Full Press Release Details
| Investor Contact: | Thomas J. Aaron | |
| Executive Vice President | ||
| and Chief Financial Officer | ||
| (615) 465-7000 |
COMMUNITY HEALTH SYSTEMS, INC. ANNOUNCES
FIRST QUARTER 2018 RESULTS WITH NET OPERATING REVENUES OF $3.689 BILLION
FRANKLIN, Tenn. (May 1, 2018) Community Health Systems, Inc. (NYSE: CYH) (the Company ) today announced financial and operating results for
the three months ended March 31, 2018.
The following highlights the financial and operating results for the three months ended
Net operating revenues for the three months ended March 31, 2018, totaled $3.689 billion, a 17.8 percent decrease, compared
with $4.486 billion for the same period in 2017.
Net loss attributable to Community Health Systems, Inc. common stockholders was
$(25) million, or $(0.22) per share (diluted), for the three months ended March 31, 2018, compared with $(199) million, or $(1.79) per share (diluted), for the same period in 2017. Excluding the adjusting items as presented in the table in
footnote (h) on page 13, net income attributable to Community Health Systems, Inc. common stockholders was $0.13 per share (diluted), for the three months ended March 31, 2018. Weighted-average shares outstanding (diluted) were
112 million for the three months ended March 31, 2018, and 111 million for the three months ended March 31, 2017.
Adjusted EBITDA for the three months ended March 31, 2018, was $440 million compared with $527 million for the same period in
2017, representing a 16.5 percent decrease.
The consolidated operating results for the three months ended March 31, 2018,
reflect a 19.6 percent decrease in total admissions, and a 20.8 percent decrease in total adjusted admissions, compared with the same period in 2017. On a same-store basis, admissions decreased 2.4 percent and adjusted admissions
decreased 1.9 percent during the three months ended March 31, 2018, compared with the same period in 2017. On a same-store basis, net operating revenues increased 1.6 percent during the three months ended March 31, 2018, compared
with the same period in 2017.
CYH Announces First Quarter 2018 Results
Commenting on the results, Wayne T. Smith, chairman and chief executive officer of Community
Health Systems, Inc., said, We achieved continued progress across a number of our strategic and operating initiatives. During the first few months of the year, we expanded our transfer and access program, launched Accountable Care
Organizations, and invested in both outpatient capabilities and service line enhancements across our markets. These efforts helped drive a good financial performance during the first quarter and position the Company for further anticipated
improvements during the balance of 2018.
The Company continues to receive interest from potential acquirers for certain of its
hospitals and, during the first four months of 2018, has entered into definitive agreements to sell six hospitals. These divestitures have not yet been completed. In addition, the Company completed the divestiture of one hospital on April 1,
2018. The Company is pursuing interests for sale transactions involving hospitals, which, together with the hospitals that are currently subject to definitive agreements and the hospital that was divested on April 1, 2018, had a combined total
of approximately $2.0 billion in annual net operating revenues and combined mid-single digit Adjusted EBITDA margins during 2017. These sale transactions are currently in various stages of negotiation
with potential buyers. There can be no assurance that these potential divestitures (or the potential divestitures currently subject to definitive agreements) will be completed, or if they are completed, the ultimate timing of the completion of these
Financial and statistical data for 2018 and 2017 presented in this press release include the operating results of divested
hospitals through the effective date of each respective transaction. Same-store operating results exclude the results of the hospitals divested in 2017.
Information About Non-GAAP Financial Measures
Adjusted EBITDA, a non-GAAP financial measure, is EBITDA adjusted to add back net income attributable
to noncontrolling interests and to exclude the effect of discontinued operations, loss from early extinguishment of debt, impairment and (gain) loss on sale of businesses, gain on sale of investments in unconsolidated affiliates, expense incurred
related to the spin-off of QHC, expense incurred related to the sale of a majority ownership interest in the Company s home care division, expense (income) related to government and other legal
settlements and related costs, expense related to employee termination benefits and other restructuring charges, expense (income) from fair value adjustments on the CVR agreement liability accounted for at fair value related to the HMA legal
proceedings and related legal expenses, and the overall impact of the change in estimate related to net patient revenue recorded in the fourth quarter of 2017 resulting from the increase in contractual allowances and the provision for bad debts.
For information regarding why the Company believes Adjusted EBITDA presents useful information to investors, and for a reconciliation of
Adjusted EBITDA to net income attributable to Community Health Systems, Inc. stockholders, see footnote (e) to the Financial Highlights, Financial Statements and Selected Operating Data below.
Additionally, the Company has presented adjusted income from continuing operations attributable to Community Health Systems, Inc. common
stockholders per share (diluted) and adjusted net income attributable to Community Health Systems, Inc. common stockholders per share (diluted) to reflect the impact on earnings per share from the selected items used in the calculation of Adjusted
EBITDA. For a presentation and reconciliation of these measures, see footnote (h) to the Financial Highlights, Financial Statements and Selected Operating Data below.
Included on pages 15, 16, 17 and 18 of this press release are tables setting forth the Company s 2018 reaffirmed annual earnings
guidance. The 2018 guidance is based on the Company s historical operating performance, current trends and other assumptions that the Company believes are reasonable at this time, and reflects the impact of planned divestitures in 2018.
CYH Announces First Quarter 2018 Results
Community Health Systems, Inc. is one of the largest publicly traded hospital companies in
the United States and a leading operator of general acute care hospitals in communities across the country. The Company, through its subsidiaries, owns, leases or operates 126 affiliated hospitals in 20 states with an aggregate of approximately
21,000 licensed beds.
The Company s headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in
Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol CYH. More information about the Company can be found on its website at www.chs.net.
Community Health Systems, Inc. will hold a conference call on Wednesday, May 2, 2018, at 10:00 a.m. Central, 11:00 a.m. Eastern, to
review financial and operating results for the first quarter ended March 31, 2018. Investors will have the opportunity to listen to a live Internet broadcast of the conference call by clicking on the Investor Relations link of the
Company s website at www.chs.net. To listen to the live call, please go to the website at least fifteen minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a
replay will be available shortly after the call and will continue to be available through June 2, 2018. Copies of this press release and conference call slide show, as well as the Company s Current Report on Form 8-K (including this press release), will be available on the Company s website at www.chs.net.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Financial Highlights (a)(b)(c)(d)
(In millions, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Net operating revenues (k) | $ | 3,689 | $ | 4,486 | ||||
| Loss from continuing operations (f), (i), (j) | (6 | ) | (176 | ) | ||||
| Net loss attributable to Community Health Systems, Inc. stockholders | (25 | ) | (199 | ) | ||||
| Adjusted EBITDA (e) | 440 | 527 | ||||||
| Net cash provided by operating activities | 106 | 242 | ||||||
| Basic loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Continuing operations (f), (i), (j) | $ | (0.22 | ) | $ | (1.78 | ) | ||
| Discontinued operations | (0.01 | ) | ||||||
| Net loss | $ | (0.22 | ) | $ | (1.79 | ) | ||
| Diluted loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Continuing operations (f), (h), (i), (j) | $ | (0.22 | ) | $ | (1.78 | ) | ||
| Discontinued operations | (0.01 | ) | ||||||
| Net loss (h) | $ | (0.22 | ) | $ | (1.79 | ) | ||
| Weighted-average number of shares outstanding (g): | ||||||||
| Basic | 112 | 111 | ||||||
| Diluted | 112 | 111 |
For footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Loss (a)(b)(c)(d)
(In millions, except per share amounts)
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Amount | % of Net Operating Revenues | Amount | % of Net Operating Revenues | |||||||||||||
| Operating revenues (net of contractual allowances and discounts) | $ | 5,168 | ||||||||||||||
| Provision for bad debts | 682 | |||||||||||||||
| Net operating revenues (k) | $ | 3,689 | 100.0 | % | 4,486 | 100.0 | % | |||||||||
| Operating costs and expenses: | ||||||||||||||||
| Salaries and benefits | 1,648 | 44.7 | % | 2,061 | 45.9 | % | ||||||||||
| Supplies | 616 | 16.7 | % | 749 | 16.7 | % | ||||||||||
| Other operating expenses | 911 | 24.7 | % | 1,057 | 23.5 | % | ||||||||||
| Government and other legal settlements and related costs (j) | 5 | 0.1 | % | (41 | ) | (0.9) | % | |||||||||
| Electronic health records incentive reimbursement | (1 | ) | % | (6 | ) | (0.1) | % | |||||||||
| Rent | 89 | 2.4 | % | 109 | 2.4 | % | ||||||||||
| Depreciation and amortization | 181 | 4.9 | % | 236 | 5.3 | % | ||||||||||
| Impairment and (gain) loss on sale of businesses, net (i) | 28 | 0.8 | % | 250 | 5.6 | % | ||||||||||
| Total operating costs and expenses | 3,477 | 94.3 | % | 4,415 | 98.4 | % | ||||||||||
| Income from operations (f), (i), (j) | 212 | 5.7 | % | 71 | 1.6 | % | ||||||||||
| Interest expense, net | 228 | 6.2 | % | 229 | 5.1 | % | ||||||||||
| Loss from early extinguishment of debt | 4 | 0.1 | % | 21 | 0.5 | % | ||||||||||
| Equity in earnings of unconsolidated affiliates | (7 | ) | (0.2) | % | (3 | ) | (0.1) | % | ||||||||
| Loss from continuing operations before income taxes | (13 | ) | (0.4) | % | (176 | ) | (3.9) | % | ||||||||
| (Benefit from) provision for income taxes | (7 | ) | (0.2) | % | % | |||||||||||
| Loss from continuing operations (f), (i), (j) | (6 | ) | (0.2) | % | (176 | ) | (3.9) | % | ||||||||
| Discontinued operations, net of taxes: | ||||||||||||||||
| Loss from operations of entities sold or held for sale | % | (1 | ) | % | ||||||||||||
| Loss from discontinued operations, net of taxes | % | (1 | ) | % | ||||||||||||
| Net loss | (6 | ) | (0.2) | % | (177 | ) | (3.9) | % | ||||||||
| Less: Net income attributable to noncontrolling interests | 19 | 0.5 | % | 22 | 0.5 | % | ||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (25 | ) | (0.7) | % | $ | (199 | ) | (4.4) | % | ||||||
| Basic loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (i), (j) | $ | (0.22 | ) | $ | (1.78 | ) | ||||||||||
| Discontinued operations | (0.01 | ) | ||||||||||||||
| Net loss | $ | (0.22 | ) | $ | (1.79 | ) | ||||||||||
| Diluted loss per share attributable to Community Health Systems, Inc. common stockholders: | ||||||||||||||||
| Continuing operations (f), (h), (i), (j) | $ | (0.22 | ) | $ | (1.78 | ) | ||||||||||
| Discontinued operations | (0.01 | ) | ||||||||||||||
| Net loss (h) | $ | (0.22 | ) | $ | (1.79 | ) | ||||||||||
| Weighted-average number of shares outstanding (g): | ||||||||||||||||
| Basic | 112 | 111 | ||||||||||||||
| Diluted | 112 | 111 |
For footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Loss
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Net loss | $ | (6 | ) | $ | (177 | ) | ||
| Other comprehensive income (loss), net of income taxes: | ||||||||
| Net change in fair value of interest rate swaps, net of tax | 18 | 5 | ||||||
| Net change in fair value of available-for-sale securities, net of tax | (2 | ) | 3 | |||||
| Amortization and recognition of unrecognized pension cost components, net of tax | 1 | |||||||
| Other comprehensive income | 17 | 8 | ||||||
| Comprehensive income (loss) | 11 | (169 | ) | |||||
| Less: Comprehensive income attributable to noncontrolling interests | 19 | 22 | ||||||
| Comprehensive loss attributable to Community Health Systems, Inc. stockholders | $ | (8 | ) | $ | (191 | ) |
footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Selected Operating Data (a)(c)
(Dollars in millions)
| Three Months Ended March 31, | ||||||||||||||||||||||||
| Consolidated | Same-Store | |||||||||||||||||||||||
| 2018 | 2017 | % Change | 2018 | 2017 | % Change | |||||||||||||||||||
| Number of hospitals (at end of period) | 127 | 155 | 125 | 125 | ||||||||||||||||||||
| Licensed beds (at end of period) | 21,051 | 26,009 | 20,849 | 20,824 | ||||||||||||||||||||
| Beds in service (at end of period) | 18,525 | 23,336 | 18,339 | 18,796 | ||||||||||||||||||||
| Admissions | 170,680 | 212,242 | -19.6 | % | 169,815 | 173,986 | -2.4 | % | ||||||||||||||||
| Adjusted admissions | 355,448 | 449,012 | -20.8 | % | 353,188 | 359,949 | -1.9 | % | ||||||||||||||||
| Patient days | 784,305 | 972,885 | 781,391 | 791,941 | ||||||||||||||||||||
| Average length of stay (days) | 4.6 | 4.6 | 4.6 | 4.6 | ||||||||||||||||||||
| Occupancy rate (average beds in service) | 46.9 | % | 46.5 | % | 47.2 | % | 47.0 | % | ||||||||||||||||
| Net operating revenues (k) | $ | 3,689 | $ | 4,486 | -17.8 | % | $ | 3,671 | $ | 3,613 | 1.6 | % | ||||||||||||
| Net inpatient revenues as a % of net operating revenues | 49.2 | % | 48.9 | % | 49.2 | % | 49.1 | % | ||||||||||||||||
| Net outpatient revenues as a % of net operating revenues | 50.8 | % | 51.1 | % | 50.8 | % | 50.9 | % | ||||||||||||||||
| Income from operations (f), (i), (j) | $ | 212 | $ | 71 | 198.6 | % | ||||||||||||||||||
| Income from operations as a % of net operating revenues | 5.7 | % | 1.6 | % | ||||||||||||||||||||
| Depreciation and amortization | $ | 181 | $ | 236 | ||||||||||||||||||||
| Equity in earnings of unconsolidated affiliates | $ | (7 | ) | $ | (3 | ) | ||||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders | $ | (25 | ) | $ | (199 | ) | 87.4 | % | ||||||||||||||||
| Net loss attributable to Community Health Systems, Inc. stockholders as a % of net operating revenues | -0.7 | % | -4.4 | % | ||||||||||||||||||||
| Adjusted EBITDA (e) | $ | 440 | $ | 527 | -16.5 | % | ||||||||||||||||||
| Adjusted EBITDA as a % of net operating revenues | 11.9 | % | 11.7 | % | ||||||||||||||||||||
| Net cash provided by operating activities | $ | 106 | $ | 242 | -56.2 | % |
For footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions, except share data)
| March 31, 2018 | December 31, 2017 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 424 | $ | 563 | ||||
| Patient accounts receivable (k) | 2,453 | 2,384 | ||||||
| Supplies | 442 | 444 | ||||||
| Prepaid income taxes | 17 | 17 | ||||||
| Prepaid expenses and taxes | 208 | 198 | ||||||
| Other current assets | 449 | 462 | ||||||
| Total current assets | 3,993 | 4,068 | ||||||
| Property and equipment, gross | 11,402 | 11,497 | ||||||
| Less accumulated depreciation and amortization | (4,431 | ) | (4,445 | ) | ||||
| Property and equipment, net | 6,971 | 7,052 | ||||||
| Goodwill | 4,704 | 4,723 | ||||||
| Deferred income taxes | 64 | 62 | ||||||
| Other assets | 1,579 | 1,545 | ||||||
| Total assets | $ | 17,311 | $ | 17,450 | ||||
| LIABILITIES AND STOCKHOLDERS DEFICIT | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | 37 | $ | 33 | ||||
| Accounts payable | 892 | 967 | ||||||
| Accrued liabilities: | ||||||||
| Employee compensation | 668 | 685 | ||||||
| Accrued interest | 231 | 229 | ||||||
| Other | 435 | 442 | ||||||
| Total current liabilities | 2,263 | 2,356 | ||||||
| Long-term debt | 13,855 | 13,880 | ||||||
| Deferred income taxes | 19 | 19 | ||||||
| Other long-term liabilities (b) | 1,352 | 1,360 | ||||||
| Total liabilities | 17,489 | 17,615 | ||||||
| Redeemable noncontrolling interests in equity of consolidated subsidiaries | 523 | 527 | ||||||
| STOCKHOLDERS DEFICIT | ||||||||
| Community Health Systems, Inc. stockholders deficit: | ||||||||
| Preferred stock, $.01 par value per share, 100,000,000 shares authorized; none issued | ||||||||
| Common stock, $.01 par value per share, 300,000,000 shares authorized; 116,301,706 shares issued and outstanding at March 31, 2018, and 114,651,004 shares issued and outstanding at December 31, 2017 | 1 | 1 | ||||||
| Additional paid-in capital | 2,014 | 2,014 | ||||||
| Accumulated other comprehensive loss | (16 | ) | (21 | ) | ||||
| Accumulated deficit | (2,774 | ) | (2,761 | ) | ||||
| Total Community Health Systems, Inc. stockholders deficit | (775 | ) | (767 | ) | ||||
| Noncontrolling interests in equity of consolidated subsidiaries | 74 | 75 | ||||||
| Total stockholders deficit | (701 | ) | (692 | ) | ||||
| Total liabilities and stockholders deficit | $ | 17,311 | $ | 17,450 |
footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
| Three Months Ended March 31, | ||||||||
| 2018 | 2017 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (6 | ) | $ | (177 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 181 | 236 | ||||||
| Government and other legal settlements and related costs (j) | 5 | (1 | ) | |||||
| Stock-based compensation expense | 4 | 9 | ||||||
| Impairment and (gain) loss on sale of businesses, net (i) | 28 | 250 | ||||||
| Loss from early extinguishment of debt | 4 | 21 | ||||||
| Other non-cash expenses, net | 12 | 8 | ||||||
| Changes in operating assets and liabilities, net of effects of acquisitions and divestitures: | ||||||||
| Patient accounts receivable | (66 | ) | 11 | |||||
| Supplies, prepaid expenses and other current assets | (21 | ) | (67 | ) | ||||
| Accounts payable, accrued liabilities and income taxes | (33 | ) | (14 | ) | ||||
| Other | (2 | ) | (34 | ) | ||||
| Net cash provided by operating activities | 106 | 242 | ||||||
| Cash flows from investing activities | ||||||||
| Acquisitions of facilities and other related businesses | (8 | ) | (2 | ) | ||||
| Purchases of property and equipment | (170 | ) | (146 | ) | ||||
| Proceeds from disposition of hospitals and other ancillary operations | 11 | |||||||
| Proceeds from sale of property and equipment | 3 | |||||||
| Purchases of available-for-sale securities and equity securities | (19 | ) | (12 | ) | ||||
| Proceeds from sales of available-for-sale securities and equity securities | 34 | 26 | ||||||
| Increase in other investments | (28 | ) | (37 | ) | ||||
| Net cash used in investing activities | (177 | ) | (171 | ) | ||||
| Cash flows from financing activities | ||||||||
| Repurchase of restricted stock shares for payroll tax withholding requirements | (1 | ) | (5 | ) | ||||
| Deferred financing costs and other debt-related costs | (11 | ) | (40 | ) | ||||
| Proceeds from noncontrolling investors in joint ventures | 5 | |||||||
| Redemption of noncontrolling investments in joint ventures | (3 | ) | (4 | ) | ||||
| Distributions to noncontrolling investors in joint ventures | (23 | ) | (28 | ) | ||||
| Borrowings under credit agreements | 10 | 610 | ||||||
| Issuance of long-term debt | 2,200 | |||||||
| Proceeds from receivables facility | 49 | 26 | ||||||
| Repayments of long-term indebtedness | (89 | ) | (2,826 | ) | ||||
| Net cash used in financing activities | (68 | ) | (62 | ) | ||||
| Net change in cash and cash equivalents | (139 | ) | 9 | |||||
| Cash and cash equivalents at beginning of period | 563 | 238 | ||||||
| Cash and cash equivalents at end of period | $ | 424 | $ | 247 |
footnotes, see pages 10, 11, 12, 13 and 14.
CYH Announces First Quarter 2018 Results
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data
The following table presents the impact of the recorded amounts as described above as applied to the CVR and the $18 million deductible
and 10% co-insurance amounts (in millions):
| As of March 31, 2018 | ||||
| Legal and other related costs incurred to date | $ | 34 | ||
| Settlements paid | 30 | |||
| Estimated liability for probable contingencies | ||||
| Estimated liability for unresolved contingencies at fair value | 259 | |||
| Costs incurred plus certain estimated liabilities for CVR-related matters | 323 | |||
| Allocated to: | ||||
| CHS deductible of $18 million | (18 | ) | ||
| CHS co-insurance at 10% | (29 | ) | ||
| Recorded amounts that reduce CVR value after giving effect to deductible and co-insurance | $ | 276 | ||
| CVRs outstanding | 265 |
CYH Announces First Quarter 2018 Results
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2018 | 2017 | |||||||
| Loss from continuing operations attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Loss from continuing operations, net of taxes | $ | (6 | ) | $ | (176 | ) | ||
| Less: Income from continuing operations attributable to noncontrolling interests, net of taxes | 19 | 22 | ||||||
| Loss from continuing operations attributable to Community Health Systems, Inc. common stockholders basic and diluted | $ | (25 | ) | $ | (198 | ) | ||
| Loss from discontinued operations attributable to Community Health Systems, Inc. common stockholders: | ||||||||
| Loss from discontinued operations, net of taxes | $ | $ | (1 | ) | ||||
| Less: Loss from discontinued operations attributable to noncontrolling interests, net of taxes | ||||||||
| Loss from discontinued operations attributable to Community Health Systems, Inc. common stockholders basic and diluted | $ | $ | (1 | ) |
CYH Announces First Quarter 2018 Results
Footnotes to Financial Highlights, Financial Statements and Selected Operating Data (Continued)
Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not
be considered in isolation or as a substitute for net income, operating income, or any other performance measure calculated in accordance with U.S. GAAP. The items excluded from Adjusted EBITDA are significant components in understanding and
evaluating financial performance. The Company believes such adjustments are appropriate as the magnitude and frequency of such items can vary significantly and are not related to the assessment of normal operating performance. Additionally, this