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UNITED STATES  
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
 
x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2002
 
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 0-29816
 
Triad Hospitals, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
  
75-2816101
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification No.)
 
13455 Noel Road, Suite 2000
Dallas, Texas
  
75240
(Address of principal executive offices)
  
(Zip Code)
 
(972) 789-2700
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
 
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, 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 of the latest practical date.
 
As of July 31, 2002, the number of shares of common stock of Triad Hospitals, Inc. outstanding was 74,218,014.
 

 
Part I:    Financial Information
Item 1:    Financial Statements
 
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the period ended June 30, 2002 and 2001
Unaudited
(Dollars in millions, except per share amounts)
 
    
For the three months ended
     
For the six months
ended
  
    
2002
     
2001
     
2002
     
2001
  
Revenues
   
$
867.2
 
   
$
643.2
 
   
$
1,728.1
 
   
$
1,009.0
 
Salaries and benefits
   
 
363.2
 
   
 
278.1
 
   
 
717.1
 
   
 
422.0
 
Reimbursable expenses
   
 
15.4
 
   
 
10.6
 
   
 
31.8
 
   
 
10.6
 
Supplies
   
 
137.1
 
   
 
101.0
 
   
 
270.6
 
   
 
158.0
 
Other operating expenses
   
 
159.6
 
   
 
122.5
 
   
 
315.0
 
   
 
193.1
 
Provision for doubtful accounts
   
 
65.9
 
   
 
69.2
 
   
 
129.5
 
   
 
105.4
 
Depreciation
   
 
39.3
 
   
 
36.4
 
   
 
78.4
 
   
 
57.8
 
Amortization
   
 
1.5
 
   
 
7.3
 
   
 
3.3
 
   
 
9.3
 
Interest expense
   
 
34.9
 
   
 
33.2
 
   
 
68.1
 
   
 
49.9
 
Interest income
   
 
(0.4
)
   
 
(0.3
)
   
 
(0.8
)
   
 
(0.7
)
Litigation settlement
   
 
(4.5
)
   
 
—  
 
   
 
(4.5
)
   
 
—  
 
ESOP expense
   
 
2.9
 
   
 
2.1
 
   
 
5.3
 
   
 
4.4
 
Gain on sale of assets
   
 
(0.3
)
   
 
—  
 
   
 
(1.9
)
   
 
(0.4
)
    
  
  
  
Total operating expenses
   
 
814.6
 
   
 
660.1
 
   
 
1,611.9
 
   
 
1,009.4
 
    
  
  
  
Income (loss) from operations before minority interests, equity in earnings and income tax provision
   
 
52.6
 
   
 
(16.9
)
   
 
116.2
 
   
 
(0.4
)
Minority interests in earnings of consolidated entities
   
 
(3.8
)
   
 
(2.3
)
   
 
(7.1
)
   
 
(4.0
)
Equity in earnings of affiliates
   
 
5.6
 
   
 
3.0
 
   
 
11.7
 
   
 
3.4
 
    
  
  
  
Income (loss) from operations before income tax provision
   
 
54.4
 
   
 
(16.2
)
   
 
120.8
 
   
 
(1.0
)
Income tax provision
   
 
(21.6
)
   
 
(2.7
)
   
 
(47.6
)
   
 
(10.1
)
    
  
  
  
Income (loss) from operations
   
 
32.8
 
   
 
(18.9
)
   
 
73.2
 
   
 
(11.1
)
Extraordinary loss on retirement of debt, net of income tax benefit of $1.5 million
   
 
—  
 
   
 
(2.4
)
   
 
—  
 
   
 
(2.4
)
    
  
  
  
Net income (loss)
   
$
32.8
 
   
$
(21.3
)
   
$
73.2
 
   
$
(13.5
)
    
  
  
  
Income (loss) per common share:
                                    
Basic
                                    
Operations
   
$
0.46
 
   
$
(0.32
)
   
$
1.03
 
   
$
(0.24
)
Extraordinary loss on retirement of debt
   
 
—  
 
   
 
(0.04
)
   
 
—  
 
   
 
(0.05
)
    
  
  
  
Net
   
$
0.46
 
   
$
(0.36
)
   
$
1.03
 
   
$
(0.29
)
    
  
  
  
Diluted
                                    
Operations
   
$
0.44
 
   
$
(0.32
)
   
$
0.99
 
   
$
(0.24
)
Extraordinary loss on retirement of debt
   
 
—  
 
   
 
(0.04
)
   
 
—  
 
   
 
(0.05
)
    
  
  
  
Net
   
$
0.44
 
   
$
(0.36
)
   
$
0.99
 
   
$
(0.29
)
    
  
  
  
 
See notes to the condensed consolidated financial statements
 

2

 
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(Dollars in millions)
    
June 30, 2002
     
December 31, 2001
  
ASSETS
                  
Current assets:
                  
Cash and cash equivalents
   
$
18.0
 
   
$
16.3
 
Restricted cash
   
 
—  
 
   
 
5.7
 
Accounts receivable, less allowances for doubtful accounts of $180.8 at June 30, 2002
and $192.4 at December 31, 2001
   
 
475.7
 
   
 
446.6
 
Inventories
   
 
88.0
 
   
 
82.2
 
Deferred income taxes
   
 
102.3
 
   
 
103.1
 
Prepaid expenses
   
 
32.0
 
   
 
23.2
 
Other
   
 
81.7
 
   
 
70.2
 
    
  
    
 
797.7
 
   
 
747.3
 
Property and equipment, at cost:
                  
Land
   
 
136.5
 
   
 
126.4
 
Buildings and improvements
   
 
1,265.4
 
   
 
1,173.4
 
Equipment
   
 
1,062.2
 
   
 
998.1
 
Construction in progress
   
 
148.8
 
   
 
175.8
 
    
  
    
 
2,612.9
 
   
 
2,473.7
 
Accumulated depreciation
   
 
(728.4
)
   
 
(656.7
)
    
  
    
 
1,884.5
 
   
 
1,817.0
 
Goodwill
   
 
1,225.2
 
   
 
1,215.2
 
Intangible assets, net of accumulated amortization of $9.7 at June 30, 2002 and $7.1 at
December 31, 2001
   
 
74.6
 
   
 
80.6
 
Investment in and advances to affiliates
   
 
183.9
 
   
 
189.4
 
Other
   
 
106.1
 
   
 
115.8
 
    
  
Total assets
   
$
4,272.0
 
   
$
4,165.3
 
    
  
LIABILITIES AND EQUITY
                  
Current liabilities:
                  
Accounts payable
   
$
125.1
 
   
$
122.4
 
Accrued salaries
   
 
88.0
 
   
 
80.0
 
Current portion of long-term debt
   
 
55.5
 
   
 
30.9
 
Other current liabilities
   
 
124.0
 
   
 
133.0
 
    
  
    
 
392.6
 
   
 
366.3
 
Long-term debt
   
 
1,656.6
 
   
 
1,742.9
 
Other liabilities
   
 
80.2
 
   
 
68.4
 
Deferred taxes
   
 
154.8
 
   
 
132.1
 
Minority interests in equity of consolidated entities
   
 
123.5
 
   
 
124.1
 
Stockholders’ equity:
                  
Common stock .01 par value: 120,000,000 shares authorized, 74,100,425 and 72,202,736
shares issued and outstanding at June 30, 2002 and December 31, 2001, respectively
   
 
0.7
 
   
 
0.7
 
Additional paid-in capital
   
 
1,860.3
 
   
 
1,810.2
 
Accumulated other comprehensive loss
   
 
(1.0
)
   
 
—  
 
Unearned ESOP compensation and stockholder notes receivable
   
 
(22.4
)
   
 
(32.9
)
Accumulated earnings (deficit)
   
 
26.7
 
   
 
(46.5
)
    
  
Total stockholders’ equity
   
 
1,864.3
 
   
 
1,731.5
 
    
  
Total liabilities and stockholders’ equity
   
$
4,272.0
 
   
$
4,165.3
 
    
  
 
See notes to the condensed consolidated financial statements.

3

 
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended June 30, 2002 and 2001
Unaudited
(Dollars in millions)
 
    
For the six
months ended
  
    
2002