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 March 31, 2003
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.) |
| 5800 Tennyson Parkway Plano, Texas |
75024 | |
| (Address of principal executive offices) |
(Zip Code) |
(214) 473-7000
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
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 April 30, 2003, the number of shares of common stock of Triad Hospitals, Inc. outstanding was 74,996,774.
Part I: Financial Information
Item 1: Financial Statements
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the periods ended March 31, 2003 and 2002
Unaudited
(Dollars in millions, except per share amounts)
| For the three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Revenues |
$ |
954.5 |
|
$ |
860.9 |
| ||
| Salaries and benefits |
|
392.8 |
|
|
353.9 |
| ||
| Reimbursable expenses |
|
14.8 |
|
|
16.4 |
| ||
| Supplies |
|
145.1 |
|
|
133.5 |
| ||
| Other operating expenses |
|
175.4 |
|
|
155.4 |
| ||
| Provision for doubtful accounts |
|
76.2 |
|
|
63.6 |
| ||
| Depreciation |
|
42.2 |
|
|
39.1 |
| ||
| Amortization |
|
1.5 |
|
|
1.8 |
| ||
| Interest expense |
|
33.2 |
|
|
33.2 |
| ||
| Interest income |
|
(0.6 |
) |
|
(0.4 |
) | ||
| ESOP expense |
|
2.1 |
|
|
2.4 |
| ||
| Gain on sales of assets |
|
(1.3 |
) |
|
(1.6 |
) | ||
| Total operating expenses |
|
881.4 |
|
|
797.3 |
| ||
| Income before minority interests, equity in earnings and income tax provision |
|
73.1 |
|
|
63.6 |
| ||
| Minority interests in earnings of consolidated entities |
|
(2.4 |
) |
|
(3.3 |
) | ||
| Equity in earnings of affiliates |
|
7.2 |
|
|
6.1 |
| ||
| Income before income tax provision |
|
77.9 |
|
|
66.4 |
| ||
| Income tax provision |
|
(30.6 |
) |
|
(26.0 |
) | ||
| Net income |
$ |
47.3 |
|
$ |
40.4 |
| ||
| Income per common share: |
||||||||
| Basic |
$ |
0.65 |
|
$ |
0.58 |
| ||
| Diluted |
$ |
0.63 |
|
$ |
0.55 |
| ||
See notes to the condensed consolidated financial statements.
2
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(Dollars in millions)
| March 31, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
56.4 |
|
$ |
68.3 |
| ||
| Accounts receivable, less allowances for doubtful accounts of $178.1 at March 31, 2003 and $174.4 at December 31, 2002 |
|
539.4 |
|
|
507.4 |
| ||
| Inventories |
|
97.0 |
|
|
95.5 |
| ||
| Deferred income taxes |
|
39.4 |
|
|
62.3 |
| ||
| Prepaid expenses |
|
45.8 |
|
|
36.6 |
| ||
| Other |
|
73.7 |
|
|
74.3 |
| ||
|
|
851.7 |
|
|
844.4 |
| |||
| Property and equipment, at cost: |
||||||||
| Land |
|
170.7 |
|
|
171.5 |
| ||
| Buildings and improvements |
|
1,344.8 |
|
|
1,340.6 |
| ||
| Equipment |
|
1,169.4 |
|
|
1,150.8 |
| ||
| Construction in progress |
|
108.1 |
|
|
79.6 |
| ||
|
|
2,793.0 |
|
|
2,742.5 |
| |||
| Accumulated depreciation |
|
(826.8 |
) |
|
(787.3 |
) | ||
|
|
1,966.2 |
|
|
1,955.2 |
| |||
| Goodwill |
|
1,224.0 |
|
|
1,224.0 |
| ||
| Intangible assets, net of accumulated amortization |
|
70.5 |
|
|
72.0 |
| ||
| Investment in and advances to affiliates |
|
183.7 |
|
|
179.7 |
| ||
| Other |
|
105.7 |
|
|
106.3 |
| ||
| Total assets |
$ |
4,401.8 |
|
$ |
4,381.6 |
| ||
| LIABILITIES AND EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ |
120.8 |
|
$ |
132.5 |
| ||
| Accrued salaries |
|
87.1 |
|
|
107.6 |
| ||
| Current portion of long-term debt |
|
77.6 |
|
|
73.1 |
| ||
| Other current liabilities |
|
139.2 |
|
|
132.0 |
| ||
|
|
424.7 |
|
|
445.2 |
| |||
| Long-term debt |
|
1,597.4 |
|
|
1,618.9 |
| ||
| Other liabilities |
|
93.9 |
|
|
86.6 |
| ||
| Deferred taxes |
|
157.0 |
|
|
151.1 |
| ||
| Minority interests in equity of consolidated entities |
|
123.9 |
|
|
125.3 |
| ||
| Stockholders’ equity: |
||||||||
| Common stock .01 par value: 120,000,000 shares authorized, 74,996,360 and 74,937,635 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
0.8 |
|
|
0.7 |
| ||
| Additional paid-in capital |
|
1,885.8 |
|
|
1,883.5 |
| ||
| Accumulated other comprehensive loss |
|
(4.2 |
) |
|
(4.0 |
) | ||
| Unearned ESOP compensation |
|
(19.8 |
) |
|
(20.7 |
) | ||
| Accumulated earnings |
|
142.3 |
|
|
95.0 |
| ||
| Total stockholders’ equity |
|
2,004.9 |
|
|
1,954.5 |
| ||
| Total liabilities and stockholders’ equity |
$ |
4,401.8 |
|
$ |
4,381.6 |
| ||
See notes to the condensed consolidated financial statements.
3
TRIAD HOSPITALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the periods ended March 31, 2003 and 2002
Unaudited
(Dollars in millions)
| For the three months ended |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities |
||||||||
| Net income |
$ |
47.3 |
|
$ |
40.4 |
| ||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Provision for doubtful accounts |
|
76.2 |
|
|
63.6 |
| ||
| Depreciation and amortization |
|
43.7 |
|
|
40.9 |
| ||
| ESOP expense |
|
2.1 |
|
|
2.4 |
| ||
| Minority interests |
|
2.4 |
|
|
3.3 |
| ||
| Equity in earnings of affiliates |
|
(7.2 |
) |
|
(6.1 |
) | ||
| Gain on sales of assets |
|
(1.3 |
) |
|
(1.6 |
) | ||
| Deferred income taxes |
|
29.4 |
|
|
26.0 |
| ||
| Non-cash interest expense |
|
2.0 |
|
|
1.8 |
| ||
| Non-cash stock option expense |
|
0.1 |
|
|
0.1 |
| ||
| Increase (decrease) in cash from operating assets and liabilities |
||||||||
| Accounts receivable |
|
(108.2 |
) |
|
(89.2 |
) | ||
| Inventories and other assets |
|
(11.5 |
) |
|
(6.9 |
) | ||
| Accounts payable and other current liabilities |
|
(25.0 |
) |
|
6.3 |
| ||
| Other |
|
6.8 |
|
|
(1.7 |
) | ||
| Net cash provided by operating activities |
|
56.8 |
|
|
79.3 |
| ||
| Cash flows from investing activities |
||||||||
| Purchases of property and equipment |
|
(55.5 |
) |
|
(73.0 |
) | ||
| Distributions and advances from affiliates |
|
3.2 |
|
|
11.4 |
| ||