G&A costs increased 5.8% to $53.7 million for the twelve months ended December 31, 1994, compared to the twelve months ended December 31, 1993. As a percentage of revenues, however, G&A costs for the twelve months ended December 31, 1994 increased only slightly to 13.3%, which is comparable to the 1993 rate of 13.2%. Compensation costs increased approximately $2.4 million primarily resulting from additional employees supporting expanded services. Depreciation expense increased approximately $1.2 million primarily due to the Company's newly constructed home office, regional home office and administrative headquarters which were occupied late in the fourth quarter 1993. Additionally, interest expense increased approximately $2.0 million principally due to new mortgage financing on certain Company-owned facilities.
The Company has a 1996 capital budget of approximately $25.0 million, primarily for the construction of a new 59,000 square-foot medical facility, computer hardware and software, furniture and equipment, and other requirements due to the Company's projected growth and expansion. Completion of the medical facility is expected in late 1996 at an estimated cost of $7.3 million. The Company's liquidity needs over the next 12 months will primarily be for the capital items noted above to support growing membership in Nevada, as well as debt service and expansion of the Company's operations. The Company believes that existing working capital, operating cash flow and, if necessary, equipment leasing, and amounts available under its credit facility will be sufficient to fund its capital expenditures, debt service and any expansion activities during the next 12 months. Additionally, subject to unanticipated cash requirements, the Company believes that its existing working capital and operating cash flow and, if necessary, its access to new credit facilities, will enable it to meet its liquidity needs on a longer term basis.
The holding company may receive dividends from its HMO and insurance subsidiaries which generally must be approved by certain state insurance departments. The Company's HMO and insurance subsidiaries are required by state regulatory agencies to maintain certain deposits and must also meet certain net worth and reserve requirements. The HMO and insurance subsidiaries had restricted assets on deposit in various states totaling $12.5 million and $9.4 million, as of December 31, 1995 and December 31, 1994, respectively. The HMO and insurance subsidiaries also meet requirements to maintain minimum stockholder's equity ranging from $200,000 to $5.2 million. Of the cash and cash equivalents held at December 31, 1995, $44.8 million is designated for use only by the regulated subsidiaries. Such amounts are available for transfer to the holding company from the HMO and insurance subsidiaries only to the extent that they can be remitted in accordance with terms of existing management agreements and by dividends. Remaining amounts are available on an unrestricted basis. The holding company will not receive dividends from its HMO or insurance subsidiaries that would cause violation of statutory net worth and reserve requirements.
In October 1995, Statement of Financial Accounting Standards No. 123 "Accounting for Stock-Based Compensation" ("FAS 123") was issued. FAS 123 is effective for fiscal years that begin after December 15, 1995. When the Company adopts FAS 123 in 1996, the Company intends to continue to account for stock-based compensation in accordance with APB Opinion 25 as permitted by FAS 123. The additional information required by FAS 123 will be provided in a note to the consolidated financial statements.
Unearned Premium Revenue Liability. This liability consists of the prepaid premium and specialty product revenues. These prepayments are recorded as revenue in the period in which the services are performed or the period that coverage for services is provided.
Reclassifications. Certain amounts in the Consolidated Financial Statements for the year ended December 31, 1994 and 1993 have been reclassified to conform with the current year presentation.
Public Offering. On October 11, 1994, the Company completed a public offering of 1,800,000 shares of its Common Stock, $.005 par value per share (the "Common Stock"), at a price of $26.50 per share. Additionally, Anthony M. Marlon, M.D., the Company's Chairman and Chief Executive Officer, sold 500,000 shares of Common Stock in such offering. The net proceeds to the Company from the offering were approximately $44.6 million, after deducting the underwriting discounts and commissions and the offering expenses payable by the Company.
Capital Accumulation Plan. The Company has a Capital Accumulation Plan (the "CAP Plan") whereby share units or fractions thereof may be awarded to key employees and executive officers of the Company. All previous outstanding awards were paid prior to December 31, 1995. Total expense recorded for SARs and the CAP Plan was $90,000, $280,000, and $525,000 for 1995, 1994 and 1993, respectively.