<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
FORM 10-QT/A
AMENDMENT NO. 1
TO
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1995
Commission file number 1-12055
PARACELSUS HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
California 95-3565943
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
515 W. Greens Road, Suite 800, Houston, Texas 77067
(Address of principal executive offices) (Zip Code)
(281) 774-5100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES_X_ NO__
As of December 31, 1995, there were 450 shares of the Registrant's Common
Stock, no stated value, outstanding.
<PAGE> 2
PARACELSUS HEALTHCARE CORPORATION
FORM 10-QT/A
For the Quarterly Period Ended
December 31, 1995
INDEX
Page
Reference
FORM 10-QT/A
------------
PRELIMINARY STATEMENT 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1995 and September 30, 1995 4
Consolidated Statements of Operations -
Three Months ended December 31, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows -
Three Months ended December 31, 1995 and 1994 6
Notes to Interim Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION 14
SIGNATURE 16
<PAGE> 3
PRELIMINARY STATEMENT
Paracelsus Healthcare Corporation (the "Company") is filing this
report on Form 10-Q/A to amend and restate the Transition Report on Form
10-Q for the quarter ended December 31, 1995, filed with the Securities
and Exchange Commission (the "Commission") on November 1, 1996.
In October 1996, the Board of Directors appointed a Special
Committee consisting of non-management members, to supervise and direct
the conduct of an inquiry by outside legal counsel regarding, among other
things, the Company's accounting and financial reporting practices and
procedures for the periods prior to the quarter ended September 30, 1996.
As a result of the inquiry, the Company restated its financial
information for periods commencing with January 1, 1992 through the nine
months ended September 30, 1996, as reflected in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, filed with the
Commission on April 15, 1997. Adjustments and reclassifications were
necessary to correct errors and irregularities relating to (i)
receivables due from Medicare and other government programs (ii) use of
corporate reserves, (iii) provisions for bad debt expense relating
principally to two of the Company's psychiatric hospitals in the Los
Angeles area and (iv) deferral of facility closure costs which only
affected the 1996 quarterly information (collectively, the "restatement
entries").
To show the impact of the restatement entries with respect to
previously reported amounts for the quarters ended December 31, 1995 and
1994, the Company has provided a description of the restatement entries
and a reconciliation of historical results for the quarters ended
December 31, 1995 and 1994, as previously reported in the filed
transition report on Form 10-Q, to the restated results.
Certain statements in this Form 10-Q are "forward-looking
statements" made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements
involve a number of risks and uncertainties. Factors which may cause the
Company's actual results in future periods to differ materially from
forecast results include, but are not limited to: general economic and
business conditions, both nationally and in the regions in which the
Company operates; industry capacity; demographic changes; existing
government regulations and changes in, or the failure to comply with
government regulations; legislative proposals for healthcare reform; the
ability to enter into managed care provider arrangements on acceptable
terms; changes in Medicare and Medicaid reimbursement levels; liability
and other claims asserted against the Company; competition; the loss of
any significant customer; changes in business strategy or development
plans; the ability to attract and retain qualified personnel, including
physicians; the significant indebtedness of the Company; and the
availability and terms of capital to fund the expansion of the Company's
business, including the acquisition of additional facilities.
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PARACELSUS HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
Restatement - See Note 2
------------------------
December September
31, 30,
1995 1995
--------- --------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 4,418 $ 2,949
Marketable securities 12,643 10,387
Accounts receivable, net 53,538 46,247
Other current assets 26,948 27,437
Deferred income taxes 28,825 32,580
------- -------
Total current assets 126,372 119,600
Property and equipment 273,685 268,412
Less: Accumulated depreciation and amortization (106,306) (102,746)
------- -------
167,379 165,666
Other assets 39,635 40,533
------- -------
Total Assets $333,386 $ 325,799
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable and other current liabilities $ 64,211 $ 69,401
Current maturities of long-term debt 5,150 8,658
------ ------
Total current liabilities 69,361 78,059
Long-term debt 130,352 113,070
Other long-term liabilities 25,230 25,176
Deferred income taxes 21,544 24,619
Minority interests 178 126
Stockholder's equity
Common stock 4,500 4,500
Additional paid-in capital 390 390
Unrealized gains on marketable securities 212 137
Retained earnings 81,619 79,722
------ ------
Total stockholder's equity 86,721 84,749
------ ------
Total Liabilities and Stockholders' Equity $333,386 $325,799
======= =======
</TABLE>
See accompanying notes.
<PAGE> 5
PARACELSUS HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands)
(Unaudited)
Restatement - See Note 2
------------------------
Three Months Ended
December 31,
------------------------
1995 1994
--------- ---------
<TABLE>
<CAPTION>
<S> <C> <C>
Net Revenue $ 130,161 $ 127,131
Costs and expenses:
Salaries and benefits 55,545 53,271
Other operating expenses 53,176 56,391
Provision for bad debts 9,612 8,804
Interest 3,851 3,716
Depreciation and amortization 3,988 4,340
------- -------
Total costs and expenses 126,172 126,522
Income before minority interests and income taxes 3,989 609
Minority interests (569) (693)
------ ------
Income (loss) before income taxes 3,420 (84)
Provision (benefit) for income taxes 1,402 (34)
------- ------
Net income (loss) $ 2,018 $ (50)
======= ======
</TABLE>
See accompanying notes.
<PAGE> 6
PARACELSUS HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Restatement - See Note 2
---------------------------
Three Months Ended
December 31,
---------------------------
1995 1994
------------ ----------
<TABLE>
<CAPTION>
<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 2,018 $ (50)
Non-cash expenses and changes in operating
assets and liabilities (6,701) (4,270)
------ ------
Net cash used in operating activities (4,683) (4,320)
------ ------
Cash Flows from Investing Activities:
Purchase of marketable securities (78) (996)
Purchase of property and equipment, net (5,253) (1,670)
Decrease in minority interests (517) (700)
Increase in other assets (1,653) (924)
----- -----
Net cash used in investing activities (7,501) (4,290)
----- -----
Cash Flows from Financing Activities:
Borrowings under Credit Facility 16,500 12,500
Repayments under Credit Facility (2,500) (2,500)
Repayments of long-term debt, net (226) (426)
Dividends to stockholder (121) (412)
------ ------
Net cash provided by financing activities 13,653 9,162
------ ------
Increase in cash and cash equivalents 1,469 552
Cash and cash equivalents at beginning of period 2,949 1,452
----- ------
Cash and cash equivalents at end of period $ 4,418 $ 2,004
===== =====
Supplementary cash flow information
Cash paid during the period for:
Income taxes $ 954 $ 172
Interest 5,550 5,351
</TABLE>
See accompanying notes.
<PAGE> 7
PARACELSUS HEALTHCARE CORPORATION
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
December 31, 1995
NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION
Organization
- ------------
Paracelsus Healthcare Corporation (the "Company") was incorporated in
November 1980 for the principal purpose of owning and operating acute
care and related healthcare businesses in selected markets. As of
December 31, 1995, the Company operated 22 hospitals with 1,986 licensed
beds in 8 states (including three psychiatric hospitals with 218 licensed
beds), of which 15 were owned and seven were leased.
Basis of Presentation
- ---------------------
The accompanying unaudited condensed consolidated financial statements of
the Company have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and notes required by generally accepted accounting
principles for annual financial statements. In the opinion of management,
all adjustments considered necessary for a fair presentation have been
included. The Company's business is seasonal in nature and subject to
general economic conditions and other factors. Accordingly, operating
results for the quarterly period ended December 31, 1995 are not
necessarily indicative of the results that may be expected for the annual
period. These financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto for the year
ended December 31, 1996 included in the Company's Annual Report on Form
10-K for such period, which include restated financial results for
calendar years 1992 through 1995 and for the quarterly 1995 and 1996
periods.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Certain account balances for the three months ended December 31, 1994
have been reclassified to conform to the Company's current presentation.
NOTE 2. RESTATEMENT OF FINANCIAL STATEMENTS
In October 1996, the Board of Directors appointed a Special
Committee consisting of non-management members, to supervise and direct
the conduct of an inquiry by outside legal counsel regarding, among other
things, the Company's accounting and financial reporting practices and
procedures for the periods prior to the quarter ended September 30, 1996.
<PAGE> 8
Such inquiry resulted in the Company restating its financial statements
for the periods commencing January 1, 1992 through the nine months ended
September 30, 1996.
The need for prior period restatements was the result of accounting
errors and irregularities in four areas: (i) overstatement of receivables
due from Medicare and other government programs; (ii) use of corporate
reserves; (iii) provisions for bad debt expense relating principally to
two of the Company's psychiatric hospitals in the Los Angeles area; and
(iv) deferral of facility closure costs which only affected the 1996
quarterly information.
The impact of the restatement entries on the Company's financial
results for the three months ended December 31, 1995 and 1994 is
summarized in the following tables. A reconciliation has been included to
reconcile to the reported amounts as shown in the Consolidated Statements
of Operations for each respective period.
QUARTER ENDED DECEMBER 31, 1995
As Previously Adjustments As
Reported to Restated
Quarter Quarter Quarter
Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31,
1995 1995 1995
------------- ----------- ----------
(IN 000'S)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net revenue $ 128,674 $ 1,487 $ 130,161
------- ----- -------
Costs and expenses:
Salaries and benefits 55,545 55,545
Other operating expenses 51,564 1,612 53,176
Provision for bad debts 9,612 9,612
Interest 3,851 3,851
Depreciation and amortization 3,988 3,988
------- ----- -------
Total costs and expenses 124,560 1,612 126,172
Income before minority
interests and income taxes 4,114 (125) 3,989
Minority interests (569) (569)
------- ----- -------
Income before income taxes 3,545 (125) 3,420
Provision for income taxes 1,453 (51) 1,402
------- ----- -------
Net income $ 2,092 $ (74) $ 2,018
======= ===== =======
</TABLE>
<PAGE> 9
QUARTER ENDED DECEMBER 31, 1994
As Previously Adjustments As
Reported to Restated
Quarter Quarter Quarter
Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31,
1994 1994 1994
------------- ----------- ----------
(IN 000'S)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net revenue $124,123 $ 3,008 $ 127,131
Costs and expenses:
Salaries and benefits 53,646 (375) 53,271
Other operating expenses 48,716 7,675 56,391
Provision for bad debts 8,804 8,804
Interest 3,716 3,716
Depreciation and amortization 4,340 4,340
-------- -------- --------
Total costs and expenses 119,222 7,300 126,522
Income before minority
interests and income taxes 4,901 (4,292) 609
Minority interests (693) (693)
-------- -------- -------
Income (loss) before income taxes 4,208 (4,292) (84)
Provision (benefit) for income taxes 1,726 (1,760) (34)
-------- -------- -------
Net income (loss) $ 2,482 $ (2,532) $ (50)
======== ======== =======
</TABLE>
NOTE 3. MARKETABLE SECURITIES
In November 1995, in concurrence with the adoption of "A Guide to
Implementation of Statement of Financial Accounting Standards No. 115 on
Accounting for Certain Investments in Debt and Equity Securities," the
Company transferred certain of its held-to-maturity debt securities to
the available-for-sale category. The amortized cost of those securities
at the time of transfer was $2.0 million and the gross unrealized loss
on those securities was immaterial.
NOTE 4. EXCHANGE TRANSACTION
On November 28, 1995, the Company entered into an Asset Exchange
Agreement and
a Stock Purchase Agreement to acquire the 139-bed Pioneer Valley Hospital
in West Valley City, Utah, the 120-bed Davis Hospital and Medical Center
in Layton, Utah and the 129-bed Santa Rosa Medical Center in Milton,
Florida from another healthcare company (collectively, the "Acquired
Hospitals"). In exchange, the other party will receive the Company's
119-bed Peninsula Medical Center in Ormond Beach, Florida, the 135-bed
Elmwood Medical Center in Jefferson, Louisiana, the 190-bed Halstead
Hospital in Halstead, Kansas, and $38.5 million in cash, net of a working
capital differential. The Company also will purchase the real property of
Elmwood and Halstead from a real estate investment trust ("REIT"),
<PAGE> 10
exchange the Elmwood and Halstead real property for the Pioneer real
property and then sell the Pioneer real property to the REIT. The
acquisition of the Acquired Hospitals will be accounted for as a purchase
transaction, with no material gain or loss to be recognized therefrom.
The Company will finance the acquisition from borrowings under its
revolving line of credit.
NOTE 5 - LONG-TERM DEBT
On December 8, 1995, the Company entered into a Second Amended and
Restated Credit Agreement (the "Agreement")(the "Credit Facility") which
provides for a revolving line of credit in the amount of $230.0 million.
The Credit Facility is available for working capital purposes, to fund
acquisitions and for the issuance of letters of credit. Borrowings under
the Credit Facility bear interest at a base rate or an offshore dollar
rate, as defined in the Agreement, plus a margin ranging from 0.25%
to 0.75% or 0.75% to 1.125%, respectively. The Credit Facility requires
annual fees ranging from 0.75% to 1.25% of the outstanding amount of the
letters of credit. The Company is also required to pay commitment fees
ranging from 0.20% to 0.375% of the unused portion of the Credit Facility.
The Credit Facility expires on November 1998, at which time, the Company
can elect to convert the then outstanding balance into a four-year term
loan, payable in 16 equal quarterly installments, commencing in December
1998.
NOTE 6. CONTINGENCIES
The Company is defending itself against a lawsuit filed by Aetna Life
Insurance Company ("Aetna") alleging false diagnosis and billings
submitted for treatment of Aetna patients at the Company's psychiatric
facilities. Management denies these allegations and believes the ultimate
resolution of the lawsuit will not have a material adverse effect on its
consolidated financial position.
The Company is subject to claims and suits in the ordinary course of
business, including those arising from care and treatment afforded at the
Company's facilities. It maintains insurance and, where appropriate,
reserves with respect to the possible liability arising from such claims.
Although the Company believes that its insurance and loss reserves are
adequate, there can be no assurance that such insurance and loss
reserves will cover all potential claims that may be asserted and that
the outcome of such claims will not have a material effect on the
Company's financial position, results of operations and cash flows.
<PAGE> 11
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
Following changes in the Company's management which became effective as
of the merger with Champion Healthcare Corporation on August 16, 1996
(the "Merger"), management determined that there were financial
performance and accounting issues with the pre-merger operating results
of the Company. In October 1996, the Company announced that its third
quarter results would be substantially lower than expected. At the same
time, the Board of Directors formed a Special Committee of non-management
members to supervise the conduct of an inquiry by outside legal counsel
as to the nature and reasons for the earnings shortfall and investigate
the accounting and financial reporting practices and procedures in
periods prior to September 30, 1996. As a result of its investigation,
the Special Committee recommended to the Board that the Company restate
its prior period financial statements. The need for the restatement of
prior period financial statements was the result of accounting errors and
irregularities at pre-merger Paracelsus as discussed in Item 1 - Note 2.
The following table presents a summary of the impact of the
restatements on the three months ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
As Previously
Reported As Restated
Quarter Quarter
Ended Ended
Dec. 31, Dec. 31,
1995 Adjustments 1995
------------ ----------- -----------
Net Revenue $128,674 $ 1,487 $130,161
Income(loss)
before income taxes 3,545 (125) 3,420
Net income (loss) 2,092 (74) 2,018
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
As Previously
Reported As Restated
Quarter Quarter
Ended Ended
Dec. 31, Dec. 31,
1994 Adjustments 1994
----------- ----------- -----------
Net Revenue $124,123 $ 3,008 $127,131
Income(loss)
before income taxes 4,208 (4,292) (84)
Net income (loss) 2,482 (2,532) (50)
</TABLE>
<PAGE> 12
The 1995 adjustments consisted primarily of (i) a decrease in deductions from
revenue of $1.8 million for receivables from Medicare and other government
programs, offset by a charge to net revenue of $278,000 for certain bad debt
expense that was deferred at two of the psychiatric hospitals, (ii) an increase
in operating expenses of $1.6 million from the reversal of corporate reserves
and (iii) an increase in operating expenses of $13,000 for certain deferred
closure costs. The 1994 adjustments consisted primarily of (i) a decrease in
deductions from revenue totaling $3.0 million, consisting of $2.1 million for
receivables from Medicare and other government programs and $864,000 for
deferral of bad debt expense in prior periods that was recorded as deductions
from revenue at two of the psychiatric hospitals and (ii) an increase in
operating expenses of $7.3 million from the reversal of corporate reserves.
The following discussion analyzes the results, as restated, for quarter ended
December 31, 1995, as compared to the quarter ended December 31, 1994. The
following information should be read in conjunction with the consolidated
financial statements of the Company, and the related notes thereto, included in
the Annual Report on Form 10-K for the year ended December 31, 1996, which
included restated financial results for periods prior thereto.
Results of Operations - Quarter ended December 31, 1995
- -------------------------------------------------------
Compared with Quarter ended December 31, 1994
- ---------------------------------------------
Net revenue for the three months ended December 31, 1995 was $130.2 million, an
increase of $3.1 million , or 2.4%, over $127.1 million for the same period of
1994. Of the $3.1 million increase, $6.6 million was contributed by hospitals
owned throughout both periods ("same hospitals"), offset by a net decrease
of $3.5 million, attributable to hospitals and healthcare related businesses
that were closed or sold since January 1995. The $6.6 million increase in "same
hospitals" net revenue was attributable to an increase of $4.1 million from
additional home health business at hospitals located primarily in Tennessee,
with the remaining $2.5 million increase resulting primarily from additional
services offered and medical staff development efforts.
Expressed as a percentage operating revenues, operating expenses (salaries and
benefits, other operating expenses, and provision for bad debts) decreased from
93.2% in 1994 to 90.9% in 1995 and operating margin increased from 6.8% to
9.1%. The 2.3% increase in operating margin in 1995 was primarily due to a 3.6%
decrease in other operating expenses, as a percentage of net revenue, from
incremental charges recorded in 1994 for accrued legal costs relating to
outstanding litigation and the write-off of certain assets, offset by an
increase in purchased services in 1995 attributable to additional home health
business which was profitable but was more labor intensive. The increase in
operating margin in 1995 was further offset by a 0.8% increase in salaries and
benefits and a 0.5% increase in provision for bad debt, as a percentage of net
revenue, with the former primarily due to an increase in home health business
and the latter attributable mainly to the psychiatric hospitals.
Depreciation and amortization decreased to $4.0 million in 1995 from $4.3
million for the same period of 1994. The $300,000 decrease was primarily
attributable to facilities and healthcare related businesses sold or closed
since January 1995.
Net income for the quarter ended December 31, 1995 was $2.0 million, as
compared to a loss of $50,000 for the quarter ended December 31, 1994. The $2.1
<PAGE> 13
million increase was due primarily to additional incremental charges recorded
in 1994 for accrued legal costs and the write-off of certain assets and an
increase in net revenue during 1995.
Liquidity and Capital Resources
- -------------------------------
Net cash used in operating activities for the quarter ended December 31, 1995
was $4.7 million, compared to $4.3 million for the same period of 1994. Net
cash used in investing activities increased $3.2 million to $7.5 million during
1995 from $4.3 million in 1994, primarily from an increase in use of cash to
finance capital expenditures. Net cash provided by financing activities
increased $4.5 million to $13.7 million during 1995 from $9.2 million for the
same 1994 period, due primarily to an incremental borrowing of $4.0 million
under the Revolving Credit Facility to finance capital expenditures and
purchases of physician clinics during 1995.
Net working capital was $57.0 million, an increase of $15.5 million from $41.5
million at September 30, 1995. The increase mainly resulted from an increase in
accounts receivable and a decrease in accounts payable and other accrued
expenses, in addition to a decrease of $3.5 million in current maturities of
long-term debt resulting from the refinancing of an existing mortgage note
originally due in January 1996 to long-term debt. The Company's long-term debt
as a percentage of total capitalization was 60.0% at December 31, 1995,
compared to 57.2% at September 30, 1995. The increase was primarily
attributable to net borrowings of $14.0 million under the Credit Facility to
finance capital expenditures and fund working capital requirements during the
three months ended December 31, 1995 and the refinancing of the mortgage note
described above.
On December 8, 1995, the Company amended and restated its existing Credit
Facility to increase the amount available for borrowings from $125.0 million to
$230.0 million. The Credit Facility is available for working capital purposes,
to finance capital expenditures, to fund acquisitions and for the issuance of
letters of credit. As of December 31, 1995, the Company had $41.5 million of
borrowings outstanding under its Credit Facility.
The Company anticipates that internally generated cash flows from earnings,
proceeds from the sale of hospital accounts receivable under the Company's
commercial paper program and borrowings under its Credit Facility will be
sufficient to fund future acquisition, capital expenditure and working capital
requirements through fiscal year 1996. There can be no assurance that future
developments in the hospital industry or general economic trends will not
adversely affect the Company's operations or its ability to meet such funding
requirements.
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of," which requires impairment losses to be recorded on long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. The statement also addresses the accounting
for long-lived assets that are expected to be disposed of. The Company will
adopt SFAS No. 121 on October 1, 1996, and, based on current circumstances,
does not believe the effect of the adoption will be material.
<PAGE> 14
Regulatory Matters
- ------------------
Various other legislative proposals for healthcare reform at both federal and
state levels have been introduced or have been under consideration. The Company
cannot predict the effect that such reforms may have on its business and there
can be no assurance that any such reforms will not have a material adverse
effect on the Company's future revenues or liquidity.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material change has occurred in the litigation described in Note 6 of the
Notes to Interim Condensed Consolidated Financial Statements.
ITEM 2. CHANGE IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.7 Third Amended and Restated Guaranty and Pledge Agreement, dated as of
December 8, 1995, by and among Dr. Manfred Krukemeyer, Paracelsus,
Bank of America and NationsBank (filed as Exhibit 4.1 to Paracelsus'
Current Report on Form 8-K dated December 8, 1995, and incorporated
herein by reference).
10.26 Stock Purchase Agreement by and between Paracelsus and General
Hospitals of Galen, Inc., dated as of November 29, 1995 (filed as
Exhibit 10.40 to Paracelsus' Annual Report on Form 10-K for the year
ended September 30, 1995, and incorporated herein by reference).
10.27 Asset Exchange Agreement by and between Paracelsus Haltstead Hospital,
Inc., Paracelsus Elmwood Medical Center, Inc., Paracelsus Peninsula
Medical Center, Inc., and Paracelsus Real Estate Corporation and
Pioneer Valley Hospital, Inc. and Medical Center of Santa Rosa, Inc.,
dated November 28, 1995 (filed as Exhibit 10.41 to Paracelsus' Annual
Report on Form 10-K for the year ended September 30, 1995, and
incorporated herein by reference).
<PAGE> 15
10.31 Second Amended and Restated Credit Agreement, dated as of December 8,
1995, among Paracelsus, Bank of America National Trust and Savings
Association as agent, and other lenders named therein (filed as
Exhibit 4.1 to Paracelsus' Current Report on Form 8-K dated December
8, 1995, and incorporated herein by reference).
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K, dated December 8, 1995,
reporting pursuant to Item 5 thereof, that the Company had entered into
a Second Amended and Restated Credit Agreement increasing the amount
available thereunder to $230.0 million.
<PAGE> 16
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.
Paracelsus Healthcare Corporation
(Registrant)
/s/ JAMES G. VANDEVENDER
Dated: Augus 11, 1997 By: ____________________________
James G. VanDevender
Senior Executive Vice President,
Chief Financial Officer
& Director
