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EXHIBIT 99.2
JORDAN VALLEY HOSPITAL, LP
CONDENSED BALANCE SHEETS
(IN THOUSANDS)
PREDECESSOR
(NOTE 1)
---------------
(UNAUDITED)
JUNE 30, SEPTEMBER 30,
2003 2002
--------------- ---------------
ASSETS
Current assets:
Cash $ -- $ 226
Accounts receivable, net of allowance for doubtful
accounts of $2,717 and $2,134, respectively 7,006 7,603
Due (to) from affiliate 7,076 (3,055)
Inventories 1,119 1,116
Prepaid expenses and other current assets 358 650
--------------- ---------------
Total current assets 15,559 6,540
Property and equipment, net 33,385 32,881
Goodwill 8,925 8,925
Other assets, net 1,150 944
--------------- ---------------
Total assets $ 59,019 49,290
=============== ===============
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 2,165 2,533
Salaries and benefits payable 1,099 979
Other accrued liabilities 251 193
Current portion of long term debt and capital lease
obligations 935 319
--------------- ---------------
Total current liabilities 4,450 4,024
Long term portion of debt allocated from IASIS and capital leases 32,683 46,476
--------------- ---------------
Total liabilities 37,133 50,500
Partners' capital 21,886 --
Stockholders' deficit -- (1,210)
--------------- ---------------
Total liabilities and equity $ 59,019 $ 49,290
=============== ===============
See accompanying notes.
1
JORDAN VALLEY HOSPITAL, LP
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS)
PREDECESSOR (NOTE 1)
-----------------------------------------------------
THREE MONTHS SIX MONTHS THREE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 2003 MARCH 31, 2003 JUNE 30, 2002 JUNE 30, 2002
--------------- --------------- --------------- ---------------
Net revenue $ 13,563 $ 25,275 $ 11,410 $ 31,546
Costs and expenses:
Salaries and benefits 4,359 8,753 3,826 11,219
Supplies 1,623 3,051 1,401 4,186
Other operating expenses 2,356 3,908 1,796 5,130
Provision for bad debts 1,003 1,973 844 2,417
Interest expense 780 3,001 1,479 4,430
Depreciation and amortization 804 1,555 666 1,918
Management fees 271 1,159 411 1,096
--------------- --------------- --------------- ---------------
Total costs and expenses 11,196 23,400 10,423 30,396
--------------- --------------- --------------- ---------------
Net earnings $ 2,367 $ 1,875 $ 987 $ 1,150
=============== =============== =============== ===============
See accompanying notes
2
JORDAN VALLEY HOSPITAL, LP
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
PREDECESSOR
(NOTE 1)
-----------------------------------
THREE MONTHS SIX MONTHS NINE MONTHS
ENDED ENDED ENDED
JUNE 30, 2003 MARCH 31, 2003 JUNE 30, 2002
--------------- --------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 2,367 $ 1,875 $ 1,150
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 804 1,555 1,918
Changes in operating assets and
liabilities:
Accounts receivable 310 287 (722)
Inventories, prepaid expenses and
other current assets (16) 102 (957)
Accounts payable, salaries and
benefits payable and other
accrued liabilities 521 (710) (1,073)
--------------- --------------- ---------------
Net cash provided by operating activities 3,986 3,109 316
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (1,505) (1,357) (1,059)
Change in other assets 118 (324) 17
--------------- --------------- ---------------
Net cash used in investing activities (1,387) (1,681) (1,042)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in due to affiliate, net (3,806) (1,497) (703)
Proceeds from syndication 1,288 -- --
Payment of capital leases (81) (157) (23)
--------------- --------------- ---------------
Net cash used in financing activities (2,599) (1,654) 726
--------------- --------------- ---------------
Change in cash -- (226) --
Cash at beginning of the period -- 226 --
--------------- --------------- ---------------
Cash at end of the period $ -- $ -- $ --
=============== =============== ===============
See accompanying notes.
3
JORDAN VALLEY HOSPITAL, LP
NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS
1. ORGANIZATION
Jordan Valley Hospital, LP, a Delaware limited partnership (the
"Partnership") was formed on February 11, 2003 to own and operate Jordan Valley
Hospital (the "Hospital"). The Hospital is a 50-bed acute care hospital that
provides inpatient, outpatient and emergency care services to residents in and
around the Salt Lake City, Utah area. The Partnership's general partner is IASIS
Healthcare Holdings, Inc. ("General Partner") and the limited partners consist
of IASIS Healthcare Corporation ("IASIS") and other third party investors. The
General Partner is an indirect wholly-owned subsidiary of IASIS. IASIS is a
for-profit hospital management company that owns and operates 14 general, acute
care hospitals in four states. IASIS also owns a Medicaid managed health plan in
Arizona. The Partnership's initial 99% limited partner was IASIS. On April 1,
2003, IASIS sold 2.6% of its limited partner units in the Partnership to third
party investors, which reduced its ownership in the Partnership accordingly.
Prior to this transaction, the Hospital was owned and operated by Jordan Valley
Hospital, Inc.
The financial statements for all periods prior to April 1, 2003 reflect
the financial position, result of operations and cash flows of Jordan Valley
Hospital, Inc., the Partnership's predecessor entity (the "Predecessor
Company"). The financial statements for all periods subsequent to April 1, 2003,
reflect the financial position, results of operations and cash flows for the
Hospital as operated by the Partnership. Unless stated otherwise as the
Predecessor Company or the Partnership, all references to the Hospital include
the operations of both the Predecessor Company and the Partnership.
The unaudited condensed financial statements include the accounts of
the Partnership and have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial reporting and in
accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and notes required by accounting principles generally
accepted in the United States for complete financial statements. The balance
sheet at September 30, 2002 has been derived from the audited financial
statements at that date but does not include all of the information and
footnotes required by accounting principles generally accepted in the United
States for complete financial statements.
In the opinion of management, the accompanying unaudited condensed
financial statements contain all material adjustments (consisting of normal
recurring items) necessary for a fair presentation of results for the interim
periods presented. The results of operations for any interim period are not
necessarily indicative of results for the full year.
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the accompanying unaudited condensed financial statements and notes. Actual
results could differ from those estimates.
2. DEBT ALLOCATED FROM IASIS
In conjunction with the acquisition of the Hospital, the Predecessor
Company entered into a promissory note (the "Note") with IASIS in the amount of
$45,080,363. Under provisions of the Note interest of 13% per annum is due and
payable on October 1, of each year until October 1, 2004, at which time the
entire outstanding principal balance, together with all accrued and unpaid
interest, shall be immediately due and payable in full. The Note may be prepaid
in whole or in part without premium or penalty and may reborrow up to the stated
principal amount.
During 2003, the Partnership entered into a new promissory note (the
"New Note") with the Predecessor Company in the amount of $32,301,279. The New
Note is a five-year note at 9.3% interest per annum on a twenty-year
amortization schedule.
3. GOODWILL
Goodwill represents cost in excess of the fair value of acquired
tangible net assets of the Hospital and is evaluated for impairment according to
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets. The Partnership adopted SFAS No. 142 effective October 1,
2001 which resulted in no goodwill impairment.
4
JORDAN VALLEY HOSPITAL, LP
NOTES TO UNAUDITED CONDENSED
FINANCIAL STATEMENTS (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES
Final determination of amounts earned under the Medicare and Medicaid
programs often occurs in subsequent years because of audits by the programs,
rights of appeal and the application of numerous technical provisions. In the
opinion of management, adequate provision has been made for adjustments that may
result from such routine audits and appeals.
The Partnership is subject to claims and legal actions arising in the
ordinary course of business. The Partnership is currently not a party to any
such proceedings that, in the Partnership's opinion, would have a material
adverse effect on the Partnership's business, financial condition or results of
operations.
The Partnership's assets and equity interests are pledged as a full and
unconditional guarantee of certain debt of IASIS, which totaled approximately
$654 million at June 30, 2003.
In order to recruit and retain physicians to the communities it serves,
the Partnership has committed to provide certain financial assistance in the
form of recruiting agreements with various physicians. Amounts advanced under
the recruiting agreements are generally forgiven prorata over a period of 24
months after one year of completed service and contingent upon the physician
continuing to practice in the respective community. The amounts advanced and not
repaid, in management's opinion, will not have a material adverse effect on the
Partnership's financial condition or results of operations.
5. INCOME TAXES
No provision for income taxes has been reflected in the accompanying
financial statements because the tax effect of the Partnership's activities
accrues to the individual partners. The Partnership's tax returns and the
amounts of distributable Partnership income or loss are subject to examination
by the federal and state taxing authorities. In the event of an examination of
the Partnership's tax return, the tax liability of the partners could be changed
if any adjustment to the Partnership taxable income or loss is ultimately
sustained by the taxing authorities.
5