Full Press Release Details
The following table sets forth our capitalization as of June 30, 2010:
| (amounts in thousands) | As of June 30, 2010 | |||||
| Actual | Pro forma as adjusted | |||||
| Cash and cash equivalents | $ | 12,337 | $ | 12,337 | ||
| Total debt (including current maturities) | ||||||
| Existing revolving credit facility | 166,000 | |||||
| New senior credit facility: | ||||||
| Revolving credit facility (1) | 391,964 | |||||
| Term loan A (1) | 1,042,125 | |||||
| Term loan B (1) | 1,576,000 | |||||
| Accounts receivable securitization program (2) | 100,000 | 250,000 | ||||
| 7.125% senior notes due 2016 (3) | 400,026 | 400,026 | ||||
| 6.75% senior notes dues 2011 (3) | 200,850 | 200,850 | ||||
| Existing UHS debt, other (4) | 16,500 | 16,500 | ||||
| Rolled PSI debt (5) | 39,635 | |||||
| Total senior secured debt (6) | 883,376 | 3,917,100 | ||||
| Senior unsecured financing | 250,000 | |||||
| Total debt | 883,376 | 4,167,100 | ||||
| Total stockholders equity | 1,930,130 | 1,884,520 | ||||
| Total capitalization | $ | 2,813,506 | $ | 6,051,620 |
Unaudited pro forma condensed combined financial information
The unaudited pro forma condensed combined statement of income for Universal Health Services, Inc. ( UHS ) and
Psychiatric Solutions, Inc. ( PSI ) for the twelve months ended June 30, 2010, the year ended December 31, 2009 and the six-month periods ended June 30, 2010 and 2009, give effect to UHS s acquisition of PSI and related
financing transactions, including this senior unsecured financing and other debt financing commitments (collectively, the Transactions ), as if they had occurred on January 1, 2009. The unaudited pro forma condensed combined balance
sheet as of June 30, 2010 gives effect to the Transactions as if they had occurred on June 30, 2010.
adjustments are preliminary and have been made solely for purposes of developing the pro forma financial information for illustrative purposes. The actual results reported in periods following the Transactions may differ significantly from that
reflected in these pro forma financial statements for a number of reasons, including, but not limited to, differences between the assumptions used to prepare these pro forma financial statements and actual amounts, cost savings from operating
efficiencies, differences resulting from the final PSI merger agreement, timing and impact of potential synergies, the impact of potential divestiture of UHS and/or PSI facilities as required by the Federal Trade Commission, the impact of the
incremental costs incurred in integrating the PSI facilities, and the actual interest rates applicable to the funds borrowed to finance the acquisition of PSI. In addition, no adjustments have been made for non-recurring items related to the
Transactions in the pro forma statements of income. As a result, the pro forma information does not purport to be indicative of what the financial condition or results of operations would have been had the Transactions been completed on the
applicable dates of this pro forma financial information. The pro forma financial statements are based upon the historical financial statements of UHS and PSI and do not purport to project the future financial condition and results of operations
after giving effect to the Transactions.
The pro forma adjustments and related assumptions are described in the accompanying
notes presented on the following pages. The pro forma adjustments are based on assumptions relating to the consideration paid and the allocation thereof to the assets acquired and liabilities of PSI based on preliminary estimates of fair value. The
final purchase price and the allocation thereof will differ from that reflected in the pro forma financial statements after final valuation procedures are performed and amounts are finalized following the completion of the Transactions.
The following unaudited pro forma condensed combined financial information is derived from the historical financial statements of UHS and
PSI and has been prepared to illustrate the effects of the acquisition of PSI by UHS and the receipt of $250.0 million of proceeds from this senior unsecured financing, as well as the proceeds from other debt financing commitments. The pro forma
financial information should be read in conjunction with the historical financial statements and the accompanying notes of UHS, which are included in this offering memorandum, and for PSI, also included in this offering memorandum.
Unaudited pro forma condensed combined balance sheet
(amounts in thousands)
| UHS | PSI | Pro forma adjustments | Pro forma combined | |||||||||||||
| Current assets: | ||||||||||||||||
| Cash and cash equivalents | $ | 12,337 | $ | 49,698 | $ | (49,698 | ) | (A) | $ | 12,337 | ||||||
| Accounts receivable, net | 618,855 | 254,412 | 873,267 | |||||||||||||
| Supplies | 84,683 | 6,200 | (B) | 90,883 | ||||||||||||
| Other current assets | 38,985 | 85,760 | (31,500 | ) | (B) | 93,245 | ||||||||||
| Deferred income taxes | 51,109 | 27,899 | (C) | 79,008 | ||||||||||||
| Current assets held for sale | 16,250 | 16,250 | ||||||||||||||
| Total current assets | 822,219 | 389,870 | (47,099 | ) | 1,164,990 | |||||||||||
| Property and equipment, net | 2,307,617 | 965,833 | 52,487 | (D) | 3,325,937 | |||||||||||
| Other assets: | ||||||||||||||||
| Goodwill | 732,754 | 1,153,111 | 811,633 | (E) | 2,697,498 | |||||||||||
| Deferred charges | 8,864 | 87,800 | (F) | 96,664 | ||||||||||||
| Other | 118,303 | 58,959 | 23,300 | (G) | 200,562 | |||||||||||
| $ | 3,989,757 | $ | 2,567,773 | $ | 928,121 | $ | 7,485,651 | |||||||||
| Liabilities and stockholders equity | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Current maturities of long-term debt | $ | 2,032 | $ | 4,742 | $ | $ | 6,774 | |||||||||
| Accounts payable and accrued liabilities | 552,794 | 215,462 | (18,166 | ) | (H) | 750,090 | ||||||||||
| Federal and state taxes | 3,298 | (13,668 | ) | (I) | (10,370 | ) | ||||||||||
| Total current liabilities | 558,124 | 220,204 | (31,834 | ) | 746,494 | |||||||||||
| Other noncurrent liabilities | 346,310 | 32,932 | 379,242 | |||||||||||||
| Long-term debt | 881,344 | 1,125,625 | 2,121,482 | (J) | 4,128,451 | |||||||||||
| Deferred income taxes | 68,386 | 82,260 | (13,501 | ) | (C) | 137,145 | ||||||||||
| Redeemable noncontrolling interests | 205,463 | 4,336 | 209,799 | |||||||||||||
| UHS/PSI common stockholders equity | 1,887,365 | 1,102,416 | (1,148,026 | ) | (K) | 1,841,755 | ||||||||||
| Noncontrolling interests | 42,765 | 42,765 | ||||||||||||||
| Total equity | 1,930,130 | 1,102,416 | (1,148,026 | ) | 1,884,520 | |||||||||||
| $ | 3,989,757 | $ | 2,567,773 | $ | 928,121 | $ | 7,485,651 |
Unaudited pro forma condensed combined statements of income
for the twelve months ended June 30, 2010
(amounts in thousands, except per share amounts)
| UHS | PSI | Pro forma adjustments | Pro forma combined | |||||||||||||
| Net revenues | $ | 5,271,788 | $ | 1,894,794 | $ | 7,166,582 | ||||||||||
| Operating charges: | ||||||||||||||||
| Salaries, wages and benefits | 2,263,653 | 1,033,787 | 3,297,440 | |||||||||||||
| Other operating expenses | 984,950 | 378,131 | (24,566 | ) | (N) | 1,338,515 | ||||||||||
| Supplies expense | 712,613 | 94,142 | 806,755 | |||||||||||||
| Provision for doubtful accounts | 538,109 | 41,599 | 579,708 | |||||||||||||
| Depreciation and amortization | 210,020 | 48,579 | 8,682 | (L) | 267,281 | |||||||||||
| Lease and rental expense | 71,407 | 19,680 | 91,087 | |||||||||||||
| 4,780,752 | 1,615,918 | (15,884 | ) | 6,380,786 | ||||||||||||
| Income from operations | 491,036 | 278,876 | 15,884 | 785,796 | ||||||||||||
| Interest expense, net | 45,947 | 69,888 | 132,845 | (M) | 248,680 | |||||||||||
| Income before income taxes | 445,089 | 208,988 | (116,961 | ) | 537,116 | |||||||||||
| Provision for income taxes | 157,676 | 80,455 | (44,281 | ) | (O) | 193,850 | ||||||||||
| Net income | 287,413 | 128,533 | (72,680 | ) | 343,266 | |||||||||||
| Less: Income attributable to noncontrolling interests | 38,083 | (202 | ) | 37,881 | ||||||||||||
| Net income attributable to UHS | $ | 249,330 | $ | 128,735 | $ | (72,680 | ) | $ | 305,385 | |||||||
| Basic earnings per share attributable to UHS | $ | 2.56 | $ | 3.13 | ||||||||||||
| Diluted earnings per share attributable to UHS | $ | 2.54 | $ | 3.11 | ||||||||||||
| Weighted average number of common shares basic | 97,229 | 97,229 | ||||||||||||||
| Add: Other share equivalents | 725 | 725 | ||||||||||||||
| Weighted average number of common shares and equivalents diluted | 97,954 | 97,954 |
See accompanying notes to the unaudited
pro forma condensed combined financial statements
Unaudited pro forma condensed combined statements of income
for the year ended December 31, 2009
(amounts in thousands, except per share amounts)
| UHS | PSI | Pro forma adjustments | Pro forma combined | ||||||||||||
| Net revenues | $ | 5,202,379 | $ | 1,805,361 | $ | 7,007,740 | |||||||||
| Operating charges: | |||||||||||||||
| Salaries, wages and benefits | 2,204,422 | 1,005,204 | 3,209,626 | ||||||||||||
| Other operating expenses | 994,923 | 339,653 | 1,334,576 | ||||||||||||
| Supplies expense | 699,249 | 92,572 | 791,821 | ||||||||||||
| Provision for doubtful accounts | 508,603 | 36,414 | 545,017 | ||||||||||||
| Depreciation and amortization | 204,703 | 44,778 | 8,682 | (L) | 258,163 | ||||||||||
| Lease and rental expense | 69,947 | 20,131 | 90,078 | ||||||||||||
| 4,681,847 | 1,538,752 | 8,682 | 6,229,281 | ||||||||||||
| Income from operations | 520,532 | 266,609 | (8,682 | ) | 778,459 | ||||||||||
| Interest expense, net | 45,810 | 71,549 | 137,121 | (M) | 254,480 | ||||||||||
| Income before income taxes | 474,722 | 195,060 | (145,803 | ) | 523,979 | ||||||||||
| Provision for income taxes | 170,475 | 74,889 | (55,201 | ) | (O) | 190,163 | |||||||||
| Net income | 304,247 | 120,171 | (90,602 | ) | 333,816 | ||||||||||
| Less: Income attributable to noncontrolling interests | 43,874 | 93 | 43,967 | ||||||||||||
| Net income attributable to UHS | $ | 260,373 | $ | 120,078 | $ | (90,602 | ) | $ | 289,849 | ||||||
| Basic earnings per share attributable to UHS | $ | 2.65 | $ | 2.95 | |||||||||||
| Diluted earnings per share attributable to UHS | $ | 2.64 | $ | 2.94 | |||||||||||
| Weighted average number of common shares basic | 97,794 | 97,794 | |||||||||||||
| Add: Other share equivalents | 481 | 481 | |||||||||||||
| Weighted average number of common shares and equivalents diluted | 98,275 | 98,275 |
See accompanying notes to the unaudited
pro forma condensed combined financial statements
Unaudited pro forma condensed combined statements of income
for the six months ended June 30, 2010
(amounts in thousands, except per share amounts)
| UHS | PSI | Pro forma adjustments | Pro forma combined | ||||||||||||
| Net revenues | $ | 2,685,468 | $ | 978,650 | $ | 3,664,118 | |||||||||
| Operating charges: | |||||||||||||||
| Salaries, wages and benefits | 1,142,478 | 522,773 | 1,665,251 | ||||||||||||
| Other operating expenses | 496,142 | 202,857 | (24,566 | ) | (N) | 674,433 | |||||||||
| Supplies expense | 363,742 | 47,982 | 411,724 | ||||||||||||
| Provision for doubtful accounts | 269,154 | 21,937 | 291,091 | ||||||||||||
| Depreciation and amortization | 107,536 | 25,269 | 4,342 | (L) | 137,147 | ||||||||||
| Lease and rental expense | 36,119 | 9,678 | 45,797 | ||||||||||||
| 2,415,171 | 830,496 | (20,224 | ) | 3,225,443 | |||||||||||
| Income from operations | 270,297 | 148,154 | 20,224 | 438,675 | |||||||||||
| Interest expense, net | 24,654 | 33,051 | 68,371 | (M) | 126,076 | ||||||||||
| Income before income taxes | 245,643 | 115,103 | (48,147 | ) | 312,599 | ||||||||||
| Provision for income taxes | 86,466 | 44,295 | (18,228 | ) | (O) | 112,533 | |||||||||
| Net income | 159,177 | 70,808 | (29,919 | ) | 200,066 | ||||||||||
| Less: Income attributable to noncontrolling interests | 21,786 | 50 | 21,836 | ||||||||||||
| Net income attributable to UHS | $ | 137,391 | $ | 70,758 | $ | (29,919 | ) | $ | 178,230 | ||||||
| Basic earnings per share attributable to UHS | $ | 1.42 | $ | 1.84 | |||||||||||
| Diluted earnings per share attributable to UHS | $ | 1.40 | $ | 1.82 | |||||||||||
| Weighted average number of common shares basic | 96,621 | 96,621 | |||||||||||||
| Add: Other share equivalents | 1,131 | 1,131 | |||||||||||||
| Weighted average number of common shares and equivalents diluted | 97,752 | 97,752 |
See accompanying notes to the unaudited
pro forma condensed combined financial statements
Unaudited pro forma condensed combined statements of income
for the six months ended June 30, 2009
(amounts in thousands, except per share amounts)
| UHS | PSI | Pro forma adjustments | Pro forma combined | ||||||||||||
| Net revenues | $ | 2,616,059 | $ | 889,217 | $ | 3,505,276 | |||||||||
| Operating charges: | |||||||||||||||
| Salaries, wages and benefits | 1,083,247 | 494,190 | 1,577,437 | ||||||||||||
| Other operating expenses | 506,115 | 164,379 | 670,494 | ||||||||||||
| Supplies expense | 350,378 | 46,412 | 396,790 | ||||||||||||
| Provision for doubtful accounts | 239,648 | 16,752 | 256,400 | ||||||||||||
| Depreciation and amortization | 102,219 | 21,468 | 4,342 | (L) | 128,029 | ||||||||||
| Lease and rental expense | 34,659 | 10,129 | 44,788 | ||||||||||||
| 2,316,266 | 753,330 | 4,342 | 3,073,938 | ||||||||||||
| Income from operations | 299,793 | 135,887 | (4,342 | ) | 431,338 | ||||||||||
| Interest expense, net | 24,517 | 34,712 | 72,647 | (M) | 131,876 | ||||||||||
| Income before income taxes | 275,276 | 101,175 | (76,989 | ) | 299,462 | ||||||||||
| Provision for income taxes | 99,265 | 38,729 | (29,148 | ) | (O) | 108,846 | |||||||||
| Net income | 176,011 | 62,446 | (47,841 | ) | 190,616 | ||||||||||
| Less: Income attributable to noncontrolling interests | 27,577 | 345 | 27,922 | ||||||||||||
| Net income attributable to UHS | $ | 148,434 | $ | 62,101 | $ | (47,841 | ) | $ | 162,694 | ||||||
| Basic earnings per share attributable to UHS | $ | 1.51 | $ | 1.65 | |||||||||||
| Diluted earnings per share attributable to UHS | $ | 1.50 | $ | 1.65 | |||||||||||
| Weighted average number of common shares basic | 98,056 | 98,056 | |||||||||||||
| Add: Other share equivalents | 202 | 202 | |||||||||||||
| Weighted average number of common shares and equivalents diluted | 98,258 | 98,258 |
See accompanying notes to the unaudited
pro forma condensed combined financial statements
Notes to unaudited pro forma condensed combined financial statements
Note 1 Basis of presentation
The unaudited pro forma condensed combined financial statements were prepared using the acquisition method of accounting under existing U.S. GAAP
standards and are based on our historical consolidated financial statements and the financial statements of PSI for the twelve months ended June 30, 2010, the year December 31, 2009 and the six-month periods ended June 30, 2010 and
The unaudited pro forma condensed combined statement of income for UHS and PSI for the twelve months ended June 30, 2010, the year
December 31, 2009 and the six-month periods ended June 30, 2010 and 2009 give effect to UHS s acquisition of PSI and related financing transactions, including this senior unsecured financing and other debt financing commitments
(collectively the Transactions ), as if they had occurred on January 1, 2009. The unaudited pro forma condensed combined balance sheet as of June 30, 2010 gives effect to the Transactions as if they had occurred on June 30,
We prepared the unaudited pro forma condensed combined financial information using the acquisition method of accounting, which is based
upon Accounting Standards Codification ( ASC ) 805, Business Combinations, the Financial Accounting Standard Board s ( FASB ) standard related to business combinations. The business combination standard incorporates
the FASB standard related to fair value measurement concepts. We have adopted both FASB standards related to business combinations and fair value measurements as required.
The FASB standard issued related to business combinations requires, among other things, that most assets acquired and liabilities assumed be recognized
at their fair values as of the acquisition date. In addition, the standard establishes that the consideration transferred be measured at the closing date of the acquisition at the then-current market price. Our intent is to use the proceeds from
this senior unsecured financing and the other debt financing commitments to pay cash to PSI as consideration for the acquisition. The transaction fees have been excluded from the unaudited pro forma condensed combined statements of income as they
are non-recurring and are reflected as borrowings under the revolving credit facility and as an adjustment to retained earnings on the unaudited pro forma condensed combined balance sheet.
ASC 820, Fair Value Measurements and Disclosures, the FASB s standards related to fair value measurements, define the term fair
value and set forth the valuation requirements for any asset or liability measured at fair value, expand related disclosure requirements and specify a hierarchy of valuation techniques based on the nature of inputs used to develop the fair
value measures. Fair value is defined in the standard as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This is an exit
price concept for the valuation of the asset or liability. In addition, market participants are assumed to be buyers and sellers in the principal (or the most advantageous) market for the asset or liability. Fair value measurements for an asset
assume the highest and best use by these market participants. As a result of these standards, we may be required to record assets that we do not intend to use or sell (defensive assets) and/or to value assets at fair value measurements that do not
reflect our intended use of those assets. Many of these fair value measurements can be highly subjective, and it is possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a
range of alternative estimated amounts.
The assumptions and related pro forma adjustments described below have been developed based on
assumptions and adjustments, including assumptions relating to the consideration paid and the allocation thereof to the assets acquired and liabilities assumed from PSI based on preliminary
estimates of fair value. The final purchase price allocation will differ from that reflected in the pro forma financial statements after final valuation procedures are performed and amounts are
finalized following the completion of the Transactions.
The unaudited pro forma condensed combined financial statements are preliminary, are
provided for illustrative purposes only and do not purport to represent what our actual consolidated results of operations or consolidated financial position would have been had the Transactions occurred on the dates assumed, nor are they
necessarily indicative of our future consolidated results of operations or financial position. The actual results reported in periods following the Transactions may differ significantly from those reflected in these pro forma financial statements
for a number of reasons, including, but not limited to, differences between the assumptions used to prepare these pro forma financial statements and actual amounts, cost savings from operating efficiencies, differences resulting from the final PSI
merger agreement, timing and impact of potential synergies, the impact of potential divestiture of UHS and/or PSI facilities as may be required by the Federal Trade Commission, the impact of the incremental costs incurred in integrating the PSI
facilities, and the actual interest rates applicable to the funds borrowed to finance the acquisition of PSI. In addition, no adjustments have been made to the condensed combined statements of income for non-recurring items related to the
Transactions. As a result, the pro forma information does not purport to be indicative of what the financial condition or results of operations would have been had the Transactions been completed on the applicable dates of this pro forma financial
information. The pro forma financial statements are based upon the historical financial statements of UHS and PSI and do not purport to project the future financial condition and results of operations after giving effect to the Transactions.
Note 2 Preliminary purchase price
We have entered into a merger agreement to acquire PSI. The purchase price for the acquisition is estimated as follows, subject to adjustments to
PSI s actual debt outstanding:
Estimated purchase price (in thousands):
| Cash paid to PSI stockholders | $ | 1,982,936 | |
| Assumption of PSI outstanding debt (a) | 1,153,367 | ||
| Subtotal estimated purchase price | 3,136,303 | ||
| Financing and transaction costs (b) | 197,119 | ||
| Total purchase price, financing and transaction costs | $ | 3,333,422 |
In connection with the acquisition of PSI, in addition to the funds generated from this senior unsecured financing, we have obtained a debt financing
commitment of $3.45 billion under a senior credit facility, consisting of an $800.0 million, 5-year revolving credit agreement, a $1.05 billion, 5-year term loan A facility and a $1.6 billion, 6-year term loan B facility.
Note 3 Preliminary purchase price allocation
We will allocate the purchase price paid by us to the fair value of the PSI business assets acquired and liabilities assumed. The pro forma purchase price
allocation below has been developed based on preliminary estimates of fair value using the historical financial statements of PSI as of June 30, 2010.
In addition, the allocation of the purchase price to acquired intangible assets is based on preliminary fair value estimates and is subject to final management analyses, with the assistance of
valuation advisors, at the completion of the acquisition. The residual amount of the purchase price after preliminary allocation to identifiable intangibles has been allocated to goodwill. The actual amounts recorded when the acquisition is complete
may differ materially from the pro forma amounts presented as follows (in thousands):
| Cash | $ | 49,698 | ||
| Net working capital | 127,309 | |||
| Other assets | 22,259 | |||
| Property and equipment | 1,018,320 | |||
| Total tangible assets acquired | 1,217,586 | |||
| Identifiable intangible assets acquired | 60,000 | |||
| Other liabilities assumed | (106,027 | ) | ||
| Total assets acquired in excess of liabilities assumed | 1,171,559 | |||
| Goodwill | 1,964,744 | |||
| Total purchase price before financing and transaction costs | $ | 3,136,303 |
We have determined that goodwill arising from
UHS s acquisition of PSI will not be deductible for tax purposes.
Note 4 Unaudited pro forma adjustments
Unaudited pro forma condensed combined balance sheet
(A) Sources and uses of funds:
Adjustments reflect the use of $49.7 million of PSI s cash on hand as of June 30, 2010 to fund a portion of the purchase price and financing and