FHP, FOUNTAIN VALLEY

Nature of Business: A health maintenance organization.

Total Employees: 9,100

In Orange County: 3,650

Stock Listing in The Times: On NASDAQ as “FHP”

Ticker Symbol: “FHPC”

Friday’s Stock Close: $12.00

Change: $1.50

Analyst Review: “The stock has been beaten up by Wall Street because of an unfavorable earnings report. FHP’s decreased earnings were caused by a number of things: tightened profit margins on Medicare, having to retroactively reimburse $1.6 million the government had errantly paid them, not to mention a sluggish economy and high unemployment rates. But The Street overreacted. In April the stock was nearly $30 per share--and it may have been overvalued then, but in the last two weeks, it bottomed out at $10--that’s a little much. The true value of FHP has been overlooked: it has has $260 million in cash or $8.30 per share. Its revenues for 1991 were $1.3 billion; in 1993, revenues should be $1.8 billion based on our estimates of their continued growth. That’s a 30% increase. We think it’s a good buy for aggressive investors. Many investors have forgotten the strength in FHP shares. We believe that once the fundamentals of FHP are remembered, these shares could experience signifcant appreciation.”

--David L. Rose, analyst

Cruttenden & Company, Irvine

Revenues and Profits

Dollar amounts in millions.

1st Qtr. 1st Qtr. ’89 ’90 ’91 ’91 ’92 Revenues 699.1 980.4 1,300 293.8 364.2 Profits 22.0 28.8 40.1 8.4 5.9

Corporate Outlook: “We plan on continued strong growth over next several years. And over the next three years, we will be spending approximately $275 million for medical centers, hospitals and expansion of health care delivery systems. The affects of the recession are still impacting our business. But because of those capital expenditures, to the extent that the economy recovers, we should have our health care delivery systems in place.”

--William R. Benz, chief financial officer

RETURN ON INVESTMENT: 3-YEAR SUMMARY AND YEAR-TO-DATE

FISCAL YEAR June 30 June 30 June 30 1ST QTR. 1ST QTR. ENDING ’89 ’90 ’91 ’91 ’92 52-Week High $13.75 $23.98 $29.75 $17.50 $27.00 52-Week Low $4.27 $12.73 $8.86 $10.00 $15.50 Book Value Per Share $4.04 $5.12 $8.38 $5.80 $8.26 Net Earnings Per Share* $0.93 $1.00 $1.37 $0.18 $0.30 Price-to-Earnings Ratio 14:1 16:1 17:1 15:1 16:1 Avg. Return on Investor 20% 20% 15% 22% 9% Equity

* Adjusted to reflect a two-for-one stock split effective December, 1989, and a 10% stock dividend effective March, 1991.

For more information call or write, FHP International Corp.: 9900 Talbert Ave., Fountain Valley, Calif., 92708. (714) 963-7233

Source: FHP International Corp.