-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BqZwvQpgHsNbEprVNXsXALbF7qJnt5ZOtN+Kt+bbEwQ8b+5moqkPAV3cLBe0UaFa 9Rtx0n285IYR9/tGLmiaDg== 0000950144-05-007114.txt : 20050705 0000950144-05-007114.hdr.sgml : 20050704 20050701180613 ACCESSION NUMBER: 0000950144-05-007114 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20050701 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050705 DATE AS OF CHANGE: 20050701 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PSYCHIATRIC SOLUTIONS INC CENTRAL INDEX KEY: 0000829608 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 232491707 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20488 FILM NUMBER: 05934308 BUSINESS ADDRESS: STREET 1: 113 SEABOARD LANE STREET 2: SUITE C-100 CITY: FRANKLIN STATE: TN ZIP: 37067 BUSINESS PHONE: 615-312-5700 MAIL ADDRESS: STREET 1: 113 SEABOARD LANE STREET 2: SUITE C-100 CITY: FRANKLIN STATE: TN ZIP: 37067 FORMER COMPANY: FORMER CONFORMED NAME: PMR CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: ZARON CAPITAL INC DATE OF NAME CHANGE: 19891116 8-K 1 g96159e8vk.htm PSYCHIATRIC SOLUTIONS, INC. - FORM 8-K PSYCHIATRIC SOLUTIONS, INC. - FORM 8-K
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

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

Date of report (Date of earliest event reported): July 1, 2005

 

Psychiatric Solutions, Inc.

(Exact Name of Registrant as Specified in Its Charter)
         
Delaware   0-20488   23-2491707
(State or Other Jurisdiction of   (Commission File Number)   (IRS Employer
Incorporation)       Identification No.)

840 Crescent Centre Drive, Suite 460, Franklin, Tennessee 37067
(Address of Principal Executive Offices)

(615) 312-5700
(Registrant’s Telephone Number, including Area Code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

TABLE OF CONTENTS

Item 7.01. Regulation FD Disclosure.
Item 9.01 Financial Statements and Exhibits.
SIGNATURES
INDEX TO EXHIBITS
EX-99.1 OFFERING MEMORANDUM SECTION
EX-99.2 OFFERING MEMORANDUM SECTION

Table of Contents

Item 7.01. Regulation FD Disclosure.

     The Company is filing under Item 7.01 of this Current Report on Form 8-K the unaudited pro forma condensed combined financial information included as Exhibit 99.1 and Exhibit 99.2 to this report. This information, which supersedes the unaudited pro forma condensed combined financial information that previously was filed on the Company’s Current Report on Form 8-K, dated June 24, 2005, is disclosed in an offering memorandum that is being furnished to prospective investors in connection with the Company’s private offering of $220,000,000 principal amount of 7.75% senior subordinated notes due 2015.

     This information is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, unless the Company specifically incorporates it by reference in a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. By filing this report on Form 8-K and furnishing this information, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.

Item 9.01 Financial Statements and Exhibits.

     (a) Financial statements of businesses acquired.

None required

     (b) Pro forma financial information.

None required

     (c) Exhibits.

         
  99.1    
The section of the offering memorandum entitled “Summary – Summary Unaudited Pro Forma Condensed Combined Financial and Operating Data.”
       
 
  99.2    
The section of the offering memorandum entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

Table of Contents

SIGNATURES

     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 hereunto duly authorized.
         
  PSYCHIATRIC SOLUTIONS, INC.
 		  
  By:   /s/ Brent Turner    
    Brent Turner   
    Vice President, Treasurer and Investor
Relations 		  
 

Date: July 1, 2005

 

Table of Contents

INDEX TO EXHIBITS

         
Exhibit Number   Description of Exhibits
  99.1    
The section of the offering memorandum entitled “Summary – Summary Unaudited Pro Forma Condensed Combined Financial and Operating Data.”
       
 
  99.2    
The section of the offering memorandum entitled “Unaudited Pro Forma Condensed Combined Financial Information.”

 

EX-99.1 2 g96159exv99w1.txt EX-99.1 OFFERING MEMORANDUM SECTION EXHIBIT 99.1 SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL AND OPERATING DATA The following table sets forth a summary of unaudited pro forma condensed combined financial and operating data for Psychiatric Solutions, Inc., giving effect to the acquisitions of Ardent Behavioral, Heartland Healthcare ("Heartland"), Brentwood Behavioral Health ("Brentwood") and other non-significant acquisitions during the fiscal year ended December 31, 2004 and the Financing Transactions as if they had occurred on the dates indicated and after giving effect to certain pro forma adjustments described in the section entitled "Unaudited Pro Forma Condensed Combined Financial Information." The pro forma condensed combined balance sheet data as of March 31, 2005 has been derived from Psychiatric Solutions' and Ardent Behavioral's historical balance sheets, adjusted to give effect to these acquisitions and the Financing Transactions as if they occurred on March 31, 2005. The pro forma condensed combined income statement for the twelve months ended March 31, 2005 gives effect to the acquisitions of Ardent Behavioral, Heartland, Brentwood and other non-significant acquisitions during the fiscal year ended December 31, 2004 and the Financing Transactions, as if they occurred at the beginning of the period presented. The adjustments necessary to fairly present the unaudited pro forma condensed combined financial data have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed combined financial data. The pro forma adjustments are preliminary and revisions to the preliminary purchase price allocations and financing of the transactions may have a significant impact on the pro forma adjustments. A final valuation of net assets acquired associated with the Ardent Behavioral acquisition cannot be made prior to the completion of this offering memorandum. A final determination of these fair values will be conducted by Psychiatric Solutions' independent valuation specialists. The consideration of this valuation will most likely result in a change in the value assigned to the fixed and intangible assets acquired from Ardent Behavioral. The unaudited pro forma condensed combined financial and operating data is for comparative purposes only and does not purport to represent what our financial position or results of operations would actually have been had the events noted above in fact occurred on the assumed dates or to project our financial position or results of operations for any future date or future period. The unaudited pro forma condensed combined financial and operating data are only a summary and should be read in conjunction with the "Unaudited Pro Forma Condensed Combined Financial Information," "Selected Consolidated Financial and Operating Data -- Psychiatric Solutions," "Selected Consolidated Financial and Operating Data -- Ardent Behavioral," "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Psychiatric Solutions," "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Ardent Behavioral" and Ardent Behavioral's combined financial statements and the notes thereto included elsewhere in this offering memorandum and Psychiatric Solutions' consolidated financial statements and the notes thereto incorporated by reference in this offering memorandum.
THREE MONTHS TWELVE MONTHS YEAR ENDED ENDED ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ ------------ ------------- (DOLLARS IN THOUSANDS, EXCEPT RATIOS AND OPERATING DATA) INCOME STATEMENT DATA: Revenue............................................... $ 827,096 $ 218,638 $ 839,732 Expenses: Salaries, wages and employee benefits............... 456,150 120,954 465,519 Other operating expenses(1)......................... 239,543 59,592 239,530 Provision for doubtful accounts..................... 20,214 5,221 19,981 Depreciation and amortization....................... 15,345 4,013 15,591 Interest expense.................................... 51,444 11,460 49,550 Other expenses(2)................................... 6,407 6,990 6,990 ---------- ---------- ---------- Total expenses................................... 789,103 208,230 797,161 ---------- ---------- ---------- Income from continuing operations before income taxes............................................... 37,993 10,408 42,571 Provision for income taxes............................ 14,437 4,059 16,177 ---------- ---------- ---------- Income from continuing operations..................... $ 23,556 $ 6,349 $ 26,394 ========== ========== ========== BALANCE SHEET DATA (END OF PERIOD): Cash and cash equivalents.......................................................... $ 5,954 Working capital.................................................................... 73,081 Property and equipment, net........................................................ 370,137 Total assets....................................................................... 1,103,302 Total debt......................................................................... 673,161 Stockholders' equity............................................................... 296,463 OTHER FINANCIAL DATA: Capital expenditures.................................. $ 27,673 $ 6,564 $ 30,368 Adjusted EBITDA(3).................................... $ 117,434 $ 32,871 $ 121,482 SELECTED PRO FORMA RATIOS: Adjusted EBITDA/Cash interest expense.............................................. 2.4x Net debt/Adjusted EBITDA........................................................... 5.5x OPERATING DATA: Number of facilities: Owned............................................... 47 47 47 Leased.............................................. 7 7 7 Number of beds........................................ 6,330 6,340 6,340 Admissions............................................ 86,646 24,818 91,736 Patient days.......................................... 1,510,909 414,067 1,586,541 Average length of stay................................ 17 17 17
- --------------- (1) Other operating expenses include other professional fees, rentals and leases expense and other operating expenses. Rent expense was $13,366 for the year ended December 31, 2004, $3,146 and $13,196 for the three months ended March 31, 2005 and the twelve months ended March 31, 2005, respectively. (2) Other expenses include: (a) for the year ended December 31, 2004, a loss of $6,407 on refinancing long-term debt and (b) for the three months ended March 31, 2005 and the twelve months ended March 31, 2005, a loss of $6,990 on refinancing of long-term debt. (3) EBITDA is a non-GAAP financial measure and is defined as income from continuing operations before income taxes, interest expense (net of interest income), depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure and is defined as EBITDA as adjusted for the other items included in the caption labeled "Other." These other expenses may occur in future periods, but the amounts recognized can vary significantly from period to period and do not directly relate to ongoing operations of our health care facilities. Our management relies on EBITDA and Adjusted EBITDA as the primary measures to review and assess the operating performance of our inpatient facilities and their management teams. We believe they are useful to investors to provide disclosures of our operating results on the same basis as that used by management. Management and investors also review EBITDA and Adjusted EBITDA to evaluate our overall performance and to compare our current operating results with corresponding periods and with other companies in the health care industry. You should not consider EBITDA and Adjusted EBITDA in isolation or as substitutes for net income, operating cash flows or other cash flow statement data determined in accordance with accounting principles generally accepted in the United States. Because EBITDA and Adjusted EBITDA are not measures of financial performance under accounting principles generally accepted in the United States and are susceptible to varying calculations, they may not be comparable to similarly titled measures of other companies. The following are the components of EBITDA and Adjusted EBITDA for the year ended December 31, 2004, the three months ended March 31, 2005 and the twelve months ended March 31, 2005:
THREE MONTHS TWELVE MONTHS YEAR ENDED ENDED ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------------- ------------- (DOLLARS IN THOUSANDS) Income from continuing operations........... $ 23,556 $ 6,349 $ 26,394 Provision for income taxes.................. 14,437 4,059 16,177 Interest expense............................ 51,444 11,460 49,550 Depreciation and amortization............... 15,345 4,013 15,591 -------- ------- -------- EBITDA...................................... 104,782 25,881 107,712 Other: Medicaid program payment adjustments for prior years at Fox Run Hospital........ 6,245 -- 6,780 Loss on refinancing long-term debt........ 6,407 6,990 6,990 -------- ------- -------- Adjusted EBITDA............................. $117,434 $32,871 $121,482 ======== ======= ========
EX-99.2 3 g96159exv99w2.txt EX-99.2 OFFERING MEMORANDUM SECTION EXHIBIT 99.2 UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION The following tables set forth the unaudited pro forma condensed combined financial data for Psychiatric Solutions, Inc., giving effect to the acquisitions of Ardent Behavioral, Heartland, Brentwood and other non- significant acquisitions during the fiscal year ended December 31, 2004 and the Financing Transactions as if they had occurred on the dates indicated and after giving effect to certain pro forma adjustments discussed herein. The unaudited pro forma condensed balance sheet as of March 31, 2005 has been derived from Psychiatric Solutions' and Ardent Behavioral's historical balance sheets, adjusted to give effect to these acquisitions and the Financing Transactions as if they occurred on March 31, 2005. The pro forma condensed combined income statement for the twelve months ended March 31, 2005 gives effect to the acquisitions of Ardent Behavioral, Heartland and other non-significant acquisitions during 2004 and the Financing Transactions, as if they occurred at the beginning of the period presented. The pro forma condensed combined income statement for the three months ended March 31, 2005 gives effect to the acquisition of Ardent Behavioral and the Financing Transactions, as if they occurred at the beginning of the period presented. The pro forma condensed combined income statement for the year ended December 31, 2004 gives effect to the acquisitions of Ardent Behavioral, Heartland, Brentwood and other non-significant acquisitions during 2004 and the Financing Transactions, as if they occurred at the beginning of the period presented. The adjustments necessary to fairly present the unaudited pro forma condensed combined financial data have been made based on available information and in the opinion of management are reasonable. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with this unaudited pro forma condensed combined financial data. The pro forma adjustments are preliminary and revisions to the preliminary purchase price allocations and financing of the transactions may have a significant impact on the pro forma adjustments. A final valuation of net assets acquired associated with the Ardent Behavioral acquisition cannot be made prior to the completion of this offering memorandum. A final determination of these fair values will be conducted by Psychiatric Solutions' independent valuation specialists. The consideration of this valuation will most likely result in a change in the value assigned to the fixed and intangible assets acquired from Ardent Behavioral. The unaudited pro forma condensed combined financial data is for comparative purposes only and does not purport to represent what our financial position or results of operations would actually have been had the events noted above in fact occurred on the assumed dates or to project our financial position or results of operations for any future date or future period. The unaudited pro forma condensed combined financial data should be read in conjunction with the "Selected Consolidated Financial and Operating Data -- Psychiatric Solutions," "Selected Consolidated Financial and Operating Data -- Ardent Behavioral" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this offering memorandum. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF MARCH 31, 2005
PRO FORMA OFFERING PSYCHIATRIC ARDENT ACQUISITION PRO FORMA PRO FORMA PRO FORMA SOLUTIONS BEHAVIORAL ADJUSTMENTS COMBINED ADJUSTMENTS PSI ----------- ---------- ----------- --------- ----------- ---------- (DOLLARS IN THOUSANDS) ASSETS Current assets: Cash and cash equivalents.... $ 14,500 $ 2,354 $(500,000)(1) $(483,146) $489,100(1) $ 5,954 Accounts receivable, net..... 80,996 41,614 7,494(2) 130,104 130,104 Other current assets......... 16,700 19,174 -- 35,874 35,874 -------- -------- --------- --------- -------- ---------- Total current assets....... 112,196 63,142 (492,506) (317,168) 489,100 171,932 Property and equipment, net.... 220,762 83,465 65,910(3) 370,137 370,137 Costs in excess of net assets acquired..................... 130,134 11,210 380,292(4) 521,636 9,600(1) 531,236 Other assets................... 21,377 84,656 (84,416)(5) 21,617 8,380(8) 29,997 -------- -------- --------- --------- -------- ---------- Total assets................... $484,469 $242,473 $(130,720) $ 596,222 $507,080 $1,103,302 ======== ======== ========= ========= ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable............. $ 12,355 $ 7,727 $ -- $ 20,082 $ -- $ 20,082 Accrued liabilities.......... 55,579 19,462 -- 75,041 -- 75,041 Current portion of long-term debt....................... 478 -- -- 478 3,250(1) 3,728 -------- -------- --------- --------- -------- ---------- Total current liabilities.............. 68,412 27,189 -- 95,601 3,250 98,851 Long-term debt, less current portion...................... 153,483 -- -- 153,483 515,950(1) 669,433 Other liabilities.............. 13,991 17,155 7,409(6) 38,555 -- 38,555 -------- -------- --------- --------- -------- ---------- Total liabilities.............. 235,886 44,344 7,409 287,639 519,200 806,839 Stockholders' equity: Common stock................. 205 -- 14(7) 219 -- 219 Additional paid-in capital... 228,784 -- 59,986(7) 288,770 -- 288,770 Accumulated earnings......... 19,594 198,129 (198,129)(2) 19,594 (12,120)(9) 7,474 -------- -------- --------- --------- -------- ---------- Total stockholders' equity................... 248,583 198,129 (138,129) 308,583 (12,120) 296,463 -------- -------- --------- --------- -------- ---------- Total liabilities and stockholders' equity......... $484,469 $242,473 $(130,720) $ 596,222 $507,080 $1,103,302 ======== ======== ========= ========= ======== ==========
See Notes to Unaudited Pro Forma Condensed Combined Balance Sheet. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET (DOLLARS IN THOUSANDS) (1) Represents the sources and uses of funds from the Financing Transactions: Notes offered hereby........................................ $220,000 Senior secured term debt.................................... 325,000 Additional borrowings on amended and restated revolving credit facility........................................... 35,500 Repurchase of 10 5/8% senior subordinated notes............. (61,300) -------- Increase in debt............................................ 519,200 Excess cash on balance sheet at March 31, 2005.............. 10,900 Premium on repurchase of 10 5/8% senior subordinated notes..................................................... (8,600) Non-recurring bridge loan commitment fee.................... (1,500) Estimate of capitalized finance costs....................... (10,400) Estimate of purchase transaction costs...................... (9,600) -------- Cash paid to Ardent Behavioral and Ardent Health Services LLC....................................................... 500,000 Less excess cash on balance sheet at March 31, 2005......... (10,900) -------- Net increase to cash and cash equivalents................... $489,100 ========
(2) Represents the elimination of Medicare liabilities not assumed in the acquisition of $7,494 included in accounts receivable and Ardent Behavioral's accumulated earnings of $198,129. (3) Represents the adjustment to the value of the property and equipment of Ardent Behavioral to reflect their appraised value. (4) Represents adjustment to cost in excess of net assets acquired as follows: Cash paid to Ardent Behavioral and Ardent Health Services LLC....................................................... $ 500,000 Value of equity consideration issued to Ardent Health Services LLC.............................................. 60,000 Less: net assets acquired(a)................................ (168,498) --------- Cost in excess of net assets acquired....................... 391,502 Ardent Behavioral's historical cost in excess of net assets acquired.................................................. (11,210) --------- Pro forma adjustment to cost in excess of net assets acquired.................................................. $ 380,292 =========
- --------------- (a) Net assets of Ardent Behavioral..................... $ 198,129 Cost in excess of net assets acquired of Ardent Behavioral........................................ (11,210) Pro forma acquisition adjustments to: Accounts receivable, net....................... 7,494 Property and equipment, net.................... 65,910 Other assets................................... (84,416) Other liabilities.............................. (7,409) --------- Net assets acquired................................ $ 168,498 =========
(5) Represents elimination of Ardent's Behavioral intercompany receivables of $78,129 and reclassification of deferred tax assets to deferred tax liabilities of $6,287. (6) Represents an adjustment to long-term deferred tax liabilities related to the step-up in basis of the property and equipment of Ardent Behavioral and the reclassification of deferred tax assets of Ardent Behavioral and an adjustment to long-term deferred tax assets related to net operating losses acquired. Step up basis on property and equipment of Ardent facilities................................................ $ 26,364 Net operating losses obtained in acquisition of Ardent Behavioral................................................ (12,668) Reclassification of deferred tax assets of Ardent Behavioral................................................ (6,287) --------- $ 7,409 =========
(7) Represents the adjustment to common stock and additional paid in capital related to the issuance of 1,413,649 shares of our common stock, $.01 par value, at a price of $42.4434. The share price was calculated based upon a volume-weighted average (rounded to four decimal places) of the daily sale price for the shares of our common stock for 20 consecutive trading days ending two days prior to March 31, 2005. This calculation assumes the fair value of the shares to be issued in the acquisition are valued at $60.0 million. The actual valuation of the shares issued will be based upon the market value of our common stock for a reasonable period of time before and after the number of shares to be issued in the transaction becomes fixed. (8) Represents capitalized finance costs on Financing Transactions and write-off of capitalized finance costs related to 10 5/8% senior subordinated notes repurchased. Capitalized finance costs on Financing Transactions......... $10,400 Write-off of capitalized finance costs related to 10 5/8% senior subordinated notes repurchased..................... (2,020) ------- $ 8,380 =======
(9) Represents non-recurring fees and charges on loans related to the Financing Transactions as summarized below: Loan commitment fee on bridge facility...................... $ 1,500 Premium on repurchase of 10 5/8% senior subordinated notes..................................................... 8,600 Write-off of capitalized loan costs related to 10 5/8% senior subordinated notes repurchased..................... 2,020 ------- $12,120 =======
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE TWELVE MONTHS ENDED MARCH 31, 2005
OFFERING PSYCHIATRIC PRO FORMA PRO FORMA PRO FORMA PRO FORMA SOLUTIONS ACQUISITIONS(1) COMBINED ADJUSTMENTS PSI ----------- --------------- --------- ----------- --------- (DOLLARS IN THOUSANDS) Revenue........................ $522,490 $317,242 $839,732 $ -- $839,732 Expenses: Salaries, wages and employee benefits.................. 286,338 179,181 465,519 -- 465,519 Professional fees............ 55,823 37,990 93,813 -- 93,813 Rentals and leases........... 9,592 3,604 13,196 -- 13,196 Other operating expenses..... 90,803 41,718 132,521 -- 132,521 Provision for doubtful accounts.................. 11,515 8,466 19,981 -- 19,981 Depreciation and amortization.............. 10,663 4,928 15,591 -- 15,591 Interest expense............. 18,031 532 18,563 30,987(1)(i) 49,550 Other expenses............... 6,990 -- 6,990 -- 6,990 -------- -------- -------- -------- -------- Total expenses............ 489,755 276,419 766,174 30,987 797,161 -------- -------- -------- -------- -------- Income from continuing operations before income taxes........................ 32,735 40,823 73,558 (30,987) 42,571 Provision for (benefit from) income taxes................. 12,494 15,513 28,007 (11,830)(1)(h) 16,177 -------- -------- -------- -------- -------- Income from continuing operations................... $ 20,241 $ 25,310 $ 45,551 $(19,157) $ 26,394 ======== ======== ======== ======== ========
See Notes to Unaudited Pro Forma Consolidated Combined Income Statements. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE THREE MONTHS ENDED MARCH 31, 2005
OFFERING PSYCHIATRIC ARDENT PRO FORMA PRO FORMA PRO FORMA PRO FORMA SOLUTIONS BEHAVIORAL ADJUSTMENTS COMBINED ADJUSTMENTS PSI ----------- ---------- ----------- --------- ----------- --------- (DOLLARS IN THOUSANDS) Revenue...................... $138,730 $79,908 $ -- $218,638 $ -- $218,638 Expenses Salaries, wages and employee benefits........ 76,367 44,447 140 (1)(a) 120,954 -- 120,954 Professional fees.......... 14,256 7,717 356 (1)(b) 22,329 -- 22,329 Rentals and leases......... 2,340 775 31 (1)(c) 3,146 -- 3,146 Other operating expenses... 24,229 9,806 82 (1)(d) 34,117 -- 34,117 Provision for doubtful accounts................. 2,668 2,553 -- 5,221 -- 5,221 Depreciation and amortization............. 2,902 1,199 (88)(1)(e) 4,013 -- 4,013 Interest expense (income)................. 3,523 (932) 932 (1)(f) 3,523 7,937 (1)(i) 11,460 Other expenses............. 6,990 3,192 (3,192)(1)(g) 6,990 -- 6,990 -------- ------- ------- -------- ------- -------- Total expenses........... 133,275 68,757 (1,739) 200,293 7,937 208,230 -------- ------- ------- -------- ------- -------- Income from continuing operations before income taxes...................... 5,455 11,151 1,739 18,345 (7,937) 10,408 Provision for (benefit from) income taxes............... 2,127 4,194 833 (1)(h) 7,154 (3,095)(1)(h) 4,059 -------- ------- ------- -------- ------- -------- Income from continuing operations................. $ 3,328 $ 6,957 $ 906 $ 11,191 $(4,842) $ 6,349 ======== ======= ======= ======== ======= ========
See Notes to Unaudited Pro Forma Condensed Combined Income Statements. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2004
OFFERING PSYCHIATRIC PRO FORMA PRO FORMA PRO FORMA PRO FORMA SOLUTIONS ACQUISITIONS(1) COMBINED ADJUSTMENTS PSI ----------- --------------- --------- ----------- --------- (DOLLARS IN THOUSANDS) Revenue......................... $487,190 $339,906 $827,096 $ -- $827,096 Expenses: Salaries, wages and employee benefits................... 265,678 190,472 456,150 456,150 Professional fees............. 53,258 41,744 95,002 -- 95,002 Rentals and leases............ 9,019 4,347 13,366 -- 13,366 Other operating expenses...... 85,670 45,505 131,175 -- 131,175 Provision for doubtful accounts................... 10,874 9,340 20,214 -- 20,214 Depreciation and amortization............... 9,868 5,477 15,345 -- 15,345 Interest expense.............. 18,964 1,148 20,112 31,332 (1)(i) 51,444 Other expenses................ 6,407 -- 6,407 -- 6,407 -------- -------- -------- -------- -------- Total expenses............. 459,738 298,033 757,771 31,332 789,103 -------- -------- -------- -------- -------- Income from continuing operations before income taxes......................... 27,452 41,873 69,325 (31,332) 37,993 Provision for (benefit from) income taxes.................. 10,432 15,912 26,344 (11,907)(1)(h) 14,437 -------- -------- -------- -------- -------- Income from continuing operations.................... $ 17,020 $ 25,961 $ 42,981 $(19,425) $ 23,556 ======== ======== ======== ======== ========
See Notes to Unaudited Pro Forma Condensed Combined Income Statements. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS (DOLLARS IN THOUSANDS) (1) The following pro forma condensed combined income statement for the twelve months ended March 31, 2005 presents the incremental pro forma operations of Ardent Behavioral, Heartland and three non-significant acquisitions applying the purchase method of accounting as if the acquisitions, which were completed on July 1, 2005, June 1, 2004 and various dates during the second quarter of 2004, respectively, had all occurred on April 1, 2004.
NON- ACQUISITION ARDENT SIGNIFICANT ACQUISITIONS PRO FORMA PRO FORMA BEHAVIORAL HEARTLAND ACQUISITIONS COMBINED ADJUSTMENTS ACQUISITIONS ---------- --------- ------------ ------------ ----------- ------------ Revenue.............................. $301,056 $9,135 $7,051 $317,242 $ -- $317,242 Expenses: Salaries, wages and employee benefits......................... 171,079 4,012 4,205 179,296 (115)(a) 179,181 Professional fees.................. 32,391 2,881 618 35,890 2,100 (b) 37,990 Rentals and leases................. 3,458 323 214 3,995 (391)(c) 3,604 Other operating expenses........... 38,845 1,351 1,194 41,390 328 (d) 41,718 Provision for doubtful accounts.... 7,718 690 58 8,466 -- 8,466 Depreciation and amortization...... 4,244 42 94 4,380 548 (e) 4,928 Interest expense................... 173 57 49 279 253 (f) 532 Other expenses..................... 15,416 311 235 15,962 (15,962)(g) -- -------- ------ ------ -------- -------- -------- Total expenses................... 273,324 9,667 6,667 289,658 (13,239) 276,419 -------- ------ ------ -------- -------- -------- Income from continuing operations before income taxes................ 27,732 (532) 384 27,584 13,239 40,823 Provision for income taxes........... 10,396 -- -- 10,396 5,117 (h) 15,513 -------- ------ ------ -------- -------- -------- Income from continuing operations.... $ 17,336 $ (532) $ 384 $ 17,188 $ 8,122 $ 25,310 ======== ====== ====== ======== ======== ========
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS -- (CONTINUED) The following pro forma condensed combined income statement for the year ended December 31, 2004 presents the incremental pro forma operations of Ardent Behavioral, Heartland, Brentwood and three non-significant acquisitions applying the purchase method of accounting as if the acquisitions, which were completed on July 1, 2005, June 1, 2004, March 1, 2004, and various dates during the second quarter of 2004, respectively, had all occurred on January 1, 2004.
NON- ACQUISITION ARDENT SIGNIFICANT ACQUISITIONS PRO FORMA PRO FORMA BEHAVIORAL HEARTLAND BRENTWOOD ACQUISITIONS COMBINED ADJUSTMENTS ACQUISITIONS ---------- --------- --------- ------------ ------------ ----------- ------------ Revenue......................... $294,282 $22,482 $5,612 $17,530 $339,906 $ -- $339,906 Expenses: Salaries, wages and employee benefits.................... 167,926 9,689 2,977 10,012 190,604 (132)(a) 190,472 Professional fees............. 32,744 4,841 653 1,389 39,627 2,117 (b) 41,744 Rentals and leases............ 3,564 788 37 559 4,948 (601)(c) 4,347 Other operating expenses...... 38,298 3,177 772 2,930 45,177 328 (d) 45,505 Provision for doubtful accounts.................... 7,245 1,500 370 225 9,340 -- 9,340 Depreciation and amortization................ 3,664 104 30 272 4,070 1,407 (e) 5,477 Interest expense.............. 2,854 127 2 136 3,119 (1,971)(f) 1,148 Other expenses................ 16,483 377 319 472 17,651 (17,651)(g) -- -------- ------- ------ ------- -------- -------- -------- Total expenses.............. 272,778 20,603 5,160 15,995 314,536 (16,503) 298,033 -------- ------- ------ ------- -------- -------- -------- Income from continuing operations before income taxes......................... 21,504 1,879 452 1,535 25,370 16,503 41,873 Provision for income taxes...... 8,159 -- -- -- 8,159 7,753 (h) 15,912 -------- ------- ------ ------- -------- -------- -------- Income from continuing operations.................... $ 13,345 $ 1,879 $ 452 $ 1,535 $ 17,211 $ 8,750 $ 25,961 ======== ======= ====== ======= ======== ======== ========
(a) Reflects adjustments to salaries, wages and employee benefits to include corporate level employees necessary to manage the facilities acquired from Ardent Behavioral and the reclassification of contract labor from salaries, wages and employee benefits to professional fees for Ardent Behavioral to conform to our presentation.
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Salaries, wages and employee benefits of corporate level employees to manage facilities acquired from Ardent Behavioral................................. $ 1,835 $ 1,835 $ 459 Reclassification of contract labor to professional fees to conform to our presentation............... (1,967) (1,950) (319) ------- ------- ------- $ (132) $ (115) $ 140 ======= ======= =======
(b) Reflects adjustment to professional fees to include additional costs at the corporate level for the acquisition of Ardent Behavioral and the reclassification of contract labor from salaries, wages and employee benefits to professional fees for Ardent Behavioral to conform to our presentation. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS -- (CONTINUED)
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Professional fees at corporate level to support facilities acquired from Ardent Behavioral........ $ 150 $ 150 $ 37 Reclassification from salaries, wages and employee benefits to conform to our presentation........... 1,967 1,950 319 ------- ------- ------- $ 2,117 $ 2,100 $ 356 ======= ======= =======
(c) Reflects adjustments to rentals and leases for real estate purchased subsequent to the acquisition of formerly leased facilities and adjustments to rentals and leases for additional office space at the corporate level necessary to accommodate employees hired as the result of the Ardent Behavioral acquisition.
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Lease expense on properties purchased related to acquisition of facilities......................... $(725) $(515) $ -- Lease expense on additional corporate office space required for additional corporate level employees to manage facilities acquired from Ardent Behavioral........................................ 124 124 31 ----- ----- ----- $(601) $(391) $ 31 ===== ===== =====
(d) Reflects adjustments to other operating expenses at the corporate level, primarily for travel and related expenses, to be incurred by employees hired as the result of the Ardent Behavioral acquisition. (e) Reflects adjustments to depreciation expense for purchase accounting step-ups of property and equipment acquired and for real estate purchased subsequent to the acquisition of formerly leased facilities. Buildings are depreciated over 35 years and equipment over 5 years.
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Additional (reduction in) depreciation on acquired facilities for purchase accounting basis step-up........................................... $ 932 $213 $(88) Depreciation on properties purchased related to acquisition of facilities......................... 475 335 -- ------ ---- ---- $1,407 $548 $(88) ====== ==== ====
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENTS -- (CONTINUED) (f) Reflects adjustments to include interest expense from the beginning of the period to the acquisition date and adjustments to eliminate interest expense (income) for Ardent Behavioral.
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Interest expense.................................... $ 883 $ 426 $ -- Less Ardent Behavioral Historical interest expense (income).......................................... (2,854) (173) 932 ------- ----- ---- $(1,971) $ 253 $932 ======= ===== ====
(g) Reflects adjustments to eliminate management fees and other related party amounts paid or payable to the sellers prior to acquisition. Incremental expenses we expect to incur on an on-going basis for additional personnel, office space, etc. to manage these facilities are reflected as acquisition pro-forma adjustments in the appropriate income statement line item. (h) Reflects adjustment to bring combined pro forma provision for income taxes to 38%, 39% and 38% of income from continuing operations before income taxes for the twelve months ended March 31, 2005, the three months ended March 31, 2005 and the year ended December 31, 2004, respectively.
THREE TWELVE MONTHS ENDED MONTHS ------------------------ ENDED DECEMBER 31, MARCH 31, MARCH 31, 2004 2005 2005 ------------ --------- --------- Pro forma acquisition income from continuing operations before income taxes.................... $ 41,873 $ 40,823 $18,345 Effective income tax rate........................... 38% 38% 39% -------- -------- ------- Provision for income taxes.......................... 15,912 15,513 7,154 Provision prior to pro-forma adjustment............. 8,159 10,396 6,321 -------- -------- ------- Pro forma acquisition adjustment to provision for income taxes...................................... $ 7,753 $ 5,117 $ 833 ======== ======== ======= Pro forma PSI income from continuing operations before income taxes............................... $ 37,993 $ 42,571 $10,408 Effective income tax rates.......................... 38% 38% 39% -------- -------- ------- Pro forma provision for income taxes................ $ 14,437 16,177 4,059 Pro forma combined provision for income taxes....... 26,344 28,007 7,154 -------- -------- ------- Offering pro forma adjustment....................... $(11,907) $(11,830) $(3,095) ======== ======== =======
(i) Reflects adjustment to give effect to interest on the $220,000 notes at 7 3/4% offered hereby and interest on the $325,000 senior secured term facility and $35,500 of additional borrowings under the amended and restated revolving credit facility at the LIBOR rate plus applicable margin. This adjustment has been offset by interest on the $61.3 million of 10 5/8% senior subordinated notes repurchased. The adjustment also includes amortization on capitalized finance costs and expense anticipated on interest rate swap arrangements. A 1/8% increase (decrease) in our interest rate assumptions would increase (decrease) our interest expense $451 for both the twelve months ended March 31, 2005 and the year ended December 31, 2004 and $113 for the three months ended March 31, 2005. -----END PRIVACY-ENHANCED MESSAGE-----