<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended September 30, 1996
Commission file number: 1-12238
Mental Health Management, Inc. Employees' Savings Plan
MHM Services, Inc.
8000 Towers Crescent Drive, Suite 800
Vienna, Virginia 22182
<PAGE> 2
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
SEPTEMBER 30, 1996 AND 1995
INDEX
Independent Auditors' Report
FINANCIAL STATEMENTS:
Statement of Net Assets Available for Plan Benefits as of September 30,
1996 and 1995
Statements of Changes in Net Assets Available for Plan Benefits for the
years ended September 30, 1996, 1995 and 1994
NOTES TO FINANCIAL STATEMENTS
SCHEDULE I - ITEM 27a
Schedule of Assets Held for Investment Purposes as of September 30, 1996
SCHEDULE II - ITEM 27d
Schedule of Reportable Transactions for the year ended September 30, 1996
SIGNATURE
EXHIBIT __
Consent of Independent Auditors-KPMG Peat Marwick LLP
Consent of Independent Auditors-Deloitte & Touche LLP
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the Mental Health
Management, Inc. Employees' Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Mental Health Management, Inc. Employees' Savings Plan (the
"Plan") as of September 30, 1996, and the related statement of changes in net
assets available for plan benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit. The
accompanying financial statements of the Plan as of September 30, 1995 and 1994,
were audited by other auditors whose report thereon dated April 13, 1996,
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the 1996 financial statements referred to above present fairly,
in all material respects, the net assets available for plan benefits as of
September 30, 1996 and the changes in net assets available for plan benefits for
the year then ended in conformity with generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in the
foregoing table of contents are presented for the purpose of additional analysis
and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The 1996 Fund information in the statement of net assets
available for plan benefits and the statement of changes in net assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the net assets available for plan benefits and changes in net assets
available for plan benefits of each fund. The supplemental schedules and Fund
Information have been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
McLean, Virginia
June 27, 1997
KPMG Peat Marwick, LLP
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the
Mental Health Management, Inc. Employees' Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Mental Health Management, Inc. Employees' Savings Plan (the
"Plan") as of September 30, 1995, and the related statements of changes in net
assets available for plan benefits for each of the two years in the period then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly in all material
respects, the net assets available for plan benefits of the Mental Health
Management, Inc. Employees' Savings Plan as of September 30, 1995, and the
related statements of changes in net assets available for plan benefits for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.
/s/ DELOITTE & TOUCHE LLP
---------------------
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
April 13, 1996
<PAGE> 5
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
September 30, 1996
<TABLE>
<CAPTION>
===================================================================================================================
Supplemental Information by Fund
-----------------------------------------------------------------------
Large Large Small Intermediate
Cap. Value Cap. Growth Cap. Growth International Fixed
Assets Equity Equity Equity Equity Income
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments-at fair value $ 371,834 275,488 442,430 141,842 126,218
Participant loans - - - - -
Employer contributions receivable - - - - -
Other receivables (payables) - - - - (629)
- -------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits $ 371,834 275,488 442,430 141,842 125,589
===================================================================================================================
<CAPTION>
===================================================================================================
Supplemental Information by Fund
-------------------------------------------------------
MHM MEDIQ
Stable Common Common Loan
Assets Value Stock Stock Fund Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments-at fair value 134,976 35,369 91,709 - 1,619,866
Participant loans - - - 58,575 58,575
Employer contributions receivable - 9,798 - - 9,798
Other receivables (payables) (1,182) 86 (6) - (1,731)
- ---------------------------------------------------------------------------------------------------
Net assets available for plan benefits 133,794 45,253 91,703 58,575 1,686,508
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
September 30, 1995
<TABLE>
<CAPTION>
====================================================================================================================
Supplemental Information by Fund
----------------------------------------------------------------------
Large Large Small Intermediate
Cap. Value Cap. Growth Cap. Growth International Fixed
Assets Equity Equity Equity Equity Income
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments-at fair value $ 431,031 355,937 402,673 184,461 153,638
Participant loans - - - - -
Employee contributions receivable 384 414 572 550 463
Employer contributions receivable - - - - -
Other receivables 20 12 4 4 21
Receivable (payable) from other funds 1,832 4,199 8,736 703 1,605
- --------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits $ 433,267 360,562 411,985 185,718 155,727
====================================================================================================================
<CAPTION>
===================================================================================================
Supplemental Information by Fund
-----------------------------------------------------
MHM MEDIQ
Stable Common Common Loan
Assets Value Stock Stock Fund Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments-at fair value 204,089 163,495 196,306 - 2,091,630
Participant loans - - - 64,242 64,242
Employee contributions receivable 474 21 - - 2,878
Employer contributions receivable 20,096 - - - 20,096
Other receivables 25 - - - 86
Receivable (payable) from other funds (32,043) 12,706 2,262 - -
- ---------------------------------------------------------------------------------------------------
Net assets available for plan benefits 192,641 176,222 198,568 64,242 2,178,932
===================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended September 30, 1996
<TABLE>
<CAPTION>
=================================================================================================================================
Supplemental Information by Fund
----------------------------------------------------------------------
Large Large Small Intermediate
Cap. Value Cap. Growth Cap. Growth International Fixed
Equity Equity Equity Equity Income
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1, 1995 $ 433,267 360,562 411,985 185,718 155,727
Additions:
Employee contributions 66,842 72,511 106,125 31,623 52,458
Employer contributions - - - - -
Investment income 13,975 16,405 61,099 7,724 10,734
Net realized/unrealized gains (losses) 42,746 32,660 23,436 1,749 (4,743)
Transfers in 2,017 664 34,141 7,011 6,984
- ---------------------------------------------------------------------------------------------------------------------------------
Total additions (deductions) 125,580 122,240 224,801 48,107 65,433
Deductions:
Benefit payments 168,071 199,264 192,263 88,558 94,865
Transfers out 18,942 8,050 2,093 3,425 706
- ---------------------------------------------------------------------------------------------------------------------------------
Total deductions 187,013 207,314 194,356 91,983 95,571
- ---------------------------------------------------------------------------------------------------------------------------------
Net additions (deductions) (61,433) (85,074) 30,445 (43,876) (30,138)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30,
1996 $ 371,834 275,488 442,430 141,842 125,589
=================================================================================================================================
<CAPTION>
==========================================================================================================================
Supplemental Information by Fund
--------------------------------------------------------
MHM MEDIQ
Stable Common Common Loan
Value Stock Stock Fund Total
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1, 1995 192,641 176,222 198,568 64,242 2,178,932
Additions:
Employee contributions 53,481 9,382 - - 392,422
Employer contributions - 67,316 - - 67,316
Investment income 7,552 - - - 117,489
Net realized/unrealized gains (losses) (1,105) (157,132) 3,445 - (58,944)
Transfers in 20,002 72 - 16,634 87,525
- -------------------------------------------------------------------------------------------------------------------------
Total additions (deductions) 79,930 (80,362) 3,445 16,634 605,808
Deductions:
Benefit payments 136,624 50,447 80,615 - 1,010,707
Transfers out 2,153 160 29,695 22,301 87,525
- -------------------------------------------------------------------------------------------------------------------------
Total deductions 138,777 50,607 110,310 22,301 1,098,232
- -------------------------------------------------------------------------------------------------------------------------
Net additions (deductions) (58,847) (130,969) (106,865) (5,667) (492,424)
- -------------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30, 1996 133,794 45,253 91,703 58,575 1,686,508
=========================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended September 30, 1995
<TABLE>
<CAPTION>
=================================================================================================================================
Supplemental Information by Fund
-----------------------------------------------------------------------
Large Large Small Intermediate
Cap. Value Cap. Growth Cap. Growth International Fixed
Equity Equity Equity Equity Income
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1,
1994 $ 394,731 326,340 305,840 184,491 176,251
Additions:
Employee contributions 91,920 90,926 91,627 70,766 59,521
Employer contributions - - - - -
Investment income 15,177 2,511 1,531 5,402 10,428
Net realized/unrealized gains (losses) 66,824 80,743 105,592 (807) 5,288
Transfers in 6,038 5,118 20,291 4,479 5,295
- ---------------------------------------------------------------------------------------------------------------------------------
Total additions 179,959 179,298 219,041 79,840 80,532
Deductions:
Benefit payments 122,620 129,311 112,339 77,058 83,613
Transfers out 18,803 15,765 557 1,555 17,443
- ---------------------------------------------------------------------------------------------------------------------------------
Total deductions 141,423 145,076 112,896 78,613 101,056
- ---------------------------------------------------------------------------------------------------------------------------------
Net additions (deductions) 38,536 34,222 106,145 1,227 (20,524)
- ---------------------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30,
1995 $ 433,267 360,562 411,985 185,718 155,727
=================================================================================================================================
<CAPTION>
==================================================================================================================
Supplemental Information by Fund
---------------------------------------------------
MHM MEDIQ
Stable Common Common Loan
Value Stock Stock Fund Total
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1, 1994 125,311 100,180 209,279 48,318 1,870,741
Additions:
Employee contributions 49,381 6,841 - - 460,982
Employer contributions - 80,757 - - 80,757
Investment income 7,070 - - - 42,119
Net realized/unrealized gains (losses) - 35,036 62,402 - 355,078
Transfers in 4,149 17 - 40,429 85,816
- ------------------------------------------------------------------------------------------------------------------
Total additions 60,600 122,651 62,402 40,429 1,024,752
Deductions:
Benefit payments 13,504) 46,541 72,767 - 630,745
Transfers out 6,774 68 346 24,505 85,816
- ------------------------------------------------------------------------------------------------------------------
Total deductions (6,730) 46,609 73,113 24,505 716,561
- ------------------------------------------------------------------------------------------------------------------
Net additions (deductions) 67,330 76,042 (10,711) 15,924 308,191
- ------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30, 1995 192,641 176,222 198,568 64,242 2,178,932
==================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended September 30, 1994
<TABLE>
<CAPTION>
===============================================================================================================================
Supplemental Information by Fund
----------------------------------------------------------------------
Large Large Small Intermediate
Cap. Value Cap. Growth Cap. Growth International Fixed
Equity Equity Equity Equity Income
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1,
1993 $ 403,868 304,185 229,024 144,700 147,760
Additions:
Employee contributions 153,980 140,811 103,802 71,144 87,377
Employer contributions - - - - -
Transfers in 1,441 2,588 5,848 2,400 -
- -------------------------------------------------------------------------------------------------------------------------------
Total additions 155,421 143,399 109,650 73,544 87,377
Deductions:
Benefit payments 161,934 115,897 28,815 43,877 45,766
Net (appreciation) depreciation in asset value (186) 4,004 3,807 (10,124) (3,036)
Transfers out 2,810 1,343 212 - 16,156
- -------------------------------------------------------------------------------------------------------------------------------
Total deductions 164,558 121,244 32,834 33,753 58,886
- -------------------------------------------------------------------------------------------------------------------------------
Net additions (deductions) (9,137) 22,155 76,816 39,791 28,491
- -------------------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30,
1994 $ 394,731 326,340 305,840 184,491 176,251
===============================================================================================================================
<CAPTION>
=====================================================================================================================
Supplemental Information by Fund
------------------------------------------------------
MHM MEDIQ
Stable Common Common Loan
Value Stock Stock Fund Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net assets available for plan benefits, October 1, 1993 126,590 197,053 284,938 44,653 1,882,771
Additions:
Employee contributions 46,736 17,283 - - 621,133
Employer contributions - 10,975 - - 10,975
Transfers in 4,131 448 - 27,255 44,111
- ---------------------------------------------------------------------------------------------------------------------
Total additions 50,867 28,706 - 27,255 676,219
Deductions:
Benefit payments 56,822 22,307 71,235 - 546,653
Net (appreciation) depreciation in asset value (4,676) 103,272 4,424 - 97,485
Transfers out - - - 23,590 44,111
- ---------------------------------------------------------------------------------------------------------------------
Total deductions 52,146 125,579 75,659 23,590 688,249
- ---------------------------------------------------------------------------------------------------------------------
Net additions (deductions) (1,279) (96,873) (75,659) 3,665 (12,030)
- ---------------------------------------------------------------------------------------------------------------------
Net assets available for plan benefits, September 30, 1994 125,311 100,180 209,279 48,318 1,870,741
=====================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
SEPTEMBER 30, 1996 AND 1995
(1) DESCRIPTION OF THE PLAN
The following description of the Mental Health Management, Inc. Employees'
Savings Plan (the Plan) provides only general information. Participants
should refer to the Summary Plan Description for a more complete
description of the Plan provisions.
GENERAL
The effective date of the Plan was September 1, 1993. The Plan is a defined
contribution plan. Employees are eligible to join the Plan upon completion
of one year of service during which they have worked a minimum of 1,000
hours and are age 21 or older.
CONTRIBUTIONS
Participants may contribute to the Plan from 1 percent to 15 percent of
their salaries to be invested, as they choose, in the various funds
described in note 3. The Plan provides that MHM Services, Inc. (formerly
Mental Health Management, Inc.) (the Company) will make a matching
contribution equal to $.50 for each $1.00 contributed by a participant, not
to exceed 3 percent of the participant's compensation. The Company's
matching contribution is made in cash to be used to purchase shares of the
common stock of the Company for the accounts of the participants.
VESTING
A participant's accrued benefit is at all times fully vested and
nonforfeitable upon death, retirement, disability or termination of
employment.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to
a maximum equal to the lesser of $50,000 or 50 percent of their account
balance. Loan terms range from one to five years or up to ten years for the
building, rehabilitation or purchase of a primary residence. The loans are
secured by the balances in the participants' accounts and bear interest at
a rate commensurate with local prevailing rates. Principal and interest are
paid ratably through payroll deductions.
PAYMENT OF BENEFITS
Upon termination of service, participants may elect to receive a lump-sum
payout of their accounts. If the account balance at termination exceeds
$3,500, a participant may leave the money in the Plan after leaving the
Company. Participants may also qualify for up to two hardship withdrawals
per Plan year with respect to amounts attributable to basic contributions.
In order to obtain a hardship withdrawal, participants must exhaust the
possibility of all other withdrawals (other than hardship withdrawals)
under the Plan. Upon receiving a hardship distribution, participants are
suspended from making contributions to the Plan for one year.
(Continued)
<PAGE> 11
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(1) CONTINUED
Distributions from the funds, with the exception of the MHM Services, Inc.
(MHM) stock fund, are made in cash. Distributions from the MHM stock fund
are in the form of the securities held; however, distributions of the
Company's common stock shall be made in cash whenever the number of shares
to be distributed is 100 or less.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method
of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
INVESTMENT VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value which is determined by
closing prices as of the last trading day of the Plan year. Purchases and
sales of securities are recorded on a trade-date basis. Participant loans
are valued at cost which approximates fair market value. Dividends and
interest are recorded when earned.
PAYMENT OF BENEFITS
Benefits are recorded when paid.
(3) INVESTMENT OPTIONS
Contributions are invested in accordance with the written directions of the
participants in one or more of the following funds:
LARGE CAPITALIZATION VALUE EQUITY FUND
The objective of this fund is to seek total return consisting of capital
appreciation and dividend income by investing primarily in a diversified
portfolio of highly liquid common stocks. The portfolio's assets will be
invested primarily in common stocks of issuers with total market
capitalization of $1 billion or greater at the time of purchase.
(Continued)
<PAGE> 12
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(3) CONTINUED
LARGE CAPITALIZATION GROWTH EQUITY FUND
This fund seeks substantial capital appreciation over time by investing
primarily in a diversified portfolio of common stocks, characterized by a
growth of earnings at a rate faster than that of the S&P 500 index. The
Portfolio's assets will be invested primarily in common stocks of issuers
with total market capitalization of $1 billion or greater at the time of
purchase.
SMALL CAPITALIZATION GROWTH EQUITY FUND
This fund seeks to achieve maximum long-term capital appreciation through
investing primarily in the common stock of "emerging growth" companies
(total market capitalization of $550 million or less).
INTERNATIONAL EQUITY FUND
This fund seeks to achieve long-term capital appreciation through investing
primarily in equity securities of companies domiciled outside the United
States.
INTERMEDIATE FIXED INCOME FUND
This fund seeks a high level of current income, with potential for some
capital appreciation, while keeping risk at a minimum. The fund invests in
high quality, intermediate-term fixed income securities.
STABLE VALUE FUND
This fund seeks to provide stable investment returns with a high degree of
capital protection by investing primarily in contracts (GIC's and BIC's)
that are guaranteed by high rated, major life insurance companies and
banks, other GIC Collective Funds, and in cash equivalents.
MHM SERVICES, INC. STOCK FUND
Purchase of MHM common stock allows employees to invest in their Company
stock over and above the matching contribution.
(Continued)
<PAGE> 13
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(3) CONTINUED
MEDIQ STOCK FUND
In August of 1993, the company spun off from MEDIQ Incorporated and formed
a separate entity. This fund contains the common stock of MEDIQ
Incorporated.
Investment in each of these funds (with the exception of the MHM Services,
Inc. Stock Fund) represents 5 percent or more of the Plan's net assets
available for plan benefits at September 30, 1996.
Pursuant to the Plan, with the exception of the Company's matching
contributions, the selection of investment options is the sole
responsibility of each participant. Neither the trustees nor the Company
have any responsibility to select investment options or to advise
participants in selecting their investment options. Subject to the
applicable provisions of law, each participant assumes all risks connected
with any decrease in the market value of any securities in these funds, and
distributions from such funds are the sole source of payments made under
the Plan.
(4) EXPENSES
Brokerage commissions and other expenses incurred in connection with the
purchase or sale of securities, are charged directly to the Plan. The Plan
also pays certain administrative expenses that amounted to $13,865, $12,403
and $7,800 as of September 30, 1996, 1995 and 1994, respectively. Other
costs and expenses of the Plan are paid for by the Company.
(5) INVESTMENTS
Investment income and net realized/unrealized gains (losses) are comprised
of the following for the years ended September 30, 1996 and 1995
respectively:
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Investment income:
Dividends $ 31,011 29,012
Capital gains distributions 86,478 13,107
- -------------------------------------------------------------------------------------------
$ 117,489 42,119
===========================================================================================
Realized/unrealized gains (losses):
Realized gains 68,174 10,761
Unrealized gains (losses) (113,253) 356,720
Administrative expenses (13,865) (12,403)
- -------------------------------------------------------------------------------------------
$ (58,944) 355,078
===========================================================================================
</TABLE>
(Continued)
<PAGE> 14
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Notes to Financial Statements
(6) DIFFERENCES BETWEEN IRS FORM 5500 AND AUDITED FINANCIAL STATEMENTS
As promulgated by the 1997 AICPA Audit and Accounting Guide, Audits of
Employee Benefit Plans, benefit claims payable to persons who have
withdrawn from participating in a defined contribution plan are disclosed
in the footnotes to the financial statements rather than on the statement
of net assets available for plan benefits as a liability of the Plan. The
benefits payable to persons who have withdrawn from participation is
$44,662 and $43,355 as of September 30, 1996 and 1995, respectively. IRS
Form 5500 requires the reporting of benefits payable as a liability to the
Plan.
(7) TAX STATUS
The Plan has adopted a standardized 401(k) plan provided by Smith Barney
Shearson. This standardized plan has received an opinion letter from the
IRS dated August 2, 1993, which indicates that the Plan and the related
trust are designed in accordance with applicable sections of the Internal
Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Plan Administrator believes that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC. Therefore, no provision for income tax
has been included in the Plan's financial statements.
Employee salary reduction contributions to the Plan, subject to an annual
limitation of 15 percent of annual compensation, are not subject to income
tax until withdrawn from the Plan as permitted under Section 401(k) of the
IRC. Additionally, employees are not subject to federal income tax on the
employer's contributions to the Plan or income earned thereon until
withdrawn from the Plan.
<PAGE> 15
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
September 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Current
Issuer Shares or units Description Cost value
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* Smith Barney 133,334 Stable Value Fund $ 134,976 134,976
* Smith Barney 15,797 Intermediate Fixed Income Fund 127,508 126,218
* Smith Barney 30,986 Large Capitalization Value Equity Fund 298,020 371,834
* Smith Barney 13,231 International Equity Fund 135,191 141,842
* Smith Barney 19,552 Large Capitalization Growth Equity Fund 211,481 275,488
* Smith Barney 23,164 Small Capitalization Growth Equity Fund 343,823 442,430
MEDIQ, Inc. 15,610 MEDIQ Common Stock 63,413 91,709
* MHM Services, Inc. 47,159 MHM Common Stock 121,822 35,369
- -------------------------------------------------------------------------------------------------------------------
Total investments $ 1,436,234 1,619,866
- -------------------------------------------------------------------------------------------------------------------
Plan 58,575 Loan Fund (interest rates ranging from
7% to 10%, maturing through 2000) $ 58,575 58,575
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Party-in-interest
<PAGE> 16
MENTAL HEALTH MANAGEMENT, INC. EMPLOYEES' SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions
Year ended September 30, 1996
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Number of Sales Gain
Number of shares or ----------------------------------
Description transactions units Cost Proceeds (Loss)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stable Value Fund 102 93,612 - - -
Stable Value Fund 47 113,970 113,970 113,970 -
Intermediate Fixed Income Fund 139 9,218 - - -
Intermediate Fixed Income Fund 53 12,342 99,700 99,612 (88)
Large Capitalization Value Equity Fund 117 8,338 - - -
Large Capitalization Value Equity Fund 48 17,522 165,624 198,276 32,652
International Equity Fund 118 5,010 - - -
International Equity Fund 42 9,313 94,859 97,993 3,134
Large Capitalization Growth Fund 128 7,854 - - -
Large Capitalization Growth Fund 53 16,574 176,733 218,273 41,540
Small Capitalization Growth Fund 115 12,115 - - -
Small Capitalization Growth Fund 57 11,497 168,582 198,803 30,221
Mediq Common Stock 11 20,489 83,233 109,912 26,679
</TABLE>
<PAGE> 17
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Mental Health Management, Inc.
Employees' Savings Plan
Date: By:
------------------ ------------------------------
Cleveland E. Slade
Vice President and
Chief Financial Officer
MHM Services, Inc.
<PAGE> 1
[KPMG PEAT MARWICK LLP LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
MHM Services, Inc.
We consent to the use of our report dated June 27, 1997, on the statement of net
assets available for plan benefits as of September 30, 1996, and the related
statement of changes in net assets available for plan benefits for the year then
ended for the Mental Health Management, Inc. Employees' Savings Plan (the
"Plan") included in the Annual Report on Form 11-K relating to the Plan filed by
MHM Services, Inc. for the years ended September 30, 1996 and 1995, and to the
incorporation by reference of such report in the Registration Statement on Form
S-8 pertaining to the Plan (File No. 333-09147).
/s/ KPMG PEAT MARWICK LLP
McLean, Virginia
September 25, 1998
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INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-09147 of MHM Services, Inc. on Form S-8 of our report dated April 13, 1996,
appearing on Form 11-K of Mental Health Management, Inc. Employees' Savings Plan
for the year ended September 30, 1996.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
October 27, 1998
