FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 number 0-14796
FHP INTERNATIONAL CORPORATION
a Delaware Corporation
I.R.S. Employer Identification No. 33-0072502
9900 Talbert Avenue, Fountain Valley, CA 92708-8000
(Address of principal executive offices) (Zip Code)
(714) 963-7233
(Registrant's telephone number, including area code)
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 registrant had 40,297,157 shares of common stock, par value
$0.05 per share, outstanding at November 8, 1995.
The Exhibit Index Appears on Page 17
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FHP INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
(amounts in thousands, September 30, June 30,
except share data) 1995 1995
_____________ ___________
Cash and cash equivalents $ 324,507 $ 299,144
Short-term investments 130,664 157,220
Accounts receivable 142,875 141,840
Prepaid expenses and other
current assets 46,331 44,091
Deferred income taxes 31,984 31,984
__________ __________
Total current assets 676,361 674,279
Property and equipment, net 227,674 229,765
Assets held for sale (Note 5) 136,001 138,164
Long-term investments 70,585 71,492
Restricted investments 102,227 105,482
Goodwill and other intangibles,
net 1,051,418 1,059,507
Other assets, net 37,227 37,127
__________ __________
Total assets $2,301,493 $2,315,816
========== ==========
__________
See accompanying notes to consolidated financial statements.<PAGE>
FHP INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
(amounts in thousands, September 30, June 30,
except share data) 1995 1995
_____________ __________
Current portion of long-term
obligations $ 30,094 $ 30,168
Accounts payable 67,613 64,762
Medical claims payable 342,913 341,222
Accrued salaries and employee
benefits 65,381 77,716
Unearned premiums 198,227 207,961
Restructuring reserve (Note 5) 13,347 15,038
Income taxes payable and other
current liabilities 25,121 15,791
____________ __________
Total current liabilities 742,696 752,658
Long-term obligations 320,340 337,817
Other liabilities 89,601 85,200
____________ __________
Total liabilities 1,152,637 1,175,675
____________ __________
Commitments and contingencies
(Note 4)
Stockholders' equity:
Series A Convertible and Series B
Preferred Stock, $0.05 par value;
40,000,000 shares authorized (Note 3) 1,056 1,056
Common Stock, $0.05 par value;
100,000,000 shares authorized;
issued and outstanding 40,291,605
and 40,220,941 shares at September 30,
1995 and June 30, 1995, respectively 2,015 2,011
Paid-in capital 929,165 927,882
Unrealized holding gains (losses) on
available-for-sale investments, net of
tax effect of $1,236 at
September 30, 1995 and $1,232 at
June 30, 1995 (1,338) (1,446)
Retained earnings 217,958 210,638
____________ ___________
Total stockholders' equity 1,148,856 1,140,141
____________ ___________
Total liabilities and
stockholders' equity $2,301,493 $2,315,816
============ ===========
__________
See accompanying notes to consolidated financial statements.
FHP INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For The
(amounts in thousands, Three Months Ended
except per share data) September 30,
1995 1994
___________ _________
Revenues $1,004,633 $954,340
___________ _________
Expenses:
Primary health care 818,971 763,008
Other health care 30,845 26,023
General, administrative and
marketing 125,126 128,073
Provision for restructuring 5,759
___________ _________
Total expenses 980,701 917,104
___________ _________
Operating income 23,932 37,236
Interest income 9,136 7,271
Interest expense (6,424) (6,136)
___________ ________
Income before income taxes 26,644 38,371
Provision for income taxes 12,717 17,651
___________ _________
Net income 13,927 20,720
Preferred Stock dividends 6,607 5,505
___________ _________
Net income attributable to
Common Stock $ 7,320 $ 15,215
=========== =========
Primary earnings per share
attributable to Common Stock (Note 2) $ 0.18 $ 0.37
=========== =========
Weighted average number of common
shares and common share equivalents 41,016 40,852
=========== =========
Fully diluted earnings per share
(Note 2) --- $ 0.36
=========== =========
Fully diluted weighted average number
of common shares and common share
equivalents --- 58,196
=========== =========
__________
See accompanying notes to consolidated financial statements.
FHP INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For The
Three Months Ended
(amounts in thousands) September 30,
1995 1994
_________ ________
Operating Activities
Net income $13,927 $20,720
Adjustments to reconcile
net income to net cash
provided by operating activities:
Provision for restructuring 5,759
Depreciation and amortization 18,372 20,090
Increase in allowance for
doubtful accounts 739 1,002
Loss on disposal of equipment 68 893
Deferred income taxes (939)
Effect on cash of changes
in operating assets and
liabilities:
Accounts receivable (1,774) (77)
Prepaid expenses and other
current assets (2,240) 4,135
Other assets (161) (2,106)
Accounts payable 2,851 (18,421)
Medical claims payable 1,691 21,087
Accrued salaries and
employee benefits (12,335) (4,357)
Deferred premiums (9,734) 137,251
Other liabilities 10,745 2,744
_________ ________
Net cash provided by operating
activities 27,908 182,022
_________ ________
Investing Activities
Purchases of available-for-sale
investments (47,272) (57,983)
Proceeds from sales/maturities
of available-for-sale investments 78,419 75,527
Loss on sale of available-for-sale
investments 161 249
Gain on sale of available-for-sale
investments (486) (74)
Purchases of property and
equipment (13,245) (14,849)
Proceeds from sales of assets held
for sale 236
_________ ________
Net cash provided by investing
activities 17,813 2,870
_________ ________
FHP INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(continued)
(unaudited)
For The
Three Months Ended
(amounts in thousands) September 30,
1995 1994
_________ _________
Financing Activities
Payments on long-term
obligations (15,048) (37)
Exercise of stock options 1,287 2,828
Cash dividends paid to preferred
shareholders (6,597) (6,304)
_________ _________
Net cash (used in) provided by
financing activities (20,358) (3,513)
_________ _________
Increase in cash and
cash equivalents 25,363 181,379
Cash and cash equivalents at
beginning of period 299,144 60,571
_________ _________
Cash and cash equivalents at end
of period $324,507 $241,950
========= =========
Supplemental cash flow information:
Interest payments (net of portion
capitalized) $ 5,123 $ 6,122
Income tax payments (net of
refunds) $ 9,677 $ 38
__________
See accompanying notes to consolidated financial statements.
<PAGE>
FHP INTERNATIONAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. Organization and Accounting Policies
FHP International Corporation (the "Company"), through its direct
and indirect subsidiaries, delivers managed health care services and
sells indemnity medical, group life, and workers' compensation
insurance.
Interim periods are viewed as an integral part of the annual period
of the Company. Accordingly, the results for the interim periods
reported are based on the accounting principles and practices followed
by the Company as presented in its Annual Report on Form 10-K for the
year ended June 30, 1995. In the opinion of management, all adjustments
necessary to fairly present the financial position and the results of
operations for the three months ended September 30, 1995 and 1994 are
included in these consolidated financial statements.
NOTE 2. Earnings Per Share
Primary earnings per share attributable to Common Stock for the
three months ended September 30, 1995 and 1994 are computed by dividing
net income after Preferred Stock dividends by the weighted average
number of common shares and dilutive common stock options (using average
market price), which are considered common share equivalents,
outstanding during the periods.
Fully diluted earnings per share for the three months ended
September 30, 1994 assume the conversion of the Series A Cumulative
Convertible Preferred Stock, the elimination of the related Preferred
Stock dividend requirement and market price as of the end of the quarter
for dilutive common stock options.
<PAGE>
NOTE 3. Preferred Stock
The issued and outstanding, and aggregate liquidation preference of
the Company's two series of preferred stock are as follows:
September 30, 1995 June 30, 1995
----------------------- -----------------------
Series B Series B
Series A Adjustable Series A Adjustable
Cumulative Rate Cumulative Rate
Convertible Cumulative Convertible Cumulative
----------- ---------- ------------ ----------
Issued and outstanding 21,040,307 79,218 21,040,307 79,218
Aggregate liquidation
preference $526,031,000 $2,003,000 $526,027,000 $1,999,000
NOTE 4. Commitments and Contingencies
During the ordinary course of business, the Company and its
subsidiaries have become a party to pending and threatened legal actions
and proceedings, a significant number of which involve alleged claims of
medical malpractice. Management is of the opinion, taking into account
its insurance coverage and reserves that have been established, that the
outcome of the currently known legal actions and proceedings will not,
singly or in the aggregate, have a material effect on the consolidated
financial position or results of operations or cash flows of the Company
and its subsidiaries.
NOTE 5. Restructuring Charge
In June, 1995, the Company's Board of Directors approved a
restructuring plan involving the discontinuance of services and programs
that do not meet the Company's strategic and economic return objectives,
a reduction in workforce, and the creation of a physician practice
management company ("PPMC"), which will be operated as a subsidiary of
the Company. The PPMC will encompass all of FHP's Company-operated
medical facilities in California, Utah, Arizona, New Mexico, and Nevada.
In addition, the Board of Directors decided to sell the Company's two
acute care hospitals and other nonproductive real estate. The formation
of the PPMC, anticipated for January 1, 1996, will entail added
operating costs during the first six months of fiscal 1996. These costs
include duplicate employees during the transition period, separation
expenses for displaced employees, and the cost of developing new
computer systems to handle fee for service business and other HMO and
preferred provider organization customers.
During three months ended September 30, 1995, the Company recorded
a pretax restructuring charge of $5.8 million ($3.6 million, net of tax)
in the accompanying Consolidated Statements of Income. Included in this
charge are the expected costs of employee separations ($2.4 million),
and certain other costs associated with the Company's restructuring of
its operations ($3.4 million). Affected employees were notified prior
to September 30, 1995. Assets identified as those to be sold as part of
the restructuring have been reclassified as assets held for sale in the
accompanying Consolidated Balance Sheets as of September 30, 1995, and
June 30, 1995 and are expected to be disposed of by the end of fiscal
year 1996. A mortgage of approximately $2.4 million relating to the
Company's Fountain Valley, California, medical center was reclassified
to assets held for sale in the Company's September 30, 1995, balance
sheet.
The restructuring charge is based on the Company's estimate and
will continue to be refined until the restructuring plan is complete.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Restructuring
In June, 1995, FHP International Corporation ("FHP" or the
"Company") announced an internal restructuring (the "Restructuring
Plan") of its operations. The Restructuring Plan was formulated in
response to the intensely competitive environment in the HMO industry
and continued declining membership in its Company-operated medical
facilities. The Restructuring Plan consists of the sale of the Company s
owned and operated hospitals, certain nonproductive real estate and
other assets; a reduction in the Company s work force; and the creation
of three distinct business segments: 1) a physician practice management
company ("PPMC"); 2) the contract model health maintenance organization
("HMO"); and 3) the Company s group life, health and accident and
workers compensation insurance and related products (collectively, the
"Insurance Group").
The Restructuring Plan includes the sale of the Company's two acute
care hospitals located in Fountain Valley, California and Salt Lake
City, Utah (with a combined total of 356 licensed beds), disposal of two
sub-acute facilities and certain other nonproductive real estate and
other assets and discontinuance of the Company's consulting product
line. Net proceeds available from the sale of assets will be used to
reduce indebtedness and for other corporate purposes. The restructuring
plan also includes a reduction of the Company's work force. The Company
reduced its work force by approximately 250 employees in the three month
period ended September 30, 1995. This reduction was in addition to a
reduction of approximately 500 employees in June, 1995. Further
reductions in the work force may take place in the second quarter, and
possibly in the second half of fiscal year 1996. Costs associated with
the reduction in work force in the first quarter of fiscal year 1996,
together with administrative facility closure costs, resulted in a
pretax charge against earnings of approximately $5.8 million.
The Restructuring Plan includes the creation of the PPMC, as a new
subsidiary of the Company and the transfer or lease of the Company s
medical centers and related assets (located in California, Arizona,
Utah, Nevada, and New Mexico) to the PPMC. Approximately 6,600 of the
Company s employees, including health care professionals, will become
employees of the PPMC or of several newly created professional
corporations (the "PCs"). The PCs will enter into long-term practice
management agreements with the PPMC, thereby enabling the PCs and PPMC
to do business with other payors and HMOs, as well as with the Company s
HMO. The PCs and PPMC are expected to be operational by January 1,
1996, subject to obtaining all necessary regulatory approvals.
The HMO will contract with the PCs to provide health care services
for approximately 20% of the Company s HMO members who are already
receiving health care in the Company s medical centers. The contractual
arrangements between the Company's HMO and the PCs will be financially
similar to existing contracts between the HMO and other contract health
care providers.
Three Months Ended September 30, 1995, Compared to the
Three Months Ended September 30, 1994
Revenue and Membership
The Company generates substantially all of its revenue from
premiums received for health care services provided to the HMO members
of its wholly-owned subsidiaries. Revenue for the three month period
ended September 30, 1995, totaled $1,004.6 million, increasing 5.3% over
revenue of $954.3 million for the same period in the previous fiscal
year. Total HMO membership grew 4.5% to approximately 1,800,000 at
September 30, 1995, from approximately 1,723,000 at September 30, 1994.
During fiscal year 1995, the Company experienced slower membership
growth than in prior years, due primarily to intense competition in all
its key markets. This trend of slow growth continued into the first
quarter and is expected to continue into the balance of fiscal year
1996.
From September 30, 1994, to September 30, 1995, total commercial
membership increased by 49,000 or 3.6% from approximately 1,368,000 to
approximately 1,417,000. The Company generates approximately half of
its HMO revenue from sales to the commercial market. The Company's
ability to increase its commercial membership and commercial premium
rates during the last two fiscal years and the first quarter of fiscal
year 1996 was adversely impacted by intense competition in all the
Company's major markets, particularly in California. In addition,
certain large employer groups and other purchasers of health care
services continue to demand minimal increases or reductions in premium
rates. Downward pressure on premium rates is expected to continue in
fiscal year 1996 in all of the Company"s major service areas. A
substantial portion of the Company's HMO commercial premium rate
increases becomes effective in January of each year.
Senior membership grew by 28,000 or 7.9% to approximately 383,000
at September 30, 1995, from approximately 355,000 at September 30, 1994.
Almost all of the Company s senior HMO revenue is generated from
premiums paid to the Company by the Health Care Financing Administration
("HCFA"). The Company receives senior premium rate increases from HCFA
on January 1 of each year. For calendar year 1995, the Company received
an average 5.8% rate increase. Revenue per senior member is
substantially higher than revenue per commercial plan member because
senior members use substantially more health care services. In
September of each year, HCFA announces the annual Medicare rate
increases that will become effective on January 1 of the subsequent
year. These rate increases vary geographically and become the basis for
determining the amounts that HCFA will pay to the Company. Based upon
the September, 1995, announcement, the Company originally estimated that
it would receive an average 3.5% senior premium rate increase on January
1, 1996. HCFA subsequently announced that it had reexamined certain
geographic increases. Accordingly, the Company has revised its January
1, rate increase expectation from 3.5% to 5.1%.
Cost of Health Care
Health care costs increased 7.7% to $849.8 million for the three
months ended September 30, 1995, from $789.0 million for the three
months ended September 30, 1994, due to operational growth and cost
increases. Health care costs increased as a percentage of revenue by
1.9 percentage points, to 84.6% from 82.7% for the same three month
period in the prior fiscal year. The increase as a percent of revenue
resulted primarily from declining commercial premiums and higher
hospital and physician costs in California, as well as higher pharmacy
costs in California and Utah.
The Company continues to experience declining membership in and,
therefore, declining utilization in certain staff model medical centers
in Los Angeles and Orange Counties in southern California. The decline
has been greater among commercial members than senior members, and
management believes that this has been caused primarily by increased
competition, the economic recession and substantial employment
reductions in several industry sectors.
General, Administrative and Marketing Costs
General, administrative and marketing ("G & A") expenses decreased
by $3.0 million or 2.3% to $125.1 million for the three month period
ended September 30, 1995, from $128.1 million for the three month period
ended September 30, 1994. The decrease is the result of cost savings
from workforce reductions and other cost controls. G & A expenses for
the three month period ended September 30, 1995, decreased as a
percentage of revenue to 12.5% from 13.4% for the same period in the
prior fiscal year.
Interest Income
Net interest income was $2.7 million for the three month period
ended September 30, 1995, as compared to $1.1 million for the three
month period ended September 30, 1994. Net interest income increased
year-over-year primarily because of higher interest rates on the
Company's cash equivalents and investments.
<PAGE>
Liquidity and Capital Resources
The Company's consolidated cash, cash equivalents, and short-term
investments decreased by $1.2 million to $455.2 million at September 30,
1995, from $456.4 million at June 30, 1995. The total at September 30,
1995, includes the early receipt of approximately $150 million of
premiums from HCFA due on October 1, 1995, for medical services to be
provided to senior members in October, 1995. (The Company's June 30,
1995, cash was similarly impacted). Other major sources of cash during
the three month period ended September 30, 1995, included cash generated
from operations of $27.9 million. Uses of cash during the three month
period ended September 30, 1995, included $13.2 million for capital
expenditures, $6.6 million for Preferred Stock dividends, and $15.0
million net reductions in borrowings.
In order to fund a major portion of the cash required for the
TakeCare, Inc. acquisition in June, 1994, the Company entered into a
$350 million Credit Agreement in March, 1994. The Credit Agreement as
amended provides for a $200 million Revolving Credit Loan and a $150
million Term Loan. The Term Loan and Revolving Credit Loan carry
interest rates currently ranging from 6.1% to 6.7% based on LIBOR rate
borrowings. The Term Loan is repayable at the rate of $15 million every
six months. The first repayment was made on September 29, 1995. The
final payment is due March 31, 2000. The Credit Agreement contains
financial and other covenants, including limitations on indebtedness,
liens, dividends, sale and lease-back transactions, and certain other
transactions.
The Company's ability to make a payment on, or repayment of, its
obligations under the Notes, the Credit Agreement, and dividends on its
Preferred Stock is significantly dependent upon the receipt of funds by
the Company from the Company's direct and indirect subsidiaries. These
subsidiary payments represent: (a) fees for management services rendered
by the Company to the subsidiaries; and (b) cash dividends by the
subsidiaries to the Company. Nearly all of the subsidiaries are subject
to HMO regulations or insurance regulations (the "Regulated
Subsidiaries"). Each of the Regulated Subsidiaries must meet or exceed
various fiscal standards imposed by HMO regulations or insurance
regulations. These fiscal standards may, from time to time, impact the
amount of funds paid by one or more of the Regulated Subsidiaries to the
Company.
The Company believes the payments referred to above by the
Regulated Subsidiaries, together with other financing sources, including
the Credit Agreement, should be sufficient to enable the Company to meet
its payment obligations (totaling approximately $80 million annually)
under the Notes, the Credit Agreement and the Company's Preferred Stock.
The Company believes that cash flow from operations, the Credit
Agreement and existing cash balances will be sufficient to continue to
fund operations and capital expenditures for the foreseeable future.
Also, sales of real property under the Restructuring Plan are expected
to generate net cash to the Company in fiscal year 1996 which is
intended to be used to reduce indebtedness and for other corporate
purposes.
Effects of Regulatory Changes and Inflation
The Company has been informed by HCFA that effective January 1,
1996, it will receive an annual average premium rate increase of
approximately 5.1% for its Senior Plan members. Over calendar years
1994 and 1995, annual average Senior Plan premium increases granted by
HCFA were approximately 2.0% and 5.8%, respectively. Periodically, the
Company evaluates the effects of HCFA premium adjustments on its
liquidity and capital resources, and incorporates the actual and
anticipated impact of such adjustments into its planning process.
The Company has been experiencing significant downward pressures on
commercial HMO membership growth and premium rates due to competition
and measures by large employer groups and other purchasers of health
care services attempting to hold their costs down. The Company may not
be able to obtain premium rate increases and may see some premium rate
reductions in its commercial HMO business in the short term. Also in
recent years health care costs have been rising at a rate higher than
that for consumer goods as a whole, as a result of inflation, new
technology and medical advances. There can be no assurance that these
trends will be reversed in the short term.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Information relating to certain litigation as set forth in
Note 4 of Notes to Consolidated Financial Statements in Part I of this
report is incorporated herein by this reference.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See Index to Exhibits at page 17 of this report.
(b) None filed during the first quarter of fiscal 1996.
<PAGE>
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 thereunto duly authorized.
FHP INTERNATIONAL CORPORATION
Dated: November 13, 1995 By: /s/ Kenneth S. Ord
Senior Vice President and
Chief (Principal) Financial Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
4.1 Registrant agrees to furnish to the Commission upon request a copy
of each instrument with respect to issues of long-term debt of the
Registrant, the authorized principal amount of which does not
exceed 10% of total assets of Registrant.
11.1 Statement Re: Computation of Earnings Per Share.
27.1 Financial Data Schedule.
EXHIBIT 11.1
FHP INTERNATIONAL CORPORATION
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(unaudited)
For The
(amounts in thousands, Three Months Ended
except per share data) September 30,
1995 1994
________ _______
Primary earnings per share
attributable to Common Stock:
Net income attributable to
Common Stock $ 7,320 $15,215
======== =======
Weighted average number of
common shares and common
share equivalents:
Common Stock 40,221 39,553
Assumed exercise of options 795 1,299
________ _______
Total shares 41,016 40,852
======== =======
Primary earnings per share
attributable to Common Stock $ 0.18 $ 0.37
======== =======
Fully diluted earnings per share:
Net income attributable to
Common Stock assuming
conversion of Series A
Cumulative Convertible
Preferred Stock $13,878 $20,702
======== =======
Weighted average number of
common shares and common
share equivalents:
Common Stock 40,221 39,553
Assumed exercise of options 800 1,682
Assumed conversion of
Series A Cumulative
Convertible Preferred Stock 16,968 16,961
________ _______
Total shares, assuming
full dilution 57,989 58,196
======== =======
Fully diluted earnings per share $ 0.24(1) $ 0.36
======== =======
(1) This computation is submitted in accordance with Regulation S-K, Item
601 (b)(11) although it is contrary to paragraph 40 of Accounting
Principles Board Opinion No. 15 because it produces an anti-dilutive
result.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF INCOME, BALANCE SHEETS AND CASH FLOWS OF FHP
INTERNATIONAL CORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH SEPTEMBER 30, 1995 QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 324,507
<SECURITIES> 130,664
<RECEIVABLES> 167,231
<ALLOWANCES> 24,356
<INVENTORY> 13,542
<CURRENT-ASSETS> 676,361
<PP&E> 378,192
<DEPRECIATION> 150,518
<TOTAL-ASSETS> 2,301,493
<CURRENT-LIABILITIES> 742,696
<BONDS> 320,340
<COMMON> 404,250
0
527,986
<OTHER-SE> 216,620
<TOTAL-LIABILITY-AND-EQUITY> 2,301,493
<SALES> 1,004,633
<TOTAL-REVENUES> 1,004,633
<CGS> 974,942
<TOTAL-COSTS> 974,942
<OTHER-EXPENSES> 5,759
<LOSS-PROVISION> 739
<INTEREST-EXPENSE> 6,424
<INCOME-PRETAX> 26,644
<INCOME-TAX> 12,717
<INCOME-CONTINUING> 13,927
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,927
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.24
</TABLE>
