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Registration Nos. 333-127115
333-127115-01
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Companies involved in this exchange | Emergency Medical Services Corporation, a newly formed Delaware corporation, or EMSC. | |
Emergency Medical Services L.P., a Delaware limited partnership, or EMS L.P. | ||
The exchange | 1.5 shares of class A common stock of EMSC for each class B unit of EMS L.P. | |
Reasons for this exchange | We structured our reorganization, as described under “Formation of Holding Company,” to ensure that our initial public offering will not result in a taxable event for any of our equity holders. We have authorized this exchange so that our class B unitholders will hold common stock that is listed on the New York Stock Exchange, and will be freely transferable under the Securities Act for holders who are not our affiliates, rather than limited partnership interests that generally are not transferable. | |
Vote required for this exchange | There is no vote or consent required of the class B unitholders. This exchange has been authorized by the general partner and the class A unitholders of EMS L.P., as permitted by the agreement of limited partnership of EMS L.P. | |
Restrictions on transfer of class A common stock issued in this exchange | You may not sell the class A common stock you receive in this exchange for a period of 180 days after the date of the final prospectus for this exchange and our initial public offering. See “Description of Capital Stock — Equityholder Agreements.” | |
Interests of certain persons in this exchange | The management and directors of EMSC will participate in this exchange on the same terms as are applicable to all class B unitholders. The Onex entities, which hold the EMS L.P. class A units, will continue to hold their limited partnership units; these units will be designated LP exchangeable units, and will be exchangeable on a one-for-one basis for shares of class B common stock of EMSC. The Onex entities will also have the benefit of one share of class B special voting stock. | |
When this exchange will occur | Concurrently with the completion of our initial public offering of class A common stock. | |
Conditions to this exchange | The only condition to this exchange is the completion of our initial public offering. | |
Appraisal or dissenters’ rights | In connection with this exchange, a holder of class B units is not entitled to any appraisal or dissenters’ rights under Delaware law. | |
Ownership of EMS L.P. before and after this exchange | The Onex entities own 96.1% of the equity and 100% of the voting power of EMS L.P., and will own 77.4% of the equity and no voting power of EMS L.P. after this exchange. |
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Ownership of EMSC after this exchange | The class B unitholders and the public stockholders will own, in the aggregate, 22.6% of the equity and 3.1% of the voting power of EMSC after this exchange, and the Onex entities will control 96.8% of the voting power of EMSC. See the diagram in the section captioned “Formation of Holding Company.” | |
Accounting treatment | The reorganization, including this exchange, will be accounted for on a carryover basis. | |
Federal income tax consequences | This exchange will be treated as a tax-free contribution of the class B units to EMSC for federal income tax purposes, and holders will not recognize gain or loss on this exchange. See “Material U.S. Income Tax Considerations — Tax Consequences of the Exchange.” | |
Our capitalization after this exchange and our initial public offering | ||
Class A common stock issued by us in this exchange | 1,148,325 shares | |
Class A common stock offered by us in our concurrent initial public offering | 8,100,000 shares | |
Class A common stock outstanding after this exchange and our concurrent initial public offering | 9,248,325 shares | |
Use of proceeds | We will not receive any cash proceeds from this exchange. The units representing limited partnership interests in EMS L.P. that we receive in exchange for shares of our class A common stock being issued in this exchange will be held by us. |
• | 9,248,325 shares of class A common stock, | |
• | 142,545 shares of class B common stock, | |
• | one share of class B special voting stock, and | |
• | 32,107,500 LP exchangeable units of EMS L.P. |
• | each LP exchangeable unit is exchangeable into one share of class B common stock, and | |
• | each share of class B common stock is convertible into one share of class A common stock. |
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Our securities are entitled to vote on all matters subject to a vote of holders of common stock, voting together as a single class, as follows: |
• | class A common stock is entitled to one vote per share, | |
• | class B common stock is entitled to ten votes per share (reducing to one vote per share under certain limited circumstances), and | |
• | one share of class B special voting stock, held for the benefit of the holders of LP exchangeable units, is entitled to a number of votes equal to the number of votes that could be cast if all the then outstanding LP exchangeable units were exchanged for class B common stock. |
Except as otherwise indicated, all of the information presented in this prospectus assumes the following: |
• | our formation as a holding company named Emergency Medical Services Corporation, as described under “Formation of Holding Company”, | |
• | the 1.5-for-1 stock split, and | |
• | no exercise of the underwriters’ over-allotment option in our initial public offering. |
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Predecessor (Pre-Acquisition) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Pre-Laidlaw | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bankruptcy) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
As Restated | (Post-Laidlaw Bankruptcy) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Successor (Post-Acquisition) | Unaudited Pro Forma | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Nine | Three | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Months | Months | Five Months Ended | Three Months | Eight Months | Three Months | Eight Months | Five Months | Eight Months | ||||||||||||||||||||||||||||||||||||||||||||||
Year Ended | Ended | Ended | Year Ended | January 31, | Ended | Ended | Ended | Ended | Year Ended | Ended | Ended | |||||||||||||||||||||||||||||||||||||||||||
August 31, | May 31, | August 31, | August 31, | September 30, | September 30, | September 30, | September 30, | August 31, | January 31, | September 30, | ||||||||||||||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2004 | 2005 | 2004 | 2004 | 2005 | 2005 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 1,415,786 | $ | 1,103,335 | $ | 384,461 | $ | 1,604,598 | $ | 667,506 | $ | 696,179 | $ | 413,869 | $ | 1,077,749 | $ | 456,245 | $ | 1,187,653 | $ | 1,604,598 | $ | 696,179 | $ | 1,187,653 | ||||||||||||||||||||||||||||
Compensation and benefits | 960,590 | 757,183 | 264,604 | 1,117,890 | 461,923 | 481,305 | 286,628 | 751,238 | 319,292 | 822,595 | 1,117,890 | 481,305 | 822,595 | |||||||||||||||||||||||||||||||||||||||||
Operating expenses | 219,321 | 163,447 | 55,212 | 218,277 | 90,828 | 94,882 | 55,863 | 147,524 | 66,156 | 168,700 | 218,277 | 94,882 | 168,700 | |||||||||||||||||||||||||||||||||||||||||
Insurance expense | 66,479 | 69,576 | 34,671 | 80,255 | 36,664 | 39,002 | 18,404 | 51,674 | 21,048 | 60,382 | 80,255 | 39,002 | 60,382 | |||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 61,455 | 37,867 | 12,017 | 47,899 | 22,016 | 21,635 | 12,093 | 31,270 | 15,654 | 38,248 | 47,899 | 21,635 | 38,248 | |||||||||||||||||||||||||||||||||||||||||
Laidlaw fees and compensation charges | 5,400 | 4,050 | 1,350 | 15,449 | 6,436 | 19,857 | 3,657 | 10,095 | — | — | 15,449 | 19,857 | — | |||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expenses | 67,183 | 32,144 | 12,560 | 52,739 | 22,079 | 18,808 | 12,669 | 34,627 | 14,843 | 38,811 | 55,869 | 23,232 | 38,811 | |||||||||||||||||||||||||||||||||||||||||
Impairment losses | 262,780 | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Restructuring charges | 3,777 | 1,288 | 1,449 | 2,115 | — | — | — | 1,381 | — | — | 2,115 | — | — | |||||||||||||||||||||||||||||||||||||||||
Laidlaw reorganization charges | 8,761 | 3,650 | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Income (loss) from operations | (239,960 | ) | 34,130 | 2,598 | 69,974 | 27,560 | 20,690 | 24,555 | 49,940 | 19,252 | 58,917 | 66,844 | 16,266 | 58,917 | ||||||||||||||||||||||||||||||||||||||||
Interest expense | (6,418 | ) | (4,691 | ) | (908 | ) | (9,961 | ) | (4,137 | ) | (5,644 | ) | (5,138 | ) | (8,679 | ) | (12,824 | ) | (34,407 | ) | (47,051 | ) | (18,555 | ) | (29,895 | ) | ||||||||||||||||||||||||||||
Realized gain (loss) on investments | — | — | 90 | (1,140 | ) | — | — | (1,140 | ) | (1,191 | ) | (34 | ) | (40 | ) | (1,140 | ) | — | (40 | ) | ||||||||||||||||||||||||||||||||||
Interest and other income | 369 | 304 | 22 | 240 | 1,403 | 714 | 162 | 210 | 91 | 189 | 240 | 714 | 189 | |||||||||||||||||||||||||||||||||||||||||
Fresh-start accounting adjustments(1) | — | 46,416 | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes and cumulative change in accounting principle | (246,009 | ) | 76,159 | 1,802 | 59,113 | 24,826 | 15,760 | 18,439 | 40,280 | 6,485 | 24,659 | 18,893 | (1,575 | ) | 29,171 | |||||||||||||||||||||||||||||||||||||||
Income tax expense | (1,374 | ) | (829 | ) | (8,633 | ) | (21,764 | ) | (9,800 | ) | (6,278 | ) | (7,191 | ) | (15,710 | ) | (3,479 | ) | (10,657 | ) | (5,764 | ) | 629 | (12,462 | ) | |||||||||||||||||||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | (247,383 | ) | 75,330 | (6,831 | ) | 37,349 | 15,026 | 9,482 | 11,248 | 24,570 | 3,006 | 14,002 | 13,129 | (946 | ) | 16,709 | ||||||||||||||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle(2) | — | (223,721 | ) | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (247,383 | ) | $ | (148,391 | ) | $ | (6,831 | ) | $ | 37,349 | $ | 15,026 | $ | 9,482 | $ | 11,248 | $ | 24,570 | $ | 3,006 | $ | 14,002 | $ | 13,129 | $ | (946 | ) | $ | 16,709 | ||||||||||||||||||||||||
Predecessor (Pre-Acquisition) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(Pre-Laidlaw | Successor | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bankruptcy) | (Post- | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
As Restated | (Post-Laidlaw Bankruptcy) | Acquisition) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Nine | Three | Eight | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Year | Months | Months | Year | Five Months Ended | Eight Months | Months | |||||||||||||||||||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | January 31, | Ended | Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
August 31, | May 31, | August 31, | August 31, | September 30, | September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2004 | 2005 | 2004 | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash flow provided by (used in): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating activities | $ | 156,544 | $ | 58,769 | $ | 30,009 | $ | 127,679 | $ | 18,627 | $ | 15,966 | $ | 99,961 | $ | 108,462 | |||||||||||||||||||||||||||||||||||||||
Investing activities | (57,347 | ) | (98,835 | ) | (15,136 | ) | (81,516 | ) | (10,881 | ) | (21,667 | ) | (73,910 | ) | (917,422 | ) | |||||||||||||||||||||||||||||||||||||||
Financing activities | (36,066 | ) | (8,060 | ) | (47,222 | ) | (47,328 | ) | (7,532 | ) | 10,856 | (20,699 | ) | 804,442 | |||||||||||||||||||||||||||||||||||||||||
Capital expenditures | 57,438 | (3) | 34,768 | 18,079 | 42,787 | 14,224 | 14,045 | (30,217 | ) | 34,947 | |||||||||||||||||||||||||||||||||||||||||||||
EBITDA(4) | $ | (172,777 | ) | $ | (111,031 | )(5) | $ | 15,428 | $ | 121,753 | $ | 49,639 | 39,498 | 83,376 | 97,688 | ||||||||||||||||||||||||||||||||||||||||
EBITDA, as adjusted(4) | $ | 59,355 | $ | 94,852 | $ | 102,948 |
As of September 30, 2005 | ||||||||
Consolidated | Pro Forma | |||||||
Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 10,113 | $ | 11,100 | ||||
Total assets | 1,253,408 | 1,251,417 | ||||||
Long-term debt and capital lease obligations, including current maturities | 608,607 | 508,607 | ||||||
Partners’/ Stockholders’ equity | $ | 235,534 | $ | 334,756 | ||||
Financial Covenant Ratios(6): | ||||||||
Total leverage ratio | 4.05 | 3.39 | ||||||
Senior leverage ratio | 2.39 | 1.72 | ||||||
Fixed charge coverage ratio | 1.64 | 1.70 |
(1) | See note 1 to our combined financial statements with respect to our fresh-start financial reporting. |
(2) | Reflects an impairment of goodwill recorded in connection with the adoption of SFAS No. 142. |
(3) | Includes $26.3 million financed through capital leases. |
(4) | EBITDA represents net income (loss) before interest expense, net, income tax expense and depreciation and amortization expenses. Adjusted EBITDA represents EBITDA adjusted to remove the effect of the Laidlaw allocations of management fees and compensation charges, insurance expenses, rebates and reorganization costs, Onex management fees and certain non-recurring items. Management routinely calculates EBITDA and uses it to allocate resources. Management believes that EBITDA is a useful measure to investors because it is commonly used as an analytical indicator within the healthcare industry to evaluate operational performance, leverage capacity and ability to service debt. |
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Adjusted EBITDA is used as a measure for various financial covenants in our senior secured credit facility, and we use adjusted EBITDA as a measure for incentive compensation purposes. EBITDA and adjusted EBITDA should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities or other financial statement data presented in the combined and consolidated financial statements as an indicator of financial performance or liquidity. EBITDA and adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies. |
Predecessor (Pre-Acquisition) | ||||||||||||||||||||||||||||||||||
(Pre-Laidlaw | ||||||||||||||||||||||||||||||||||
Bankruptcy) | ||||||||||||||||||||||||||||||||||
As Restated | (Post-Laidlaw Bankruptcy) | |||||||||||||||||||||||||||||||||
Successor | ||||||||||||||||||||||||||||||||||
(Post-Acquisition) | ||||||||||||||||||||||||||||||||||
Nine | Three | Five Months | ||||||||||||||||||||||||||||||||
Months | Months | Ended | Eight Months | Eight Months | ||||||||||||||||||||||||||||||
Year Ended | Ended | Ended | Year Ended | January 31, | Ended | Ended | ||||||||||||||||||||||||||||
August 31, | May 31, | August 31, | August 31, | September 30, | September 30, | |||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2004 | 2005 | 2004 | 2005 | |||||||||||||||||||||||||||
Combined/Consolidated Results: | ||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (247,383 | ) | $ | (148,391 | ) | $ | (6,831 | ) | $ | 37,349 | $ | 15,026 | $ | 9,482 | $ | 24,570 | $ | 14,002 | |||||||||||||||
Depreciation and amortization expenses | 67,183 | 32,144 | 12,560 | 52,739 | 22,079 | 18,808 | 34,627 | 38,811 | ||||||||||||||||||||||||||
Interest expense | 6,418 | 4,691 | 908 | 9,961 | 4,137 | 5,644 | 8,679 | 34,407 | ||||||||||||||||||||||||||
Interest and other income | (369 | ) | (304 | ) | (22 | ) | (240 | ) | (1,403 | ) | (714 | ) | (210 | ) | (189 | ) | ||||||||||||||||||
Income tax expense | 1,374 | 829 | 8,633 | 21,764 | 9,800 | 6,278 | 15,710 | 10,657 | ||||||||||||||||||||||||||
EBITDA(a) | $ | (172,777 | ) | $ | (111,031 | ) | $ | 15,248 | $ | 121,573 | $ | 49,639 | 39,498 | 83,376 | 97,688 | |||||||||||||||||||
Laidlaw fees and compensation charges | 19,857 | 10,095 | — | |||||||||||||||||||||||||||||||
Onex management fee | — | — | 667 | |||||||||||||||||||||||||||||||
Transaction related costs | — | — | 2,131 | |||||||||||||||||||||||||||||||
Non-cash charges | — | — | 2,462 | |||||||||||||||||||||||||||||||
Restructuring charges | — | 1,381 | — | |||||||||||||||||||||||||||||||
EBITDA, as adjusted | $ | 59,355 | $ | 94,852 | $ | 102,948 | ||||||||||||||||||||||||||||
(a) | EBITDA for periods presented includes Laidlaw’s allocation to us of fees and compensation charges, insurance expenses and rebates and reorganization costs. Laidlaw’s allocations to us of fees and compensation charges and of reorganization costs are based on allocations among all of Laidlaw’s business units based on revenues, plus an additional amount allocated to us in respect of a one-time compensation expense related to the changes in the enterprise values of AMR and EmCare. Laidlaw’s allocation to us of insurance expense and rebates is based on an allocation of investment income of Laidlaw’s captive insurance subsidiary among all of Laidlaw’s business units based on revenues, and an allocation of claims among Laidlaw’s business units based on each business unit’s claims experience. We do not believe that Laidlaw’s allocation of these expenses and rebates are predictive of expenses and rebates we expect to incur as a stand-alone company in respect of management services or for comparable stand-alone insurance costs. Laidlaw’s allocation of these expenses and rebates for the historical periods presented were as follows: |
Predecessor (Pre-Acquisition) | ||||||||||||||||||||||||||||||||||
(Pre-Laidlaw | ||||||||||||||||||||||||||||||||||
Bankruptcy) | (Post-Laidlaw Bankruptcy) | |||||||||||||||||||||||||||||||||
Nine | Three | |||||||||||||||||||||||||||||||||
Year | Months | Months | Year | Five Months Ended | Three Months | Eight Months | ||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | January 31, | Ended | Ended | ||||||||||||||||||||||||||||
August 31, | May 31, | August 31, | August 31, | September 30, | September 30, | |||||||||||||||||||||||||||||
2002 | 2003 | 2003 | 2004 | 2004 | 2005 | 2004 | 2004 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||
Laidlaw insurance expense (rebate)(a) | $ | (8,094 | ) | $ | 3,058 | $ | 11,522 | $ | (4,505 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Laidlaw fees and compensation charges | 5,400 | 4,050 | 1,350 | 15,449 | (b) | 6,436 | 19,857 | (c) | 3,657 | 10,095 | ||||||||||||||||||||||||
Laidlaw reorganization costs | 8,761 | 3,650 | — | — | — | — | — | — | ||||||||||||||||||||||||||
Total Laidlaw allocated expense | $ | 6,067 | $ | 10,758 | $ | 12,872 | $ | 10,944 | $ | 6,436 | $ | 19,857 | $ | 3,657 | $ | 10,095 | ||||||||||||||||||
(a) | Included in “Insurance expense” in our combined statements of operations. | |
(b) | Includes compensation charges of $4.1 million. |
We estimate that the costs we will incur in respect of management services and other costs as a stand-alone company will total approximately $4.0 million a year. See note (1) to the unaudited pro forma consolidated statement of operations for the five months ended January 31, 2005 and the year ended August 31, 2004 in “Unaudited Pro Forma Consolidated Financial Data.” We incurred $1.9 million of such costs in the eight months ended September 30, 2005, excluding costs related to our acquisition of AMR and EmCare. |
(c) | Includes compensation charges of $15.3 million. |
(5) | Includes $46.4 million relating to the fresh-start accounting adjustment and $(223.7) million relating to the cumulative effect of a change in accounting principle. |
(6) | Represents financial covenant coverages, calculated in accordance with our senior secured credit facility. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Debt Facilities” for information with respect to required coverages at September 30, 2005 and the calculation of these ratios. |
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• | it may be difficult for us to satisfy our obligations, including debt service requirements under our outstanding debt, | |
• | our ability to obtain additional financing for working capital, capital expenditures, debt service requirements or other general corporate purposes may be impaired, | |
• | we must use a significant portion of our cash flow for payments on our debt, which will reduce the funds available to us for other purposes, | |
• | we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited, | |
• | our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt, and | |
• | our ability to borrow additional funds or to refinance debt may be limited. |
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• | incur additional debt or issue certain preferred stock, | |
• | pay dividends or make distributions to our stockholders, | |
• | repurchase or redeem our capital, | |
• | make investments, | |
• | incur liens, | |
• | make capital expenditures, | |
• | enter into transactions with our stockholders and affiliates, | |
• | sell certain assets, | |
• | acquire the assets of, or merge or consolidate with, other companies, and | |
• | incur restrictions on the ability of our subsidiaries to make distributions or transfer assets to us. |
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We could be subject to lawsuits for which we are not fully reserved. |
The reserves we establish with respect to our losses covered under our insurance programs are subject to inherent uncertainties. |
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Insurance coverage for some of our losses may be inadequate and may be subject to the credit risk of commercial insurance companies. |
We are subject to decreases in our revenue and profit margin under our fee-for-service contracts, where we bear the risk of changes in volume, payor mix and third party reimbursement rates. |
We may not be able to successfully recruit and retain physicians and other healthcare professionals with the qualifications and attributes desired by us and our customers. |
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We are required to make significant capital expenditures for our ambulance services business in order to remain competitive. |
We depend on our senior management and may not be able to retain those employees or recruit additional qualified personnel. |
We must perform on our own services that Laidlaw previously performed for us, and we are subject to financial reporting and other requirements for which our accounting and other management systems and resources may not be adequate. |
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Our revenue would be adversely affected if we lose existing contracts. |
We may not accurately assess the costs we will incur under new contracts. |
The high level of competition in our segments of the market for emergency medical services could adversely affect our contract and revenue base. |
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Our business depends on numerous complex information systems, and any failure to successfully maintain these systems or implement new systems could materially harm our operations. |
If we fail to implement our business strategy, our financial performance and our growth could be materially and adversely affected. |
Our ability to obtain adequate bonding coverage, and therefore maintain existing contracts and successfully bid on new ones, could be adversely affected by our high leverage. |
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A successful challenge by tax authorities to our treatment of certain physicians as independent contractors could require us to pay past taxes and penalties. |
We may make acquisitions which could divert the attention of management and which may not be integrated successfully into our existing business. |
If Laidlaw is unwilling or unable to satisfy any indemnification claims made by us pursuant to the purchase agreements relating to the acquisition of AMR and EmCare, we will be forced to satisfy such claims ourselves. |
Many of our employees are represented by labor unions and any work stoppage could adversely affect our business. |
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We conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations. |
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Changes in the rates or methods of third party reimbursements may adversely affect our revenue and operations. |
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If current or future laws or regulations force us to restructure our arrangements with physicians, professional corporations and hospitals, we may incur additional costs, lose contracts and suffer a reduction in net revenue under existing contracts, and we may need to refinance our debt or obtain debt holder consent. |
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• | actual or anticipated fluctuations in our operating results, | |
• | changes in healthcare pricing or reimbursement policies, | |
• | our competitors’ announcements of significant contracts, acquisitions or strategic investments, | |
• | changes in our growth rates or our competitors’ growth rates, | |
• | the timing or results of regulatory submissions or actions with respect to our business, | |
• | our inability to raise additional capital, |
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• | conditions of the healthcare industry or in the financial markets or economic conditions in general, and | |
• | changes in stock market analyst recommendations regarding our class A common stock, other comparable companies or the healthcare industry generally. |
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• | providing for a classified board of directors with staggered terms, | |
• | providing for the class B special voting stock which will be voted as directed by the Onex entities, | |
• | providing for multi-vote shares of common stock which, upon exchange of LP exchangeable units, will be owned by the Onex entities, | |
• | establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings, and | |
• | the authority of the board of directors to issue, without stockholder approval, up to 20,000,000 shares of preferred stock with such terms as the board of directors may determine and an additional 54,425,666 shares of class A common stock. |
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• | the impact on our revenue of changes in transport volume, mix of insured and uninsured patients, and third party reimbursement rates, | |
• | the adequacy of our insurance coverage and insurance reserves, | |
• | potential penalties or changes to our operations if we fail to comply with extensive and complex government regulation of our industry, | |
• | our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians, | |
• | the effect of changes in rates or methods of third party reimbursement, | |
• | our ability to generate cash flow to service our debt obligations, | |
• | the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment, | |
• | the loss of services of one or more members of our senior management team, | |
• | the outcome of government investigations of certain of our business practices, | |
• | our ability to successfully restructure our operations to comply with future changes in government regulation, | |
• | our ability to perform services previously performed for us by Laidlaw, | |
• | the loss of existing contracts and the accuracy of our assessment of costs under new contracts, | |
• | the high level competition in our industry, | |
• | our ability to maintain or implement complex information systems, | |
• | our ability to implement our business strategy, | |
• | our ability to obtain adequate bonding coverage, and | |
• | our ability to successfully integrate strategic acquisitions. |
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• | EMS L.P., currently our top-tier holding company and the issuer of the class B units, will become our consolidated subsidiary, and | |
• | we will own the general partner interests in EMS L.P., and will continue to conduct our operations through AMR and EmCare, our operating subsidiaries. |
• | 9,248,325 shares of class A common stock, held by our management and persons who purchase shares in our offering, and including the 1,148,325 shares being issued in this exchange, | |
• | 142,545 shares of class B common stock, held by certain former holders of interests in EMS L.P., and | |
• | one share of class B special voting stock, held by Onex Corporation as trustee for the holders of LP exchangeable units. |
• | 32,107,500 LP exchangeable units, exchangeable on a one-for-one basis for shares of our class B common stock, held by the Onex entities, and | |
• | 9,390,870 other partnership units, including the general partner interest, held by us. |
• | the holders of the capital stock of the sole general partner of EMS L.P. will contribute that capital stock to us in exchange for shares of class B common stock, the general partner will be merged into us and we will become the general partner of EMS L.P., |
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• | the holders of class B units of EMS L.P. will contribute their units to us in exchange for shares of our class A common stock, and the holders of certain class A units of EMS L.P. will contribute their units to us in exchange for shares of our class B common stock, | |
• | the class A units of EMS L.P. held by the Onex entities will continue to be held by the Onex entities and will be designated “LP exchangeable units”, and | |
• | we will issue one share of class B special voting stock to Onex Corporation as trustee to hold for the benefit of the holders of the LP exchangeable units. |
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![(PRIOR TO OFFERING STRUCTURE AND OWNERSHIP)](https://capedge.com/proxy/424B1/0000950123-05-014948/x10746b1y1074605.gif)
* | The stock of AMR and EmCare is held through 100% wholly-owned subsidiaries. |
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![(UPON COMPLETION OF OFFERING STRUCTURE AND OWNERSHIP)](https://capedge.com/proxy/424B1/0000950123-05-014948/x10746b1y1074606.gif)
* | The stock of AMR and EmCare is held through 100% wholly-owned subsidiaries. |
** | The Onex entities will hold 45 shares of class B common stock and will have the benefit of one share of class B special voting stock. |
*** | Holders have consent rights under certain limited circumstances with respect to changes in the rights attributable to LP exchangeable units. See “Limited Partnership Agreement of Emergency Medical Services L.P. — Limited Consent Rights.” |
• | 9,248,325 shares of class A common stock, | |
• | 142,545 shares of class B common stock, |
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• | one share of class B special voting stock, and | |
• | 32,107,500 LP exchangeable units of EMS L.P. |
• | each LP exchangeable unit is exchangeable into one share of class B common stock, and | |
• | each share of class B common stock is convertible into one share of class A common stock. |
• | class A common stock is entitled to one vote per share, | |
• | class B common stock is entitled to ten votes per share (reducing to one vote per share under certain limited circumstances), and | |
• | one share of class B special voting stock, held for the benefit of the holders of LP exchangeable units, is entitled to a number of votes equal to the number of votes that could be cast if all the then outstanding LP exchangeable units were exchanged for class B common stock. |
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• | our consolidated capitalization on an actual basis, | |
• | our consolidated capitalization on a pro forma basis to give effect to our reorganization as a holding company and the 1.5-for-1 stock split to be effected immediately prior to our offering, and | |
• | our consolidated capitalization on a pro forma, as adjusted, basis to give effect to the sale of 8,100,000 shares of class A common stock by us in our offering, and the application of those proceeds as described in “Formation of Holding Company — Use of Proceeds from Our Initial Public Offering.” |
As of September 30, 2005 | |||||||||||||||
Pro Forma, | |||||||||||||||
Actual | Pro Forma | as Adjusted | |||||||||||||
(dollars in millions) | |||||||||||||||
(unaudited) | |||||||||||||||
Long-term debt, including current portion: | |||||||||||||||
Revolving credit facility(1) | $ | 5.0 | $ | 5.0 | $ | 5.0 | |||||||||
Term loan | 348.3 | 348.3 | 248.3 | ||||||||||||
Capital leases and other debt | 5.3 | 5.3 | 5.3 | ||||||||||||
Total senior debt | 358.6 | 358.6 | 258.6 | ||||||||||||
Senior subordinated notes | 250.0 | 250.0 | 250.0 | ||||||||||||
Total debt | $ | 608.6 | $ | 608.6 | $ | 508.6 | |||||||||
Redeemable partnership equity | 1.2 | — | — | ||||||||||||
Partnership equity | 222.2 | — | — | ||||||||||||
Stockholders’ equity | |||||||||||||||
Preferred stock, $0.01 par value per share, 20,000,000 shares authorized pro forma; no shares issued and outstanding | — | — | — | ||||||||||||
Class A common stock, $0.01 par value per share, 100,000,000 shares authorized pro forma; 1,148,325 shares issued and outstanding pro forma; 9,248,325 shares issued and outstanding pro forma, as adjusted | — | — | 0.1 | ||||||||||||
Class B common stock, $0.01 par value per share, 40,000,000 shares authorized pro forma; 142,545 shares issued and outstanding pro forma and as adjusted | — | — | — | ||||||||||||
LP exchangeable units, 32,107,500 units issued and outstanding pro forma and as adjusted | — | 213.3 | 213.3 | ||||||||||||
Additional paid-in capital | — | 10.1 | 111.1 | ||||||||||||
Retained earnings | 14.0 | 14.0 | 11.0 | ||||||||||||
Comprehensive loss | (.7 | ) | (.7 | ) | (.7 | ) | |||||||||
Total equity | 235.5 | 236.7 | 334.8 | ||||||||||||
Total capitalization | $ | 845.3 | $ | 845.3 | $ | 843.4 | |||||||||
(1) | The revolving credit facility provides for availability of borrowings and issuances of letters of credit for up to $100.0 million. At September 30, 2005, $5.0 million of borrowings were outstanding under the revolving credit facility, letters of credit outstanding were $27.3 million and the maximum remaining available under the facility was $67.7 million. |
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Initial public offering price per share | $ | 14.00 | |||||||
Net tangible book value per share at September 30, 2005 | $ | (3.53 | ) | ||||||
Increase in pro forma net tangible book value per share attributable to new investors | 3.08 | ||||||||
Pro forma adjusted net tangible book value per share after our offering | (0.45 | ) | |||||||
Dilution per share to new investors | $ | 14.45 | |||||||
Shares Purchased | Total Consideration | ||||||||||||||||||||
Average Price | |||||||||||||||||||||
Number | Percent | Amount | Percent | Per Share | |||||||||||||||||
Existing stockholders | 33,398,370 | 80.5 | % | $ | 222,655,800 | 66.3 | % | $ | 6.67 | ||||||||||||
New investors | 8,100,000 | 19.5 | % | $ | 113,400,000 | 33.7 | % | $ | 14.00 | ||||||||||||
Total | 41,498,370 | 100.0 | % | $ | 336,055,800 | 100.0 | % | ||||||||||||||
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• | the pro forma consolidated balance sheet as of September 30, 2005, assuming this offering occurred on September 30, 2005 and the proceeds were applied as described in “Formation of Holding Company — Use of Proceeds from Our Initial Public Offering,” | |
• | the pro forma consolidated statement of operations for the eight months ended September 30, 2005, assuming this offering occurred on February 1, 2005 and the proceeds were applied as described in “Formation of Holding Company — Use of Proceeds from Our Initial Public Offering,” | |
• | the pro forma consolidated statement of operations for the five months ended January 31, 2005, assuming the transactions described below occurred as of September 1, 2004, and | |
• | the pro forma consolidated statement of operations for the year ended August 31, 2004, assuming the transactions described below occurred as of September 1, 2003. |
• | our acquisition of AMR and EmCare, including: |
• | issuance of equity by Emergency Medical Services for aggregate contributions of $219.2 million, | |
• | our senior secured credit facility, consisting of: |
• | a revolving credit facility of $100.0 million, of which we borrowed approximately $20.2 million at the closing date of the acquisition and had outstanding $24.3 million of letters of credit, and | |
• | a term loan of $350.0 million, all of which was borrowed on the closing date, |
• | the issuance and sale of $250.0 million in aggregate principal amount of our senior subordinated notes, | |
• | our purchase of all of the outstanding common stock of AMR and EmCare, and | |
• | the payment of related fees and expenses related to the acquisition. |
• | our formation as a holding company, with EMS L.P. as a subsidiary, the issuance of common stock to our equityholders other than the Onex entities and the 1.5-for-1 stock split, and |
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• | the sale of the 8,100,000 shares of class A common stock offered by us in our initial public offering and the application of the proceeds therefrom as described in “Formation of Holding Company — Use of Proceeds from Our Initial Public Offering.” |
• | the fair value of our finite life contract intangible asset, | |
• | the fair value adjustment for favorable or unfavorable leases, | |
• | the fair value adjustment for property and equipment, | |
• | changes in the excess purchase price allocated to goodwill, | |
• | changes in the fair value of other liabilities assumed and incurred as part of the acquisition, and | |
• | changes in the value of net deferred tax assets carried over as part of the acquisition, including the final determination of the deductibility of amounts related to certain settlement accruals. |
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Pro Forma Equity | ||||||||||||||
Offering | Pro | |||||||||||||
Actual | Adjustments | Forma | ||||||||||||
(dollars in thousands) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 10,113 | $ | 987 | (1) | $ | 11,100 | |||||||
Restricted cash and cash equivalents | 11,949 | — | 11,949 | |||||||||||
Restricted marketable securities | 2,165 | — | 2,165 | |||||||||||
Trade and other accounts receivable, net | 369,766 | — | 369,766 | |||||||||||
Parts and supplies inventory | 18,760 | — | 18,760 | |||||||||||
Other current assets | 31,008 | — | 31,008 | |||||||||||
Current deferred tax assets | 22,971 | — | 22,971 | |||||||||||
Total current assets | 466,732 | 987 | 467,719 | |||||||||||
Non-current assets: | ||||||||||||||
Property, plant and equipment, net | 133,283 | — | 133,283 | |||||||||||
Intangible assets, net | 81,363 | — | 81,363 | |||||||||||
Non-current deferred tax assets | 117,488 | — | 117,488 | |||||||||||
Restricted long-term investments | 73,304 | — | 73,304 | |||||||||||
Goodwill | 271,987 | — | 271,987 | |||||||||||
Other long-term assets | 109,251 | (2,978 | )(2) | 106,273 | ||||||||||
Total assets | $ | 1,253,408 | $ | (1,991 | ) | $ | 1,251,417 | |||||||
LIABILITIES AND EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 53,066 | $ | — | $ | 53,066 | ||||||||
Accrued liabilities | 199,849 | — | 199,849 | |||||||||||
Current portion of long-term debt | 13,478 | — | 13,478 | |||||||||||
Total current liabilities | 266,393 | — | 266,393 | |||||||||||
Long-term debt | 595,129 | (100,000 | )(3) | 495,129 | ||||||||||
Other long-term liabilities | 155,139 | — | 155,139 | |||||||||||
Total liabilities | 1,016,661 | (100,000 | ) | 916,661 | ||||||||||
Redeemable partnership equity | 1,213 | (1,213 | )(4) | — | ||||||||||
Equity | ||||||||||||||
Partnership equity | 222,178 | (222,178 | )(4) | — | ||||||||||
Class A common stock | — | 93 | (4) | 93 | ||||||||||
Class B common stock | — | 1 | (4) | 1 | ||||||||||
LP exchangeable units | — | 213,311 | (4) | 213,311 | ||||||||||
Additional paid-in capital | — | 110,973 | (4) | 110,973 | ||||||||||
Retained earnings | 14,002 | (2,978 | )(2) | 11,024 | ||||||||||
Comprehensive income (loss) | (646 | ) | — | (646 | ) | |||||||||
Total equity | 235,534 | 99,222 | 334,756 | |||||||||||
Total liabilities and equity | $ | 1,253,408 | $ | (1,991 | ) | $ | 1,251,417 | |||||||
(1) | To record cash receipts from the net proceeds of this offering to be used for general corporate purposes. |
(2) | To record the write-off of certain deferred financing costs associated with the portion of our senior secured credit facility we will pay down with the net proceeds of this offering. We will expense these costs in our historical post-offering consolidated statement of operations. |
(3) | To record the pay-down of our senior secured credit facility with the net proceeds of this offering. |
(4) | To record (a) our formation as a holding company, with EMS L.P. as a subsidiary, the (b) issuance of class A common stock and class B common stock to certain of our existing equityholders and the designation of the remaining class A partnership units as LP exchangeable units, exchangeable for our class B common stock and (c) net proceeds of our offering. |
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Pro Forma Equity | ||||||||||||
Offering | ||||||||||||
Consolidated | Adjustments | Pro Forma | ||||||||||
(dollars in thousands) | ||||||||||||
Net revenue | $ | 1,187,653 | $ | — | $ | 1,187,653 | ||||||
Compensation and benefits | 822,595 | — | 822,595 | |||||||||
Operating expenses | 168,700 | — | 168,700 | |||||||||
Insurance expense | 60,382 | — | 60,382 | |||||||||
Selling, general and administrative expenses | 38,248 | — | 38,248 | |||||||||
Depreciation and amortization expenses | 38,811 | — | 38,811 | |||||||||
Income from operations | 58,917 | — | 58,917 | |||||||||
Interest expense | (34,407 | ) | 4,512 | (1) | (29,895) | |||||||
Realized loss on investments | (40 | ) | — | (40) | ||||||||
Interest and other income | 189 | — | 189 | |||||||||
Income before income taxes | 24,659 | 4,512 | 29,171 | |||||||||
Income tax expense | (10,657 | ) | (1,805 | ) (2) | (12,462) | |||||||
Net income | $ | 14,002 | $ | 2,707 | $ | 16,709 | ||||||
Net income per share: | ||||||||||||
Basic | $ | 0.41 | ||||||||||
Diluted | $ | 0.40 | ||||||||||
Weighted average shares — basic | 41,192,381 | (3) | ||||||||||
Weighted average shares — diluted | 42,026,816 | (3) |
(1) | To record reduction of interest expense on our senior secured credit facility as a result of the pay-down with net proceeds of this offering and reduce amortization associated with the write-down of deferred financing costs. |
(2) | To adjust income tax expense to reflect the reduction of interest expense, at an effective tax rate of 40%. |
(3) | The pro forma weighted shares outstanding are based on the actual equity transactions recorded in the eight-month period ended September 30, 2005 and described elsewhere in this prospectus. These actual equity transactions have been adjusted to give effect to our reorganization as a holding company, assume the exchange of all LP exchangeable units for class B common stock, and include the 8.0 million shares of common stock we will issue in our offering to generate the $100 million of net proceeds we intend to use to repay debt outstanding under our senior secured credit facility. These weighted shares were used to calculate basic earnings per share, and the number of diluted shares gives pro forma effect to the options outstanding during the eight-month period, using the offering price of $14.00 per share. |
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AMR and | Pro Forma | Pro Forma | ||||||||||||||
EmCare | Acquisition | Equity Offering | ||||||||||||||
Combined | Adjustments | Adjustments | Pro Forma | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Net revenue | $ | 696,179 | $ | — | $ | — | $ | 696,179 | ||||||||
Compensation and benefits | 481,305 | — | — | 481,305 | ||||||||||||
Operating expenses | 94,882 | — | — | 94,882 | ||||||||||||
Insurance expense | 39,002 | — | — | 39,002 | ||||||||||||
Selling, general and administrative expenses | 21,635 | — | — | 21,635 | ||||||||||||
Laidlaw fees and compensation charges | 19,857 | — | — | 19,857 | (1) | |||||||||||
Depreciation and amortization expenses | 18,808 | 4,424 | (2) | — | 23,232 | |||||||||||
Income (loss) from operations | 20,690 | (4,424 | ) | — | 16,266 | |||||||||||
Interest expense | (5,644 | ) | 5,254 | (3) | — | |||||||||||
(21,306 | )(4)(5) | 3,141 | (6) | (18,555 | ) | |||||||||||
Interest and other income | 714 | — | — | 714 | ||||||||||||
Income (loss) before income taxes | 15,760 | (20,476 | ) | 3,141 | (1,575 | ) | ||||||||||
Income tax expense | (6,278 | ) | 8,157 | (7) | (1,250 | )(7) | 629 | |||||||||
Net income (loss) | $ | 9,482 | $ | (12,319 | ) | $ | 1,891 | $ | (946 | ) | ||||||
Net loss per share: | ||||||||||||||||
Basic | $ | (0.02 | ) | |||||||||||||
Diluted | $ | (0.02 | ) | |||||||||||||
Weighted average shares — basic | 41,192,381 | (8) | ||||||||||||||
Weighted average shares — diluted | 42,026,816 | (8) |
(1) | Represents certain Laidlaw fees and compensation charges, primarily relating to a compensation charge associated with the increase in the enterprise values of AMR and EmCare. Our estimated replacement costs for certain functions are not recorded on the face of this pro forma statement of operations because we do not have a contract for each element of these costs. We will be required to replace certain functions and costs previously provided to us by Laidlaw and which comprise Laidlaw fees and compensation charges. Our estimate of these costs on an annual basis ($1.67 million for a five-month period) are: |
Compensation and benefits costs for personnel providing internal audit and tax services | $ | 1,100 | ||
Directors and officers insurance | 500 | |||
Selling, general and administrative expenses for external audit fees, treasury services and other costs | 1,400 | |||
Onex management fee | 1,000 | |||
$ | 4,000 | |||
(2) | AMR and EmCare combined amortization expense includes amortization (over a7-year period) of the finite life intangible assets of $89.0 million based on the value of identifiable intangible assets determined by an independent valuation group. |
(3) | To eliminate interest expense charged on the Laidlaw payable. |
(4) | To record amortization on $18.1 million of deferred financing costs associated with our acquisition-related borrowings, utilizing a weighted average maturity of eight years on an effective yield basis. |
(5) | To record interest expense on our acquisition-related borrowings, assuming a weighted average interest rate of 7.87%. |
(6) | To record reduction of interest expense on our senior secured credit facility as a result of the pay-down with net proceeds of this offering. |
(7) | To adjust income tax expense to reflect the adjustments identified in notes (2) through (6), at an effective tax rate of 40%. |
(8) | The pro forma weighted shares outstanding are based on the actual equity transactions recorded in the eight-month period ended September 30, 2005 and described elsewhere in this prospectus. These actual equity transactions have been adjusted to give effect to our reorganization as a holding company, assume the exchange of all LP exchangeable units for class B common stock, and include the 8.0 million shares of common stock we will issue in our offering to generate the $100 million of net proceeds we intend to use to repay debt outstanding under our senior secured credit facility. These weighted shares were used to calculate basic earnings per share, and the number of diluted shares gives pro forma effect to the options outstanding during the eight-month period, using the offering price of $14.00 per share. |
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AMR and | Pro Forma | Pro Forma | ||||||||||||||
EmCare | Acquisition | Equity Offering | ||||||||||||||
Combined | Adjustments | Adjustments | Pro Forma | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Net revenue | $ | 1,604,598 | $ | — | $ | — | $ | 1,604,598 | ||||||||
Compensation and benefits | 1,117,890 | — | — | 1,117,890 | ||||||||||||
Operating expenses | 218,277 | — | — | 218,277 | ||||||||||||
Insurance expense | 80,255 | — | — | 80,255 | ||||||||||||
Selling, general and administrative expenses | 47,899 | — | — | 47,899 | ||||||||||||
Laidlaw fees and compensation charges | 15,449 | — | — | 15,449 | (1) | |||||||||||
Depreciation and amortization expenses | 52,739 | 3,130 | (2) | — | 55,869 | |||||||||||
Restructuring charges | 2,115 | — | — | 2,115 | ||||||||||||
Income (loss) from operations | 69,974 | (3,130 | ) | — | 66,844 | |||||||||||
Interest expense | (9,961 | ) | 6,373 | (3) | ||||||||||||
(50,968 | )(4)(5) | 7,505 | (6) | (47,051 | ) | |||||||||||
Realized loss on investments | (1,140 | ) | — | — | (1,140 | ) | ||||||||||
Interest and other income | 240 | — | — | 240 | ||||||||||||
Income (loss) before income taxes | 59,113 | (47,725 | ) | 7,505 | 18,893 | |||||||||||
Income tax expense | (21,764 | ) | 19,000 | (7) | (3,000 | )(7) | (5,764 | ) | ||||||||
Net income (loss) | $ | 37,349 | $ | (28,725 | ) | $ | 4,505 | $ | 13,129 | |||||||
Net income per share: |
Basic | $ | 0.32 | ||
Diluted | $ | 0.31 | ||
Weighted average shares — basic | 41,192,381 | (8) | ||
Weighted average shares — diluted | 42,026,816 | (8) |
(1) | Represents certain Laidlaw fees and compensation charges, primarily relating to a compensation charge associated with the increase in the enterprise values of AMR and EmCare. Our estimated replacement costs for certain functions, are not recorded on the face of this pro forma statement of operations because we do not have a contract for each element of these costs. We will be required to replace certain functions and costs previously provided to us by Laidlaw and which comprise Laidlaw fees and compensation charges. Our estimate of these costs on an annual basis are: |
Compensation and benefits costs for personnel providing internal audit and tax services | $ | 1,100 | ||
Directors and officers insurance | 500 | |||
Selling, general and administrative expenses for external audit fees, treasury services and other costs | 1,400 | |||
Onex management fee | 1,000 | |||
$ | 4,000 | |||
(2) | AMR and EmCare combined amortization expense includes amortization (over a7-year period) of the finite life intangible assets of $89.0 million based on the value of identifiable intangible assets by an independent valuation group. |
(3) | To eliminate interest expense charged on the Laidlaw payable. |
(4) | To record amortization on $18.1 million of deferred financing costs associated with our acquisition-related borrowings, utilizing a weighted average maturity of eight years on an effective yield basis. |
(5) | To record interest expense on our acquisition-related borrowings, assuming a weighted average interest rate of 7.87%. |
(6) | To record reduction of interest expense on our senior secured credit facility as a result of the pay-down with net proceeds of this offering. |
(7) | To adjust income tax expense to reflect the adjustments identified in notes (2) through (6), at an effective tax rate of 40%. |
(8) | The pro forma weighted shares outstanding are based on the actual equity transactions recorded in the eight-month period ended September 30, 2005 and described elsewhere in this prospectus. These actual equity transactions have been adjusted to give effect to our reorganization as a holding company, assume the exchange of all LP exchangeable units for class B common stock, and include the 8.0 million shares of common stock we will issue in our offering to generate the $100 million of net proceeds we intend to repay debt outstanding under our senior secured credit facility. These weighted shares were used to calculate basic earnings per share, and the number of diluted shares gives pro forma effect to the options outstanding during the eight-month period, using the offering price of $14.00 per share. |
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Predecessor (Pre-Acquisition) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Pre-Laidlaw Bankruptcy | |||||||||||||||||||||||||||||||||||||||||||||||||||
As Restated | Post-Laidlaw Bankruptcy | Successor (Post-Acquisition) | |||||||||||||||||||||||||||||||||||||||||||||||||
Nine | Three | ||||||||||||||||||||||||||||||||||||||||||||||||||
Months | Months | Five Months Ended | Three Months | Eight Months | Three Months | Eight Months | |||||||||||||||||||||||||||||||||||||||||||||
Year Ended August 31, | Ended | Ended | Year Ended | January 31, | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||||||||||||||
May 31, | August 31, | August 31, | September 30, | September 30, | September 30, | September 30, | |||||||||||||||||||||||||||||||||||||||||||||
2000(1) | 2001(2) | 2002 | 2003 | 2003 | 2004 | 2004 | 2005 | 2004 | 2004 | 2005 | 2005 | ||||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 1,355,978 | $ | 1,386,136 | $ | 1,415,786 | $ | 1,103,335 | $ | 384,461 | $ | 1,604,598 | $ | 667,506 | $ | 696,179 | $ | 413,869 | $ | 1,077,749 | $ | 456,245 | $ | 1,187,653 | |||||||||||||||||||||||||||
Compensation and benefits | 980,731 | 976,330 | 960,590 | 757,183 | 264,604 | 1,117,890 | 461,923 | 481,305 | 286,628 | 751,238 | 319,292 | 822,595 | |||||||||||||||||||||||||||||||||||||||
Operating expenses | 201,853 | 216,019 | 219,321 | 163,447 | 55,212 | 218,277 | 90,828 | 94,882 | 55,683 | 147,524 | 66,156 | 168,700 | |||||||||||||||||||||||||||||||||||||||
Insurance expense | 78,079 | 117,374 | 66,479 | 69,576 | 34,671 | 80,255 | 36,664 | 39,002 | 18,404 | 51,674 | 21,048 | 60,382 | |||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 59,404 | 53,017 | 61,455 | 37,867 | 12,017 | 47,899 | 22,016 | 21,635 | 12,093 | 31,270 | 15,654 | 38,248 | |||||||||||||||||||||||||||||||||||||||
Laidlaw fees and compensation charges | 7,320 | 7,260 | 5,400 | 4,050 | 1,350 | 15,449 | 6,436 | 19,857 | 3,657 | 10,095 | — | — | |||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 99,957 | 66,286 | 67,183 | 32,144 | 12,560 | 52,739 | 22,079 | 18,808 | 12,669 | 34,627 | 14,843 | 38,811 | |||||||||||||||||||||||||||||||||||||||
Impairment losses | 1,183,681 | — | 262,780 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Restructuring charges | 1,826 | — | 3,777 | 1,288 | 1,449 | 2,115 | — | — | — | 1,381 | — | — | |||||||||||||||||||||||||||||||||||||||
Laidlaw reorganization charges | — | 9,198 | 8,761 | 3,650 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Income (loss) from operations | (1,256,873 | ) | (59,348 | ) | (239,960 | ) | 34,130 | 2,598 | 69,974 | 27,560 | 20,690 | 24,555 | 49,940 | 19,252 | 58,917 | ||||||||||||||||||||||||||||||||||||
Interest expense | (95,087 | ) | (66,181 | ) | (6,418 | ) | (4,691 | ) | (908 | ) | (9,961 | ) | (4,137 | ) | (5,644 | ) | (5,138 | ) | (8,679 | ) | (12,824 | ) | (34,407 | ) | |||||||||||||||||||||||||||
Realized gain (loss) on investments | — | — | — | — | 90 | (1,140 | ) | — | — | (1,140 | ) | (1,191 | ) | (34 | ) | (40 | ) | ||||||||||||||||||||||||||||||||||
Interest and other income | 86 | 222 | 369 | 304 | 22 | 240 | 1,403 | 714 | 162 | 210 | 91 | 189 | |||||||||||||||||||||||||||||||||||||||
Fresh-start accounting adjustments(3) | — | — | — | 46,416 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes and cumulative effect of change in accounting principle | (1,351,874 | ) | (125,307 | ) | (246,009 | ) | 76,159 | 1,802 | 59,113 | 24,826 | 15,760 | 18,439 | 40,280 | 6,485 | 24,659 | ||||||||||||||||||||||||||||||||||||
Income tax expense | (54,639 | ) | 17,538 | (1,374 | ) | (829 | ) | (8,633 | ) | (21,764 | ) | (9,800 | ) | (6,278 | ) | (7,191 | ) | (15,710 | ) | (3,479 | ) | (10,657 | ) | ||||||||||||||||||||||||||||
Income (loss) before cumulative effect of change in accounting principle | (1,406,513 | ) | (107,769 | ) | (247,383 | ) | 75,330 | (6,831 | ) | 37,349 | 15,026 | 9,482 | 11,248 | 24,570 | 3,006 | 14,002 | |||||||||||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle | (5,288 | ) | — | — | (223,721 | )(4) | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (1,411,801 | ) | $ | (107,769 | ) | $ | (247,383 | ) | $ | (148,391 | ) | $ | (6,831 | ) | $ | 37,349 | $ | 15,026 | $ | 9,482 | $ | 11,248 | $ | 24,570 | $ | 3,006 | $ | 14,002 | ||||||||||||||||||||||
Other Financial Data: | |||||||||||||||||||||||||||||||||||||||||||||||||||
Cash flows provided by (used in): | |||||||||||||||||||||||||||||||||||||||||||||||||||
Operating activities | $ | 30,133 | $ | 28,044 | $ | 156,544 | $ | 58,769 | $ | 30,009 | $ | 127,679 | $ | 18,627 | $ | 15,966 | $ | 99,961 | $ | 108,462 | |||||||||||||||||||||||||||||||
Investing activities | (40,983 | ) | (36,442 | ) | (57,347 | ) | (98,835 | ) | (15,136 | ) | (81,516 | ) | (10,881 | ) | (21,667 | ) | (73,910 | ) | (917,422 | ) | |||||||||||||||||||||||||||||||
Financing activities | 22,402 | 11,376 | (36,066 | ) | (8,060 | ) | (47,222 | ) | (47,328 | ) | (7,532 | ) | 10,856 | (20,699 | ) | 804,442 | |||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 37,698 | $ | 39,347 | $ | 57,438 | (5) | $ | 34,768 | $ | 18,079 | $ | 42,787 | $ | 14,224 | $ | 14,045 | $ | 30,217 | $ | 34,947 |
As of | ||||
September 30, 2005 | ||||
(dollars in | ||||
thousands) | ||||
Balance Sheet Data: | ||||
Cash and cash equivalents | $ | 10,113 | ||
Total assets | 1,253,408 | |||
Long-term debt and capital lease obligations, including current maturities | 608,607 | |||
Partners’ equity | $ | 235,534 |
(1) | Represents the combination of the audited financial statements of AMR and the unaudited financial statements of EmCare for the year ended August 31, 2000. |
(2) | Represents the combination of the audited financial statements of AMR and EmCare for the year ended August 31, 2001. |
(3) | See note 1 to our combined financial statements with respect to our fresh-start financial reporting. |
(4) | Reflects an impairment of goodwill recorded in connection with the adoption of SFAS No. 142. |
(5) | Includes $26.3 million financed through capital leases. |
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Percentage of | Percentage of Total | ||||||||||||||||
Net Revenue | Transports and Visits | ||||||||||||||||
Year Ended August 31, | Year Ended August 31, | ||||||||||||||||
2003 | 2004 | 2003 | 2004 | ||||||||||||||
Medicare | 27.4 | % | 27.3 | % | 25.5 | % | 25.8 | % | |||||||||
Medicaid | 5.3 | 5.2 | 11.8 | 12.3 | |||||||||||||
Commercial insurance and managed care | 47.3 | 47.7 | 42.2 | 41.4 | |||||||||||||
Self-pay | 4.7 | 4.0 | 20.5 | 20.5 | |||||||||||||
Subsidies and fees | 15.3 | 15.8 | 0.0 | 0.0 | |||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||
• | Transports. We utilize transport data, including the number and types of transports, to evaluate net revenue and as the basis by which we measure certain costs of the business. We segregate transports into two main categories — ambulance transports (including emergency, as well as non-emergency critical care and other interfacility transports) and wheelchair transports — due to the significant differences in reimbursement and the associated costs of providing ambulance and wheelchair transports. As a result of these differences, in certain analyses we weight our transport numbers according to category in an effort to better measure net revenue and costs. |
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• | Net revenue per transport. Net revenue per transport reflects the expected net revenue for each transport based on gross billings less all estimated provisions for contractual discounts and uncompensated care. In order to better understand the trends across business segments and in our transport rates, we analyze our net revenue per transport based on weighted transports to reflect the differences in our transportation mix. |
• | Unit hours and cost per unit hour. Our measurement of a unit hour is based on a fully staffed ambulance or wheelchair van for one operating hour. We use unit hours and cost per unit hour to measure compensation-related costs and the efficiency of our deployed resources. We monitor unit hours and cost per unit hour on a combined basis, as well as on a segregated basis between ambulance and wheelchair transports. | |
• | Operating costs per transport. Operating costs per transport is comprised of certain direct operating costs, including vehicle operating costs, medical supplies and other transport-related costs, but excluding compensation-related costs. Monitoring operating costs per transport allows us to better evaluate cost trends and operating practices of our regional and local management teams. | |
• | Accident and insurance claims. We monitor the number and magnitude of all accident and insurance claims in order to measure the effectiveness of our risk management programs. Depending on the type of claim (workers compensation, auto, general or professional liability), we monitor our performance by utilizing various bases of measurement, such as net revenue, miles driven, number of vehicles operated, compensation dollars, and number of transports. |
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• | Number of contracts. This reflects the number of contractual relationships we have for outsourced emergency department staffing and related management services, hospitalist services and other management services. We analyze the change in our number of contracts from period to period based on “net new contracts,” which is the difference between total new contracts and contracts that have terminated. | |
• | Revenue per patient visit. This reflects the expected net revenue for each patient visit based on gross billings less all estimated provisions for contractual discounts and uncompensated care. Net revenue per patient visit also includes net revenue from billings to third party payors and hospitals. |
• | Provider compensation per patient visit. Provider compensation per patient visit includes all compensation and benefit costs for all professional providers, including physicians, physician assistants and nurse practitioners, during each patient visit. Providers include all full-time, part-time and independently contracted providers. Analyzing provider compensation per patient visit enables us to monitor our most significant cost in performing under our contracts. | |
• | Professional liability costs. These costs include provisions for estimated losses for actual claims, and claims likely to be incurred in the period, within our self-insurance limits based on our past loss experience, as well as actual direct costs, including investigation and defense costs, claims payments, reinsurance costs and other costs related to provider professional liability. |
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Basis of Presentation |
• | the combined financial results and cash flows for the year ended August 31, 2003, which represents the financial results and cash flows for the Predecessor — Post-Laidlaw Bankruptcy for the three months ended August 31, 2003 and the financial results and cash flows for the Predecessor — Pre-Laidlaw Bankruptcy for the nine months ended May 31, 2003, and | |
• | our Predecessor — Pre-Laidlaw Bankruptcy’s financial results for the year ended August 31, 2002. |
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Predecessor | |||||||||||||||||||||||||||||||||||||
Successor | |||||||||||||||||||||||||||||||||||||
Year Ended August 31, | |||||||||||||||||||||||||||||||||||||
Five Months | Three Months | Eight Months | Three Months | Eight Months | |||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||||
As Restated | January 31, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2004 | 2005 | 2004 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Net revenue | $ | 1,415,786 | $ | 1,487,796 | $ | 1,604,598 | $ | 667,506 | $ | 696,179 | $ | 413,869 | $ | 1,077,749 | $ | 456,245 | $ | 1,187,653 | |||||||||||||||||||
Compensation and benefits | 960,590 | 1,021,787 | 1,117,890 | 461,923 | 481,305 | 286,628 | 751,238 | 319,292 | 822,595 | ||||||||||||||||||||||||||||
Operating expenses | 219,321 | 218,659 | 218,277 | 90,828 | 94,882 | 55,863 | 147,524 | 66,156 | 168,700 | ||||||||||||||||||||||||||||
Insurance expense | 66,479 | 104,247 | 80,255 | 36,664 | 39,002 | 18,404 | 51,674 | 21,048 | 60,382 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 61,455 | 49,884 | 47,899 | 22,016 | 21,635 | 12,093 | 31,270 | 15,654 | 38,248 | ||||||||||||||||||||||||||||
Laidlaw fees and compensation charges(1) | 5,400 | 5,400 | 15,449 | 6,436 | 19,857 | 3,657 | 10,095 | — | — | ||||||||||||||||||||||||||||
Depreciation and amortization expenses | 67,183 | 44,704 | 52,739 | 22,079 | 18,808 | 12,669 | 34,627 | 14,843 | 38,811 | ||||||||||||||||||||||||||||
Impairment losses | 262,780 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Restructuring charges | 3,777 | 2,737 | 2,115 | — | — | — | 1,381 | — | — | ||||||||||||||||||||||||||||
Laidlaw reorganization costs | 8,761 | 3,650 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Income (loss) from operations | (239,960 | ) | 36,728 | 69,974 | 27,560 | 20,690 | 24,555 | 49,940 | 19,252 | 58,917 | |||||||||||||||||||||||||||
Interest expense | (6,418 | ) | (5,599 | ) | (9,961 | ) | (4,137 | ) | (5,644 | ) | (5,138 | ) | (8,679 | ) | (12,824 | ) | (34,407 | ) | |||||||||||||||||||
Realized gain (loss) on investments | — | 90 | (1,140 | ) | — | — | (1,140 | ) | (1,191 | ) | (34 | ) | (40 | ) | |||||||||||||||||||||||
Interest and other income | 369 | 326 | 240 | 1,403 | 714 | 162 | 210 | 91 | 189 | ||||||||||||||||||||||||||||
Fresh-start accounting adjustments | — | 46,416 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | (223,721 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Income tax expense | (1,374 | ) | (9,462 | ) | (21,764 | ) | (9,800 | ) | (6,278 | ) | (7,191 | ) | (15,710 | ) | (3,479 | ) | (10,657 | ) | |||||||||||||||||||
Net income (loss) | $ | (247,383 | ) | $ | (155,222 | ) | $ | 37,349 | $ | 15,026 | $ | 9,482 | $ | 11,248 | $ | 24,570 | $ | 3,006 | $ | 14,002 | |||||||||||||||||
(1) | Amounts include specifically allocated compensation costs and the Laidlaw fees and compensation charges allocated to AMR and EmCare by Laidlaw pursuant to a formula based upon each company’s share of Laidlaw’s consolidated revenue. |
Predecessor | |||||||||||||||||||||||||||||||||||||
Successor | |||||||||||||||||||||||||||||||||||||
Year Ended August 31, | |||||||||||||||||||||||||||||||||||||
Five Months | Three Months | Eight Months | Three Months | Eight Months | |||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||||||||||||||||
As Restated | January 31, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||||||||
2002 | 2003 | 2004 | 2004 | 2005 | 2004 | 2004 | 2005 | 2005 | |||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||
Net revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||
Compensation and benefits | 67.8 | 68.7 | 69.7 | 69.2 | 69.1 | 69.3 | 69.7 | 70.0 | 69.3 | ||||||||||||||||||||||||||||
Operating expenses | 15.5 | 14.7 | 13.6 | 13.6 | 13.6 | 13.5 | 13.7 | 14.5 | 14.2 | ||||||||||||||||||||||||||||
Insurance expense | 4.7 | 7.0 | 5.0 | 5.5 | 5.6 | 4.4 | 4.8 | 4.6 | 5.1 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | 4.3 | 3.4 | 3.0 | 3.3 | 3.1 | 2.9 | 2.9 | 3.4 | 3.2 | ||||||||||||||||||||||||||||
Laidlaw fees and compensation charges(1) | 0.4 | 0.4 | 1.0 | 1.0 | 2.9 | 0.9 | 0.9 | 0.0 | 0.0 | ||||||||||||||||||||||||||||
Depreciation and amortization expense | 4.7 | 3.0 | 3.3 | 3.3 | 2.7 | 3.1 | 3.2 | 3.3 | 3.3 | ||||||||||||||||||||||||||||
Impairment losses | 18.6 | — | — | — | — | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||||||||||
Restructuring charges | 0.3 | 0.2 | 0.1 | — | — | 0.0 | 0.1 | 0.0 | 0.0 | ||||||||||||||||||||||||||||
Laidlaw reorganization costs | 0.6 | 0.2 | — | — | — | 0.0 | 0.0 | 0.0 | 0.0 | ||||||||||||||||||||||||||||
Income (loss) from operations | (16.9 | )% | 2.5 | % | 4.4 | % | 4.1 | % | 3.0 | % | 5.9 | % | 4.6 | % | 4.2 | % | 5.0 | % | |||||||||||||||||||
(1) | Amounts include specifically allocated compensation costs and the Laidlaw fees and compensation charges allocated to AMR and EmCare by Laidlaw pursuant to a formula based upon each company’s share of Laidlaw’s consolidated revenue. |
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Predecessor | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended August 31, | Five Months Ended January 31, | Successor | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
As Restated | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months | Eight Months | Three Months | Eight Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% of | % of | % of | % of | % of | Ended | % of | Ended | % of | Ended | % of | Ended | % of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Net | Net | Net | Net | September 30, | Net | September 30, | Net | September 30, | Net | September 30, | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2002 | Revenue | 2003 | Revenue | 2004 | Revenue | 2004 | Revenue | 2005 | Revenue | 2004 | Revenue | 2004 | Revenue | 2005 | Revenue | 2005 | Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 984,451 | 100.0 | % | $ | 1,007,151 | 100.0 | % | $ | 1,054,800 | 100.0 | % | $ | 441,956 | 100.0 | % | $ | 455,059 | 100.0 | % | $ | 270,887 | 100.0 | % | $ | 705,181 | 100.0 | % | $ | 291,909 | 100.0 | % | $ | 761,712 | 100.0 | % | |||||||||||||||||||||||||||||||||||||
Compensation and benefits | 627,818 | 63.8 | 647,255 | 64.3 | 687,221 | 65.2 | 287,736 | 65.1 | 289,733 | 63.7 | 174,792 | 64.5 | 457,661 | 64.9 | 190,112 | 65.1 | 486,455 | 63.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses | 195,335 | 19.8 | 195,105 | 19.4 | 194,398 | 18.4 | 80,277 | 18.2 | 83,910 | 18.4 | 49,693 | 18.3 | 131,520 | 18.7 | 58,751 | 20.1 | 150,123 | 19.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance expense | 36,079 | 3.7 | 67,409 | 6.7 | 44,272 | 4.2 | 20,297 | 4.6 | 22,437 | 4.9 | 11,612 | 4.3 | 28,785 | 4.1 | 9,431 | 3.2 | 30,368 | 4.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 44,686 | 4.5 | 35,078 | 3.5 | 32,217 | 3.1 | 16,175 | 3.7 | 15,721 | 3.5 | 7,754 | 2.9 | 19,806 | 2.8 | 10,951 | 3.8 | 26,953 | 3.5 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laidlaw fees and compensation charges(1) | 3,600 | 0.4 | 3,600 | 0.4 | 9,020 | 0.9 | 3,758 | 0.9 | 9,399 | 2.1 | 2,211 | 0.8 | 5,970 | 0.8 | — | 0.0 | — | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 62,223 | 6.3 | 39,273 | 3.9 | 43,629 | 4.1 | 18,278 | 4.1 | 16,394 | 3.6 | 10,464 | 3.9 | 28,591 | 4.1 | 12,084 | 4.1 | 31,527 | 4.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment losses | 262,780 | 26.7 | — | — | — | — | — | 0.0 | — | 0.0 | — | 0.0 | — | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring charges | 3,777 | 0.4 | 2,737 | 0.3 | 2,115 | 0.2 | — | — | — | 0.0 | 1,381 | 0.2 | — | 0.0 | — | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from operations | $ | (251,847 | ) | (25.6 | )% | $ | 16,694 | 1.7 | % | $ | 41,928 | 4.0 | % | $ | 15,435 | 3.5 | % | $ | 17,465 | 3.8 | % | $ | 14,361 | 5.3 | % | $ | 31,467 | 4.5 | % | $ | 10,580 | 3.6 | % | $ | 36,286 | 4.8 | % | ||||||||||||||||||||||||||||||||||||
(1) | Amounts include specifically allocated compensation costs and the Laidlaw fees and compensation charges allocated to AMR by Laidlaw pursuant to a formula based upon AMR’s share of Laidlaw’s consolidated revenue. |
Predecessor | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended August 31, | Five Months Ended January 31, | Successor | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months | Eight Months | Three Months | Eight Months | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% of | % of | % of | % of | % of | Ended | % of | Ended | % of | Ended | % of | Ended | % of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net | Net | Net | Net | Net | September 30, | Net | September 30, | Net | September 30, | Net | September 30, | Net | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2002 | Revenue | 2003 | Revenue | 2004 | Revenue | 2004 | Revenue | 2005 | Revenue | 2004 | Revenue | 2004 | Revenue | 2005 | Revenue | 2005 | Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net revenue | $ | 431,335 | 100.0 | % | $ | 480,645 | 100.0 | % | $ | 549,798 | 100.0 | % | $ | 225,550 | 100.0 | % | $ | 241,120 | 100.0 | % | $ | 142,982 | 100.0 | % | $ | 372,568 | 100.0 | % | $ | 164,336 | 100.0 | % | $ | 425,941 | 100.0 | % | |||||||||||||||||||||||||||||||||||||
Compensation and benefits | 332,772 | 77.1 | 374,532 | 77.9 | 430,669 | 78.3 | 174,187 | 77.2 | 191,572 | 79.5 | 111,836 | 78.2 | 293,577 | 78.8 | 129,180 | 78.6 | 336,140 | 78.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses | 23,986 | 5.6 | 23,554 | 4.9 | 23,879 | 4.3 | 10,551 | 4.7 | 10,972 | 4.6 | 6,170 | 4.3 | 16,004 | 4.3 | 7,405 | 4.5 | 18,577 | 4.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance expense | 30,400 | 7.0 | 36,838 | 7.7 | 35,983 | 6.5 | 16,367 | 7.3 | 16,565 | 6.9 | 6,792 | 4.8 | 22,889 | 6.1 | 11,617 | 7.1 | 30,014 | 7.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 16,769 | 3.9 | 14,806 | 3.1 | 15,682 | 2.9 | 5,841 | 2.6 | 5,914 | 2.5 | 4,339 | 3.0 | 11,464 | 3.1 | 4,703 | 2.9 | 11,295 | 2.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laidlaw fees and compensation charges(1) | 1,800 | 0.4 | 1,800 | 0.4 | 6,429 | 1.2 | 2,678 | 1.2 | 10,458 | 4.3 | 1,446 | 1.0 | 4,125 | 1.1 | — | 0.0 | — | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and amortization expense | 4,960 | 1.1 | 5,431 | 1.1 | 9,110 | 1.7 | 3,801 | 1.7 | 2,414 | 1.0 | 2,205 | 1.5 | 6,036 | 1.6 | 2,759 | 1.7 | 7,284 | 1.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Laidlaw reorganization costs | 8,761 | 2.0 | 3,650 | 0.8 | — | — | — | — | 0.0 | — | 0.0 | — | 0.0 | — | 0.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income from operations | $ | 11,887 | 2.8 | % | $ | 20,034 | 4.2 | % | $ | 28,046 | 5.1 | % | $ | 12,125 | 5.4 | % | $ | 3,225 | 1.3 | % | $ | 10,194 | 7.1 | % | $ | 18,473 | 5.0 | % | $ | 8,672 | 5.3 | % | 22,631 | 5.3 | % | ||||||||||||||||||||||||||||||||||||||
(1) | Amounts include specifically allocated compensation costs and the Laidlaw fees and compensation charges allocated to EmCare by Laidlaw pursuant to a formula based upon EmCare’s share of Laidlaw’s consolidated revenue. |
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Debt Facilities |
• | substantially all present and future shares of the capital stock of AMR HoldCo, Inc. and EmCare HoldCo, Inc., our wholly-owned subsidiaries which are the co-borrowers, and each of their present and future domestic subsidiaries and 65% of the capital stock of controlled foreign corporations; | |
• | substantially all present and future intercompany debt of the co-borrowers and each guarantor; and | |
• | substantially all of the present and future property and assets, real and personal, of the co-borrowers and each guarantor. |
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As of September 30, 2005 | ||||||||||||||
Consolidated | Pro Forma | |||||||||||||
Total Leverage Ratio: | ||||||||||||||
Consolidated Indebtedness/ | $ | 608,607 | $ | 508,607 | ||||||||||
Adjusted LTM EBITDA(1) | ÷ | $ | 150,128 | $ | 150,128 | |||||||||
= 4.05 | × | = 3.39 | × | |||||||||||
Senior Leverage Ratio: | ||||||||||||||
Senior Indebtedness/ | $ | 358,607 | $ | 258,607 | ||||||||||
Adjusted LTM EBITDA(1) | ÷ | $ | 150,128 | $ | 150,128 | |||||||||
= 2.39 | × | = 1.72 | × | |||||||||||
Fixed Charge Coverage Ratio: | ||||||||||||||
Fixed Charge Numerator(2) | $ | 103,336 | $ | 103,336 | ||||||||||
Fixed Charge Denominator(3) | ÷ | $ | 63,097 | $ | 60,686 | |||||||||
= 1.64 | × | = 1.70 | × |
(1) | “Adjusted LTM EBITDA” is calculated as set forth in our senior secured credit facility: our consolidated EBITDA for the four fiscal quarters ended September 30, 2005, adding back all management fees (totaling $19.8 million), and other specifically identified exclusions. |
(2) | The numerator for the fixed charge ratio is calculated as set forth in our senior secured credit facility: Adjusted EBITDA, less capital expenditures, for the four fiscal quarters ended September 30, 2005. |
(3) | The denominator for the fixed charge ratio is calculated as set forth in our senior secured credit facility: the sum of our consolidated interest expense, cash income taxes and principal amount of all scheduled amortization payments on all Indebtedness (as defined), including pro forma annual principal payments on our senior secured credit facility, for the four fiscal quarters ended September 30, 2005. |
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Payments Due by Period | |||||||||||||||||||||
Less than | More than | ||||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Contractual obligations: | |||||||||||||||||||||
Long-term debt(1) | $ | 157 | $ | 271 | $ | 221 | $ | 319 | $ | 968 | |||||||||||
Senior secured credit facility(2) | 8,500 | 7,000 | 7,000 | 330,750 | 353,250 | ||||||||||||||||
Capital lease obligations (principal) | 4,389 | — | — | — | 4,389 | ||||||||||||||||
Capital lease obligations (interest) | 112 | — | — | — | 112 | ||||||||||||||||
Senior subordinated notes | — | — | — | 250,000 | 250,000 | ||||||||||||||||
Interest on debt(3) | 45,901 | 91,218 | 90,312 | 136,042 | 363,473 | ||||||||||||||||
Operating lease obligations | 24,876 | 33,708 | 14,527 | 11,886 | 84,997 | ||||||||||||||||
Other contractual obligations(4) | 5,793 | 3,982 | 3,363 | 243 | 13,381 | ||||||||||||||||
Subtotal | 89,728 | 136,179 | 115,423 | 729,240 | 1,070,570 | ||||||||||||||||
(1) | Excludes capital lease obligations. |
(2) | Excludes interest on our senior secured credit facility and senior subordinated notes. |
(3) | Interest on our floating rate debt was calculated for all years using the effective rate as of September 30, 2005 of 5.98%. |
(4) | Includes Onex management fees, dispatch fees and responder fees. |
Amount of Commitment Expiration Per Period | |||||||||||||||||||||
Less than | More than | ||||||||||||||||||||
1 Year | 1-3 Years | 3-5 Years | 5 Years | Total | |||||||||||||||||
(in thousands) | |||||||||||||||||||||
Other commitments: | |||||||||||||||||||||
Guarantees of surety bonds | 2,545 | — | — | 29,957 | 32,502 | ||||||||||||||||
Letters of credit(1) | — | — | — | 27,347 | 27,347 | ||||||||||||||||
Subtotal | 2,545 | — | — | 57,304 | 59,849 | ||||||||||||||||
Total obligations and commitments | $ | 92,273 | $ | 136,179 | $ | 115,423 | $ | 786,544 | $ | 1,130,419 | |||||||||||
(1) | Evergreen renewals are deemed to have expiration dates in excess of 5 years. |
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• | Increase in outsourcing. Communities, government agencies and healthcare facilities are under significant pressure both to improve the quality and to reduce the cost of care. The outsourcing of certain medical services has become a preferred means to alleviate these pressures. |
• | From 2000 to 2003, we believe outsourced emergency department services increased from 55% to 65% of total emergency department services. | |
• | From 1999 to 2003, the percentage of emergency medical transportation services supplied by private ambulance providers increased from 34% to 39% in the country’s largest 200 cities. |
• | Favorable demographics. The growth and aging of the population will be a significant demand driver for healthcare services, and we believe it will result in an increase in ambulance transports, emergency department visits and hospital admissions. |
• | The U.S. Census Bureau estimates that the number of Americans over 65 will increase to 39 million by 2010 from 31 million in 1990. It is also expected that Americans over the age of 65 will increase from one in eight Americans in 2000 to one in five by 2030. | |
• | A 2003 CDC Emergency Department Summary noted that patients aged 65 or over represent 38% of patients delivered to emergency departments by ambulance. Emergency department visits for persons aged 65 or over increased to 17.5 million in 2003, a 26% increase from 1993. |
• | Increased federal funding for disaster preparedness and other federal programs. The United States government has increased its focus on our nation’s ability to respond quickly and effectively to emergencies, including both terrorist attacks and natural disasters. Federal programs, such as Homeland Security, FEMA and funding for services for undocumented aliens, have made increased funding available which is aimed directly at emergency services, including ambulance providers and emergency physician services. |
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Ambulance Services |
Emergency Department Services |
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AMR | EmCare | ||||
Core Services: | • Pre- and post-hospital medical transportation | • Hospital-based medical care | |||
• Emergency (“911”) ambulance transports | • Emergency department staffing and related management | ||||
• Non-emergency ambulance | services | ||||
transports | • Hospitalist services | ||||
Customers: | • Communities | • Hospitals | |||
• Government agencies | • Independent physician groups | ||||
• Healthcare facilities | • Attending medical staff | ||||
• Insurers | |||||
National Market Position: | • #1 provider of ambulance transports | • #1 provider of outsourced emergency department services | |||
• 8% share of total ambulance market | • 6% share of emergency department services market | ||||
• 21% of private provider ambulance market | • 9% of outsourced emergency department services market | ||||
Number of Contracts: | |||||
At September 30, 2005 | • 155 “911” contracts | • 333 hospital contracts | |||
• 2,700 non-emergency transport contracts | |||||
Volume: | |||||
For fiscal 2004 | • 3.7 million transports | • 5.3 million patient visits | |||
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• | Cost efficiencies and broad program offering. Our investments in technology may be too costly for certain providers to replicate, and provide us with several competitive advantages, including: (i) operating cost efficiencies, (ii) scalability and (iii) the capability to provide broad, high quality service offerings to our customers at competitive rates. In addition, our technology, including electronic patient records, and our expertise in providing both pre-hospital and hospital-based emergency care uniquely positions us to respond to community demand for enhanced coordination among their emergency service providers. | |
• | National contracting and preferred provider relationships. We are able to enter into national and regional contracts with managed care organizations and insurance companies. We have an exclusive provider contract with Kaiser Foundation Health Plan, one of the largest managed care organizations, and we have preferred provider status with several healthcare systems and many managed care organizations. | |
• | Ability to recruit and retain quality personnel. We are able to recruit and retain clinical and support employees by providing attractive compensation packages, comprehensive training programs, risk mitigation strategies, career development and greater breadth of job transferability. This lowers our costs associated with employee turnover and increases customer and patient satisfaction. |
• | One of the keys to our success has been our ability to recruit and retain high quality medical personnel. AMR has a competitive advantage in recruiting quality medical personnel through our in-house paramedic training institute, which we believe is the largest in the United States. EmCare has developed proprietary software that allows us to identify physicians, based on multiple characteristics, matching the specific needs of our customers. We provide continuing education to our affiliated medical professionals through EMEDS, our in-house Emergency Medical Education Systems. | |
• | We believe our 79% and 94% retention rates in fiscal 2004 for full-time medical personnel at AMR and EmCare, respectively, are among the highest in the emergency medical services segments in which they compete. We believe that successfully recruiting and retaining highly qualified clinicians and healthcare professionals improves the overall experience and outcomes for our customers and patients while significantly reducing our operating costs. |
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• | We believe AMR is the largest user of ambulance electronic patient care records, ore-PCR. Our proprietary system enables us to eliminate the use of manual patient records by replacing them with electronic records, which we expect will reduce both chart errors and costs. | |
• | AMR utilizes proprietary software, Millennium, to determine the appropriate level of transportation services to be dispatched and track response times and other data for hospitals. Our initial implementation of these technologies has improved our ability to capture revenue, decrease our billing costs and bid more effectively for 911 contracts. | |
• | EmCare has developed proprietary physician recruitment software that has enhanced our recruitment efficiency and improved our physician retention rate. | |
• | At EmCare, we track risk exposure trends through what we believe is one of the largest emergency department risk databases, allowing us to assess, develop and implement targeted risk intervention programs. |
• | Implementing innovative productivity-enhancing programs |
• | At EmCare, we have developed and implemented programs, such as “fast track” and advanced triage protocols, to improve throughput and wait times, thereby improving patient satisfaction and reducing the number of patients who leave without being seen. | |
• | At AMR, we have developed and implemented innovative programs to improve our productivity through decreased “drop” and “on scene” time. For example, we have recently established transition units at several hospitals to hold and monitor discharged patients awaiting transport, thereby increasing our productivity while accelerating inpatient bed availability and overall hospital throughput. |
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• | Continuing to broaden product and service offerings to our customers |
• | In 2002, we began marketing hospitalist services. Since that time, our hospitalist services revenue increased at a compound annual growth rate of 48.3% from $7.2 million to $23.5 million in fiscal 2004. Approximately fifty percent of our hospitalist contracts are with our emergency department customers. | |
• | At certain facilities, AMR provides a dedicatedon-site non-emergency transport coordinator during times of peak demand to increase efficiency and ensure appropriate utilization of all medical transportation service levels. |
• | Targeted geographic sales and marketing programs, | |
• | Pursuing new outsourcing opportunities for emergency department, hospitalist, radiology and ambulance services, | |
• | Expanding our public/private ambulance partnerships with local fire departments, | |
• | Evaluating opportunities that leverage our core businesses, including our communications center infrastructure, to manage health-related transportation logistics. |
• | System Status Management (SSM): Enables AMR to use current incident data to position our vehicles efficiently, minimizing response time while maximizing asset utilization. We currently utilize SSM in all communities in which we operate under contracts to provide 911 emergency ambulance services. We believe we are one of only a few ambulance services providers that have begun to implement “real-time” SSM technology. | |
• | Electronic patient care record(e-PCR): Where implemented, allows AMR to capture billable revenue, decrease our billing costs and optimize reimbursement. In addition, our proprietarye-PCR enables us to shorten our billing cycle and reduce risk by utilizing defined clinical and rules-based protocols to capture patient information electronically. | |
• | Millennium software: Millennium, our proprietary software, allows us greater flexibility in meeting our customers’ needs. This rules-based software program integrates medical protocol, managed care criteria and other detailed data prescribed by our customers, enabling AMR to efficiently dispatch appropriate transport and more effectively track response time. |
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• | EmSource: EmSource, our proprietary physician recruitment system, enables EmCare to more effectively recruit physicians who meet the needs of our customers. The system consists of a database of approximately 800,000 physicians that is updated weekly to provide the most current physician contact available. | |
• | EmBillz: EmBillz, our proprietary coding, billing and accounts receivable management system, enables EmCare to more effectively process more than five million emergency department visits each year. |
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Emergency Response Services (911). We provide emergency response services primarily under long-term exclusive contracts with communities and hospitals. Our contracts typically stipulate that we must respond to 911 calls in the designated area within a specified response time. We utilize two types of ambulance units — Advanced Life Support, or ALS, units and Basic Life Support, or BLS, units. ALS units, which are staffed by two paramedics or one paramedic and an emergency medical technician, or EMT, are equipped with high-acuity life support equipment such as cardiac monitors, defibrillators and oxygen delivery systems, and carry pharmaceutical and medical supplies. BLS units are usually staffed by two EMTs and are outfitted with medical supplies and equipment necessary to administer first aid and basic medical treatment. The decision to dispatch an ALS or BLS unit is determined by our contractual requirements, as well as by the nature of the medical situation. | |
Under certain of our 911 emergency response contracts, we are the first responder to an emergency scene. However, under most of our 911 contracts, the local fire department is the first responder. In these situations, the fire department typically begins stabilization of the patient. Upon our arrival, we continue stabilization through the provision of attendant medical care and transport the patient to the closest appropriate healthcare facility. In certain communities where the fire department historically has been responsible for both first response and emergency services, we seek to develop public/private |
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partnerships with fire departments rather than compete with them to provide the emergency service. These partnerships emphasize collaboration with the fire departments and afford us the opportunity to provide 911 emergency services in communities that, for a variety of reasons, may not otherwise have outsourced this service to a private provider. In most instances, the provision of emergency services under our partnerships closely resembles that of our most common 911 contracts described above. What differentiates the public/private partnerships is the level of contractually negotiated collaboration and coordination between AMR and the fire department. As an example, in several of our public/private partnerships, we utilize a fire department-employed paramedic when we transport the patient and subsequently reimburse the fire department for its employee’s time. These partnerships benefit both parties — they create a new revenue source for the fire department while relieving it of the complexities associated with the emergency transport business, and they enable us to provide emergency response services in communities that may not otherwise have outsourced this service. In addition, the public/private partnerships lower our costs by reducing the number of full-time paramedics we would otherwise require. We estimate that these public/private partnerships represented approximately 20% of AMR’s net revenue in fiscal 2004. | |
Non-Emergency Transport Services. With non-emergency services, we provide transportation to patients requiring ambulance or wheelchair transport with varying degrees of medical care needs between healthcare facilities or between healthcare facilities and their homes. Unlike emergency response services, which typically are provided by communities or private providers under exclusive or semi-exclusive contracts, non-emergency transportation usually involves multiple contract providers at a given facility, with one or more of the competitors designated as the “preferred” provider. Non-emergency transport business generally is awarded by a healthcare facility, such as a hospital or nursing home, or a healthcare payor, such as an HMO, managed care organization or insurance company. | |
Non-emergency transport services include: (i) critical care transport, (ii) wheelchair and stretcher-car transports, and (iii) other inter-facility transports. |
• | Critical care transports are provided to medically unstable patients (such as cardiac patients and neonatal patients) who require critical care while being transported between healthcare facilities. Critical care services differ from ALS services in that the ambulance may be equipped with additional medical equipment and may be staffed by one of our medical specialists or by an employee of a healthcare facility to attend to a patient’s specific medical needs. | |
• | Wheelchair and stretcher-car transports are non-medical transportation provided to handicapped and certain non-ambulatory persons in some service areas. In providing this service, we use vans that contain hydraulic wheelchair lifts or ramps operated by drivers who generally are trained in cardiopulmonary resuscitation, or CPR. | |
• | Other inter-facility transports, that require advanced or basic levels of medical supervision during transfer, may be provided when a home-bound patient requires examination or treatment at a healthcare facility or when a hospital inpatient requires tests or treatments (such as magnetic resonance imaging, or MRI, testing, CAT scans, dialysis or chemotherapy treatment) available at another facility. We use ALS or BLS ambulance units to provide general ambulance services depending on the patient’s needs. |
Other Services. In addition to our 911 emergency and non-emergency ambulance services, we provide the following services: |
• | Dispatch Services. Our dispatch centers manage our own calls and, in certain communities, also manage dispatch centers for public safety agencies, such as police and fire departments, aeromedical transport programs and others. | |
• | Event Medical Services. We provide medical stand-by support for concerts, athletic events, parades, conventions, international conferences and VIP appearances in conjunction with local and federal law enforcement and fire protection agencies. We have contracts to provide stand-by support for numerous sports franchises, such as the Oakland Raiders, Oakland Athletics, Detroit |
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Lions and Los Angeles Dodgers, as well as for various NASCAR events, Hollywood production studios and other specialty events. | ||
• | Managed Transportation Services. Managed care organizations and insurance companies contract with us to manage various of their medical transportation-related needs, including call-taking and scheduling, management of a network of transportation providers and billing and reporting through oure-PCR system. | |
• | Paramedic Training. We own and operate Northern California Training Institute, or NCTI, the largest paramedic training school in the United States and the only accredited institution of its size, with over 500 graduates each year. |
• | the federal and state governments, primarily under the Medicare and Medicaid programs, | |
• | health maintenance organizations, preferred provider organizations and private insurers, | |
• | individual patients, and | |
• | community subsidies and fees. |
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Percentage of AMR | |||||||||||||
Net Revenue | |||||||||||||
Year Ended | |||||||||||||
August 31, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Medicare | 35 | % | 33 | % | 33 | % | |||||||
Medicaid | 6 | 6 | 6 | ||||||||||
Commercial insurance/managed care | 41 | 44 | 45 | ||||||||||
Self-pay | 6 | 6 | 5 | ||||||||||
Subsidies/fees | 12 | 11 | 11 | ||||||||||
Total net revenue | 100 | % | 100 | % | 100 | % | |||||||
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• | To be the leader for safety in the emergency medical services industry, and | |
• | To be recognized as a leader for safety among all industries. |
• | Selecting highly qualified employees, | |
• | Providing exemplary safety policies and programs to control losses, |
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• | Effective training and education programs, | |
• | Accountability of management and employees for safety of the operation, and | |
• | Continuous review of new opportunities and existing programs for improvement. |
• | pricing, | |
• | the ability to improve customer service, such as on-time performance and efficient call intake, | |
• | the ability to recruit, train and motivate employees, particularly ambulance crews who have direct contact with patients and healthcare personnel, and | |
• | billing and reimbursement expertise. |
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• | recruiting, scheduling and credentials coordination for clinical professionals, | |
• | support services, such as payroll, insurance coverage, continuing education services and management training, and | |
• | coding, billing and collection of fees for services provided by medical professionals. |
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• | Incident Reporting Systems. We have established a comprehensive support system for medical professionals. Our Risk Management Hotline provides each physician with the ability to discuss medical issues with a peer. In the event of a negative patient outcome, the physician may discuss legal and medical issues in anticipation of litigation directly with an EmCare attorney experienced with medical malpractice issues. |
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• | Tracking and Trending Claims. We have an extensive claims database developed from our experience in the emergency department setting. From this database, we track multiple data points on each professional liability claim. We utilize the database to identify claim trends and risk factors so that we can better target our risk management initiatives. Each year, we target the medical conditions associated with our most frequent professional liability claims, and provide detailed education to assist our affiliated medical professionals in treating these medical conditions. | |
• | Professional Risk Assessment. We conduct risk assessments of our medical professionals. Typically, a risk assessment includes a thorough review of professional liability claims against the professional, assessment of issues raised by hospital risk management and identification of areas where additional education may be advantageous for the professional. | |
• | Hospital Risk Assessment. We conduct risk assessments of potential hospital customers in conjunction with our sales and contracting process. As part of the risk assessment, registered nurses or physicians employed by us conduct a detailed analysis of the hospital’s operations affecting the emergency department or hospitalist services, including the triage procedures, on-call coverage, transfer procedures, nursing staffing and related matters in an effort to address risk factors contractually during negotiations with potential customer hospitals. | |
• | Clinical Fail-Safe Programs. We review and identify key risk areas which we believe may result in increased incidence of patient injuries and resulting claims against us and our affiliated medical professionals. We continue to develop “fail-safe” clinical tools and make them available to our affiliated physicians for use in conjunction with their practice and to our customer hospitals for use as a part of their peer review process. These “fail-safe” tools assist physicians in identifying common patient attributes and complaints that may identify the patient as being at high risk for certain conditions (e.g., a heart attack). | |
• | Quality Improvement Programs. Our medical directors are actively engaged in their respective hospital’s quality improvement committees and initiatives. In addition, we provide tools that provide guidance to the medical directors on how to conduct quality reviews of their physicians and help them track their physicians’ medical practices. | |
• | Physician Education Programs. Our wholly owned subsidiary, Emergency Medical Education Systems, Inc, or EMEDS, conducts physician education through risk management and board review conferences and on-line teaching modules. Our affiliated medical professionals can access EMEDS to obtain valuable medical information. Our internal continuing education services are fully accredited by the Accreditation Council for Continuing Medical Education. This allows us to grant our physicians and nurses continuing education credits for internally developed educational programs at a lower cost than if such credits were earned through external programs. Our risk management department also provides other forms of education, including articles in the company newsletter that highlight current medical literature on important emergency medicine topics. | |
• | Proactive Professional Liability Claims Handling. We utilize a third party claims administrator to manage professional liability claims against companies and medical professionals covered under our insurance program. For each case, detailed reports are reviewed to ensure proactively that the defense is comprehensive and aggressive. Each professional liability claim brought against an EmCare affiliated medical professional or EmCare affiliated company is reviewed by EmCare’s Claims Committee, consisting of physicians, attorneys and company executives, before any resolution of the claim. The Claims Committee periodically instructs EmCare’s risk management department to undertake an analysis of particular physicians or hospital locations associated with a given claim. |
• | the federal and state governments, primarily under the Medicare and Medicaid programs, |
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• | health maintenance organizations, preferred provider organizations and private insurers, | |
• | hospitals, and | |
• | individual patients. |
Percentage of EmCare’s | |||||||||||||
Net Revenue | |||||||||||||
Year Ended August 31, | |||||||||||||
2002 | 2003 | 2004 | |||||||||||
Medicare | 15 | % | 16 | % | 17 | % | |||||||
Medicaid | 2 | 3 | 3 | ||||||||||
Commercial insurance/managed care | 57 | 54 | 53 | ||||||||||
Self-pay | 4 | 3 | 2 | ||||||||||
Subsidies/fees | 22 | 24 | 25 | ||||||||||
Total net revenue | 100 | % | 100 | % | 100 | % | |||||||
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• | we bill patients and third party payors directly for physician fees, | |
• | we bill patients and third party payors directly for physician fees, with the hospital paying us an additional pre-arranged fee for our services, and | |
• | we bill the hospitals directly for the services of the physicians. |
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• | the ability to recruit and retain qualified physicians, | |
• | the ability to improve department productivity and patient satisfaction while reducing overall costs, | |
• | the ability to integrate the emergency department with other hospital departments and to provide value added services, | |
• | billing and reimbursement expertise, | |
• | a reputation for compliance with state and federal regulations, | |
• | the breadth of staffing and management services offered, and | |
• | financial stability, demonstrating an ability to pay providers in a timely manner and provide professional liability insurance. |
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Job Classification | Full-Time | Part-Time | Total | |||||||||
Physicians* | 1,887 | 714 | 2,601 | |||||||||
Physician assistants | 162 | 142 | 304 | |||||||||
Nurse practitioners | 104 | 94 | 198 | |||||||||
Non-clinical employees | 1,076 | 119 | 1,195 | |||||||||
Total | 3,229 | 1,069 | 4,298 |
* | We have approximately 4,500 affiliated physicians. These figures represent clinicians providing services at a particular time. |
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• | disputes between payors as to which party is responsible for payment, | |
• | the difficulty of adherence to specific compliance requirements, diagnosis coding and various other procedures mandated by the government, and | |
• | failure to obtain proper physician credentialing and documentation in order to bill governmental payors. |
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• | providing guidance, education and proper controls based on the regulatory risks associated with our business model and strategic plan, | |
• | conducting internal audits and reviews to identify any improper practices that may be occurring, | |
• | resolving regulatory matters, and | |
• | enhancing the ethical culture and leadership of the organization. |
• | formal policies and written procedures, | |
• | designation of a Compliance Officer, | |
• | education and training programs, | |
• | internal monitoring and reviews, | |
• | responding appropriately to detected misconduct, | |
• | open lines of communication, and | |
• | discipline and accountability. |
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Name | Age | Position* | ||||
William A. Sanger | 55 | Director, Chairman and Chief Executive Officer | ||||
Don S. Harvey | 48 | Director, President and Chief Operating Officer | ||||
Randel G. Owen | 46 | Chief Financial Officer | ||||
Dighton C. Packard, M.D. | 57 | Chief Medical Officer | ||||
Todd G. Zimmerman | 40 | General Counsel | ||||
Robert M. Le Blanc | 39 | Lead Director | ||||
Steven B. Epstein | 62 | Director | ||||
James T. Kelly | 59 | Director | ||||
Michael L. Smith | 57 | Director |
* | Unless otherwise noted, the positions identified are the positions held with the general partner of Emergency Medical Services L.P. prior to this offering and with Emergency Medical Services Corporation following this offering. |
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• | our Class I directors will be Messrs. Le Blanc and Sanger, | |
• | our Class II directors will be Messrs. Epstein and Kelly, and | |
• | our Class III directors will be Messrs. Harvey and Smith. |
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Annual Compensation | |||||||||||||||||||||||||
Other Annual | Long-Term | All Other | |||||||||||||||||||||||
Name and Principal Position(1) | Year | Salary | Bonus | Compensation(2) | Compensation Awards(3) | Compensation(4) | |||||||||||||||||||
William A. Sanger | 2004 | $ | 571,411 | $ | 488,750 | — | — | $ | 9,957 | ||||||||||||||||
Chief Executive Officer of AMR and of EmCare | |||||||||||||||||||||||||
Don S. Harvey | 2004 | $ | 391,667 | $ | 337,500 | — | — | $ | 3,925 | ||||||||||||||||
President and Chief Operating Officer of EmCare | |||||||||||||||||||||||||
Randel G. Owen | 2004 | $ | 286,422 | $ | 117,500 | $ | 55,944(5 | ) | $ | 35,245 | $ | 7,745 | |||||||||||||
Chief Financial Officer of AMR | |||||||||||||||||||||||||
Dighton C. Packard, M.D. | 2004 | $ | 211,467 | $ | 83,200 | — | $ | 21,333 | $ | 4,571 | |||||||||||||||
Chief Medical Officer of EmCare | |||||||||||||||||||||||||
Todd G. Zimmerman | 2004 | $ | 201,955 | $ | 146,997 | — | $ | 11,594 | $ | 5,157 | |||||||||||||||
General Counsel of EmCare |
(1) | Represents each person’s principal position in fiscal 2004. All of these individuals became executive officers of Emergency Medical Services in connection with our acquisition of AMR and EmCare. |
(2) | In accordance with the rules of the SEC, other annual compensation disclosed in this table does not include various perquisites and other personal benefits received by a named executive officer that does not exceed the lesser of $50,000 or 10% of such officer’s total annual salary and bonus disclosed in this table. |
(3) | Represents the vesting of restricted share awards granted to the named executive officers by Laidlaw on November 24, 2004, as follows: Mr. Owen — 1,900 shares; Dr. Packard — 1,150 shares; Mr. Zimmerman — 625 shares. In connection with our acquisition of AMR and EmCare, these awards terminated and no further restricted shares will vest. |
(4) | Represents matching contributions to company 401(k) plans. |
(5) | Other annual compensation for Mr. Owen includes a relocation allowance of $47,544. |
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Individual Grants | ||||||||||||||||||||||||
Potential Realizable Value of | ||||||||||||||||||||||||
Number of | % of Total | Assumed Annual Rates | ||||||||||||||||||||||
Securities | Options | of Stock Price Appreciation | ||||||||||||||||||||||
Underlying | Granted to | for Option Term | ||||||||||||||||||||||
Options | Employees in | Exercise | ||||||||||||||||||||||
Name | Granted(1) | Fiscal Year | Price | Expiration Date(1) | 5% | 10% | ||||||||||||||||||
William A. Sanger | 1,482,168 | (2) | 42.2 | % | $ | 6.67 | February 10, 2015 | $ | 4,943,030.28 | $ | 9,886,060.56 | |||||||||||||
Don S. Harvey | 370,542 | (3) | 10.6 | % | $ | 6.67 | February 10, 2015 | 1,235,757.57 | 2,471,515.14 | |||||||||||||||
Randel G. Owen | 370,542 | (3) | 10.6 | % | $ | 6.67 | February 10, 2015 | 1,235,757.57 | 2,471,515.14 | |||||||||||||||
Todd G. Zimmerman | 148,217 | (3) | 4.2 | % | $ | 6.67 | February 10, 2015 | 494,303.70 | 988,607.39 | |||||||||||||||
Dighton C. Packard, M.D. | 48,750 | (3) | 1.4 | % | $ | 6.67 | February 10, 2015 | 162,581.25 | 325,162.50 |
(1) | The options may expire earlier, upon termination of employment or certain corporate events. See “— Equity Plans — Equity Option Plan.” If the employee’s employment is terminated prior to February 10, 2015, his options will expire earlier as follows: (a) upon the termination of employment if the termination is for “cause”, (b) 30 days after the termination of employment, or such other |
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date as determined by the compensation committee, following termination by the employee for “good reason” or by us without “cause” or due to retirement, or (c) 90 days after termination of employment due to death or disability. Vesting of the options may accelerate, and all options will terminate if not exercised, upon (i) a sale of our equity (other than a sale as part of an initial public offering) whereby any person other than existing equity holders as of the grant date acquire our voting power to elect a majority of our board of directors or (ii) a sale of all or substantially all of our assets. | |
(2) | The options vest ratably on the first eight six-month anniversaries of the grant date,provided, that the exercisability of one-half of the options is conditioned upon meeting certain specified performance targets. See “— Equity Plans — Equity Option Plan.” If Mr. Sanger is terminated, the options will vest as scheduled to the nearest six-month anniversary of the grant date. |
(3) | The options vest ratably on the first four anniversaries of the grant date, provided, that the exercisability of one-half of the options is conditioned upon meeting certain specified performance targets. See “— Equity Plans — Equity Option Plan.” |
Target | ||||||||
Annual | Bonus | |||||||
Executive | Base Salary | Percentage | ||||||
William A. Sanger | $ | 850,000 | 100 | % | ||||
Don S. Harvey | $ | 500,000 | 75 | % | ||||
Randel G. Owen | $ | 350,000 | 50 | % | ||||
Todd G. Zimmerman | $ | 325,000 | 50 | % | ||||
Dighton C. Packard, M.D. | $ | 260,000 | 50 | % |
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Equity Option Plan |
• | exercise price equal to $6.67 per share, being the equity purchase price paid by the initial investors, | |
• | vesting ratably on each of the first four anniversaries of the effective February 10, 2005 grant date (the first eight 6-month anniversaries in the case of Mr. Sanger),provided, that the exercisability of one-half of the options granted to each employee is subject to the further condition that Onex has realized a 15% internal rate of return, as defined, or, on the fourth anniversary of the grant date, we have achieved an aggregate EBITDA of not less than $617.4 million, subject to certain adjustments, for the four fiscal years ending December 31, 2008, | |
• | each option expires on the tenth anniversary of the grant date unless the employee’s employment is terminated earlier, in which case the options will expire as follows: (i) upon the termination of employment if the termination is for “cause”, (ii) 30 days after the termination of employment, or such other date as determined by the compensation committee, following termination by the employee for “good reason” or by us without “cause” or due to retirement, or (iii) 90 days after termination of employment due to death or disability, and | |
• | upon (i) a sale of the equity of Emergency Medical Services (other than a sale as part of this offering) whereby any person other than existing equity holders as of the grant date acquire voting power to elect a majority of our board of directors or (ii) a sale of all or substantially all of our assets, all options granted to each employee will accelerate (although still subject to the performance target) and will terminate if not exercised. |
• | restrict transfer of their equity until the fifth anniversary of purchase, and | |
• | grant “piggyback” registration rights. |
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Management Investment and Equity Purchase Plan |
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• | each person known by us to own beneficially 5% or more of our class A or class B common stock, | |
• | each of our directors, | |
• | each of our named executive officers, and | |
• | all of our directors and executive officers as a group. |
Before Offering | After Offering | |||||||||||||||||||
Number of | Percentage | Percentage | ||||||||||||||||||
Shares | of Class/All | Percentage | of Class/All | Percentage | ||||||||||||||||
Beneficially | Common | of Voting | Common | of Voting | ||||||||||||||||
Name of Beneficial Owner | Owned(1)(2) | Stock | Power | Stock | Power | |||||||||||||||
Five Percent Stockholders | ||||||||||||||||||||
Onex Corporation(3) | 32,107,523 | 99.6%/ | 96.1% | 99.6%/ | 77.4% | |||||||||||||||
class B | 98.9% | 96.8% | ||||||||||||||||||
Onex Partners LP(4) | 17,226,723 | 53.5%/ | 51.6% | 53.5%/ | 41.5% | |||||||||||||||
class B | 53.1% | 51.9% | ||||||||||||||||||
Onex Partners LLC(5) | 11,106,924 | 34.4%/ | 33.3% | 34.4%/ | 26.8% | |||||||||||||||
class B | 34.2% | 33.3% | ||||||||||||||||||
Onex EMSC Co-Invest LP(6) | 2,844,855 | 8.8%/ | 8.5% | 8.8%/ | 6.9% | |||||||||||||||
class B | 8.8% | 8.5% | ||||||||||||||||||
Directors and Executive Officers | ||||||||||||||||||||
Robert M. Le Blanc(7) | 56,107 | |||||||||||||||||||
class B | */ | * | * | */ | * | * | ||||||||||||||
Steven B. Epstein(8) | 37,500 | |||||||||||||||||||
class A | 3.3%/ | * | * | */ | * | * | ||||||||||||||
James T. Kelly(8) | 112,500 | |||||||||||||||||||
class A | 9.8%/ | * | * | 1.1%/ | * | * | ||||||||||||||
Michael L. Smith(8) | 37,500 | |||||||||||||||||||
class A | 3.3%/ | * | * | */ | * | * | ||||||||||||||
William A. Sanger(8) | 450,000 | 39.2%/ | 1.4% | 4.4%/ | 1.1% | |||||||||||||||
class A | * | * | ||||||||||||||||||
Don S. Harvey(8) | 75,000 | |||||||||||||||||||
class A | 6.5%/ | * | * | */ | * | * | ||||||||||||||
Dighton C. Packard, M.D.(9) | 33,750 | |||||||||||||||||||
class A | 2.9%/ | * | * | */ | * | * | ||||||||||||||
Randel G. Owen(8) | 33,750 | |||||||||||||||||||
class A | 2.9%/ | * | * | */ | * | * | ||||||||||||||
Todd G. Zimmerman(8) | 18,750 | |||||||||||||||||||
class A | 1.6%/ | * | * | */ | * | * | ||||||||||||||
All directors and executive officers as a group (9 persons) | 56,107 | |||||||||||||||||||
class B | */ | * | * | */ | * | * | ||||||||||||||
798,750 | 69.6%/ | 2.4% | * | 7.8%/ | 1.9% | * | ||||||||||||||
class A |
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* | Represents beneficial ownership of less than 1%. |
(1) | The amounts and percentages of our common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days, including our common stock subject to an option that is exercisable within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of such securities as to which such person has an economic interest. None of the options granted under our equity option plan is exercisable within 60 days. |
The LP exchangeable units are exchangeable on a one-for-one basis for shares of class B common stock at any time at the option of the holder. Accordingly, this table assumes the exchange of all LP exchangeable units for class B common stock. Until such exchange, the holders of the LP exchangeable units have the benefit of the class B special voting stock through which the holders may exercise voting rights as though they held the same number of shares of class B common stock. | |
(2) | On each matter submitted to the stockholders for their vote, our class A common stock is entitled to one vote per share, and our class B common stock is entitled to ten votes per share, reducing to one vote per share under certain limited circumstances. Except as required by law, our class A and class B common stock vote together on all matters submitted to stockholders for their vote. |
(3) | Includes the following: (i) 17,226,723 LP exchangeable units held by Onex Partners LP; (ii) 11,106,924 LP exchangeable units held by Onex Partners LLC; (iii) 2,844,855 LP exchangeable units held by Onex EMSC Co-Invest LP; (iv) 639,649 LP exchangeable units held by EMS Executive Investco LLC; (v) 289,349 LP exchangeable units held by Onex US Principals LP; and (vi) 23 LP exchangeable units held by EMSC, Inc. (formerly known as Emergency Medical Services Corporation). Onex Corporation may be deemed to own beneficially the LP exchangeable units held by (a) Onex Partners LP, through Onex’ ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex Partners LP; (b) Onex Partners LLC, through Onex’ ownership of all of the equity of Onex Partners LLC; (c) Onex EMSCo-Invest LP, through Onex’ ownership of all of the common stock of Onex Partners GP, Inc., the general partner of Onex Partners GP LP, the general partner of Onex EMSC Co-Invest LP; (d) EMS Executive Investco LLC, through Onex’ ownership of Onex American Holdings II LLC which owns 33.33% of the voting power of EMS Executive Investco LLC; and (e) Onex US Principals LP through Onex’ ownership of all of the equity of Onex American Holdings GP LLC, the general partner of Onex US Principals LP. Onex Corporation disclaims such beneficial ownership. |
In addition, prior to the formation of our holding company, Onex Corporation’s subsidiary, Onex American Holdings II LLC, owns 50% of the voting stock of Emergency Medical Services Corporation, the general partner of EMS L.P., and a 99.9% economic interest in EMSC, Inc. EMSC, Inc. owns directly less than .001% of the equity interest of EMS L.P. However, as its general partner, EMSC, Inc. may be deemed to own beneficially all of the equity of the partnership. The equity owned by EMSC, Inc. may be deemed beneficially owned 50% by Mr. Le Blanc and 50% by Onex American Holdings II LLC and Onex Corporation. Mr. Le Blanc disclaims such beneficial ownership. | |
Mr. Gerald W. Schwartz, the Chairman, President and Chief Executive Officer of Onex Corporation, owns shares representing a majority of the voting rights of the shares of Onex Corporation and as such may be deemed to own beneficially all of the LP exchangeable units owned beneficially by Onex Corporation. Mr. Schwartz disclaims such beneficial ownership. The address for Onex Corporation is 161 Bay Street, Toronto, ON M5J 2S1. | |
(4) | All of the LP exchangeable units owned by Onex Partners LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex Partners LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. |
(5) | All of the LP exchangeable units owned by Onex Partners LLC may be deemed owned beneficially by Onex Corporation. The address for Onex Partners LLC is 421 Leader Street, Marion, Ohio 43302. |
(6) | All of the LP exchangeable units owned by Onex EMSC Co-Invest LP may be deemed owned beneficially by each of Onex Partners GP LP, Onex Partners GP, Inc. and Onex Corporation. The address for Onex EMSC Co-Invest LP is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. |
(7) | Includes (i) 35,837 LP exchangeable units held by Onex US Principals LP which may be deemed owned beneficially by Mr. Le Blanc by reason of his pecuniary interest in the LP exchangeable units owned by Onex US Principals LP, (ii) 20,250 LP exchangeable units owned by Onex EMSC Co-Invest LP which may be deemed to be owned beneficially by Mr. Le Blanc by reason of his pecuniary interest in Onex EMSC Co-Invest LP and (iii) 23 LP exchangeable units owned by EMSC, Inc. Prior to our reorganization into a holding company, Mr. Le Blanc owns 50% of the voting common stock of EMSC, Inc. and a 0.01% economic interest in EMSC, Inc. See note (3) with respect to EMSC, Inc.’s equity interest in EMS L.P., as to which Mr. Le Blanc disclaims beneficial ownership. Mr. Le Blanc also disclaims beneficial interest in the LP exchangeable units owned by Onex US Principals LP and Onex EMSC Co-Invest LP. Mr. Le Blanc’s address is c/o Onex Investment Corporation, 712 Fifth Avenue, New York, New York 10019. |
(8) | The address of these stockholders is c/o Emergency Medical Services Corporation, 6200 S. Syracuse Way, Suite 200, Greenwood Village, Colorado80111-4737. |
(9) | The address of this stockholder is c/o EmCare Holdings Inc., 1717 Main Street, Suite 5200, Dallas, Texas 75201. |
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Shares Beneficially Owned | ||||||||||||||||
Number of | After the Offering | |||||||||||||||
Shares Offered | ||||||||||||||||
in Over- | Percentage of | |||||||||||||||
Allotment | Class/All | Percentage of | ||||||||||||||
Name of Beneficial Owner | Option | Number | Common Stock | Voting Power | ||||||||||||
Onex Partners LP | 651,887 | 16,574,836 | 51.4%/ | 38.8% | 51.7 | % | ||||||||||
Onex Partners LLC | 420,304 | 10,686,620 | 33.1%/ | 25.0% | 33.3 | % | ||||||||||
Onex EMSC Co-Invest LP | 107,654 | 2,737,201 | 8.5%/ | 6.4% | 8.5 | % | ||||||||||
Onex US Principals LP | 10,949 | 278,400 | */ | * | * | |||||||||||
EMS Executive Investco LLC | 24,205 | 615,444 | 1.9%/ | 1.4% | 1.9 | % |
* | Represents beneficial ownership of less than 1%. |
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• | 100,000,000 shares of class A common stock, par value $0.01 per share, | |
• | 40,000,000 shares of class B common stock, par value $0.01 per share, | |
• | one share of class B special voting stock, $0.01 par value, and | |
• | 20,000,000 shares of preferred stock, par value $0.01 per share. |
• | 9,248,325 shares of class A common stock, held by our management, employees and persons who purchase shares in our offering; | |
• | 142,545 shares of class B common stock, held by certain former holders of interests in EMS L.P.; | |
• | one share of class B special voting stock, held by Onex Corporation as trustee for the holders of LP exchangeable units; | |
• | 32,107,500 LP exchangeable units of EMS L.P., exchangeable on a one-for-one basis for shares of class B common stock, held by the Onex entities; and | |
• | 9,390,870 other partnership units of EMS L.P., including the general partner interest, held by us. |
• | each LP exchangeable unit is exchangeable into one share of class B common stock, and | |
• | each share of class B common stock is convertible into one share of class A common stock. |
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• | class A common stock is entitled to one vote per share, | |
• | class B common stock is entitled to ten votes per share (reducing to one vote per share under certain limited circumstances), and | |
• | one share of class B special voting stock, held for the benefit of the holders of LP exchangeable units, is entitled to a number of votes equal to the number of votes that could be cast if all the then outstanding LP exchangeable units were exchanged for class B common stock. |
Class A Common Stock.In addition to the other voting rights or power to which the holders of class A common stock are entitled, holders of class A common stock are entitled to vote as a separate class on approval of (i) any alteration, repeal or amendment of our certificate of incorporation which would adversely affect the powers, preferences or rights of the holders of class A common stock; and (ii) any merger or consolidation of our company with any other entity if, as a result, shares of class B |
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common stock would be converted into or exchanged for, or receive, any consideration that differs from that applicable to the shares of class A common stock as a result of such merger or consolidation, other than a difference limited to preserving the relative voting power of the holders of the class A common stock, the class B common stock and the class B special voting stock. In respect of any matter as to which the holders of the class A common stock are entitled to a class vote, holders have one vote per share, and the affirmative vote of the holders of a majority of the shares of class A common stock outstanding is required for approval. | |
Class B Common Stock and Class B Special Voting Stock. In addition to the other voting rights or power to which the holders of class B common stock and class B special voting stock are entitled, holders of class B common stock and class B special voting stock are entitled to vote together as a single class on approval of (i) any alteration, repeal or amendment of our certificate of incorporation which would adversely affect the powers, preferences or rights of the holders of class B common stock or class B special voting stock; and (ii) any merger or consolidation of our company with any other entity if, as a result, (a) the class B special voting stock would not remain outstanding or (b) shares of class B common stock would be converted into or exchanged for, or receive, any consideration that differs from that applicable to the shares of class A common stock as a result of such merger or consolidation, other than a difference limited to preserving the relative voting power of the holders of the class A common stock, the class B common stock and the class B special voting stock. In respect of any matter as to which the holders of the class B common stock and class B special voting stock are entitled to a class vote, holders of class B common stock have one vote per share and the holder of the class B special voting stock will have one vote for each LP exchangeable unit outstanding, and the affirmative vote of the holders of a majority of the votes entitled to be cast is required for approval. |
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• | the right to exchange those units, at the holders’ option, for shares of class B common stock on a one-for-one basis, | |
• | the right to receive distributions, on a per unit basis, in amounts (or property in the case of non-cash dividends), which are the same as, or economically equivalent to, and which are payable at the same time as, dividends declared on the class B common stock (or dividends that would be required to be declared if class B common stock were outstanding), | |
• | the right to vote, through the trustee holder of the class B special voting stock, at all stockholder meetings at which holders of the class B common stock or class B special voting stock are entitled to vote, and | |
• | the right to participate on a pro rata basis with the class B common stock in the distribution of assets of Emergency Medical Services, upon specified events relating to the voluntary or involuntary liquidation, dissolution, winding up or other distribution of the assets through the mandatory exchange of LP exchangeable units for shares of class B common stock. |
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Class B Common Stock and Class B Special Voting Stock |
Undesignated Preferred Stock |
Advance Notice Requirements for Stockholder Proposals and Directors Nominations |
Call of Special Meetings |
Filling of Board Vacancies; Removal |
Staggered Board |
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Stockholder Action by Written Consent |
Delaware “Business Combination” Statute |
Amendments to our Certificate of Incorporation and By-laws |
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• | any breach of the director’s duty of loyalty to us or our stockholders, | |
• | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, | |
• | the payment of unlawful dividends and unlawful repurchase or redemption of our capital stock prohibited by the DGCL, and | |
• | any transaction from which the director derived any improper personal benefits. |
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• | distributions by the partnership, | |
• | the right of holders of LP exchangeable units to exchange their units for class B common stock, and | |
• | the right of holders of LP exchangeable units to exercise essentially the same voting rights with respect to Emergency Medical Services as they would have if they had exchanged their LP exchangeable units for shares of our class B common stock. |
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• | convert a limited partner’s interest into a general partner’s interest, | |
• | modify the limited liability of a limited partner, or | |
• | alter the right to receive any distributions, or alter or modify the provisions applicable to the LP exchangeable units. |
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Issuance of additional units | None. | |
Amendment of partnership agreement | None. Consent of each partner adversely affected required in certain limited circumstances. See “— Limited Consent Rights”. | |
Merger or sale of assets of Emergency Medical Services | None. | |
Removal of general partner | None. | |
Transfer of general partner interest | None. | |
Dissolution of partnership | None. | |
Reconstitution of partnership upon dissolution | A majority of outstanding LP exchangeable units. |
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Emergency Medical | ||||
EMS L.P. | Services Corporation | |||
Management Control | The conduct and control of the business and affairs of EMS L.P. is vested solely in its general partner, EMSC, Inc. | EMSC is managed by its board of directors. See “Management”. | ||
Authorized Equity | The general partner is authorized to issue additional class B units of the partnership. | The board of directors of EMSC is authorized to issue up to 100,000,000 shares of class A common stock, 40,000,000 shares of class B common stock, one share of class B special voting stock and 20,000,000 shares of preferred stock. See “Description of Capital Stock”. | ||
Distributions/Dividends | The general partner may make distributions at the times and in the amounts determined by the general partner in its sole discretion. All distributions are to be made to the partners in accordance with their respective percentage interests. | Delaware law provides that dividends may be paid by a Delaware corporation either out of (1) surplus or (2) in case there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year, except when the capital is diminished to an amount less than the aggregate |
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Emergency Medical | ||||
EMS L.P. | Services Corporation | |||
amount of capital represented by issued and outstanding stock having a preference on the distribution of assets. | ||||
Our certificate of incorporation provides that no dividend can be paid on the class A or class B common stock unless at the same time an equal dividend is paid on the class A or class B common stock, as the case may be. See “Dividend Policy” and “Description of Capital Stock”. | ||||
Voting Rights | Holders of the class B units have no voting rights. | Holders of the class A common stock are entitled to one vote per share on all matters on which holders of common stock of EMSC are entitled to vote. | ||
Generally, the holders of our class A common stock, class B common stock and class B special voting stock will vote together as a single class. At the completion of our offering, the class A stockholders will hold 3.0% of our combined voting power. | ||||
Holders of class A common stock shall be entitled to vote as a separate class, in addition to any other vote of stockholders that may be required, on approval of (i) any alteration, repeal or amendment of the certificate of incorporation which would adversely affect the powers, preferences or rights of the holders of class A common stock, and (ii) any merger or consolidation of EMSC with any other entity if, as a result, shares of class B common stock would be converted into or exchanged for, or receive, any consideration that differs from that applicable to the shares of class A common stock as a result of such merger or consolidation, other than a difference limited to preserving the relative voting power of the holders of class A common stock |
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Emergency Medical | ||||
EMS L.P. | Services Corporation | |||
and class B common stock. In respect of any of the foregoing matters as to which the holders of the class A common stock shall be entitled to a class vote, holders shall have one vote per share and the affirmative vote of the holders of a majority of the shares of class A common stock shall be required for approval. See “Description of Capital Stock”. | ||||
Amendment of Governing Documents | The Partnership Agreement may be amended by the authorization of general partner and the holders of more than 50% of the class A units. Holders of class B units are not entitled to vote on amendments to the Partnership Agreement. | Generally, Delaware law provides that a corporation may amend its certificate of incorporation if (1) its board of directors has adopted a resolution setting forth the proposed amendment and declared its advisability, and (2) the amendment is adopted by the affirmative votes of a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding stock of each class entitled to vote on the amendment as a class. Except as described under “Voting Rights”, holders of class A common stock will vote together with holders of class B common stock and the class B special voting stock on any amendment to our certificate of incorporation. | ||
The by-laws of EMSC may be amended by the affirmative vote of a majority of the board of directors or by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of common stock. See “Description of Capital Stock”. | ||||
Transfer of Units/Shares | Holders of class B units may not transfer their units without the prior written consent of the general partner. | At any time after the 180th day following our initial public offering and this exchange, holders of class A common stock other than our affiliates may freely transfer their class A common stock, subject in certain limited cases to contractual restrictions. See “Management — Equityholders Agreements” and |
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“Shares Eligible for Future Sale”. | ||||
Appraisal or Dissenters’ Rights | Holders of the class B units have no appraisal or dissenters’ rights in connection with any partnership transaction. | Delaware law provides that in certain transactions, a holder of any class or series of capital stock has the right, in specified circumstances, to dissent from a merger or consolidation by demanding payment in cash for the stockholder’s shares equal to the fair value of those shares, as determined by the Delaware Chancery Court in an action timely brought by the corporation or a dissenting stockholder. However, no appraisal rights are available for shares of any class or series that are listed on a national security exchange, such as the New York Stock Exchange, or held of record by more than 2,000 stockholders, unless the agreement of merger or consolidation requires the holders to accept for their shares anything other than certain specified consideration. | ||
Number of Directors | EMS L.P. is managed directly by its general partner and has no board of directors. | The EMSC by-laws provide that the number of directors will be determined by resolution of the board of directors, adopted by the affirmative vote of a majority of the board of directors. | ||
Upon completion of this exchange, our board will consist of six directors. The composition of the board of directors at the effective time of our initial public offering and this exchange is described in “Management — Composition of Our Board of Directors after this Offering”. | ||||
Appointment and Removal of General Partner/Directors | There is no provision in the Partnership Agreement for the removal of the general partner. Upon the withdrawal of the general partner, a new general partner may be appointed by the affirmative vote of a majority of the holders of class A units. | Directors may be nominated by the Corporate Governance and Nominating Committee of the board of directors and appointed upon the affirmative vote of a majority of the board. See “Description of Capital Stock — Filling of Board Vacancies; Removal”. |
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EMS L.P. | Services Corporation | |||
Under Delaware law, directors may be removed with cause by holders of a majority of the shares entitled to vote at an election of directors. Our certificate of incorporation provides that, so long as the Minimum Hold Condition is satisfied, any director or the entire board of directors may also be removed without cause by holders of a majority of the shares entitled to vote at an election of directors. | ||||
Notice of Partner/Stockholder Meeting | Holders of class B units are not entitled to notice of, or to attend, any meeting of the partners. | Written notice of meetings of stockholders and, in the case of a special meeting, of the general nature of the business to be transacted at the meeting, must be given to each stockholder at least 10 days before the date of the meeting. | ||
Fiduciary Duties of the General Partner/Directors | The Partnership Agreement provides that the general partner has a fiduciary duty to the limited partners and shall exercise its power and authority only in such manner as is consistent with such duty. | Under Delaware law, directors of a corporation have fiduciary obligations to the corporation and its stockholders. These fiduciary obligations require the directors to act in accordance with the so-called duties of “due care” and “loyalty”. Under Delaware law, the duty of care requires that the directors act in good faith, in an informed and deliberative manner and they inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of loyalty requires a director to act in good faith in a manner reasonably believed to be in the best interests of the corporation and its stockholders and not in their own interests. | ||
Indemnification of the General Partner/Directors | The Partnership Agreement provides that EMS L.P. will indemnify the general partner, its agents, officers, employees and directors, and hold them harmless against, any loss, liability or damage, cost or expense sustained as a result of any act or omission concerning the partnership or the general partner,providedthat the | Delaware law provides that a corporation may indemnify its present and former directors, officers, employees and agents, as well as any individual serving with another corporation in that capacity at the corporation’s request, against expenses (including attorney’s fees) judgments, fines and amounts paid |
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indemnitee was acting in good faith within what the indemnitee reasonably believed to be the scope of its or his authority for a purpose it or he reasonably believed to be not opposed to the interests of EMS L.P. | in settlement of actions, if the individual acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation and, in a criminal proceeding, the individual had no reasonable cause to believe the individual’s conduct was unlawful. | |||
The EMSC certificate of incorporation and by-laws provide that EMSC will indemnify its directors to the fullest extent allowed under Delaware law. In addition, EMSC has entered into indemnification agreements with each of its directors. See “Description of Capital Stock — Indemnification of Directors and Officers and Limitations on Liability” and “Certain Relationships and Related Party Transactions — Indemnification Agreements”. | ||||
The EMSC certificate of incorporation provides that, except to the extent prohibited by Delaware law, no director shall be personally liable to EMSC or its stockholders for monetary damages for any breach of fiduciary duty as a director. | ||||
Anti-Takeover Provisions | Pursuant to the transfer restrictions in the Partnership Agreement, the general partner may withhold its consent to the transfer of any units. | EMSC has expressly elected in its certificate of incorporation not to be governed by provisions of Delaware law that prohibit, in certain circumstances, a business combination between the corporation and an “interested stockholder” (generally a person owning or controlling more than 15% of the outstanding voting stock) within three years of the stockholders becoming an “interested stockholder” absent compliance with the approval requirements of the provisions or other specified exceptions. See “Description of Capital Stock — Anti-Takeover Effects of Our Certificate of Incorporation and By-Laws”. |
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• | breaches by the seller of its representations, warranties, covenants and agreements contained in the stock purchase agreements, | |
• | damages relating to certain government investigations, and | |
• | tax liabilities for periods prior to closing. |
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• | we agreed to hire a tax employee who would work for Laidlaw on a consulting basis, until about December 31, 2005, to assist in Laidlaw’s preparation of pre-closing period state and federal tax returns relating to AMR and EmCare, | |
• | Laidlaw agreed to make its tax personnel available to us on a consulting basis until December 31, 2005, and | |
• | Laidlaw agreed to lease certain Arlington, Texas office space to us for 120 days at a lease price of $3,500 per month. |
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Aggregate | |||||||||||
Number and | Purchase | ||||||||||
Name | Type of Shares | Price | Date of Purchase | ||||||||
5% Holders | |||||||||||
Onex Corporation | 32,107,523 class B | $ | 214,050,010 | February 10, 2005 | |||||||
Onex Partners LP | 17,226,723 class B | $ | 114,844,820 | February 10, 2005 | |||||||
Onex Partners LLC | 11,106,924 class B | $ | 74,046,160 | February 10, 2005 | |||||||
Onex EMSC Co-Invest LP | 2,844,855 class B | $ | 18,965,700 | February 28, 2005 | |||||||
Executive Officers | |||||||||||
William A. Sanger | 450,000 class A | $ | 3,000,000 | February 10, 2005 | |||||||
Don S. Harvey | 75,000 class A | $ | 500,000 | February 10, 2005 | |||||||
Randel G. Owen | 33,750 class A | $ | 225,000 | February 10, 2005 | |||||||
Dighton S. Packard, M.D. | 33,750 class A | $ | 225,000 | February 10, 2005 | |||||||
Todd G. Zimmerman | 18,750 class A | $ | 125,000 | February 10, 2005 | |||||||
Non-Officer Directors | |||||||||||
Robert M. Le Blanc | 56,107 class B | $ | 373,981 | February 10, 2005 | |||||||
Steven B. Epstein | 37,500 class A | $ | 250,000 | April 22, 2005 | |||||||
James T. Kelly | 112,500 class A | $ | 750,000 | March 10, 2005 | |||||||
Michael L. Smith | 37,500 class A | $ | 250,000 | June 30, 2005 |
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• | a U.S. citizen or individual resident in the United States, | |
• | a corporation, or other entity treated as a corporation created or organized under the laws of the United States or any political subdivision thereof, | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source, or | |
• | a trust (i) if a U.S. court can exercise primary supervision over the administration of such trust and one or more U.S. fiduciaries have the authority to control all of the substantial interests of such trust or (ii) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. |
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• | the gain is U.S. trade or business income, in which case such gain generally will be taxed in the same manner as gains of U.S. persons, and such gains may also be subject to the branch profits tax in the case of a corporateNon-U.S. Holder; | |
• | theNon-U.S. Holder is an individual who is present in the United States for more than 182 days in the taxable year of the disposition and who meets certain other requirements, in which case such holder generally will be subject to U.S. federal income tax at a rate of 30% (or a reduced rate under an applicable treaty) on the amount by which capital gains allocable to U.S. sources (including gains from the sale, exchange, retirement or other disposition of the common stock) exceed capital losses allocable to U.S. sources; or | |
• | we are or have been a “U.S. real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that theNon-U.S. Holder held our common stock (the “applicable period”). |
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• | 349,575 shares will be eligible for sale beginning 180 days after the date of the final prospectus for this exchange and our offering subject to an extension in certain circumstances as set forth in the section entitled “Underwriting — Lock-up Agreements”, | |
• | 798,750 shares held by our executive officers and directors will be eligible for sale under Rule 144 commencing one-year from the date of this offering, or, if earlier, after the shares are registered under the Securities Act, | |
• | 142,545 shares issuable on conversion of our currently outstanding class B common stock will be eligible for sale under Rule 144 commencing one year from the date of such conversion or, if earlier, after the resale is registered under the Securities Act, and | |
• | 32,107,500 shares will be eligible for sale under Rule 144 one year from the date of the exchange of the LP exchangeable units for class B common stock and the conversion of the class B common stock for class A common stock or, if earlier, after the exchange or the resale of the shares is registered under the Securities Act. |
• | 1% of the number of shares of our class A common stock then outstanding, which will equal 92,483 shares immediately after this offering, assuming no exercise of the underwriters’ over-allotment option, or | |
• | the average weekly trading volume of our class A common stock during the four calendar weeks preceding the filing of the Form 144 with respect to such sale. |
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Page | |||||
Combined Financial Statements (as Restated) for the Five Months Ended January 31, 2005, for the Year Ended August 31, 2004, for the Three Months Ended August 31, 2003, for the Nine Months Ended May 31, 2003 (Predecessor) for the Year Ended August 31, 2002 (Predecessor) | |||||
Report of Independent Registered Public Accounting Firm | F-2 | ||||
Combined Balance Sheets at January 31, 2005, August 31, 2004 and 2003 | F-5 | ||||
Combined Statements of Operations and Comprehensive Income (Loss) for the five months ended January 31, 2005, for the year ended August 31, 2004, for the three months ended August 31, 2003, for the nine months ended May 31, 2003 (Predecessor) and for the year ended August 31, 2002 (Predecessor) | F-6 | ||||
Statements of Changes in Combined Equity for the five months ended January 31, 2005, for the year ended August 31, 2004, for the three months ended August 31, 2003, for the nine months ended May 31, 2003 (Predecessor) and for the year ended August 31, 2002 (Predecessor) | F-7 | ||||
Combined Statements of Cash Flows for the five months ended January 31, 2005, for the year ended August 31, 2004, for the three months ended August 31, 2003, for the nine months ended May 31, 2003 (Predecessor) and for the year ended August 31, 2002 (Predecessor) | F-8 | ||||
Notes to Combined Financial Statements | F-9 |
Page | |||||
Unaudited Consolidated/ Combined Financial Statements for the Three Months and Eight Months Ended September 30, 2005 and September 30, 2004 | |||||
Unaudited Consolidated Balance Sheet at September 30, 2005 and Combined Balance Sheet at January 31, 2005 | F-50 | ||||
Unaudited Consolidated/ Combined Statements of Operations and Comprehensive Income for the three months and eight months ended September 30, 2005 and 2004 | F-51 | ||||
Unaudited Consolidated/Combined Statements of Cash Flows for eight months ended September 30, 2005 and 2004 | F-52 | ||||
Notes to Unaudited Consolidated/ Combined Financial Statements | F-53 |
Page | |||||
Financial Statements at November 10, 2005 | |||||
Report of Independent Registered Public Accounting Firm | F-70 | ||||
Balance Sheet at November 10, 2005 | F-72 | ||||
Notes to Financial Statements | F-73 |
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As Restated — | |||||||||||||||
See Note 1 | |||||||||||||||
January 31, | August 31, | August 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 14,631 | $ | 9,476 | $ | 10,641 | |||||||||
Restricted cash and cash equivalents | 9,846 | 5,691 | 939 | ||||||||||||
Restricted marketable securities | 2,473 | 6,756 | 201 | ||||||||||||
Trade and other accounts receivable, net | 369,767 | 344,210 | 320,452 | ||||||||||||
Parts and supplies inventory | 18,499 | 18,577 | 17,444 | ||||||||||||
Prepaids and other current assets | 40,135 | 32,015 | 32,207 | ||||||||||||
Current deferred tax assets | 65,092 | 52,981 | 58,836 | ||||||||||||
Current assets | 520,443 | 469,706 | 440,720 | ||||||||||||
Non-current assets: | |||||||||||||||
Property, plant and equipment, net | 128,766 | 132,685 | 133,546 | ||||||||||||
Intangible assets, net | 16,075 | 15,758 | 148,205 | ||||||||||||
Non-current deferred tax assets | 202,469 | 214,389 | 96,596 | ||||||||||||
Restricted long-term investments | 41,810 | 47,285 | 40,608 | ||||||||||||
Other long-term assets | 73,947 | 69,776 | 55,071 | ||||||||||||
Assets | $ | 983,510 | $ | 949,599 | $ | 914,746 | |||||||||
LIABILITIES AND COMBINED EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 55,818 | $ | 50,915 | $ | 50,182 | |||||||||
Accrued liabilities | 171,645 | 166,784 | 146,179 | ||||||||||||
Current portion of long-term debt | 5,846 | 7,565 | 8,270 | ||||||||||||
Current liabilities | 233,309 | 225,264 | 204,631 | ||||||||||||
Long-term debt | 5,651 | 7,915 | 15,787 | ||||||||||||
Other long-term liabilities | 146,273 | 142,580 | 133,789 | ||||||||||||
Liabilities | 385,233 | 375,759 | 354,207 | ||||||||||||
Commitments and contingencies (notes 7, 9 and 10) | |||||||||||||||
Laidlaw payable | 202,042 | 186,778 | 22,416 | ||||||||||||
Laidlaw investment | 356,550 | 356,550 | 546,144 | ||||||||||||
Retained earnings (deficit) | 40,000 | 30,518 | (6,831 | ) | |||||||||||
Comprehensive loss | (315 | ) | (6 | ) | (1,190 | ) | |||||||||
Combined equity | 598,277 | 573,840 | 560,539 | ||||||||||||
Liabilities and combined equity | $ | 983,510 | $ | 949,599 | $ | 914,746 | |||||||||
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Predecessor — as Restated | ||||||||||||||||||||||
See note 1 | ||||||||||||||||||||||
Five | Three | |||||||||||||||||||||
Months | Year | Months | Nine Months | Year | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | ||||||||||||||||||
Net revenue | $ | 696,179 | $ | 1,604,598 | $ | 384,461 | $ | 1,103,335 | $ | 1,415,786 | ||||||||||||
Compensation and benefits | 481,305 | 1,117,890 | 264,604 | 757,183 | 960,590 | |||||||||||||||||
Operating expenses | 94,882 | 218,277 | 55,212 | 163,447 | 219,321 | |||||||||||||||||
Insurance expense | 39,002 | 80,255 | 34,671 | 69,576 | 66,479 | |||||||||||||||||
Selling, general and administrative expenses | 21,635 | 47,899 | 12,017 | 37,867 | 61,455 | |||||||||||||||||
Laidlaw fees and compensation charges | 19,857 | 15,449 | 1,350 | 4,050 | 5,400 | |||||||||||||||||
Depreciation and amortization expense | 18,808 | 52,739 | 12,560 | 32,144 | 67,183 | |||||||||||||||||
Impairment losses | — | — | — | — | 262,780 | |||||||||||||||||
Restructuring charges | — | 2,115 | 1,449 | 1,288 | 3,777 | |||||||||||||||||
Laidlaw reorganization costs | — | — | — | 3,650 | 8,761 | |||||||||||||||||
Income (loss) from operations | 20,690 | 69,974 | 2,598 | 34,130 | (239,960 | ) | ||||||||||||||||
Interest expense | (5,644 | ) | (9,961 | ) | (908 | ) | (4,691 | ) | (6,418 | ) | ||||||||||||
Realized gain (loss) on investments | — | (1,140 | ) | 90 | — | — | ||||||||||||||||
Interest and other income | 714 | 240 | 22 | 304 | 369 | |||||||||||||||||
Fresh-start accounting adjustments | — | — | — | 46,416 | — | |||||||||||||||||
Income (loss) before income taxes and cumulative effect of change in accounting principle | 15,760 | 59,113 | 1,802 | 76,159 | (246,009 | ) | ||||||||||||||||
Income tax expense | (6,278 | ) | (21,764 | ) | (8,633 | ) | (829 | ) | (1,374 | ) | ||||||||||||
Income (loss) before cumulative effect of a change in accounting principle | 9,482 | 37,349 | (6,831 | ) | 75,330 | (247,383 | ) | |||||||||||||||
Cumulative effect of a change in accounting principle | — | — | — | (223,721 | ) | — | ||||||||||||||||
Net income (loss) | 9,482 | 37,349 | (6,831 | ) | (148,391 | ) | (247,383 | ) | ||||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||
Unrealized holding gains (losses) during the period | (309 | ) | 1,184 | (1,190 | ) | 603 | 116 | |||||||||||||||
Comprehensive income (loss) | $ | 9,173 | $ | 38,533 | $ | (8,021 | ) | $ | (147,788 | ) | $ | (247,267 | ) | |||||||||
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Accumulated | ||||||||||||||||||||
Retained | Other | Total | ||||||||||||||||||
Laidlaw | Laidlaw | Earnings | Comprehensive | Combined | ||||||||||||||||
Payable | Investment | (Deficit) | Income (Loss) | Equity | ||||||||||||||||
Balances August 31, 2001 (Predecessor) | $ | 1,422,088 | $ | 2,089,376 | $ | (2,437,836 | ) | $ | — | $ | 1,073,628 | |||||||||
Prior period adjustment — see note 1 | — | — | (41,020 | ) | — | (41,020 | ) | |||||||||||||
Net loss | — | — | (247,383 | ) | — | (247,383 | ) | |||||||||||||
Payments made to Laidlaw, net | (24,823 | ) | — | — | — | (24,823 | ) | |||||||||||||
Unrealized holding gains | — | — | — | 116 | 116 | |||||||||||||||
Balances August 31, 2002 (Predecessor) as restated — see note 1 | 1,397,265 | 2,089,376 | (2,726,239 | ) | 116 | 760,518 | ||||||||||||||
Net loss | — | — | (148,391 | ) | — | (148,391 | ) | |||||||||||||
Payments made to Laidlaw, net | (83 | ) | — | — | — | (83 | ) | |||||||||||||
Unrealized holding gains | — | — | — | 603 | 603 | |||||||||||||||
Balances May 31, 2003 (Predecessor) as restated — see note 1 | $ | 1,397,182 | $ | 2,089,376 | $ | (2,874,630 | ) | $ | 719 | $ | 612,647 | |||||||||
Fresh-start balances June 1, 2003 as restated — see note 1 | $ | 66,503 | $ | 546,144 | $ | — | $ | — | $ | 612,647 | ||||||||||
Net loss | — | — | (6,831 | ) | — | (6,831 | ) | |||||||||||||
Payments made to Laidlaw, net | (44,087 | ) | — | — | — | (44,087 | ) | |||||||||||||
Unrealized holding losses | — | — | — | (1,190 | ) | (1,190 | ) | |||||||||||||
Balances August 31, 2003, as restated — see note 1 | 22,416 | 546,144 | (6,831 | ) | (1,190 | ) | 560,539 | |||||||||||||
Dividend to Laidlaw | 200,000 | (200,000 | ) | — | — | — | ||||||||||||||
Net income | — | — | 37,349 | — | 37,349 | |||||||||||||||
Fresh-start adjustments (note 1) | — | 10,406 | — | — | 10,406 | |||||||||||||||
Payments made to Laidlaw, net | (35,638 | ) | — | — | — | (35,638 | ) | |||||||||||||
Unrealized holding gains | — | — | — | 1,184 | 1,184 | |||||||||||||||
Balances August 31, 2004 as restated — see note 1 | 186,778 | 356,550 | 30,518 | (6 | ) | 573,840 | ||||||||||||||
Net income | — | — | 9,482 | — | 9,482 | |||||||||||||||
Advances from Laidlaw, net | 15,264 | — | — | — | 15,264 | |||||||||||||||
Unrealized holding losses | — | — | — | (309 | ) | (309 | ) | |||||||||||||
Balances January 31, 2005 | $ | 202,042 | $ | 356,550 | $ | 40,000 | $ | (315 | ) | $ | 598,277 | |||||||||
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Predecessor — as | ||||||||||||||||||||||||
restated | ||||||||||||||||||||||||
see note 1 | ||||||||||||||||||||||||
Five Months | Three Months | Nine Months | ||||||||||||||||||||||
Ended | Year Ended | Ended | Ended | Year Ended | ||||||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | ||||||||||||||||||||
(dollars in thousands) | (dollars in thousands) | |||||||||||||||||||||||
Cash Flows from Operating Activities | ||||||||||||||||||||||||
Net income (loss) | $ | 9,482 | $ | 37,349 | $ | (6,831 | ) | $ | (148,391 | ) | $ | (247,383 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | 18,808 | 53,957 | 12,775 | 32,359 | 67,205 | |||||||||||||||||||
Loss (gain) on disposal of property, plant and equipment | 145 | (446 | ) | (316 | ) | (349 | ) | (1,140 | ) | |||||||||||||||
Impairment charge | — | — | — | — | 262,780 | |||||||||||||||||||
Cumulative effect of a change in accounting principle (note 3) | — | — | — | 223,721 | — | |||||||||||||||||||
Non-cash allocated expenses (income) | — | (4,505 | ) | 11,522 | 3,058 | (8,094 | ) | |||||||||||||||||
Restructuring charges | — | 2,115 | 1,449 | 1,288 | 3,777 | |||||||||||||||||||
Notes payable discount | 213 | 132 | 50 | 218 | 422 | |||||||||||||||||||
Loss (gain) on restricted investments | 197 | 1,140 | (90 | ) | — | — | ||||||||||||||||||
Deferred income taxes | 6,278 | 21,899 | (8,421 | ) | — | — | ||||||||||||||||||
Fresh-start accounting adjustments (note 1) | — | — | — | (46,416 | ) | — | ||||||||||||||||||
Changes in operating assets/liabilities (net of acquisitions): | ||||||||||||||||||||||||
Trade and other accounts receivable | (26,057 | ) | (23,764 | ) | 1,522 | (14,049 | ) | 21,352 | ||||||||||||||||
Parts and supplies inventory | 78 | (1,133 | ) | (517 | ) | 233 | (153 | ) | ||||||||||||||||
Prepaids and other current assets | (269 | ) | 5,892 | 3,700 | (12,257 | ) | (10,345 | ) | ||||||||||||||||
Accounts payable and accrued liabilities | 3,046 | 17,322 | 3,553 | (6,614 | ) | 22,350 | ||||||||||||||||||
Compliance and insurance accruals | 4,045 | 20,402 | 12,520 | 31,312 | 46,575 | |||||||||||||||||||
Restructuring charges and acquisition accruals | — | (2,681 | ) | (907 | ) | (5,344 | ) | (802 | ) | |||||||||||||||
Net cash provided by operating activities | 15,966 | 127,679 | 30,009 | 58,769 | 156,544 | |||||||||||||||||||
Cash Flows from Investing Activities | ||||||||||||||||||||||||
Purchase of property, plant and equipment | (14,045 | ) | (42,787 | ) | (18,079 | ) | (34,768 | ) | �� | (31,118 | ) | |||||||||||||
Purchase of business | (1,200 | ) | — | — | — | — | ||||||||||||||||||
Proceeds from sale of business | 1,300 | — | — | — | — | |||||||||||||||||||
Proceeds from sale of property, plant and equipment | 175 | 858 | 341 | 624 | 2,549 | |||||||||||||||||||
Purchase of restricted cash and investments | (31,257 | ) | (64,357 | ) | (11,287 | ) | (66,266 | ) | (50,946 | ) | ||||||||||||||
Proceeds from sale and maturity of restricted investments | 35,960 | 46,389 | 12,530 | 36,748 | 32,215 | |||||||||||||||||||
Other investing activities | (79 | ) | 6,814 | 1,359 | (35,173 | ) | (10,047 | ) | ||||||||||||||||
Increase in Laidlaw insurance deposits | (12,521 | ) | (28,433 | ) | — | — | — | |||||||||||||||||
Net cash used in investing activities | (21,667 | ) | (81,516 | ) | (15,136 | ) | (98,835 | ) | (57,347 | ) | ||||||||||||||
Cash Flows from Financing Activities | ||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | (3,992 | ) | (8,709 | ) | (1,851 | ) | (6,338 | ) | (17,817 | ) | ||||||||||||||
Increase (decrease) in bank overdrafts | 5,866 | (4,544 | ) | 8,675 | (815 | ) | (1,134 | ) | ||||||||||||||||
Advances from (payments to) Laidlaw | 8,982 | (31,133 | ) | (55,609 | ) | (3,141 | ) | (16,729 | ) | |||||||||||||||
Increase (decrease) in other non-current liabilities | — | (2,942 | ) | 1,563 | 2,234 | (386 | ) | |||||||||||||||||
Net cash provided by (used in) financing activities | 10,856 | (47,328 | ) | (47,222 | ) | (8,060 | ) | (36,066 | ) | |||||||||||||||
Increase (decrease) in cash and cash equivalents | 5,155 | (1,165 | ) | (32,349 | ) | (48,126 | ) | 63,131 | ||||||||||||||||
Cash and cash equivalents, beginning of period | 9,476 | 10,641 | 42,990 | 91,116 | 27,985 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | 14,631 | $ | 9,476 | $ | 10,641 | $ | 42,990 | $ | 91,116 | ||||||||||||||
F-8
Table of Contents
1. | General |
F-9
Table of Contents
As Previously | As | |||||||||||
Reported | Adjustments | Restated | ||||||||||
August 31, 2004 | ||||||||||||
Trade and other accounts receivable, net | $ | 394,210 | $ | (50,000 | ) | $ | 344,210 | |||||
Current deferred tax assets | 33,935 | 19,046 | 52,981 | |||||||||
Current assets | 500,660 | (30,954 | ) | 469,706 | ||||||||
Property, plant & equipment | 133,362 | (677 | ) | 132,685 | ||||||||
Non-current deferred tax assets | 213,127 | 1,262 | 214,389 | |||||||||
Assets | 979,968 | (30,369 | ) | 949,599 | ||||||||
Other long-term liabilities | 140,897 | 1,683 | 142,580 | |||||||||
Liabilities | 374,076 | 1,683 | 375,759 | |||||||||
Laidlaw investment | 388,602 | (32,052 | ) | 356,550 | ||||||||
Combined equity | 605,892 | (32,052 | ) | 573,840 | ||||||||
Liabilities and combined equity | 979,968 | (30,369 | ) | 949,599 | ||||||||
August 31, 2003 | ||||||||||||
Trade and other accounts receivable, net | 370,452 | (50,000 | ) | 320,452 | ||||||||
Current assets | 490,720 | (50,000 | ) | 440,720 | ||||||||
Property, plant & equipment | 134,223 | (677 | ) | 133,546 | ||||||||
Intangible assets, net | 95,845 | 52,360 | 148,205 | |||||||||
Assets | 913,063 | 1,683 | 914,746 | |||||||||
Other long-term liabilities | 132,106 | 1,683 | 133,789 | |||||||||
Liabilities | 352,524 | 1,683 | 354,207 | |||||||||
Liabilities and combined equity | $ | 913,063 | $ | 1,683 | $ | 914,746 |
F-10
Table of Contents
As Previously | As | |||||||||||
Reported | Adjustments | Restated | ||||||||||
Nine months ended May 31, 2003 (predecessor) | ||||||||||||
Net revenue | $ | 1,111,335 | $ | (8,000 | ) | $ | 1,103,335 | |||||
Operating expenses | 163,293 | 154 | 163,447 | |||||||||
Depreciation and amortization expense | 32,156 | (12 | ) | 32,144 | ||||||||
Income (loss) from operations | 42,272 | (8,142 | ) | 34,130 | ||||||||
Fresh-start accounting adjustments | 38,274 | 8,142 | 46,416 | |||||||||
Cumulative effect of a change in accounting principle | (267,939 | ) | 44,218 | (223,721 | ) | |||||||
Net income (loss) | (192,609 | ) | 44,218 | (148,391 | ) | |||||||
Comprehensive income (loss) | (192,006 | ) | 44,218 | (147,788 | ) | |||||||
Year ended August 31, 2002 (predecessor) | ||||||||||||
Net revenue | 1,418,786 | (3,000 | ) | 1,415,786 | ||||||||
Operating expenses | 219,121 | 200 | 219,321 | |||||||||
Depreciation and amortization expense | 67,185 | (2 | ) | 67,183 | ||||||||
Income (loss) from operations | (236,762 | ) | (3,198 | ) | (239,960 | ) | ||||||
Income (loss) before income taxes and cumulative effect of a change in accounting principle | (242,811 | ) | (3,198 | ) | (246,009 | ) | ||||||
Income (loss) before cumulative effect of a change in accounting principle | (244,185 | ) | (3,198 | ) | (247,383 | ) | ||||||
Net income (loss) | (244,185 | ) | (3,198 | ) | (247,383 | ) | ||||||
Comprehensive income (loss) | $ | (244,069 | ) | $ | (3,198 | ) | $ | (247,267 | ) |
F-11
Table of Contents
Restated | ||||||||||||||
Predecessor | Fair Value | Successor | ||||||||||||
Company | Adjustments | Company | ||||||||||||
Assets | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 42,990 | $ | — | $ | 42,990 | ||||||||
Restricted cash and cash equivalents | 1,154 | — | 1,154 | |||||||||||
Trade and other accounts receivable, net | 321,974 | — | 321,974 | |||||||||||
Parts and supplies inventory | 16,927 | — | 16,927 | |||||||||||
Other current assets | 35,907 | — | 35,907 | |||||||||||
Current deferred tax assets | — | (c) | 72,493 | 72,493 | ||||||||||
Current assets | 418,952 | 72,493 | 491,445 | |||||||||||
Property, plant, and equipment, net | 130,212 | (a) | (4,683 | ) | 125,529 | |||||||||
Intangible assets, net | 230,222 | (b) | (79,843 | ) | 150,379 | |||||||||
Non-current deferred tax assets | — | (c) | 73,918 | 73,918 | ||||||||||
Restricted long-term investments — trust | 43,764 | — | 43,764 | |||||||||||
Other long-term assets | 56,596 | — | 56,596 | |||||||||||
Assets | $ | 879,746 | $ | 61,885 | $ | 941,631 | ||||||||
F-12
Table of Contents
Restated | ||||||||||||||
Predecessor | Fair Value | Successor | ||||||||||||
Company | Adjustments | Company | ||||||||||||
Liabilities and Combined Equity | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 40,156 | $ | — | $ | 40,156 | ||||||||
Accrued liabilities | 140,777 | (d) | 1,000 | 141,777 | ||||||||||
Current portion of long-term debt | 8,807 | — | 8,807 | |||||||||||
Current liabilities | 189,740 | 1,000 | 190,740 | |||||||||||
Long-term debt | 17,052 | — | 17,052 | |||||||||||
Other long-term liabilities | 106,723 | (e) | 14,469 | 121,192 | ||||||||||
Liabilities | 313,515 | 15,469 | 328,984 | |||||||||||
Laidlaw payable | 59,355 | (f) | 7,148 | 66,503 | ||||||||||
Laidlaw investment | 3,419,470 | (f) | (2,873,326 | ) | 546,144 | |||||||||
Retained earnings (deficit) | (2,913,313 | ) (f) | 2,913,313 | — | ||||||||||
Comprehensive income | 719 | (f) | (719 | ) | — | |||||||||
Combined equity | 566,231 | 46,416 | 612,647 | |||||||||||
Liabilities and combined equity | $ | 879,746 | $ | 61,885 | $ | 941,631 | ||||||||
(a) | Adjusts property, plant and equipment to reflect the estimated fair value of the assets based on independent appraisals. | |
(b) | Eliminates the Predecessor Company’s historic goodwill, records identifiable intangible assets at estimated fair value based upon independent appraisals and records the remaining reorganization value to goodwill. | |
(c) | Records the net deferred income tax assets of the Company. | |
(d) | Records the operating leases at their estimated fair value based on independent valuations and the current borrowing rate of the Company. | |
(e) | Adjusts the Company’s insurance reserves to their estimated fair value. | |
(f) | Reflects the elimination of the accumulated deficit and comprehensive income and establishes the payable account to Laidlaw. |
2. | Summary of Significant Accounting Policies |
F-13
Table of Contents
August 31, | |||||||||||||
January 31, | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Accounts receivable, net | |||||||||||||
AMR | $ | 229,798 | $ | 210,177 | $ | 196,473 | |||||||
EmCare | 139,969 | 134,033 | 123,979 | ||||||||||
Total | $ | 369,767 | $ | 344,210 | $ | 320,452 | |||||||
Accounts receivable allowances | |||||||||||||
AMR | |||||||||||||
Allowance for contractual discounts | $ | 126,771 | $ | 103,412 | $ | 89,856 | |||||||
Allowance for uncompensated care | 124,699 | 111,766 | 104,833 | ||||||||||
Total | $ | 251,470 | $ | 215,178 | $ | 194,689 | |||||||
EmCare | |||||||||||||
Allowance for contractual discounts | $ | 188,092 | $ | 168,060 | $ | 168,912 | |||||||
Allowance for uncompensated care | 556,605 | 499,512 | 382,757 | ||||||||||
Total | $ | 744,697 | $ | 667,572 | $ | 551,669 | |||||||
F-14
Table of Contents
Buildings | 35 to 40 years | |
Leasehold improvements | Shorter of expected life or life of lease | |
Vehicles | 5 to 7 years | |
Computer hardware and software | 3 to 5 years | |
Other | 3 to 10 years |
F-15
Table of Contents
Restated | |||||
Predecessor Company: | |||||
Balance on August 31, 2002 | $ | 453,943 | |||
Impairment loss under SFAS No. 142, September 1, 2002 | (223,721 | ) | |||
Balance on May 31, 2003 | $ | 230,222 | |||
Successor Company: | |||||
Fresh-start adjustment | $ | (177,862 | ) | ||
Balance on June 1, 2003 and August 31, 2003 | 52,360 | ||||
Deferred tax valuation adjustment, August 31, 2004 | (52,360 | ) | |||
Balance on August 31, 2004 and January 31, 2005 | $ | — | |||
F-16
Table of Contents
F-17
Table of Contents
Predecessor | ||||||||||||||||||||
Five Months | Three Months | Nine Months | ||||||||||||||||||
Ended | Year Ended | Ended | Ended | Year Ended | ||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | ||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | ||||||||||||||||
AMR | ||||||||||||||||||||
Gross revenue | 100% | 100% | 100% | 100% | 100% | |||||||||||||||
Provision for contractual discounts | 35% | 35% | 30% | 30% | 26% | |||||||||||||||
Provision for uncompensated care | 14% | 14% | 16% | 15% | 16% | |||||||||||||||
EmCare | ||||||||||||||||||||
Gross revenue | 100% | 100% | 100% | 100% | 100% | |||||||||||||||
Provision for contractual discounts | 42% | 41% | 40% | 40% | 38% | |||||||||||||||
Provision for uncompensated care | 25% | 24% | 24% | 23% | 23% | |||||||||||||||
Total | ||||||||||||||||||||
Gross revenue | 100% | 100% | 100% | 100% | 100% | |||||||||||||||
Provision for contractual discounts | 39% | 37% | 35% | 34% | 31% | |||||||||||||||
Provision for uncompensated care | 19% | 18% | 19% | 18% | 19% |
F-18
Table of Contents
F-19
Table of Contents
3. | Property, Plant and Equipment, net |
Restated | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Land | $ | 2,079 | $ | 2,079 | $ | 2,079 | ||||||
Building and leasehold improvements | 14,293 | 14,147 | 11,670 | |||||||||
Vehicles | 91,114 | 85,172 | 65,163 | |||||||||
Computer hardware and software | 42,006 | 35,585 | 29,290 | |||||||||
Other | 46,891 | 45,622 | 32,130 | |||||||||
196,383 | 182,605 | 140,332 | ||||||||||
Less: accumulated depreciation | (67,617 | ) | (49,920 | ) | (6,786 | ) | ||||||
Property, plant and equipment, net | $ | 128,766 | $ | 132,685 | $ | 133,546 | ||||||
4. | Intangible Assets, net |
Restated | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Goodwill | $ | — | $ | — | $ | 52,360 | ||||||
Contract value | 22,544 | 22,106 | 94,177 | |||||||||
Radio frequencies | — | — | 4,000 | |||||||||
Covenant not to compete | 250 | — | 19 | |||||||||
22,794 | 22,106 | 150,556 | ||||||||||
Less: accumulated amortization | (6,719 | ) | (6,348 | ) | (2,351 | ) | ||||||
Intangible assets, net | $ | 16,075 | $ | 15,758 | $ | 148,205 | ||||||
F-20
Table of Contents
5. | Income Taxes |
Restated | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Deferred tax assets: | |||||||||||||
Accounts receivable | $ | 38,817 | $ | 34,726 | $ | 54,447 | |||||||
Accrued liabilities | 58,508 | 56,803 | 62,120 | ||||||||||
Intangible assets | 42,732 | 46,047 | 24,311 | ||||||||||
Interest carryforwards | 84,590 | 85,188 | 84,474 | ||||||||||
Net operating loss carryforwards | 54,565 | 55,055 | 94,576 | ||||||||||
279,212 | 277,819 | 319,928 | |||||||||||
Deferred tax liabilities: | |||||||||||||
Excess of tax over book depreciation | (11,651 | ) | (10,449 | ) | (8,544 | ) | |||||||
Net deferred tax assets | 267,561 | 267,370 | 311,384 | ||||||||||
Valuation allowance | — | — | (155,952 | ) | |||||||||
Net deferred tax assets | $ | 267,561 | $ | 267,370 | $ | 155,432 | |||||||
F-21
Table of Contents
Predecessor | |||||||||||||||||||||
Five Months | Year | Three Months | Nine Months | Year | |||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | |||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | |||||||||||||||||
Current tax expense | |||||||||||||||||||||
State | $ | — | $ | 559 | $ | (162 | ) | $ | 829 | $ | 1,374 | ||||||||||
Federal | — | (694 | ) | 17,216 | — | — | |||||||||||||||
Total | — | (135 | ) | 17,054 | 829 | 1,374 | |||||||||||||||
Deferred tax expense | |||||||||||||||||||||
State | 762 | 2,496 | (76 | ) | — | — | |||||||||||||||
Federal | 5,516 | 19,403 | (8,345 | ) | — | — | |||||||||||||||
Total | 6,278 | 21,899 | (8,421 | ) | — | — | |||||||||||||||
Total tax expense | |||||||||||||||||||||
State | 762 | 3,055 | (238 | ) | 829 | 1,374 | |||||||||||||||
Federal | 5,516 | 18,709 | 8,871 | — | — | ||||||||||||||||
Total | $ | 6,278 | $ | 21,764 | $ | 8,633 | $ | 829 | $ | 1,374 | |||||||||||
As Restated | ||||||||||||||||||||||
Predecessor | ||||||||||||||||||||||
Five Months | Year | Three Months | Nine Months | Year | ||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | ||||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | ||||||||||||||||||
Income tax expense (benefit) at the statutory rate | $ | 5,516 | $ | 20,690 | $ | 631 | $ | 26,656 | $ | (86,103 | ) | |||||||||||
Decrease(increase) in income taxes resulting from: | ||||||||||||||||||||||
State taxes, net of federal | 495 | 1,986 | (155 | ) | 539 | 893 | ||||||||||||||||
Goodwill amortization/impairment | — | — | — | — | 76,517 | |||||||||||||||||
Fresh start accounting adjustments | — | — | — | (16,246 | ) | — | ||||||||||||||||
Parent Company allocations | — | (1,577 | ) | 7,990 | (2,826 | ) | (40,377 | ) | ||||||||||||||
Change in valuation allowance | — | — | — | (7,607 | ) | 50,158 | ||||||||||||||||
Other | 267 | 665 | 167 | 313 | 286 | |||||||||||||||||
Provision for income taxes | $ | 6,278 | $ | 21,764 | $ | 8,633 | $ | 829 | $ | 1,374 | ||||||||||||
F-22
Table of Contents
6. | Accrued Liabilities |
2005 | 2004 | 2003 | ||||||||||
Accrued wages and benefits | $ | 53,231 | $ | 65,757 | $ | 56,960 | ||||||
Accrued paid time off | 20,141 | 19,828 | 16,896 | |||||||||
Current portion of self-insurance reserve | 41,283 | 36,384 | 28,206 | |||||||||
Accrued restructuring | 1,118 | 1,611 | 3,088 | |||||||||
Current portion of compliance and legal | 3,607 | 5,660 | 8,056 | |||||||||
Accrued billing and collection fees | 3,522 | 3,466 | 3,300 | |||||||||
Accrued profit sharing | 23,802 | 7,566 | 6,552 | |||||||||
Other | 24,941 | 26,512 | 23,121 | |||||||||
Total accrued liabilities | $ | 171,645 | $ | 166,784 | $ | 146,179 | ||||||
7. | Long-term Debt |
2005 | 2004 | 2003 | ||||||||||
Notes due at various dates from 2004 to 2022 with interest rates from 6% to 10% | $ | 1,219 | $ | 2,959 | $ | 6,478 | ||||||
Mortgage loan due 2010 with an interest rate of 7% | 2,168 | 2,190 | 2,242 | |||||||||
Capital lease obligations due at various dates from 2006 to 2007 (note 10) | 8,110 | 10,331 | 15,337 | |||||||||
11,497 | 15,480 | 24,057 | ||||||||||
Less current portion | (5,846 | ) | (7,565 | ) | (8,270 | ) | ||||||
Total long-term debt | $ | 5,651 | $ | 7,915 | $ | 15,787 | ||||||
Year ending January 31, | ||||
2006 | $ | 5,846 | ||
2007 | 3,771 | |||
2008 | (878 | ) | ||
2009 | 121 | |||
2010 | 108 | |||
Thereafter | 2,529 | |||
$ | 11,497 | |||
F-23
Table of Contents
8. | Restructuring Charges and Impairment Losses |
2002 Plan | 2003 Plan | 2004 Plan | ||||||||||||||||||||||
Severance | Lease | Total | Severance | Severance | Total | |||||||||||||||||||
Incurred | $ | 1,517 | $ | 2,260 | $ | 3,777 | $ | 3,777 | ||||||||||||||||
Paid | (456 | ) | (149 | ) | (605 | ) | (605 | ) | ||||||||||||||||
August 31, 2002 | 1,061 | 2,111 | 3,172 | 3,172 | ||||||||||||||||||||
Incurred April 2003 | — | — | — | $ | 1,288 | 1,288 | ||||||||||||||||||
Incurred August 2003 | — | — | — | 1,449 | 1,449 | |||||||||||||||||||
Paid | (559 | ) | (561 | ) | (1,120 | ) | (1,701 | ) | (2,821 | ) | ||||||||||||||
August 31, 2003 | 502 | 1,550 | 2,052 | 1,036 | 3,088 | |||||||||||||||||||
Incurred | — | — | — | — | $ | 2,115 | 2,115 | |||||||||||||||||
Paid | (502 | ) | (566 | ) | (1,068 | ) | (1,036 | ) | (1,488 | ) | (3,592 | ) | ||||||||||||
August 31, 2004 | — | 984 | 984 | — | 627 | 1,611 | ||||||||||||||||||
Incurred | — | — | — | — | — | — | ||||||||||||||||||
Paid | — | (238 | ) | (238 | ) | — | (255 | ) | (493 | ) | ||||||||||||||
January 31, 2005 | $ | — | $ | 746 | $ | 746 | $ | — | $ | 372 | $ | 1,118 | ||||||||||||
F-24
Table of Contents
9. | Retirement Plans and Employee Benefits |
10. | Commitments and Contingencies |
F-25
Table of Contents
Operating | ||||||||
Capital | Leases & | |||||||
Leases | Other | |||||||
Year ending January 31, | ||||||||
2006 | $ | 6,000 | $ | 27,289 | ||||
2007 | 3,558 | 20,335 | ||||||
2008 | (948 | ) | 16,242 | |||||
2009 | — | 12,785 | ||||||
2010 | — | 8,810 | ||||||
Thereafter | — | 20,659 | ||||||
8,610 | $ | 106,120 | ||||||
Less imputed interest | (500 | ) | ||||||
Total capital lease obligations | 8,110 | |||||||
Less current portion | (5,530 | ) | ||||||
Long-term capital lease obligations | $ | 2,580 | ||||||
F-26
Table of Contents
F-27
Table of Contents
11. | Related Party |
F-28
Table of Contents
Predecessor | |||||||||||||||||||||
Five Months | Year | Three Months | Nine Months | Year | |||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | |||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | |||||||||||||||||
Allocated insurance expense (income) | $ | — | $ | (4,505 | ) | $ | 11,522 | $ | 3,058 | $ | (8,094 | ) | |||||||||
Direct insurance expense | 17,069 | 40,554 | — | — | — | ||||||||||||||||
Laidlaw fees and compensation charges | 19,857 | 15,449 | 1,350 | 4,050 | 5,400 | ||||||||||||||||
Reorganization costs | — | — | — | 3,650 | 8,761 | ||||||||||||||||
Interest | 4,480 | 6,225 | 403 | 3,081 | 4,585 |
F-29
Table of Contents
12. | Insurance |
Accrued | Other Long-Term | Total | ||||||||||
January 31, 2005 | Liabilities | Liabilities | Liabilities | |||||||||
Automobile | $ | 4,054 | $ | 10,558 | $ | 14,612 | ||||||
Workers compensation | 11,554 | 34,636 | 46,190 | |||||||||
General/ Professional liability | 25,675 | 97,905 | 123,580 | |||||||||
$ | 41,283 | $ | 143,099 | $ | 184,382 | |||||||
Accrued | Other Long-Term | Total | ||||||||||
August 31, 2004 | Liabilities | Liabilities | Liabilities | |||||||||
Automobile | $ | 4,007 | $ | 8,887 | $ | 12,894 | ||||||
Workers compensation | 10,903 | 32,406 | 43,309 | |||||||||
General/ Professional liability | 21,474 | 96,887 | 118,361 | |||||||||
$ | 36,384 | $ | 138,180 | $ | 174,564 | |||||||
F-30
Table of Contents
Accrued | Other Long-term | Total | ||||||||||
August 31, 2003 | Liabilities | Liabilities | Liabilities | |||||||||
Automobile | $ | 4,845 | $ | 6,244 | $ | 11,089 | ||||||
Workers compensation | 10,152 | 23,870 | 34,022 | |||||||||
General/ Professional liability | 13,209 | 88,897 | 102,106 | |||||||||
$ | 28,206 | $ | 119,011 | $ | 147,217 | |||||||
January 31, | August 31, | August 31, | ||||||||||
2005 | 2004 | 2003 | ||||||||||
Restricted cash and cash equivalents | $ | 9,846 | $ | 5,691 | $ | 939 | ||||||
Restricted marketable securities | 2,473 | 6,756 | 201 | |||||||||
Short-term deposits (included in other current assets) | 8,044 | 9,889 | 14,997 | |||||||||
Short-term deposits with Laidlaw (included in other current assets) | 11,541 | 5,700 | — | |||||||||
Restricted long-term investments | 41,810 | 47,285 | 40,608 | |||||||||
Long-term deposits (included in other long-term assets) | 20,006 | 23,708 | 28,626 | |||||||||
Long-term deposits with Laidlaw (included in other long-term assets) | 29,413 | 22,733 | — | |||||||||
Total insurance deposits | $ | 123,133 | $ | 121,762 | $ | 85,371 | ||||||
F-31
Table of Contents
13. | Supplemental Cash Flow Information |
Predecessor | |||||||||||||||||||||||
Restated | |||||||||||||||||||||||
Five Months | Year | Three Months | Nine Months | Year | |||||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | |||||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | |||||||||||||||||||
Cash paid during the period for interest | $ | 488 | $ | 556 | $ | 436 | $ | 1,605 | $ | 1,278 | |||||||||||||
Finance and investing activities not requiring the use of cash: | |||||||||||||||||||||||
Dividend to Laidlaw | — | 200,000 | — | — | — | ||||||||||||||||||
Acquisition of equipment through capital leases | — | — | — | — | 26,320 | ||||||||||||||||||
Reduction of deferred tax asset valuation allowance through: | |||||||||||||||||||||||
Reduction of ambulance service contracts and other intangibles | — | 124,977 | — | — | — | ||||||||||||||||||
Reduction of associated deferred tax asset | — | (27,606 | ) | — | — | — | |||||||||||||||||
Laidlaw equity | $ | — | $ | 10,406 | $ | — | $ | — | $ | — |
14. | Segment Information |
F-32
Table of Contents
Predecessor Company — | |||||||||||||||||||||
Restated | |||||||||||||||||||||
Five Months | Year | Three Months | Nine Months | Year | |||||||||||||||||
Ended | Ended | Ended | Ended | Ended | |||||||||||||||||
January 31, | August 31, | August 31, | May 31, | August 31, | |||||||||||||||||
2005 | 2004 | 2003 | 2003 | 2002 | |||||||||||||||||
Healthcare Transportation Services | |||||||||||||||||||||
Revenue | $ | 455,059 | $ | 1,054,800 | $ | 255,807 | $ | 751,344 | $ | 984,451 | |||||||||||
Segment EBITDA | 33,859 | 85,557 | 7,941 | 48,026 | (189,624 | )(1) | |||||||||||||||
Total identifiable assets | 645,441 | 628,635 | 605,268 | 638,495 | (2) | 894,943 | |||||||||||||||
Capital expenditures | 12,054 | 38,573 | 17,581 | 30,888 | 26,670 | ||||||||||||||||
Emergency Management Services | |||||||||||||||||||||
Revenue | 241,120 | 549,798 | 128,654 | 351,991 | 431,335 | ||||||||||||||||
Segment EBITDA | 5,639 | 37,156 | 7,217 | 18,248 | 16,847 | ||||||||||||||||
Total identifiable assets | 338,069 | 320,964 | 309,478 | 303,136 | (2) | 163,132 | |||||||||||||||
Capital expenditures | 1,991 | 4,214 | 498 | 3,880 | 4,448 | ||||||||||||||||
Total | |||||||||||||||||||||
Total revenue | 696,179 | 1,604,598 | 384,461 | 1,103,335 | 1,415,786 | ||||||||||||||||
Total segment EBITDA | 39,498 | 122,713 | 15,158 | 66,274 | (172,777 | ) | |||||||||||||||
Total identifiable assets | 983,510 | 949,599 | 914,746 | 941,631 | (2) | 1,058,075 | |||||||||||||||
Total capital expenditures | 14,045 | 42,787 | 18,079 | 34,768 | 31,118 | ||||||||||||||||
Reconciliation of EBITDA to Net Income (Loss) | |||||||||||||||||||||
EBITDA | 39,498 | 122,713 | 15,158 | 66,274 | (172,777 | )(1) | |||||||||||||||
Depreciation and amortization expense | (18,808 | ) | (52,739 | ) | (12,560 | ) | (32,144 | ) | (67,183 | ) | |||||||||||
Interest expense | (5,644 | ) | (9,961 | ) | (908 | ) | (4,691 | ) | (6,418 | ) | |||||||||||
Realized gain (loss) on investments | — | (1,140 | ) | 90 | — | — | |||||||||||||||
Interest and other income | 714 | 240 | 22 | 304 | 369 | ||||||||||||||||
Fresh-start accounting adjustments | — | — | — | 46,416 | — | ||||||||||||||||
Income tax expense | (6,278 | ) | (21,764 | ) | (8,633 | ) | (829 | ) | (1,374 | ) | |||||||||||
Cumulative effect of a change in accounting principle | — | — | — | (223,721 | ) | — | |||||||||||||||
Net income (loss) | $ | 9,482 | $ | 37,349 | $ | (6,831 | ) | $ | (148,391 | ) | $ | (247,383 | ) | ||||||||
(1) | Includes an impairment loss of $262,780. |
(2) | Total assets of the Company at June 1, 2003 after fair value adjustments. |
F-33
Table of Contents
15. | Valuation and Qualifying Accounts |
Total | Valuation | ||||||||||||||||||||
Allowance for | Allowance for | Accounts | Allowance for | ||||||||||||||||||
Contractual | Uncompensated | Receivable | Deferred Tax | ||||||||||||||||||
Discounts | Care | Allowances | Assets | Total | |||||||||||||||||
Balance at August 31, 2001 (Predecessor) — restated | $ | 242,172 | $ | 423,562 | $ | 665,734 | $ | 309,275 | $ | 975,009 | |||||||||||
Additions | 858,590 | 521,277 | 1,379,867 | 6,383 | 1,386,250 | ||||||||||||||||
Reductions | (850,862 | ) | (532,030 | ) | (1,382,892 | ) | (4,964 | ) | (1,387,856 | ) | |||||||||||
Balance at August 31, 2002 (Predecessor) — restated | 249,900 | 412,809 | 662,709 | 310,694 | 973,403 | ||||||||||||||||
Additions | 795,809 | 428,578 | 1,224,387 | 3,200 | 1,227,587 | ||||||||||||||||
Reductions | (786,770 | ) | (377,363 | ) | (1,164,133 | ) | (157,942 | ) | (1,322,075 | ) | |||||||||||
Balance at May 31, 2003 (Predecessor) — restated | $ | 258,939 | $ | 464,024 | $ | 722,963 | $ | 155,952 | $ | 878,915 | |||||||||||
Fresh-start balance at June 1, 2003 — restated | $ | 258,939 | $ | 464,024 | $ | 722,963 | $ | 155,952 | $ | 878,915 | |||||||||||
Additions | 289,329 | 161,100 | 450,429 | — | 450,429 | ||||||||||||||||
Reductions | (289,500 | ) | (137,533 | ) | (427,033 | ) | — | (427,033 | ) | ||||||||||||
Balance at August 31, 2003 — restated | 258,768 | 487,591 | 746,359 | 155,952 | 902,311 | ||||||||||||||||
Additions | 1,361,708 | 666,116 | 2,027,824 | — | 2,027,824 | ||||||||||||||||
Reductions | (1,349,005 | ) | (542,429 | ) | (1,891,434 | ) | (155,952 | ) | (2,047,386 | ) | |||||||||||
Balance at August 31, 2004 — restated | 271,471 | 611,278 | 882,749 | — | 882,749 | ||||||||||||||||
Additions | 632,959 | 312,310 | 945,269 | — | 945,269 | ||||||||||||||||
Reductions | (589,568 | ) | (242,284 | ) | (831,852 | ) | — | (831,852 | ) | ||||||||||||
Balance at January 31, 2005 | $ | 314,862 | $ | 681,304 | $ | 996,166 | $ | — | $ | 996,166 | |||||||||||
16. | Prior Period Results (unaudited) |
Five Months | ||||
Ended | ||||
January 31, | ||||
2004 | ||||
(unaudited) | ||||
Combined Statement of Operations | ||||
Net revenue | $ | 667,506 | ||
Compensation and benefits | 461,923 | |||
Operating expenses | 90,828 | |||
Insurance expense | 36,664 | |||
Selling, general and administrative expenses | 22,016 |
F-34
Table of Contents
Five Months | |||||||
Ended | |||||||
January 31, | |||||||
2004 | |||||||
(unaudited) | |||||||
Laidlaw fees and compensation charges | 6,436 | ||||||
Depreciation and amortization expense | 22,079 | ||||||
Income from operations | 27,560 | ||||||
Interest expense | (4,137 | ) | |||||
Interest and other income | 1,403 | ||||||
Income before income taxes | 24,826 | ||||||
Income tax expense | (9,800 | ) | |||||
Net income | $ | 15,026 | |||||
Combined Statement of Cash Flows | |||||||
Cash Flows from Operating Activities | |||||||
Net income | $ | 15,026 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 22,079 | ||||||
Loss on disposal of property, plant and equipment | 309 | ||||||
Deferred income taxes | 9,320 | ||||||
Changes in operating assets/liabilities: | |||||||
Trade and other accounts receivable | (33,822 | ) | |||||
Other current assets | 4,889 | ||||||
Accounts payable and accrued liabilities | 827 | ||||||
Net cash provided by operating activities | 18,627 | ||||||
Cash Flows from Investing Activities | |||||||
Purchase of property, plant and equipment | (14,224 | ) | |||||
Proceeds from sale of property, plant and equipment | 84 | ||||||
Purchase of restricted cash and investments | (9,585 | ) | |||||
Proceeds from sale of restricted investments | 14,758 | ||||||
Net change in deposits and other assets | (1,914 | ) | |||||
Net cash used in investing activities | (10,881 | ) | |||||
Cash Flows from Financing Activities | |||||||
Repayments of capital lease obligations and other debt | (3,784 | ) | |||||
Increase in bank overdrafts | (3,216 | ) | |||||
Payments made to Laidlaw | (2,215 | ) | |||||
Increase in other non-current liabilities | 1,683 | ||||||
Net cash used in financing activities | (7,532 | ) | |||||
Increase in cash and cash equivalents | 215 | ||||||
Cash and cash equivalents, beginning of period | 10,641 | ||||||
Cash and cash equivalents, end of period | $ | 10,856 | |||||
F-35
Table of Contents
17. | Guarantors of Debt |
F-36
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 4,778 | $ | 9,853 | $ | — | $ | 14,631 | |||||||||||||||||
Restricted cash and cash equivalents | — | — | — | — | 9,846 | — | 9,846 | ||||||||||||||||||||||||
Restricted marketable securities | — | — | — | — | 2,473 | — | 2,473 | ||||||||||||||||||||||||
Trade and other accounts receivable, net | — | — | — | 359,945 | 43,339 | (33,517 | ) | 369,767 | |||||||||||||||||||||||
Parts and supplies inventory | — | — | — | 18,499 | — | — | 18,499 | ||||||||||||||||||||||||
Other current assets | — | — | — | 81,818 | 6,097 | (47,780 | ) | 40,135 | |||||||||||||||||||||||
Current deferred tax assets | — | — | — | 62,433 | 2,659 | — | 65,092 | ||||||||||||||||||||||||
Current assets | — | — | — | 527,473 | 74,267 | (81,297 | ) | 520,443 | |||||||||||||||||||||||
Non-current assets: | |||||||||||||||||||||||||||||||
Property, plant, and equipment, net | — | — | — | 128,766 | — | — | 128,766 | ||||||||||||||||||||||||
Intangible assets, net | — | — | — | 16,075 | — | — | 16,075 | ||||||||||||||||||||||||
Non-current deferred tax assets | — | — | — | 203,391 | (922 | ) | — | 202,469 | |||||||||||||||||||||||
Restricted long-term investments | — | — | — | — | 41,810 | �� | — | 41,810 | |||||||||||||||||||||||
Goodwill | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other long-term assets | — | — | — | 73,947 | — | — | 73,947 | ||||||||||||||||||||||||
Investment and advances in subsidiaries | — | — | — | 6,404 | — | (6,404 | ) | — | |||||||||||||||||||||||
Assets | $ | — | $ | — | $ | — | $ | 956,056 | $ | 115,155 | $ | (87,701 | ) | $ | 983,510 | ||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 82,167 | $ | 5,186 | $ | (31,535 | ) | $ | 55,818 | ||||||||||||||||
Accrued liabilities | — | — | — | 147,291 | 24,354 | — | 171,645 | ||||||||||||||||||||||||
Current portion of long-term debt | — | — | — | 5,846 | — | — | 5,846 | ||||||||||||||||||||||||
Current liabilities | — | — | — | 235,304 | 29,540 | (31,535 | ) | 233,309 | |||||||||||||||||||||||
Long-term debt | — | — | — | 5,651 | — | — | 5,651 | ||||||||||||||||||||||||
Other long-term liabilities | — | — | — | 116,824 | 79,211 | (49,762 | ) | 146,273 | |||||||||||||||||||||||
Liabilities | — | — | — | 357,779 | 108,751 | (81,297 | ) | 385,233 | |||||||||||||||||||||||
Laidlaw payable | — | — | — | 202,042 | — | — | 202,042 | ||||||||||||||||||||||||
Laidlaw investment | — | — | — | 356,550 | — | — | 356,550 | ||||||||||||||||||||||||
Common stock | — | — | — | — | 30 | (30 | ) | — | |||||||||||||||||||||||
Additional paid-in capital | — | — | — | — | 5,054 | (5,054 | ) | — | |||||||||||||||||||||||
Retained earnings | — | — | — | 40,000 | 1,635 | (1,635 | ) | 40,000 | |||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (315 | ) | (315 | ) | 315 | (315 | ) | |||||||||||||||||||||
Equity | — | — | — | 598,277 | 6,404 | (6,404 | ) | 598,277 | |||||||||||||||||||||||
Liabilities and Equity | $ | — | $ | — | $ | — | $ | 956,056 | $ | 115,155 | $ | (87,701 | ) | $ | 983,510 | ||||||||||||||||
F-37
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 9,436 | $ | 40 | $ | — | $ | 9,476 | |||||||||||||||||
Restricted cash and cash equivalents | — | — | — | — | 5,691 | — | 5,691 | ||||||||||||||||||||||||
Restricted marketable securities | — | — | — | — | 6,756 | — | 6,756 | ||||||||||||||||||||||||
Trade and other accounts receivable, net | — | — | — | 339,896 | 17,321 | (13,007 | ) | 344,210 | |||||||||||||||||||||||
Parts and supplies inventory | — | — | — | 18,577 | — | — | 18,577 | ||||||||||||||||||||||||
Other current assets | — | — | — | 45,254 | 1,820 | (15,059 | ) | 32,015 | |||||||||||||||||||||||
Current deferred tax assets | — | — | — | 50,322 | 2,659 | — | 52,981 | ||||||||||||||||||||||||
Current assets | — | — | — | 463,485 | 34,287 | (28,066 | ) | 469,706 | |||||||||||||||||||||||
Non-current assets: | |||||||||||||||||||||||||||||||
Property, plant, and equipment, net | — | — | — | 132,685 | — | — | 132,685 | ||||||||||||||||||||||||
Intangible assets, net | — | — | — | 15,758 | — | — | 15,758 | ||||||||||||||||||||||||
Non-current deferred tax assets | — | — | — | 215,520 | (1,131 | ) | — | 214,389 | |||||||||||||||||||||||
Restricted long-term investments | — | — | — | — | 47,285 | — | 47,285 | ||||||||||||||||||||||||
Other long-term assets | — | — | — | 69,776 | — | — | 69,776 | ||||||||||||||||||||||||
Investment and advances in subsidiaries | — | — | — | 6,694 | — | (6,694 | ) | — | |||||||||||||||||||||||
Assets | $ | — | $ | — | $ | — | $ | 903,918 | $ | 80,441 | $ | (34,760 | ) | $ | 949,599 | ||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 59,631 | $ | 1,129 | $ | (9,845 | ) | $ | 50,915 | ||||||||||||||||
Accrued liabilities | — | — | — | 146,722 | 20,062 | — | 166,784 | ||||||||||||||||||||||||
Current portion of long-term debt | — | — | — | 7,565 | — | — | 7,565 | ||||||||||||||||||||||||
Current liabilities | �� | — | — | — | 213,918 | 21,191 | (9,845 | ) | 225,264 | ||||||||||||||||||||||
Long-term debt | — | — | — | 7,915 | — | — | 7,915 | ||||||||||||||||||||||||
Other long-term liabilities | — | — | — | 108,245 | 52,556 | (18,221 | ) | 142,580 | |||||||||||||||||||||||
Liabilities | — | — | — | 330,078 | 73,747 | (28,066 | ) | 375,759 | |||||||||||||||||||||||
Laidlaw payable | — | — | — | 186,778 | — | — | 186,778 | ||||||||||||||||||||||||
Laidlaw investment | — | — | — | 356,550 | — | — | 356,550 | ||||||||||||||||||||||||
Common stock | — | — | — | — | 30 | (30 | ) | — | |||||||||||||||||||||||
Additional paid-in capital | — | — | — | — | 5,035 | (5,035 | ) | — | |||||||||||||||||||||||
Retained earnings | — | — | — | 30,518 | 1,635 | (1,635 | ) | 30,518 | |||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (6 | ) | (6 | ) | 6 | (6 | ) | |||||||||||||||||||||
Equity | — | — | — | 573,840 | 6,694 | (6,694 | ) | 573,840 | |||||||||||||||||||||||
Liabilities and Equity | $ | — | $ | — | $ | — | $ | 903,918 | $ | 80,441 | $ | (34,760 | ) | $ | 949,599 | ||||||||||||||||
F-38
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Guarantor | Adjustments | Total | |||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 10,604 | $ | 37 | $ | — | $ | 10,641 | |||||||||||||||||
Restricted cash and cash equivalents | — | — | — | — | 939 | — | 939 | ||||||||||||||||||||||||
Restricted marketable securities | — | — | — | — | 201 | — | 201 | ||||||||||||||||||||||||
Trade and other accounts receivable, net | — | — | — | 316,395 | 4,057 | 320,452 | |||||||||||||||||||||||||
Parts and supplies inventory | — | — | — | 17,444 | — | — | 17,444 | ||||||||||||||||||||||||
Other current assets | — | — | — | 40,259 | 5,059 | (13,111 | ) | 32,207 | |||||||||||||||||||||||
Current deferred tax assets | — | — | — | 55,921 | 2,915 | — | 58,836 | ||||||||||||||||||||||||
Current assets | — | — | — | 440,623 | 13,208 | (13,111 | ) | 440,720 | |||||||||||||||||||||||
Non-current assets: | |||||||||||||||||||||||||||||||
Property, plant, and equipment, net | — | — | — | 133,546 | — | — | 133,546 | ||||||||||||||||||||||||
Intangible assets, net | — | — | — | 148,205 | — | — | 148,205 | ||||||||||||||||||||||||
Non-current deferred tax assets | — | — | — | 96,596 | — | — | 96,596 | ||||||||||||||||||||||||
Restricted long-term investments | — | — | — | — | 40,608 | — | 40,608 | ||||||||||||||||||||||||
Other long-term assets | — | — | — | 55,071 | — | — | 55,071 | ||||||||||||||||||||||||
Investment and advances in subsidiaries | — | — | — | 3,859 | — | (3,859 | ) | — | |||||||||||||||||||||||
Assets | $ | — | $ | — | $ | — | $ | 877,900 | $ | 53,816 | $ | (16,970 | ) | $ | 914,746 | ||||||||||||||||
Liabilities and Equity | |||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 50,148 | $ | 34 | $ | — | $ | 50,182 | |||||||||||||||||
Accrued liabilities | — | — | — | 146,772 | 9,529 | (10,122 | ) | 146,179 | |||||||||||||||||||||||
Current portion of long-term debt | — | — | — | 8,270 | — | — | 8,270 | ||||||||||||||||||||||||
Current liabilities | — | — | — | 205,190 | 9,563 | (10,122 | ) | 204,631 | |||||||||||||||||||||||
Long-term debt | — | — | — | 15,787 | — | — | 15,787 | ||||||||||||||||||||||||
Other long-term liabilities | — | — | — | 96,384 | 40,394 | (2,989 | ) | 133,789 | |||||||||||||||||||||||
Liabilities | — | — | — | 317,361 | 49,957 | (13,111 | ) | 354,207 | |||||||||||||||||||||||
Laidlaw payable | — | — | — | 22,416 | — | — | 22,416 | ||||||||||||||||||||||||
Laidlaw investment | — | — | — | 546,144 | — | — | 546,144 | ||||||||||||||||||||||||
Additional paid-in capital | — | — | — | — | 5,049 | (5,049 | ) | — | |||||||||||||||||||||||
Retained earnings | — | — | — | (6,831 | ) | — | — | (6,831 | ) | ||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (1,190 | ) | (1,190 | ) | 1,190 | (1,190 | ) | |||||||||||||||||||||
Equity | — | — | — | 560,539 | 3,859 | (3,859 | ) | 560,539 | |||||||||||||||||||||||
Liabilities and Equity | $ | — | $ | — | $ | — | $ | 877,900 | $ | 53,816 | $ | (16,970 | ) | $ | 914,746 | ||||||||||||||||
F-39
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 696,179 | $ | 15,913 | $ | (15,913 | ) | $ | 696,179 | ||||||||||||||
Compensation and benefits | — | — | — | 481,305 | — | — | 481,305 | ||||||||||||||||||||||
Operating expenses | — | — | — | 94,882 | — | — | 94,882 | ||||||||||||||||||||||
Insurance expense | — | — | — | 39,002 | 15,913 | (15,913 | ) | 39,002 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 21,635 | — | — | 21,635 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 19,857 | — | — | 19,857 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 18,808 | — | — | 18,808 | ||||||||||||||||||||||
Income from operations | — | — | — | 20,690 | — | — | 20,690 | ||||||||||||||||||||||
Interest expense | — | — | — | (5,644 | ) | — | — | (5,644 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 714 | — | — | 714 | ||||||||||||||||||||||
Income before income taxes | — | — | — | 15,760 | — | — | 15,760 | ||||||||||||||||||||||
Income tax expense | — | — | — | (6,278 | ) | — | — | (6,278 | ) | ||||||||||||||||||||
Net income | $ | — | $ | — | $ | — | $ | 9,482 | $ | — | $ | — | $ | 9,482 | |||||||||||||||
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 1,604,598 | $ | 29,803 | $ | (29,803 | ) | $ | 1,604,598 | ||||||||||||||
Compensation and benefits | — | — | — | 1,117,890 | — | — | 1,117,890 | ||||||||||||||||||||||
Operating expenses | — | — | — | 218,277 | — | — | 218,277 | ||||||||||||||||||||||
Insurance expense | — | — | — | 81,395 | 28,663 | (29,803 | ) | 80,255 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 47,899 | — | — | 47,899 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 15,449 | — | — | 15,449 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 52,739 | — | 52,739 | |||||||||||||||||||||||
Restructuring charges | — | — | — | 2,115 | — | — | 2,115 | ||||||||||||||||||||||
Income from operations | — | — | — | 68,834 | 1,140 | — | 69,974 | ||||||||||||||||||||||
Interest expense | — | — | — | (9,961 | ) | — | — | (9,961 | ) | ||||||||||||||||||||
Realized loss on investments | — | — | — | — | (1,140 | ) | — | (1,140 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 240 | — | — | 240 | ||||||||||||||||||||||
Income before income taxes | — | — | — | 59,113 | — | — | 59,113 | ||||||||||||||||||||||
Income tax expense | — | — | — | (23,399 | ) | 1,635 | — | (21,764 | ) | ||||||||||||||||||||
Income before equity in earnings of subsidiary | — | — | — | 35,714 | 1,635 | — | 37,349 | ||||||||||||||||||||||
Equity in earnings of subsidiary | — | — | — | 1,635 | — | (1,635 | ) | — | |||||||||||||||||||||
Net income | $ | — | $ | — | $ | — | $ | 37,349 | $ | 1,635 | $ | (1,635 | ) | $ | 37,349 | ||||||||||||||
F-40
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 384,461 | $ | 9,807 | $ | (9,807 | ) | $ | 384,461 | ||||||||||||||
Compensation and benefits | — | — | — | 264,604 | — | — | 264,604 | ||||||||||||||||||||||
Operating expenses | — | — | — | 55,212 | — | — | 55,212 | ||||||||||||||||||||||
Insurance expense | — | — | — | 36,239 | 8,239 | (9,807 | ) | 34,671 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 12,017 | — | — | 12,017 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 1,350 | — | — | 1,350 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 12,560 | — | 12,560 | |||||||||||||||||||||||
Restructuring charges | — | — | — | 1,449 | — | — | 1,449 | ||||||||||||||||||||||
Income from operations | — | — | — | 1,030 | 1,568 | — | 2,598 | ||||||||||||||||||||||
Interest expense | — | — | — | (908 | ) | — | — | (908 | ) | ||||||||||||||||||||
Realized gain on investments | — | — | — | — | 90 | — | 90 | ||||||||||||||||||||||
Interest and other income | — | — | — | 22 | — | — | 22 | ||||||||||||||||||||||
Income before income taxes | — | — | — | 144 | 1,658 | — | 1,802 | ||||||||||||||||||||||
Income tax expense | — | — | — | (8,053 | ) | (580 | ) | — | (8,633 | ) | |||||||||||||||||||
Income (loss) before equity in earnings of subsidiary | — | — | — | (7,909 | ) | 1,078 | — | (6,831 | ) | ||||||||||||||||||||
Equity in earnings of subsidiary | — | — | — | 1,078 | — | (1,078 | ) | — | |||||||||||||||||||||
Net income (loss) | $ | — | $ | — | $ | — | $ | (6,831 | ) | $ | 1,078 | $ | (1,078 | ) | $ | (6,831 | ) | ||||||||||||
Issuer | Issuer | ||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Non-guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 1,103,335 | $ | 16,640 | $ | (16,640 | ) | $ | 1,103,335 | ||||||||||||||
Compensation and benefits | — | — | — | 757,183 | — | — | 757,183 | ||||||||||||||||||||||
Operating expenses | — | — | — | 163,447 | — | — | 163,447 | ||||||||||||||||||||||
Insurance expense | — | — | — | 69,576 | 16,640 | (16,640 | ) | 69,576 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 37,867 | — | — | 37,867 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 4,050 | — | — | 4,050 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 32,144 | — | 32,144 | |||||||||||||||||||||||
Restructuring charges | 1,288 | — | — | 1,288 | |||||||||||||||||||||||||
Laidlaw reorganization costs | — | — | — | 3,650 | — | — | 3,650 | ||||||||||||||||||||||
Income from operations | — | — | — | 34,130 | — | — | 34,130 | ||||||||||||||||||||||
Interest expense | — | — | — | (4,691 | ) | — | — | (4,691 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 304 | — | — | 304 | ||||||||||||||||||||||
Fresh-start accounting adjustments | — | — | — | 46,416 | — | — | 46,416 | ||||||||||||||||||||||
Income before income taxes and cumulative effect of a change in accounting principle | — | — | — | 76,159 | — | — | 76,159 | ||||||||||||||||||||||
Income tax expense | — | — | — | (829 | ) | — | — | (829 | ) | ||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | — | (223,721 | ) | — | — | (223,721 | ) | ||||||||||||||||||||
Net loss | $ | — | $ | — | $ | — | $ | (148,391 | ) | $ | — | $ | — | $ | (148,391 | ) | |||||||||||||
F-41
Table of Contents
Issuer | Issuer | ||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Non-guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 1,415,786 | $ | 12,004 | $ | (12,004 | ) | $ | 1,415,786 | ||||||||||||||
Compensation and benefits | — | — | — | 960,590 | — | — | 960,590 | ||||||||||||||||||||||
Operating expenses | — | — | — | 219,321 | — | — | 219,321 | ||||||||||||||||||||||
Insurance expense | — | — | — | 66,479 | 12,004 | (12,004 | ) | 66,479 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 61,455 | — | — | 61,455 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 5,400 | — | — | 5,400 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 67,183 | — | 67,183 | |||||||||||||||||||||||
Impairment losses | — | — | — | 262,780 | — | — | 262,780 | ||||||||||||||||||||||
Restructuring charges | — | — | — | 3,777 | — | — | 3,777 | ||||||||||||||||||||||
Laidlaw reorganization costs | — | — | — | 8,761 | — | — | 8,761 | ||||||||||||||||||||||
Loss from operations | — | — | — | (239,960 | ) | — | — | (239,960 | ) | ||||||||||||||||||||
Interest expense | — | — | — | (6,418 | ) | — | — | (6,418 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 369 | — | — | 369 | ||||||||||||||||||||||
Loss before income taxes | — | — | — | (246,009 | ) | — | — | (246,009 | ) | ||||||||||||||||||||
Income tax expense | — | — | — | (1,374 | ) | — | — | (1,374 | ) | ||||||||||||||||||||
Net loss | $ | — | $ | — | $ | — | $ | (247,383 | ) | $ | — | $ | — | $ | (247,383 | ) | |||||||||||||
F-42
Table of Contents
Issuer | Issuer | ||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary | ||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Non-guarantors | Total | ||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | — | $ | 10,856 | $ | 5,110 | $ | 15,966 | |||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (14,045 | ) | — | (14,045 | ) | |||||||||||||||||
Purchase of business | — | — | — | (1,200 | ) | — | (1,200 | ) | |||||||||||||||||
Proceeds from sale of business | — | — | — | 1,300 | — | 1,300 | |||||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 175 | — | 175 | |||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | — | (31,257 | ) | (31,257 | ) | |||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 35,960 | 35,960 | |||||||||||||||||||
Other investing activities | — | — | — | (79 | ) | — | (79 | ) | |||||||||||||||||
Increase in Laidlaw insurance deposits | — | — | — | (12,521 | ) | — | (12,521 | ) | |||||||||||||||||
Net cash (used in) provided by investing activities | — | — | — | (26,370 | ) | 4,703 | (21,667 | ) | |||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (3,992 | ) | — | (3,992 | ) | |||||||||||||||||
Advances from Laidlaw | — | — | — | 8,982 | — | 8,982 | |||||||||||||||||||
Increase in bank overdrafts | — | — | — | 5,866 | — | 5,866 | |||||||||||||||||||
Net cash provided by financing activities | — | — | — | 10,856 | — | 10,856 | |||||||||||||||||||
Change in cash and cash equivalents | — | — | — | (4,658 | ) | 9,813 | 5,155 | ||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 9,436 | 40 | 9,476 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 4,778 | $ | 9,853 | $ | 14,631 | |||||||||||||
F-43
Table of Contents
Issuer | Issuer | ||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary Non- | ||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantors | Total | ||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | — | $ | 109,708 | $ | 17,971 | $ | 127,679 | |||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (42,787 | ) | — | (42,787 | ) | |||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 858 | — | 858 | |||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | — | (64,357 | ) | (64,357 | ) | |||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 46,389 | 46,389 | |||||||||||||||||||
Other investing activities | — | — | — | 6,814 | — | 6,814 | |||||||||||||||||||
Increase in Laidlaw insurance deposits | — | — | — | (28,433 | ) | — | (28,433 | ) | |||||||||||||||||
Net cash used in investing activities | — | — | — | (63,548 | ) | (17,968 | ) | (81,516 | ) | ||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (8,709 | ) | — | (8,709 | ) | |||||||||||||||||
Payments to Laidlaw | — | — | — | (31,133 | ) | — | (31,133 | ) | |||||||||||||||||
Decrease in bank overdrafts | — | — | — | (4,544 | ) | — | (4,544 | ) | |||||||||||||||||
Decrease in other non-current liabilities | — | — | — | (2,942 | ) | — | (2,942 | ) | |||||||||||||||||
Net cash used in financing activities | — | — | — | (47,328 | ) | — | (47,328 | ) | |||||||||||||||||
Change in cash and cash equivalents | — | — | — | (1,168 | ) | 3 | (1,165 | ) | |||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 10,604 | 37 | 10,641 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 9,436 | $ | 40 | $ | 9,476 | |||||||||||||
F-44
Table of Contents
Issuer | Issuer | ||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary Non- | ||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantors | Total | ||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | — | $ | — | $ | — | $ | 31,268 | $ | (1,259 | ) | $ | 30,009 | ||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (18,079 | ) | — | (18,079 | ) | |||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 341 | — | 341 | |||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | — | (11,287 | ) | (11,287 | ) | |||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 12,530 | 12,530 | |||||||||||||||||||
Other investing activities | — | — | — | 1,359 | — | 1,359 | |||||||||||||||||||
Net cash (used in) provided by investing activities | — | — | — | (16,379 | ) | 1,243 | (15,136 | ) | |||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (1,851 | ) | — | (1,851 | ) | |||||||||||||||||
Payments to Laidlaw | — | — | — | (55,609 | ) | — | (55,609 | ) | |||||||||||||||||
Increase in bank overdrafts | — | — | — | 8,675 | — | 8,675 | |||||||||||||||||||
Increase in other non-current liabilities | — | — | — | 1,563 | — | 1,563 | |||||||||||||||||||
Net cash used in financing activities | — | — | — | (47,222 | ) | — | (47,222 | ) | |||||||||||||||||
Change in cash and cash equivalents | — | — | — | (32,333 | ) | (16 | ) | (32,349 | ) | ||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 42,937 | 53 | 42,990 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 10,604 | $ | 37 | $ | 10,641 | |||||||||||||
F-45
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantors | Adjustments | Total | |||||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | — | $ | 34,398 | $ | 24,371 | $ | — | $ | 58,769 | |||||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (34,768 | ) | — | — | (34,768 | ) | ||||||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 624 | — | — | 624 | ||||||||||||||||||||||
Capital contribution | — | — | — | (2,721 | ) | — | 2,721 | — | |||||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | (2,400 | ) | (63,866 | ) | — | (66,266 | ) | |||||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 36,748 | — | 36,748 | ||||||||||||||||||||||
Other investing activities | — | — | — | (35,173 | ) | — | — | (35,173 | ) | ||||||||||||||||||||
Net cash used in investing activities | — | — | — | (74,438 | ) | (27,118 | ) | 2,721 | (98,835 | ) | |||||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (6,338 | ) | — | — | (6,338 | ) | ||||||||||||||||||||
Payments to Laidlaw | — | — | — | (3,141 | ) | — | — | (3,141 | ) | ||||||||||||||||||||
Decrease in bank overdrafts | — | — | — | (815 | ) | — | — | (815 | ) | ||||||||||||||||||||
Capital contribution | — | — | — | — | 2,721 | (2,721 | ) | — | |||||||||||||||||||||
Increase in other non-current liabilities | — | — | — | 2,234 | — | — | 2,234 | ||||||||||||||||||||||
Net cash used in financing activities | — | — | — | (8,060 | ) | 2,721 | (2,721 | ) | (8,060 | ) | |||||||||||||||||||
Change in cash and cash equivalents | — | — | — | (48,100 | ) | (26 | ) | — | (48,126 | ) | |||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 91,037 | 79 | — | 91,116 | ||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 42,937 | $ | 53 | $ | — | $ | 42,990 | |||||||||||||||
F-46
Table of Contents
Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantors | Adjustments | Total | |||||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | — | $ | 140,296 | $ | 16,248 | $ | — | $ | 156,544 | |||||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (31,118 | ) | — | — | (31,118 | ) | ||||||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 2,549 | — | — | 2,549 | ||||||||||||||||||||||
Capital contribution | — | — | — | (1,150 | ) | — | 1,150 | — | |||||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | (1,412 | ) | (49,534 | ) | — | (50,946 | ) | |||||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | �� | — | — | 32,215 | — | 32,215 | |||||||||||||||||||||
Other investing activities | — | — | — | (10,047 | ) | — | — | (10,047 | ) | ||||||||||||||||||||
Net cash used in investing activities | — | — | — | (41,178 | ) | (17,319 | ) | 1,150 | (57,347 | ) | |||||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (17,817 | ) | — | — | (17,817 | ) | ||||||||||||||||||||
Payments to Laidlaw | — | — | — | (16,729 | ) | — | — | (16,729 | ) | ||||||||||||||||||||
Decrease in bank overdrafts | — | — | — | (1,134 | ) | — | — | (1,134 | ) | ||||||||||||||||||||
Capital contributions | — | — | — | — | 1,150 | (1,150 | ) | — | |||||||||||||||||||||
Decrease in other non-current liabilities | — | — | — | (386 | ) | — | — | (386 | ) | ||||||||||||||||||||
Net cash used in financing activities | — | — | — | (36,066 | ) | 1,150 | (1,150 | ) | (36,066 | ) | |||||||||||||||||||
Change in cash and cash equivalents | — | — | — | 63,052 | 79 | — | 63,131 | ||||||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 27,985 | — | — | 27,985 | ||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 91,037 | $ | 79 | $ | — | $ | 91,116 | |||||||||||||||
F-47
Table of Contents
18. | Subsequent Event |
19. | Subsequent Events (unaudited) |
F-48
Table of Contents
F-49
Table of Contents
Unaudited | Predecessor | |||||||||||
Consolidated | Combined | |||||||||||
September 30, | January 31, | |||||||||||
2005 | 2005 | |||||||||||
ASSETS | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 10,113 | $ | 14,631 | ||||||||
Restricted cash and cash equivalents | 11,949 | 9,846 | ||||||||||
Restricted marketable securities | 2,165 | 2,473 | ||||||||||
Trade and other accounts receivable, net | 369,766 | 369,767 | ||||||||||
Parts and supplies inventory | 18,760 | 18,499 | ||||||||||
Other current assets | 31,008 | 40,135 | ||||||||||
Current deferred tax assets | 22,971 | 65,092 | ||||||||||
Current assets | 466,732 | 520,443 | ||||||||||
Non-current assets: | ||||||||||||
Property, plant, and equipment, net | 133,283 | 128,766 | ||||||||||
Intangible assets, net | 81,363 | 16,075 | ||||||||||
Non-current deferred tax assets | 117,488 | 202,469 | ||||||||||
Restricted long-term investments | 73,304 | 41,810 | ||||||||||
Goodwill | 271,987 | — | ||||||||||
Other long-term assets | 109,251 | 73,947 | ||||||||||
Assets | $ | 1,253,408 | $ | 983,510 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable | $ | 53,066 | $ | 55,818 | ||||||||
Accrued liabilities | 199,849 | 171,645 | ||||||||||
Current portion of long-term debt | 13,478 | 5,846 | ||||||||||
Current liabilities | 266,393 | 233,309 | ||||||||||
Long-term debt | 595,129 | 5,651 | ||||||||||
Other long-term liabilities | 155,139 | 146,273 | ||||||||||
Liabilities | 1,016,661 | 385,233 | ||||||||||
Redeemable partnership equity | 1,213 | — | ||||||||||
Laidlaw payable | — | 202,042 | ||||||||||
Laidlaw investment | — | 356,550 | ||||||||||
Partnership equity | 222,178 | — | ||||||||||
Retained earnings | 14,002 | 40,000 | ||||||||||
Comprehensive income (loss) | (646 | ) | (315 | ) | ||||||||
Equity | 235,534 | 598,277 | ||||||||||
Liabilities and equity | $ | 1,253,408 | $ | 983,510 | ||||||||
F-50
Table of Contents
Consolidated | Combined | |||||||||||||||||
Predecessor | Predecessor | |||||||||||||||||
Eight Months | Three Months | Eight Months | Three Months | |||||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||||
2005 | 2005 | 2004 | 2004 | |||||||||||||||
Net revenue | $ | 1,187,653 | $ | 456,245 | $ | 1,077,749 | $ | 413,869 | ||||||||||
Compensation and benefits | 822,595 | 319,292 | 751,238 | 286,628 | ||||||||||||||
Operating expenses | 168,700 | 66,156 | 147,524 | 55,863 | ||||||||||||||
Insurance expense | 60,382 | 21,048 | 51,674 | 18,404 | ||||||||||||||
Selling, general and administrative expenses | 38,248 | 15,654 | 31,270 | 12,093 | ||||||||||||||
Laidlaw fees and compensation charges | — | — | 10,095 | 3,657 | ||||||||||||||
Depreciation and amortization expense | 38,811 | 14,843 | 34,627 | 12,669 | ||||||||||||||
Restructuring charges | — | — | 1,381 | — | ||||||||||||||
Income from operations | 58,917 | 19,252 | 49,940 | 24,555 | ||||||||||||||
Interest expense | (34,407 | ) | (12,824 | ) | (8,679 | ) | (5,138 | ) | ||||||||||
Realized gain (loss) on investments | (40 | ) | (34 | ) | (1,191 | ) | (1,140 | ) | ||||||||||
Interest and other income | 189 | 91 | 210 | 162 | ||||||||||||||
Income before income taxes | 24,659 | 6,485 | 40,280 | 18,439 | ||||||||||||||
Income tax expense | (10,657 | ) | (3,479 | ) | (15,710 | ) | (7,191 | ) | ||||||||||
Net income | 14,002 | 3,006 | 24,570 | 11,248 | ||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||||
Unrealized holding gains (losses) during the period | (646 | ) | (1,010 | ) | 364 | 364 | ||||||||||||
Comprehensive income | $ | 13,356 | $ | 1,996 | $ | 24,934 | $ | 11,612 | ||||||||||
F-51
Table of Contents
Combined | ||||||||||||
Consolidated | Predecessor | |||||||||||
Eight Months | Eight Months | |||||||||||
Ended | Ended | |||||||||||
September 30, | September 30, | |||||||||||
2005 | 2004 | |||||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income | $ | 14,002 | $ | 24,570 | ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 40,444 | 34,627 | ||||||||||
Gain on disposal of property, plant and equipment | (480 | ) | (344 | ) | ||||||||
Deferred income taxes | 1,395 | 14,243 | ||||||||||
Stock compensation expense | 2,462 | — | ||||||||||
Changes in operating assets/liabilities: | ||||||||||||
Trade and other accounts receivable | 4,801 | 586 | ||||||||||
Other current assets | 8,866 | (1,047 | ) | |||||||||
Accounts payable and accrued liabilities | 36,972 | 27,326 | ||||||||||
Net cash provided by operating activities | 108,462 | 99,961 | ||||||||||
Cash Flows from Investing Activities | ||||||||||||
EMS purchase of AMR and EmCare | (828,775 | ) | — | |||||||||
Purchase of property, plant and equipment | (34,947 | ) | (30,217 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 565 | 773 | ||||||||||
Purchase of restricted cash and investments | (51,495 | ) | (61,213 | ) | ||||||||
Proceeds from sale and maturity of restricted investments | 17,560 | 40,152 | ||||||||||
Net change in deposits and other assets | (20,330 | ) | (23,405 | ) | ||||||||
Net cash used in investing activities | (917,422 | ) | (73,910 | ) | ||||||||
Cash Flows from Financing Activities | ||||||||||||
Borrowings under new senior secured credit facility | 350,000 | — | ||||||||||
Proceeds from issuance of senior subordinated notes | 250,000 | — | ||||||||||
Borrowings under new revolving credit facility | 25,200 | — | ||||||||||
Issuance of partnership equity | 222,655 | — | ||||||||||
Financing costs | (20,122 | ) | — | |||||||||
Repayments of capital lease obligations and other debt | (5,722 | ) | (5,396 | ) | ||||||||
Repayments of revolving credit facility | (20,200 | ) | — | |||||||||
Increase (decrease) in bank overdrafts | 997 | 4,290 | ||||||||||
Payments made to Laidlaw | — | (13,937 | ) | |||||||||
Increase (decrease) in other non-current liabilities | 1,634 | (5,656 | ) | |||||||||
Net cash provided by (used in) financing activities | 804,442 | (20,699 | ) | |||||||||
Change in cash and cash equivalents | (4,518 | ) | 5,352 | |||||||||
Cash and cash equivalents, beginning of period | 14,631 | 10,856 | ||||||||||
Cash and cash equivalents, end of period | $ | 10,113 | $ | 16,208 | ||||||||
Cash paid for: | ||||||||||||
Interest | $ | 27,729 | $ | 10,636 | ||||||||
Taxes | $ | 9,550 | $ | — | ||||||||
F-52
Table of Contents
1. | General |
Current assets | $ | 483,957 | |||
Property, plant & equipment | 128,766 | ||||
Intangible assets | 89,850 | ||||
Goodwill | 271,987 | ||||
Other long-term assets | 254,027 | ||||
Total assets acquired | 1,228,587 | ||||
Current liabilities | 245,144 | ||||
Long-term debt | 620,183 | ||||
Other long-term liabilities | 144,381 | ||||
Total liabilities assumed | 1,009,708 | ||||
Net assets acquired | $ | 218,879 | |||
F-53
Table of Contents
2. | Summary of Significant Accounting Policies |
F-54
Table of Contents
Predecessor | |||||||||
September 30, | January 31, | ||||||||
2005 | 2005 | ||||||||
Accounts receivable, net | |||||||||
AMR | $ | 236,729 | $ | 229,798 | |||||
EmCare | 133,037 | 139,969 | |||||||
Total | $ | 369,766 | $ | 369,767 | |||||
Accounts receivable allowances | |||||||||
AMR | |||||||||
Allowance for contractual discounts | $ | 121,453 | $ | 126,771 | |||||
Allowance for uncompensated care | 122,906 | 124,699 | |||||||
Total | $ | 244,359 | $ | 251,470 | |||||
EmCare | |||||||||
Allowance for contractual discounts | $ | 197,542 | $ | 188,092 | |||||
Allowance for uncompensated care | 653,181 | 556,605 | |||||||
Total | $ | 850,723 | $ | 744,697 | |||||
Predecessor | ||||||||||||||||
Eight Months | Three Months | Eight Months | Three Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2005 | 2005 | 2004 | 2004 | |||||||||||||
AMR | ||||||||||||||||
Gross revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Provision for contractual discounts | 37 | % | 36 | % | 35 | % | 34 | % | ||||||||
Provision for uncompensated care | 13 | % | 14 | % | 14 | % | 15 | % | ||||||||
EmCare | ||||||||||||||||
Gross revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Provision for contractual discounts | 44 | % | 44 | % | 41 | % | 41 | % | ||||||||
Provision for uncompensated care | 26 | % | 26 | % | 25 | % | 25 | % | ||||||||
Total | ||||||||||||||||
Gross revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Provision for contractual discounts | 40 | % | 40 | % | 38 | % | 37 | % | ||||||||
Provision for uncompensated care | 19 | % | 20 | % | 19 | % | 19 | % |
F-55
Table of Contents
3. | Equity-based Compensation |
F-56
Table of Contents
4. | Accrued Liabilities |
Predecessor | |||||||||
September 30, | January 31, | ||||||||
2005 | 2005 | ||||||||
Accrued wages and benefits | $ | 51,288 | $ | 53,231 | |||||
Accrued paid time off | 21,646 | 20,141 | |||||||
Current portion of self-insurance reserve | 49,550 | 41,283 | |||||||
Accrued restructuring | 325 | 1,118 | |||||||
Current portion of compliance and legal | 14,783 | 3,607 | |||||||
Accrued billing and collection fees | 4,081 | 3,522 | |||||||
Accrued incentive compensation | 20,332 | 23,802 | |||||||
Accrued interest | 5,545 | — | |||||||
Other | 32,299 | 24,941 | |||||||
Total accrued liabilities | $ | 199,849 | $ | 171,645 | |||||
5. | Commitments and Contingencies |
F-57
Table of Contents
F-58
Table of Contents
6. | Insurance |
F-59
Table of Contents
7. | Segment Information |
Predecessor | |||||||||||||||||
Eight Months | Three Months | Eight Months | Three Months | ||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||
September 30, | September 30, | September 30, | September 30, | ||||||||||||||
2005 | 2005 | 2004 | 2004 | ||||||||||||||
Healthcare Transportation Services | |||||||||||||||||
Net revenue | $ | 761,712 | $ | 291,909 | $ | 705,181 | $ | 270,887 | |||||||||
Segment EBITDA | 67,813 | 22,664 | 60,058 | 24,825 | |||||||||||||
Capital expenditures | 31,612 | 13,307 | 27,257 | 12,506 | |||||||||||||
Emergency Management Services | |||||||||||||||||
Net revenue | 425,941 | 164,336 | 372,568 | 142,982 | |||||||||||||
Segment EBITDA | 29,915 | 11,431 | 24,509 | 12,399 | |||||||||||||
Capital expenditures | 3,335 | 901 | 2,960 | 1,566 | |||||||||||||
Total | |||||||||||||||||
Net revenue | 1,187,653 | 456,245 | 1,077,749 | 413,869 | |||||||||||||
Segment EBITDA | 97,728 | 34,095 | 84,567 | 37,224 | |||||||||||||
Capital expenditures | 34,947 | 14,208 | 30,217 | 14,072 | |||||||||||||
Reconciliation of EBITDA to Net Income | |||||||||||||||||
EBITDA | 97,728 | 34,095 | 84,567 | 37,224 | |||||||||||||
Depreciation and amortization expense | (38,811 | ) | (14,843 | ) | (34,627 | ) | (12,669 | ) | |||||||||
Interest expense | (34,407 | ) | (12,824 | ) | (8,679 | ) | (5,138 | ) | |||||||||
Realized gain (loss) on investments | (40 | ) | (34 | ) | (1,191 | ) | (1,140 | ) | |||||||||
Interest and other income (loss) | 189 | 91 | 210 | 162 | |||||||||||||
Income tax expense | (10,657 | ) | (3,479 | ) | (15,710 | ) | (7,191 | ) | |||||||||
Net income | $ | 14,002 | $ | 3,006 | $ | 24,570 | $ | 11,248 | |||||||||
8. | Debt |
F-60
Table of Contents
Predecessor | |||||||||
September 30, | January 31, | ||||||||
2005 | 2005 | ||||||||
Senior subordinated notes due 2015 | $ | 250,000 | $ | — | |||||
Senior secured term loan due 2012 (5.65% at September 30, 2005) | 348,250 | — | |||||||
Revolving credit facility | 5,000 | ||||||||
Capital lease obligations | 4,389 | 8,110 | |||||||
Notes due at various dates from 2005 to 2022 with interest rates from 6% to 10% | 968 | 3,387 | |||||||
Total long-term debt | 608,607 | 11,497 | |||||||
Less current maturities | (13,478 | ) | (5,846 | ) | |||||
Long-term debt, less current maturities | $ | 595,129 | $ | 5,651 | |||||
Twelve months ended September 30, | ||||
2006 | $ | 13,478 | ||
2007 | 3,020 | |||
2008 | 3,624 | |||
2009 | 3,613 | |||
2010 | 3,608 | |||
Thereafter | 581,264 | |||
$ | 608,607 | |||
F-61
Table of Contents
9. | Guarantors of Debt |
F-62
Table of Contents
Issuer | Issuer | |||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary | Eliminations/ | ||||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Non-guarantor | Adjustments | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 4,828 | $ | — | $ | — | $ | 5,203 | $ | 82 | $ | — | $ | 10,113 | ||||||||||||||||
Restricted cash and cash equivalents | — | — | — | — | 11,949 | — | 11,949 | |||||||||||||||||||||||
Restricted marketable securities | — | — | — | — | 2,165 | — | 2,165 | |||||||||||||||||||||||
Trade and other accounts receivable, net | — | — | — | 366,995 | 2,620 | 151 | 369,766 | |||||||||||||||||||||||
Parts and supplies inventory | — | — | — | 18,760 | — | — | 18,760 | |||||||||||||||||||||||
Other current assets | 325 | — | — | 41,459 | 1,986 | (12,762 | ) | 31,008 | ||||||||||||||||||||||
Current deferred tax assets | — | — | — | 20,312 | 2,659 | — | 22,971 | |||||||||||||||||||||||
Current assets | 5,153 | — | — | 452,729 | 21,461 | (12,611 | ) | 466,732 | ||||||||||||||||||||||
Non-current assets: | ||||||||||||||||||||||||||||||
Property, plant, and equipment, net | 329 | — | — | 132,954 | — | — | 133,283 | |||||||||||||||||||||||
Intercompany receivable | — | 420,069 | 188,741 | 17,156 | — | (625,966 | ) | — | ||||||||||||||||||||||
Intangible assets, net | — | — | — | 81,363 | — | — | 81,363 | |||||||||||||||||||||||
Non-current deferred tax assets | — | — | — | 118,619 | (1,131 | ) | — | 117,488 | ||||||||||||||||||||||
Restricted long-term investments | — | — | — | — | 73,304 | — | 73,304 | |||||||||||||||||||||||
Goodwill | — | — | — | 271,529 | 458 | — | 271,987 | |||||||||||||||||||||||
Other long-term assets | — | 11,838 | 5,318 | 92,095 | — | — | 109,251 | |||||||||||||||||||||||
Investment and advances in subsidiaries | 236,747 | 160,515 | 76,218 | 6,074 | — | (479,554 | ) | — | ||||||||||||||||||||||
Assets | $ | 242,229 | $ | 592,422 | $ | 270,277 | $ | 1,172,519 | $ | 94,092 | $ | (1,118,131 | ) | $ | 1,253,408 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 53,066 | $ | — | $ | — | $ | 53,066 | ||||||||||||||||
Accrued liabilities | — | 3,826 | 1,720 | 161,037 | 33,266 | — | 199,849 | |||||||||||||||||||||||
Current portion of long-term debt | — | 5,865 | 2,635 | 4,978 | — | — | 13,478 | |||||||||||||||||||||||
Current liabilities | — | 9,691 | 4,355 | 219,081 | 33,266 | — | 266,393 | |||||||||||||||||||||||
Long-term debt | — | 410,378 | 184,372 | 379 | — | — | 595,129 | |||||||||||||||||||||||
Other long-term liabilities | — | — | — | 112,998 | 54,752 | (12,611 | ) | 155,139 | ||||||||||||||||||||||
Intercompany | 5,482 | 11,838 | 5,318 | 603,328 | — | (625,966 | ) | — | ||||||||||||||||||||||
Liabilities | 5,482 | 431,907 | 194,045 | 935,786 | 88,018 | (638,577 | ) | 1,016,661 | ||||||||||||||||||||||
Redeemable partnership equity | 1,213 | — | — | — | — | — | 1,213 | |||||||||||||||||||||||
Common stock | — | — | — | — | 30 | (30 | ) | — | ||||||||||||||||||||||
Additional paid-in capital | — | — | — | — | 6,690 | (6,690 | ) | — | ||||||||||||||||||||||
Partnership equity | 222,178 | 153,722 | 69,669 | 223,391 | — | (446,782 | ) | 222,178 | ||||||||||||||||||||||
Retained earnings | 14,002 | 6,793 | 7,209 | 13,988 | — | (27,990 | ) | 14,002 | ||||||||||||||||||||||
Comprehensive income (loss) | (646 | ) | — | (646 | ) | (646 | ) | (646 | ) | 1,938 | (646 | ) | ||||||||||||||||||
Equity | 235,534 | 160,515 | 76,232 | 236,733 | 6,074 | (479,554 | ) | 235,534 | ||||||||||||||||||||||
Liabilities and Equity | $ | 242,229 | $ | 592,422 | $ | 270,277 | $ | 1,172,519 | $ | 94,092 | $ | (1,118,131 | ) | $ | 1,253,408 | |||||||||||||||
F-63
Table of Contents
Issuer | Issuer | |||||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Subsidiary | Eliminations/ | ||||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | Non-guarantor | Adjustments | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | — | $ | 4,778 | $ | 9,853 | $ | — | $ | 14,631 | ||||||||||||||||
Restricted cash and cash equivalents | — | — | — | — | 9,846 | — | 9,846 | |||||||||||||||||||||||
Restricted marketable securities | — | — | — | — | 2,473 | — | 2,473 | |||||||||||||||||||||||
Trade and other accounts receivable, net | — | — | — | 359,945 | 43,339 | (33,517 | ) | 369,767 | ||||||||||||||||||||||
Parts and supplies inventory | — | — | — | 18,499 | — | — | 18,499 | |||||||||||||||||||||||
Other current assets | — | — | — | 81,818 | 6,097 | (47,780 | ) | 40,135 | ||||||||||||||||||||||
Current deferred tax assets | — | — | — | 62,433 | 2,659 | — | 65,092 | |||||||||||||||||||||||
Current assets | — | — | — | 527,473 | 74,267 | (81,297 | ) | 520,443 | ||||||||||||||||||||||
Non-current assets: | ||||||||||||||||||||||||||||||
Property, plant, and equipment, net | — | — | — | 128,766 | — | — | 128,766 | |||||||||||||||||||||||
Intangible assets, net | — | — | — | 16,075 | — | — | 16,075 | |||||||||||||||||||||||
Non-current deferred tax assets | — | — | — | 203,391 | (922 | ) | — | 202,469 | ||||||||||||||||||||||
Restricted long-term investments | — | — | — | — | 41,810 | — | 41,810 | |||||||||||||||||||||||
Goodwill | — | — | — | — | — | — | — | |||||||||||||||||||||||
Other long-term assets | — | — | — | 73,947 | — | — | 73,947 | |||||||||||||||||||||||
Investment and advances in subsidiaries | — | — | — | 6,404 | — | (6,404 | ) | — | ||||||||||||||||||||||
Assets | $ | — | $ | — | $ | — | $ | 956,056 | $ | 115,155 | $ | (87,701 | ) | $ | 983,510 | |||||||||||||||
Liabilities and Equity | ||||||||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||||||||
Accounts payable | $ | — | $ | — | $ | — | $ | 82,167 | $ | 5,186 | $ | (31,535 | ) | $ | 55,818 | |||||||||||||||
Accrued liabilities | — | — | — | 147,291 | 24,354 | — | 171,645 | |||||||||||||||||||||||
Current portion of long-term debt | — | — | — | 5,846 | — | — | 5,846 | |||||||||||||||||||||||
Current liabilities | — | — | — | 235,304 | 29,540 | (31,535 | ) | 233,309 | ||||||||||||||||||||||
Long-term debt | — | — | — | 5,651 | — | — | 5,651 | |||||||||||||||||||||||
Other long-term liabilities | — | — | — | 116,824 | 79,211 | (49,762 | ) | 146,273 | ||||||||||||||||||||||
Liabilities | — | — | — | 357,779 | 108,751 | (81,297 | ) | 385,233 | ||||||||||||||||||||||
Laidlaw payable | — | — | — | 202,042 | — | — | 202,042 | |||||||||||||||||||||||
Laidlaw investment | — | — | — | 356,550 | — | — | 356,550 | |||||||||||||||||||||||
Common stock | — | — | — | — | 30 | (30 | ) | — | ||||||||||||||||||||||
Additional paid-in capital | — | — | — | — | 5,054 | (5,054 | ) | — | ||||||||||||||||||||||
Retained earnings | — | — | — | 40,000 | 1,635 | (1,635 | ) | 40,000 | ||||||||||||||||||||||
Comprehensive income (loss) | — | — | — | (315 | ) | (315 | ) | 315 | (315 | ) | ||||||||||||||||||||
Equity | — | — | — | 598,277 | 6,404 | (6,404 | ) | 598,277 | ||||||||||||||||||||||
Liabilities and Equity | $ | — | $ | — | $ | — | $ | 956,056 | $ | 115,155 | $ | (87,701 | ) | $ | 983,510 | |||||||||||||||
F-64
Table of Contents
Issuer | Issuer | Subsidiary | ||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | ||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | ||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 1,187,653 | $ | 25,264 | $ | (25,264 | ) | $ | 1,187,653 | |||||||||||||
Compensation and benefits | — | — | — | 822,595 | — | — | 822,595 | |||||||||||||||||||||
Operating expenses | — | — | — | 168,700 | — | — | 168,700 | |||||||||||||||||||||
Insurance expense | — | — | — | 60,422 | 25,224 | (25,264 | ) | 60,382 | ||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 38,248 | — | — | 38,248 | |||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 38,811 | — | — | 38,811 | |||||||||||||||||||||
Income from operations | — | — | — | 58,877 | 40 | — | 58,917 | |||||||||||||||||||||
Interest expense | — | — | — | (34,407 | ) | — | — | (34,407 | ) | |||||||||||||||||||
Realized loss on investments | — | — | — | — | (40 | ) | — | (40 | ) | |||||||||||||||||||
Interest and other income | — | — | 14 | 175 | — | — | 189 | |||||||||||||||||||||
Income before income taxes | — | — | 14 | 24,645 | — | — | 24,659 | |||||||||||||||||||||
Income tax expense | — | — | — | (10,657 | ) | — | — | (10,657 | ) | |||||||||||||||||||
Income before equity in earnings of unconsolidated subsidiaries | — | — | 14 | 13,988 | — | — | 14,002 | |||||||||||||||||||||
Equity in earnings of unconsolidated subsidiaries | 14,002 | 6,793 | 7,195 | — | — | (27,990 | ) | — | ||||||||||||||||||||
Net income | $ | 14,002 | $ | 6,793 | $ | 7,209 | $ | 13,988 | $ | — | $ | (27,990 | ) | $ | 14,002 | |||||||||||||
F-65
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Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 1,077,749 | $ | 21,233 | $ | (21,233 | ) | $ | 1,077,749 | ||||||||||||||
Compensation and benefits | — | — | — | 751,238 | — | — | 751,238 | ||||||||||||||||||||||
Operating expenses | — | — | — | 147,524 | — | — | 147,524 | ||||||||||||||||||||||
Insurance expense | — | — | — | 52,865 | 20,042 | (21,233 | ) | 51,674 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 31,270 | — | — | 31,270 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 10,095 | — | — | 10,095 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 34,627 | — | — | 34,627 | ||||||||||||||||||||||
Restructuring charges | — | — | — | 1,381 | — | — | 1,381 | ||||||||||||||||||||||
Income from operations | — | — | — | 48,749 | 1,191 | — | 49,940 | ||||||||||||||||||||||
Interest expense | — | — | — | (8,679 | ) | — | — | (8,679 | ) | ||||||||||||||||||||
Realized loss on investments | — | — | — | — | (1,191 | ) | — | (1,191 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 210 | — | — | 210 | ||||||||||||||||||||||
Income before income taxes | — | — | — | 40,280 | — | — | 40,280 | ||||||||||||||||||||||
Income tax expense | — | — | — | (17,345 | ) | 1,635 | — | (15,710 | ) | ||||||||||||||||||||
Income before equity in earnings of subsidiary | — | — | — | 22,935 | 1,635 | — | 24,570 | ||||||||||||||||||||||
Equity in earnings of subsidiary | — | — | — | 1,635 | — | (1,635 | ) | — | |||||||||||||||||||||
Net income | $ | — | $ | — | $ | — | $ | 24,570 | $ | 1,635 | $ | (1,635 | ) | $ | 24,570 | ||||||||||||||
Issuer | Issuer | Subsidiary | ||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | ||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | ||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 456,245 | $ | 2,839 | $ | (2,839 | ) | $ | 456,245 | |||||||||||||
Compensation and benefits | — | — | — | 319,292 | — | — | 319,292 | |||||||||||||||||||||
Operating expenses | — | — | — | 66,156 | — | — | 66,156 | |||||||||||||||||||||
Insurance expense | — | — | — | 21,082 | 2,805 | (2,839 | ) | 21,048 | ||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 15,654 | — | — | 15,654 | |||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 14,843 | — | — | 14,843 | |||||||||||||||||||||
Income from operations | — | — | — | 19,218 | 34 | — | 19,252 | |||||||||||||||||||||
Interest expense | — | — | — | (12,824 | ) | — | — | (12,824 | ) | |||||||||||||||||||
Realized gain on investments | — | — | — | — | (34 | ) | — | (34 | ) | |||||||||||||||||||
Interest and other income | — | — | — | 91 | — | — | 91 | |||||||||||||||||||||
Income before income taxes | — | — | — | 6,485 | — | — | 6,485 | |||||||||||||||||||||
Income tax expense | — | — | — | (3,479 | ) | — | — | (3,479 | ) | |||||||||||||||||||
Income before equity in earnings of unconsolidated subsidiaries | — | — | — | 3,006 | — | — | 3,006 | |||||||||||||||||||||
Equity in earnings of unconsolidated subsidiaries | 3,006 | 501 | 2,505 | — | — | (6,012 | ) | — | ||||||||||||||||||||
Net income | $ | 3,006 | $ | 501 | $ | 2,505 | $ | 3,006 | $ | — | $ | (6,012 | ) | $ | 3,006 | |||||||||||||
F-66
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Issuer | Issuer | Subsidiary | |||||||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | Eliminations/ | |||||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantor | Adjustments | Total | |||||||||||||||||||||||
Net revenue | $ | — | $ | — | $ | — | $ | 413,869 | $ | 7,962 | $ | (7,962 | ) | $ | 413,869 | ||||||||||||||
Compensation and benefits | — | — | — | 286,628 | — | — | 286,628 | ||||||||||||||||||||||
Operating expenses | — | — | — | 55,863 | — | — | 55,863 | ||||||||||||||||||||||
Insurance expense | — | — | — | 19,544 | 6,822 | (7,962 | ) | 18,404 | |||||||||||||||||||||
Selling, general and administrative expenses | — | — | — | 12,093 | — | — | 12,093 | ||||||||||||||||||||||
Laidlaw fees and compensation charges | — | — | — | 3,657 | — | — | 3,657 | ||||||||||||||||||||||
Depreciation and amortization expense | — | — | — | 12,669 | — | — | 12,669 | ||||||||||||||||||||||
Income from operations | — | — | — | 23,415 | 1,140 | — | 24,555 | ||||||||||||||||||||||
Interest expense | — | — | — | (5,138 | ) | — | — | (5,138 | ) | ||||||||||||||||||||
Realized loss on investments | — | — | — | — | (1,140 | ) | — | (1,140 | ) | ||||||||||||||||||||
Interest and other income | — | — | — | 162 | — | — | 162 | ||||||||||||||||||||||
Income before income taxes | — | — | — | 18,439 | — | — | 18,439 | ||||||||||||||||||||||
Income tax expense | — | — | — | (8,826 | ) | 1,635 | — | (7,191 | ) | ||||||||||||||||||||
Income before equity in earnings of subsidiary | — | — | — | 9,613 | 1,635 | — | 11,248 | ||||||||||||||||||||||
Equity in earnings of subsidiary | — | — | — | 1,635 | — | (1,635 | ) | — | |||||||||||||||||||||
Net income | $ | — | $ | — | $ | — | $ | 11,248 | $ | 1,635 | $ | (1,635 | ) | $ | 11,248 | ||||||||||||||
F-67
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Issuer | Issuer | Subsidiary | |||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | ||||||||||||||||||||||
Parent Co. | HoldCo Inc. | HoldCo Inc. | Guarantors | guarantors | Total | ||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | 14 | $ | 84,284 | $ | 24,164 | $ | 108,462 | |||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||
EMS purchase of AMR and EmCare | (828,775 | ) | — | — | — | — | (828,775 | ) | |||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (34,947 | ) | — | (34,947 | ) | |||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 565 | — | 565 | |||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | — | (51,495 | ) | (51,495 | ) | |||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 17,560 | 17,560 | |||||||||||||||||||
Net change in deposits and other assets | — | — | — | (20,330 | ) | — | (20,330 | ) | |||||||||||||||||
Net cash used in investing activities | (828,775 | ) | — | — | (54,712 | ) | (33,935 | ) | (917,422 | ) | |||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||
Borrowings under new senior secured credit facility | — | 241,500 | 108,500 | — | — | 350,000 | |||||||||||||||||||
Proceeds from issuance of senior subordinated notes | — | 172,500 | 77,500 | — | — | 250,000 | |||||||||||||||||||
Borrowings under new revolving credit facility | — | 17,388 | 7,812 | — | — | 25,200 | |||||||||||||||||||
Issuance of partnership equity | 222,655 | — | — | — | — | 222,655 | |||||||||||||||||||
Financing costs | (1,737 | ) | (12,686 | ) | (5,699 | ) | — | — | (20,122 | ) | |||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (5,722 | ) | — | (5,722 | ) | |||||||||||||||||
Repayments of revolving credit facility | — | (13,938 | ) | (6,262 | ) | — | — | (20,200 | ) | ||||||||||||||||
Net intercompany borrowings (payments) | 612,685 | (404,764 | ) | (181,865 | ) | (26,056 | ) | — | — | ||||||||||||||||
Increase (decrease) in bank overdrafts | — | — | — | 997 | — | 997 | |||||||||||||||||||
Increase (decrease) in other non-current liabilities | — | — | — | 1,634 | — | 1,634 | |||||||||||||||||||
Net cash provided by (used in) financing activities | 833,603 | — | (14 | ) | (29,147 | ) | — | 804,442 | |||||||||||||||||
Increase in cash and cash equivalents | 4,828 | — | — | 425 | (9,771 | ) | (4,518 | ) | |||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 4,778 | 9,853 | 14,631 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | 4,828 | $ | — | $ | — | $ | 5,203 | $ | 82 | $ | 10,113 | |||||||||||||
F-68
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Issuer | Issuer | Subsidiary | |||||||||||||||||||||||
AMR | EmCare | Subsidiary | Non- | ||||||||||||||||||||||
Parent Co. | HoldCo, Inc. | HoldCo, Inc. | Guarantors | guarantors | Total | ||||||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||||||||||
Net cash provided by operating activities | $ | — | $ | — | $ | — | $ | 78,886 | $ | 21,075 | $ | 99,961 | |||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||||||||||
Purchase of property, plant and equipment | — | — | — | (30,217 | ) | — | (30,217 | ) | |||||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 773 | — | 773 | |||||||||||||||||||
Purchase of restricted cash and investments | — | — | — | — | (61,213 | ) | (61,213 | ) | |||||||||||||||||
Proceeds from sale and maturity of restricted investments | — | — | — | — | 40,152 | 40,152 | |||||||||||||||||||
Other investing activities | — | — | — | (23,405 | ) | — | (23,405 | ) | |||||||||||||||||
Net cash used in investing activities | — | — | — | (52,849 | ) | (21,061 | ) | (73,910 | ) | ||||||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||||||||||
Repayments of capital lease obligations and other debt | — | — | — | (5,396 | ) | — | (5,396 | ) | |||||||||||||||||
Payments to Laidlaw | — | — | — | (13,937 | ) | — | (13,937 | ) | |||||||||||||||||
Change in other non-current liabilities | — | — | — | (5,656 | ) | — | (5,656 | ) | |||||||||||||||||
Decrease in bank overdrafts | — | — | — | 4,290 | — | 4,290 | |||||||||||||||||||
Net cash used in financing activities | — | — | — | (20,699 | ) | — | (20,699 | ) | |||||||||||||||||
Change in cash and cash equivalents | — | — | — | 5,338 | 14 | 5,352 | |||||||||||||||||||
Cash and cash equivalents, beginning of period | — | — | — | 10,830 | 26 | 10,856 | |||||||||||||||||||
Cash and cash equivalents, end of period | $ | — | $ | — | $ | — | $ | 16,168 | $ | 40 | $ | 16,208 | |||||||||||||
10. | Planned Public Offering |
F-69
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F-70
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F-71
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ASSETS | |||||
Cash | $ | 100 | |||
STOCKHOLDER’S EQUITY | |||||
Stockholder’s equity: | |||||
Common stock, $.01 par value; 100 shares class B authorized, 10 shares issued and outstanding; 100 shares class A authorized, 0 shares issued and outstanding | $ | 0 | |||
Additional paid-in capital | 100 | ||||
Total stockholders equity | $ | 100 | |||
F-72
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Current assets | $ | 483,957 | |||
Property, plant & equipment | 128,766 | ||||
Intangible assets | 89,850 | ||||
Goodwill | 271,987 | ||||
Other long-term assets | 254,027 | ||||
Total assets acquired | 1,228,587 | ||||
Current liabilities | 245,144 | ||||
Long-term debt | 620,183 | ||||
Other long-term liabilities | 144,381 | ||||
Total liabilities assumed | 1,009,708 | ||||
Net assets acquired | $ | 218,879 | |||
F-73
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• | The Company will amend and restate its certificate of incorporation, and its authorized capital stock will include 100,000,000 shares of class A common stock, $.01 par value, 40,000,000 shares of class B common stock, $.01 par value, and one share of class B special voting stock, $.01 par value. | |
• | The holders of the capital stock of the sole general partner of EMS L.P. will contribute that capital stock to the Company in exchange for shares of class B common stock, the general partner will be merged into the Company and the Company will become the general partner of EMS L.P. | |
• | The holders of class B units of EMS L.P. will contribute their units to the Company in exchange for shares of class A common stock, and the holders of certain class A units of EMS L.P. will contribute their units to the Company in exchange for shares of class B common stock. | |
• | The balance of the class A units of EMS L.P., which are held by certain of the Company’s affiliates, will continue to be held by those persons and will be designated “LP exchangeable units”. | |
• | The Company will issue the one share of class B special voting stock to Onex Corporation, as trustee, to hold for the benefit of the holders of the LP exchangeable units. |
• | the right to exchange those units, at the holder’s option, for shares of class B common stock on a one-for-one basis, | |
• | the right to receive distributions, on a per unit basis, in amounts (or property in the case of non-cash dividends) which are the same as, or economically equivalent to, and which are payable at the same time as, dividends declared on the class B common stock (or dividends that would be required to be declared if class B common stock were outstanding), | |
• | the right to vote, through the trustee holder of the class B special voting stock, at all stockholder meetings at which holders of the class B common stock or class B special voting stock are entitled to vote, and | |
• | the right to participate on a pro rata basis with the class B common stock in the distribution of assets of the Company, upon specified events relating to the voluntary or involuntary liquidation, dissolution, |
F-74
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winding up or other distribution of the assets through the mandatory exchange of LP exchangeable units for shares of class B common stock. |
F-75
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