1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 14, 1998
------------------------------
PROVINCE HEALTHCARE COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 0-23639 62-1710772
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification
Number)
105 WESTWOOD PLACE
SUITE 400
BRENTWOOD, TENNESSEE 37027
(Address of principal executive offices) (Zip Code)
(615) 370-1377
(Registrant's telephone number, including area code)
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2
Province Healthcare Company (the "Company"), a Delaware corporation,
hereby amends its Report on Form 8-K, dated June 26, 1998, relating to the
acquisition of Elko General Hospital ("Elko") in Elko, Nevada on June 11, 1998
(the "Acquisition"). The Company is filing this amendment for the purpose of
including the required financial statements and pro forma financial information
with respect to the Acquisition in accordance with the requirements of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
The required audited consolidated financial statements of
Elko General Hospital as of and for the year ended June
30, 1997 are filed herewith.
(b) Pro Forma Financial Information.
The required pro forma financial statements of the Company and
its subsidiaries, giving effect to the Acquisition as if it
had occurred on March 31, 1998, as to the balance sheet, and
on January 1, 1997, as to the income statements, are filed
herewith.
(c) Exhibits:
2.1 Asset Purchase Agreement, dated June 8, 1998,
between the Company and the County of Elko is incorporated
herein by reference to the Company's Current Report on Form
8-K, filed June 26, 1998, Commission File No. 0-23639.
20.1 Copy of the press release, dated June 12, 1998,
relating to the completion of the Elko General Hospital
acquisition, incorporated herein by reference to the Company's
Current Report on Form 8-K, filed June 26, 1998, Commission
File No. 0-23639.
23.1 Consent of Kafoury, Armstrong & Co.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PROVINCE HEALTHCARE COMPANY
By: /S/ BRENDA B. RECTOR
----------------------------------
Brenda B. Rector
Vice President and Controller
Date: August 14, 1998
2
4
INDEX TO FINANCIAL STATEMENTS
Page
----
ELKO GENERAL HOSPITAL
Independent Auditor's Report 1
Balance Sheet at June 30, 1997 2
Statement of Operations - Operating Fund - Unrestricted
for the Year Ended June 30, 1997 4
Statement of Cash Flows - Operating Fund - Unrestricted for the
Year Ended June 30, 1997 5
Notes to Financial Statements 6
Condensed Balance Sheet at March 31, 1998 (Unaudited) 18
Condensed Statements of Operations - Operating Fund - Unrestricted
for the Nine Months Ended March 31, 1998 and 1997 (Unaudited) 20
Condensed Statements of Cash Flows - Operating Fund - Unrestricted
for the Nine Months Ended March 31, 1998 and 1997 (Unaudited) 21
Notes to Condensed Financial Statements (Unaudited) 22
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
Pro Forma Condensed Consolidated Financial Statements 24
Pro Forma Condensed Consolidated Balance Sheet at March 31, 1998 (Unaudited) 25
Pro Forma Condensed Consolidated Statement of Income for the Year
Ended December 31, 1997 (Unaudited) 27
Pro Forma Condensed Consolidated Statement of Income for the Three Months
Ended March 31, 1998 (Unaudited) 28
Notes to Pro Forma Condensed Consolidated Financial Statements (Unaudited) 29
5
KAFOURY, ARMSTRONG & CO.
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Honorable Board of Trustees
of Elko General Hospital
We have audited the accompanying financial statements of Elko General
Hospital, State of Nevada, as of and for the year ended June 30, 1997 as listed
in the table of contents. These financial statements are the responsibility of
Elko General Hospital's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Elko General
Hospital, State of Nevada, as of June 30, 1997 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
/s/ Kafoury, Armstrong & Co.
Elko, Nevada
September 12, 1997, except for Note 13,
as to which the date is June 11, 1998
- 1 -
6
ELKO GENERAL HOSPITAL
BALANCE SHEET
JUNE 30, 1997
(Page 1 of 2)
ASSETS
1997
----
OPERATING FUND -- UNRESTRICTED
CURRENT ASSETS
Cash -- Note 5 $ 1,526,087
Accounts receivable -- Note 6 5,189,886
Due from other governments 107,473
Due from contractual agencies 171,866
Due from other funds 14,744
Inventories -- Note 7 583,942
Prepaid expenses 195,980
Assets limited as to use:
Cash -- Note 5 500,189
-----------
8,290,167
-----------
PROPERTY AND EQUIPMENT, NET -- Note 8 8,797,838
-----------
Total Assets $17,088,005
===========
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable $ 591,846
Accrued salaries 280,313
Accrued retirement 145,968
Accrued vacation and compensatory time 449,110
Other accrued expenses 107,751
Current maturities of capital lease obligations -- Note 9 156,000
Current maturities of long-term notes payable -- Note 10 617,248
-----------
2,348,236
-----------
LONG-TERM LIABILITIES
Compensated absences 59,910
Capital lease obligations -- Note 9 226,215
Notes payable -- Note 10 1,699,474
-----------
1,985,599
-----------
Total Liabilities 4,333,835
-----------
FUND BALANCE 12,754,170
-----------
Total Liabilities and Fund Balance $17,088,005
===========
- 2 -
7
ELKO GENERAL HOSPITAL
BALANCE SHEET
JUNE 30, 1997
(Page 2 of 2)
RESTRICTED FUNDS
1997
------
ASSETS
SPECIFIC PURPOSE FUNDS
Cash - Note 5 $ 64,108
========
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Deferred revenue $ 23,297
--------
FUND BALANCE
Unreserved
Designated for future year's operations 40,811
Undesignated --
--------
40,811
--------
Total Liabilities and Fund Balance $ 64,108
========
ASSETS
CAPITAL IMPROVEMENT FUND
ASSETS
Cash - Note 5 $ 63,458
========
FUND BALANCE
Fund Balance
Unreserved
Designated for future year's operations $ 62,662
Undesignated 796
--------
Total Fund Balance $ 63,458
========
ASSETS
SELF INSURANCE FUND
CURRENT ASSETS
Cash - Note 5 $ 6,589
Accounts receivable 40,288
--------
Total Assets $ 46,877
========
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable $ 96,366
Due to other funds 14,744
--------
111,110
--------
FUND BALANCE
Unreserved
Designated for future year's operations --
Undesignated (Deficit) (64,233)
--------
(64,233)
--------
Total Liabilities and Fund Balance $ 46,877
========
The accompanying notes are an integral part of these financial statements.
- 3 -
8
ELKO GENERAL HOSPITAL
STATEMENT OF OPERATIONS
OPERATING FUND - UNRESTRICTED
FOR THE YEAR ENDED JUNE 30, 1997
1997
-----------
REVENUE
Net Patient Service Revenue - Note 3
Routine services $ 6,610,374
Ancillary service 22,514,846
Contract physician revenue 1,898,597
-----------
31,023,817
Less adjustments to revenues:
Contractual allowances under governmental health
care and insurance programs (4,903,212)
Uncompensated care, charity care (169,603)
-----------
25,951,002
Other Operating Revenue 162,412
-----------
26,113,414
-----------
OPERATING EXPENSES
Professional care of patients 12,273,874
Dietary services 469,008
General services 2,362,371
Administrative services 2,660,859
Employee benefits 1,843,337
Insurance costs 321,506
Depreciation and amortization 1,076,878
Interest 166,394
Provision for bad debts 3,042,298
-----------
24,216,525
-----------
Income From Operations 1,896,889
-----------
NON-OPERATING GAINS (LOSSES)
Interest Income 90,445
Gifts, grants and bequests 39,764
Elko County Jail meal gains (net) 133,978
Other nonoperating revenues 45,386
-----------
309,573
-----------
Revenue and Gains in Excess of Expenses and Losses $ 2,206,462
===========
The accompanying notes are an integral part of these financial statements.
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9
ELKO GENERAL HOSPITAL
STATEMENT OF CASH FLOWS
OPERATING FUND - UNRESTRICTED
FOR THE YEAR ENDED JUNE 30, 1997
1997
----------
OPERATING FUND - UNRESTRICTED
CASH FLOWS FROM OPERATING AND NONOPERATING GAINS (LOSSES)
Revenue and gains in excess of expenses and losses $2,206,462
Adjustments to reconcile revenue and gains in excess of
expenses and losses to net cash provided by operating
activities and gains and losses:
Depreciation and amortization 1,076,878
Reclassify gain on sale of equipment (15,959)
Net (increase) in receivables, inventory, other current
assets and payables (870,670)
---------
Net Cash Provided by Operating and Nonoperating Activities 2,396,711
---------
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of property and equipment (2,186,190)
Operating transfers for asset acquisitions 30,000
Proceeds from sale of equipment 29,718
Repayment of long-term debt (956,533)
----------
Net Cash (Used) by Capital and Related Financing
Activities (3,083,005)
----------
Net Decrease in Cash (686,294)
CASH AND CASH EQUIVALENTS, July 1 2,712,570
----------
CASH AND CASH EQUIVALENTS, June 30 $2,026,276
==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 167,579
==========
The accompanying notes are an integral part of these financial statements.
- 5 -
10
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization:
Elko General Hospital is governed by an elected Board of five trustees,
plus a representative from the Elko County Board of County Commissioners
pursuant to NRS 450.040 and 450.070 of the Nevada Revised Statutes.
The Hospital Board possesses final decision-making authority and is held
accountable for those decisions. The Hospital Board is responsible for
approving the budget, establishing spending limitations, funding and/or
issuing bonds to finance hospital system operations and construction.
Basis of Accounting:
The accounting policies of Elko General Hospital conform to generally
accepted accounting principles as applicable to providers of health care
services. A summary of the Hospital's significant accounting policies
consistently applied in the preparation of the financial statements is as
follows:
Enterprise funds are used to account for activities similar to those
found in the private sector, where the determination of net income is
necessary or useful to sound financial administration. Revenues derived from
current operations are intended to provide those resources necessary to
maintain continued delivery of such services in future periods. Goods or
services from such activities are provided to outside parties. The primary
operations of Elko General Hospital are presented in the "Operating Fund,"
which is accounted for as an Enterprise Fund. In accordance with
Governmental Accounting Standards Board (GASB) Statement 20, the Hospital
has determined to apply all GASB pronouncements as well as the Financial
Accounting Standards Board (FASB) pronouncements issued unless the FASB
pronouncement conflicts with GASB.
The Restricted Funds are used to account for resources whose use has
been restricted by donors or grantors. The Restricted Funds are comprised of
the following: 1) the Specific Purpose Funds have been restricted by
grantors and employees for specific uses; 2) the Capital Improvement Fund
has been restricted to accumulate resources for capital improvements to the
Hospital; and 3) the Self Insurance Fund has been restricted for the
accumulation of resources for and payment of claims related to the
Hospital's self insured health program.
The accounting records for all funds are maintained on the accrual basis
of accounting. Under this method, revenues are recorded when earned and
expenses are recorded at the time liabilities are incurred.
Statement of Operations:
For purposes of display, transactions deemed by management to be
ongoing, major, or central to the provision of health care services are
reported as revenues and expenses. Peripheral or incidental transactions are
reported as gains and losses.
- 6 -
11
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
Budgetary Accounting:
In accordance with State statute, actual expenses may not exceed the sum
of budgeted operating and nonoperating expenses. Elko General Hospital, on
its final 1997-98 budget, designated more for opening fund balance than was
available at June 30, 1997 in the following funds:
1997-98
BUDGETED OPENING FUND BALANCE
FUND BALANCE JUNE 30, 1997 DEFICIT
---------------- ------------- -------
Specific Purpose Fund $40,858 $ 40,811 $ 47
Self Insurance Fund 30,036 (64,233) 94,269
Concentrations of Credit Risk:
The Hospital is located in Elko, Nevada and primarily provides medical
care to residents of Northeastern Nevada. Financial instruments which
potentially subject the Hospital to credit risk consist principally of cash
and patient receivables. The Hospital maintains its cash at two financial
institutions in Elko, Nevada and as of June 30, 1997, FDIC coverage was
exceeded by $2,019,354 and $142,488 at these institutions.
The Hospital grants credit without collateral to its patients, most of
whom are local residents and are insured under third-party payor agreements.
The mix of receivables from patients and third party payors was as follows
for the years ended June 30, 1997:
1997
------
Medicare 12%
Medicaid 6
Other third-party payors 40
Patients 42
---
100%
===
Cash and Cash Equivalents:
Cash and cash equivalents include investments in highly liquid debt
instruments with a maturity of three months or less, excluding amounts whose
use is limited by Board designation or other arrangements under trust
agreements or with third-party payors.
Inventories:
Inventories are stated at cost, with cost being determined principally
on the first-in, first-out basis.
- 7 -
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ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
Property, Equipment and Capital Leases:
Property, equipment and capital leases are recorded at cost. Donated
assets are recorded at their fair market value at the date of donation.
Major additions and betterments are charged to the fixed asset accounts,
while maintenance and repairs which do not improve or extend the life of the
respective assets, are expensed currently. Depreciation is provided on the
straight-line method over the estimated useful lives of the respective
assets. Equipment under capital leases is amortized on the straight-line
method over the shorter of the lease term or the estimated useful life of
the equipment. Such amortization is included in provision for depreciation
in the financial statements.
Compensated Absences:
The costs involved in vacation, compensatory time and sick leave are
recorded as obligations when earned and the right to receive compensation
for future absences vests with the employee. Employees are allowed to
accumulate 120 to 240 hours of vacation time depending upon length of
service. Employees are allowed to accumulate up to 240 hours of sick leave,
but will be paid at 1/3 of the regular rate of pay at termination, subject
to various ceiling amounts dependent upon the length of service.
Use of Estimates:
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires the use of estimates
based on management's knowledge and experience. Due to their prospective nature,
actual results could differ from those estimates. As indicated below, the
Hospital utilizes the net patient service revenue method of revenue recognition
which relies heavily on estimates.
Fund Balances - Restricted:
Elko General Hospital segregates fund balances into the following
categories:
"Unreserved" - represents that portion of fund balance that is not
segregated for a specific future use and is available for the ensuing
year's operations. Unreserved fund balance is comprised of the following
two categories:
Designated for future years' operations - represents the budgeted
opening fund balance for the forthcoming year
Undesignated - represents the remainder of fund balance not
specifically reserved or designated for future year's operations
- 8 -
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ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
Net Patient Service Revenues:
Net patient service revenue is reported at the estimated net realizable
amounts from patients, third-party payors, and others for services rendered,
including estimated retroactive adjustments under reimbursement agreements
with third-party payors. Retroactive adjustments are accrued on an estimated
basis in the period the related services are rendered and adjusted in future
periods as final settlements are determined.
Charity Care:
The Hospital provides care to all who require it under its charity care
policy without charge or at amounts less than its established rates. Because
the Hospital does not pursue collection of amounts determined to qualify as
charity care, they are not reported as revenue. This policy is mandated by
Nevada State statutory provisions applicable to county hospitals and Title
VI of the Federal Regulations.
NOTE 2 - COMPLIANCE WITH THE NEVADA REVISED STATUTES AND THE NEVADA
ADMINISTRATIVE CODE:
The Hospital conformed to all statutory and legal constraints on its
financial administration during the year ended June 30, 1997 with the
following possible exceptions:
- Total expenditures of the Operating Fund and Self Insurance Fund
exceeded total appropriations by $420,661 and $92,007 respectively,
an apparent violation of NRS 354.626.
The Hospital Board responded to the Nevada Department of Taxation in a
corrective action plan for all possible violations related to the year ended
June 30, 1996.
NOTE 3 - NET PATIENT SERVICE REVENUE:
The Hospital has agreements with third-party payors that provide for
payments to the Hospital at amounts different from its established rates. A
summary of the payment arrangements with major third-party payors follows.
- Medicare. Inpatient acute care services rendered to Medicare program
beneficiaries are paid at prospectively determined rates per
discharge. These rates vary according to a patient classification
system that is based on clinical, diagnostic, and other factors.
Inpatient non-acute services, certain outpatient services, and
defined capital and medical education costs related to Medicare
beneficiaries are paid based on a cost reimbursement methodology.
The Hospital is reimbursed for cost reimbursable items at a
tentative rate with final settlement determined after submission of
annual cost reports by the Hospital and audits thereof by the
Medicare fiscal intermediary. The Hospital's classification of
patients under the Medicare program and the appropriateness of their
admission are subject to an independent review by a peer review
organization under contract with the Hospital. The Hospital's
Medicare cost reports have been reviewed by the Medicare fiscal
intermediary through June 30, 1995.
- 9 -
14
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
- Medicaid. Sub-acute inpatient services rendered to Medicaid program
beneficiaries are reimbursed under an established rate which is not
subject to retroactive adjustment. For acute and outpatient
services, the Hospital is paid at prospectively determined rates.
Annual cost reports are filed by the Hospital for determination of
future rates and audited by the Medicaid fiscal intermediary. The
Hospital's Medicaid cost reports have been reviewed by the Medicaid
fiscal intermediary through June 30, 1994.
The Hospital has also entered into payment agreements with certain
commercial insurance carriers, preferred provider organizations and other
third party payors. The basis for payment to the Hospital under these
agreements includes prospectively determined rates per discharge, discounts
from established charges, and prospectively determined daily rates.
NOTE 4 - DEFINED BENEFIT PENSION PLAN:
Plan Description. Elko General Hospital contributes to the Public
Employees Retirement System of the State of Nevada (PERS), a cost sharing
multiple employer, defined benefit plan administered by the Public Employees
Retirement System of the State of Nevada. PERS provides retirement benefits,
disability benefits, and death benefits, including annual cost of living
adjustments, to plan members and their beneficiaries. Chapter 286 of the
Nevada Revised Statutes establishes the benefit provisions provided to the
participants of PERS. These benefit provisions may only be amended through
legislation. The Public Employees Retirement System of the State of Nevada
issues a publicly available financial report that includes financial
statements and required supplementary information for PERS. That report may
be obtained by writing to the Public Employees Retirement System of the
State of Nevada, 693 West Nye Lane, Carson City, NV 89703-1599 or by calling
(702) 687-4200.
Funding Policy. Plan members are funded under one of two methods. Under
the employer pay contribution plan, the Hospital is required to contribute
all amounts due under the plan. The second funding mechanism for providing
benefits is the employer/employee paid contribution plan. Under this method,
employees are required to contribute a percentage of their contribution. The
contribution requirements of plan members and the Hospital are established
by Chapter 286 of the Nevada Revised Statutes. The funding mechanism may
only be amended through legislation. The Hospital's contribution rates and
amounts contributed for the last three years are as follows:
Contribution Rate
-----------------
Employer/ Total
Fiscal Year Employer Employee Contribution
----------- -------- -------- ------------
1996-97 18.75% 10.0% $1,854,999
1995-96 18.75% 10.0% 1,584,362
1994-95 18.22% 9.31% 1,205,370
- 10 -
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ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 5 - CASH:
State statutes authorize deposits in any bank, credit union or savings
and loan in the State of Nevada that is federally insured. The Hospital may
invest in securities as required by Nevada Revised Statutes.
To facilitate better management of Hospital resources, cash balances for
all funds except the Pinkerton Scholarship Fund, Group Health Self Insurance
Fund, and Capital Improvement Fund are combined in pooled operating
accounts. The cash reflected on the balance sheet is the carrying amount of
deposits comprised of the individual fund's equity in the pooled and
separate cash balances. A summary of cash as of June 30, 1997 is as follows:
1997
----------
Unrestricted Funds
Current operating cash $1,526,087
Restricted cash held 500,189
----------
2,026,276
Restricted Funds
Specific purpose restricted funds
Research Fund 27,767
Scholarship Fund 8,879
Mammography Grant Fund 4,165
HCFA Grant Fund 23,297
----------
64,108
----------
Capital Improvement Fund 63,458
----------
Self Insurance Fund 6,589
----------
Total Cash $2,160,431
==========
Use of the restricted funds is limited to the purpose designated by the
donors of the funds. Cash held by the Unrestricted Funds in the amount of
$500,189 is recorded as restricted cash on the balance sheet. This cash was
advanced by Nevada State Bank as a portion of a note payable in the amount
of $2,500,000 and is to be used for a hospital-wide computer upgrade. The
cash limited as to use reflects the portion of the note proceeds that were
unexpended as of June 30, 1997.
The following is a listing of collateral or insurance on deposits as of
June 30, 1997:
- 11 -
16
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
CARRYING BANK
AMOUNT BALANCE
----------- -----------
Insured (FDIC) $ 300,000 $ 300,000
Collateralized, collateral held
by bank in Hospital's name 1,858,966 2,161,842
Uninsured and uncollateralized -- --
----------- -----------
2,158,966 2,461,842
Cash on hand, refunds held 1,465 --
----------- -----------
$ 2,160,431 $ 2,461,842
=========== ===========
NOTE 6 - ACCOUNTS RECEIVABLE:
At June 30, 1997, accounts receivable in the Operating Fund consisted of
the following:
1997
-----------
Patient Receivables
Patients $ 7,752,003
Less estimated uncollectible accounts and
allowance for contractual adjustments (3,356,032)
-----------
Net Patient Receivables 4,395,971
Accounts Receivable - Other 793,915
-----------
$ 5,189,886
===========
NOTE 7 - INVENTORIES:
As of June 30, 1997, Operating Fund inventories consisted of the
following:
1997
---------
Operating room $ 417,265
Pharmacy, Dietary, Central Supply and other 166,677
---------
Total $ 583,942
=========
NOTE 8 - PROPERTY AND EQUIPMENT:
As of June 30, 1997, property and equipment consisted of the following:
- 12 -
17
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1997
-----------
Land improvements $ 211,193
Buildings and improvements 7,850,377
Equipment 7,756,340
-----------
15,817,910
Less: Accumulated depreciation 8,506,734
-----------
7,311,176
Land 35,000
Construction in progress 15,214
Computer project in progress 1,436,448
-----------
$ 8,797,838
===========
Equipment is pledged as collateral for long-term debt as explained in
Notes 9 and 10.
NOTE 9 - LEASE OBLIGATIONS:
Capital Leases
The Hospital has entered into lease transactions which are accounted for
as capital leases. The related assets and liabilities acquired under these
lease agreements have been recorded in the Operating Fund. The asset
balances related to these leases have been recorded as follows:
1997
----------
Equipment $1,102,233
Less: Accumulated depreciation 605,834
----------
$ 496,399
==========
The following is a schedule by individual lease of the net present value
of the minimum lease payments as of June 30, 1997:
1997
-------
Lease payable to Coulter Leasing for hematology instrument,
dated July15, 1994, in monthly installments of $2,256,
including interest at 6.5% per annum; secured by equipment. $52,604
Lease payable to Sutro & Co., Incorporated for endoscopy
camera system, blood gas analyzer, and phacoemulsification
equipment, dated February 25, 1994, in monthly installments
of $1,481, including interest at 8.3% per annum; secured
by equipment. 30,128
- 13 -
18
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
Lease payable to Nevada State Bank for mammography
machine and Lifeline units, dated May 12, 1994, in monthly
installments of $2,254, including interest at 5.95% per
annum; secured by equipment. 48,603
Lease payable to Nevada State Bank for remodel of
modular building, dated September 8, 1994, in monthly
installments of $4,862, including interest at 6.3% per
annum; secured by modular building. 117,870
Lease payable to Nevada State Bank for operating room
table, dishwasher, mobile digital imaging system, dated
September 15, 1996, in monthly installments of $3,740,
including interest at 5.625% per annum; secured
by equipment. 133,010
---------
382,215
Less: Current maturities of capital leases 156,000
---------
$ 226,215
=========
Operating Lease
Elko General Hospital has entered into an operating lease for a medical arts
building to house its contract physicians. The lease has a term of seven and
one-half years, terminating on August 31, 2003. The lease expense for this
building for the year ended June 30, 1997 was $183,600.
The future minimum lease payments under these lease agreements as of June
30, 1997 are as follows:
YEAR ENDING CAPITAL OPERATING
JUNE 30, LEASES LEASES
----------- ---------- ----------
1998 $ 174,992 $ 183,600
1999 169,786 183,600
2000 56,856 183,600
2001 11,219 183,600
2002 -- 183,600
Subsequent -- 168,300
---------- -----------
Total minimum payments 412,853 $ 1,086,300
Less: Amount representing interest 30,638 ===========
----------
Present value of net minimum lease payments $ 382,215
==========
- 14 -
19
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 10 - NOTES PAYABLE:
Notes payable consisted of the following as of June 30, 1997:
1997
----------
Note payable to Bank of America dated January 25, 1990,
payable in monthly installments of $12,446, including
principal and interest at 6.9% per annum. Secured
by furniture, fixtures and equipment. $ 319,910
Note payable to Nevada State Bank dated October 26, 1993,
in monthly installments of $9,990, including interest
at 5.6% per annum. Secured by equipment. 107,611
Note payable to Nevada State Bank dated February 6, 1997,
in monthly installments of $46,784, including interest
at 4.66% per annum; secured by equipment. 1,889,201
----------
2,316,722
Less: Current maturities 617,248
----------
$1,699,474
==========
The aggregate maturities of notes payable for years after June 30, 1997,
based upon present arrangements, are as follows:
YEAR ENDING
JUNE 30 AMOUNT
----------- ----------
1998 $ 617,248
1999 647,017
2000 621,541
2001 384,905
2002 17,646
Subsequent 28,365
----------
$2,316,722
==========
NOTE 11 - RISK MANAGEMENT:
The Hospital is exposed to various risks of loss related to torts; theft
of, damage to, and destruction of assets; errors and omissions; injuries to
employees; and natural disasters.
- 15 -
20
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
The Hospital has joined together with other rural hospitals throughout
the State of Nevada to create the Liability Cooperative of Nevada (LICON).
LICON is a public entity risk pool currently operating as a common risk
management and insurance program for eleven member rural hospitals.
The Hospital pays an annual premium and specific deductibles, as
necessary, to LICON for its general insurance coverage. LICON is considered
a self-sustaining risk pool that will provide for its members comprehensive
hospital liability coverage up to $2,000,000 per insured event, and
directors, officers and trustees liability coverage of $500,000 per insured
occurrence and annual aggregate.
The Hospital continues to carry commercial insurance for other risks of
loss, including specific risks of loss not covered by LICON. Settled claims
resulting from these risks have not exceeded commercial insurance coverage
in the past three fiscal years.
The Hospital is self-insured for employees health and accident
insurance. The risk financing fund (Self Insurance Fund) is accounted for as
an internal service fund where assets are set aside for claim settlements. A
premium is charged to the operating fund based upon the total payroll of the
hospital. The Hospital maintains stop loss insurance coverage from an
outside insurance carrier for any claims in excess of $35,000 per
occurrence.
Liabilities of the fund are reported when it is probable that a loss has
occurred and the amount of the loss can be reasonably estimated. Liabilities
include an amount for claims that have been incurred but not reported
(IBNR). Claim liabilities are calculated considering the effects of
inflation, recent claim settlement trends including frequency and amount of
pay-outs and other economic and social factors. Changes in the balances of
claims liabilities during the past two fiscal years are as follows:
Unpaid Incurred Unpaid
Claims, Claims Claims,
Beginning of (Including Claim End of
Fiscal Year IBNRs) Payments Fiscal Year
------------ ---------- -------- -----------
1995-96 $111,965 $615,809 $638,941 $ 88,833
1996-97 88,833 910,170 902,637 96,366
NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair value amounts of all financial instruments have been
determined by the Hospital using available information and appropriate
valuation methodologies. Considerable judgment is necessary in interpreting
data to develop estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the
Hospital might realize in a current market exchange.
The carrying amount of cash and equivalents and current receivables and
payables approximates fair value. The carrying amounts of the notes and
leases payable approximates fair value because the interest rate on these
financial instruments approximates the Hospital's current incremental
borrowing rates.
- 16 -
21
ELKO GENERAL HOSPITAL
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
NOTE 13 - SUBSEQUENT EVENTS:
On June 11, 1998, Elko County, State of Nevada, Commissioners and the
Trustees of the Elko General Hospital sold the operations of the hospital
to Province Healthcare for approximately $22,000,000, subject to a final
determination of certain hospital assets and liabilities. Upon signing of
the sales agreement, the local State of Nevada governmental unit known as
the Elko General Hospital ceases to exist. The proceeds from the sale of
the hospital to Province Healthcare is to be paid directly to Elko County,
State of Nevada.
- 17 -
22
ELKO GENERAL HOSPITAL
CONDENSED BALANCE SHEET (UNAUDITED)
MARCH 31, 1998
(PAGE 1 OF 2)
ASSETS
OPERATING FUND - UNRESTRICTED
CURRENT ASSETS
Cash $ 2,470,420
Accounts receivable 6,021,964
Due from other governments --
Due from other funds 100,207
Inventories 610,147
Prepaid expenses 454,501
-----------
9,657,239
PROPERTY AND EQUIPMENT, NET 8,821,940
-----------
Total Assets $18,479,179
===========
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable $ 1,080,051
Accrued expenses 1,261,465
Current maturities of capital lease obligations 163,254
Current maturities of long-term notes payable 627,950
-----------
3,132,720
-----------
LONG-TERM LIABILITIES
Compensated absences 59,910
Capital lease obligations 103,169
Notes payable 1,232,253
-----------
1,395,332
-----------
Total Liabilities 4,528,052
-----------
FUND BALANCE 13,951,127
-----------
Total Liabilities and Fund Balance $18,479,179
===========
- 18 -
23
ELKO GENERAL HOSPITAL
CONDENSED BALANCE SHEET (UNAUDITED)
MARCH 31, 1998
(PAGE 2 OF 2)
RESTRICTED FUNDS
ASSETS
SPECIFIC PURPOSE FUNDS
Cash $ 35,405
===========
FUND BALANCE
FUND BALANCE
Unreserved
Undesignated $ 35,405
===========
ASSETS
CAPITAL IMPROVEMENT FUND
Assets
Cash $ 104,142
===========
FUND BALANCE
FUND BALANCE
Unreserved
Undesignated $ 104,142
===========
ASSETS
SELF INSURANCE FUND
CURRENT ASSETS
Cash $ 6,713
Accounts receivable 70,643
-----------
Total Assets $ 77,356
===========
LIABILITIES AND FUND BALANCE
CURRENT LIABILITIES
Accounts payable $ 127,450
Due to other funds 100,207
-----------
227,657
-----------
FUND BALANCE
Unreserved
Undesignated (Deficit) (150,301)
-----------
Total Liabilities and Fund Balance $ 77,356
===========
See notes to condensed financial statements.
- 19 -
24
ELKO GENERAL HOSPITAL
CONDENSED STATEMENTS OF OPERATIONS
OPERATING FUND - UNRESTRICTED
Nine Months Ended
March 31,
---------------------------
1998 1997
---- ----
REVENUE
Net Patient Service Revenue
Routine services $ 5,448,659 $ 4,925,621
Ancillary service 17,728,184 16,857,791
Contract physician revenue 1,659,800 1,426,832
------------ ------------
24,836,643 23,210,244
Less adjustments to revenues:
Contractual allowances under governmental
health care and insurance programs (3,891,627) (3,776,131)
Uncompensated care, charity care (262,469) (85,445)
------------ ------------
20,682,547 19,348,668
Other Operating Revenue 168,082 120,518
------------ ------------
20,850,629 19,469,186
------------ ------------
OPERATING EXPENSES
Professional care of patients 10,177,958 9,140,195
Dietary services 400,648 353,808
General services 1,948,496 1,798,917
Administrative services 2,344,757 1,863,933
Employee benefits 1,513,344 1,352,136
Insurance costs 249,394 210,278
Depreciation and amortization 1,095,706 803,416
Interest 91,181 130,169
Provision for bad debts 2,087,132 2,442,905
------------ ------------
19,908,616 18,095,757
------------ ------------
Income From Operations 942,013 1,373,429
------------ ------------
NON-OPERATING GAINS (LOSSES)
Interest income 69,264 68,544
Gifts, grants and bequests 21,810 12,028
Elko County Jail meal gains (net) 91,688 101,661
Other nonoperating revenues 72,182 19,704
------------ ------------
254,944 201,937
------------ ------------
Revenue and Gains in Excess of Expenses and Losses $ 1,196,957 $ 1,575,366
============ ============
See notes to condensed financial statements.
- 20 -
25
ELKO GENERAL HOSPITAL
CONDENSED STATEMENTS OF CASH FLOWS
OPERATING FUND - UNRESTRICTED
Nine Months Ended
March 31,
---------------------------
1998 1997
---- ----
OPERATING FUND - UNRESTRICTED
CASH FLOWS FROM OPERATING AND
NONOPERATING GAINS (LOSSES)
Revenue and gains in excess of (less than)
expenses and losses $ 1,196,957 $ 1,575,366
Adjustments to reconcile revenue and gains in excess
of expenses and losses to net cash provided by
operating activities and gains and losses:
Depreciation and amortization 1,095,706 803,416
Reclassify gain on sale of equipment (400) 13,584
Net (increase) decrease in receivables, inventory,
other current assets and payables (156,400) (747,793)
------------ ------------
Net Cash Provided by Operating and Nonoperating
Activities 2,135,863 1,644,573
------------ ------------
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Acquisition of property and equipment (1,119,808) (1,709,917)
Operating transfers for asset acquisitions -- 30,000
Proceeds from sale of equipment 400 4,715
Repayment of long-term debt (572,311) (759,945)
------------ ------------
Net Cash Provided (Used) by Capital and Related
Financing Activities (1,691,719) (2,435,147)
------------ ------------
Net Increase in Cash 444,144 (790,574)
CASH AND CASH EQUIVALENTS, July 1 2,026,276 2,712,570
------------ ------------
CASH AND CASH EQUIVALENTS, March 31 $ 2,470,420 $ 1,921,996
============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Interest paid $ 91,596 $ 130,198
============ ============
See notes to condensed financial statements.
- 21 -
26
ELKO GENERAL HOSPITAL
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization:
Elko General Hospital is governed by an elected Board of five trustees,
plus a representative from the Elko County Board of County Commissioners
pursuant to NRS 450.040 and 450.070 of the Nevada Revised Statutes.
The Hospital Board possesses final decision-making authority and is held
accountable for those decisions. The Hospital Board is responsible for approving
the budget, establishing spending limitations, funding and/or issuing bonds to
finance hospital system operations and construction.
Basis of Accounting:
The accounting policies of Elko General Hospital conform to generally
accepted accounting principles as applicable to providers of health care
services. A summary of the Hospital's significant accounting policies
consistently applied in the preparation of the financial statements is as
follows:
Enterprise funds are used to account for activities similar to those found
in the private sector, where the determination of net income is necessary or
useful to sound financial administration. Revenues derived from current
operations are intended to provide those resources necessary to maintain
continued delivery of such services in future periods. Goods or services from
such activities are provided to outside parties. The primary operations of Elko
General Hospital are presented in the "Operating Fund," which is accounted for
as an Enterprise Fund. In accordance with Governmental Accounting Standards
Board (GASB) Statement 20, the Hospital has determined to apply all GASB
pronouncements as well as the Financial Accounting Standards Board (FASB)
pronouncements issued unless the FASB pronouncement conflicts with GASB.
The Restricted Funds are used to account for resources whose use has been
restricted by donors or grantors. The Restricted Funds are comprised of the
following: 1) the Specific Purpose Funds have been restricted by grantors and
employees for specific uses; 2) the Capital Improvement Fund has been restricted
to accumulate resources for capital improvements to the Hospital; and 3) the
Self Insurance Fund has been restricted for the accumulation of resources for
and payment of claims related to the Hospital's self insured health program.
The accounting records for all funds are maintained on the accrual basis of
accounting. Under this method, revenues are recorded when earned and expenses
are recorded at the time liabilities are incurred.
- 22 -
27
NOTE 2 - SUBSEQUENT EVENT
On June 11, 1998, Elko County, State of Nevada, Commissioners and the
Trustees of the Elko General Hospital sold the operations of the hospital to
Province Healthcare for approximately $22,000,000, subject to a final
determination of certain hospital assets and liabilities. Upon signing of the
sales agreement, the local State of Nevada governmental unit known as the Elko
General Hospital ceases to exist. The proceeds from the sale of the hospital to
Province Healthcare is to be paid directly to Elko County, State of Nevada.
- 23 -
28
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
On February 10, 1998, Province completed its initial public offering of
common stock and its Junior Preferred Stock was converted into Common Stock. On
May 1, 1998, Province acquired Havasu Samaritan Regional Hospital (Havasu). On
June 11, 1998, Province acquired Elko General Hospital (Elko).
The following unaudited pro forma condensed consolidated balance sheet as
of March 31, 1998 gives effect to the acquisitions of Havasu and Elko by
Province as if the transactions had been completed as of March 31, 1998.
The following unaudited pro forma condensed consolidated statements of
income for the year ended December 31, 1997 and the three months ended March 31,
1998 give effect to: (i) the conversion of Junior Preferred Stock into Common
Stock and the sale of 5,405,000 shares of Common Stock in the initial public
offering at the price of $16.00 per share, and the application of the net
proceeds thereof to the repurchase of certain shares of Common Stock, the
redemption of Senior Preferred Stock and the repayment of debt, (ii) the
acquisition of Havasu by Province, and (iii) the acquisition of Elko by
Province, as if all such transactions had been completed as of January 1, 1997.
The pro forma condensed consolidated financial information presented herein
does not purport to represent what the Company's results of operations or
financial position would have been had such transactions in fact occurred at the
beginning of the periods presented or to project the Company's results of
operations in any future period. The pro forma results of operations, which do
not take into account certain operational changes instituted by the Company upon
acquisition of its hospitals, are not necessarily indicative of the results that
may be expected from such hospitals. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements of Province, included in its 1997 Form 10-K,
the audited financial statements of Havasu included in the Current Report on
Form 8-K/A Amendment No. 1 dated June 15, 1998, and the audited financial
statements of Elko, included elsewhere in this Current Report on Form 8-K/A.
Certain reclassifications have been made in the Elko historical financial
statements, included in the pro forma financial statements, to conform to the
Province presentation.
- 24 -
29
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(In thousands)
Historical
------------------------------ Pro Forma Pro Forma
Province Havasu Elko Adjustments Consolidated
-------- ------ ------- ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,675 $ 6 $ 2,498 $106,000 (a)
(6)(b)
(105,567)(c)
22,000 (d)
(2,498)(e)
(22,035)(f) $ 7,073
Accounts receivable, net 35,705 3,767 6,022 (3,767)(b) 41,727
Inventories 3,848 1,076 610 5,534
Prepaid expenses and other 6,028 160 130 (154)(b)
(32)(f)
350 (f) 6,482
-------- ------- ------- -------- --------
Total current assets 52,256 5,009 9,260 (5,709) 60,816
Property, plant and equipment, net 66,804 18,666 8,822 11,094 (c)
(5,272)(f) 100,114
Other assets:
Unallocated purchase price 760 -- -- 760
Cost is excess of net assets acquired, net 53,146 -- -- 75,724 (c)
14,687 (f) 143,557
Other 8,256 7,982 324 (7,982)(b)
(324)(e) 8,256
-------- ------- ------- -------- --------
$181,222 $31,657 $18,406 $ 82,218 $313,503
======== ======= ======= ======== ========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,029 $ 667 $ 1,064 $ (667)(b) $ 6,093
Accrued salaries and benefits 6,968 -- -- 6,968
Accrued expenses 2,311 510 1,218 489 (c)
1,000 (f) 5,528
Current maturities of long-term obligations 2,255 637 800 (637)(b)
(800)(e) 2,255
-------- ------- ------- -------- --------
Total current liabilities 16,563 1,814 3,082 (615) 20,844
Long-term obligations, less current maturities 52,166 21,062 1,327 106,000 (a)
(21,062)(b)
22,000 (d)
(1,327)(e)
180,166
Third-party settlements 7,255 -- -- 7,255
Other liabilities 8,506 -- 60 (60)(e) 8,506
Minority interest 888 -- -- 888
Common stockholders' equity (deficit):
Net assets -- 8,781 13,937 10,457 (b)
(19,238)(c)
(635)(e)
(13,302)(f) --
Common stock 130 -- -- 130
Additional paid-in-capital 97,338 -- -- 97,338
Retained earnings (deficit) (1,624) -- -- (1,624)
-------- ------- ------- -------- --------
Total common stockholders'
equity (deficit) 95,844 8,781 13,937 (22,718) 95,844
-------- ------- ------- -------- --------
$181,222 $31,657 $18,406 $ 82,218 $313,503
======== ======= ======= ======== ========
- 25 -
30
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
- ------------------
(a) Reflects the borrowing by Province of $106.0 million to finance the
acquisition of Havasu.
(b) Reflects the elimination of Havasu assets not purchased and liabilities not
assumed by Province as follows:
Cash.................................................................................... $ (6)
Accounts receivable, net ............................................................... (3,767)
Prepaid expenses and other ............................................................. (154)
Other .................................................................................. (7,982)
Accounts payable ....................................................................... 667
Current maturities of long-term obligations ............................................ 637
Long-term obligations, less current maturities ......................................... 21,062
--------
Net assets ............................................................................. $ 10,457
========
(c) Reflects the purchase of Havasu and the allocation of the $105.5 million
purchase price to adjust assets purchased and liabilities assumed to fair
value and to record intangibles as follows:
Property, plant and equipment........................................................... $ 11,094
Cost in excess of net assets acquired................................................... 75,724
Accrued expenses........................................................................ (489)
Net assets.............................................................................. 19,238
--------
Cash paid............................................................................... $105,567
========
(d) Reflects the borrowing by Province of $22.0 million to finance the
acquisition of Elko.
(e) Reflects the elimination of Elko assets not purchased and liabilities not
assumed by Province as follows:
Cash ................................................................................... $(2,498)
Other .................................................................................. (324)
Current maturities of long-term obligations ............................................ 800
Long-term obligations, less current maturities ......................................... 1,327
Other liabilities ...................................................................... 60
-------
Net assets ............................................................................. $ (635)
=======
(f) Reflects the purchase of Elko and the allocation of the purchase price
to adjust assets purchased and liabilities assumed to fair value and to
record intangibles as follows:
Prepaid expenses and other ............................................................. $ 318
Property, plant and equipment .......................................................... (5,272)
Cost in excess of net assets acquired .................................................. 14,687
Accrued expenses ....................................................................... (1,000)
Net assets ............................................................................. 13,302
--------
Cash paid .............................................................................. $ 22,035
========
- 26 -
31
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands)
IPO Acquisition
Historical Pro Forma Pro Forma Historical Pro Forma Pro Forma
Province Adjustments IPO Havasu Elko Adjustments Consolidated
---------- ----------- --------- ------- ------- ----------- ------------
Revenue:
Net patient service revenue $149,296 $149,296 $55,101 $25,863 $230,260
Management and professional services 9,691 9,691 -- -- 9,691
Reimbursable expenses 6,674 6,674 -- -- 6,674
Other 4,866 4,866 -- 497 5,363
-------- ------ -------- ------- ------- -------- --------
Net operating revenue 170,527 170,527 55,101 26,360 -- 251,988
Expenses:
Salaries, wages and benefits 66,172 66,172 16,626 13,333 96,131
Reimbursable expenses 6,674 6,674 -- -- 6,674
Purchased services 23,242 23,242 -- 1,172 24,414
Supplies 16,574 16,574 7,457 3,619 27,650
Provision for doubtful accounts 12,812 12,812 4,541 2,794 20,147
Other operating expenses 16,318 16,318 14,407 2,353 33,078
Rentals and leases 4,888 4,888 -- 282 5,170
Depreciation and amortization 7,557 7,557 1,689 1,287 $ 1,560 (d)
(145)(e) 11,948
Interest expense 8,121 $(3,334)(a) 4,787 1,628 139 7,170 (f)
1,687 (g) 15,411
Minority interest 329 329 -- -- 329
Loss on sale of assets 115 115 -- -- 115
-------- ------ -------- ------- ------- -------- --------
Total expenses 162,802 (3,334) 159,468 46,348 24,979 10,272 241,067
-------- ------ -------- ------- ------- -------- --------
Income (loss) before income taxes 7,725 3,334 11,059 8,753 1,381 (10,272) 10,921
Income taxes (benefit) 3,650 1,299 (b) 4,949 -- -- (54)(b) 4,895
-------- ------ -------- ------- ------- -------- --------
Net income 4,075 2,035 6,110 8,753 1,381 (10,218) 6,026
Preferred stock dividends and accretion (5,077) 5,077 (c) -- -- -- -- --
-------- ------ -------- ------- ------- -------- --------
Net income (loss) to common shareholders $( 1,002) $7,112 $ 6,110 $ 8,753 $ 1,381 $(10,218) $ 6,026
======== ====== ======== ======= ======= ======== ========
Basic earnigs (loss) per common share:
Net income $ 0.71 $ 0.49 $ 0.48
Preferred stock dividends and accretion (0.88) -- --
-------- -------- --------
Net income (loss) to common shareholders $ (0.17) $ 0.49 $ 0.48
======== ======== ========
Diluted earnings (loss) per common share:
Net income $ 0.71 $ 0.46 $ 0.46
Preferred stock dividends and accretion (0.88) -- --
-------- -------- --------
Net income (loss) to common shareholders $ (0.17) $ 0.46 $ 0.46
======== ======== ========
Weighted-average shares:
Basic earnings per common share 5,787 12,466 12,466
Diluted earnings per common share 5,787 13,140 13,140
- 27 -
32
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(In thousands)
IPO Acquisition
Historical Pro Forma IPO Historical Pro Forma Pro Forma
Province Adjustments Subtotal Havasu Elko Adjustments Consolidated
---------- ----------- -------- ------- ------- ------------ ------------
Revenue:
Net patient service revenue $42,750 $42,750 $15,168 $7,417 $65,335
Management and professional services 2,930 2,930 -- -- 2,930
Reimbursable expenses 1,562 1,562 -- -- 1,562
Other 609 609 -- 134 743
------- ---- ------- ------- ------ ------- -------
Net operating revenue 47,851 -- 47,851 15,168 7,551 70,570
Expenses:
Salaries, wages and benefits 18,606 18,606 4,786 3,859 27,251
Reimbursable expenses 1,562 1,562 -- -- 1,562
Purchased services 6,035 6,035 -- 331 6,366
Supplies 4,627 4,627 2,218 1,007 7,852
Provision for doubtful accounts 3,082 3,082 996 521 4,599
Other operating expenses 4,257 4,257 3,483 690 8,430
Rentals and leases 1,474 1,474 -- 86 1,560
Depreciation and amortization 2,205 2,205 459 366 $ 353 (d)
(80)(e) 3,303
Interest expense 1,855 $(474)(a) 1,381 395 28 1,840 (f)
436 (g) 4,080
Minority interest 68 68 -- -- 68
Loss on sale of assets 33 33 -- -- 33
------- ---- ------- ------- ------ ------- -------
Total expenses 43,804 (474) 43,330 12,337 6,888 2,549 65,104
------- ---- ------- ------- ------ ------- -------
Income (loss) before income taxes 4,047 474 4,521 2,831 663 (2,549) 5,466
Income taxes 1,772 189 (b) 1,961 -- -- 368 (b) 2,329
------- ---- ------- ------- ------ ------- -------
Net income 2,275 285 2,560 2,831 663 (2,917) 3,137
Preferred stock dividends and accretion (696) 696 (c) -- -- -- --
------- ---- ------- ------- ------ ------- -------
Net income to common shareholders $ 1,579 $981 $ 2,560 $ 2,831 $ 663 $(2,917) $ 3,137
======= ==== ======= ======= ====== ======= =======
Basic earnings (loss) per common share:
Net income $ 0.24 $ 0.20 $ 0.24
Preferred stock dividends and accretion (0.07) -- --
------- ------- -------
Net income (loss) to common shareholders $ 0.17 $ 0.20 $ 0.24
======= ======= =======
Diluted earnings (loss) per common share:
Net income $ 0.23 $ 0.19 $ 0.24
Preferred stock dividends and accretion (0.07) -- --
------- ------- -------
Net income (loss) to common shareholders $ 0.16 $ 0.19 $ 0.24
======= ======= =======
Weighted-average shares:
Basic earnings per common share 9,343 13,010 13,010
Diluted earnings per common share 9,615 13,282 13,282
- 28 -
33
PROVINCE HEALTHCARE COMPANY AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
- ------------------
(a) Reflects the elimination of interest expense associated with the $39.6
million of long-term obligations repaid with the net proceeds of the IPO.
(b) Reflects the inclusion of the income tax expense (benefit) based on the
combined federal and state statutory rate of 39.0% applied to adjusted
pre-tax income or loss.
(c) Reflects the elimination of the dividends and the accretion of issuance
costs on the Senior Preferred Stock redeemed with a portion of the net
proceeds of the IPO and the Junior Preferred Stock converted into Common
Stock in connection with the IPO.
(d) Reflects the elimination of the historical depreciation expense of Havasu,
and the inclusion of the Company's depreciation of property, plant and
equipment and amortization of goodwill and other intangible assets.
(e) Reflects the elimination of the historical depreciation expense of Elko,
and the inclusion of the Company's depreciation of property, plant and
equipment and amortization of goodwill and other intangible assets.
(f) Reflects the elimination of the historical interest expense related to the
debt of Havasu not assumed in the acquisition, and the inclusion of the
Company's interest expense related to the debt used to finance the
acquisition.
(g) Reflects the elimination of the historical interest expense related to the
debt of Elko not assumed in the acquisition, and the inclusion of the
Company's interest expense related to the debt used to finance the
acquisition.
- 29 -