CHAMPION HEALTHCARE CHANGES ACCOUNTING TREATMENT OF HOSPITAL PARTNERSHIP.HOUSTON--(BUSINESS WIRE)--June 23, 1995--Champion Healthcare Corporation (AMEX AMEX See: American Stock Exchange :CHC CHC Chicago Cubs CHC Community Health Center CHC Chestnut Hill College (Philadelphia, Pennsylvania) CHC Congressional Hispanic Caucus CHC Community Health Council (UK National Health Service) ) today announced that, following discussions with officials of the Securities and Exchange Commission ("SEC"), the Company has voluntarily agreed to change its accounting treatment of a hospital partnership and, accordingly, today filed its restated consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge for the year ended December December: see month. 31, 1994, and for the quarter ended March 31, 1995. Because the partnership did not begin operations until December 31, 1994, the restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. had no impact on the statement of operations See Income statement. and minimal impact on the statement of cash flows for the year ended December 31, 1994. Additionally, the restatement had no impact on net income or earnings per share for the quarter ended March 31, 1995. For more detailed comparative balance sheet and income statement information, see attachments. Charles R. Miller Charles Robert Miller (September 30 1857 – September 18 1927) was an American lawyer and politician from Wilmington, in New Castle County, Delaware. He was a member of the Republican Party, who served in the Delaware General Assembly and as Governor of Delaware. , chairman, president and chief executive officer of Champion, said, "Our discussions with the SEC were cordial cordial: see liqueur. and based on an honest difference of opinion. We had consolidated the results of our North Dakota North Dakota, state in the N central United States. It is bordered by Minnesota, across the Red River of the North (E), South Dakota (S), Montana (W), and the Canadian provinces of Saskatchewan and Manitoba (N). partnership relying on the opinion of the Company's auditors AUDITORS, practice. Persons lawfully appointed to examine and digest accounts referred to them, take down the evidence in writing, which may be lawfully offered in relation to such accounts, and prepare materials on which a decree or judgment may be made; and to report the whole, together and outside counsel, both of whom felt that the partnership structure more than fulfilled ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. the requirements of consolidation. Interestingly, but unfortunately, there is neither sufficient precedent nor accounting literature to make this a clear cut issue. Consequently, the SEC took a different position. We continue to believe that consolidation of the partnership is appropriate, but since the change of accounting treatment requested by the SEC has no effect whatsoever on earnings, we have concluded that this is not an issue worthy of prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. debate." In December 1994, Champion formed a partnership with Dakota Dakota: see Sioux. Hospital wherein where·in adv. In what way; how: Wherein have we sinned? conj. 1. In which location; where: the country wherein those people live. 2. the Company contributed its hospital, Heartland Medical Center, and $20,000,000 in cash for a 50% interest in the partnership. Dakota Hospital, in turn, contributed its hospital to the partnership for a 50% interest. The partnership began operations on December 31, 1994, as Dakota Heartland Health System ("DHHS DHHS Department of Health & Human Services (US government) DHHS Dana Hills High School (Dana Point, California) DHHS Deaf and Hard of Hearing Services DHHS Deaf and Hard of Hearing Services "). The Company previously included the financial statements of DHHS in its consolidated financial statements at December 31, 1994, and for the quarter ended March 31, 1995. The SEC disagreed with the Company and its independent accountants and outside counsel that consolidation was the appropriate accounting for the partnership and requested that the Company restate re·state tr.v. re·stat·ed, re·stat·ing, re·states To state again or in a new form. See Synonyms at repeat. re·state its previously filed consolidated financial statements to account for the partnership using the equity method. Champion Healthcare Corporation, a public company listed on the American Stock Exchange American Stock Exchange (AMEX) Stock exchange in the U.S. Originally known as “the Curb,” it began as an outdoor marketplace in New York City c. 1850. It moved indoors to its present location in the Wall Street area in 1921. , was founded in 1990 and is headquartered in Houston, Texas “Houston” redirects here. For other uses, see Houston (disambiguation). Houston (pronounced /'hjuːstən/) is the largest city in the state of Texas and the . Including partnerships, the Company owns or operates nine hospitals and one skilled nursing facility skilled nursing facility n. Abbr. SNF An establishment that houses chronically ill, usually elderly patients, and provides long-term nursing care, rehabilitation, and other services. in seven states, with a total of 1,348 licensed beds. -0-
CHAMPION HEALTHCARE CORPORATION
Selected Balance Sheet Data
(Dollars in thousands)
March 31, 1995 December 31, 1994
As Previously As As Previously As
Reported Restated Reported Restated
Current Assets $ 91,956 $ 62,799 $105,122 $ 77,380
Property and Equipment, net $129,961 $ 88,353 $124,247 $ 81,913
Investment in DHHS $ - $ 41,653 $ - $ 40,079 Total Assets $244,015 $212,839 $248,514 $216,553 Current Liabilities $ 31,783 $ 22,027 $ 37,845 $ 26,105 Long-Term Debt and Capital Leases $104,747 $104,655 $105,388 $105,284 Minority Interests $ 21,680 $ - $ 20,423 $ - Total Liabilities and Shareholders' Equity $244,015 $212,839 $248,514 $216,553
CHAMPION HEALTHCARE CORPORATION
Unaudited Selected Operating Data
(Dollars in thousands, except per share data)
Three Months Ended
March 31, 1995
As Previously As
Reported Restated
Net Revenue $ 54,815 $ 28,727
Operating Expenses $ 48,165 $ 24,270
EBITDA Margin $ 6,650(1) $ 4,457
EBITDA Margin Percentage 12.1% 15.5%
Capital Costs(2) $ 5,098 $ 4,162
Operating Income $ 1,552 $ 295
Minority Interests $ 1,257 $ -
Income before Income Taxes $ 295 $ 295 Net Income $ 177 $ 177 Loss Applicable to Common Stockholders(3) $ (1,312) $ (1,312) Primary Loss Per Common Share $ (0.31) $ (0.31) Income Per Share Assuming Full Dilution(4) $ - $ - Weighted Average Shares Outstanding 4,227,975 4,227,975
(1) Earnings before interest, taxes, depreciation and
amortization and minority interests.
(2) Capital costs include depreciation, amortization and
interest.
(3) Net income less non-cash preferred stock dividend
requirements of $1,489,000.
(4) Fully diluted earnings per share for the period are not
presented because such amounts are antidilutive.
CHAMPION HEALTHCARE CORPORATION
Unaudited Hospital Statistics
Three Months Ended March 31, 1995
As Previously
Reported As Restated
Consolidated Equity-Owned
Hospitals Hospitals
Number of Hospitals 8 6 2 Adjusted Average Daily Census 685 443 242 Admissions 6,069 3,402 2,667 Outpatient Visits 62,625 31,832 30,793 Surgery Cases 3,971 1,536 2,435 Deliveries 487 148 339
CHAMPION HEALTHCARE CORPORATION
Unaudited Consolidated Statement of Operations
For the Three Months Ended March 31, 1995
(Dollars in thousands, except per share data)
March 31, 1995
As Previously Reported As Restated
Amount Percent Amount Percent
Net Revenue $ 54,815 100.00% $ 28,727 100.00%
Salaries and Benefits 22,607 41.24% 12,762 44.43%
Supplies 7,304 13.32% 3,237 11.27%
Bad Debts 3,093 5.64% 2,073 7.22%
Other Operating Expenses 15,161 27.67% 7,676 26.70%
Equity in Earnings of DHHS - - (1,478) (5.14%)
Total Operating Expenses 48,165 87.87% 24,270 84.48%
EBITDA 6,650 12.13% 4,457 15.52%
Depreciation and Amortization 2,460 4.49% 1,532 5.33%
Interest Expense 2,638 4.81% 2,630 9.16%
Total Capital Costs 5,098 9.30% 4,162 14.49%
Minority Interests 1,257 2.29% - -
Income before Income Taxes 295 0.54% 295 1.03% Income Taxes 118 0.22% 118 0.41% Net Income $ 177 0.32% $ 177 0.62% Preferred Stock Dividend Requirement 1,489 1,489 Loss Applicable to Common Stockholders $ (1,312) $ (1,312) Primary Loss Per Share $ (0.31) $ (0.31) CONTACT: Champion Healthcare Corp., Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; James G. VanDevender or Deborah H. Frankovich, 713/583-5491 |
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