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 September 30, 1994
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 October 31, 1994.
Class A 1,090,527
Class B 12,836,918
Class C 109,622
Class D 23,244
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Page One of Twelve Pages
2
UNIVERSAL HEALTH SERVICES, INC.
I N D E X
PART I. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . PAGE NO.
--------
Item 1. Financial Statements
Condensed Consolidated Statements of Income -
Three Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . Three
Nine Months Ended September 30, 1994 and 1993
Condensed Consolidated Balance Sheets - September 30, 1994
and December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Four
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . Five
Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . . . Six & Seven
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . . . . . . . . . . . Eight, Nine & Ten
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eleven
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Twelve
Page Two of Twelve Pages
3
PART I. FINANCIAL INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(000's omitted except per share amounts)
(unaudited)
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------- ---------------------
1994 1993 1994 1993
------------------------- ---------------------
Net revenues $191,512 $186,332 $578,143 $569,090
Operating charges:
Operating expenses 73,856 74,120 223,773 228,241
Salaries and wages 71,143 69,435 211,225 208,696
Provision for doubtful accounts 16,011 14,962 42,082 41,597
Depreciation and amortization 10,871 9,885 31,107 28,212
Lease and rental expense 8,514 8,423 25,510 25,249
Interest expense 1,495 2,004 4,673 6,737
-------- -------- -------- --------
181,890 178,829 538,370 538,732
-------- -------- -------- --------
Income before income taxes 9,622 7,503 39,773 30,358
Provision for income taxes 3,787 2,346 15,498 10,112
-------- -------- -------- --------
NET INCOME $ 5,835 $ 5,157 $ 24,275 $ 20,246
======== ======== ======== ========
Earnings per common
and common equivalent share: $ 0.41 $ 0.37 $ 1.70 $ 1.43
======== ======== ======== ========
Weighted average number of
common shares and equivalents: 14,314 14,794 14,490 14,848
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
Page Three of Twelve Pages
4
UNIVERSAL HEALTH SERVICES,INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(000's omitted)
SEPTEMBER 30, DECEMBER 31,
------------- -----------
1994 1993
---- ----
(UNAUDITED)
-----------
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 985 $ 569
Accounts receivable, net 76,395 78,605
Supplies 14,076 12,617
Deferred income taxes 15,350 7,733
Other current assets 2,963 2,475
---------- ----------
Total current assets 109,769 101,999
---------- ----------
Property and equipment 580,639 533,941
Less: accumulated depreciation (256,206) (231,509)
---------- ----------
324,433 302,432
---------- ----------
OTHER ASSETS:
Excess of cost over fair value of net
assets acquired 38,574 38,089
Deferred charges 1,573 1,697
Other 23,779 16,205
---------- ----------
63,926 55,991
---------- ----------
$ 498,128 $ 460,422
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt $ 5,078 $ 4,313
Accounts payable and accrued liabilities 85,716 79,639
Federal and state taxes 110 2,547
---------- ----------
Total current liabilities 90,904 86,499
---------- ----------
Deferred income taxes 3,863 3,863
---------- ----------
Other noncurrent liabilities 78,355 70,491
---------- ----------
Long-term debt, net of current maturities 58,005 75,081
---------- ----------
COMMON STOCKHOLDERS' EQUITY:
Class A Common Stock, 1,090,527 shares
outstanding in 1994, 1,139,123 in 1993 11 11
Class B Common Stock, 13,013,472 shares
outstanding in 1994, 12,171,454 in 1993 130 122
Class C Common Stock, 109,622 shares
outstanding in 1994, 114,482 in 1993 1 1
Class D Common Stock, 23,392 shares
outstanding in 1994, 26,223 in 1993 0 0
Capital in excess of par, net of deferred
compensation of $480,000 in 1994
and $291,000 in 1993 99,108 80,878
Retained earnings 167,751 143,476
---------- ----------
267,001 224,488
---------- ----------
$ 498,128 $ 460,422
========== ==========
See accompanying notes to consolidated financial statements.
Page Four of Twelve Pages
5
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
--------------
(000'S UNAUDITED)
---------------
1994 1993
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $24,275 $20,246
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation & amortization 31,107 28,212
Provision for self-insurance reserves 9,461 16,475
Reserve for loss on disposition of businesses 0 2,888
Changes in assets & liabilities, net of effects from
acquisitions and dispositions:
Accounts receivable 3,014 15,794
Accrued interest (1,487) (646)
Accrued and deferred income taxes (10,054) (6,577)
Other working capital accounts 5,816 2,251
Other assets and deferred charges (3,482) (1,908)
Other 5,314 718
Payments made in settlement of self-insurance claims (9,231) (7,981)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 54,733 69,472
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment additions (42,892) (34,849)
Acquisition of property previously leased 0 (3,218)
Acquisition of businesses (8,292) (11,526)
Disposition of assets 750 5,250
------- -------
NET CASH USED IN INVESTING ACTIVITIES (50,434) (44,343)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additional borrowings 10,614 0
Reduction of long-term debt (13,247) (27,141)
Issuance of common stock 971 162
Repurchase of common shares (2,221) (3,410)
------- -------
NET CASH USED IN FINANCING ACTIVITIES (3,883) (30,389)
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 416 (5,260)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 569 6,686
------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $985 $1,426
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $6,160 $7,383
======= =======
Income taxes paid, net of refunds $25,552 $16,689
======= =======
See accompanying notes to consolidated financial statements.
Page Five of Twelve 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, 1993.
(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. In April of 1994, the Company called for the redemption of the
$29.9 million, 7 1/2% convertible bonds, of which $10.6 million were redeemed
at par for cash and $19.3 million were converted to 820,103 newly issued shares
of the Company's Class B Common Stock. The bond redemption reduced the
Company's fully diluted number of shares outstanding by 451,233. Prior to this
redemption, the earnings per share were historically adjusted to reflect the
assumed conversion of all the Company's convertible debentures. Accordingly,
the earnings per share for the first three months of the nine month period
ended September 30, 1994 and the three and nine months ended September 30, 1993
have been adjusted to reflect the assumed conversion of the Company's
convertible debentures.
(3) 1994 AND 1993 UNUSUAL ITEMS
Included in net revenues for the three month period ended September 30, 1994 is
$3.1 million of additional revenues received from the Medicaid reimbursement
program described below. Included in net revenues for the three month period
ended September 30, 1993 is $1.0 million of additional revenues received from
the Medicaid reimbursement program, offset by approximately $3.0 million of
unfavorable adjustments related to prior year reimbursement issues.
Included in net revenues for the nine month period ended September 30, 1994 is
$9.1 million of additional revenues received from the Medicaid reimbursement
program. Included in operating expenses for the nine months ended September
30, 1994 is a $2.8 million write-down recorded against the book value of the
real property of a psychiatric hospital owned by the Company and leased to an
unaffiliated third party which is currently in default under the terms of the
lease, $2.5 million of expenses related to the disposition of businesses and a
$1.1 million favorable adjustment made to reduce the Company's workers
compensation reserves.
Included in net revenues for the nine months ended September 30, 1993 is $10.2
million of additional revenues received from the Medicaid reimbursement
program, which is partially offset by the $3.0 million unfavorable adjustment
related to prior year reimbursement issues. Included in operating expenses
for the nine months ended September 30, 1993 is approximately $4.0 million of
expense related to the disposition of ancillary businesses and an additional
$3.2 million of expense related to the Company's self-insurance programs.
The Medicaid reimbursement program revenues discussed above were 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 disproportionately high share of the state's low income patients,
Page Six of Twelve Pages
7
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) COMMITMENTS AND CONTINGENCIES
Under certain agreements, the Company has committed or guaranteed an aggregate
of $23,000,000 related principally to the Company's self-insurance programs and
as support for various debt instruments and loan guarantees.
(6) ACQUISITIONS
During the second quarter of 1994, the Company purchased a majority interest in
a partnership which owns and operates an ambulatory surgery center in
California. The Company also merged the operations of an additional ambulatory
surgery center into its majority owned partnership which owns and operates an
existing ambulatory surgery center located in California.
(7) SUBSEQUENT EVENTS
Subsequent to September 30, 1994, the Company acquired a 112 bed acute care
hospital for net cash of approximately $11.6 million and agreed to invest up to
an additional $30 million to renovate the existing facility and construct an
additional facility in Edinburg, Texas.
Page Seven of Twelve Pages
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Net revenues for the three and nine months ended September 30, 1994 increased
4% and 7%, respectively, over the comparable 1993 periods at hospitals owned
during both years (therefore excluding the net revenues generated from two
acute care hospitals which were disposed of during 1993) excluding the effects
of the unusual revenue items reflected in each period, as discussed below.
Unusual revenue items included in net revenues for the three and nine months
ended September 30, 1994 consist of $3.1 million and $9.1 million,
respectively, of revenues received from the Medicaid reimbursement program
discussed in Note 3 to the Financial Statements. This program is scheduled to
terminate in August, 1995 and the Company cannot predict whether this program
will continue beyond the scheduled termination date. Included in net revenues
for the three and nine months ended September 30, 1993 is $1.0 million and
$10.2 million, respectively, of revenues received from the Medicaid
reimbursement program, partially offset by a $3.0 million unfavorable
adjustment related to prior year reimbursement issues which was recorded during
the third quarter of 1993. Despite the continued shift in the delivery of
healthcare services to outpatient care, the Company's acute care hospitals
owned during both periods experienced a 6% and 9% increase in net revenues
resulting from an 8% and 9% increase in admissions for the three and nine
months ended September 30, 1994 as compared to the comparable prior year
periods, due to additional capacity and expansion of service lines at two of
the Company's larger facilities. The increase in net revenues was less than
the increase in admissions due to a reduction in the average length of stay at
the Company's acute care facilities to 5.1 days and 5.3 days for the three and
nine months ended September 30, 1994 as compared to 5.2 days and 5.4 days in
the comparable prior year periods, respectively. Gross outpatient revenues at
the Company's acute care hospitals owned during both periods increased 18% for
the three months ended September 30, 1994 and 16% for the nine month period
ended September 30, 1994 over the comparable prior year periods and comprises
25% and 24% of gross patient revenues for the three months ended September 30,
1994 and 1993 and 24% for the nine months ended September 30, 1994 and 1993.
Advances in medical technologies permit more services to be provided on an
outpatient basis, and there is increased pressure from Medicare, Medicaid,
health maintenance organizations (HMOs), preferred provider organizations
(PPOs) and insurers to reduce hospital stays and provide services, when
possible, on a less expensive outpatient basis.
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 eighteen ambulatory treatment centers, which have
contributed to the increase in the Company's outpatient revenue. The Company
expects the growth in outpatient services to continue, although the rate of
growth may be moderated in the future.
Although admissions at the Company's psychiatric facilities increased 15% and
13% for the three and nine months ended September 30, 1994 over the comparable
1993 periods, net revenues at these facilities decreased approximately 3% and
5% for the three and nine months ended September 30, 1994 as compared to the
comparable 1993 periods, respectively. The decreases in the net revenues
despite the increases in admissions were due to a reduction in the average
length of stay at the Company's psychiatric hospitals to 13.2 days and 13.8
days for the three and nine months ended September 30, 1994 as compared to 15.1
days and 16.1 days in the comparable prior year periods, respectively, due to
increased emphasis in outpatient treatment programs. The shift to outpatient
care was reflected in higher revenues from outpatient services, as gross
outpatient revenues at the Company's psychiatric hospitals increased 15% for
the three months ended September 30, 1994 and 16% for the nine month period
ended September 30, 1994 over the comparable prior year periods and now
comprise 15% and 14% of gross psychiatric patient revenues for the three and
nine months ended September 30, 1994, respectively, as compared to 14% and 13%
in the comparable 1993 periods, respectively. The trend in outpatient
treatment for psychiatric patients is expected to continue as a result of
changing practices in delivery and continued cost containment pressures from
payors.
Page Eight of Twelve Pages
9
An increased proportion of the Company's revenue is derived from fixed payment
services, including Medicare and Medicaid which accounted for 42% and 50% of
the Company's net patient revenues for the three months ended September 30,
1994 and 1993, respectively and 43% and 43% of the Company's net patient
revenues for the nine months ended September 30, 1994 and 1993, respectively,
excluding the unusual revenues received from the Medicaid reimbursement program
described above. The Company expects Medicare and Medicaid revenues to
continue to increase due to the general aging of the population and expansion
of state Medicaid programs. In addition to the Medicare and Medicaid programs,
other payors 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 continue 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.
Excluding the effects of the unusual revenue items described above and the
unusual expense items included in the nine month period ended September 30,
1994 and 1993, operating expenses, including salaries and wages and provision
for doubtful accounts, as a percentage of net revenues increased to 85% for the
three months ended September 30, 1994 as compared to 84% in the prior year
quarter. For the nine month period ended September 30, 1994, operating
expenses as a percentage of net revenues were 83% as compared to 84% in the
comparable prior year period. Included in operating expenses for the nine
months ended September 30, 1994 is a $2.8 million write-down recorded against
the book value of the real property of a psychiatric hospital owned by the
Company and leased to an unaffiliated third party which is currently in default
under the terms of the lease, $2.5 million of expenses related to the
disposition of businesses and a $1.1 million favorable adjustment made to
reduce the Company's workers compensation reserves. Included in operating
expenses for the nine months ended September 30, 1993 is a $3.2 million
increase in the reserves for the Company's professional and general liability
self-insurance reserves and $4.0 million of expenses related to the disposition
of ancillary businesses. Although the rate of inflation has not had a
significant impact on the results of operations, pressure on operating margins
is expected to continue because, while Medicare fixed payment rates are indexed
for inflation annually, the increases have historically lagged behind actual
inflation.
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 payor 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 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 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.
Interest expense decreased 25% and 31% for the three and nine months ended
September 30, 1994 as compared to the comparable 1993 periods due to lower
average outstanding borrowings.
Depreciation and amortization expense increased 10% for both the three and nine
months ended September 30, 1994 as compared to the comparable 1993 periods due
primarily to increased depreciation and amortization expense related to the
Company's acquisitions of ambulatory treatment centers.
The effective tax rate was 39.4% and 31.3% for the three months ended September
30, 1994 and 1993, respectively, and 39.0% and 33.3% for the nine months ended
September 30, 1994 and 1993, respectively. The increase in the effective rate
during the 1994 periods as compared to the 1993 periods was due primarily to
the 1993 periods including a reduction in the state tax provision.
Page Nine of Twelve Pages
10
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 1994, net cash provided by operating activities
was $54.7 million as compared to $69.5 million in the comparable 1993 period.
The decrease during the 1994 period as compared to the 1993 period was
primarily due to an $8.9 million increase in income tax payments and a $12.8
unfavorable change in the Company's outstanding accounts receivable for the
nine months of 1994 and 1993, relative to the 1993 and 1992 year end balances.
This unfavorable change is due to a temporary decline in the collection of
accounts receivable resulting from information systems conversions at the
Company's hospitals.
During the first nine months of 1994, the Company used $42.9 million of its
operating cash flow to finance capital expenditures, $8.3 million to acquire
majority interest in partnerships which own and operate ambulatory treatment
centers, $2.6 million to reduce outstanding debt and $2.2 million to repurchase
shares of its outstanding common stock. Subsequent to September 30, 1994, the
Company acquired a 112 bed acute care hospital for net cash of approximately
$11.6 million and agreed to invest up to an additional $30 million to renovate
the exiting facility and construct an additional facility in Edinburg, Texas.
During the third quarter of 1994, the Company replaced its existing $72.4
million revolving credit agreement with a new $125 million revolving credit
agreement. The new agreement, which expires in August of 1999, provides for
interest, at the Company's option, at the prime rate, the certificate of
deposit rate plus 5/8% to 1 1/8% or the Euro-dollar rate plus 1/2% to 1%. A
commitment fee ranging from 1/8% to 3/8% is required on the unused portion of
this commitment. The margins over the certificate of deposit, the Euro-dollar
rates and the commitment fee are based upon certain leverage and coverage
ratios. At September 30, 1994 the applicable margins over the certificate of
deposit and the Euro-dollar rate were 7/8% and 3/4%, respectively, and the
commitment fee was 1/4%. Subsequent to the third quarter of 1994, borrowing
capacity under the Company's commercial paper program was increased from $25
million to $50 million. At September 30, 1994, the Company had approximately
$35 million of unused borrowing capacity under the increased borrowing limit of
its commercial paper program and $121 million of unused borrowing capacity
under the terms of its new $125 million revolving credit facility.
Page Ten of Twelve Pages
11
PART II. OTHER INFORMATION
UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Amendment of the Pooling Agreement dated as of September 30, 1994,
among UHS Receivables Corp., Sheffield Receivables Corporation and Bank
of America Illinois (as successor to Continental Bank N.A.) as Trustee.
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 Eleven of Twelve Pages
12
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: November 8, 1994 /s/ Steve Filton
-------------------------------------------
Steve Filton, Vice President and Controller
(Chief Accounting Officer and
Duly Authorized Officer).
Page Twelve of Twelve Pages
1
EXHIBIT 10.1
UHS
[Execution Copy]
AMENDMENT NO. 1
DATED AS OF SEPTEMBER 30, 1994
TO
POOLING AGREEMENT
DATED AS OF NOVEMBER 16, 1993
AND
DEFINITIONS LIST
DATED AS OF NOVEMBER 16, 1993
THIS AMENDMENT NO. 1 (the "Amendment") is executed as of September
30, 1994, among UHS RECEIVABLES CORP. ("Finco"), SHEFFIELD RECEIVABLES
CORPORATION ("Sheffield") and BANK OF AMERICA ILLINOIS (as successor to
Continental Bank N.A.), as Trustee (the "Trustee").
WITNESSETH:
WHEREAS, Finco, Sheffield and the Trustee entered into that certain
Pooling Agreement dated as of November 16, 1993 (the "Pooling Agreement");
WHEREAS, the Pooling Agreement incorporates by reference that certain
Definitions List dated as of November 16, 1993 (the "Definitions List"; the
terms defined in the Definitions List, as amended hereby, being used herein as
therein defined unless otherwise defined herein), prepared in connection with
the Pooling Agreement and certain related agreements and instruments; and
WHEREAS, the parties hereto have agreed to amend the Pooling Agreement
and the Definitions List;
NOW, THEREFORE, for good and valuable consideration, the sufficiency
of which is hereby acknowledged, the Borrower and Barclays hereby agree as
follows:
Section 1. Amendment of the Pooling Agreement. The Pooling Agreement
is hereby amended as follows:
(a) Section 2.6 of the Pooling Agreement is amended by deleting
subsections (a) and (d) thereof in their entirety and substituting in their
respective places the following:
(a) During the Sheffield Revolving Period, and subject to
the terms and conditions of this Agreement, the Sheffield Capital may
be increased (an "Increase") on any Business day upon request of
Finco; provided that Finco gives irrevocable written notice to
Sheffield prior to 3:00 pm (New York City time) on the Business Day
prior to the date of such Increase, unless the Sheffield Yield Rate
with respect to such Increase Amount shall be calculated by reference
to the Adjusted Eurodollar Rate, in which case such notice shall be
2
delivered no later than 3:00 pm three Business Days prior to the date
of such Increase. Such notice shall state (i) the Business Day on
which such Increase is proposed to occur, (ii) the Increase Amount,
which shall not be less than $1,000,000, (iii) the Fixed Period
applicable to such Increase Amount and (iv) the Sheffield Yield Rate
applicable to such Increase Amount. Promptly upon receipt of such
notice, Sheffield shall determine whether or not to approve the Fixed
Period and Sheffield Yield Rate requested in respect of such Increase
Amount and shall promptly notify Finco of such determination,
proposing an alternative Fixed Period and/or Sheffield Yield Rate if
the requested Fixed Period and/or Sheffield Yield Rate has not been
approved. If Sheffield approves the requested Fixed Period and
Sheffield Yield Rate or the parties otherwise agree on an alternative
Fixed Period and/or Sheffield Yield Rate, then on the Business Day on
which such Increase is scheduled to occur, Sheffield shall make
available to Finco at its office specified in Section 14.1, in
immediately available funds, the applicable Increase Amount.
Sheffield shall in no event acquire any Increase if, after giving
effect thereto, the Sheffield Capital would exceed the Maximum
Sheffield Capital.
(d) Fixed Periods shall be selected from time to time to
apply to each Sheffield Tranche in accordance with Section 2.10.
(b) Section 2.7 of the Pooling Agreement is amended by deleting the
second, third, fourth and fifth sentences of subsection (b) thereof.
(c) Section 2.13 of the Pooling Agreement is amended by deleting
subsection (a) thereof in its entirety and substituting in its place the
following:
(a) Unless (i) the Sheffield Termination Date shall have
occurred, (ii) an Early Amortization Event shall have occurred and be
continuing or (iii) either Finco or the Servicer shall be in default
in the performance of any covenant or agreement contained herein or in
any Operative Document, then at least 100 but not more than 120 days
prior to the Scheduled Sheffield Termination Date, Finco may by
written notice to Sheffield and the Trustee request that the
Scheduled Sheffield Termination Date be extended to the last Business
Day occurring not more than 364 days after the Scheduled Sheffield
Termination Date then in effect. On or before the 90th day preceding
such Scheduled Sheffield Termination Date then in effect, Sheffield
shall indicate by written notice to Finco and the Trustee (an
"Indicative Notice") whether as of the date
-2-
3
of such Indicative Notice Sheffield would be prepared to approve such
extension if such extension were to occur as of the date of such
Indicative Notice. Any Indicative Notice given by Sheffield pursuant
to this Section 2.13(a) shall be given in good faith, but no such
Indicative Notice shall be deemed to constitute a binding consent to
Finco's extension request nor an enforceable commitment on the part of
Sheffield. Failure by Sheffield to give an Indicative Notice shall be
deemed to be a denial of Finco's request by Sheffield. Not earlier
than 30 days preceding such Scheduled Sheffield Termination Date then
in effect, Sheffield will determine, in its sole and absolute
discretion, whether to consent to Finco's request for extension of the
Scheduled Sheffield Termination Date. If Sheffield determines to
consent to Finco's request, it will so advise Finco and the Trustee
by written notice (a "Consent Notice"), such Consent Notice to be
given on the 30th day preceding the Scheduled Sheffield Termination
Date then in effect. Failure by Sheffield to deliver a Consent Notice
as aforesaid shall be deemed to be a denial of Finco's request. If
Sheffield shall have delivered a Consent Notice as aforesaid, then
the requested extension shall become effective as of such Scheduled
Sheffield Termination Date then in effect provided that as of such
Scheduled Sheffield Termination Date then in effect, (i) the
Termination Date shall not have otherwise occurred, (ii) no Early
Amortization Event shall have occurred and be continuing and (iii)
neither Finco nor the Servicer shall be in default in the performance
of any covenant or agreement contained herein or in any Operative
Document.
Section 2. Amendment of the Definitions List. The Definitions List
is hereby amended as follows:
(a) The following new definitions are added to the Definitions List
in proper alphabetical position:
Consent Notice: As defined in Section 2.13(a) of the Pooling
Agreement.
Indicative Notice: As defined in Section 2.13(a) of
the Pooling Agreement.
(b) The definitions of Maximum Sheffield Capital and Scheduled
Sheffield Termination Date are deleted in their entirety and the following
definitions are substituted in their respective places:
Maximum Sheffield Capital: $50,000,000, as such amount may be
increased from time to time in accordance with Section 2.13 of the
Pooling Agreement.
-3-
4
Scheduled Sheffield Termination Date: October 31, 1995, as
such date may be extended in accordance with Section 2.13 of the
Pooling Agreement.
Section 3. Conditions to Effectiveness. This Amendment shall become
effective on the earliest date on which the following conditions precedent
shall have been satisfied:
(a) This Amendment shall have been duly executed and delivered by
each of the parties hereto and duly acknowledged and agreed to by the Persons
named on the signature pages hereof;
(b) Each Rating Agency shall have delivered written confirmation to
Finco and the Trustee that the execution and delivery of this Amendment will
not adversely affect its rating of the TRIPs and/or the Commercial Paper, as
the case may be; and
(c) Finco shall have delivered a certificate of an Authorized
Officer dated the date of the effectiveness of this Amendment to the effect
that, after giving effect to this Amendment, (i) no Early Amortization Event
shall have occurred and (ii) neither Finco nor the Servicer shall be in
default in the performance of any covenant or agreement contained herein or in
any Operative Document.
Section 4. Reference to and Effect on the Pooling Agreement, the
Definitions List and the Related Documents. Upon the effectiveness of this
Amendment, each reference in the Pooling Agreement or the Definitions List to
"this Agreement", "the Definitions List", "the Pooling Agreement",
"hereunder", "hereof", "herein" or words of like import shall mean and be, and
any references to the Pooling Agreement or the Definitions List in any other
document, instrument or agreement executed and/or delivered in connection with
the Pooling Agreement or the Definitions List shall mean and be, a reference to
the Pooling Agreement or the Definitions List, as the case may be, as amended
hereby.
Section 5. Effect. Except as otherwise amended by this Amendment,
each of the Pooling Agreement and the Definitions List shall continue in full
force and effect and is hereby ratified and confirmed.
Section 6. Governing Law. This Amendment will be governed by and
construed in accordance with the laws of State of New York.
Section 7. Severability. Each provision of this Amendment shall be
severable from every other provision of this Amendment for the purpose of
determining the legal enforceability of any provision hereof. and the
unenforceability of one or more provisions of this Amendment in one
jurisdiction shall not have the effect of rendering such provision or
provisions unenforceable in any other jurisdiction.
-4-
5
Section 8. Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
-5-
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written.
UHS RECEIVABLES CORP.
By: /s/ KIRK E. GORMAN
-------------------
Title:
SHEFFIELD RECEIVABLES CORPORATION
By: Barclays Bank PLC, New York
Branch as Attorney-in-Fact
By: /s/ BARRY W. WOOD
-----------------
Title: Director
BANK OF AMERICA ILLINOIS
(as successor to Continental
Bank, N.A.)
By: /s/ NANCIE ARVIN
--------------------
Title: Trust Officer
Acknowledged and agreed to as
of this 30th day of September, 1994
CHALMETTE GENERAL HOSPITAL, INC.
DALLAS FAMILY HOSPITAL, INC.
DEL AMO HOSPITAL, INC.
HRI HOSPITAL, INC.
LA AMISTAD RESIDENTIAL TREATMENT
CENTER, INC.
MCALLEN MEDICAL CENTER, INC.
MERIDELL ACHIEVEMENT CENTER,INC.
-6-
7
RIVER OAKS, INC.
TURNING POINT CARE CENTER, INC.
UHS OF ARKANSAS, INC.
UHS OF AUBURN, INC.
UHS OF BELMONT, INC.
UHS OF MASSACHUSETTS, INC.
UHS OF RIVER PARISHES, INC.
UHS OF SHREVEPORT, INC.
UNIVERSAL HEALTH SERVICES OF INLAND VALLEY, INC.
UNIVERSAL HEALTH SERVICES OF NEVADA, INC.
VICTORIA REGIONAL MEDICAL CENTER, INC.
WELLINGTON REGIONAL MEDICAL CENTER INCORPORATED
By: /s/ KIRK E. GORMAN
------------------
Kirk E. Gorman
Treasurer
SPARKS RENO PARTNERSHIP L.P.
By Sparks Family Hospital, Inc.,
General Partner
By: /s/ KIRK E. GORMAN
------------------
Kirk E. Gorman
Treasurer
-7-
8
UHS OF DELAWARE, INC.,
as Servicer
By: /s/ KIRK E. GORMAN
------------------
Kirk E. Gorman
Treasurer
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ KIRK E. GORMAN
------------------
Treasurer
BARCLAYS BANK PLC, NEW YORK BRANCH.
as Managing Agent and Administrative
Agent for Sheffield Receivables
Corporation
By: /s/ BARRY W. WOOD
-----------------------
Barry Wood
Associate Director
-8-
5
1,000
U.S. DOLLARS
9-MOS
JAN-01-1994
DEC-31-1994
SEP-30-1994
1
985
0
113,600
37,205
14,076
109,769
580,639
256,206
498,128
85,826
63,083
142
0
0
266,859
498,128
0
578,143
0
434,998
56,617
42,082
4,673
39,773
15,498
24,275
0
0
0
24,275
$1.70
$1.70
