Exhibit 99.1
 
 Independent Auditors Report and Consolidated Financial Statements for Prime Healthcare Services, Inc. and Subsidiaries December 31, 2010 and 2009 MOSS-ADAMS LLP Certified Public Accountants | Business Consultants Acumen, Agility, Answers.




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CONTENTS
 PAGEINDEPENDENT AUDITORS REPORT
    
    
    1CONSOLIDATED FINANCIAL STATEMENTSConsolidated balance sheets
    
    
    2-3Consolidated statements of income
    
    
    4Consolidated statements of stockholders equity
    
    
    5Consolidated statements of cash flows
    
    
    6-7Notes to consolidated financial statements
    
    
    8-34




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INDEPENDENT AUDITORS REPORT
 
    
 1
    
    (PRAXITY LOGO)




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PRIME HEALTHCARE SERVICES, INC.  AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 ASSETS
 DECEMBER 31,2010
    
    
    2009CURRENT ASSETSCash and cash equivalents
    
    $
    77,159,641
    
    
    $
    46,003,201Patient accounts receivable, net of
allowance for doubtful accounts of
$75,513,000 in 2010
and $76,665,000 in 2009
    
    
    211,696,750
    
    
    
    190,063,206Related party receivables
    
    
    3,609,270
    
    
    
    848,105Notes receivable
    
    
    2,000,000
    
    
    
    Estimated third-party payor settlements
    
    
    64,975,818
    
    
    
    6,933,628Supplies inventory
    
    
    6,032,664
    
    
    
    5,149,389Prepaid expenses and other current assets
    
    
    67,482,488
    
    
    
    66,882,327Deposits
    
    
    1,102,966
    
    
    
    2,607,902Total current assets
    
    
    434,059,597
    
    
    
    318,487,758PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization
    
    
    262,620,741
    
    
    
    205,492,387INSURANCE CLAIMS AND RESERVES RECOVERABLE
    
    
    64,164,484
    
    
    
    46,318,954INVESTMENTS IN JOINT VENTURES
    
    
    150,000
    
    
    
    150,000GOODWILL
    
    
    13,707,803
    
    
    
    13,707,803OTHER ASSETS
    
    
    21,550,654
    
    
    
    5,214,170$
    796,253,279
    
    
    $
    589,371,072
 2




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##### 



LIABILITIES AND STOCKHOLDERS EQUITY
 DECEMBER 31,2010
    
    
    2009CURRENT LIABILITIESAccounts payable
    
    $
    36,942,224
    
    
    $
    30,024,524Accrued expenses
    
    
    76,158,133
    
    
    
    67,914,649Medical claims payable
    
    
    5,135,213
    
    
    
    5,394,327Related party payables
    
    
    
    
    
    
    50,000Current portion of capital leases
    
    
    6,161,122
    
    
    
    7,193,226Current portion of long-term debt
    
    
    11,014,600
    
    
    
    40,388,724Total current liabilities
    
    
    135,411,292
    
    
    
    150,965,450LONG-TERM LIABILITIESSale lease-back liability
    
    
    68,000,000
    
    
    
    143,000,000Insurance claims liabilities and reserves
    
    
    64,164,484
    
    
    
    46,318,954Interest rate swap
    
    
    6,439,555
    
    
    
    Capital leases, net of current portion
    
    
    7,328,405
    
    
    
    14,322,308Long-term debt, net of current portion
    
    
    250,986,875
    
    
    
    72,207,803Total long-term liabilities
    
    
    396,919,319
    
    
    
    275,849,065STOCKHOLDERS EQUITYCommon stock, $0.01 par value, 3,000
shares authorized, 30 shares issued and
outstanding
    
    
    1
    
    
    
    1Additional paid in capital
    
    
    2,999
    
    
    
    2,999Retained earnings
    
    
    114,674,021
    
    
    
    49,980,544Non-controlling interest
    
    
    149,245,647
    
    
    
    112,573,013Total stockholders equity
    
    
    263,922,668
    
    
    
    162,556,557$
    796,253,279
    
    
    $
    589,371,072
  See accompanying notes.
 3




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PRIME HEALTHCARE SERVICES, INC.  AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31,2010
    
    
    2009REVENUENet patient service revenue
    

    $
    1,556,162,877
    
    
    $
    1,544,421,821Premium revenue
    
    
    24,322,191
    
    
    
    22,635,296Other revenue
    
    
    8,596,841
    
    
    
    11,305,428OPERATING EXPENSES
    
    
    1,589,081,909
    
    
    
    1,578,362,545Compensation and employee benefits
    
    
    540,599,662
    
    
    
    538,823,926Provision for doubtful accounts
    
    
    264,700,509
    
    
    
    383,393,440General and administrative
    
    
    202,281,814
    
    
    
    71,802,415Supplies
    
    
    131,686,278
    
    
    
    132,462,044Professional services
    
    
    98,035,329
    
    
    
    124,666,861Rent and lease expense
    
    
    52,878,612
    
    
    
    51,911,515Depreciation and amortization
    
    
    29,418,170
    
    
    
    25,533,5561,319,600,374
    
    
    
    1,328,593,757GAIN FROM ACQUISITION
    
    
    13,272,876
    
    
    
    INCOME FROM OPERATIONS
    
    
    282,754,411
    
    
    
    249,768,788INTEREST EXPENSE, net
    
    
    (32,261,258

    )
    
    
    (25,139,763
    )INCOME BEFORE PROVISION FOR INCOME TAXES
    
    
    250,493,153
    
    
    
    224,629,025INCOME TAX PROVISION
    
    
    2,671,612
    
    
    
    3,487,151INCOME BEFORE ALLOCATION TO NON-CONTROLLING INTEREST
    
    
    247,821,541
    
    
    
    221,141,874ALLOCATION OF INCOME TO NON-CONTROLLING INTEREST
    
    
    (141,244,753
    )
    
    
    (128,098,593
    )CONTROLLING INTEREST IN NET INCOME
    
    $
    106,576,788
    
    
    $
    93,043,281
  See accompanying notes.
 4




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PRIME HEALTHCARE SERVICES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Common
    
    
    Additional Paid in
    
    
    Note Receivable
    
    
    Retained
    
    
    Non-controllingShares
    
    
    Stock
    
    
    Capital
    
    
    from Related Party
    
    
    Earnings
    
    
    Interest
    
    
    TotalBALANCE,December 31, 2008
    
    
    30
    
    
    $
    1
    
    
    $
    2,999
    
    
    $
    (3,110,975
    )
    
    $
    16,118,029
    
    
    $
    71,264,022
    
    
    $
    84,274,076Repayment of notes receivable from Prime A
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,110,975
    
    
    
    
    
    
    
    
    
    
    
    3,110,975Distribution of Encino Hospital Medical Center (note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (32,318,335
    )
    
    
    
    
    
    
    (32,318,335
    )Cash distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,584,554
    )
    
    
    (92,067,479
    )
    
    
    (113,652,033
    )Controlling interest in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93,043,281
    
    
    
    
    
    
    
    93,043,281Non-controlling interest in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,098,593
    
    
    
    128,098,593BALANCE,
December 31, 2009
    
    
    30
    
    
    
    1
    
    
    
    2,999
    
    
    
    
    
    
    
    55,258,421
    
    
    
    107,295,136
    
    
    
    162,556,557Contributions from stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,410,000
    
    
    
    2,410,000Distribution of Montclair Hospital Medical Center (note 4)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,161,188
    )
    
    
    
    
    
    
    (47,161,188
    )Cash distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,704,242
    )
    
    
    (101,704,242
    )Controlling interest in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,576,788
    
    
    
    
    
    
    
    106,576,788Non-controlling interest in net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141,244,753
    
    
    
    141,244,753BALANCE,
December 31, 2010
    
    
    30
    
    
    $
    1
    
    
    $
    2,999
    
    
    $
    
    
    
    $
    114,674,021
    
    
    $
    149,245,647
    
    
    $
    263,922,668
  5




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PRIME HEALTHCARE SERVICES, INC.  AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIESIncome before allocation to non controlling interest
    
    $
    247,821,541
    
    
    $
    221,141,874Adjustments to reconcile controlling interest in net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    29,418,170
    
    
    
    25,533,556Loss (gain) on sale of assets
    
    
    (134,165
    )
    
    
    22,000Provision for doubtful accounts
    
    
    264,700,509
    
    
    
    383,393,440Gain on acquisition
    
    
    (13,272,876
    )
    
    
    Change in interest rate swap
    
    
    2,138,505
    
    
    
    Changes in assets and liabilities net of acquisitions/dispositions:Patient accounts receivable
    
    
    (277,399,333
    )
    
    
    (408,779,166
    )Supplies inventory
    
    
    (94,785
    )
    
    
    587,579Prepaid expenses and other assets
    
    
    (4,070,723
    )
    
    
    (32,653,674
    )Deposits
    
    
    1,504,936
    
    
    
    810,164Other assets
    
    
    (2,730,039
    )
    
    
    (1,292,877
    )Due to/ from related parties
    
    
    (2,811,165
    )
    
    
    (423,434
    )Accounts payable
    
    
    (1,805,096
    )
    
    
    (4,917,547
    )Accrued expenses
    
    
    (5,580,082
    )
    
    
    (6,464,942
    )Medical claims payable
    
    
    (259,114
    )
    
    
    1,057,086Estimated third-party payor settlements
    
    
    (62,157,789
    )
    
    
    (7,280,299
    )Net cash provided by operating activities
    
    
    175,268,494
    
    
    
    170,733,760CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (21,811,864
    )
    
    
    (24,268,158
    )Proceeds from sale of property and equipment
    
    
    939,353
    
    
    
    Cash paid for acquisitions, net of cash acquired
    
    
    (51,893,403
    )
    
    
    Repayments (advances) on notes receivable
    
    
    (2,000,000
    )
    
    
    1,050,000Net cash used in investing activities
    
    
    (74,765,914
    )
    
    
    (23,218,158
    )CASH FLOWS FROM FINANCING ACTIVITIESPayments of loan issuance costs
    
    
    (9,305,395
    )
    
    
    Proceeds from long-term debt borrowing
    
    
    232,066,959
    
    
    
    Lease buyout of Montclair Hospital Medical Center facility
    
    
    (20,041,610
    )
    
    
    Repayments of sale lease-back borrowings
    
    
    (75,000,000
    )
    
    
    (15,000,000
    )Borrowings on lines of credit
    
    
    320,831,871
    
    
    
    592,223,149Repayments on lines of credit
    
    
    (373,554,707
    )
    
    
    (599,910,426
    )Payments on long term debt
    
    
    (29,939,175
    )
    
    
    (1,982,989
    )Payments on capital lease obligations
    
    
    (11,502,536
    )
    
    
    (5,901,697
    )Repayments on related party notes receivable
    
    
    
    
    
    
    3,110,975Contributions from shareholder
    
    
    2,410,000
    
    
    
    Cash distributions
    
    
    (101,704,242
    )
    
    
    (113,652,033
    )Distribution of Encino Hospital Medical Center
    
    
    
    
    
    
    (3,205,015
    )Distribution of Montclair Hospital Medical Center
    
    
    (3,607,305
    )
    
    
    Net cash used in financing activities
    
    
    (69,346,140
    )
    
    
    (144,318,036
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    31,156,440
    
    
    
    3,197,566CASH AND CASH EQUIVALENTS, beginning of year
    
    
    46,003,201
    
    
    
    42,805,635CASH AND CASH EQUIVALENTS, end of year
    
    $
    77,159,641
    
    
    $
    46,003,201
 6




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SUPPLEMENTAL CASH FLOW INFORMATION
 YEARS ENDED DECEMBER 31,2010
    
    
    2009Cash paid during the year for:Interest
    
    $
    38,396,419
    
    
    $
    43,350,446Income taxes
    
    $
    1,713,000
    
    
    $
    2,490,000SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIESCapital lease obligations incurred for the acquisition of property and equipment of property
    
    $
    3,476,529
    
    
    $
    9,329,703Note payable obligation incurred for the acquisition of property and
equipment
    
    $
    
    
    
    $
    5,516,150Non-cash distribution of Encino Hospital Medical Center assets (Note 4)
    
    $
    
    
    
    $
    29,113,320Non-cash distribution of Montclair Hospital Medical Center assets (Note 4)
    
    $
    43,553,883
    
    
    $
    
  7




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1  Nature of Business
   LicensedHospital
    
    Beds
    
    LocationDesert Valley Hospital
    
    
    83
    
    
    VictorvilleChino Valley Medical Center
    
    
    126
    
    
    ChinoSherman Oaks Hospital
    
    
    153
    
    
    Sherman Oaks* Montclair Hospital Medical Center
    
    
    102
    
    
    MontclairHuntington Beach Hospital
    
    
    131
    
    
    Huntington BeachLa Palma Intercommunity Hospital
    
    
    141
    
    
    La PalmaWest Anaheim Medical Center
    
    
    219
    
    
    AnaheimParadise Valley Hospital
    
    
    301
    
    
    National CityCentinela Hospital Medical Center
    
    
    370
    
    
    InglewoodGarden Grove Hospital Medical Center
    
    
    167
    
    
    Garden GroveSan Dimas Community Hospital
    
    
    93
    
    
    San DimasShasta Regional Medical Center
    
    
    246
    
    
    ReddingAlvarado Hospital
    
    
    306
    
    
    San Diego
 
 *
    
    As of December 31, 2010, Montclair Hospital Medical Center was distributed by
the Company, on behalf of the controlling stockholder, who contributed Montclair
Hospital Medical Center to Prime Healthcare Services Foundation, Inc. (Note 4). Note 2  Organization and Summary of Significant Accounting Policies
 Basis of consolidation
 
 8




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Note 2  Organization and Summary of Significant Accounting Policies (Continued)
 Basis of consolidation (continued)
  
  
   9




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Organization and Summary of Significant Accounting Policies (Continued)
 Net patient service revenue
 Premium revenue and medical claims expense
 Supplies inventory
 Property and equipment
 Asset retirement obligations
 10




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Note 2  Organization and Summary of Significant Accounting Policies (Continued)
 Use of estimates
 Income taxes
  Cash and cash equivalents
 11




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 2  Organization and Summary of Significant Accounting Policies (Continued)
 Goodwill
  Fair value of financial instruments
 Deferred loan issuance costs
 Recently Issued Accounting Standards
 Reclassification
 12




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Note 2  Organization and Summary of Significant Accounting Policies (Continued)
 Subsequent events
 Note 3  Net Patient Service Revenue
  Medicare
  13




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 3  Net Patient Service Revenue (Continued)
 Medi-Cal
 Other
  Note 4  Acquisitions and Dispositions
  14




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Note 4  Acquisitions and Dispositions (Continued)
  Cash and cash equivalents
    
    $
    3,205,015Patient accounts receivable, net of allowance
    
    
    12,157,072Supplies inventory
    
    
    339,723Prepaid expenses and other current assets
    
    
    2,331,891Property and equipment
    
    
    14,009,638Estimated third-party payor settlements
    
    
    274,996$
    32,318,335
   Cash and cash equivalents
    
    $
    3,607,305Patient accounts receivable, net of allowance
    
    
    7,736,639Supplies inventory
    
    
    194,487Prepaid expenses and other current assets
    
    
    5,871,314Property and equipment
    
    
    25,635,844Estimated third-party payor settlements
    
    
    4,115,599$
    47,161,188
  15




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 4  Acquisitions and Dispositions (Continued)
   Allocation atNovember 17, 2010Cash and equivalents
    
    $
    4,335,774Accounts receivable
    
    
    16,671,359Prepaids and other current assets
    
    
    2,400,752Supplies inventory
    
    
    982,977Land
    
    
    4,200,000Building and land improvements
    
    
    50,153,593Equipment and software
    
    
    13,303,960Liabilities
    
    
    (22,546,362
    )Gain on purchase
    
    
    (13,272,876
    )Net cash consideration
    
    $
    56,229,177
 Note 5  Concentration of Credit Risk
   16




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Note 6  Property and Equipment
  2010
    
    
    2009Land
    
    $
    42,612,568
    
    
    $
    38,412,568Buildings
    
    
    111,255,273
    
    
    
    61,101,680Building improvements
    
    
    21,992,507
    
    
    
    18,523,416Equipment
    
    
    167,086,257
    
    
    
    138,796,293Automobiles and aircraft
    
    
    9,134,900
    
    
    
    9,134,900Construction in progress (estimated cost to complete
at December 31, 2010 is approximately $15,812,000)
    
    
    7,557,968
    
    
    
    8,755,354359,639,473
    
    
    
    274,724,211Accumulated depreciation and amortization
    
    
    (97,018,732
    )
    
    
    (69,231,824
    )$
    262,620,741
    
    
    $
    205,492,387
  Note 7  Long-Term Debt
   17




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PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Long-Term Debt (Continued)
  2010
    
    
    2009Term A Loan with Royal Bank of Canada, secured by all assets
of the Company, payable in quarterly installments ranging from
$900,000 to $3,600,000 with final payment on maturity of $45
million, plus interest at LIBOR (greater of 2% or average British
Bankers Association Interest Settlement Rate) plus 4.25% on
Eurodollar Loans or 3.25% on Alternate Base Rate Loans
(6.25% at December 31, 2010) per annum, maturing in 2014.
PHSI is required to maintain certain financial and non financial
covenants relating to this loan.
    
    $
    69,300,000
    
    
    $
    Term B Loan with Royal Bank of Canada, secured by all assets
of the Company, payable in quarterly installments of $400,000
plus interest at interest at LIBOR (greater of 2% or average
British Bankers Association Interest Settlement Rate) plus
5.25% on Eurodollar Loans or 4.25% on Alternate Base Rate
Loans (7.25% at December 31, 2010) per annum, maturing in
2015. PHSI is required to maintain certain financial and non
financial covenants relating to this loan.
    
    
    158,800,000
    
    
    
    Line of credit with City National Bank, secured by accounts
receivable of Desert Valley Hospital, interest payable monthly
at an annual rate of prime of City National Bank. This line of
credit was paid off and closed on April 28, 2010, in connection
with the RBC Term A and B Loans.
    
    
    
    
    
    
    4,000,000Term loans with GE Commercial Finance, secured by various
equipment of Desert Valley Hospital, payable in monthly
installments ranging from approximately $7,000 to $60,000
including interest at fixed interest rates ranging from 6.59% to
7.43% per annum, maturing in 2010. These term loans were
paid off and closed on April 28, 2010 in connection with the
RBC Term A and B Loans.
    
    
    
    
    
    
    1,080,604
 18




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##### 



Note 7  Long-Term Debt (Continued)
 2010
    
    
    2009Term loan with Siemens Financial Services, secured by certain
equipment of Prime Healthcare Air Transport LLC, payable in
monthly installments of approximately $75,000 including
interest at a fixed rate of 6.77% per annum, maturing in 2017.
    
    $
    4,837,895
    
    
    $
    5,385,038Term loan with City National Bank, secured by equipment of
Chino Valley Medical Center, interest payable monthly at an
annual rate of prime (3.25% at December 31, 2009) of City
National Bank. This term loan was paid off and closed on April
28, 2010.
    
    
    
    
    
    
    2,293,442Bank note payable, secured by certain real estate of Desert
Valley Medical Group, bearing interest at 5.75% per annum,
payable in monthly payments of $1,258, maturing in August
2024.
    
    
    135,853
    
    
    
    142,541Note payable, secured by a vehicle, bearing interest at 3.90%
per annum, payable in monthly payments of $1,131, maturing
in July 2015.
    
    
    62,264
    
    
    
    Note payable with City National Bank, secured by business
assets, bearing interest at an annual rate of prime (3.25% at
December 31, 2009) of City National Bank, principal payable in
monthly payment of $63,837, maturing September 1, 2012.
This note payable was paid off and closed on April 28, 2010 .
    
    
    
    
    
    
    2,106,603Note payable with Medical Properties Trust secured by certain
equipment of Sherman Oaks Hospital, bearing a fixed interest
rate of 10.64% per annum as of December 31, 2009. Interest
only payment due monthly, principal balance due at maturity
on December 30, 2020. This note payable was paid off and
closed on April 28, 2010.
    
    
    
    
    
    
    5,000,000Note payable with Medical Properties Trust secured by certain
equipment of Montclair Hospital Medical Center and bearing a
fixed interest rate of 10.53% per annum. Interest only
payments due monthly, principal balance due at maturity on
August 9, 2021. This note payable was paid off and closed on
April 28, 2010.
    
    
    
    
    
    
    5,000,000
 19




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Long-Term Debt (Continued)
 2010
    
    
    2009Note payable with Medical Properties Trust secured by certain
equipment and purchase options of Huntington Beach Hospital,
La Palma Intercommunity Hospital, and West Anaheim Medical
Center bearing a fixed interest rate of 10.27% per annum as of
December 31, 2009. This note payable was paid off and closed
on April 28, 2010.
    
    $
    
    
    
    $
    10,000,000Line of credit with Medical Properties Trust, interest payable
monthly at an annual rate of 9.25% as of December 31, 2009,
maturing in November 2018. Shasta Regional Medical Center is
required to maintain certain financial and non-financial
covenants at year end. At December 31, 2009, there were no
available borrowings under this line of credit. This line of
credit was paid off and closed on April 28, 2010.
    
    
    
    
    
    
    20,000,000Note payable with Medical Properties Trust secured by certain
property and equipment and lease deposits of Paradise Valley
Hospital, bearing a fixed interest rate of 9.59% per annum as of
December 31, 2010. Interest only payments due monthly,
principal balance due at maturity on May 6, 2022.
    
    
    25,000,000
    
    
    
    25,000,000Lines of credit with Healthcare Finance Group (HFG), secured
by accounts receivable of Huntington Beach Hospital, La Palma
Intercommunity Hospital and West Anaheim Medical Center,
interest payable monthly at an annual rate of the greater of
2.75% or LIBOR + 3.50% (5.5% at December 31, 2010),
maturing in November 2012. Under the terms of the
agreements, the respective hospitals are required to maintain
financial and non-financial covenants. At December 31, 2010,
approximately $3,000,000, $3,723,000, and $5,907,000,
respectively, were available under these lines.
    
    
    2,073,629
    
    
    
    12,145,429Line of credit with HFG, secured by accounts receivable and
inventory of Sherman Oaks Hospital, interest payable monthly
at an annual rate of the greater for 2.75% or LIBOR + 3.00%
(5.50% at December 31, 2010), maturing in February 2013.
SOH is required to maintain certain financial and non-financial
covenants at year end. At December 31, 2010, approximately
$6,484,000 was available under this line.
    
    
    516,231
    
    
    
    5,087,016
 20




---



##### 



Note 7  Long-Term Debt (Continued)
 2010
    
    
    2009Line of credit with HFG, secured by accounts receivable and
inventory of Centinela Hospital Medical Center, interest payable
monthly at an annual rate of the greater of 2.75% or LIBOR +
3.00% (5.75% at December 31, 2009), maturing in December
2011. Centinela Hospital Medical Center is required to
maintain certain financial and non-financial covenants at year
end. This line of credit was paid off and closed on April 28,
2010 in connection with the RBC Term A and B Loans.
    
    $
    
    
    
    $
    4,580,801Line of credit with HFG, secured by accounts receivable and
inventory of Chino Valley Medical Center, interest payable
monthly at an annual rate of the greater of 2.75% or LIBOR +
2.50% (5.25% at December 31, 2010), maturing in September
2011. Chino Valley Medical Center is required to maintain
certain financial and non-financial covenants at year end. At
December 31, 2010, approximately $7,487,000 was available
under this line.
    
    
    500,000
    
    
    
    2,243,899Line of credit with HFG, secured by accounts receivable and
inventory of Paradise Valley Hospital, interest payable monthly
at an annual rate of the greater for 2.75% or Libor + 2.50%
(5.25% at December 31, 2010), maturing in December 2011.
Paradise Valley Hospital is required to maintain certain
financial & non-financial covenants at year end. At December
31, 2010, approximately $9,224,000 was available under this
line.
    
    
    775,603
    
    
    
    8,531,154262,001,475
    
    
    
    112,596,527Less current portion
    
    
    (11,014,600
    )
    
    
    (40,388,724
    )$
    250,986,875
    
    
    $
    72,207,803
 21




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 7  Long-Term Debt (Continued)
  Years ending December 31,2011
    
    $
    11,014,6002012
    
    
    8,995,6372013
    
    
    14,890,3052014
    
    
    47,338,0502015
    
    
    153,187,467Thereafter
    
    
    26,575,416$
    262,001,475
  22




---



##### 



Note 8  Interest rate swap
   Note 9  Leases
  23




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9  Leases (Continued)
 .
 .
 24




---



##### 



Note 9  Leases (Continued)
 .
  December 31,Hospital

    
    2010
    
    
    2009Paradise Valley Hospital
    
    $
    23,000,000
    
    
    $
    23,000,000Centinela Hospital Medical Center
    
    
    
    
    
    
    75,000,000San Dimas Community Hospital
    
    
    13,000,000
    
    
    
    13,000,000San Dimas Medical Office Building
    
    
    7,000,000
    
    
    
    7,000,000Garden Grove Hospital Medical Center
    
    
    16,250,000
    
    
    
    16,250,000Garden Grove Medical Office Building
    
    
    8,750,000
    
    
    
    8,750,000$
    68,000,000
    
    
    $
    143,000,000
  25




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 9  Leases (Continued)
         26




---



##### 



Note 9  Leases (Continued)
   Operating
    
    
    SaleCapital
    
    
    Lease
    
    
    LeasebackYears ending December 31,
    
    Leases
    
    
    Commitments
    
    
    Commitments2011
    
    $
    6,868,288
    
    
    $
    45,305,370
    
    
    $
    7,122,0792012
    
    
    6,399,265
    
    
    
    43,631,098
    
    
    
    7,264,5212013
    
    
    1,314,252
    
    
    
    42,962,642
    
    
    
    7,409,8112014
    
    
    
    
    
    
    41,554,495
    
    
    
    7,558,0072015
    
    
    
    
    
    
    39,473,963
    
    
    
    7,709,167Thereafter
    
    
    
    
    
    
    200,755,929
    
    
    
    100,635,124Total minimum payments
    
    
    14,581,805
    
    
    $
    413,683,497
    
    
    
    137,698,709Less amounts representing interest
    
    
    (1,092,278
    )
    
    
    
    
    
    
    (69,698,709
    )13,489,527
    
    
    
    
    
    
    
    68,000,000Less current portion
    
    
    (6,161,122
    )
    
    
    
    
    
    
    $
    7,328,405
    
    
    
    
    
    
    $
    68,000,000
 Note 10  Professional Liability, Workers Compensation, Healthcare and Earthquake Insurance
  27




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 10  Professional Liability, and Workers Compensation, Healthcare and Earthquake
Insurance (Continued)
     28




---



##### 



Note 10  Professional Liability, and Workers Compensation, Healthcare and Earthquake
Insurance (Continued)
  Note 11  Related Party Transactions
  2010
    
    
    2009Receivable from DVIL, related to
expenses incurred in excess of
deductibles.
    
    $
    3,387,798
    
    
    $
    719,063Various
    
    
    221,472
    
    
    
    129,042$
    3,609,270
    
    
    $
    848,105
   29




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 11  Related Party Transactions (Continued)
    30




---



##### 



Note 11  Related Party Transactions (Continued)
  Note 12  Retirement Savings Plan
  Note 13  Contingencies
  31




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 13  Contingencies (Continued)
   Note 14  Legislation
  Note 15  Hospital Fee
  32




---



##### 



Note
15  Hospital Fee (continued)
    Note 16  Labor Relations
     33




---



##### 



PRIME HEALTHCARE SERVICES, INC.
  AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note
16  Labor Relations (continued)
     Note 17  Subsequent Event
  34