Fitch Rates Mount Sinai Medical Center, FL Bonds 'BB'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 25, 2003

Fitch Ratings assigns a 'BB' rating to the approximately $107 million series 2004 Mount Sinai Medical Center, FL (MSMC). Bond proceeds will be used to current refund the series 2001B and 2001C bonds ($105 million), fund debt service reserve fund ($9 million), and pay costs of issuance. In addition, Fitch affirms the 'BB' rating on approximately $184.6 million of outstanding debt listed below. The Rating Outlook is Stable. The bonds are expected to price in January 2004 through negotiation led by Merrill Lynch & Co. Fitch will publish its full rating report nearer to the time of pricing.

The rating is primarily supported by MSMC's continued financial improvement brought about by good management practices. MSMC's operating and excess margins improved to negative 3.7% (negative $12.1 million) and negative 2.4% (negative $7.9 million), respectively, through the nine months period ended Sept. 30, 2003, from negative 10% (negative $31.9 million) and negative 9.7% (negative $30.8 million), respectively, through the same period in fiscal 2002. Additionally, MSMC's balance sheet is stronger. Days in accounts receivable at Sept. 30, 2003 declined to 48.1 days from a high of 89 days at fiscal 2000. MSMC's days cash on hand (including unrestricted foundation cash and investments) also improved to 79.6 days at Sept. 30, 2003 from 66.7 days at fiscal 2002. Ongoing strengths remain MSMC's good market position, foundation support and good disclosure practices. Mount Sinai maintains its position as the only full service hospital provider on Miami Beach and benefits from strong foundation support through a guaranty and a security interest in its unrestricted revenues and receivables. Fitch commends management's above average disclosure practices, which include quarterly and annual financial reporting to both Fitch and bondholders, and quarterly conference calls.

Credit concerns include declining utilization trends, and future capital needs. MSMC's admissions, outpatient surgeries, and emergency room visits through Sept. 30, 2003 decreased 2.6%, 9.4%, and 7.1% compared to the prior year. Despite these declines, revenue increased when compared to the same period last year. MSMC is budgeting a bottom line loss for fiscal year 2003 of $9.9 million with no expected transfers from the Foundation. MSMC's capital spending as a percent of depreciation expense in 2001 and 2002 was 82.5% and 33.5%, respectively. Despite remaining bond funds from the series 2001 issuance, Fitch believes capital needs are growing.

Fitch also notes MSMC's bottom line is $1.8 million below its budget through the first nine months of fiscal 2003. Management indicated that this shortfall is primarily due to more conservative accrual practices related to insurance and bad debt expense. Fitch believes views these practices positively.

The rating and outlook reflect MSMC's continued improvement in profitability. Management has budgeted a $241,000 bottom line in fiscal 2004, not including expected cash flow from a dedicated capital campaign expected to begin in calendar 2004, which would mark the first time the medical center has posted a profit since 1996. The budget includes initiatives that would result in $9.8 million of improvement from staffing and productivity, supply chain management, medical enterprise, medical management, and managed care contracting. Fitch believes these goals are achievable, given MSMC's previous success in meeting financial targets. Fitch will evaluate MSMC's progress towards its budgeted goals throughout the coming fiscal year.

SunTrust, the trustee for the bonds, recently filed a notice of events of default for a debt service covenant violation in fiscal 2002 which was based on the auditors report, and failure of Cap Gemini and Ernst and Young to deliver a document certifying that all consultant recommendations were being met in fiscal 2002. Management indicated that they believe the debt service covenant violation is inaccurate and is making every effort to have these events of default lifted. Fitch expects the events of default will be withdrawn and therefore believes they should have no material impact on the rating.

MSMC is a two campus health care provider offering a wide range of tertiary services with 979 licensed beds (780 staffed) located in Miami Beach, FL. MSMC has total operating revenue of $437 million in 2002.

Outstanding debt:

-- $92,125,000 City of Miami Beach Health Facilities Authority,

hospital revenue bonds, series 2001A (Mount Sinai Medical

Center of Florida Project);

-- $30,430,000 City of Miami Beach Health Facilities Authority,

hospital revenue bonds, series 2001B (Mount Sinai Medical

Center of Florida Project);

-- $70,640,000 City of Miami Beach Health Facilities Authority,

hospital revenue bonds, series 2001C (Mount Sinai Medical

Center of Florida Project);

-- $98,000,000 City of Miami Beach Health Facilities Authority,

hospital revenue bonds, series 1998 (Mount Sinai Medical

Center of Florida Project).