(MARK ONE)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

OR

o

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 1-10765

UNIVERSAL HEALTH SERVICES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE

23-2077891

(State or other jurisdiction of Incorporation or Organization)

(I.R.S. Employer 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

Yes   x

No   o

Yes   x

No   o

Class A

3,328,404

Class B

54,796,764

Class C

335,800

Class D

34,413

PAGE NO.

PART I. 

FINANCIAL INFORMATION

Item 1. 

Financial Statements

Consolidated Statements of Income -Three Months Ended March 31, 2003 and 2002

3

Condensed Consolidated Balance Sheets - March 31, 2003 and December 31, 2002

4

Condensed Consolidated Statements of Cash Flows Three Months Ended March 31, 2003 and 2002

5

Notes to Condensed Consolidated Financial Statements

6 through 12

Item 2. 

Management’s Discussion and Analysis of Operations and Financial Condition

13 through 23

PART II. 

Other Information

24

Signatures

25

Certifications

26 & 27

Three Months
Ended March 31,

2003

2002

Net revenues

$

894,808

$

804,371

Operating charges:

Salaries, wages and benefits

355,782

319,707

Other operating expenses

203,910

191,896

Supplies expense

120,737

103,508

Provision for doubtful accounts

65,420

57,894

Depreciation and amortization

34,537

29,408

Lease and rental expense

15,821

15,190

Interest expense, net

9,855

8,964

Gain on foreign exchange and derivative transactions

(6

)

(234

)

806,056

726,333

Income before minority interests and income taxes

88,752

78,038

Minority interests in earnings of consolidated entities

5,030

5,873

Income before income taxes

83,722

72,165

Provision for income taxes

30,932

26,492

Net income

$

52,790

$

45,673

Earnings per common share - basic

$

0.91

$

0.76

Earnings per common share - diluted

$

0.84

$

0.71

Weighted average number of common shares - basic

58,277

59,862

Shares for conversion of convertible debentures

6,577

6,577

Weighted average number of common share equivalents

742

609

Weighted average number of common shares and equivalents - diluted

65,596

67,048

March 31,
2003

December 31,
2002

Assets

Current assets:

Cash and cash equivalents

$

32,416

$

17,750

Accounts receivable, net

510,149

474,763

Supplies

60,018

58,217

Deferred income taxes

21,132

25,023

Other current assets

30,863

30,823

Total current assets

654,578

606,576

Property and equipment

1,935,438

1,854,717

Less: accumulated depreciation

(713,267

)

(687,430

)

1,222,171

1,167,287

Other assets:

Goodwill

429,123

410,320

Deferred charges

14,795

14,390

Other

120,361

124,656

564,279

549,366

$

2,441,028

$

2,323,229

Liabilities and Stockholders’ Equity

Current liabilities:

Current maturities of long-term debt

$

11,092

$

8,253

Accounts payable and accrued liabilities

339,782

350,098

Federal and state taxes

37,876

12,062

Total current liabilities

388,750

370,413

Other noncurrent liabilities

219,310

206,238

Minority interest

139,070

134,339

Long-term debt, net of current maturities

730,600

680,514

Deferred income taxes

13,309

14,266

Common stockholders’ equity:

Class A Common Stock, 3,328,404 shares outstanding in 2003, 3,328,404 in 2002

33

33

Class B Common Stock, 54,777,683 shares outstanding in 2003, 55,341,350 in 2002

548

553

Class C Common Stock, 335,800 shares outstanding in 2003, 335,800 in 2002

3

3

Class D Common Stock, 35,143 shares outstanding in 2003, 35,506 in 2002

—  

—  

Capital in excess of par, net of deferred compensation of $12,309 in 2003 and $14,247 in 2002

63,231

84,135

Retained earnings

904,215

851,425

Accumulated other comprehensive loss

(18,041

)

(18,690

)

949,989

917,459

$

2,441,028

$

2,323,229

Three Months Ended
March 31,

2003

2002

Cash Flows from Operating Activities:

Net income

$

52,790

$

45,673

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation & amortization

34,537

29,408

Accretion of discount on convertible debentures

3,159

3,035

Gains on foreign exchange and derivative transactions

(6

)

(234

)

Changes in assets & liabilities, net of effects from acquisitions and dispositions:

Accounts receivable

(20,762

)

(40,126

)

Accrued interest

2,329

3,723

Accrued and deferred income taxes

31,288

24,132

Other working capital accounts

(35,087

)

605

Other assets and deferred charges

9,783

(10,843

)

Other

(1,097

)

(2,841

)

Minority interest in earnings of consolidated entities, net of distributions

3,581

1,280

Accrued insurance expense, net of commercial premiums paid

15,399

13,931

Payments made in settlement of self-insurance claims

(15,148

)

(10,870

)

Net cash provided by operating activities

80,766

56,873

Cash Flows from Investing Activities:

Property and equipment additions, net

(40,342

)

(40,711

)

Proceeds received from divestitures, net

2,978

—  

Acquisition of businesses

(45,482

)

—  

Net cash used in investing activities

(82,846

)

(40,711

)

Cash Flows from Financing Activities:

Additional borrowings

38,738

—  

Reduction of long-term debt

—  

(20,728

)

Issuance of common stock, net of issuance costs

525

583

Repurchase of common shares

(22,517

)

(2,483

)