<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One):
(x) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the year ended December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1994.
For the transition period from _________ to _____________
Commission File Number 1-12718
A. Full title of the plan and the address of the plan, if different from that
of the issuer named below: Foundation Health Corporation Profit Sharing
and 401(k) Plan (Amended and Restated effective January 1, 1994)
B. Name of issuer of the securities held pursuant to the plan and the address
of its principal executive office:
FOUNDATION HEALTH SYSTEMS, INC.
21660 OXNARD STREET
WOODLAND HILLS, CALIFORNIA 91367
C. Exhibits. Exhibit Index
23.1 Consent of Deloitte & Touche LLP, a copy of which
is filed herewith.
99.1 Financial Statements for the Years Ended December
31, 1997 and 1996 and Independent Auditors'
Report of Foundation Health Corporation Profit
Sharing and 401(K) Plan
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Foundation Health Systems,
Inc., (i) Registration Statement No. 33-74780 on Form S-8, (ii) Registration
Statement No. 333-24621 on Form S-8, (iii) Registration Statement No.
33-90976 on Form S-8 and (iv) Registration Statement No. 333-35193 on Form
S-8, of our report dated June 24, 1998, appearing in this Annual Report on
Form 11-K of the Foundation Health Corporation Profit Sharing and 401(k) Plan
for the year ending December 31, 1997.
Deloitte & Touche LLP
Sacramento, California
June 24, 1998
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
Financial Statements for the Years Ended December 31, 1997
and 1996 and Independent Auditors' Report
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S><C>
Independent Auditors' Report 1
Financial Statements as of December 31, 1997 and
1996 and for The Years Then Ended:
Statements of Net Assets Available for Plan Benefits 2
Statements of Changes in Net Assets Available for Plan Benefits 3
Notes to Financial Statements 4-10
Supplemental Schedules as of December 31, 1997 and
for The Year Then Ended:
Item 27a - Schedule of Assets Held for Investment Purposes 12
Item 27d - Schedule of Reportable Transactions 13
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustee and Participants
of the Foundation Health Corporation
Profit Sharing and 401(k) Plan
We have audited the accompanying statements of net assets available for plan
benefits of the Foundation Health Corporation Profit Sharing and 401(k) Plan
(the "Plan") as of December 31, 1997 and 1996, and the related statements of
changes in net assets available for plan benefits for the years 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 Plan at December 31,
1997 and 1996, and the changes in net assets available for plan benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were conducted 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. These schedules are the responsibility of the Plan's
management. Such schedules 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 when considered in relation to the basic
financial statements taken as a whole.
Sacramento, California
June 24, 1998
-1-
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31
---------------------------
ASSETS: 1997 1996
---- ----
Investments, at fair value:
Interest bearing cash $ 5,419,425 $ 4,280,799
Common stock:
Foundation Health Systems, Inc. 6,074,873 6,817,455
Other 40,144,385 26,537,897
United States government securities 7,344,788 5,460,191
Corporate bonds 267,201 845,924
Mutual funds 27,572,314 24,406,389
Loans to participants 3,563,138 2,872,606
----------- -----------
Total investments 90,386,124 71,221,261
----------- -----------
Contributions receivable:
Employer 191,482 164,230
Employee 506,616 494,877
----------- -----------
698,098 659,107
----------- -----------
Total assets 91,084,222 71,880,368
----------- -----------
LIABILITIES:
Forfeitures payable 565,464 451,421
----------- -----------
Total liabilities 565,464 451,421
----------- -----------
Net assets available for plan benefits $90,518,758 $71,428,947
----------- -----------
----------- -----------
See accompanying notes to financial statements.
- 2 -
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31
---------------------------
ASSETS: 1997 1996
---- ----
Additions:
Contributions:
Employee $14,937,822 $16,419,726
Employer 4,673,384 4,277,660
Investment income 4,270,470 2,702,323
Net appreciation in fair value of investments 5,738,995 1,763,716
----------- -----------
29,620,671 25,163,425
Deductions:
Benefits paid to participants 11,112,552 8,141,962
----------- -----------
Net increase in plan assets 18,508,119 17,021,463
Net assets available for plan benefits:
Beginning of year 71,428,947 51,770,922
Transfer of assets from other plans 581,692 2,636,562
----------- -----------
End of year $90,518,758 $71,428,947
----------- -----------
----------- -----------
See accompanying notes to financial statements.
- 3 -
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF PLAN
The Foundation Health Corporation Profit Sharing and 401(k) Plan (the "Plan")
enables participants to save for retirement through voluntary contributions
and allows the participant to invest in a broad base of funds. Included in
these investment options is the opportunity for employees to acquire a
proprietary interest in the growth of Foundation Health Systems, Inc. (the
"Company" or "FHS") through stock ownership.
On April 1, 1997, FHC merged with Health Systems International, Inc. ("HSI").
FHC merged into and became a wholly-owned subsidiary of HSI. HSI changed
its name to Foundation Health Systems, Inc. The Plan Administrator
anticipates the Plan will merge into a FHS Plan in 1998.
The Compensation and Organizational Committee of the Company's Board of
Directors is the Administrator of the Plan. The Company believes that the
Plan will continue without interruption but reserves the right to terminate
the Plan at any time. In the event of termination of the Plan, all
participants will become fully vested.
The following description of the Plan provides only general information.
Participants should refer to the plan document for a more complete
description of the Plan's provisions.
CONTRIBUTIONS TO THE PLAN
Each eligible participant may elect a pre-tax contribution rate from 2% to
10% (or from 2% to 6% for highly compensated employees as defined by the
Internal Revenue Service ("IRS")) of his or her compensation subject to the
annual cap on elective deferrals set by the Internal Revenue Code ("IRC").
From January 1, 1996 through March 31, 1997, the participant was also able to
make contributions from 2% to 10% (or from 2% to 6% for highly compensated
employees as defined by the IRS) of his or her compensation on an after-tax
basis. Effective April 1, 1997, after-tax contributions are not permitted.
The Company makes discretionary matching contributions equal to 0% to 100% of
up to the first 6% of each participant's base compensation. The Company also
may make discretionary nonmatching contributions.
ELIGIBILITY AND VESTING
All employees of the Company and certain subsidiaries who are not covered by
a collective bargaining agreement and have met specified service requirements
are eligible to participate in the Plan. All participants are immediately
100% vested in their contributions plus any investment earnings thereon.
Participants employed by the Company prior to January 1, 1995 vest in
employer contributions 33 1/3% per year commencing on the first anniversary
of the participant's date of hire. Through August 31, 1997, participants
employed by the Company on or after January 1, 1995 vested in employer
contributions 20% per year commencing on the first anniversary of the
participant's date of hire. Effective September 1, 1997, participants
employed by the company on or after January 1, 1995 vest in employer
contributions 25% per year commencing on the first anniversary of the
participant's date of hire.
- 4 -
<PAGE>
In addition, all participants who have attained the age of 65, who terminate
employment and have attained the age of 55, or who are terminated from
employment by reason of death or disability become 100% vested in employer
contributions and investment earnings thereon. Employer contributions and
earnings thereon made prior to April 1, 1989 also are 100% vested.
BENEFITS
Benefits are distributable from Plan assets upon retirement, death,
disability, termination of employment, termination of the Plan, or in certain
cases of hardship. Benefits are based upon the participant's vested share of
Plan assets. Upon termination of employment, other than as described under
"Eligibility and vesting" above, the unvested portion of employer
contributions and investment earnings thereon is forfeited by the participant
and can be used to reduce future employer contributions.
PARTICIPANT LOANS
A participant may borrow up to half of the value of the vested portion of his
or her account in the form of a loan with a minimum principal of $1,000 and
subject to a maximum of $50,000. Loans bear interest at prime plus 1% and
generally must be repaid within five years.
ALLOCATION OF EARNINGS
Earnings of each investment fund are allocated on a monthly basis to that
fund's participants in proportion to each participant's share of fund assets
at the beginning of the month.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method.
INVESTMENTS
Participants allocate their contributions in any combination among eight
investment funds held by Merrill Lynch Trust Company ("Merrill Lynch" or
"ML"). Investments are stated at their fair market value measured by quoted
market prices. Gains or losses on the sale of investments are recorded on
the trade date as the difference between proceeds received and current value
at the beginning of the year or cost if acquired during the year determined
by the specific identification method. Net appreciation or depreciation in
the fair value of investments includes net unrealized market appreciation and
depreciation of investments and net realized gains and losses on the sale of
investments during the period. Investment income includes dividends and
interest paid on the Plan's investments.
DISTRIBUTIONS OF BENEFITS TO PARTICIPANTS
Benefits are recorded when paid.
- 5 -
<PAGE>
ADMINISTRATIVE EXPENSES
All administrative expenses are paid by the Plan. No indirect expenses are
allocated to the Plan by the Company.
ACCOUNTING ESTIMATES
In preparing the financial statements of the Plan, estimates and assumptions
are made which affect the reported amounts of net assets available for
benefits at the date of the financial statements and the reported amounts of
changes in net assets available for benefits during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - INCOME TAXES
The Company has received a favorable determination letter dated December 18,
1997 from the Internal Revenue Service as to the qualified status of the Plan
as amended and restated on April 3, 1997, conditioned upon the adoption of
certain plan amendments which condition has been met by the adoption of
certain technical changes to the Plan. The Company is of the opinion that
the Plan continues to fulfill the requirements of the IRC and the Employee
Retirement Income Security Act of 1974, and that the trust, which forms a
part of the Plan, is exempt from income tax. Accordingly, no provision has
been made for federal or state income taxes.
NOTE 4 - PLAN MERGERS
The net assets of the Health Maintenance Center 401(k) retirement account were
transferred into the Plan in March 1997. The net assets of the Managed Health
Network 401(k) Plan, the Associated Claims Management 401(k) Plan, and the
Intergroup of Utah 401(k) Plan were transferred into the Plan in December 1996,
November 1996, and July 1996, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
Certain Plan investments are in shares of Merrill Lynch mutual funds.
Merrill Lynch is the trustee as defined by the Plan, and therefore, these
transactions qualify as party-in-interest transactions. In addition,
transactions with the Company's common stock qualify as party-in-interest
transactions. However, exemptions from the prohibited transaction rules
permit these transactions.
From January 1, 1996 to June 30, 1996, prior to the Intergroup of Utah 401(k)
Plan's merger into the Plan, Plan investments were held and managed by
Merrill Lynch in commingled funds with the assets and investments of the
Intergroup of Utah 401(k) Plan, which is sponsored by an affiliate of FHS.
These financial statements only represent the assets and activity related to
the Plan.
- 6 -
<PAGE>
NOTE 6 - NET ASSETS BY FUND AVAILABLE FOR PLAN BENEFITS AND CHANGES IN NET
ASSETS BY FUND AVAILABLE FOR BENEFITS
NET ASSETS BY FUND AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FHS GLOBAL FIXED RETIREMENT
STOCK GROWTH INCOME BALANCED PRESERVATION
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Interest bearing cash $468,591 $580,043 $375,622 $425,588 $199,746
Common stock:
Foundation Health
Systems, Inc. 6,074,873
Other 10,890,283
United States government
securities 4,895,523 2,449,265
Corporate bonds 267,201
Mutual funds 13,798,030 6,527,171 7,247,113 27,572,314
Loans to participants
---------- ---------- ---------- ---------- ----------
Total investments 6,543,464 14,378,073 5,538,346 13,765,136 6,726,917
---------- ---------- ---------- ---------- ----------
Contributions receivable:
Employer 17,212 30,501 11,446 28,212 20,842
Employee 45,539 80,700 30,282 74,642 55,142
---------- ---------- ---------- ---------- ----------
62,751 111,201 41,728 102,854 75,984
---------- ---------- ---------- ---------- ----------
Total assets 6,606,215 14,489,274 5,580,074 13,867,990 6,802,901
---------- ---------- ---------- ---------- ----------
Forfeitures payable 42,617 93,642 36,070 89,650 43,811
---------- ---------- ---------- ---------- ----------
Total liabilities 42,617 93,642 36,070 89,650 43,811
---------- ---------- ---------- ---------- ----------
Net assets available for
plan benefits $6,563,598 $14,395,632 $5,544,004 $13,778,340 $6,759,090
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
EQUITY INTERNATIONAL EQUITY
GROWTH EQUITY GROWTH LOANS TO
FUND FUND FUND - #2 PARTICIPANTS TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Interest bearing cash $1,597,978 $775,513 $996,344 $5,419,425
Common stock:
Foundation Health
Systems, Inc. 6,074,873
Other 17,644,934 11,609,168 40,144,385
United States government
securities 7,344,788
Corporate bonds 267,201
Mutual funds
Loans to participants $3,563,138 3,563,138
---------- ---------- ---------- ---------- ----------
Total investments 19,242,912 8,022,626 12,605,512 3,563,138 90,386,124
---------- ---------- ---------- ---------- ----------
Contributions receivable:
Employer 40,427 17,008 25,834 191,482
Employee 106,960 45,001 68,350 506,616
---------- ---------- ---------- ---------- ----------
147,387 62,009 94,184 698,098
---------- ---------- ---------- ---------- ----------
Total assets 19,390,299 8,084,635 12,699,696 3,563,138 91,084,222
---------- ---------- ---------- ---------- ----------
Forfeitures payable 125,326 52,250 82,098 565,464
---------- ---------- ---------- ---------- ----------
Total liabilities 125,326 52,250 82,098 565,464
---------- ---------- ---------- ---------- ----------
Net assets available for
plan benefits $19,264,973 $8,032,385 $12,617,598 $3,563,138 $90,518,758
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- 7 -
<PAGE>
NOTE 6 - CONTINUED
CHANGES IN NET ASSETS BY FUND AVAILABLE FOR PLAN BENEFITS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FHS GLOBAL FIXED RETIREMENT
STOCK GROWTH INCOME BALANCED PRESERVATION
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employee $1,523,297 $2,016,290 $1,021,094 $2,002,295 $1,046,230
Employer 573,659 697,125 286,479 684,664 43,595
Investment income 21,291 1,798,622 291,537 267,174 454,589
Net appreciation
(depreciation) in fair
value of investments (581,280) (437,515) 120,665 2,702,349 (9,455)
---------- ---------- ---------- ---------- ----------
1,536,967 4,074,522 1,719,775 5,656,482 1,534,959
Deductions:
Benefits paid
to participants (1,201,249) (1,865,451) (714,533) (1,435,782) (1,244,796)
Interfund transfers (996,664) 101,519 (329,786) 131,197 (2,591,597)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
plan assets (660,946) 2,310,590 675,456 4,351,897 (2,301,434)
Net assets
available for plan
benefits:
Beginning of year 7,224,544 12,085,042 4,868,548 9,426,443 8,478,832
Transfer of assets 581,692
---------- ---------- ---------- ---------- ----------
End of year $6,563,598 $14,395,632 $5,544,004 $13,778,340 $6,759,090
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
EQUITY INTERNATIONAL EQUITY
GROWTH EQUITY GROWTH LOANS TO
FUND FUND FUND - #2 PARTICIPANTS TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employee $3,245,327 $1,554,554 $2,528,735i $14,937,822
Employer 1,062,756 532,991 792,115 4,673,384
Investment income 183,319 794,649 200,970 $258,319 4,270,470
Net appreciation
(depreciation) in fair
value of investments 2,587,517 (456,098) 1,812,812 5,738,995
---------- ---------- ---------- ---------- ----------
7,078,919 2,426,096 5,334,632 258,319 29,620,671
Deductions:
Benefits paid
to participants (1,904,435) (1,148,345) (1,266,941) (331,020) (11,112,552)
Interfund transfers 1,408,681 765,867 747,550 763,233
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
plan assets 6,583,165 2,043,618 4,815,241 690,532 18,508,119
Net assets
available for plan
benefits:
Beginning of year 12,681,808 5,988,767 7,802,357 2,872,606 71,428,947
Transfer of assets 581,692
---------- ---------- ---------- ---------- ----------
End of year $19,264,973 $8,032,385 $12,617,598 $3,563,138 $90,518,758
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- 8 -
<PAGE>
NOTE 6 - CONTINUED
NET ASSETS BY FUND AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FHS GLOBAL FIXED RETIREMENT
STOCK GROWTH INCOME BALANCED PRESERVATION
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Interest bearing cash $389,775 $615,286 $111,899 $279,063 $891,829
Common stock:
Foundation Health
Systems, Inc. 6,817,455
Other 7,549,178
United States government
securities 4,740,292 719,899
Corporate bonds 845,924
Mutual funds 11,432,093 7,566,414
Loans to participants
---------- ---------- ---------- ---------- ----------
Total investments 7,207,230 12,047,379 4,852,191 9,394,064 8,458,243
---------- ---------- ---------- ---------- ----------
Contributions receivable:
Employer 16,175 29,211 12,061 23,528 19,050
Employee 48,740 88,021 36,343 70,897 57,403
---------- ---------- ---------- ---------- ----------
64,915 117,232 48,404 94,425 76,453
---------- ---------- ---------- ---------- ----------
Total assets 7,272,145 12,164,611 4,900,595 9,488,489 8,534,696
---------- ---------- ---------- ---------- ----------
Forfeitures payable 47,601 79,569 32,047 62,046 55,864
---------- ---------- ---------- ---------- ----------
Total liabilities 47,601 79,569 32,047 62,046 55,864
---------- ---------- ---------- ---------- ----------
Net assets available for
plan benefits $7,224,544 $12,085,042 $4,868,548 $9,426,443 $8,478,832
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
EQUITY INTERNATIONAL EQUITY
GROWTH EQUITY GROWTH LOANS TO
FUND FUND FUND - #2 PARTICIPANTS TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investments, at fair value:
Interest bearing cash $361,606 $563,405 $1,067,936 $4,280,799
Common stock:
Foundation Health
Systems, Inc. 6,817,455
Other 12,278,647 6,710,072 26,537,897
United States government
securities 5,460,191
Corporate bonds 845,924
Mutual funds 5,407,882 24,406,389
Loans to participants $2,872,606 2,872,606
---------- ---------- ---------- ---------- ----------
Total investments 12,640,253 5,971,287 7,778,008 2,872,606 71,221,261
---------- ---------- ---------- ---------- ----------
Contributions receivable:
Employer 31,156 14,182 18,867 164,230
Employee 93,884 42,736 56,853 494,877
---------- ---------- ---------- ---------- ----------
125,040 56,918 75,720 659,107
---------- ---------- ---------- ---------- ----------
Total assets 12,765,293 6,028,205 7,853,728 2,872,606 71,880,368
---------- ---------- ---------- ---------- ----------
Forfeitures payable 83,485 39,438 51,371 451,421
---------- ---------- ---------- ---------- ----------
Total liabilities 83,485 39,438 51,371 451,421
---------- ---------- ---------- ---------- ----------
Net assets available for
plan benefits $12,681,808 $5,988,767 $7,802,357 $2,872,606 $71,428,947
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- 9 -
<PAGE>
NOTE 6 - CONTINUED
CHANGES IN NET ASSETS BY FUND AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
FHS GLOBAL FIXED RETIREMENT
STOCK GROWTH INCOME BALANCED PRESERVATION
FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employee $1,959,133 $2,182,182 $1,192,774 $2,343,835 $1,124,387
Employer 578,913 645,508 324,807 609,420 217,765
Investment income 6,124 1,116,762 296,945 206,312 365,465
Net appreciation
(depreciation) in
fair value of
investments (2,552,633) 397,928 (226,142) 788,033 (102,840)
---------- ---------- ---------- ---------- ----------
(8,463) 4,342,380 1,588,384 3,947,600 1,604,777
Deductions:
Benefits paid to
participants (1,393,499) (1,265,198) (617,732) (1,100,888) (693,355)
Interfund transfers (553,080) (242,165) (137,982) 175,564 (1,761,619)
---------- ---------- ---------- ---------- ----------
Net increase (decrease)
in plan assets (1,955,042) 2,835,017 832,670 3,022,276 (850,197)
Net assets available for
plan benefits:
Beginning of year 9,179,586 9,250,025 4,035,878 6,404,167 6,692,467
Transfer of assets 2,636,562
---------- ---------- ---------- ---------- ----------
End of year $7,224,544 $12,085,042 $4,868,548 $9,426,443 $8,478,832
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
EQUITY INTERNATIONAL EQUITY
GROWTH EQUITY GROWTH LOANS TO
FUND FUND FUND - #2 PARTICIPANTS TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Additions:
Contributions:
Employee $3,041,780 $1,960,516 $2,615,119 $16,419,726
Employer 773,214 505,032 623,001 4,277,660
Investment income 124,539 236,750 143,972 $205,454 2,702,323
Net appreciation
(depreciation) in
fair value of
investments 2,155,184 496,854 807,332 1,763,716
---------- ---------- ---------- ---------- ----------
6,094,717 3,199,152 4,189,424 205,454 25,163,425
Deductions:
Benefits paid to
participants (1,242,201) (769,237) (746,967) (312,885) (8,141,962)
Interfund transfers 686,074 75,222 668,041 1,089,945
---------- ---------- ---------- ---------- ----------
Net increase (decrease)
in plan assets 5,538,590 2,505,137 4,110,498 982,514 17,021,463
Net assets available for
plan benefits:
Beginning of year 7,143,218 3,483,630 3,691,859 1,890,092 51,770,922
Transfer of assets 2,636,562
---------- ---------- ---------- ---------- ----------
End of year $12,681,808 $5,988,767 $7,802,357 $2,872,606 $71,428,947
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- 10 -
<PAGE>
SUPPLEMENTAL SCHEDULES
- 11 -
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
ITEM 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CURRENT
DESCRIPTION COST VALUE
<S> <C> <C>
Interest bearing cash $ 5,419,425 $ 5,419,425
Common stock:
Foundation Health Systems, Inc. 7,087,958 6,074,873
Other 26,668,727 40,144,385
United states government securities 7,292,588 7,344,788
Corporate bonds 266,852 267,201
Mutual funds 21,225,268 27,572,314
Loans to participants 3,563,138 3,563,138
</TABLE>
- 12 -
<PAGE>
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(K) PLAN
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CURRENT VALUE
--------------------------
PURCHASE SALES COST OF
IDENTITY OF FUND DESCRIPTION OF ASSETS PRICE PRICE ASSETS SOLD
<S> <C> <C> <C> <C>
SERIES OF TRANSACTIONS
Equity Growth ML Cash Management Account
Investment Fund Money Fund $9,944,177 $8,723,629 $8,723,629
Fixed Income ML Cash Management Account
Investment Fund Money Fund 6,272,297 5,985,441 5,985,441
Balanced ML Cash Management Account
Investment Fund Money Fund 4,793,718 4,700,485 4,700,485
Retirement
Preservation
Trust Fund* Merrill Lynch Retirement
Preservation Trust 4,021,913 5,061,155 5,061,155
Retirement ML Cash Management Account
Preservation Money Fund
Trust Fund 4,956,884 5,603,644 5,603,644
Global Growth* Merrill Lynch Global
Investment Fund Allocation Fund - Class A 5,092,061
Global Growth ML Cash Management Account
Investment Fund Money Fund 4,493,968 4,535,296 4,535,296
Equity Growth II ML Cash Management Account
Investment Fund Money Fund 6,179,689 6,261,413 6,261,413
</TABLE>
*Party-in-interest
- 13 -
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities and 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.
FOUNDATION HEALTH CORPORATION
PROFIT SHARING AND 401(k) PLAN
June 26, 1998 /s/ Steven P. Erwin
-------------------- ---------------------------
Date Steven P. Erwin
Executive Vice President and
Chief Financial Officer of
Foundation Health Systems, Inc.
