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3 2 F O U N D ATIO N H EALTH SYST EMS, I N C.
Consolidated Statements of Cash Flows
Foundation Health Systems, Inc.
(Amounts in thousands)
Years Ended December 31, 1998 1997 1996
Cash Flows from Operating Activities:
Net income (loss) $(165,158) $(187,084) $ 84,231
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Amortization and depreciation 128,093 98,353 112,916
Loss on disposal of United Kingdom operations —12,676 —
Loss on early redemption of Senior Notes —9,586 —
Impairment of assets 193,966 8,456 14,963
Other changes in net assets of discontinued operations —(5,395) (78,589)
(Gain) loss on disposition of discontinued operations —88,845 (20,317)
(Income) loss from discontinued operations —30,409 (25,084)
Other changes 15,041 (7,061) (1,049)
Changes in assets and liabilities,net of effects of acquisitions:
Premium receivable and unearned subscriber premiums 38,569 3,105 35,941
Other assets (75,271) (112,302) (239,013)
Amounts receivable/ payable under government contracts (58,000) (16,155) (101,711)
Reserves for claims and other settlements (6,416) (55,450) 165,695
Accounts payable and accrued liabilities 30,043 6,145 45,351
Net cash provided by (used in) operating activities 100,867 (125,872) (6,666)
Cash Flows from I nvesting Activities:
Sale or maturity of investments 718,446 597,691 441,550
Purchase of investments (692,305) (406,818) (513,734)
Purchases of property and equipment (147,782) (131,669) (95,751)
Proceeds from notes receivables —93,011 825
Other 11,504 6,633 (17,784)
Sale of net assets of discontinued operations 257,100 — —
Acquisition of businesses,net of cash acquired —(293,625) 108
Net cash provided by (used in) investing activities 146,963 (134,777) (184,786)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options and employee stock purchases 13,209 21,506 31,756
Proceeds from sale of stock —— 95,828
Proceeds from issuance of notes payable and other financing arrangements 155,575 566,240 331,576
Repayment of debt and other non-current liabilities (212,109) (144,341) (4,939)
Stock repurchase —(111,334) (105,418)
Net cash provided by (used in) financing activities (43,325) 332,071 348,803
Net increase in cash and cash equivalents 204,505 71,422 157,351
Cash and cash equivalents,beginning of year 559,360 487,938 330,587
Cash and cash equivalents,end of year $ 763,865 $ 559,360 $ 487,938
See accompanying notes to consolidated financial statements.