1
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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............to..........
Commission file number 0-10454
UNIVERSAL HEALTH SERVICES, INC.
- - - - - - - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-2077891
- - - - - - - ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
UNIVERSAL CORPORATE CENTER
367 SOUTH GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
---------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (610) 768-3300
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common shares outstanding, as
of April 30, 1995.
Class A 1,090,527
Class B 12,618,614
Class C 109,622
Class D 21,598
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Page One of Eleven Pages
2
UNIVERSAL HEALTH SERVICES, INC.
I N D E X
PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE NO.
--------
Item 1. Financial Statements
Consolidated Statements of Income -
Three Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . Three
Condensed Consolidated Balance Sheets - March 31, 1995
and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Four
Condensed Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . Five
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . . . . . Six
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . . . Seven, Eight & Nine
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ten
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eleven
Page Two of Eleven Pages
3
PART I. FINANCIAL INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(000's omitted except per share amounts)
(unaudited)
THREE MONTHS
ENDED MARCH 31,
----------------------
1995 1994
--------- ---------
Net Revenues $ 220,715 $ 194,432
Operating charges:
Operating expenses 84,469 74,327
Salaries and wages 78,021 69,870
Provision for doubtful accounts 17,185 13,208
Depreciation and amortization 11,310 9,920
Lease and rental expense 8,772 8,491
Interest expense, net 1,614 1,822
--------- ---------
201,371 177,638
--------- ---------
Income before income taxes 19,344 16,794
Provision for income taxes 7,503 6,507
--------- ---------
NET INCOME $ 11,841 $ 10,287
========= =========
Earnings per common
and common equivalent share: $ 0.85 $ 0.72
========= =========
Weighted average number of
common shares and equivalents: 13,942 14,761
========= =========
See accompanying notes to these condensed consolidated financial statements.
Page Three of Eleven Pages
4
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
MARCH 31, DECEMBER 31,
--------- ------------
1995 1994
---- ----
(UNAUDITED)
-----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,832 $ 780
Accounts receivable, net 90,511 84,818
Supplies 15,827 15,723
Deferred income taxes 18,491 12,942
Other current assets 5,407 4,126
----------- -----------
Total current assets 132,068 118,389
----------- -----------
Property and equipment 608,070 596,702
Less: accumulated depreciation (272,650) (265,059)
----------- -----------
335,420 331,643
----------- -----------
OTHER ASSETS:
Excess of cost over fair value of net
assets acquired 37,572 38,762
Deferred income taxes 2,742 2,742
Deferred charges 1,630 1,527
Other 29,800 28,429
----------- -----------
71,744 71,460
----------- -----------
$ 539,232 $ 521,492
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 7,175 $ 7,236
Accounts payable and accrued liabilities 92,072 92,129
Federal and state taxes 17,228 4,417
----------- -----------
Total current liabilities 116,475 103,782
----------- -----------
Other noncurrent liabilities 74,831 71,956
----------- -----------
Long-term debt, net of current maturities 75,038 85,125
----------- -----------
COMMON STOCKHOLDERS' EQUITY:
Class A Common Stock, 1,090,527 shares
outstanding in 1995, 1,090,527 in 1994 11 11
Class B Common Stock, 12,618,277 shares
outstanding in 1995, 12,591,854 in 1994 126 126
Class C Common Stock, 109,622 shares
outstanding in 1995, 109,622 in 1994 1 1
Class D Common Stock, 21,953 shares
outstanding in 1995, 22,769 in 1994 0 0
Capital in excess of par, net of deferred
compensation of $332,000 in 1995
and $414,000 in 1994 88,713 88,295
Retained earnings 184,037 172,196
----------- -----------
272,888 260,629
----------- -----------
$ 539,232 $ 521,492
=========== ===========
See accompanying notes to these condensed consolidated financial statements.
Page Four of Eleven Pages
5
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
------------------
MARCH 31,
---------
(000'S UNAUDITED)
-----------------
1995 1994
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $11,841 $10,287
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 11,310 9,920
Provision for self-insurance reserves 4,504 2,900
Changes in assets & liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable (5,693) (5,946)
Accrued interest (1,891) (1,601)
Accrued and deferred income taxes 7,262 3,458
Other working capital accounts (105) (3,840)
Other assets and deferred charges (2,085) (171)
Other 529 171
Payments made in settlement of self-insurance claims (1,566) (3,889)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 24,106 11,289
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (13,536) (11,871)
Disposition of assets 250 250
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (13,286) (11,621)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings 0 2,284
Reduction of long-term debt (10,148) 0
Issuance of common stock 380 278
-------- --------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (9,768) 2,562
-------- --------
INCREASE IN CASH AND CASH EQUIVALENTS 1,052 2,230
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 780 569
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $1,832 $2,799
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $3,505 $3,423
======== ========
Income taxes paid, net of refunds $241 $3,049
======== ========
See accompanying notes to these condensed consolidated financial statements.
Page Five of Eleven Pages
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UNIVERSAL HEALTH SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) GENERAL
The consolidated financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission and reflect all adjustments which, in the opinion of
the Company, are necessary to fairly present results for the interim periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the accompanying disclosures are adequate to make the
information presented not misleading. It is suggested that these financial
statements be read in conjunction with the financial statements, accounting
policies and the notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1994.
(2) EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common shares
outstanding during the year adjusted to give effect to common stock
equivalents. Earnings per share have been adjusted for the three months ended
March 31, 1994 to reflect the assumed conversion of the Company's convertible
debentures. In April 1994, the Company redeemed the debentures which reduced
the fully diluted number of shares outstanding by 451,233.
(3) UNUSUAL ITEMS
Included in net revenues for the three month periods ended March 31, 1995 and
1994 was $3.3 million and $3.0 million, respectively, of additional revenues
received from special Medicaid reimbursements received by one of the Company's
acute care facilities which participates in the Texas Medical Assistance
Program. Upon meeting certain conditions of participation and serving a
disproportionally high share of the state's low income patients, the hospital
became eligible and received additional reimbursement from the state's
disproportionate share hospital fund. This program is scheduled to terminate in
August, 1995 and the Company cannot predict whether this program will continue
beyond the scheduled termination date.
(4) OTHER LIABILITIES
Other noncurrent liabilities include the long-term portion of the Company's
professional and general liability and workers' compensation reserves.
(5) COMMITMENT AND CONTINGENCIES
Under certain agreements, the Company has committed or guaranteed an aggregate
of $20,000,000 related principally to the Company's self-insurance programs and
as support for various debt instruments and loan guarantees.
Page Six of Eleven Pages
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Net revenues increased 14% or $26 million to $220.7 million for the three
months ended March, 31, 1995 as compared to the comparable prior year period
due primarily to revenue growth at facilities owned during both periods and the
acquisition of a 112-bed acute care hospital in November of 1994. Net revenues
at hospital facilities owned during both periods increased 8% or $15 million
for the three months ended March 31, 1995 as compared to the comparable prior
year period, excluding the additional revenues received from the special
Medicaid reimbursements received by one of the Company's Acute Care facilities
which participate in the Texas Medical Assistance Program. Upon meeting certain
conditions of participation and serving a disproportionally high share of the
states low income patients, the hospital became eligible and received
additional reimbursement from the state's disproportionate share hospital fund
totaling $3.3 million and $3.0 million for the three months ended March 31,
1995 and 1994, respectively. These programs are scheduled to terminate in
August, 1995 and the Company cannot predict whether these programs will
continue beyond the scheduled termination date.
Excluding the net revenue effects of the special Medicaid reimbursement
programs mentioned above, earnings before interest, income taxes, depreciation,
amortization and lease rental expense (EBITDAR) increased 11% or $3.8 million
to $37.8 million for the three months ended March 31, 1995 as compared to $34.0
million in the comparable prior year period. Overall operating margins,
excluding the special Medicaid reimbursements, were 17.3% for the three months
ended March 31, 1995 as compared to 17.8% in the comparable prior year period.
ACUTE CARE SERVICES
Net revenues from the Company's acute care hospitals and ambulatory treatment
centers accounted for 85% of the consolidated net revenues for each of the
three month periods ended March 31, 1995 and 1994. Net revenues at the
Company's acute care hospitals owned during both periods increased 9% during
the three months ended March 31, 1995 over the comparable prior year period,
after excluding the revenues received from the special Medicaid reimbursements
described above. Despite the continued shift in the delivery of healthcare
services to outpatient care, the Company's acute care hospitals experienced a
4% increase in patient days and a 10% increase in admissions for the three
months ended March 31, 1995 as compared to the comparable prior year period.
Outpatient activity at the Company's acute care hospitals continues to increase
as gross outpatient revenues at these hospitals increased 17% for the three
months ended March 31, 1995 over the prior year period and continues to
comprise 23% of the Company's acute care gross patient revenues. The increase
is primarily the result of advances in medical technologies, which allow more
services to be provided on an outpatient basis, increased pressure from
Medicare, Medicaid, health maintenance organizations (HMOs), preferred provider
organizations (PPOs) and insurers to reduce hospital stays and provide
services, where possible, on a less expensive outpatient basis and the
acquisition of several physician practices. To accommodate the increased
utilization of outpatient services, the Company has expanded or redesigned
several of its outpatient facilities and services.
In addition, to take advantage of the trend toward increased outpatient
services, the Company has continued to invest in the acquisition and
development of outpatient surgery and radiation therapy centers. The Company
currently operates or manages twenty-two outpatient treatment centers, which
have contributed to the increase in the Company's outpatient revenues. The
Company expects the growth in outpatient services to continue, although the
rate of growth may be moderated in the future.
Page Seven of Eleven Pages
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BEHAVIORAL HEALTH SERVICES
Net revenues from the Company's behavioral health services accounted for 14%
and 15% of the consolidated net revenues for the three month period ended March
31, 1995 and 1994, respectively. Net revenues at the Company's psychiatric
hospitals owned during both periods increased 2% during the three months ended
March 31, 1995 over the comparable prior year period due primarily to a 12%
increase in admissions and a slight increase in patient days. The average
length of stay was 12.9 days in the 1995 quarter compared to 14.3 days in the
1994 quarter. The reduction in the average length of stay is a result of
changing practices in the delivery of psychiatric care and continued cost
containment pressures from payers which includes a greater emphasis on the
utilization of outpatient services. Management of the Company has responded to
these trends by developing and marketing new outpatient treatment programs. The
shift to outpatient care is reflected in higher revenues from outpatient
services, as gross outpatient revenues at the Company's psychiatric hospitals
increased 25% for the three months ended March 31,1995 as compared to the
comparable prior year quarter and now comprises 16% of psychiatric gross
patient revenues as compared to 13% in the prior year quarter.
OTHER OPERATING RESULTS
Depreciation and amortization expense increased $1.4 million for the three
months ended March 31, 1995 as compared to the comparable prior year period due
primarily to the acquisition of a 112-bed acute care hospital in November of
1994 and additional depreciation expense related to capital expenditures and
expansions made in the Company's acute care division.
Interest expense decreased 11% in the 1995 first quarter as compared to last
year's first quarter due to lower average outstanding borrowings.
The effective tax rate was 39% in each of the quarters ended March 31, 1995 and
1994.
GENERAL TRENDS
An increased proportion of the Company's revenue is derived from fixed payment
services, including Medicare and Medicaid which accounted for 43% and 41% of
the Company's net patient revenues for the three months ended March 31, 1995
and 1994, respectively, excluding the additional revenues from special Medicaid
reimbursement programs. The Company expects the Medicare and Medicaid revenues
to continue to increase as a larger portion of the general population qualifies
for coverage as a result of the aging of the population and expansion of state
Medicaid programs. The Medicare program reimburses the Company's hospitals
primarily based on established rates by a diagnosis related group for acute
care hospitals and by a cost based formula for psychiatric hospitals.
In addition to the Medicare and Medicaid programs, other payers continue to
actively negotiate the amounts they will pay for services performed. In
general, the Company expects the percentage of its business from managed care
programs, including HMOs and PPOs to grow. The consequent growth in managed
care networks and the resulting impact of these networks on the operating
results of the Company's facilities vary among the markets in which the Company
operates.
Page Eight of Eleven Pages
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In addition to the trends described above that continue to have an impact on
operating results, there are a number of other, more general factors affecting
the Company's business. The Company and the healthcare industry as a whole face
increased uncertainty with respect to the level of payer payments because of
national and state efforts to reform healthcare. These efforts include
proposals at all levels of government to contain healthcare costs while making
quality, affordable health services available to more Americans. The Company is
unable to predict which proposals, if any, will be adopted or the resulting
implications for providers at this time. However, the Company believes that the
delivery of primary care, emergency care, obstetrical services, outpatient
surgery, diagnostic and radiation services and psychiatric services will be an
integral component of any strategy for controlling healthcare costs and it also
believes it is well positioned to provide these services.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $24.1 million during the first
three months of 1995 as compared to $11.3 million in the comparable 1994
period. The increase during the 1995 quarter as compared to 1994 was due
primarily to a $4.5 million increase in net income plus the addback of the
non-cash charges (depreciation and amortization and provision for
self-insurance reserves), a $2.8 million decrease in income tax payments and a
$2.3 million decrease in payments made in settlement of self-insurance claims.
The net cash provided by operating activities substantially exceeded the
scheduled maturities of long-term debt.
During the first three months of 1995, the Company used $13.5 million of its
operating cash flow to finance capital expenditures and $10.1 million to reduce
outstanding debt.
During the fourth quarter of 1994, the Company signed letters of intent to
acquire a 225-bed acute and psychiatric care hospital in Aiken, South Carolina
and a 512-bed acute care hospital located in Bradenton, Florida in exchange for
approximately $200 million in cash and two acute care facilities. The closing
of these transactions, which are subject to a number of conditions, are
expected to occur during the second and third quarters of 1995, respectively.
In addition, in connection with the acquisition of Edinburg hospital in 1994,
the Company is committed to invest at least an additional $30 million over a
ten year period to renovate the existing facility and construct an additional
facility.
The Company expects to finance all capital expenditures and acquisitions with
internally generated funds and borrowed funds. Additional borrowed funds may
be obtained either through refinancing the existing commercial paper facility
or the issuance of long-term securities. Subsequent to March 31, 1995, the
Company amended the terms of its revolving credit agreement. The amended
agreement, which expires on March 31, 2000, provides for $225 million of
borrowing capacity, subject to certain conditions, until March 31, 1998, $210
million until March 31, 1999 and $185 million until March 31, 2000. Including
this additional borrowing capacity, as of March 31, 1995, the Company had
approximately $236 million of unused borrowing capacity under its commercial
paper program and revolving credit facility.
Page Nine of Eleven Pages
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PART II. OTHER INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Amendment to the Credit Agreement dated as of April 24, 1995 among
Universal Health Services, Inc., Certain Participating Banks and Morgan
Guaranty Trust Company of New York, as Agent.
27 Financial Data Schedule
(b) Reports on Form 8-K
11. Statement re computation of per share earnings is set forth on Page six in
Note 2 of the Notes to Condensed Consolidated Financial Statements.
All other items of this Report are inapplicable.
Page Ten of Eleven Pages
11
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
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)
Date: May 10, 1995 /s/ Kirk E. Gorman
-----------------------------------------
Kirk E. Gorman, Senior Vice President and
Chief Financial Officer
(Principal Financial Officer and
Duly Authorized Officer).
Page Eleven of Eleven Pages
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- - - - - - - ------- -----------
10.1 Amendment to the Credit Agreement dated as of April 24, 1995
among Universal Health Services, Inc., Certain Participating
Banks and Morgan Guaranty Trust Company of New York, as Agent.
27 Financial Data Schedule
1
EXHIBIT 10.1
[CONFORMED COPY]
AMENDMENT NO. 1 TO CREDIT AGREEMENT
AMENDMENT dated as of April 24, 1995 among UNIVERSAL HEALTH
SERVICES, INC. (the "Borrower"), the BANKS listed on the signature pages hereof
(the "Banks") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H :
WHEREAS, the parties hereto have heretofore entered into a
Credit Agreement dated as of August 2, 1994 (the "Agreement"); and
WHEREAS, the parties hereto desire to amend the Agreement as
set forth below;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Agreement shall have the meaning assigned to such term in the Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other similar
reference contained in the Agreement shall from and after the date hereof refer
to the Agreement as amended hereby.
SECTION 2. Amendment of the Agreement.
(a) Section 1.01 is amended by the addition of the
following defined terms in their appropriate alphabetical positions:
"Aiken Acquisition" means the acquisition by the Borrower, or
an affiliate, of the assets and business of Aiken Regional Medical
Center, a 225 licensed bed hospital in Aiken, South Carolina.
2
"Manatee Acquisition" means the acquisition by the Borrower,
or an affiliate, of the assets and business of Manatee Memorial
Hospital, a 512 licensed bed hospital in Bradenton, Florida.
(b) The definition of Consolidated Capital Expenditures
is amended by the addition of the following proviso thereto:
provided that Consolidated Capital Expenditures shall be adjusted (i)
to exclude any such additions (up to a maximum aggregate amount of
$200,000,000) attributable to the Aiken Acquisition or the Manatee
Acquisition and (ii) to include only the net increase resulting from
an exchange of fixed assets for other fixed assets.
(c) The definition of Consolidated Debt is amended by the
addition of the following proviso thereto:
provided that from December 1 of any year to but not including June 30
of the following year Consolidated Debt shall not include amounts
borrowed to fund the Voluntary Employment Benefit Association not
exceeding the aggregate amount of employee benefits prepaid by the
Borrower and its Consolidated Subsidiaries through payments to the
Voluntary Employment Benefit Association during such period.
(d) The definition of Interest Period is amended by the
addition of the following further proviso thereto:
and provided further that if any Interest Period includes a date on
which a payment of principal of the Loans is required to be made under
Section 2.09 but does not end on such date, then (x) the principal
amount (if any) of each Loan required to be repaid on such date shall
have an Interest Period ending on such date and (y) the remainder (if
any) of each such Loan shall have an Interest Period determined as set
forth above.
(e) Section 2.09 is amended (i) by the deletion of
subsections (d) and (e) thereto and (ii) by the addition of the following new
subsections thereto:
(d) To the extent not theretofore reduced to the same or
a lesser amount pursuant to Section 2.08 or 2.09(b), the Commitments
shall be ratably reduced on December 31, 1995 to an aggregate amount
of $125,000,000, unless the Agent shall have received from the
Borrower not less than five Euro-Dollar Business
2
3
Days prior to such date a certificate of a duly authorized officer to
the effect that the Manatee Acquisition has been consummated on or
prior to the date of such certificate.
(e) Upon receiving any notice pursuant to subsection (c)
of this Section, and upon receiving or failing to timely receive the
certificate contemplated by subsection (d) of this Section, the Agent
shall promptly notify each Bank thereof, of the contents of any such
notice and of such Bank's ratable share of any related reduction of
the Commitments.
(f) To the extent not theretofore reduced to the same or
a lesser amount pursuant to Section 2.08, 2.09(b) or 2.09(d), the
Commitments shall be ratably reduced on each date to the aggregate
amount set forth below with respect to such date:
March 31, 1998 $210,000,000
March 31, 1999 $185,000,000
(g) Except as otherwise provided in Section 9.05, on each
date when Commitments shall be reduced pursuant to this Section, the
Borrower shall repay such amounts of outstanding Loans as may be
necessary so that after such repayment the aggregate unpaid principal
amount of each Bank's outstanding Loans does not exceed the amount of
such Bank's Commitment as then reduced. Each such required repayment
shall be made with respect to such outstanding Borrowing or Borrowings
as the Borrower may specify in the related Notice of Borrowing or,
failing such designation by the Borrower, as the Agent may specify by
notice to the Borrower and the Banks.
(f) The definition of Termination Date is amended by
changing the date specified therein to "March 31, 2000".
(g) Section 9.05 is amended (i) by changing the reference
therein to "Section 2.09(e)" to be a reference to "Section 2.09(g)" and (ii) by
changing the reference therein to "Section 2.09(b)" to be a reference to
"Section 2.09(b) or (d)".
3
4
(h) The table in Section 5.07 is amended to read in its
entirety as follows:
Period Ratio
------ -----
January 1, 1995 through
December 31, 1995 0.70 to 1.00
January 1, 1996 through
December 31, 1996 0.68 to 1.00
January 1, 1997 through
December 31, 1997 0.66 to 1.00
January 1, 1998 through
December 31, 1998 0.66 to 1.00
January 1, 1999 through
December 31, 1999 0.60 to 1.00
January 1, 2000 and
thereafter 0.60 to 1.00
(i) The table in Section 5.09 is amended to read in its
entirety as follows:
Fiscal Year Ending Ratio
------------------ -----
December 31, 1995 4.50 to 1.0
December 31, 1996 4.00 to 1.0
December 31, 1997 3.75 to 1.0
December 31, 1998 3.75 to 1.0
December 31, 1999 3.50 to 1.0
December 31, 2000 3.25 to 1.0
(j) The text of Section 5.10 is amended to read in its
entirety as follows:
The Fixed Charge Coverage Ratio will not, at the last day of
any fiscal quarter ending during any fiscal year set forth below, be
less than the ratio set forth below opposite such year:
Fiscal Year Ending Ratio
------------------ -----
December 31, 1995 1.75 to 1.0
December 31, 1996 1.80 to 1.0
December 31, 1997 1.85 to 1.0
December 31, 1998 1.85 to 1.0
December 31, 1999 1.90 to 1.0
December 31, 2000 2.00 to 1.0
4
5
(k) Section 5.11 is amended (i) by changing the figure
"$90,000,000" in clause (i) and in clause (ii)(B)(y) to "$110,000,000" and (ii)
by changing the figure "$90,000,000" in clause (ii)(A) to "$95,000,000".
(l) Section 5.13(b) is amended to add the name of "the
Manatee Memorial Hospital" to the list of facilities that begins with "the
McAllen Medical Center".
SECTION 3. Changes in Commitments. With effect from and
including the date this Amendment becomes effective in accordance with Section
5 hereof, (i) the aggregate amount of the Commitments of the Banks shall be
increased from $125,000,000 to $225,000,000, and (ii) the Commitment of each
Bank shall be the amount set forth opposite the name of such Bank on the
signature pages hereof. The signature pages of the Agreement will be deemed
amended to give effect to the foregoing.
SECTION 4. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 5. Counterparts; Effectiveness. This Amendment may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Amendment shall become effective on and as of the date hereof
provided that the Agent shall have received:
(a) duly executed counterparts hereof signed by the
Borrower and each of the Banks with the subscribed consent of each of
the Subsidiary Guarantors (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall
have received telegraphic, telex, telecopy or other written
confirmation from such party of execution of a counterpart hereof by
such party);
(b) an opinion of counsel for the Borrower substantially
in the form of Exhibit A hereto;
(c) all documents that the Agent may reasonably request
relating to the corporate authority for and validity of this Amendment
and any other matters relevant hereto, all in form and substance
satisfactory to the Agent; and
5
6
(d) payment in Federal or other immediately available
funds of a participation fee for the account of each Bank in an
amount equal to 0.075% of the excess (if any) of such Bank's
Commitment after giving effect to this Amendment over its Commitment
before giving effect hereto.
6
7
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date first above written.
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ Kirk E. Gorman
----------------------------------
Title: Senior Vice President
Commitments
- - - - - - - -----------
$40,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Penelope J.B. Cox
-------------------------------
Title: Vice President
$36,000,000 CHEMICAL BANK
By: /s/ Peter C. Eckstein
----------------------------------
Title: Vice President
$36,000,000 BANK OF AMERICA ILLINOIS
By: /s/ Ambrish D. Thanawala
----------------------------------
Title: Authorized officer
$36,000,000 NATIONSBANK OF NORTH CAROLINA, N.A.
By: /s/ Michael B. Andry
----------------------------------
Title: Vice President
8
Commitments
- - - - - - - -----------
$30,000,000 PNC BANK, NATIONAL ASSOCIATION
By: /s/ Philip G. DeBaun
----------------------------------
Title: Vice President
$22,000,000 FIRST FIDELITY BANK, N.A.
By: /s/ Jeanette A. Griffin
----------------------------------
Title: Assistant Vice President
$15,000,000 THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Oscar C. Jazdowski
----------------------------------
Title: Managing Director
$10,000,000 CORESTATES BANK, N.A.
By: /s/ Jennifer W. Leibowitz
----------------------------------
Title: Commercial Officer
- - - - - - - -------------------
Total Commitments
$225,000,000
===================
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Agent
By: /s/ Penelope J.B. Cox
----------------------------------
Title: Vice President
9
The undersigned Subsidiary Guarantors parties to the Guaranty
Agreement (as defined in the Agreement referred to the foregoing Amendment)
hereby consent to the foregoing Amendment.
ASC of Chicago, Inc.
ASC of Corona, Inc.
ASC of Las Vegas, Inc.
ASC of Littleton, Inc.
ASC of Midwest City, Inc.
ASC of New Albany, Inc.
ASC of Palm Springs, Inc.
ASC of Ponca City, Inc.
ASC of Springfield, Inc.
ASC of St. George, Inc.
Aiken Regional Medical Centers, Inc.
The Arbour, Inc.
Auburn General Hospital, Inc. (formerly UHS of Auburn, Inc.)
The BridgeWay, Inc.
Children's Hospital of McAllen, Inc.
Comprehensive Occupational and Clinical Health, Inc.
Dallas Family Hospital, Inc.
Del Aim Hospital, Inc.
Doctors' General Hospital, Ltd. d/b/a Universal Medical Center
Doctors' Hospital of Shreveport, Inc.
Forest View Psychiatric Hospital, Inc.
Glen Oaks Hospital, Inc.
Health Care Finance & Construction Corp.
HRI Clinics, Inc.
HRI Hospital, Inc.
Inland Valley Regional Medical Center, Inc.
La Amistad Residential Treatment Center, Inc.
McAllen Medical Center, Inc.
Meridell Achievement Center, Inc.
Merion Building Management, Inc.
The Pavilion Foundation
Relational Therapy Clinic, Inc.
River Crest Hospital, Inc.
River Oaks, Inc.
River Parishes Internal Medicine, Inc.
Southwest Dallas Hospital, Inc.
Sparks Family Hospital, Inc.
Tonopah Health Services, Inc.
Turning Point Care Center, Inc.
Two Rivers Psychiatric Hospital, Inc.
UHS Holding Company, Inc.
UHS/IPA, Inc.
UHS International, Inc.
UHS Las Vegas Properties, Inc.
UHS of Belmont, Inc.
10
UHS of Bethesda, Inc.
UHS of Columbia, Inc.
UHS of De La Ronde, Inc.
UHS of Delaware, Inc.
UHS of Florida, Inc.
UHS of Fuller, Inc.
UHS of Illinois, Inc.
UHS of London, Inc.
UHS of Manatee, Inc. (formerly Doctors' Hospital of Hollywood, Inc.)
UHS of New Orleans, Inc. d/b/a Chalmette Hospital and River
Parishes Hospital
UHS of New York, Inc.
UHS of Odessa, Inc.
UHS of Plantation, Inc.
UHSR Corporation
UHS Receivables Corp.
UHS of River Parishes, Inc.
UHS of Riverton, Inc.
UHS of Springfield, Inc.
UHS of Vermont, Inc.
UHS of Waltham, Inc.
Universal HMO, Inc.
Universal Health Network, Inc.
Universal Health Pennsylvania Properties, Inc.
Universal Health Recovery Centers, Inc., d/b/a KeyStone Center
Universal Health Services of Cedar Hill, Inc.
Universal Health Services of Concord, Inc.
Universal Treatment Centers, Inc.
Valley Hospital Centers, Inc.
Valley Hospital Medical Center, Inc.
Victoria Regional Medical Center, Inc.
Wellington Regional Medical Center Incorporated
Westlake Medical Center, Inc.
By: /s/ Kirk E. Gorman
------------------------------
Title: Senior Vice President
11
EXHIBIT A
[Opinion of General Counsel of the Borrower]
April , 1995
To the Banks Referred to Below
c/o Morgan Guaranty Trust Company
of New York, as Agent
60 Wall Street
New York, New York 10260-0060
Re: Amendment No. 1 dated as of April 21, 1995 (the "Amendment")
to the Credit Agreement dated as of August 2, 1994 (as amended
by the Amendment, the "Credit Agreement") among Universal
Health Services, Inc., the banks named therein (the "Banks")
and Morgan Guaranty Trust Company of New York (the "Agent"),
as agent for such banks
Ladies and Gentlemen:
I am General Counsel to Universal Health Services, Inc., a
Delaware corporation (the "Borrower"), and its existing corporate Subsidiaries,
and I am rendering this opinion in connection with the Credit Agreement, which
provides for the extension of loans to the Borrower by the Banks in an
aggregate principal amount not exceeding $225,000,000 at any one time
outstanding. All terms defined in the Credit Agreement are used herein with
their defined meanings unless the context otherwise requires.
In connection with this opinion I have examined such
certificates of officers of the Borrower and its Subsidiaries and originals or
copies certified to my satisfaction of such corporate documents and resolutions
of the Borrower and its Subsidiaries and other corporate records as I have
deemed relevant and necessary as the basis for my opinion hereinafter set
forth. I have relied upon (i) such certificates of officers of the Borrower
and its Subsidiaries with respect to the accuracy of factual matters contained
therein with respect to the operations and properties of the Borrower and its
Subsidiaries and (ii) certain certificates of public officials.
12
On the basis of the foregoing, I am of the opinion that:
1. Each of the Borrower and its existing corporate
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified as a foreign corporation and in good standing in each other
jurisdiction in which the conduct of its business or the ownership of its
property requires such qualification.
2. Each of the Borrower and its existing Subsidiaries
has all corporate powers required to own its properties and conduct its
business as now conducted. The Borrower has the corporate power and authority
to execute and deliver the Amendment and to perform the Credit Agreement and
the Notes and to borrow under the Credit Agreement. The Borrower has taken all
necessary corporate action to authorize the borrowings under the Credit
Agreement and to authorize the execution and delivery of the Amendment and the
performance of the Credit Agreement and the Notes. The Amendment has been duly
executed and delivered by the Borrower. Each of the Credit Agreement and the
Notes constitutes a valid and binding agreement or obligation of the Borrower,
as the case may be, enforceable against the Borrower in accordance with its
terms. No consent of any other Person (including stockholders of the Borrower)
and no license, approval or authorization of, exemption by, or registration or
declaration with, any governmental body is required in connection with the
execution or delivery of the Amendment or the performance, validity or
enforceability of the Credit Agreement and the Notes.
3. The execution and delivery by the Borrower of the
Amendment and the performance by the Borrower of the Credit Agreement and the
Notes and by the Subsidiaries that are party thereto of the Guaranty Agreement
will not violate any provision of any existing law or regulation or the
Restated Certificate of Incorporation, as amended, or By-Laws of the Borrower or
the charter or by-laws of any such Subsidiary or, to the best of my knowledge
after due inquiry, of any judgment, order, decree or award of any court,
arbitrator or governmental body, any mortgage, indenture, security agreement,
contract, undertaking or other agreement to which the Borrower or any
Subsidiary is a party or that is or may be binding upon any of them or any of
their respective properties or assets and of which I have knowledge and will
not result in the imposition or creation of any Lien on any thereof pursuant to
the provisions of any such mortgage, indenture, security agreement, contract,
2
13
undertaking or other agreement to which the Borrower or any Subsidiary is a
party or that is or may be binding upon any of them or any of their respective
properties or assets and of which I have knowledge.
4. Each Subsidiary that is a party to the Guaranty
Agreement has taken all necessary corporate action to authorize the execution
and delivery of its consent to the Amendment, and each such consent has been
duly executed and delivered by each such Subsidiary. After giving effect to
the Amendment, the Guaranty Agreement remains a valid and binding agreement of
each Subsidiary party thereto enforceable against each such Subsidiary in
accordance with its terms.
5. After giving effect to the Amendment, no consent of
any other Person and no license, approval or authorization of, exemption by, or
registration or declaration with, any governmental body is required in
connection with the execution, delivery, performance, validity or
enforceability of the Guaranty Agreement.
6. To the best of my knowledge after due inquiry, except
as described in the Borrower's Annual Report on Form 10-K for the year ended
December 31, [1993,] which has previously been delivered to the Banks, there
are no actions, suits or proceedings pending or threatened against or affecting
the Borrower or any Subsidiary or any of their respective properties in any
court or before any arbitrator of any kind or before or by any governmental
body, except actions, suits or proceedings of the character normally incident
to the kind of business conducted by the Borrower and its Subsidiaries that (a)
would not materially impair the right or ability of the Borrower or any
Subsidiary to carry on its business substantially as now conducted and (b)
would not have a material adverse effect on the consolidated financial
condition of the Borrower and its Subsidiaries, and there are no actions, suits
or proceedings pending or threatened that relate to or which in any manner draw
into question the validity of any of the transactions contemplated by the
Credit Agreement or the Guaranty Agreement.
7. Neither the Borrower nor any of its Subsidiaries is
an "investment company" or an "affiliated person" thereof, within the meaning
of the Investment Company Act of 1940, as amended, and the rules and
regulations thereunder.
The opinions set forth above are subject to the following
qualifications:
3
14
(a) The enforceability of (i) the Borrower's
obligations under the Credit Agreement and the Notes and (ii)
each of the Subsidiaries obligations under the Guaranty
Agreement are subject to the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally;
(b) I express no opinion as to the availability
of the equitable remedy of specific performance (other than
with respect to obligations for the payment of money) or
injunctive relief; and
(c) I am qualified to practice law in the
Commonwealth of Pennsylvania and nothing herein shall
constitute an opinion as to the laws of any jurisdiction other
than the laws of the Commonwealth of Pennsylvania, the General
Corporation Law of the State of Delaware and the federal law
of the United States of America. Insofar as the conclusions
set forth above involve matters governed by the laws of the
State of New York, I have with your consent assumed such laws
are the same as the laws of the Commonwealth of Pennsylvania.
(d) I express no opinion as to the applicability
(and, if applicable, the effect) of Section 548 of the United
States Bankruptcy Code or any comparable provision of state
law to the questions addressed in paragraph 4 or the
conclusions expressed with respect thereto.
Very truly yours,
4
5
0000352915
UNIVERSAL HEALTH SERVICES, INC.
1,000
U.S. DOLLARS
3-MOS
DEC-31-1995
JAN-01-1995
MAR-31-1995
1
1,832
0
130,097
39,586
15,827
132,068
608,070
272,650
539,232
116,475
75,038
138
0
0
272,750
539,232
0
220,715
0
162,490
20,082
17,185
1,614
19,344
7,503
11,841
0
0
0
11,841
$0.85
$0.85
