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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
Date of Report: September 15, 1995
UNIVERSAL HEALTH SERVICES, INC.
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(Exact name of Registrant as specified in its charter)
Delaware 0-10454 23-2077891
----------- ----------------- --------------
(State of (Commission File No.) (IRS Employer
Incorporation) Identification No.)
367 South Gulph Road, King of Prussia, Pennsylvania 19406
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(Address of principal executive offices Zip Code)
Registrant's telephone number, including area code: 610-768-3300
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Page One of Thirteen Pages
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Item 2. Acquisition of Assets
(a) On August 31, 1995, the Company acquired substantially all of the assets
and operations of Manatee Memorial Hospital ("Manatee"), a 512-bed acute care
hospital located in Brandenton, Florida from Baptist Hospitals and Health
Systems, Inc. and affiliates ("BHHS") for approximately $139 million in cash.
The sources of the cash payment were proceeds from the Company's recent sale of
$135 million principal amount of 8 3/4% Senior Notes due 2005 and borrowings
under the Company's revolving credit facility with Morgan Guaranty Trust
Company of New York, as agent. The assets acquired include the real and
personal property, working capital and intangible assets of Manatee.
(b) The assets acquired consisted substantially of all the assets owned by
BHHS and used to operate Manatee. The Company intends to continue to operate
Manatee.
Page Two of Thirteen Pages
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Item 7. Financial Statements and Exhibits
(a) The audited financial statements of Manatee Hospitals and Health Systems,
Inc. ("Manatee") as of and for the years ended August 31, 1994 and 1993
are incorporated by reference to pages F-31 to F-45 of the Company's
Registration Statement on Form S-3, File No. 33-60287, declared effective
on July 18, 1995. The consent of Ernst & Young LLP to use their Report of
Independent Certified Public Accountants on the financial statements of
Manatee will be filed by amendment to this Form 8-K as soon as practicable.
The unaudited interim combined financial statements of Manatee included
herein include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation of
the financial position of Manatee as of June 30, 1995 and the results of
operations for the ten month periods ended June 30, 1994 and 1995, as
presented in the accompanying unaudited interim combined financial
statements.
(b) BASIS OF PRESENTATION OF FINANCIAL STATEMENTS:
The accompanying pro forma financial statements of the Company reflect the
Company's recent acquisition of Manatee Memorial Hospital as described in
Item 2 hereof. In addition, such financial statements also reflect (i) the
Company's recent sale of $135 million principal amount of 8 3/4% senior
notes due 2005, which closed on August 4, 1995 and (ii) the acquisition of
Aiken Regional Medical Centers ("Aiken"), a 225-bed medical complex located
in Aiken, South Carolina. Aiken was acquired by the Company on July 7,
1995 from a subsidiary of Columbia/HCA Healthcare Corporation ("Columbia")
in exchange for approximately $44 million in cash and the operations and
fixed assets of Westlake Medical Center ("Westlake") and Dallas Family
Hospital. Coincident with the Aiken transaction, the Company acquired the
property of Westlake, which it leased from Universal Health Realty Income
Trust ("UHT"), in exchange for other property consisting of additional
real estate assets owned by the Company but related to three acute care
facilities owned by UHT and operated by the Company, which were transferred
to and leased back from UHT. These additional real estate assets
represent major additions and expansions made to the facilities since the
purchase of the properties from the Company in 1986. The Westlake property
was then transferred to Columbia. In addition to the Westlake property,
the real and personal property of Dallas Family Hospital, and certain
working capital accounts of both facilities, excluding accounts receivable,
were acquired by Columbia.
Page Three of Thirteen Pages
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The Pro Forma Consolidated Statements of Income were prepared as if the
transactions occurred as of the beginning of the period presented. The Pro
Forma Condensed Consolidated Balance Sheet was prepared as if the
transactions occurred on June 30, 1995. These pro forma financial
statements should be read in connection with the historical financial
statements and notes thereto incorporated by reference in this Form 8-K.
The pro forma financial information is unaudited and is not necessarily
indicative of the consolidated results which actually would have occurred
if the transactions had been consummated at the beginning of the periods
presented, nor does it purport to present the future financial position and
results of operations for future periods.
1. The Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1995 for
Universal Health Services, Inc. and Subsidiaries is included herein.
2. The Pro Forma Condensed Consolidated Income Statement for the year ended
December 31, 1994 for Universal Health Services, Inc. and Subsidiaries is
incorporated by reference to page S-4 of the Company's Registration
Statement on Form S-3, File No. 33- 60287, declared effective on July 18,
1995.
3. The Pro Forma Condensed Consolidated Income Statement for the Six Months
Ended June 30, 1995 for Universal Health Services, Inc. and Subsidiaries
is included herein.
Page Four of Thirteen Pages
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MANATEE HOSPITALS AND HEALTH SYSTEMS, INC.
COMBINED BALANCE SHEET
AS OF JUNE 30, 1995
(unaudited)
(amounts in thousands)
<TABLE>
<S> <C>
Current assets:
Cash and cash equivalents $2,492
Short term investments 11,819
Accounts receivable 19,731
Inventories 2,556
Prepaid expenses and other assets 320
Current portion of assets whose use is limited 3,835
---------
Total current assets 40,753
---------
Assets whose use is limited, less current portion 11,495
Property, plant and equipment:
Land and land improvements 4,604
Leasehold improvements 107
Buildings 57,148
Equipment 29,719
Less allowances for depreciation (36,783)
---------
54,795
Construction in progress 876
---------
55,671
Due from affiliated organizations 25,975
Other assets:
Debt issue costs 2,249
Acquisition costs 1,252
Other 853
---------
4,354
---------
TOTAL ASSETS $138,248
=========
Current liabilities:
Accounts payable and accrued expenses $4,206
Accrued employee compensation and related liabilities 6,466
Accrued interest payable 4,080
Estimated third party settlements 2,726
Other current liabilities 2,383
Current portion of long term debt 1,727
---------
Total current liabilities 21,588
---------
Other liabilities 459
Long term debt, less current portion and escrowed funds 80,990
Fund balance 35,211
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TOTAL LIABILITIES AND FUND BALANCE $138,248
=========
</TABLE>
Page Five of Thirteen Pages
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MANATEE HOSPITALS AND HEALTH SYSTEMS, INC.
COMBINED STATEMENTS OF REVENUES AND EXPENSES
FOR THE TEN MONTHS ENDED JUNE 30, 1995 & 1994
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Ten months ended
June 30,
-----------------------------
1995 1994
---- ----
<S> <C> <C>
Net patient service revenue $102,453 $97,007
Other revenue 2,492 1,952
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TOTAL REVENUE 104,945 98,959
EXPENSES:
Salaries and wages 33,219 32,324
Employee benefits 9,159 8,682
Supplies and other 35,389 33,410
Provision for doubtful accounts 7,464 7,474
Depreciation and amortization 4,832 4,748
Interest 8,016 6,352
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TOTAL EXPENSES 98,079 92,990
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Income from operations before allocated costs 6,866 5,969
Allocated costs (1,199) (1,156)
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Income from operations 5,667 4,813
Nonoperating gains 796 449
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EXCESS REVENUE OVER EXPENSES $6,463 $5,262
=========== ==========
</TABLE>
Page Six of Thirteen Pages
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MANATEE HOSPITALS AND HEALTH SYSTEMS, INC.
COMBINED STATEMENTS OF CASH FLOWS
FOR THE TEN MONTHS ENDED JUNE 30, 1995 & 1994
(unaudited)
(amounts in thousands)
<TABLE>
<CAPTION>
Ten months ended
June 30,
----------------------------
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES AND NONOPERATING GAINS
Excess of revenue over expenses $6,463 $5,262
Adjustments to reconcile excess of revenue over expenses to net
cash provided by operating activities and nonoperating gains:
Depreciation and amortization 4,832 4,748
Change in current assets and current liabilities, exclusive of cash and cash
equivalents and current portions of noncurrent assets and liabilities (2,007) 3,669
Increase (decrease) in other liabilities (227) 142
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Net cash provided by operating activities and nonoperating gains 9,061 13,821
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INVESTING ACTIVITIES
Purchases of property, plant and equipment (2,646) (4,899)
Increase in short term investments (1,514) (4,717)
Decrease in assets whose use is limited 1,082 2,888
Decrease in other assets 45 79
Restricted expenditures (3) (103)
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Net cash used in investing activities (3,036) (6,752)
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FINANCING ACTIVITIES
Transfer to Foundation (200) ---
Payments to affiliated organizations (9,049) (4,829)
Repayment of long-term debt (1,187) (2,976)
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Net cash used in financing activities (10,436) (7,805)
--------- ---------
Decrease in cash and cash equivalents (4,411) (736)
Cash and cash equivalents at beginning of period 6,903 4,989
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,492 $4,253
========= =========
</TABLE>
Page Seven of Thirteen Pages
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UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
ACQUISITIONS
THE COMPANY AND PRO FORMA THE COMPANY
HISTORICAL DIVESTITURES (A) ADJUSTMENTS PRO FORMA
------------ ---------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $3,809 --- --- $3,809
Accounts receivable, net 71,233 19,650 --- 90,883
Other current assets 19,992 4,345 --- 24,337
Deferred income taxes 14,428 --- --- 14,428
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TOTAL CURRENT ASSETS 109,462 23,995 --- 133,457
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Property and equipment, net 347,555 56,852 4,516 B. 408,923
Other Assets:
Excess of cost over fair value of
assets acquired 37,170 --- 104,223 C. 141,393
Deferred income taxes 12,687 --- --- 12,687
Deferred charges and other 32,752 1,014 8,478 D. 42,244
----------- ------------ ----------- -----------
TOTAL ASSETS $539,626 $81,861 $117,217 $738,704
=========== ============ =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current maturities of debt $7,568 ($190) --- $7,378
Accounts payable and accrued expenses 104,402 9,649 --- 114,051
Federal and state taxes 2,770 --- 3,000 E. 5,770
----------- ------------ ----------- -----------
TOTAL CURRENT LIABILITIES 114,740 9,459 3,000 127,199
----------- ------------ ----------- -----------
Other non-current liabilities 75,428 459 (3,000) E. 72,887
Long-term debt, net of current maturities 66,820 (1,968) 191,128 F. 255,980
Common stockholders' equity 282,638 73,911 (73,911) 282,638
TOTAL LIABILITIES AND ----------- ------------ ----------- -----------
STOCKHOLDERS' EQUITY $539,626 $81,861 $117,217 $738,704
=========== ============ =========== ===========
</TABLE>
Page Eight of Thirteen Pages
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UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(Unaudited)
(In Thousands, except Per Share Data)
<TABLE>
<CAPTION>
ACQUISITIONS
THE COMPANY AND PRO FORMA THE COMPANY
HISTORICAL DIVESTITURES (a) ADJUSTMENTS PRO FORMA
------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
Net revenues $434,880 $83,712 ($750) b. $515,880
(862) c.
(1,100) d.
Operating Charges:
Operating expenses 168,561 37,287 (1,100) d. 203,206
500 e.
(2,042) f.
Salaries and wages 155,638 21,256 --- 176,894
Provision for doubtful accounts 33,242 8,525 --- 41,767
Depreciation and amortization 23,058 2,956 3,249 g. 29,263
Lease and rental expense 17,548 (718) 1,193 h. 18,023
Interest expense, net 3,041 5,467 2,706 i. 11,214
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Total expenses 401,088 74,773 4,506 480,367
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Income before income taxes 33,792 8,939 (7,218) 35,513
Provision for income taxes 12,396 2,172 (1,513) j. 13,055
------------ ---------------- ------------ --------------
Net income $21,396 $6,767 ($5,705) $22,458
============ ================ ============ ==============
Earnings per common and common
equivalent share: $1.53 $1.61
============ ==============
Weighted average number of
common shares and equivalents: 13,977,000 13,977,000
============ ==============
</TABLE>
Page Nine of Thirteen Pages
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UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET:
(A) To reflect the historical cost basis of the assets acquired and the
liabilities assumed in the Aiken and Manatee transactions, net of
assets and liabilities divested as part of the Aiken transaction.
<TABLE>
<CAPTION>
THE MANATEE TRANSACTION THE AIKEN TRANSACTION
--------------------------- ----------------------------------------------
ASSETS AND ASSETS AND UHS ASSETS/ NET
MANATEE LIABILITIES AIKEN LIABILITIES LIABILITIES ACQUISITIONS/
HISTORICAL NOT ACQUIRED HISTORICAL NOT ACQUIRED DIVESTED DIVESTITURES
------------ ------------ ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $14,311 ($14,311) $1,491 ($1,491) --- ---
Accounts receivable, net 19,731 --- 15,966 (15,966) (81) 19,650
Other current assets 6,711 (3,835) 2,568 --- (1,099) 4,345
Deferred income taxes --- --- --- --- --- ---
------------ ------------ ---------- --------- --------- ---------
TOTAL CURRENT ASSETS 40,753 (18,146) 20,025 (17,457) (1,180) 23,995
------------ ------------ ---------- --------- --------- ---------
Property and equipment, net 55,671 --- 41,583 --- (40,402) 56,852
Other Assets:
Excess of cost over fair value of
assets acquired --- --- 7,888 (7,888) --- ---
Deferred income taxes --- --- --- --- --- ---
Deferred charges and other 41,824 (40,971) 2,222 (2,029) (32) 1,014
------------ ------------ ---------- --------- --------- ---------
TOTAL ASSETS $138,248 ($59,117) $71,718 ($27,374) ($41,614) $81,861
============ ============ ========== ========= ========= =========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current maturities of debt $1,727 ($1,727) --- --- ($190) ($190)
Accounts payable and accrued
expeneses 19,861 (6,556) 6,676 (908) (9,424) 9,649
Federal and state taxes --- --- --- --- --- ---
------------ ------------ ---------- --------- --------- ---------
TOTAL CURRENT LIABILITIES 21,588 (8,283) 6,676 (908) (9,614) 9,459
------------ ------------ ---------- --------- --------- ---------
Other non-current liabilities 459 --- --- --- --- 459
Long-term debt, net of current
maturities 80,990 (80,990) 30,503 (30,503) (1,968) (1,968)
Common stockholders' equity 35,211 30,156 34,539 4,037 (30,032) 73,911
------------ ------------ ---------- --------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $138,248 ($59,117) $71,718 ($27,374) ($41,614) $81,861
============ ============ ========== ========= ========= =========
</TABLE>
(B) To adjust the carrying value of property and equipment acquired to
fair value.
(C) To record the excess of cost over fair value of net tangible assets
acquired.
(D) To capitalize financing costs incurred in connection with issuance
of $135 million Senior Notes.
(E) To reclassify income taxes currently payable as a result of these
transactions.
(F) To record the net borrowings necessary to finance the Aiken and
Manatee transactions and the financing costs incurred in
connection with the $135 million Senior Notes.
Page Ten of Thirteen Pages
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ADJUSTMENTS TO PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT:
(a) To reflect the historical revenues and operating expenses of the hospitals
acquired and divested as part of the Manatee and Aiken transactions.
SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
THE AIKEN TRANSACTION
------------------------------------------ NET
DALLAS ACQUISITIONS/
MANATEE AIKEN WESTLAKE FAMILY DIVESTITURES
---------- --------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
Net Revenues $65,003 $44,233 ($15,258) ($10,266) $83,712
Operating Charges
Operating expenses 28,061 21,546 (8,094) (4,226) 37,287
Salaries and wages 19,764 12,474 (6,744) (4,238) 21,256
Provision for doubtful accounts 4,615 5,638 (880) (848) 8,525
Depreciation and amortization 2,921 1,907 (1,108) (764) 2,956
Lease and rental expense 816 576 (1,763) (347) (718)
Interest expense, net 5,375 92 --- --- 5,467
---------- --------- ----------- ----------- -----------
Total expenses 61,552 42,233 (18,589) (10,423) 74,773
---------- --------- ----------- ----------- -----------
Income (loss) before income taxes 3,451 2,000 (3,331) (157) 8,939
Provision (benefit) for income taxes --- 822 (1,289) (61) 2,172
---------- --------- ----------- ----------- -----------
Net income (loss) $ 3,451 $ 1,178 ($ 2,042) ($ 96) $ 6,767
========== ========= =========== =========== ===========
</TABLE>
<TABLE>
<S> <C>
(b) To eliminate intercompany interest received by Manatee from an affiliate ($750)
(c) To eliminate interest income earned by Manatee on cash investments (862)
(d) To eliminate management fees charged by UHS to Manatee (1,100)
(e) To adjust operating expenses at Manatee for state and local taxes other
than income taxes and other operating costs 500
(f) To eliminate management fees paid to affiliates of Aiken and Manatee (2,042)
(g) To adjust historical depreciation and amortization expense of Manatee and
Aiken based on average depreciable lives of 20 years for buildings and
improvements, 5 years for equipment and 15 years for amortization of goodwill 3,519
To adjust historical depreciation expense on the real property transferred to
UHT as part of the Aiken transaction (425)
To record amortization expense on capitalized financing costs 155
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Net increase in depreciation and amortization expense 3,249
===========
(h) To record lease and rental expense relating to the assets transferred from
UHS to UHT 1,193
(i) To eliminate the historical interest expense at Aiken and Manatee (5,467)
To record interest on borrowings to finance the Aiken and Manatee transactions
using borrowings generated from the Company's $135 million Senior Notes,
commercial paper and revolving credit facilities. The average interest rate on
all funds used for the acquisitions was assumed to be 8.5% for the six months
ended June 30, 1995 8,173
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Net increase in interest expense 2,706
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(j) To adjust income tax expense (1,513)
</TABLE>
Page Eleven of Thirteen Pages
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(C) EXHIBITS:
99.1 Asset purchase agreement among Baptist Hospitals and Health Systems,
Inc. and Affiliated Companies and Manatee Memorial Hospital, L.P. and Universal
Health Services, Inc., dated as of June 30, 1995, incorporated by reference in
the Company's registration statement on Form S-3, File No. 33-60287, declared
effective on July 18, 1995.
Page Twelve of Thirteen Pages
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SIGNATURE
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 thereunto duly authorized.
UNIVERSAL HEALTH SERVICES, INC.
(Registrant)
By: /s/ Kirk E. Gorman
------------------------------------------
Senior Vice President and Chief Financial Officer
Dated: September 15, 1995
(Principal Financial Officer and
Duly Authorized Officer)
Page Thirteen of Thirteen Pages
