Cleveland Clinic Health System Obligated Group - FMSbonds.com
Cleveland Clinic Health System Obligated Group - FMSbonds.com Cleveland Clinic Health System Obligated Group - FMSbonds.com
B. CONSOLIDATED STATEMENTS OF OPERATIONSThe following consolidated statements of operations for the years ended December 31, 2005, 2006 and2007 set forth the results of operations of the Obligated Group; they are derived from unaudited consolidatingfinancial information underlying the audited consolidated financial statements of the Cleveland Clinic and itscontrolled Affiliates. The consolidated statements of operations for the six months ended June 30, 2007 and 2008have been derived from unaudited interim consolidated financial statements. In the opinion of Cleveland Clinicmanagement, the unaudited interim consolidated financial statements include all adjustments necessary for a fairpresentation of such information. The consolidated statement of operations for the six months ended June 30, 2008is not necessarily indicative of full-year results. Items affecting changes in net assets that are not depicted in thefollowing consolidated statements of operations include discontinued operations, contributions of long-lived assets,restricted gifts and bequests, restricted investment income, net assets released from restrictions, changes in theminimum pension liability, changes in the value of cash flow hedges, changes in the beneficial interest infoundations, changes in the value of perpetual trusts, foreign currency translation adjustments, unrealized gains andlosses on nontrading investments and the cumulative effect of changes in accounting.The information shown includes data for each period for the Obligated Group and the Health System,respectively. The data should be read in conjunction with the information included under “PART IV –MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF HEALTH SYSTEM OPERATIONSAND FINANCIAL POSITION,” as well as the audited consolidated financial statements and related notes includedin Appendix B and the June 30, 2008 unaudited consolidated financial statements filed with DAC.[Balance of Page Left Blank Intentionally]A-30
OBLIGATED GROUPConsolidated Statements of Operations 1(unaudited)(dollars in thousands)Six Months EndedYear Ended December 31, June 30,2005 2006 2007 2007 2008Unrestricted revenuesNet patient service revenue $ 3,448,261 $3,712,206 $3,983,556 $ 1,955,785 $2,101,035Other 318,957 344,286 388,802 168,542 193,077Total unrestricted revenues 3,767,218 4,056,492 4,372,358 2,124,327 2,294,112ExpensesSalaries, wages and benefits 1,994,651 2,185,062 2,339,639 1,163,207 1,251,248Supplies 434,743 461,768 485,283 243,902 243,878Pharmaceuticals 195,603 223,845 239,384 114,362 124,917Purchased services 193,148 215,852 234,529 115,220 124,772Administrative services 95,551 108,211 137,526 53,429 72,151Facilities 170,619 189,968 227,702 104,770 119,242Insurance 113,218 92,131 72,969 43,820 40,522Provision for uncollectible accounts 87,223 88,172 124,114 60,973 63,4433,284,756 3,565,009 3,861,146 1,899,683 2,040,173Operating income before interest,depreciation and amortizationexpenses 482,462 491,483 511,212 224,644 253,939Interest 50,369 53,377 54,118 27,250 28,947Depreciation and amortization 183,209 176,426 188,133 101,140 107,927Operating income before specialcharges 248,884 261,680 268,961 96,254 117,065Special charges 3,728 - - - -Operating income 245,156 261,680 268,961 96,254 117,065Nonoperating gains and lossesInterest and dividends 30,272 44,010 36,864 18,748 15,800Net realized and unrealized gains (losses)on investments classified as trading 28,952 89,201 64,667 73,164 (90,101)Other, net (3,372) (5,856) 9,474 26,964 (15,381)Net nonoperating gains and losses 55,852 127,355 111,005 118,876 (89,682)Excess of revenuesover expenses $ 301,008 $ 389,035 $ 379,966 $ 215,130 $ 27,3831 Reclassification of the prior period financial statements have been made to conform with the current presentation. In previous years, theObligated Group investments were classified as other-than-trading and unrealized gains and losses were excluded from excess of revenue overexpenses. During 2007, the Obligated Group determined that substantially all of its investment portfolio was more accurately classified astrading, whereby unrealized gains and losses are included in excess of revenues over expenses. Therefore, $55,307 and $7,530 of netunrealized gains and losses previously included in net assets at December 31, 2006 and December 31, 2005, respectively, have been reclassifiedand included in excess of revenue over expenses.A-31
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OBLIGATED GROUPConsolidated Statements of Operations 1(unaudited)(dollars in thousands)Six Months EndedYear Ended December 31, June 30,2005 2006 2007 2007 2008Unrestricted revenuesNet patient service revenue $ 3,448,261 $3,712,206 $3,983,556 $ 1,955,785 $2,101,035Other 318,957 344,286 388,802 168,542 193,077Total unrestricted revenues 3,767,218 4,056,492 4,372,358 2,124,327 2,294,112ExpensesSalaries, wages and benefits 1,994,651 2,185,062 2,339,639 1,163,207 1,251,248Supplies 434,743 461,768 485,283 243,902 243,878Pharmaceuticals 195,603 223,845 239,384 114,362 124,917Purchased services 193,148 215,852 234,529 115,220 124,772Administrative services 95,551 108,211 137,526 53,429 72,151Facilities 170,619 189,968 227,702 104,770 119,242Insurance 113,218 92,131 72,969 43,820 40,522Provision for uncollectible accounts 87,223 88,172 124,114 60,973 63,4433,284,756 3,565,009 3,861,146 1,899,683 2,040,173Operating in<strong>com</strong>e before interest,depreciation and amortizationexpenses 482,462 491,483 511,212 224,644 253,939Interest 50,369 53,377 54,118 27,250 28,947Depreciation and amortization 183,209 176,426 188,133 101,140 107,927Operating in<strong>com</strong>e before specialcharges 248,884 261,680 268,961 96,254 117,065Special charges 3,728 - - - -Operating in<strong>com</strong>e 245,156 261,680 268,961 96,254 117,065Nonoperating gains and lossesInterest and dividends 30,272 44,010 36,864 18,748 15,800Net realized and unrealized gains (losses)on investments classified as trading 28,952 89,201 64,667 73,164 (90,101)Other, net (3,372) (5,856) 9,474 26,964 (15,381)Net nonoperating gains and losses 55,852 127,355 111,005 118,876 (89,682)Excess of revenuesover expenses $ 301,008 $ 389,035 $ 379,966 $ 215,130 $ 27,3831 Reclassification of the prior period financial statements have been made to conform with the current presentation. In previous years, the<strong>Obligated</strong> <strong>Group</strong> investments were classified as other-than-trading and unrealized gains and losses were excluded from excess of revenue overexpenses. During 2007, the <strong>Obligated</strong> <strong>Group</strong> determined that substantially all of its investment portfolio was more accurately classified astrading, whereby unrealized gains and losses are included in excess of revenues over expenses. Therefore, $55,307 and $7,530 of netunrealized gains and losses previously included in net assets at December 31, 2006 and December 31, 2005, respectively, have been reclassifiedand included in excess of revenue over expenses.A-31