operations, f) a $0.5 million increase in net revenues
related to the Company's contract services division, and g) net revenues in the
quarter ended December 31, 1994 related to RMCI of $3.5 million.
Same facility net inpatient revenues decreased 5% between periods (from
$22.6 million in the December 1994 quarter to $21.4 million in the current year
quarter) while same facility patient days were stable between periods. Increased
pressures by managed care organizations and other payors, as well as a change in
the Company's payor mix and service levels, decreased the Company's inpatient
revenue per patient day by 5.5% between periods. The increase in net revenues
related to subacute operations is due to the opening of an additional unit at
the end of the December 1994 quarter and a significant increase in census
between periods at two of the Company's other three subacute units.
9
<PAGE>
Salaries, wages and benefits in the quarter ended December 31, 1995
were $16.2 million, compared to $18.2 million in the comparable quarter of the
prior fiscal year. Same facility salaries, wages and benefits decreased $0.2
million (from $13.5 million to $13.3 million) between periods, or 1.5%. Other
changes to salaries, wages and benefits between periods included a) a decrease
of $1.3 million related to the closure of the Three Rivers facility, b) an
increase of $0.9 million related to the opening of Benchmark South, c) an
increase of $0.3 million related to subacute operations and d) salaries, wages
and benefits in the quarter ended December 30, 1994 related to RMCI of $1.7
million.
Other operating expenses in the quarter ended December 31, 1995 were
$10.2 million, compared to $11.2 million in the comparable quarter of the prior
fiscal year. Same facility other operating expenses decreased $0.5 million
between periods ($7.1 million in the current quarter compared to $7.6 million in
the prior fiscal year quarter), other operating expenses of RMCI in the quarter
ended December 31, 1994 were $1.4 million, and other operating expenses related
to subacute operations increased $0.8 million between periods. The decrease in
other operating expenses between periods due to the closure of the Three Rivers
facility was offset by the increase in other operating expenses due to the
opening of Benchmark South.
The provision for doubtful accounts in the quarter ended December 31,
1995 totalled $1.1 million, compared to $1.3 million in the prior year
comparable quarter. The overall provision for doubtful accounts associated with
the same facilities decreased $0.2 million between periods due to the continued
shift in the Company's overall payor mix away from charged-based payors, which
typically include a higher patient portion due and, consequently, higher bad
debts.
Depreciation and amortization in the quarter ended December 31, 1995
totalled $1.3 million, compared to $2.0 million in the prior year comparable
quarter. This decrease is due to a) the closure of the Three Rivers facility
($0.1 million), b) depreciation and amortization in the quarter ended December
31, 1994 related to RMCI of $0.3 million and c) a sale/leaseback transaction and
asset write-down recorded by the Company in the third and fourth quarter,
respectively, of its prior fiscal year, which reduced depreciation expense on
the underlying assets between periods by $0.3 million.
Interest expense decreased from $2.1 million in the quarter ended
December 31, 1994 to $1.8 million in the current year comparable quarter. Debt
levels were reduced between periods through a prepayment of principal on the
senior secured notes, a $0.5 million reduction in principal on the subordinated
secured notes and a $0.8 million reduction in principal on the variable rate
demand revenue bonds. In addition, interest costs included in the December 31,
1994 quarter related to RMCI were not incurred in the current year quarter.
Minority interests reflects the limited partners' share of income or
loss before income taxes of the Three Rivers facility. The decrease in minority
interests between periods is due to the closure of this facility in June 1995.
10
<PAGE>
Six Months Ended December 31, 1995 Compared to
Six Months Ended December 31, 1994
Net revenues in the six months ended December 31, 1995 were $60.9
million, compared to $71.5 million in the comparable period of the prior fiscal
year. The material changes in net revenues between these periods consisted of a)
a $2.4 million decrease in same facility net inpatient revenues between periods,
b) a $0.9 million decrease in same facility net outpatient revenues between
periods, c) a decrease in net patient revenues of $7.1 million (of which $2.8
million was disproportionate share revenues) due to the closure of the Three
Rivers facility, d) an increase in net patient revenues of $3.0 million related
to the opening of an additional facility near Salt Lake City, Utah ("Benchmark
South"), e) a $3.1 million increase in net patient revenues related to the
Company's subacute operations, f) a $0.7 million increase in net revenues
related to the Company's contract services division and g) net revenues in the
six months ended December 31, 1994 related to RMCI of $7.0 million.
Same facility net inpatient revenues, excluding Louisiana
disproportionate share revenues recorded at the Company's Bayou Oaks facility in
the prior year period, decreased 3% between periods (from $43.9 million in the
prior year to $42.4 million in the current year) while same facility patient
days increased 3% between periods. Increased pressures by managed care
organizations and other payors, as well as a change in the Company's payor mix
and service levels, decreased the Company's inpatient revenue per patient day by
6.2% between periods. The increase in net revenues related to subacute
operations is due to the opening of an additional unit at the end of December
1994 and a significant increase in census between periods at two of the
Company's other three subacute units.
Salaries, wages and benefits in the six months ended December 31, 1995
were $32.4 million, compared to $35.9 million in the comparable period of the
prior fiscal year. Same facility salaries, wages and benefits increased $0.3
(from $26.5 million to $26.8 million) between periods, or 1%. Other changes to
salaries, wages and benefits between periods included a) a decrease of $2.9
million related to the closure of the Three Rivers facility, b) an increase of
$1.6 million related to the opening of Benchmark South, c) an increase of $0.6
million related to subacute operations and d) salaries, wages and benefits in
the six months ended December 31, 1994 related to RMCI of $3.1 million.
Other operating expenses in the six months ended December 31, 1995 were
$19.7 million, compared to $22.2 million in the comparable six month period of
the prior fiscal year. Same facility other operating expenses decreased $0.2
million between periods ($14.5 million in the current year period compared to
$14.7 million in the prior year period), other operating expenses of RMCI in the
six months ended December 31, 1994 were $2.9 million, and other operating
expenses related to subacute operations increased $0.7 million between periods.
The decrease in other operating expenses between periods due to the closure of
the Three Rivers facility was offset by the increase in other operating expenses
due to the opening of Benchmark South.
The provision for doubtful accounts in the six months ended December
31, 1995 totalled $2.0 million, compared to $2.6 million in the prior year
comparable period. The overall provision for doubtful accounts associated with
11
<PAGE>
the same facilities decreased $0.6 million between periods due to the continued
shift in the Company's overall payor mix away from charged-based payors, which
typically include a higher patient portion due and, consequently, higher bad
debts.
Depreciation and amortization in the six months ended December 31, 1995
totalled $2.6 million, compared to $3.8 million in the prior year comparable
period. This decrease is due to a) the closure of the Three Rivers facility
($0.2 million), b) depreciation and amortization in the six months ended
December 31, 1994 related to RMCI of $0.5 million and c) a sale/leaseback
transaction and asset write-down recorded by the Company in the third and fourth
quarter, respectively, of its prior fiscal year, which reduced depreciation
expense on the underlying assets between periods by $0.5 million.
Interest expense decreased from $4.3 million in the six months ended
December 31, 1994 to $3.5 million in the current year comparable period. Debt
levels were reduced between periods through regularly scheduled principal
payments and a prepayment of principal on the senior secured notes, a $0.5
million reduction in principal on the subordinated secured notes and a $0.8
million reduction in principal on the variable rate demand revenue bonds. In
addition, interest costs included in the December 31, 1994 six month period
related to RMCI were not incurred in the current year period.
Minority interests reflects the limited partners' share of income or
loss before income taxes of the Three Rivers facility. The decrease in minority
interests between periods is due to the closure of this facility in June 1995.
Financial Condition
The Company records amounts due to or from third-party contractual
agencies (Medicare, Medicaid and Blue Cross) based on its best estimate, using
the principles of cost reimbursement, of amounts to be ultimately received or
paid under current and prior years' cost reports filed (or to be filed) with the
appropriate intermediaries. Ultimate settlements and other lump-sum adjustments
due from and paid to these intermediaries occur at various times during the
fiscal year. At December 31, 1995, amounts due from Medicare, Medicaid and Blue
Cross totalled $3.7 million, $1.3 million and $1.2 million, respectively. Also
at December 31, 1995, amounts due to Medicare, Medicaid and Blue Cross totalled
$3.9 million, $1.1 million and $0.3 million, respectively.
During the six months ended December 31, 1995, amounts owed to minority
interests decreased by a total of $0.8 million due primarily to distributions
made to the minority partners in the Three Rivers Hospital Limited Partnership.
In addition, the current portion of long-term debt increased approximately $4.3
million since June 30, 1995 due to a) the Company's commitment to reduce the
credit exposure of its bank group by $3.0 million on July 1, 1996 and b) $3.1
million in principal on the senior secured notes which came due within one year
on September 30, 1995. These increases were offset by $1.5 million in payments
during the six months ended December 31, 1995 on the amount outstanding at June
30, 1995 under the Company's former working capital facility. The Company fully
paid down and terminated this working capital facility in December 1995. See
"Liquidity and Capital Resources" below.
The Company has net deferred tax assets of approximately $8.4 million
at December 31, 1995. Management has considered the effects of implementing tax
12
<PAGE>
planning strategies, consisting of the sales of certain appreciated property, as
the primary basis for not recognizing a valuation allowance related to its
deferred tax assets at December 31, 1995. The ultimate realization of deferred
tax assets may be affected by changes in the underlying values of the properties
considered in the Company's tax planning strategies, which values are dependent
upon the operating results and cash flows of the individual properties. The
Company evaluates the realizability of its deferred tax assets on a quarterly
basis by reviewing its tax planning strategies and assessing the need for a
valuation allowance.
In October 1995, a corporate affiliate of Paul J. Ramsay, the Chairman
of the Board of the Company, acquired through private placement an aggregate of
275,863 shares of common stock of the Company at a price of $3.625 per share. Of
the total shares acquired, 121,363 were issued for cash and 154,500 were issued
for management fees due during the remainder of the Company's current fiscal
year under the Company's management agreement with another corporate affiliate
of Mr. Ramsay. The shares issued for management fees were recorded as prepaid
management fees and the total amount prepaid at December 31, 1995 ($0.4 million)
is included in other current assets in the accompanying balance sheet. With the
issuance of the additional shares, the voting power of the interests in the
Company controlled by Mr. Ramsay increased from approximately 30.9% to
approximately 32.9%.
Liquidity and Capital Resources
The Company's credit facilities include $34.2 million in senior secured
notes, approximately $20 million in letters of credit and $2.1 million in
subordinated secured notes. The senior secured notes bear interest at 11.6% and
are payable as follows: a) $3.1 million due on September 30, 1996, b)
semi-annual principal payments of $3.5 million from March 31, 1997 through
September 30, 1998 and c) semi-annual principal payments of $5.65 million from
March 31, 1999 through March 31, 2000. The subordinated secured notes bear
interest at 15.6% and require semi-annual principal payments of $0.2 million
through March 31, 2000. Required annual principal payments on the variable rate
demand revenue bonds total $0.8 million through year 2000 and $0.9 million to
$1.3 million in years 2001 through 2015.
In September 1995, the Company and the banks supporting the 1993 Credit
Facility agreed to terms which extended the expiration date of the 1993 Credit
Facility from May 15, 1996 to February 15, 1997. In connection with this
extension, the Company agreed to reduce the banks' exposure (through regular
principal payments on the variable rate demand revenue bonds outstanding, early
redemption of certain of these bonds and/or elimination of a working capital
facility) by $2.8 million on or before December 31, 1995 and an additional $3
million on or before July 1, 1996. In December 1995, the Company fully paid down
and terminated the working capital facility originally issued in connection with
the 1993 Credit Facility, thereby achieving, along with regularly scheduled
principal payments made prior to December 31, 1995, the $2.8 million reduction
in the banks' credit exposure.
At the current time, the Company does not have any commitments to make
any material capital expenditures. The Company's current primary cash
requirements relate to its normal operating expenses, the requirement to reduce
its banks' credit exposure as discussed above, principal payments on its senior
secured notes (which recommence on September 30, 1996) and routine capital
improvements at its facilities. Construction costs related to the Company's
subacute business were completed during fiscal 1995 and this business began
13
<PAGE>
generating positive cash flow from operations in the fourth quarter of fiscal
1995. Also, during 1995, the Company closed outpatient day treatment centers and
other outpatient clinics which were experiencing negative cash flow.
On the basis of its historical experience and projected cash needs, the
Company believes that its existing cash resources, internally generated funds
from operations, repayments of certain of the amounts owed by Ramsay Managed
Care, Inc. and funds derived from any future asset sales will be sufficient to
fund its current cash requirements and future identifiable needs. At the present
time, the Company does not have any agreement to sell any of its assets.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on November
10, 1995. At the meeting, the Ramsay Health Care, Inc. 1995 Long Term Incentive
Plan was approved by the stockholders by a vote of 4,734,610 votes in favor,
1,128,348 votes against, 20,492 votes abstaining and 1,214,063 broker non-votes.
The Board of Directors' selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ended June 30, 1996 was ratified during
the meeting by a vote of 7,047,306 in favor, 33,523 against and 17,440
abstaining. The affirmative vote of a majority of the shares of Company stock
represented and voted at the meeting was required for approval or ratification.
During the Annual Meeting of Stockholders of the Company held on
November 10, 1995, nominees for directors of the Company were approved by a vote
which approximated, for each director, 6,700,000 in favor and 400,000
abstaining. The nine directors of the Company elected during the meeting were as
follows: Aaron Beam, Jr., Gregory H. Browne, Peter J. Evans, Robert E. Galloway,
Thomas M. Haythe, Reynold J. Jennings, Paul J. Ramsay, Steven J. Shulman and
Michael S. Siddle.
Item 5. Other Information
During fiscal years 1994 and 1995, the Company's Three Rivers facility
received Medicaid disproportionate share payments based on annual patient volume
projections made at the beginning of the facility's cost reporting periods. The
State of Louisiana has reviewed Three Rivers' annual patient volume for these
periods and has made a preliminary determination that the facility was overpaid
approximately $1.6 million in disproportionate share payments. The Company
believes that certain of the calculations which support the State's preliminary
determination are in error and that other relevant factors affecting this
determination have not been considered.
Further, during fiscal years 1994 and 1995, the Company's Three Rivers
and Bayou Oaks facilities received additional disproportionate share payments
totalling $2.6 million and $0.6 million, respectively, based on the facilities'
classification as Louisiana teaching hospitals. The Company is aware through
public information sources that the State of Louisiana may take the position
that these facilities (and other psychiatric facilities not operated by the
Company) were not teaching hospitals at the time these payments were made. The
Company believes that, based on its understanding of the rules and regulations
14
<PAGE>
in place at the time these payments were made, payments received as a result of
the teaching classification were appropriate.
In neither of the foregoing matters has the State of Louisiana made a
final determination or demand for repayment by the Company. Although the Company
intends to discuss the foregoing matters with representatives from the State of
Louisiana, at this time, the Company cannot predict the outcome of these
discussions or the State's ultimate position on these matters.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The exhibits required to be filed as part of this Quarterly
Report on Form 10-Q are as follows:
Exhibit 10.103 Ramsay Health Care, Inc. 1995 Long Term
Incentive Plan
Exhibit 11 Computation of Net Income per Share
Exhibit 27 Financial Data Schedule
(b) Current Reports on Form 8-K
There were no Current Reports on Form 8-K filed with the
Commission during the quarter ended December 31, 1995.
15
<PAGE>
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
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 thereupon duly authorized.
RAMSAY HEALTH CARE, INC.
Registrant
/s/ Daniel A. Sims
Corporate Controller
Date: February 14, 1996
16
<PAGE>
RAMSAY HEALTH CARE, INC.
1995 LONG TERM INCENTIVE PLAN
SECTION 1. Purpose. The purposes of this Ramsay Health Care, Inc. 1995 Long
Term Incentive Plan (the "Plan") are to encourage selected employees, officers,
directors and consultants of, and other individuals providing services to,
Ramsay Health Care, Inc. (together with any successor thereto, the "Company")
and its Affiliates (as defined below) to acquire a proprietary interest in the
growth and performance of the Company, to generate an increased incentive to
contribute to the Company's future success and prosperity thus enhancing the
value of the Company for the benefit of its stockholders, and to enhance the
ability of the Company and its Affiliates to attract and retain exceptionally
qualified individuals upon whom, in large measure, the sustained progress,
growth and profitability of the Company depend.
SECTION 2. Definitions. As used in the Plan, the following terms shall have
the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or through one or more
intermediaries, is controlled by the Company and (ii) any entity in which the
Company has a significant equity interest, as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Security, Performance Award, or Other Stock-Based Award granted under the Plan.
"Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan.
"Board" shall mean the Board of Directors of the Company.
"Cause", as used in connection with the termination of a Participant's
employment, shall mean (i) with respect to any Participant employed under a
written employment agreement with the Company or an Affiliate of the Company
which agreement includes a definition of "cause," "cause" as defined in such
agreement or, if such agreement contains no such definition, a material breach
by the Participant of such agreement, or (ii) with respect to any other
Participant, the failure to perform adequately in carrying out such
Participant's employment responsibilities, including any directives from the
Board, or engaging in such behavior in his personal or business life as to lead
the Committee in its reasonable judgment to determine that it is in the best
interests of the Company to terminate his employment.
"Common Stock" shall mean the common stock of the Company, $.01 par value.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated thereunder.
"Committee" shall mean the Compensation and Conflict of Interest Committee
or any other committee of the Board designated by the Board to administer the
Plan and composed of not less than three outside directors.
"Common Shares" shall mean any or all, as applicable, of the Common Stock
and such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 4(b) of
the Plan and any other securities of the Company or any Affiliate or any
successor that may be so designated by the Committee.
"Employee" shall mean any employee of the Company or of any Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
<PAGE>
"Fair Market Value" shall mean (A) with respect to any property other than
the Common Shares, the fair market value of such property determined by such
methods or procedures as shall be established from time to time by the
Committee; and (B) with respect to the Common Shares, the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the high bid and low asked prices, in either case on the
principal national securities exchange on which the Common Shares are listed or
admitted to trading, or if the Common Shares are not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on such date, or the average of the
closing high bid and low asked prices in the over-the-counter market reported on
NASDAQ on such date, whichever is applicable, or if there are no such prices
reported on NASDAQ on such date, as furnished to the Committee by any New York
Stock Exchange member selected from time to time by the Committee for such
purpose. If there is no bid or asked price reported on any such date, the Fair
Market Value shall be determined by the Committee in accordance with the
regulations promulgated under Section 2031 of the Code, or by any other
appropriate method selected by the Committee.
"Good Reason", as used in connection with the termination of a
Participant's employment, shall mean (i) with respect to any Participant
employed under a written employment agreement with the Company or an Affiliate
of the Company, "good reason" as defined in such written agreement or, if such
agreement contains no such definition, a material breach by the Company of such
agreement, or (ii) with respect to any other Participant, a failure by the
Company to pay such Participant any amount otherwise vested and due and a
continuation of such failure for 30 business days following notice to the
Company thereof.
"Incentive Stock Option" shall mean an option granted under Section 6(a) of
the Plan that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.
"Non-Qualified Stock Option" shall mean an option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option. Any stock
option granted by the Committee which is not designated an Incentive Stock
Option shall be deemed a Non-Qualified Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Stock-Based Award" shall mean any right granted under Section 6(e)
of the Plan.
"Participant" shall mean any individual granted an Award under the Plan.
"Performance Award" shall mean any right granted under Section 6(d) of the
Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, or government or
political subdivision thereof.
"Released Securities" shall mean securities that were Restricted Securities
but with respect to which all applicable restrictions have expired, lapsed or
been waived in accordance with the terms of the Plan or the applicable Award
Agreement.
"Restricted Securities" shall mean any Common Shares granted under Section
6(c) of the Plan, any right granted under Section 6(c) of the Plan that is
denominated in Common Shares or any other Award under which issued and
outstanding Common Shares are held subject to certain restrictions.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or regulation
thereto as in effect from time to time.
"Stock Appreciation Right" shall mean any right granted under Section 6(b)
of the Plan.
SECTION 3. Administration. The Plan shall be administered by the Committee.
Subject to the terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by the Plan, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to an eligible Employee
or other individual under the Plan; (iii) determine the number and
classification of Common Shares to be covered by (or with respect to which
payments, rights or other matters are to be calculated in connection with)
Awards; (iv) determine the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Common Shares, other securities, other Awards or other
property, or canceled, forfeited or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or suspended; (vi)
determine requirements for the vesting of Awards or performance criteria to be
achieved in order for Awards to vest; (vii) determine whether, to what extent
and under what circumstances cash, Common Shares, other securities, other
Awards, other property and other amounts payable with respect to an Award under
the Plan shall be deferred either automatically or at the election of the holder
thereof or of the Committee; (viii) interpret and administer the Plan and any
instrument or agreement relating to, or Award made under, the Plan; (ix)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan;
and (x) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder or beneficiary
of any Award, any shareholder and any Employee. Notwithstanding the foregoing,
the maximum number of Awards which may be granted to any one Participant under
this Plan shall not exceed 150,000 Common Shares, subject to the adjustments
provided in Section 4(b) hereof and no Awards under this Plan shall be granted
after June 30, 2005.
SECTION 4. Common Shares Available for Awards.
(a) Common Shares Available. Subject to adjustment as provided in
Section 4(b):
(i) Calculation of Number of Common Shares Available. The number of Common
Shares available for granting Awards under the Plan shall be 500,000,
any or all of which may be or may be based on Common Stock, any other
security which becomes the subject of Awards, or any combination
thereof. Initially 500,000 shares of Common Stock shall be reserved
for Awards hereunder. Further, if, after the effective date of the
Plan, any Common Shares covered by an Award granted under the Plan or
to which such an Award relates, are forfeited, or if an Award
otherwise terminates or is canceled without the delivery of Shares or
of other consideration, then the Common Shares covered by such Award
or to which such Award relates, or the number of Common Shares
otherwise counted against the aggregate number of Common Shares
available under the Plan with respect to such Award, to the extent of
any such forfeiture, termination or cancellation, shall again be, or
shall become, available for granting Awards under the Plan.
(ii) Accounting for Awards. For purposes of this Section 4,
(A) if an Award is denominated in or based upon Common Shares, the
number of Common Shares covered by such Award or to which such
Award relates shall be counted on the date of grant of such Award
against the aggregate number of Common Shares available for
granting Awards under the Plan and against the maximum number of
Awards available to any Participant; and
(B) Awards not denominated in Common Shares may be counted against
the aggregate number of Common Shares available for granting
Awards under the Plan and against the maximum number of Awards
available to any participant in such amount and at such time as
the Committee shall determine under procedures adopted by the
Committee consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with (whether
granted simultaneously with or at a different time from), or that are
substituted for, other Awards may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting.
Any Common Shares that are delivered by the Company, and any Awards
that are granted by, or become obligations of, the Company, through the
assumption by the Company or an Affiliate of, or in substitution for,
outstanding awards previously granted by an acquired company shall, in
the case of Awards granted to Participants who are officers or
directors of the Company for purposes of Section 16 of the Exchange
Act, be counted against the Common Shares available for granting Awards
under the Plan.
(iii) Sources of Common Shares Deliverable Under Awards. Any Common
Shares delivered pursuant to an Award may consist, in whole or in
part, of authorized and unissued Common Shares or of treasury
Common Shares.
(b) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash,
Common Shares, other securities or other property),
recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Common Shares or other
securities of the Company, issuance of warrants or other rights
to purchase Common Shares or other securities of the Company, or
other similar corporate transaction or event affects the Common
Shares such that an adjustment is determined by the Committee to
be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and kind
of Common Shares (or other securities or property) which
thereafter may be made the subject of Awards, (ii) the number and
kind of Common Shares (or other securities or property) subject
to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award or, if deemed appropriate, make provision
for a cash payment to the holder of an outstanding Award;
provided, however, that the number of Common Shares subject to
any Award denominated in Common Shares shall always be a whole
number.
In connection with any merger or consolidation in which the Company is not
the surviving corporation and which results in the holders of the outstanding
voting securities of the Company (determined immediately prior to such merger or
consolidation) owning less than a majority of the outstanding voting securities
of the surviving corporation (determined immediately following such merger or
consolidation), or any sale or transfer by the Company of all or substantially
all its assets or any tender offer or exchange offer for or the acquisition,
directly or indirectly, by any person or group of all or a majority of the then
outstanding voting securities of the Company, all outstanding Options under the
Plan shall become exercisable in full, notwithstanding any other provision of
the Plan or of any outstanding options granted thereunder, on and after (i) the
fifteenth day prior to the effective date of such merger, consolidation, sale,
transfer or acquisition or (ii) the date of commencement of such tender offer or
exchange offer, as the case may be. The provisions of the foregoing sentence
shall apply to any outstanding Options which are Incentive Stock Options to the
extent permitted by Section 422(d) of the Code and such outstanding Options in
excess thereof shall, immediately upon the occurrence of the event described in
clause (i) or (ii) of the foregoing sentence, be treated for all purposes of the
Plan as Non-Qualified Stock Options and shall be immediately exercisable as such
as provided in the foregoing sentence.
SECTION 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or of any Affiliate, and any consultant of, or
other individual providing services to, the Company or any Affiliate shall be
eligible to be designated a Participant. A non-employee director shall be
eligible to receive Non-Qualified Stock Options under the Plan.
SECTION 6. Awards.
(a) Options. The Committee is hereby authorized to grant to eligible
individuals options to purchase Common Shares (each, an "Option") which shall
contain the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan, as
the Committee shall determine:
(i) Exercise Price. The purchase price per Common Share purchasable
under an Option shall be determined by the Committee; provided,
however, that such purchase price shall not be less than the Fair
Market Value of a Common Share on the date of grant of such
Option, or such other price as required under Subsection 6(a)(iv)
hereof.
(ii) Time and Method of Exercise. Subject to the terms of Section
6(a)(iii), the Committee shall determine the time or times at
which an Option may be exercised in whole or in part, and the
method or methods by which, and the form or forms (including,
without limitation, cash, Common Shares, outstanding Awards, or
other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price)
in which, payment of the exercise price with respect thereto may
be made or deemed to have been made.
(iii)Exercisability Upon Death, Retirement and Termination of
Employment. Subject to the condition that no Option may be
exercised in whole or in part after the expiration of the Option
period specified in the applicable Award Agreement:
(A) Subject to the terms of paragraph (D) below, upon the death
of a Participant while employed or within 3 months of
retirement or disability as defined in paragraph (B) below,
the person or persons to whom such Participant's rights with
respect to any Option held by such Participant are
transferred by will or the laws of descent and distribution
may, prior to the expiration of the earlier of: (1) the
outside exercise date determined by the Committee at the
time of granting the Option, or (2) nine months after such
Participant's death, purchase any or all of the Common
Shares with respect to which such Participant was entitled
to exercise such Option immediately prior to such
Participant's death, and any Options not so exercisable will
lapse on the date of such Participant's death;
(B) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company
(x) as a result of retirement pursuant to a retirement plan
of the Company or an Affiliate or disability (as determined
by the Committee) of such Participant, (y) by the Company
other than for Cause, or (z) by the Participant with Good
Reason, such Participant may, prior to the expiration of the
earlier of: (1) the outside exercise date determined by the
Committee at the time of granting the Option, or (2) three
months after the date of such termination, purchase any or
all of the Common Shares with respect to which such
Participant was entitled to exercise any Options immediately
prior to such termination, and any Options not so
exercisable will lapse on such date of termination;
(C) Subject to the terms of paragraph (D) below, upon
termination of a Participant's employment with the Company
under any circumstances not described in paragraphs (A) or
(B) above, such Participant's Options shall be canceled to
the extent not theretofore exercised;
(D) Upon (i) the death of the Participant, or (ii) termination
of the Participant's employment with the Company (x) by the
Company other than for Cause (y) by the Participant with
Good Reason or (z) as a result of retirement or disability
as defined in paragraph (B) above, the Company shall have
the right to cancel all of the Options such Participant was
entitled to exercise at the time of such death or
termination (subject to the terms of paragraphs (A) or (B)
above) for a payment in cash equal to the excess, if any, of
the Fair Market Value of one Common Share on the date of
death or termination over the exercise price of such Option
for one Common Share times the number of Common Shares
subject to the Option and exercisable at the time of such
death or termination; and
(E) Upon expiration of the respective periods set forth in each
of paragraphs (A) through (C) above, the Options of a
Participant who has died or whose employment has been
terminated shall be canceled to the extent not theretofore
canceled or exercised.
(F) For purposes of paragraphs (A) through (D) above, the period
of service of an individual as a director or consultant of
the Company or an Affiliate shall be deemed the period of
employment.
(iv) Incentive Stock Options. The following provisions shall apply
only to Incentive Stock Options granted under the Plan:
(A) No Incentive Stock Option shall be granted to any
eligible Employee who, at the time such Option is
granted, owns securities possessing more than ten
percent (10%) of the total combined voting power of all
classes of securities of the Company or of any
Affiliate, except that such an Option may be granted to
such an Employee if at the time the Option is granted
the option price is at least one hundred ten percent
(110%) of the Fair Market Value of the Common Shares
(determined in accordance with Section 2) subject to
the Option, and the Option by its terms is not
exercisable after the expiration of five (5) years from
the date the Option is granted; and
(B) To the extent that the aggregate Fair Market Value of
the Common Shares with respect to which Incentive Stock
Options (without regard to this subsection) are
exercisable for the first time by any individual during
any calendar year (under all plans of the Company and
its Affiliates) exceeds $100,000, such Options shall be
treated as Non-Qualified Stock Options. This subsection
shall be applied by taking Options into account in the
order in which they were granted. If some but not all
Options granted on any one day are subject to this
subsection, then such Options shall be apportioned
between Incentive Stock Option and Non-Qualified Stock
Option treatment in such manner as the Committee shall
determine. For purposes of this subsection, the Fair
Market Value of any Common Shares shall be determined,
in accordance with Section 2, as of the date the Option
with respect to such Common Shares is granted.
(v) Terms and Conditions of Options Granted to Directors.
Notwithstanding any provision contained in the Plan to the
contrary, during any period when any member of the Committee
shall not be a "disinterested person" as defined in Rule 16b-3,
as such Rule was in effect at April 30, 1991, then, the terms and
conditions of Options granted under the Plan to any director of
the Company during such period shall be as follows:
(A) The price at which each Common Share subject to an option
may be purchased shall, subject to any adjustments which may
be made pursuant to Section 4, in no event be less than the
Fair Market Value of a Common Share on the date of grant,
and provided further that in the event the option is
intended to be an Incentive Stock Option and the optionee
owns on the date of grant securities possessing more than
ten percent (10%) of the total combined voting power of all
classes of securities of the Company or of any Affiliate,
the price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per Common Share on
the date of grant.
(B) The Option may be exercised to purchase Common Shares
covered by the Option not sooner than six (6) months
following the date of grant. The Option shall terminate and
no Common Shares may be purchased thereunder more than ten
(10) years after the date of grant, provided that if the
Option is intended to be an Incentive Stock Option and the
Optionee owns on the date of grant securities possessing
more than ten percent (10%) of the total combined voting
power of all classes of securities of the Company or of any
Affiliate, the Option shall terminate and no Common Shares
may be purchased thereunder more than five (5) years after
the date of grant.
(C) The maximum number of Common Shares which may be subject to
options granted to all directors pursuant to this Section
5(j) shall be 500,000 shares in the aggregate. The maximum
number of Common Shares which may be subject to options
granted to any director of the Company shall be 150,000
shares.
(b) Stock Appreciation Rights. The Committee is hereby authorized to grant
to eligible Employees "Stock Appreciation Rights." Each Stock Appreciation Right
shall consist of a right to receive the excess of (i) the Fair Market Value of
one Common Share on the date of exercise or, if the Committee shall so determine
in the case of any such right other than one related to any Incentive Stock
Option, at any time during a specified period before or after the date of
exercise over (ii) the grant price of the right as specified by the Committee,
which shall not be less than one hundred percent (100%) of the Fair Market Value
of one Common Share on the date of grant of the Stock Appreciation Right (or, if
the Committee so determines, in the case of any Stock Appreciation Right
retroactively granted in tandem with or in substitution for another Award, on
the date of grant of such other Award). Subject to the terms of the Plan and any
applicable Award Agreement, the grant price, term, methods of exercise, methods
of settlement, and any other terms and conditions of any Stock Appreciation
Right granted under the Plan shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of any
Stock Appreciation Right as it may deem appropriate.
(c) Restricted Securities.
(i) Issuance. The Committee is hereby authorized to grant to eligible
Employees "Restricted Securities" which shall consist of the
right to receive, by purchase or otherwise, Common Shares which
are subject to such restrictions as the Committee may impose
(including, without limitation, any limitation on the right to
vote such Common Shares or the right to receive any dividend or
other right or property), which restrictions may lapse separately
or in combination at such time or times, in such installments or
otherwise, as the Committee may deem appropriate.
(ii) Registration. Restricted Securities granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or
issuance of a stock certificate or certificates. In the event any
stock certificate is issued in respect of Restricted Securities
granted under the Plan, such certificate shall be registered in
the name of the Participant and shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to
such Restricted Securities.
(iii)Forfeiture. Except as otherwise determined by the Committee, upon
termination of a Participant's employment for any reason during
the applicable restriction period, all of such Participant's
Restricted Securities which had not become Released Securities by
the date of termination of employment shall be forfeited and
reacquired by the Company; provided, however, that the Committee
may, when it finds that a waiver would be in the best interests
of the Company, waive in whole or in part any or all remaining
restrictions with respect to such Participant's Restricted
Securities. Unrestricted Common Shares, evidenced in such manner
as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Securities promptly after such Restricted
Securities become Released Securities.
(d) Performance Awards. The Committee is hereby authorized to grant to
eligible Employees "Performance Awards." Each Performance Award shall consist of
a right, (i) denominated or payable in cash, Common Shares, other securities or
other property (including, without limitation, Restricted Securities), and (ii)
which shall confer on the holder thereof rights valued as determined by the
Committee and payable to, or exercisable by, the holder of the Performance
Award, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the termination of a Participant's
employment and the amount of any payment or transfer to be made pursuant to any
Performance Award shall be determined by the Committee and by the other terms
and conditions of any Performance Award. The Committee shall issue performance
goals prior to the commencement of the performance period to which such
performance goals pertain.
(e) Other Stock-Based Awards. The Committee is hereby authorized to grant
to eligible Employees "Other Stock Based Awards." Each Other Stock-Based Award
shall consist of a right (i) which is other than an Award or right described in
Section 6(a), (b), (c) or (d) above and (ii) which is denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Common Shares (including, without limitation, securities convertible into Common
Shares) as are deemed by the Committee to be consistent with the purposes of the
Plan; provided, however, that such right shall comply, to the extent deemed
desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the
terms of the Plan and any applicable Award Agreement, the Committee shall
determine the terms and conditions of Other Stock-Based Awards. Common Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(e) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms, including, without limitation,
cash, Common Shares, other securities, other Awards, other property, or any
combination thereof, as the Committee shall determine.
(f) General.
(i) No Cash Consideration for Awards. Awards may be granted for no
cash consideration or for such minimal cash consideration as may
be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for any other
Award, except that in no event shall an Incentive Stock Option be
granted together with a Non-Qualified Stock Option in such a
manner that the exercise of one Option affects the right to
exercise the other. Awards granted in addition to or in tandem
with other Awards may be granted either at the same time as or at
a different time from the grant of such other awards.
(iii)Forms of Payment Under Awards. Subject to the terms of the Plan
and of any applicable Award Agreement, payments or transfers to
be made by the Company or an Affiliate upon the grant, exercise
or payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, cash,
Common Shares, other securities, other Awards, or other property,
or any combination thereof, and may be made in a single payment
or transfer, in installments, or on a deferred basis, in each
case in accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments. In accordance with
the above, the Committee may elect (i) to pay a Participant (or
such Participant's permitted transferee) upon the exercise of an
Option in whole or in part, in lieu of the exercise thereof and
the delivery of Common Shares thereunder, an amount of cash equal
to the excess, if any, of the Fair Market Value of one Common
Share on the date of such exercise over the exercise price of
such Option for one Common Share times the number of Common
Shares subject to the Option or portion thereof so exercised or
(ii) to settle other stock denominated Awards in cash.
(iv) Limits on Transfer of Awards.
(A) No award (other than Released Securities), and no right
under any such Award, may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent
and distribution (or, in the case of Restricted Securities,
to the Company) and any such purported assignment,
alienation, pledge, attachment, sale or other transfer or
encumbrance shall be void and unenforceable against the
Company or any Affiliate.
(B) Each award, and each right under any Award, shall be
exercisable during the Participant's lifetime only by the
Participant or, if permissible under applicable law, by the
Participant's guardian or legal representative.
(v) Terms of Awards. The term of each Award shall be for such period
as may be determined by the Committee; provided, however, that in
no event shall the term of any Option exceed a period of ten
years from the date of its grant. (vi) Rule 16b-3 Six-Month
Limitations. To the extent required in order to maintain the
exemption provided under Rule 16b-3 only, any equity security
offered pursuant to the Plan must be held for at least six months
after the date of grant, and with respect to any derivative
security issued pursuant to the Plan, at least six months must
elapse from the date of acquisition of such derivative security
to the date of disposition of the derivative security (other than
upon exercise or conversion) or its underlying equity security.
Terms used in the preceding sentence shall, for the purposes of
such sentence only, have the meanings, if any, assigned or
attributed to them under Rule 16b-3.
(vii)Common Share Certificates. All certificates for Common Shares
delivered under the Plan pursuant to any Award of the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
such Common Shares are then listed, and any applicable Federal or
state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate
reference to such restrictions.
(viii) Delivery of Common Shares or Other Securities and Payment by
Participant of Consideration. No Common Shares or other
securities shall be delivered pursuant to any Award until payment
in full of any amount required to be paid pursuant to the Plan or
the applicable Award Agreement is received by the Company. Such
payment may be made by such method or methods and in such form or
forms as the Committee shall determine, including, without
limitation, cash, Common Shares, other securities, other Awards
or other property, or any combination thereof; provided that the
combined value, as determined by the Committee, of all cash and
cash equivalents and the Fair Market Value of any such Common
Shares or other property so tendered to the Company, as of the
date of such tender, is at least equal to the full amount
required to be paid pursuant to the Plan or the applicable Award
Agreement to the Company.
SECTION 7. Amendments; Adjustments and Termination. Except to the extent
prohibited by applicable law and unless otherwise expressly provided in an Award
Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or other Person; provided,
however, that, subject to the Company's rights to adjust Awards under Sections
7(c) and (d), any amendment, alteration, suspension, discontinuation, or
termination that would impair the rights of any Participant, or any other holder
or beneficiary of any Award theretofore granted, shall not to that extent be
effective without the consent of such Participant, other holder or beneficiary
of an Award, as the case may be; and provided further, however, that
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the stockholders of the Company no such amendment, alteration,
suspension, discontinuation, or termination shall be made that would:
(i) increase the total number of Common Shares available for Awards
under the Plan, except as provided in Section 4 hereof; or
(ii) otherwise cause the Plan to cease to comply with any tax or
regulatory requirement, including for these purposes any approval
or other requirement which is or would be a prerequisite for
exemptive relief from Section 16(b) of the Exchange Act.
(b) Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any Award theretofore granted, prospectively or retroactively; provided,
however, that, subject to the Company's rights to adjust Awards under Sections
7(c) and (d), any amendment, alteration, suspension, discontinuation,
cancellation or termination that would impair the rights of any Participant or
holder or beneficiary of any Award theretofore granted, shall not to that extent
be effective without the consent of such Participant or holder or beneficiary of
an Award, as the case may be.
(c) Adjustment of Awards Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards or the right
or obligation to make future such awards in connection with the acquisition of
another business or another corporation or business entity, the Committee may
make such adjustments, not inconsistent with the terms of the Plan, in the terms
of Awards as it shall deem appropriate in order to achieve reasonable
comparability or other equitable relationship between the assumed awards and the
Awards granted under the Plan as so adjusted.
(d) Adjustments of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or non-recurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
SECTION 8. General Provisions.
(a) No Rights to Awards. No Employee or other Person shall have any claim
to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Employees, or holders or beneficiaries of Awards
under the Plan. The terms and conditions of Awards need not be the same with
respect to each recipient.
(b) Delegation. Subject to the terms of the Plan and applicable law, the
Committee may delegate to one or more officers or managers of the Company or any
Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify, waive rights with respect to, alter,
discontinue, suspend, or terminate Awards; provided, however, that, no such
delegation shall be permitted with respect to Awards held by Employees who are
officers or directors of the Company for purposes of Section 16 of the Exchange
Act, or any successor section thereto or who are otherwise subject to such
Section.
(c) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
(d) Withholding. The Company or any Affiliate shall be authorized to
withhold from any Award granted, from any payment due or transfer made under any
Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Common Shares, other securities, other Awards,
or other property) of withholding taxes due in respect of an Award, its
exercise, or any payment or transfer under such Award or under the Plan and to
take such other action as may be necessary in the opinion of the Company or
Affiliate to satisfy all obligations for the payment of such taxes.
(e) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.
(f) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
(g) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable Federal law.
(h) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or as
to any Person or Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or
if it cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, Person or Award and the
remainder of the Plan and any such Award shall remain in full force and effect.
(i) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(j) No Fractional Common Shares. No fractional Common Shares shall be
issued or delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Common Shares or whether such fractional
Common Shares or any rights thereto shall be canceled, terminated, or otherwise
eliminated.
(k) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 9. Adoption, Approval and Effective Date of the Plan. The Plan
shall be considered adopted and shall become effective on the date the Plan is
approved by the Board; provided, however, that the Plan and any Awards granted
under the Plan shall be void, if the stockholders of the Company shall not have
approved the adoption of the Plan within twelve (12) months after the effective
date, by a majority of votes cast thereon at a meeting of stockholders duly
called and held for such purpose.
RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER SHARE
(unaudited)
Quarter Ended Six Months Ended
December 31 December 31
1995 1994 1995 1994
---------------------------------------------
PRIMARY
Weighted average common shares
outstanding ............ 7,952,692 7,729,864 7,836,866 7,726,370
Class A convertible preferred
stock .................. -- 22,910 -- 22,910
Class B convertible preferred
stock, Series C ........ 1,424,860 1,424,860 1,424,860 1,424,860
Net effect of dilutive stock
options-based on the modified
treasury stock method .. -- 337,377 -- 337,377
---------- ---------- --------- ---------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES .. 9,377,552 9,515,011 9,261,726 9,511,517
========== ========== ========= =========
Net Income Available to Common
Shareholders .............. $ 835,000 $ 437,000 $ 444,000 $1,025,000
========== ========== ========== ==========
NET INCOME PER SHARE ...... $ 0.09 $ 0.05 $ 0.05 $ 0.11
========== ========== ========== ==========
FULLY DILUTED
Weighted average common shares
outstanding ............ 8,012,701 7,741,799 8,012,701 7,743,465
Class A convertible
preferred stock .. ..... -- 22,910 -- 22,910
Class B convertible
preferred stock,
Series C ............... 1,424,860 1,424,860 1,424,860 1,424,860
Net effect of dilutive stock
options-based on the modified
treasury stock method .. -- 337,377 -- 337,377
---------- --------- --------- ---------
TOTAL COMMON AND DILUTIVE
COMMON EQUIVALENT SHARES .. 9,437,561 9,526,946 9,437,561 9,528,612
========== ========= ========= =========
Net Income Available to Common
Shareholders .............. $ 835,000 $ 437,000 $ 444,000 $1,025,000
========== ========== ========== ==========
NET INCOME PER SHARE ...... $ 0.09 $ 0.05 $ 0.05 $ 0.11
========== ========== ========== ==========
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Oct-01-1995
<PERIOD-END> Dec-31-1995
<CASH> 5,390,000
<SECURITIES> 0
<RECEIVABLES> 27,360,000
<ALLOWANCES> 3,545,000
<INVENTORY> 0
<CURRENT-ASSETS> 42,897,000
<PP&E> 103,272,000
<DEPRECIATION> 31,415,000
<TOTAL-ASSETS> 135,481,000
<CURRENT-LIABILITIES> 21,606,000
<BONDS> 48,576,000
0
233,000
<COMMON> 86,000
<OTHER-SE> 62,808,000
<TOTAL-LIABILITY-AND-EQUITY> 135,481,000
<SALES> 0
<TOTAL-REVENUES> 31,815,000
<CGS> 0
<TOTAL-COSTS> 26,384,000
<OTHER-EXPENSES> 1,242,000
<LOSS-PROVISION> 1,070,000
<INTEREST-EXPENSE> 1,783,000
<INCOME-PRETAX> 1,336,000
<INCOME-TAX> 501,000
<INCOME-CONTINUING> 835,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 835,000
<EPS-PRIMARY> $0.09
<EPS-DILUTED> $0.09
</TABLE>
