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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 21, 1994
COMMISSION FILE NUMBER 0-11851
CHAMPION HEALTHCARE CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 0-11851 59-2283872
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(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NUMBER)
14340 TORREY CHASE, SUITE 320, HOUSTON, TEXAS 77014
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE
(713) 583-5491
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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This Form 8-K/A Amendment No. 2 updates the Registrant's report on Form 8-K
dated December 21, 1994, reporting the formation of a general partnership by a
subsidiary of the Registrant.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements (attached following the signature page):
Certain financial information of the Registrant and its subsidiaries as
of the dates and for the periods listed below has been previously reported in
the Registrant's Form 8-K/A (Amendment No. 1) amending Form 8-K dated December
6, 1994. Certain financial information of Dakota Hospital as of the dates and
for the periods listed before have been previously reported in this Registrant's
Form 8-K dated December 21, 1994. Accordingly, such information is not being
included in reliance on General Instructions B.3 to Form 8-K because it has been
previously reported.
CHAMPION HEALTHCARE CORPORATION
Condensed Consolidated Balance Sheet at September 30, 1994
(Unaudited)(1)
Condensed Consolidated Statement of Operations for the nine months
ended September 30, 1994 and 1993 (Unaudited)(1)
Condensed Consolidated Statement of Cash Flows for the nine months
ended September 30, 1994 and 1993 (Unaudited)(1)
Notes to Condensed Consolidated Financial Statements (Unaudited)(1)
DAKOTA HOSPITAL
Independent Auditor's Report of Charles Bailly & Company, P.L.L.P.(2)
Dakota Hospital Balance Sheets dated September 30, 1994 and 1993(2)
Dakota Hospital Statement of Revenue and Expenses and Changes in Fund
Balance for the years ended September 30, 1994 and 1993(2)
Dakota Hospital Statement of Cash Flows for the years ended September
30, 1994 and 1993(2) Notes to Financial Statements(2)
Dakota Hospital Statement of Revenue and Expenses and Changes in Fund
Balance for the three months ended December 31, 1994 (Unaudited)(3)
Dakota Hospital Statement of Cash Flows for the three months ended
December 31, 1994(Unaudited)(3)
Notes to Financial Statements (Unaudited)(3)
---------
(1) Previously reported in Form 8-K/A dated December 6, 1994, Amendment No. 1
(2) Previously reported in this Form 8-K
(3) Included in this Form 8-K/A, Amendment No. 2
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(b) Pro Forma Financial Information:
The following pro forma financial information of the Registrant and its
subsidiaries as of the dates and for the periods listed below has been
previously reported in the Registrant's Form 8-K/A (Amendment No. 2)
amending the Registrant's report on Form 8-K dated December 6, 1994.
Champion Combined Company and Dakota Hospital
Pro Forma Combining Income Statement
For the Nine Months Ended September 30, 1994
Pro Forma Combining Income Statement
For the Year Ended December 31, 1993
Pro Forma Combining Balance Sheet
September 30, 1994
Notes to Pro Forma Combining Financial Statements
Champion Combined Group and AmeriHealth, Inc. (Combined Company)
Pro Forma Combining Income Statement
For the Nine Months Ended September 30, 1994
Pro Forma Combining Income Statement
For the Year Ended December 31, 1993
Pro Forma Combining Balance Sheet
September 30, 1994
Notes to Pro Forma Combining Financial Statements
Champion Combined Group
Champion Healthcare Corporation and Psychiatric Healthcare
Corporation
Pro Forma Combining Income Statement
For the Nine Months Ended September 30, 1994
Champion Healthcare Corporation, Midland Physicians and Surgeons
Hospital, Inc. and Psychiatric Healthcare Corporation
Pro Forma Combining Income Statement
For the Year Ended December 31, 1993
Champion Healthcare Corporation and Psychiatric Healthcare Corporation
Pro Forma Combining Balance Sheet, September 30, 1994
Notes to Pro Forma Combining Financial Statements
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(c) Exhibits
The following exhibits as of the dates and for the periods listed below
have been previously reported in the Registrant's Form 8-K dated December 21,
1994.
10. Amended and Restated Partnership Agreement of Dakota/Champion
Partnership dated December 31, 1994.
10.1 Operating Agreement between Dakota/Champion Partnership and the
Registrant, dated December 21, 1994.
23 Consent of Charles Bailly & Company, P.L.L.P. to the incorporation by
reference of their report on the financial statements of Dakota
Hospital in the Registrant's Registration Statement on Form S-8
(No. 33- 47144).
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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, thereunto duly authorized.
Dated: August 4, 1995 Champion Healthcare Corporation
(Registrant)
By: /s/ James G. VanDevender
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James G. VanDevender
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
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DAKOTA HOSPITAL
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1994
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INDEX
DAKOTA HOSPITAL
Page
Number
------
FINANCIAL INFORMATION
Condensed statement of revenue and expenses and changes in fund balance
for the three months ended December 31, 1994 (unaudited) 3
Condensed statement of cash flows for the three months ended
December 31, 1994 (unaudited) 4
Notes to condensed financial statements for December 31, 1994 (unaudited) 5
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DAKOTA HOSPITAL
CONDENSED STATEMENT OF REVENUE AND EXPENSES AND CHANGES IN FUND BALANCE
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended
December 31,
1994
------------------
<S> <C>
Net patient service revenue $ 15,408
Other revenue 521
---------
Net revenue 15,929
Operating expenses:
Salaries and benefits 7,302
Other operating and administrative 7,784
Provision for bad debts 917
Interest 566
Depreciation and amortization 689
---------
Total expenses 17,258
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Loss from operations (1,329)
Non-operating gains (losses):
Gain on curtailment of pension plan 3,729
Other (105)
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Total non-operating gains 3,624
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Net revenue and gains in excess of expenses and
losses $ 2,295
=========
CHANGES IN FUND BALANCE
Balance, September 30, 1994 $ 23,135
Net revenue and gains in excess of expenses and losses 2,295
---------
Balance, December 31, 1994 $ 25,430
========
</TABLE>
See notes to condensed financial statements.
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DAKOTA HOSPITAL
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months
Ended
December 31, 1994
-----------------
<S> <C>
Net cash used by operating activities $ (428)
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Investing activities:
Decrease in expansion and replacement funds 18,633
Additions to property and equipment (319)
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Net cash provided by investing activities 18,314
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Financing activities:
Payments on debt (420)
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Net cash used in financing activities (420)
--------
Increase in cash and cash equivalents 17,466
Cash and cash equivalents at beginning of period 2,993
--------
Cash and cash equivalents at end of period $ 20,459
========
</TABLE>
See notes to condensed consolidated financial statements.
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DAKOTA HOSPITAL
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 -- BASIS OF PRESENTATION
Dakota Hospital ("Hospital") is a 199-bed medical acute-care facility located in
Fargo, North Dakota. The sole member of the Hospital is Dakota Health Systems
("Health Systems") which was organized to facilitate diversification of
services. The Hospital and Health Systems are organized as North Dakota
nonprofit corporations and are exempt from federal income taxes under Section
501(c)(3) of the Internal Revenue Code. Consolidated financial statements for
Dakota Health Systems are prepared under separate cover.
The accompanying unaudited condensed financial statements of the Hospital have
been prepared, without audit, in accordance with generally accepted accounting
principles for interim financial statements and in accordance with Rule 3-01 and
3-02 of Regulation S-X. Accordingly, these financial statements do not include
all of the information and disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the results for the period presented have been reflected.
These financial statements have been prepared prior to the Hospital's
contribution of its operating assets to a partnership that began operations on
December 31, 1994 (See "Note 2 - Formation of Partnership"). These financial
statements should be read in conjunction with the Hospital's audited
consolidated financial statements for the year ended September 30, 1994,
included in Champion Healthcare Corporation's Form 8-K, as amended, dated
December 21, 1994.
Net patient service revenue is presented based on established billing rates less
allowances and discounts for patients covered by Medicare, Medicaid and other
contractual programs. Payments received under these programs are generally less
than established billing rates with the difference recorded as contractual
allowances or discounts. Such allowances have been deducted from accounts
receivable pending final audit and settlement. Provision for contractual
allowances and discounts for the three months ended December 31, 1994 was
$5,926,000.
The Company's business is seasonal in nature and subject to general economic
conditions and other factors. Accordingly, operating results for the three month
period ended December 31, 1994 are not necessarily indicative of the results
that may be expected for the fiscal year.
NOTE 2 -- FORMATION OF PARTNERSHIP
On November 18, 1994, the Hospital and Champion Healthcare Corporation of North
Dakota ("Champion") approved a plan to form a partnership (the "Partnership").
The Partnership is operated as Dakota Heartland Health System ("DHHS") and began
operations on December 31, 1994. The Hospital and Champion contributed their
respective hospitals both debt and lien free (except capitalized leases), and
Champion contributed an additional $20,000,000 in cash, each in exchange for 50%
ownership in the Partnership. In addition, each partner contributed $2,000,000
in cash to the working capital of the Partnership. A $20,000,000 special
distribution was made to the Hospital after capitalization of the Partnership in
accordance with the terms of the Partnership agreement. The ownership interest
acquired by each partner was based on the value of the assets contributed to the
Partnership. In connection with the formation of the Partnership, the Hospital
acquired and contributed to the Partnership the stock of Dakota Health
Enterprises ("DHE"), an affiliate, and thus all the long-term business
investments of DHE. The transaction was subject to a thirty day state mandated
notification period. Such notice was delivered on November 21, 1994, and the
transaction was finalized on December 21, 1994 (the "Closing").
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DAKOTA HOSPITAL
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) -- CONTINUED
On December 21, 1994, the Partnership entered into an operating agreement with
Champion and the Hospital to manage the combined operations of the two
hospitals. Under the terms of the Partnership agreement, Champion is obligated
to advance funds to the Partnership to cover any and all operating deficits of
the Partnership. Champion will receive 55% of the net income and distributable
cash flow ("DCF") of the Partnership until such time as it has recovered on a
cumulative basis an additional $10,000,000 of DCF in the form of an "excess"
distribution.
The Partnership is administered by a Governing Board comprised of six members
appointed by the Hospital, three members appointed by Champion and three members
appointed by mutual consent of the Hospital members and Champion members.
Certain Governing Board actions require the majority approval of each of
Champion members and Hospital members.
From the 19th month after the commencement of the Partnership, the Hospital has
the right to require Champion to purchase its Partnership interest free of debt
or liens for a cash purchase price equal to 5.5 times earnings before
depreciation, interest, income taxes and amortization less the Hospital's
pro-rata share of the Partnership's long-term debt. From the 37th month after
the commencement of the Partnership, the purchase price for the Hospital's
Partnership interest shall not be less than $50,000,000. After receipt of
written notice of the Hospital's intent to sell its Partnership interest,
Champion would have 12 months to complete the purchase. Should Champion not
complete the purchase during this period, the Hospital would have the right to,
among others, (i) terminate the operating agreement and engage an outside party
to manage the hospital, (ii) replace Champion's designees to the Governing Board
and (iii) enter into a fair market value transaction to sell substantially all
of the Partnership's assets.
In connection with the formation of the Partnership, the Hospital terminated its
pension plan and recognized a curtailment gain of $3,729,000. Additionally, the
Hospital incurred approximately $817,000 in severance cost, which has been
reflected in the condensed statement of revenue and expenses and changes in
fund balance for the three months ended December 31, 1994.
NOTE 3 - SUBSEQUENT EVENT
In order to deliver the hospital free and clear as a condition of Closing, the
Hospital provided the bond trustee of its Series 1992 Bonds, (Norwest Bank of
Minneapolis) (the "Trustee"), with sufficient funds and irrevocable instructions
to commence a tender offer (the "Tender Offer") for the purchase of Series 1992
Bonds from current bondholders, and to defease (the "Defeasance") all bonds not
so tendered and extinguished. The Hospital secured a letter of credit in the
amount of $36,750,000 to assure that funds would be available to purchase the
bonds from tendering bondholders and to purchase securities for the Defeasance
escrow thereafter. Approximately $10,365,000 in Series 1992 Bonds were tendered
pursuant to the Tender Offer, which expired in January 1995. The Defeasance of
the remaining $22,645,000 principal amount of Series 1992 Bonds was completed in
February 1995. The Series 1992 Bonds extinguished as a result of the Tender
Offer and Defeasance resulted in an extraordinary gain of approximately
$1,550,000.
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