##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the quarterly period ended March 31, 2008
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 for the transition period from to
 Commission file number 0-20488
 Psychiatric Solutions, Inc.
  Delaware
    
    23-2491707(State or Other Jurisdiction of Incorporation or
    
    (I.R.S. Employer Identification No.)Organization)
 
 
 þ  o
  Large accelerated filer
þ
    
    Accelerated filer
o
    
    Non-accelerated filer  
o
(Do not check if a smaller reporting company)
    
    Smaller reporting company
o
 o þ




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##### 



TABLE OF CONTENTS
 PAGEPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of March 31, 2008 and December 31, 2007 (Unaudited)
    
    
    1Condensed Consolidated Statements of Income for the three month periods ended March 31, 2008
and 2007 (Unaudited)
    
    
    2Condensed Consolidated Statement of Stockholders Equity for the three month period ended
March 31, 2008 (Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31,
2008 and 2007 (Unaudited)
    
    
    4Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    22Item 6. Exhibits
    
    
    22EX-10.3 ISDA Master AgreementEx-31.1 Section 302 Certification of the CEOEx-31.2 Section 302 Certification of the CFOEx-32.1 Section 906 Certification of the CEO & CFO




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 PSYCHIATRIC SOLUTIONS, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited, in thousands)
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    14,743
    
    
    $
    39,975Accounts receivable, less allowance for doubtful accounts
of $38,635 and $35,587 for 2008 and 2007,
respectively
    
    
    254,935
    
    
    
    233,945Prepaids and other
    
    
    71,237
    
    
    
    66,159Total current assets
    
    
    340,915
    
    
    
    340,079Property and equipment, net of accumulated depreciation
    
    
    742,200
    
    
    
    694,018Cost in excess of net assets acquired
    
    
    1,183,970
    
    
    
    1,073,583Other assets
    
    
    64,601
    
    
    
    71,843Total assets
    
    $
    2,331,686
    
    
    $
    2,179,523LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    30,899
    
    
    $
    31,394Salaries and benefits payable
    
    
    79,159
    
    
    
    82,899Other accrued liabilities
    
    
    58,496
    
    
    
    61,939Current portion of long-term debt
    
    
    5,071
    
    
    
    6,016Total current liabilities
    
    
    173,625
    
    
    
    182,248Long-term debt, less current portion
    
    
    1,299,898
    
    
    
    1,166,008Deferred tax liability
    
    
    47,807
    
    
    
    49,131Other liabilities
    
    
    22,771
    
    
    
    23,235Total liabilities
    
    
    1,544,101
    
    
    
    1,420,622Minority Interest
    
    
    4,273
    
    
    
    4,159Stockholders equity:Common stock, $0.01 par value, 125,000 shares authorized;
55,419 and 55,107 issued and outstanding for 2008
and 2007, respectively
    
    
    554
    
    
    
    551Additional paid-in capital
    
    
    581,210
    
    
    
    574,943Accumulated other comprehensive loss
    
    
    (3,675
    )
    
    
    (479
    )Retained earnings
    
    
    205,223
    
    
    
    179,727Total stockholders equity
    
    
    783,312
    
    
    
    754,742Total liabilities and stockholders equity
    
    $
    2,331,686
    
    
    $
    2,179,523
  1




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##### Table of Contents



PSYCHIATRIC SOLUTIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
 (Unaudited, in thousands, except for per share amounts)
 Three Months Ended March 31,2008
    
    
    2007Revenue
    
    $
    429,691
    
    
    $
    322,438Salaries, wages and employee benefits (including share-
based compensation of $5,560 and $3,673 for 2008
and 2007, respectively)
    
    
    238,651
    
    
    
    180,135Professional fees
    
    
    43,504
    
    
    
    30,900Supplies
    
    
    23,779
    
    
    
    18,344Rentals and leases
    
    
    6,230
    
    
    
    4,629Other operating expenses
    
    
    39,115
    
    
    
    31,547Provision for doubtful accounts
    
    
    7,159
    
    
    
    6,664Depreciation and amortization
    
    
    9,435
    
    
    
    6,256Interest expense
    
    
    20,376
    
    
    
    14,386388,249
    
    
    
    292,861Income from continuing operations before income taxes
    
    
    41,442
    
    
    
    29,577Provision for income taxes
    
    
    15,789
    
    
    
    11,328Income from continuing operations
    
    
    25,653
    
    
    
    18,249Loss from discontinued operations, net of
income tax benefit of $83 and $77
for 2008 and 2007, respectively
    
    
    (157
    )
    
    
    (124
    )Net income
    
    $
    25,496
    
    
    $
    18,125Basic earnings per share:Income from continuing operations
    
    $
    0.46
    
    
    $
    0.34Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    Net income
    
    $
    0.46
    
    
    $
    0.34Diluted earnings per share:Income from continuing operations
    
    $
    0.46
    
    
    $
    0.33Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    Net income
    
    $
    0.46
    
    
    $
    0.33Shares used in computing per share amounts:Basic
    
    
    55,143
    
    
    
    53,804Diluted
    
    
    55,799
    
    
    
    55,237
  2




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PSYCHIATRIC SOLUTIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 (Unaudited, in thousands)
 AccumulatedAdditional
    
    
    OtherCommon Stock
    
    
    Paid-In
    
    
    Comprehensive
    
    
    RetainedShares
    
    
    Amount
    
    
    Capital
    
    
    Loss
    
    
    Earnings
    
    
    TotalBalance at December 31, 2007
    
    
    55,107
    
    
    $
    551
    
    
    $
    574,943
    
    
    $
    (479
    )
    
    $
    179,727
    
    
    $
    754,742Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,496
    
    
    
    25,496Change in fair value of interest rate
swap, net of tax
benefit of $1,967
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,196
    )
    
    
    
    
    
    
    (3,196
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    22,300Share-based compensation
    
    
    
    
    
    
    
    
    
    
    5,560
    
    
    
    
    
    
    
    
    
    
    
    5,560Exercise of stock options and
grants of restricted stock, net
of issuance costs
    
    
    312
    
    
    
    3
    
    
    
    707
    
    
    
    
    
    
    
    
    
    
    
    710Income tax benefit of stock option
exercises
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance at March 31, 2008
    
    
    55,419
    
    
    $
    554
    
    
    $
    581,210
    
    
    $
    (3,675
    )
    
    $
    205,223
    
    
    $
    783,312
  3




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##### Table of Contents



PSYCHIATRIC SOLUTIONS, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Unaudited, in thousands)
 Three Months Ended March 31,2008
    
    
    2007Operating activities:Net income
    
    $
    25,496
    
    
    $
    18,125Adjustments to reconcile net income to
net cash provided by continuing
operating activities:Depreciation and amortization
    
    
    9,435
    
    
    
    6,256Amortization of loan costs and bond premium
    
    
    553
    
    
    
    517Share-based compensation
    
    
    5,560
    
    
    
    3,673Change in income tax assets and liabilities
    
    
    10,003
    
    
    
    (1,798
    )Loss from discontinued operations, net of taxes
    
    
    157
    
    
    
    124Changes in operating assets and liabilities,
net of effect of acquisitions:Accounts receivable
    
    
    (19,888
    )
    
    
    (9,484
    )Prepaids and other current assets
    
    
    (64
    )
    
    
    (894
    )Accounts payable
    
    
    (523
    )
    
    
    (838
    )Salaries and benefits payable
    
    
    (4,511
    )
    
    
    (9,387
    )Accrued liabilities and other liabilities
    
    
    (14,802
    )
    
    
    (1,101
    )Net cash provided by continuing operating activities
    
    
    11,416
    
    
    
    5,193Net cash provided by (used in) discontinued operating activities
    
    
    136
    
    
    
    (62
    )Net cash provided by operating activities
    
    
    11,552
    
    
    
    5,131Investing activities:Cash paid for acquisitions, net of cash acquired
    
    
    (141,248
    )
    
    
    (25,241
    )Capital purchases of property and equipment
    
    
    (22,932
    )
    
    
    (9,872
    )Other assets
    
    
    (1,205
    )
    
    
    233Net cash used in continuing investing activities
    
    
    (165,385
    )
    
    
    (34,880
    )Financing activities:Net increase in revolving credit facility
    
    
    130,000
    
    
    
    19,000Principal payments on long-term debt
    
    
    (2,057
    )
    
    
    (315
    )Payment of loan and issuance costs
    
    
    (12
    )
    
    
    (85
    )Excess tax benefit from share based payment arrangements
    
    
    
    
    
    
    2,569Proceeds from exercises of common stock options
    
    
    670
    
    
    
    5,706Net cash provided by financing activities
    
    
    128,601
    
    
    
    26,875Net decrease in cash
    
    
    (25,232
    )
    
    
    (2,874
    )Cash and cash equivalents at beginning of the period
    
    
    39,975
    
    
    
    18,572Cash and cash equivalents at end of the period
    
    $
    14,743
    
    
    $
    15,698Effect of Acquisitions:Assets acquired, net of cash acquired
    
    $
    144,289
    
    
    $
    35,928Cash paid for prior year acquisitions
    
    
    
    
    
    
    2,081Liabilities assumed
    
    
    (3,041
    )
    
    
    (2,064
    )Common stock issued
    
    
    
    
    
    
    (9,000
    )Long-term debt assumed
    
    
    
    
    
    
    (1,704
    )Cash paid for acquisitions, net of cash acquired
    
    $
    141,248
    
    
    $
    25,241
  4




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1. Recent Developments
  2. Basis of Presentation
  3. Earnings Per Share
 Earnings per Share
  Three Months EndedMarch 31,2008
    
    
    2007Numerator:Basic and diluted earnings per share:Income from continuing operations
    
    $
    25,653
    
    
    $
    18,249Loss from discontinued operations, net of taxes
    
    
    (157
    )
    
    
    (124
    )Net income
    
    $
    25,496
    
    
    $
    18,125Denominator:Weighted average shares outstanding for basic earnings per share
    
    
    55,143
    
    
    
    53,804Effects of dilutive stock options and restriced stock outstanding
    
    
    656
    
    
    
    1,433Shares used in computing diluted earnings per common share
    
    
    55,799
    
    
    
    55,237Basic earnings per share:Income from continuing operations
    
    $
    0.46
    
    
    $
    0.34Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    $
    0.46
    
    
    $
    0.34Diluted earnings per share:Income from continuing operations
    
    $
    0.46
    
    
    $
    0.33Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    $
    0.46
    
    
    $
    0.33
 5




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##### Table of Contents



4. Share-Based Compensation
      5. Acquisitions
     6. Long-term debt
  6




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March 31,
    
    
    December 31,2008
    
    
    2007Senior credit facility:Revolving line of credit facility, expiring on December 21, 2009
and bearing interest of 4.5% and 6.4% at March 31, 2008
and December 31, 2007, respectively
    
    $
    210,000
    
    
    $
    80,000Senior secured term loan facility, expiring on July 1, 2012
and bearing interest of 5.0% and 6.8% at March 31, 2008
and December 31, 2007, respectively
    
    
    571,438
    
    
    
    573,3127 3/4% Notes
    
    
    476,346
    
    
    
    476,508Mortgage loans on facilities, maturing in 2036, 2037 and 2038
bearing fixed interest rates of 5.7% to 7.6%
    
    
    33,574
    
    
    
    33,671Other
    
    
    13,611
    
    
    
    8,5331,304,969
    
    
    
    1,172,024Less current portion
    
    
    5,071
    
    
    
    6,016Long-term debt
    
    $
    1,299,898
    
    
    $
    1,166,008
 Senior Credit Facility
    7 3 / 4 % Notes
 3 4 3 4 3 4 3 4 3 4 3 4
 Mortgage Loans
  7




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##### Table of Contents



Interest Rate Swap Agreements
  7. Income Taxes
  8. Discontinued Operations
 Accounting for the Impairment or Disposal of Long-Lived Assets
  Three Months EndedMarch 31,2008
    
    
    2007Revenue
    
    $
    
    
    
    $
    1,280Operating expenses
    
    
    240
    
    
    
    1,481Loss from discontinued operations before income taxes
    
    
    (240
    )
    
    
    (201
    )Benefit for income taxes
    
    
    (83
    )
    
    
    (77
    )Loss from discontinued operations, net of income taxes
    
    $
    (157
    )
    
    $
    (124
    )
 9. Disclosures About Reportable Segments
 Disclosures About Segments of an Enterprise and
Related Information
  8




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Three Months Ended March 31, 2008
 Owned andLeasedFacilities
    
    
    Other
    
    
    Corporate
    
    
    ConsolidatedRevenue
    
    $
    388,308
    
    
    $
    41,383
    
    
    $
    
    
    
    $
    429,691Adjusted EBITDA
    
    $
    80,769
    
    
    $
    7,959
    
    
    $
    (11,915
    )
    
    $
    76,813Interest expense
    
    
    7,114
    
    
    
    214
    
    
    
    13,048
    
    
    
    20,376Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    15,789
    
    
    
    15,789Depreciation and amortization
    
    
    7,890
    
    
    
    1,184
    
    
    
    361
    
    
    
    9,435Inter-segment expenses
    
    
    15,951
    
    
    
    1,952
    
    
    
    (17,903
    )
    
    
    Other expenses:Share-based compensation
    
    
    
    
    
    
    
    
    
    
    5,560
    
    
    
    5,560Total other expenses
    
    
    
    
    
    
    
    
    
    
    5,560
    
    
    
    5,560Income (loss) from continuing operations
    
    $
    49,814
    
    
    $
    4,609
    
    
    $
    (28,770
    )
    
    $
    25,653Total assets
    
    $
    2,030,544
    
    
    $
    224,812
    
    
    $
    76,330
    
    
    $
    2,331,686
 Three Months Ended March 31, 2007
 Owned andLeasedFacilities
    
    
    Other
    
    
    Corporate
    
    
    ConsolidatedRevenue
    
    $
    306,862
    
    
    $
    15,576
    
    
    $
    
    
    
    $
    322,438Adjusted EBITDA
    
    $
    61,237
    
    
    $
    2,181
    
    
    $
    (9,526
    )
    
    $
    53,892Interest expense
    
    
    9,028
    
    
    
    (5
    )
    
    
    5,363
    
    
    
    14,386Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    11,328
    
    
    
    11,328Depreciation and amortization
    
    
    5,730
    
    
    
    182
    
    
    
    344
    
    
    
    6,256Inter-segment expenses
    
    
    11,369
    
    
    
    721
    
    
    
    (12,090
    )
    
    
    Other expenses:Share-based compensation
    
    
    
    
    
    
    
    
    
    
    3,673
    
    
    
    3,673Total other expenses
    
    
    
    
    
    
    
    
    
    
    3,673
    
    
    
    3,673Income (loss) from continuing operations
    
    $
    35,110
    
    
    $
    1,283
    
    
    $
    (18,144
    )
    
    $
    18,249Total assets
    
    $
    1,499,188
    
    
    $
    47,577
    
    
    $
    76,459
    
    
    $
    1,623,224
 10. Financial Information for the Company and Its Subsidiaries
  9




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Condensed Consolidating Balance Sheet
As of March 31, 2008
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    7,808
    
    
    $
    6,935
    
    
    $
    
    
    
    $
    14,743Accounts receivable, net
    
    
    
    
    
    
    246,986
    
    
    
    7,949
    
    
    
    
    
    
    
    254,935Prepaids and other
    
    
    
    
    
    
    55,785
    
    
    
    15,452
    
    
    
    
    
    
    
    71,237Total current assets
    
    
    
    
    
    
    310,579
    
    
    
    30,336
    
    
    
    
    
    
    
    340,915Property and equipment, net of accumulated depreciation
    
    
    
    
    
    
    692,316
    
    
    
    57,170
    
    
    
    (7,286
    )
    
    
    742,200Cost in excess of net assets acquired
    
    
    
    
    
    
    1,183,970
    
    
    
    
    
    
    
    
    
    
    
    1,183,970Investment in subsidiaries
    
    
    1,167,606
    
    
    
    
    
    
    
    
    
    
    
    (1,167,606
    )
    
    
    Other assets
    
    
    14,743
    
    
    
    45,698
    
    
    
    22,415
    
    
    
    (18,255
    )
    
    
    64,601Total assets
    
    $
    1,182,349
    
    
    $
    2,232,563
    
    
    $
    109,921
    
    
    $
    (1,193,147
    )
    
    $
    2,331,686Current Liabilities:Accounts payable
    
    $
    
    
    
    $
    29,715
    
    
    $
    1,184
    
    
    $
    
    
    
    $
    30,899Salaries and benefits payable
    
    
    
    
    
    
    77,859
    
    
    
    1,300
    
    
    
    
    
    
    
    79,159Other accrued liabilities
    
    
    13,550
    
    
    
    44,310
    
    
    
    636
    
    
    
    
    
    
    
    58,496Current portion of long-term debt
    
    
    4,667
    
    
    
    
    
    
    
    404
    
    
    
    
    
    
    
    5,071Total current liabilities
    
    
    18,217
    
    
    
    151,884
    
    
    
    3,524
    
    
    
    
    
    
    
    173,625Long-term debt, less current portion
    
    
    1,266,728
    
    
    
    
    
    
    
    33,170
    
    
    
    
    
    
    
    1,299,898Deferred tax liability
    
    
    
    
    
    
    47,807
    
    
    
    
    
    
    
    
    
    
    
    47,807Other liabilities
    
    
    2,204
    
    
    
    10,900
    
    
    
    31,332
    
    
    
    (21,665
    )
    
    
    22,771Total liabilities
    
    
    1,287,149
    
    
    
    210,591
    
    
    
    68,026
    
    
    
    (21,665
    )
    
    
    1,544,101Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,273
    
    
    
    4,273Total stockholders (deficit) equity
    
    
    (104,800
    )
    
    
    2,021,972
    
    
    
    41,895
    
    
    
    (1,175,755
    )
    
    
    783,312Total liabilities and stockholders (deficit) equity
    
    $
    1,182,349
    
    
    $
    2,232,563
    
    
    $
    109,921
    
    
    $
    (1,193,147
    )
    
    $
    2,331,686
 Condensed Consolidating Balance Sheet
As of December 31, 2007
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    19,159
    
    
    $
    20,816
    
    
    $
    
    
    
    $
    39,975Accounts receivable, net
    
    
    
    
    
    
    226,501
    
    
    
    7,444
    
    
    
    
    
    
    
    233,945Prepaids and other
    
    
    
    
    
    
    64,604
    
    
    
    1,555
    
    
    
    
    
    
    
    66,159Total current assets
    
    
    
    
    
    
    310,264
    
    
    
    29,815
    
    
    
    
    
    
    
    340,079Property and equipment, net of accumulated depreciation
    
    
    
    
    
    
    643,838
    
    
    
    57,526
    
    
    
    (7,346
    )
    
    
    694,018Cost in excess of net assets acquired
    
    
    
    
    
    
    1,073,583
    
    
    
    
    
    
    
    
    
    
    
    1,073,583Investment in subsidiaries
    
    
    1,058,235
    
    
    
    
    
    
    
    
    
    
    
    (1,058,235
    )
    
    
    Other assets
    
    
    15,441
    
    
    
    52,298
    
    
    
    22,359
    
    
    
    (18,255
    )
    
    
    71,843Total assets
    
    $
    1,073,676
    
    
    $
    2,079,983
    
    
    $
    109,700
    
    
    $
    (1,083,836
    )
    
    $
    2,179,523Current Liabilities:Accounts payable
    
    $
    
    
    
    $
    30,335
    
    
    $
    1,059
    
    
    $
    
    
    
    $
    31,394Salaries and benefits payable
    
    
    
    
    
    
    81,242
    
    
    
    1,657
    
    
    
    
    
    
    
    82,899Other accrued liabilities
    
    
    25,171
    
    
    
    36,526
    
    
    
    242
    
    
    
    
    
    
    
    61,939Current portion of long-term debt
    
    
    5,619
    
    
    
    
    
    
    
    397
    
    
    
    
    
    
    
    6,016Total current liabilities
    
    
    30,790
    
    
    
    148,103
    
    
    
    3,355
    
    
    
    
    
    
    
    182,248Long-term debt, less current portion
    
    
    1,132,735
    
    
    
    
    
    
    
    33,273
    
    
    
    
    
    
    
    1,166,008Deferred tax liability
    
    
    
    
    
    
    49,131
    
    
    
    
    
    
    
    
    
    
    
    49,131Other liabilities
    
    
    2,659
    
    
    
    10,912
    
    
    
    31,096
    
    
    
    (21,432
    )
    
    
    23,235Total liabilities
    
    
    1,166,184
    
    
    
    208,146
    
    
    
    67,724
    
    
    
    (21,432
    )
    
    
    1,420,622Minority Interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,159
    
    
    
    4,159Total stockholders (deficit) equity
    
    
    (92,508
    )
    
    
    1,871,837
    
    
    
    41,976
    
    
    
    (1,066,563
    )
    
    
    754,742Total liabilities and stockholders (deficit) equity
    
    $
    1,073,676
    
    
    $
    2,079,983
    
    
    $
    109,700
    
    
    $
    (1,083,836
    )
    
    $
    2,179,523
 10




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##### Table of Contents



Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 2008
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsRevenue
    
    $
    
    
    
    $
    418,526
    
    
    $
    13,596
    
    
    $
    (2,431
    )
    
    $
    429,691Salaries, wages and employee benefits
    
    
    
    
    
    
    231,451
    
    
    
    7,200
    
    
    
    
    
    
    
    238,651Professional fees
    
    
    
    
    
    
    41,654
    
    
    
    1,850
    
    
    
    
    
    
    
    43,504Supplies
    
    
    
    
    
    
    23,209
    
    
    
    570
    
    
    
    
    
    
    
    23,779Rentals and leases
    
    
    
    
    
    
    6,138
    
    
    
    92
    
    
    
    
    
    
    
    6,230Other operating expenses
    
    
    
    
    
    
    37,438
    
    
    
    1,707
    
    
    
    (30
    )
    
    
    39,115Provision for doubtful accounts
    
    
    
    
    
    
    6,890
    
    
    
    269
    
    
    
    
    
    
    
    7,159Depreciation and amortization
    
    
    
    
    
    
    8,881
    
    
    
    615
    
    
    
    (61
    )
    
    
    9,435Interest expense
    
    
    19,858
    
    
    
    
    
    
    
    518
    
    
    
    
    
    
    
    20,37619,858
    
    
    
    355,661
    
    
    
    12,821
    
    
    
    (91
    )
    
    
    388,249(Loss) income from continuing operations before
income taxes
    
    
    (19,858
    )
    
    
    62,865
    
    
    
    775
    
    
    
    (2,340
    )
    
    
    41,442(Benefit from) provision for income taxes
    
    
    (7,566
    )
    
    
    23,323
    
    
    
    32
    
    
    
    
    
    
    
    15,789(Loss) income from continuing operations
    
    
    (12,292
    )
    
    
    39,542
    
    
    
    743
    
    
    
    (2,340
    )
    
    
    25,653Loss from discontinued operations, net of tax
    
    
    
    
    
    
    (157
    )
    
    
    
    
    
    
    
    
    
    
    (157
    )Net (loss) income
    
    $
    (12,292
    )
    
    $
    39,385
    
    
    $
    743
    
    
    $
    (2,340
    )
    
    $
    25,496
 Condensed Consolidating Statement of Income
For the Three Months Ended March 31, 2007
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsRevenue
    
    $
    
    
    
    $
    322,438
    
    
    $
    4,534
    
    
    $
    (4,534
    )
    
    $
    322,438Salaries, wages and employee benefits
    
    
    
    
    
    
    180,135
    
    
    
    
    
    
    
    
    
    
    
    180,135Professional fees
    
    
    
    
    
    
    30,902
    
    
    
    (2
    )
    
    
    
    
    
    
    30,900Supplies
    
    
    
    
    
    
    18,344
    
    
    
    
    
    
    
    
    
    
    
    18,344Rentals and leases
    
    
    
    
    
    
    4,629
    
    
    
    
    
    
    
    
    
    
    
    4,629Other operating expenses
    
    
    
    
    
    
    31,153
    
    
    
    3,749
    
    
    
    (3,355
    )
    
    
    31,547Provision for doubtful accounts
    
    
    
    
    
    
    6,664
    
    
    
    
    
    
    
    
    
    
    
    6,664Depreciation and amortization
    
    
    
    
    
    
    6,042
    
    
    
    275
    
    
    
    (61
    )
    
    
    6,256Interest expense
    
    
    14,158
    
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    14,38614,158
    
    
    
    277,869
    
    
    
    4,250
    
    
    
    (3,416
    )
    
    
    292,861(Loss) income from continuing operations before
income taxes
    
    
    (14,158
    )
    
    
    44,569
    
    
    
    284
    
    
    
    (1,118
    )
    
    
    29,577(Benefit from) provision for income taxes
    
    
    (5,423
    )
    
    
    16,751
    
    
    
    
    
    
    
    
    
    
    
    11,328(Loss) income from continuing operations
    
    
    (8,735
    )
    
    
    27,818
    
    
    
    284
    
    
    
    (1,118
    )
    
    
    18,249Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    (124
    )
    
    
    
    
    
    
    
    
    
    
    (124
    )Net (loss) income
    
    $
    (8,735
    )
    
    $
    27,694
    
    
    $
    284
    
    
    $
    (1,118
    )
    
    $
    18,125
 11




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2008
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsOperating activities:Net (loss) income
    
    $
    (12,292
    )
    
    $
    39,385
    
    
    $
    743
    
    
    $
    (2,340
    )
    
    $
    25,496Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    8,881
    
    
    
    615
    
    
    
    (61
    )
    
    
    9,435Amortization of loan costs and bond premium
    
    
    542
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    553Share-based compensation
    
    
    
    
    
    
    5,560
    
    
    
    
    
    
    
    
    
    
    
    5,560Change in income tax assets and liabilities
    
    
    
    
    
    
    10,003
    
    
    
    
    
    
    
    
    
    
    
    10,003Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    157
    
    
    
    
    
    
    
    
    
    
    
    157Changes in operating assets and liabilities, net of
effect of acquisitions:Accounts receivable
    
    
    
    
    
    
    (19,383
    )
    
    
    (505
    )
    
    
    
    
    
    
    (19,888
    )Prepaids and other current assets
    
    
    
    
    
    
    13,833
    
    
    
    (13,897
    )
    
    
    
    
    
    
    (64
    )Accounts payable
    
    
    
    
    
    
    (648
    )
    
    
    125
    
    
    
    
    
    
    
    (523
    )Salaries and benefits payable
    
    
    
    
    
    
    (4,154
    )
    
    
    (357
    )
    
    
    
    
    
    
    (4,511
    )Accrued liabilities and other liabilities
    
    
    (304
    )
    
    
    (15,128
    )
    
    
    630
    
    
    
    
    
    
    
    (14,802
    )Net cash (used in) provided by continuing operating activities
    
    
    (12,054
    )
    
    
    38,506
    
    
    
    (12,635
    )
    
    
    (2,401
    )
    
    
    11,416Net cash provided by discontinued operating activities
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    
    
    
    
    136Net cash (used in) provided by operating activities
    
    
    (12,054
    )
    
    
    38,642
    
    
    
    (12,635
    )
    
    
    (2,401
    )
    
    
    11,552Investing activities:Cash paid for acquisitions, net of cash acquired
    
    
    (141,248
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (141,248
    )Capital purchases of property and equipment
    
    
    
    
    
    
    (22,673
    )
    
    
    (259
    )
    
    
    
    
    
    
    (22,932
    )Other assets
    
    
    
    
    
    
    (1,138
    )
    
    
    (67
    )
    
    
    
    
    
    
    (1,205
    )Net cash used in investing activities
    
    
    (141,248
    )
    
    
    (23,811
    )
    
    
    (326
    )
    
    
    
    
    
    
    (165,385
    )Financing activities:Net increase in revolving credit facility
    
    
    130,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    130,000Principal payments on long-term debt
    
    
    (1,961
    )
    
    
    
    
    
    
    (96
    )
    
    
    
    
    
    
    (2,057
    )Payment of loan and issuance costs
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12
    )Net transfers to and from members
    
    
    24,605
    
    
    
    (26,182
    )
    
    
    (824
    )
    
    
    2,401
    
    
    
    Proceeds from exercises of common stock options
    
    
    670
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    670Net cash provided by (used in) financing activities
    
    
    153,302
    
    
    
    (26,182
    )
    
    
    (920
    )
    
    
    2,401
    
    
    
    128,601Net decrease in cash
    
    
    
    
    
    
    (11,351
    )
    
    
    (13,881
    )
    
    
    
    
    
    
    (25,232
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    19,159
    
    
    
    20,816
    
    
    
    
    
    
    
    39,975Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    7,808
    
    
    $
    6,935
    
    
    $
    
    
    
    $
    14,743
 12




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##### Table of Contents



Condensed Consolidating Statement of Cash Flows
For the Three Months Ended March 31, 2007
(Dollars in thousands)
 Combined
    
    
    
    
    
    
    
    
    
    
    TotalSubsidiary
    
    
    Combined Non-
    
    
    Consolidating
    
    
    ConsolidatedParent
    
    
    Guarantors
    
    
    Guarantors
    
    
    Adjustments
    
    
    AmountsOperating activities:Net (loss) income
    
    $
    (8,735
    )
    
    $
    27,694
    
    
    $
    284
    
    
    $
    (1,118
    )
    
    $
    18,125Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    6,042
    
    
    
    275
    
    
    
    (61
    )
    
    
    6,256Amortization of loan costs and bond premium
    
    
    506
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    517Share-based compensation
    
    
    
    
    
    
    3,673
    
    
    
    
    
    
    
    
    
    
    
    3,673Loss on refinancing long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Change in income tax assets and liabilities
    
    
    
    
    
    
    (1,798
    )
    
    
    
    
    
    
    
    
    
    
    (1,798
    )Loss from discontinued operations, net of taxes
    
    
    
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    124Changes in operating assets and liabilities, net of
effect of acquisitions:Accounts receivable
    
    
    
    
    
    
    (9,484
    )
    
    
    
    
    
    
    
    
    
    
    (9,484
    )Prepaids and other current assets
    
    
    
    
    
    
    (15,538
    )
    
    
    14,644
    
    
    
    
    
    
    
    (894
    )Accounts payable
    
    
    
    
    
    
    (838
    )
    
    
    
    
    
    
    
    
    
    
    (838
    )Salaries and benefits payable
    
    
    
    
    
    
    (9,387
    )
    
    
    
    
    
    
    
    
    
    
    (9,387
    )Accrued liabilities and other liabilities
    
    
    10,424
    
    
    
    (25,664
    )
    
    
    14,139
    
    
    
    
    
    
    
    (1,101
    )Net cash provided by (used in) continuing operating activities
    
    
    2,195
    
    
    
    (25,176
    )
    
    
    29,353
    
    
    
    (1,179
    )
    
    
    5,193Net cash used in discontinued operating activities
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    
    
    
    (62
    )Net cash provided by (used in) operating activities
    
    
    2,195
    
    
    
    (25,238
    )
    
    
    29,353
    
    
    
    (1,179
    )
    
    
    5,131Investing activities:Cash paid for acquisitions, net of cash acquired
    
    
    (25,241
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,241
    )Capital purchases of property and equipment
    
    
    
    
    
    
    (9,872
    )
    
    
    
    
    
    
    
    
    
    
    (9,872
    )Other assets
    
    
    
    
    
    
    361
    
    
    
    (128
    )
    
    
    
    
    
    
    233Net cash used in investing activities
    
    
    (25,241
    )
    
    
    (9,511
    )
    
    
    (128
    )
    
    
    
    
    
    
    (34,880
    )Financing activities:Net increase in revolving credit facility
    
    
    19,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,000Principal payments on long-term debt
    
    
    (241
    )
    
    
    
    
    
    
    (74
    )
    
    
    
    
    
    
    (315
    )Payment of loan and issuance costs
    
    
    (85
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (85
    )Excess tax benefits from share-based payment arrangements
    
    
    2,569
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,569Net transfers to and from members
    
    
    (3,903
    )
    
    
    31,809
    
    
    
    (29,085
    )
    
    
    1,179
    
    
    
    Proceeds from exercises of common stock options
    
    
    5,706
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,706Net cash provided by (used in) financing activities
    
    
    23,046
    
    
    
    31,809
    
    
    
    (29,159
    )
    
    
    1,179
    
    
    
    26,875Net (decrease) increase in cash
    
    
    
    
    
    
    (2,940
    )
    
    
    66
    
    
    
    
    
    
    
    (2,874
    )Cash and cash equivalents at beginning of period
    
    
    
    
    
    
    1,149
    
    
    
    17,423
    
    
    
    
    
    
    
    18,572Cash and cash equivalents at end of period
    
    $
    
    
    
    $
    (1,791
    )
    
    $
    17,489
    
    
    $
    
    
    
    $
    15,698
 11 Fair Value Measurements.
 Fair Value Measurements
   13




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##### Table of Contents



12. Recently Issued Accounting Pronouncements
  Business Combinations Business Combinations
 Noncontrolling Interests in Consolidated Financial
Statementsan Amendment of ARB No. 51
 14




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 FORWARD LOOKING STATEMENTS
 ( SEC)
   
    
    our ability to successfully integrate and improve the operations of acquired inpatient facilities;
    
    potential competition that alters or impedes our acquisition strategy by decreasing our ability to acquire additional
inpatient facilities on favorable terms;
    
    our ability to maintain favorable and continuing relationships with physicians who use our inpatient facilities;
    
    our substantial indebtedness and our ability to receive timely additional financing on terms acceptable to us to fund our
acquisition strategy and capital expenditure needs;
    
    risks inherent to the health care industry, including the impact of unforeseen changes in regulation and exposure to
claims and legal actions by patients and others;
    
    efforts by federal and state health care programs and managed care companies to reduce reimbursement rates for our
services;
    
    our ability to comply with applicable licensure and accreditation requirements;
    
    our ability to comply with extensive laws and government regulations related to billing, physician relationships,
adequacy of medical care and licensure;
    
    our ability to retain key employees who are instrumental to our successful operations;
    
    our ability to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act;
    
    our ability to ensure confidential information is not inappropriately disclosed and that we are in compliance with
federal and state health information privacy standards;
    
    our ability to comply with federal and state governmental regulation covering health care-related products and services
on-line, including the regulation of medical devices and the practice of medicine and pharmacology;
    
    our ability to obtain adequate levels of general and professional liability insurance;
    
    those risks and uncertainties described from time to time in our filings with the SEC; and
    
    future trends for pricing, margins, revenue and profitability remain difficult to predict in the industries that we serve.
  Overview
  15




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##### Table of Contents



Sources of Revenue
 Patient Service Revenue
  Other Revenue
  Results of Operations
  16




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##### Table of Contents



For the Three Months Ended March 31,2008
    
    
    2007Amount
    
    
    %
    
    
    Amount
    
    
    %Revenue
    
    $
    429,691
    
    
    
    100.0
    %
    
    $
    322,438
    
    
    
    100.0
    %Salaries, wages, and employee benefits (including
share-based compensation
of $5,560 and $3,673 for 2008 and 2007,
respectively)
    
    
    238,651
    
    
    
    55.6
    %
    
    
    180,135
    
    
    
    55.9
    %Professional fees
    
    
    43,504
    
    
    
    10.1
    %
    
    
    30,900
    
    
    
    9.6
    %Supplies
    
    
    23,779
    
    
    
    5.5
    %
    
    
    18,344
    
    
    
    5.7
    %Provision for doubtful accounts
    
    
    7,159
    
    
    
    1.7
    %
    
    
    6,664
    
    
    
    2.0
    %Other operating expenses
    
    
    45,345
    
    
    
    10.6
    %
    
    
    36,176
    
    
    
    11.2
    %Depreciation and amortization
    
    
    9,435
    
    
    
    2.2
    %
    
    
    6,256
    
    
    
    1.9
    %Interest expense, net
    
    
    20,376
    
    
    
    4.7
    %
    
    
    14,386
    
    
    
    4.5
    %Income from continuing operations before
income taxes
    
    
    41,442
    
    
    
    9.6
    %
    
    
    29,577
    
    
    
    9.2
    %Provision for income taxes
    
    
    15,789
    
    
    
    3.6
    %
    
    
    11,328
    
    
    
    3.5
    %Income from continuing operations
    
    $
    25,653
    
    
    
    6.0
    %
    
    $
    18,249
    
    
    
    5.7
    %
 Three Months Ended March 31, 2008 Compared To Three Months Ended March 31, 2007
  Three Months Ended March 31,
    
    %2008
    
    2007
    
    ChangeSame-facility results:Revenue (in thousands)
    
    $
    326,579
    
    
    $
    303,288
    
    
    
    7.7
    %Admissions
    
    
    33,181
    
    
    
    32,371
    
    
    
    2.5
    %Patient days
    
    
    568,439
    
    
    
    554,941
    
    
    
    2.4
    %Average length of stay (in days)
    
    
    17.1
    
    
    
    17.1
    
    
    
    0.0
    %Revenue per patient day
    
    $
    575
    
    
    $
    547
    
    
    
    5.1
    %Total facility results:Revenue (in thousands)
    
    $
    388,308
    
    
    $
    306,862
    
    
    
    26.5
    %Admissions
    
    
    40,860
    
    
    
    32,748
    
    
    
    24.8
    %Patient days
    
    
    686,350
    
    
    
    562,026
    
    
    
    22.1
    %Average length of stay (in days)
    
    
    16.8
    
    
    
    17.2
    
    
    
    -2.3
    %Revenue per patient day
    
    $
    566
    
    
    $
    546
    
    
    
    3.7
    %
 Revenue
 Salaries, wages and employee benefits
 17




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##### Table of Contents



Professional fees
 Supplies.
 Provision for doubtful accounts
 Other operating expenses
 Depreciation and amortization
 Interest expense, net
 Loss from discontinued operations, net of taxes
 Liquidity and Capital Resources
  18




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##### Table of Contents



Contractual Obligations
 Payments Due by Period (in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsLong-term debt (1):Senior Credit Facility:Revolving line of credit facility, expiring on December 21, 2009
and bearing interest of 4.5% and
6.4% at March 31, 2008
and December 31, 2007, respectively
    
    $
    210,000
    
    
    $
    
    
    
    $
    210,000
    
    
    $
    
    
    
    $
    Senior secured term loan facility, expiring on July 1, 2012
and bearing interest of 5.0%
and 6.8% at March 31, 2008
and December 31, 2007, respectively
    
    
    571,438
    
    
    
    3,750
    
    
    
    7,500
    
    
    
    560,188
    
    
    
    7 3/4% Notes
    
    
    476,346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    476,346Mortgage loans on facilities, maturing in 2036, 2037 and 2038
bearing fixed interest rates of 5.7% to 7.6%
    
    
    33,574
    
    
    
    404
    
    
    
    886
    
    
    
    1,003
    
    
    
    31,2811,291,358
    
    
    
    4,154
    
    
    
    218,386
    
    
    
    561,191
    
    
    
    507,627Lease and other obligations
    
    
    96,431
    
    
    
    16,413
    
    
    
    29,459
    
    
    
    12,904
    
    
    
    37,655Total contractual obligations
    
    $
    1,387,789
    
    
    $
    20,567
    
    
    $
    247,845
    
    
    $
    574,095
    
    
    $
    545,282
 
 (1)
    
    Excludes capital lease obligations, fair value of interest rate swap,
and other obligations totaling $13.6 million, which are included in
lease and other obligations. 19




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##### Table of Contents



3 4 3 4
 Critical Accounting Policies
  Allowance for Doubtful Accounts
    Allowances for Contractual Discounts
  Professional and General Liability
  20




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##### Table of Contents



Income Taxes
  Accounting for Uncertainty in Income Taxes An Interpretation of FASB Statement No. 109,
 Share-Based Compensation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  21




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##### Table of Contents



Item 1A. Risk Factors.
  
 Item 6. Exhibits.
 ExhibitNumber
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of PMR
Corporation, filed with the Delaware Secretary of State on March
9, 1998 (incorporated by reference to Exhibit 3.1 to the Companys
Annual Report on Form 10-K for the fiscal year ended April 30,
1998).3.2
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of PMR Corporation, filed with the Delaware
Secretary of State on August 5, 2002 (incorporated by reference to
Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q for the
quarter ended July 31, 2002).3.3
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of Psychiatric Solutions, Inc., filed with the
Delaware Secretary of State on March 21, 2003 (incorporated by
reference to Appendix A of the Companys Definitive Proxy
Statement, filed on January 22, 2003).3.4
    
    Certificate of Amendment to Amended and Restated Certificate of
Incorporation of Psychiatric Solutions, Inc., filed with the
Delaware Secretary of State on December 15, 2005.3.5
    
    By-laws (incorporated by reference to Exhibit 3 to the Companys
Current Report on Form 8-K filed on November 6, 2007).10.1
    
    Psychiatric Solutions, Inc. 2008 Long-Term Equity Compensation Plan
(incorporated by reference to Exhibit 10.2 to the Companys Current
Report on Form 8-K, filed on February 27, 2008).10.2
    
    Psychiatric Solutions, Inc. 2008 Cash Bonus Plans (incorporated by
reference to Exhibit 10.1 to the Companys Current Report on Form
8-K, filed on February 27, 2008).10.3*
    
    ISDA Master Agreement, dated as of
November 29, 2007, between
Merrill Lynch Capital Services, Inc. and Psychiatric Solutions, Inc.31.1*
    
    Certification of the Chief Executive Officer of Psychiatric
Solutions, Inc. Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of the Chief Accounting Officer of Psychiatric
Solutions, Inc. Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.32.1*
    
    Certifications of the Chief Executive Officer and Chief Accounting
Officer of Psychiatric Solutions, Inc. Pursuant to Rule 13a-14(b) of
the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith 22




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SIGNATURES
  Psychiatric Solutions, Inc.By:
    /s/ Jack E. PolsonJack E. PolsonExecutive Vice President, Chief Accounting Officer