jfk financial statements dec 31, 2011 and 2010

7/31/2019 JFK Financial Statements Dec 31, 2011 and 2010

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JFK Health System, Inc.(formerly Solaris Health System,

Inc.) and Controlled Entities

Consolidated Financial Statements andSupplementary Information

December 31, 2011 and 2010


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JFK Health System, Inc. and Controlled Entities

Table of ContentsDecember 31, 2011 and 2010

Page

Independent Auditors Report 1

Consolidated Financial Statements

Balance Sheet 2

Statement of Operations 3

Statement of Changes in Net Deficit 4

Statement of Cash Flows 5

Notes to Consolidated Financial Statements 6

Supplementary Information

Independent Auditors Report on Supplementary Information 41

Consolidating Schedules for 2011

Consolidating Schedule, Balance Sheet 42

Consolidating Schedule, Statement of Operations 44

Consolidating Schedule Changes in Net (Deficit) Assets 45


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Independent Auditors Report

Board of DirectorsJFK Health System, Inc. and Controlled Entities

We have audited the accompanying consolidated balance sheet of the JFK Health System, Inc. andcontrolled entities (collectively, the JFK Health System)(formerly the Solaris Health System, Inc.)as of December 31, 2011 and 2010, and the related consolidated statements of operations,changes in net deficit, and cash flows for the years then ended. These financial statements are theresponsibility of the JFK Health Systems management. Our responsibility is to express an opinionon these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the UnitedStates of America. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material

respects, the financial position of the JFK Health System, Inc. and controlled entities as ofDecember 31, 2011 and 2010, and the results of their operations, changes in net deficit, and cashflows for the years then ended in conformity with accounting principles generally accepted in theUnited States of America.


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2011 2010 2011 2010

Assets

Current Assets Current Liabilities

Cash and cash equivalents 52,989,638$ 40,741,409$ Current maturities of long-term debt 966,656$ 1,115,415$Funds held for residents 225,236 236,175 Current maturities of capitalInvestments 19,335,590 18,756,219 lease obligations 1,673,125 1,153,507Assets whose use is limited 2,203,372 2,214,214 Funds held for residents 225,236 236,175Accounts receivable, patients (net of estimated Accounts payable 30,127,035 32,350,270

allowance for doubtful collections of $13,639,000 Accrued expenses 31,863,852 32,361,623in 2011 and $15,219,000 in 2010) 60,914,121 64,493,204 Estimated third-party payor settlements 10,301,653 5,315,291

Inventories of drugs and supplies 6,305,765 6,324,349 Accrued postretirement benefits 718,861 881,649Prepaid expenses and other current assets 8,050,233 8,965,898 Other current liabilities 2,516,798 2,113,622

Total current assets 150,023,955 141,731,468 Total current liabilities 78,393,216 75,527,552

Investments 1,991,092 2,559,178 Long-Term Debt 171,292,194 171,957,285

Assets Whose Use is Limited 54,023,047 50,714,780 Capital Lease Obligations 4,862,723 4,131,589

Property and Equipment, Net 155,371,337 155,149,059 Estimated Third-party Payor

Settlements 17,284,313 15,828,841

Property and Equipment Held For Sale, Net - 3,930,481

Self-Insurance Reserves 24,147,699 21,718,056

Deferred Financing Costs, Net 4,267,506 4,623,086

Accrued Pension Cost 82,348,263 84,627,015

Pledges Receivable, Net 722,935 231,146

Accrued Postretirement Benefits 1,164,328 13,258,999

Other Assets 5,509,720 2,466,701

Other Liabilities 7,604,959 1,020,868

Beneficial Interest in Perpetual Trusts 4,327,504 4,452,935

Total liabilities 387,097,695 388,070,205

Net (Deficit) Assets

Unrestricted (31,647,641) (42,020,642)Temporarily restricted 13,357,658 12,266,016Permanently restricted 7,429,384 7,543,255

Total net deficit (10,860,599) (22,211,371)

Total 376,237,096$ 365,858,834$ Total 376,237,096$ 365,858,834$


Consolidated Balance SheetDecember 31, 2011 and 2010

See notes to consolidated financial statements

2


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2011 2010

Unrestricted Revenues, Gains, and Other Support:

Net patient service revenues 482,704,155$ 471,124,849$

Other revenues 18,910,316 21,735,244

Resident fees 6,835,570 6,770,008

Special events 209,715 230,750

Net assets released from restrictions used in operations 554,907 769,784

Contributions 370,127 400,214

Total unrestricted revenues, gains, and other support 509,584,790 501,030,849

ExpensesSalaries and wages 224,213,477 234,114,060

Employee benefits 46,306,468 49,074,259

Supplies and expenses 174,559,077 163,327,968

Special events - unrestricted 101,507 115,742

Provision for doubtful collections 33,727,291 29,606,824

Depreciation and amortization 16,347,681 15,528,424

Interest 8,992,471 8,813,804

Total expenses 504,247,972 500,581,081

Operating Income 5,336,818 449,768

Loss on Sale of Property (30,909) -

Pension Settlement and Curtailment Changes 2,692,503 -

Investment Income 1,577,000 1,561,570

Change in Net Unrealized Gains and Losses on Trading Securities 1,052,441 631,416

Gain on Sale of Home Health Program - 4,619,185


Years Ended December 31, 2011 and 2010

Consolidated Statement of Operations


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2011 2010

Unrestricted Net Deficit

Revenues in excess of expenses 10,593,228$ 7,162,084$Pension/postretirement liability adjustment (95,519) (19,399,312)Distributions (231,555) -Net assets released from restrictions

for capital purchases 394,065 262,188

Decrease (increase) in unrestricted net deficitfrom continuing operations 10,660,219 (11,975,040)

Loss from discontinued operations (287,218) (586,817)

Decrease (increase) in unrestricted net deficit 10,373,001 (12,561,857)

Temporarily Restricted Net Assets

Contributions 2,064,690 1,146,048Investment income 176,007 237,795Net realized and unrealized (losses) gains on investments (104,636) 214,922Change in provision for doubtful accounts (95,447) 10,829

Net assets released from restrictions used in operations (554,907) (769,784)Net assets released from restrictions

for capital purchases (394,065) (262,188)

Increase in temporarily restricted net assets 1,091,642 577,622

Permanently Restricted Net Assets

Contributions 11 560 11 050

JFK Health System, Inc. and Controlled EntitiesConsolidated Statement of Changes in Net DeficitYears Ended December 31, 2011 and 2010


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2011 2010

Cash Flows from Operating Activities

Decrease (increase) in net deficit 11,350,772$ (11,700,379)$Adjustments to reconcile decrease (increase) in net deficit

to net cash provided by operating activities:Depreciation 15,970,363 15,150,688Amortization 377,318 377,736Provision for doubtful collections 33,727,291 29,606,824Loss on sale of equipment 30,909 36,274Gain on sale of Home Health Program - (4,619,185)Loss on impairment 607,570 1,040,873Net realized and unrealized gains on investments (1,126,983) (914,550)

Change in valuation of beneficial interest in perpetual trusts 125,431 (272,806)Pension/postretirement liability adjustment 95,519 19,399,312Postretirement settlement and curtailment changes (2,692,503) -Temporarily restricted contributions and investment income (2,240,697) (1,383,843)Changes in assets and liabilities:

Accounts receivable, patients (30,148,208) (30,999,860)Inventories of drugs and supplies 18,584 876,015Prepaid expenses and other assets (2,127,354) (1,554,316)Accounts payable (2,223,235) 2,901,833Accrued expenses (497,771) 1,974,107

Estimated third-party payor settlements 6,441,834 961,383Accrued pension cost (2,374,271) (7,089,984)Self-insurance reserves 2,429,643 (3,636,937)Accrued postretirement benefits (9,564,956) 1,413,534Other liabilities 3,987,267 (970,766)

Net cash provided by operating activities 22,166,523 10,595,953

Cash Flows from Investing Activities

Increase in investments and assets whose use is limited (2,181,727) (1,244,056)Net proceeds from sale of Home Health Program and equipment - 4,657,565Net proceeds from sale of Midtown Shops 3,896,882 -Purchases of property and equipment (13,955,461) (8,992,481)


Years Ended December 31, 2011 and 2010Consolidated Statement of Cash Flows


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Notes to Consolidated Financial StatementsDecember 31, 2011 and 2010

1. Organizational Structure and Nature of Operations

During 2011, the Solaris Health System, Inc. legally changed its name to JFK Health System,Inc. (the JFK Health System). The JFK Health System is the parent company of theCommunity Hospital Group, Inc. d/b/a JFK Medical Center (JFK Medical Center); MuhlenbergRegional Medical Center, Inc. (MRMC); John F. Kennedy Medical Center Foundation, Inc.(JFK Foundation); Muhlenberg Foundation, Inc. (Muhlenberg Foundation); LIFEstyleInstitute, Inc. (LIFEstyle); JFK Healthshare, Inc. (Healthshare); Hartwyck at JFK, Inc.;Hartwyck West Nursing Home, Inc. and affiliates (Hartwyck West); Hartwyck at Oak Tree, Inc.

(Oak Tree); and Atlantic Insurance Exchange, Ltd. (AIE), a wholly-owned insurancecompany.

Hartwyck West operates Hartwyck at Cedar Brook (Cedar Brook), JFK Assisted Living, Inc.d/b/a Whispering Knoll (Whispering Knoll), and JFK Hartwyck Management and Consulting,Inc. (Consulting). Healthshare is the general partner in Mediplex Surgical Center Associates,Limited Partnership (Mediplex).

On February 21, 2008, the JFK Health System Board of Directors voted to immediatelyauthorize the filing of a certificate of need (CON) application to close MRMC. The CONapplication was approved on July 29, 2008 and MRMC was closed on August 13, 2008. TheJFK Health System will provide the opportunity for MRMC to continue its remaining operations.The consolidated financial statements do not include any adjustments that might be necessary ifMRMC is unable to continue as a going concern.

On December 31, 2010 MRMC formed a joint venture with Meridian Healthcare to establish thenew organization, JFK Meridian Home Care Services, LLC d/b/a JFK at Home (JFK at Home).

JFK at Home is a home health care provider. The operations of Muhlenbergs Home Caredepartment ceased as of that date. In connection with the formation of JFK at Home, MRMCtransferred property and equipment to JFK at Home at its carrying value of approximately$258,000 for 50% ownership and $5,000,000. A gain on sale of the Home Care business of


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During 2011, the JFK Medical Center entered into a joint venture to provide managementservices with Edison Imaging Associates, P.A. to create Edison Imaging at JFK Medical Center,LLC which is accounted for under the equity method of accounting. Equity balance atDecember 31, 2011 was $900,838 and included in other long-term assets. During 2011,distributions received from the joint venture were $1,500,000 and increase in joint venture of$2,400,838 was recorded in other revenue in the statement of operations for 2011.

The JFK Health System and its controlled entities provide health care services ranging from

acute care hospital services to rehabilitation, skilled nursing, sub-acute, and long-term careservices in New Jersey and the New York metropolitan area, in addition to other activities for thebenefit and support of the JFK Health System.

Subsequent Events

The System evaluated subsequent events for recognition or disclosure through May 1,2012, the date the consolidated financial statements were issued.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the JFK Health System, JFKMedical Center, MRMC, JFK Foundation, Muhlenberg Foundation, LIFEstyle, Healthshare,

Hartwyck at JFK, Inc., Hartwyck West, Oak Tree, and AIE. All significant intercompanybalances and transactions have been eliminated.

Use of Estimates


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Inventories of Drugs and Supplies

Inventories of drugs, medical and surgical supplies, and maintenance supplies are stated atthe lower of cost or market. Cost is determined on a first-in, first-out basis.

Investments and Investment Risk

Investments in equity securities with readily determinable fair values and all investments indebt and equity securities and mutual funds are measured at fair value in the consolidated

balance sheet. Cash and cash equivalents are carried at cost which approximates fair value.Investment income or loss (including realized and unrealized gains and losses on tradingsecurities, interest, dividends, and capital gains distributions) is included in thedetermination of revenues in excess of expenses unless the income or loss is restricted bydonor or law. Unrealized gains and losses on investments are excluded from determinationof revenues in excess of expenses unless the investments are trading securities. Donorrestricted investment income is reported as an increase in temporarily restricted net assets.

The JFK Health System's investments are comprised of a variety of financial instrumentsand are managed by investment advisors. The fair values reported in the consolidatedbalance sheet are subject to various risks including changes in the equity markets, theinterest rate environment, and general economic conditions. Due to the level of riskassociated with certain investment securities and the level of uncertainty related to changesin the fair value of investment securities, it is reasonably possible that the amounts reportedin the consolidated balance sheet could change materially in the near term.

Assets Whose Use is Limited

Assets whose use is limited include assets held by bond trustees under trust indentures;assets set aside under deferred compensation plans; assets set aside as required for self-insurance programs; and assets restricted by donors. Amounts available to meet current


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Impairment of Long-Lived Assets

The JFK Health System reviews long-lived assets for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may not berecoverable. Recoverability of assets to be held and used is measured by a comparison ofthe carrying amount of an asset to future net cash flows expected to be generated by theasset. If the carrying amount of an asset exceeds its estimated future cash flows, animpairment charge is recognized by the amount by which the carrying amount of the assetexceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the

carrying amount of fair value, less costs to sell.

Beneficial Interest in Perpetual Trusts

MRMC and Muhlenberg Foundation have received as contributions various split-interestagreements, including perpetual trusts.

Under the perpetual trust agreements, MRMC and Muhlenberg Foundation have recordedthe asset and have recognized permanently restricted contribution revenue at the fairmarket value of their beneficial interest in the trust assets. Income earned on the trustassets is recorded as investment income in the accompanying consolidated statement ofoperations, unless otherwise restricted by the donor. Subsequent changes in fair values arerecorded as a change in valuation of beneficial interest in perpetual trusts in permanentlyrestricted net assets.

Pursuant to the terms of the instruments creating such perpetual trusts, MRMC andMuhlenberg Foundation have no legal right to direct the application of the assets and even

though these assets are shown on the accompanying consolidated balance sheet, they aresubject to the jurisdiction of the court. With the closure of MRMCs hospital, the perpetualtrusts are all being reviewed; however the possible future financial effects, if any, are notpresently determinable.


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permanent transfers of assets to and from subsidiaries for other than goods and services,loss from discontinued operations, and contributions of long-lived assets (including assetsacquired using contributions which by donor restriction were to be used for the purposes ofacquiring such assets).

Net Patient Service Revenues

The JFK Health System has agreements with third-party payors that provide for payments atamounts different from its established rates. Payment arrangements include prospectively

determined rates per discharge, reimbursed costs, discounted charges, and per diempayments.

Net patient service revenues are reported at the estimated net realizable amounts frompatients, third-party payors, and others for services rendered, including estimated retroactiveadjustments under reimbursement agreements with third-party payors. Retroactiveadjustments are accrued on an estimated basis in the period the related services arerendered and adjusted in future periods as tentative and final settlements are determined. It

is reasonably possible that the estimates used could change in the near term.

Charity Care

The JFK Health System provides care to patients who meet certain criteria without charge orat amounts less than its established rates. Because the JFK Health System does not pursuecollection of amounts determined to qualify as charity care, such amounts are not reportedas revenues.

Advertising Costs

Advertising costs are expensed as incurred. Such costs amounted to approximately$1,584,000 and $1,079,000 in 2011 and 2010, respectively.


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Consulting, Healthshare, AIE, Midtown Shops, and Mediplex are organizations subject tofederal and state income taxes.

The JFK Health System accounts for uncertainty in income taxes by prescribing arecognition threshold of more-likely-than-not to be sustained upon examination by theappropriate taxing authority. Measurement of the tax uncertainty occurs if the recognitionthreshold has been met. There were no tax uncertainties that met the recognition thresholdin 2011 or 2010.

The JFK Health Systems policy is to recognize interest related to unrecognized tax benefitsin interest expense and penalties in operating expenses.

The JFK Health Systems federal Tax Exempt Organization Business Income Tax Returnsfor years ended December 31, 2010, 2009, and 2008 remain subject to examination by theIRS.

Estimated Malpractice Costs

The provision for estimated medical malpractice claims includes estimates of the ultimatecosts for both reported claims and claims incurred but not reported, including costsassociated with litigating or settling claims. Anticipated insurance recoveries associated withreported claims are reported separately in JFK Health Systems consolidated balance sheetat net realizable value.

Fair Value of Financial Instruments

The carrying amounts of cash and cash equivalents and demand note payable approximatefair value at December 31, 2011 and 2010.

Investments and assets whose use is limited are stated at fair value, which are the amounts


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Postretirement Benefits

The JFK Health System accounts for postretirement benefits on an accrual basis.Postretirement benefits include reimbursement to qualified retirees for a portion of theirhealth and life insurance costs.

Temporarily and Permanently Restricted Net Assets

Temporarily restricted net assets are those whose use by the JFK Health System have beenlimited by donors to a specific time period or purpose. Permanently restricted net assetshave been restricted by donors to be maintained by the JFK Health System in perpetuity.

Reclassification

Certain 2010 amounts have been reclassed to conform to the 2011 presentation.

New Accounting Pronouncements

Charity Care

In August 2010, the Financial Accounting Standards Board (FASB) issued amendeddisclosure guidance relating to the measurement of charity care provided. The guidancerequires that direct and indirect costs be used as the basis of measurement for charitycare disclosure purposes. The guidance also requires disclosure of the method used to

identify or determine such costs. The adoption of the amended guidance revised thedisclosure in the notes to the JFK Health Systems consolidated financial statements butdid not impact amounts reported in the primary consolidated financial statements.


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Provision for Doubtful Collections

The JFK Health System will be required to adopt amended guidance related to heathcare entities which requires a change in reporting the provision for bad debts associatedwith net service revenues. As a result of this guidance, the provision, which is currentlyreported as an operating expense in the JFK Health Systems consolidated statement ofoperations, will be reported as a deduction from service revenues, net of contractualallowances and discounts. The guidance also enhances required disclosures regarding

the policies for recognizing net service revenues and assessing bad debts. In addition,the guidance requires disclosure of net service revenues and qualitative and quantitativeinformation about changes in the allowance for doubtful accounts, both my major payorsources. The amended guidance is effective for the fiscal years ending after December15, 2012. Adoption of the amended guidance will require retrospective restatement ofthe statement of operations and prospective financial statement disclosures.

3. Charity Care

The JFK Health System provides care to patients who meet the strict charity care criteria of theNew Jersey State Department of Health (the Department) without charge or at amounts lessthan its established rates. Because the JFK Health System does not pursue collection ofamounts determined to qualify as charity care, they are not reported as patient service revenue.

In accordance with guidelines established by the Department, the JFK Health System maintainsrecords to identify and monitor the level of charity care it provides. The estimated costs ofproviding charity care are based upon the direct and indirect costs identified with the specific

charity care services provided. The level of charity care provided by the JFK Health Systemamounted to approximately $27,063,000 in 2011 and $22,548,000 in 2010.

4. Net Patient Service Revenues


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In July 2011, the Department of Health & Human Services, Centers for Medicare &Medicaid Services issued the final rule reducing Medicare Part A payments to skillednursing facilities for the period October 1, 2011 through September 30, 2012 by 11.1%,as compared to payments for the period October 1, 2010 through September 30, 2011.

Medicaid: Inpatient acute care and skilled nursing services rendered to Medicaidprogram beneficiaries are paid at prospectively determined rates per discharge. Theserates vary according to a patient classification system that is based on clinical,diagnostic, and other factors. Inpatient nonacute services are paid at prospectively

determined per diem rates. Outpatient services are paid based on a published feeschedule with final settlement determined after submission of annual cost reports. TheMedicaid cost reports have been settled through December 31, 2008.

Through June 30, 2010, the rates were based on facility cost information from a prioryear and were subject to various limitations and adjustments. Effective July 1, 2010, therates are determined using state-wide nursing facility cost information and the HartwyckWest cost information from a prior year. The rates also vary according to a residentclassification system that is based on clinical, diagnostic, and other factors. Thereimbursement methodology is subject to various limitations and adjustments.

The new reimbursement methodology effective July 1, 2010 was finalized by the NewJersey Department of Health and Senior Services (NJDHSS) during 2011. As a result,during 2010, Hartwyck West and Oak Tree were reimbursed and recorded revenue forthe period July 1, 2010 through December 31, 2010 using the July 1, 2009 Medicaidrate. Net resident service revenues for 2011 include the effects of negative rateadjustments for the period July 1, 2010 through December 31, 2010 of approximately

$53,880 for Hartwyck West and a positive rate adjustment through December 31, 2010for Oak Tree of approximately $124,000.

As a result of a negative rate adjustment implemented by NJDHSS effective July 1,


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New Jersey Nursing Home Assessment

The New Jersey Nursing Home Assessment Plan (the Plan) requires the JFK HealthSystem to pay a quarterly assessment on its nursing facility days, excluding Medicare Part Adays, and the New Jersey Department of Health and Senior Services provides additionalreimbursement to the JFK Health System.

The financial effects of the Plan have been recorded in the accompanying consolidatedfinancial statements, as follows:

2011 2010

Revenue $ 937,904 $ 1,948,377Expense 1,570,532 1,609,975

Revenue (less than) in excess of expense $ (632,628) $ 338,402

Plan revenue is classified as a component of net patient service revenues and Plan expenseis classified as a component of supplies and expenses in the accompanying consolidatedstatement of operations.

In addition, Oak Tree and Cedar Brook recorded a liability of $387,186 and $405,685 atDecember 31, 2011 and 2010, respectively, related to the fourth quarter assessment. Theamount is included in accrued expenses in the accompanying consolidated balance sheet.

5. Investments and Assets Whose Use is Limited

The composition of investments and assets whose use is limited at December 31, 2011 and2010 is set forth in the following table:


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2011 2010

Assets whose use is limited:Held by bond trustees under trust indentures,

Cash and cash equivalents $ 18,054,612 $ 21,810,981

Self-insurance funds:Cash and cash equivalents 4,657,518 2,623,318U.S. government obligations 14,940,795 11,325,390U.S. government mortgage-backed obligations 11,762,700 10,905,925

Total 31,361,013 24,854,633

Under deferred compensation plans:Cash and cash equivalents 30,432 30,654Mutual funds equities 2,071,604 1,511,132Mutual funds fixed income - 73,633

Total under deferred compensation plans 2,102,036 1,615,419

Donor restricted:Cash and cash equivalents 994,708 388,638Certificates of deposit 127,284 336,517Mutual funds equities 1,631,556 1,418,158Mutual funds fixed income 748,223 499,361U.S. government obligations 608,116 927,661Corporate bonds 314,835 480,984Marketable equity securities 284,036 596,642

Total 4 708 758 4 647 961


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Investment income, gains and losses on investments, assets whose use is limited, and cashand cash equivalents are comprised of the following in 2011 and 2010:

2011 2010

UnrestrictedTemporarilyUnrestricted Unrestricted

TemporarilyUnrestricted

Investment income:Interest and dividend

income $ 1,450,603 $ 123,226 $ 1,524,338 $ 206,815

Realized (losses) gains,net 126,397 52,781 37,232 30,980

Total $ 1,577,000 $ 176,007 $ 1,561,570 $ 237,795

Change in net unrealizedgains and losses ontrading securities $ 1,052,441 $ (104,636) $ 631,416 $ 214,922

6. Fair Value Measurements

The JFK Health System measured its investments and assets whose use is limited on arecurring basis in accordance with accounting principles generally accepted in the United Statesof America.

Fair value is defined as the price that would be received to sell an asset or the price that wouldbe paid to transfer a liability in an orderly transaction between market participants at themeasurement date. The framework that the authoritative guidance establishes for measuringfair value includes a hierarchy used to classify the inputs used in measuring fair value The


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These items were measured with the following inputs at December 31, 2011:

Level 1 Level 2 Level 3 Total

Cash and cashequivalents $ 37,879,547 $ - $ - $ 37,879,547

Certificates of deposit - 441,434 - 441,434Mutual funds equities 5,641,687 - - 5,641,687Mutual funds fixed

income 1,305,746 - - 1,305,746U.S. government

mortgage-backedobligations - 11,762,700 - 11,762,700

U.S. government agencyobligations 1,594,097 - 1,594,097

U.S. governmentobligations 16,910,194 - 16,910,194

Corporate bonds - 962,006 - 962,006Marketable equitysecurities 1,055,690 - - 1,055,690

Beneficial interest inperpetual trusts - - 4,327,504 4,327,504

Total $ 64,386,961 $ 13,166,140 $ 4,327,504 $ 81,880,605

These items were measured with the following inputs at December 31, 2010:

Level 1 Level 2 Level 3 Total

Cash and cash


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Level 1 and Level 2 investments and assets whose use is limited are valued at fair value basedon quoted market prices, or similar assets quoted market prices.

Level 3 investments are valued using discounted cash flow methodologies. Beneficial interest inperpetual trusts contain eleven trusts established in which MRMC receives between 2.5% and100% of the annual income and gains and losses. These trusts are discounted using anaverage interest rate of 2.3%. Two of the trusts were established in which MuhlenbergFoundation receives between 25% and 100% of the annual income and gains and losses andare discounted using an average interest rate of 2.9%.

The Muhlenberg Foundation and MRMC measure their beneficial interest in perpetual trusts atfair value based on the funds underlying investments using unobservable inputs (Level 3) inaccordance with accounting principles generally accepted in the United States of America.Changes to the beneficial interest in perpetual trusts in 2011 and 2010 were as follows:

2011 2010

Beginning balance $ 4,452,935 $ 4,180,129

Investment income from beneficial interest in perpetualtrusts 141,151 120,050

Distributions from beneficial interest in perpetual trusts (141,151) (120,050)

Valuation (loss) gain, net (125,431) 272,806

Ending balance $ 4,327,504 $ 4,452,935

Valuation (loss) gain is reported as changes in permanently restricted net assets within the


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7. Property and Equipment

Property and equipment at December 31, 2011 and 2010 are as follows:

2011 2010

Land and land improvements $ 17,363,103 $ 17,363,102Buildings and improvements 274,677,871 267,545,425Fixed equipment 43,065,121 42,811,046

Movable equipment 192,990,830 186,627,337Leasehold improvements 646,022 646,022Capitalized leases 9,027,373 6,185,313Construction in progress 6,717,268 7,154,092

Total 544,487,588 528,332,337

Less accumulated depreciation 389,116,251 373,183,278

Property and equipment, net $ 155,371,337 $ 155,149,059

Due to the closure of the acute care facility of MRMC, cumulative impairments of $13,456,658and $12,849,088 are recorded against building and improvements and equipment assets as ofDecember 31, 2011 and 2010, respectively, in the table above.

The JFK Health System capitalizes the interest cost on borrowings, net of income earned oncertain proceeds from the borrowings, as a component of the cost of the asset acquired orconstructed. Accordingly, interest costs of $645,593 and $790,800 were capitalized in 2011 and2010, respectively.

In connection with the sale of Midtown Shops the following assets are shown as property and


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8. Pledges Receivable

Capital pledge campaigns have been undertaken to raise funds in connection with constructionof the Schools of Nursing, Medical Imaging, and Therapeutic Services at MRMC andconstruction of an Ambulatory Care Services Building, improvements to the EmergencyDepartment, and supporting the Intensity Modulated Radiation Therapy project (along with othermedical technology investments) at JFK Medical Center. Pledges related to these campaignshave been recorded as temporarily restricted contributions.

Pledges receivable are recorded as follows as of December 31, 2011 and 2010:

2011 2010

Capital campaign pledges before unamortized discount andallowance for uncollectible pledges $ 1,047,582 $ 390,025

Unamortized discount (21,859) (15,974)

Subtotal 1,025,723 374,051

Allowance for uncollectible pledges (82,598) (34,528)

Net unconditional promises to give $ 943,125 $ 339,523

2011 2010

Amounts due in:Less than one year $ 363,634 $ 120,418One to five years 683,948 269,607

Total $ 1 047 582 $ 390 025


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9. Accrued Expenses

Accrued expenses at December 31, 2011 and 2010 are as follows:

2011 2010

Salaries and wages $ 6,601,500 $ 5,804,847Paid time off 11,527,161 11,001,809Employee benefits 4,211,214 4,542,724

Unemployment 10,000 159,629Other 1,595,374 1,524,651Interest 2,109,967 2,133,048Refund over payments 2,249,243 1,952,425Payroll taxes 762,541 696,371Severance 1,745,671 3,189,824Occupational/physical therapy services 663,995 950,610Provider tax assessment 387,186 405,685

Total $ 31,863,852 $ 32,361,623

10. Long-Term Debt and Capital Lease Obligations

Series 2009 A-1 Bonds, Obligated Group

In June 2009, the New Jersey Health Care Facilities Financing Authority (the Authority)

issued $152,925,000 to JFK Medical Center, Oak Tree, and MRMC (the Borrowers) Series2009 A-1 Bonds (Series of 2009 A-1 Bonds) under the State of New Jersey Hospital AssetTransformation Program (HATP). The Series of 2009 A-1 Bonds include serial bonds of$5,930,000, maturing through October 1, 2014 with interest at 4.0%, term bonds of


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Series 2001 Bonds, Whispering Knoll and Hartwyck West

In September 2001, the Authority issued $15,260,000 of Revenue Bonds as JFK AssistedLiving and Hartwyck West Nursing Home, Series 2001 (Series 2001 Bonds). WhisperingKnolls portion of the Series 2001 Bonds is payable in monthly installments of $87,374,including interest at 5.65% through September 1, 2011. On September 1, 2011 andSeptember 1, 2021, the interest rate will be reset to a fixed rate equal to the then-in-effectweekly average yield on United States Treasury Bonds. Whispering Knolls portion of theSeries 2001 Bonds matures on January 1, 2026. Hartwyck Wests portion of the Series 2001

Bonds is payable in monthly installments of $21,662, including interest at 5.65%, andmatured October 1, 2008. The proceeds of the Series 2001 Bonds were used to refinance aconstruction loan and other costs associated with the existing debt with the Authority andpay for issuance costs.

Payments of principal and interest on the Series 2001 Bonds are collateralized by a pledgeof revenues and property of Whispering Knoll, guaranteed by Hartwyck West, and areinsured by Old Republic National Title Insurance Company.

Mortgage Notes Payable

In August 2008, Hartwyck West entered into a mortgage with a bank for $5,680,000, whichbears interest at a variable rate through August 13, 2013. The interest rate was 2.27% as ofDecember 31, 2011. The mortgage is secured by the Cedar Brook facility.

In August 2008, Whispering Knoll entered into a mortgage with a bank for $3,500,000 whichbears interest at a variable rate through August 13, 2013. The interest rate was 2.27% as ofDecember 31, 2011. The mortgage is secured by the Whispering Knoll facility.

In June 1998, Healthshare, Inc. borrowed $2,200,000 under a mortgage note collateralizedby certain land, building and equipment. The proceeds of the mortgage were used to pay anexisting mortgage note and to purchase certain property, plant and equipment. In October2002 H lth h I difi d th 1998 t t t i l d i t t t 6 3% th


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The JFK Health Systems long-term debt at December 31, 2011 and 2010 consists of thefollowing:

2011 2010

New Jersey Health Care Facilities Financing AuthorityRevenue Bonds:

Series 2009 A-1 Bonds, Obligated Group $ 152,925,000 $ 152,925,000Series 2001 Bonds, Whispering Knoll 10,578,446 11,062,135

Mortgage notes payable:Mortgage payable Whispering Knoll 3,206,699 3,294,508Mortgage payable Hartwyck West 5,198,081 5,343,038Mortgage payable Healthshare, Inc. 350,624 448,019

Total 172,258,850 173,072,700

Less current maturities 966,656 1,115,415

Long-term debt $ 171,292,194 $ 171,957,285

Under the terms of the various bond indenture agreements with the Authority, Hartwyck Westand Whispering Knoll are required to maintain certain financial ratios, comply with otherrestrictive covenants as described in the respective agreements, and achieve certain occupancypercentages at Whispering Knoll. Hartwyck West and Whispering Knoll were in compliance withtheir covenants at December 31, 2011.

Under the terms of the Series 2009 A-1 bond indenture agreement, the Borrowers collectivelyare required to maintain certain financial ratios and comply with other restrictive covenants asdescribed in the respective agreement. The Borrowers are required to maintain a minimum dayscash on hand ratio of 30 days and its days in accounts payable ratio cannot exceed 90 days


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New capital lease obligations were entered by JFK Medical Center during 2011 and 2010 andconsisted of the following at December 31, 2011 and 2010:

2011 2010

Capital lease obligations with interest ranging from3.90% to 9.08% per annum, final payment due in2016 $ 6,535,848 $ 5,285,096

Less current portion 1,673,125 1,153,507

Long-term portion $ 4,862,723 $ 4,131,589

JFK Medical Centers future minimum lease payments under capital lease obligations are asfollows:

Years ending December 31:

2012 $ 2,069,7502013 2,169,3132014 1,659,4722015 1,154,2862016 378,951

Total minimum payments 7,431,772

Less amounts representing interest 895,924

6,535,848

Less current installments 1,673,125


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The changes in projected benefit obligations in 2011 and 2010 are as follows:2011 2010

Projected benefit obligation at beginning of year $ 259,665,635 $ 228,819,833Interest cost 13,324,022 14,463,277

Actuarial gain 633,722 26,448,074Benefits paid (10,446,573) (10,065,549)

Projected benefit obligation at end of year $ 263,176,806 $ 259,665,635

Accumulated benefit obligation $ 263,176,806 $ 259,665,635

The changes in plan assets in 2011 and 2010 are as follows:

2011 2010

Fair value of plan assets at beginning of year $ 176,463,291 $ 158,449,405Actual return on plan assets 4,378,612 19,608,363Employer contributions 11,639,554 8,471,072Benefits paid (10,446,573) (10,065,549)

Fair value of plan assets at end of year $ 182,034,884 $ 176,463,291

The following is a summary of the funded status of the plan at December 31, 2011 and

2010:

2011 2010


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The components of net periodic pension cost for 2011 and 2010 are as follows:2011 2010

Interest cost $ 13,324,022 $ 14,463,277Expected return on plan assets (13,896,207) (12,641,893)

Amortization of actuarial loss 1,953,142 1,484,044

Net periodic pension cost $ 1,380,957 $ 3,305,428

A net actuarial loss of $10,151,316 represents the previously unrecognized components ofnet periodic pension cost included in unrestricted net assets at December 31, 2011.

A net actuarial loss of $2,246,098 represents the unrecognized component of net periodicbenefit cost included in unrestricted net assets at December 31, 2011 expected to beamortized into net periodic pension cost in 2012.

The following table provides the amounts recognized in the consolidated balance sheet atDecember 31, 2011 and 2010:

2011 2010

Net amount recognized - noncurrent $ 81,141,922 $ 84,627,015

During 2011 and 2010, an additional $1,206,341 and $1,424,671, respectively, was includedin accrued pension cost to cover inactive MRMC participants through 2013 calculated by theactuary.

The contribution to the plan in 2012 is expected to be $12,789,000.


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The weighted-average assumptions used in the measurement of the plans net periodicpension cost for the years ended December 31, 2011 and 2010 are as follows:

2011 010

Discount rate 5.34 % 6.43 %Expected long-term rate of return on plan assets 8.00 8.00Rate of compensation increase N/A N/A

The expected long-term rate of return on plan assets assumption was developed based onhistorical returns for the major asset classes. This review also considered both currentmarket conditions and projected future conditions. Adjustments are made to the expectedlong-term rate of return assumption when deemed necessary based upon revisedexpectations of future investment performance of the overall capital markets. The expectedlong-term rate of return assumption used in computing 2011 net periodic pension cost was8.0%.

The following table sets forth the actual asset allocation and target asset allocation for planassets at December 31, 2011 and 2010:

2011

TargetAsset

Allocation

Asset category:Equity securities 51 % 51 %Debt securities 35 33

Alternative investments Collective fund 14 16

TargetAsset


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The composition of plan assets at December 31, 2011 and 2010, is set forth in the followingtable:

2011 2010

Mutual funds:Large cap $ 52,866,038 $ 51,960,845Small cap 11,316,107 11,681,987Equities 28,784,871 29,450,885

Emerging markets debt fund 7,055,130 6,717,096High yield bond fund 14,776,545 14,075,299Long duration fund 41,935,145 36,948,736

Collective funds 25,301,048 25,628,443

Total $ 182,034,884 $ 176,463,291

The plans collective fund, an alternative investment, is comprised of limited partnerships

that invest primarily in securities that are traded in active markets. Its investment objective isto deliver a 7% rate of return, but with approximately half of the annualized volatility ofequities. This approach can generate investment results that achieve higher long-termreturns; however, this approach can also produce negative results depending on marketconditions.

The following table sets forth by level, within the fair value hierarchy, the plan assets at fairvalue as of December 31, 2011:

Assets at Fair Value as of December 31, 2011Level 1 Level 3 Total

M t al f nds


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The following table sets forth by level, within the fair value hierarchy, the plan assets at fairvalue as of December 31, 2010:

Assets at Fair Value as of December 31, 2011

Level 1 Level 3 Total

Mutual funds:Large cap $ 51,960,845 $ - $ 51,960,845Small cap 11,681,987 - 11,681,987

Equity 29,450,885 - 29,450,885Emerging markets debt fund 6,717,096 - 6,717,096High yield bond fund 14,075,299 - 14,075,299Long duration fund 36,948,736 - 36,948,736

Collective funds - 25,628,443 25,628,443

Total $ 150,834,848 $ 25,628,443 $ 176,463,291

The following table summarizes Level 3 instruments measured at fair value on a recurringbasis:

Fair Value Measurements At

Reporting Date Using

Significant Unobservable

Inputs (Level 3)

Collective Fund

2011 2010


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Defined Contribution Pension Plan

On January 1, 2010, the JFK Health System established the Solaris Defined ContributionPension Plan. All employees are eligible for participation in the plan. JFK Medical Center willcontribute a maximum of 2% of employee contributions. Total expense recorded in 2011and 2010 was $3,234,882 and $3,458,705, respectively.

Tax Deferred Annuity Program Oak Tree and Hartwyck

Eligible employees of Oak Tree and Hartwyck West may participate in the Hartwyck NursingHome Tax Deferred Annuity Program (the Hartwyck Plan) pursuant to Section 403(b) ofthe Internal Revenue Code. The Hartwyck Plan is a noncontributory, defined contributionprogram covering substantially all employees. Effective November 15, 2006, a new plan wasestablished which provided the same level of benefits as prior years, and the old plan wasfrozen to new participants. The new plan includes an employer contribution of 2% to amaximum of $500 per employee. Pension expense was approximately $249,000 and

$259,000 in 2011 and 2010, respectively.

Union Plan Hartwyck at Edison Estates

Eligible union employees of Hartwyck at Edison Estates may participate in anoncontributory, defined contribution plan. This union plan is funded based on contributionsmade in accordance with the plan document. Pension expense was approximately $104,000in 2011 and $52,000 in 2010.

Union Plan Hartwyck at Cedar Brook

Eligible union employees of Hartwyck at Cedar Brook may participate in a noncontributory,


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MRMC- To be eligible, a retiring employee must have at least 10 years of service and haveattained age 55. Coverage under the life insurance benefit plan is provided on anoncontributory basis, and the medical insurance plan is partially contributory. The JFKHealth Systems funding policy is on a pay-as-you-go basis; the life insurance plan isfunded through individual life insurance contracts. Both coverages terminate at age 65,when a Medicare supplemental program is provided on a fully contributory basis.

In January 2011, the JFK Health System approved a five year phase out of the retireemedical program. Beginning in 2012, the subsidy will be reduced each year by $500 until

January 1, 2016 when the medical program will end. This phase out created a reduction ofthe benefit obligation as of December 31, 2011 of $7,810,880 for the Plan amendments anda curtailment gain of $3,575,470.

The changes in benefit obligations in 2011 and 2010 are as follows:

2011 2010

Benefit obligation at beginning of year $ 14,140,648 $ 12,727,114Service cost 71 216,482Interest cost 42,765 748,983Plan participants contributions 870,156 836,519Plan changes (7,810,880) -

Actuarial loss (545,110) 782,062Benefits paid (1,238,991) (1,170,512)Curtailment (3,575,470) -

Benefit obligation at end of year $ 1,883,189 $ 14,140,648

The changes in plan assets in 2011 and 2010 are as follows:


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The following is a summary of the funded status and amounts recognized in the JFK HealthSystems consolidated financial statements as of December 31, 2011 and 2010:

2011 2010

Fair value of plan assets $ - $ -Accumulated benefit obligation 1,883,189 14,140,648

Funded status of the postretirement plan

(under funded) (1,883,189) (14,140,648)

Accrued postretirement healthcare benefit liability atend of year (1,883,189) (14,140,648)

Less current portion (718,861) (881,649)

Noncurrent portion of accrued postretirement

healthcare benefit liability $ (1,164,328) $ (13,258,999)

The components of net periodic postretirement benefit credit for 2011 and 2010 are asfollows:

2011 2010

Interest cost $ 42,765 $ 748,983Service cost 71 216,482

Amortization of asset at transition date - -Amortization of prior service credit (1,756,270) (688,006)Curtailment credit (2,708,535) -A ti ti f t i l l 304 137 122 989


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Assumed healthcare cost trend rates have a significant effect on the amounts reported forthe postretirement benefit plans. However, since the JFK Health System has reached theemployer-paid cap on benefits, a one percentage point change in assumed healthcare costtrend rates would not have an effect on the components of net periodic postretirementbenefit cost and the postretirement benefit obligations for 2011.

The JFK Health System expects to contribute $602,389 to its postretirement benefit plans in2012. MRMC expects to contribute $116,472 to its postretirement benefit plan in 2012.

The following benefit payments, which reflect expected future service, as appropriate, areexpected to be paid:

Years ending December 312012 $ 718,8612013 566,2332014 406,1632015 246,130

12. Professional and General Liability Insurance

The JFK Health System maintains professional and general liability insurance coverage for allsubsidiaries and their employees. The JFK Health Systems insurance coverages are providedunder the provisions of two insurance arrangements, as follows:

Primary coverage: Primary coverage is provided by AIE. Professional liability is under

the terms of a claims-made insurance policy. General liability is under the terms of anoccurrence based policy. Both policies have an individual claim limit of $3,000,000 andan annual aggregate limit of $10,000,000.


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13. Other Long-Term Liabilities

JFK Medical Center has recorded a reserve of approximately $902,000 for asserted andunasserted workers compensation claims which exceed primary coverage which is recorded inother long-term liabilities in the consolidated balance sheet as of December 31, 2011. Of theseclaims, approximately $902,000 is recorded as a receivable under the claims-made excessliability insurance and is recorded within other long-term assets in the consolidated balancesheet as of December 31, 2011.

In August 2011, JFK Medical Center entered into a line of credit agreement with a minimumwithdrawal amount of $3 million and a maximum of $27 million. The line of credit is payable infull in August 2014, subject to renewal terms per the line of credit agreement. As of December31, 2011, JFK Medical Center drew $3 million on the line of credit, which is included in otherlong-term liabilities in the consolidated balance sheet.

14. Health Insurance Benefits

JFK Medical Center and MRMC self-insure their employee health insurance coverages. JFKMedical Center and MRMC accrue the estimated costs of incurred and reported and incurredbut not reported claims, after consideration of their individual and aggregate stop-loss insurancecoverages, based upon data provided by the third-party administrator of the programs and theirhistorical claims experience. JFK Medical Center and MRMC recorded liabilities of $3,347,557and $3,612,845 at December 31, 2011 and 2010, respectively, related to health insurance. Theamount is included in employee benefits within accrued expenses in the accompanyingconsolidated balance sheet.

15. Deferred Compensation Plans

The JFK Health System has certain deferred compensation and supplemental income plans for


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Permanently restricted net assets are related to the following:

2011 2010

Investments to be held in perpetuity, the income fromwhich is generally available for the JFK HealthSystem operations and programs $ 3,101,880 $ 3,090,320

Beneficial interest in perpetual trusts 4,327,504 4,452,935

Total $ 7,429,384 $ 7,543,255

Endowment Funds

The JFK Health Systems endowment funds consist of four funds established for a variety ofpurposes. The endowments include only donor-restricted endowment funds at the currenttime. As required by accounting principles generally accepted in the United States of

America, net assets associated with endowment funds are classified and reported based

upon the existence or absence of donor-imposed restrictions.

The JFK Health System has interpreted relevant New Jersey state law governing the netasset classification of endowment funds as requiring the preservation of the fair value of theoriginal gift as of the gift date of the donor-restricted endowment funds absent explicit donorstipulations to the contrary. As a result, the JFK Health System classifies as permanentlyrestricted net assets (a) the original value of gifts donated as permanent endowments; (b)the original value of subsequent gifts to the permanent endowments, and (c) accumulationsto the permanent endowment made in accordance with the direction of the applicable donor

gift instrument at the time the accumulation is added to the fund. Interest income earned onthe endowment funds or market losses in excess of original value of the gift are recorded ineither unrestricted or temporarily restricted net assets, depending upon the donordesignation


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Changes in permanently restricted endowment net assets for the years endedDecember 31, 2011 and 2010 are comprised of the following:

2011 2010

Endowment net assets, beginning of year $ 3,090,320 $ 3,079,270

Total investment return 149,181 168,908

Contributions 11,560 11,050

Total Assets restricted by donor for permanentlyrestricted endowment funds 3,251,061 3,259,228

Unrestricted net assets increased for unrealizedgains (149,181) (168,908)

Endowment net assets, end of year $ 3,101,880 $ 3,090,320

17. Concentrations of Credit Risk

The JFK Health System grants credit without collateral to its patients, some of whom areinsured under third-party payor arrangements, primarily with Medicaid, Medicare, and variouscommercial insurance companies. The mix of receivables at December 31, 2011 and 2010 frompatients and third-party payors is as follows:

2011 2010

Medicare 27 % 29 %Medicaid 2 4


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18. Contingencies

Reopening of Cost Reports

In October 2006, MRMC received a letter from Riverbend, the previous New JerseysMedicare fiscal intermediary, indicating their intention to reopen previously final settledMedicare cost reports for 2001 through 2003. Riverbend cited that the calculations forDisproportionate Share Hospital (DSH) reimbursement for these years may have

contained errors in the number of Medicaid eligible days, which is a critical component of theDSH calculation. For these years, Riverbend received information on Medicaid eligible daysfrom the New Jersey Medicaid Agency and the Division of Medical Assistance and HealthServices. During 2009, CMS decided not to reopen cost reports for the fiscal years 2001 to2003. The balances for these years were moved to the 2005 to 2006 cost report years.

Utilizing Medicaid eligible days based on the final settled Medicare cost report for 2004,MRMC estimated a potential overpayment of DSH reimbursement for 2005 through 2007 of$2,977,755 as of December 31, 2011. These amounts are included in estimated third-party

payor settlements at December 31, 2011 in the accompanying consolidated balance sheet.

Asbestos

MRMCs building, which was constructed prior to the passage of the Clean Air Act, containsencapsulated asbestos material. Current law requires that this asbestos be removed in anenvironmentally safe fashion prior to the demolition and renovation of the building. At thistime, MRMC does not have plans to renovate this building; and, therefore, a liability for such

asbestos removal cannot be reasonably estimated and there is no liability recognized in theaccompanying consolidated financial statements.

Other


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19. Lease Commitments

The JFK Health System is committed under the terms of operating leases for future minimumrental payments on equipment as follows:

Years Ending December 312012 $ 1,312,2452013 1,044,4592014 919,435

2015 62,9872016 7,831

Total 3,346,957

Rental expense on operating leases was $2,676,079 in 2011 and $3,737,211 in 2010.

20. Functional Expenses

The JFK Health System provides health care and other related services to its patients. Theclassification of expenses related to providing these services approximates the following in 2011and 2010:

2011 2010

(in thousands)

Program services $ 458,554 $ 455,395General and administrative 45,310 44,855Fundraising 274 210Education and scholarship 110 121


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21. Discontinued Operations

On August 13, 2008, the acute care hospital operation of MRMC was closed as noted in Note 1.The following represents revenues and costs associated with the operation of the hospital thatclosed and were classified and presented in discontinued operations for 2011 and 2010:

2011 2010

Unrestricted Revenues, Gains, and Other Support:Net patient service revenues $ - $ 277,740

Total unrestricted revenues, gains, and othersupport - 277,740

Expenses:Employee benefits (132,667) (269,756)Supplies and expenses 143,304 654,158(Recoveries of) provision for doubtful collections (330,989) (560,718)Impairment building (See Note 7) 607,570 1,040,873

Total expenses 287,218 864,557

Loss from Discounted Operations $ (287,218) $ (586,817)

Accounts payable, accrued expenses, and other liabilities accrued associated with discontinuedoperations will be satisfied through remaining assets and support from the JFK Health System.


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Independent Auditors Reporton Supplementary Information

Board of Directors


Our audits were conducted for the purpose of forming an opinion on the consolidated financialstatements as a whole. The additional information on pages 42 through 49 is presented forpurposes of additional analysis rather than to present the financial position, results of operations,and cash flows of the individual companies and is not a required part of the consolidated financialstatements. Such information is the responsibility of management and was derived from and relatesdirectly to the underlying accounting and other records used to prepare the consolidated financialstatements. The information has been subjected to the auditing procedures applied in the audit of

the consolidated financial statements and certain additional procedures applied in the audit of theconsolidated financial statements and certain additional procedures, including comparing andreconciling such information directly to the underlying accounting and other records used to preparethe consolidated financial statements or to the consolidated financial statements themselves, andother additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the information is fairly stated in all material respects in relation tothe consolidated financial statements as a whole.


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JFK Atlantic JFK

Health Insurance Medical Hartwyck Hartwyck Hartwyck

System Exchange Center MRMC Lifestyle Oak Tree West at JFK

Assets

Current Assets

Cash and cash equivalents 556,129$ -$ 34,842,410$ 1,651,563$ 308,320$ 44,143$ 3,787,331$ 3,439,520$ 3,151,650$ 5,208,572$ -$ -$ 52,989,638$

Funds held for residents - - - - - - - - 91,007 134,229 - - 225,236Investments - - 16,449,218 - - - 1,486,924 1,399,448 - - - - 19,335,590

Assets whose use is limited - - 2,203,372 - - - - - - - - - 2,203,372

Accounts receivable, patients (net of

estimated allowance for doubtfulcollections of $13,639,000) - - 50,841,007 - - 62,936 - - 7,785,450 2,224,728 - - 60,914,121

Inventories of drugs and supplies - - 6,096,788 - - - 26,956 - 143,677 38,344 - - 6,305,765

Prepaid expenses and other current assets 2,659,309 2,561,243 5,345,625 428,523 108,187 38,707 246,629 91,869 29,378 0 2,713 (3,461,950) 8,050,233Note Receivable, Affiliate - - 93,000 - - - - - - - - (93,000) -Due from affiliates - 145,113 244,474 183 - - - 1,842 1,990 - (393,602) -

Total current assets 3,215,438 2,561,243 116,016,533 2,324,560 416,690 145,786 5,547,840 4,930,837 11,203,004 7,607,863 2,713 (3,948,552) 150,023,955

Investments - - - - - - 70,050 1,921,042 - - - - 1,991,092

Assets Whose Use is Limited 2,065,702 31,361,013 15,851,240 1,826,564 - - 1,144,785 1,773,743 - - - - 54,023,047

Property and Equipment, Net 660,126 - 105,680,185 14,167,434 1,872,550 - 377,358 - 14,840,891 14,923,138 2,849,655 - 155,371,337

Property and Equipment Held For Sale, Net - - - - - - - - - - - - -

Deferred Financing Costs, Net - - 3,337,250 391,957 - - - - 364,164 174,135 - - 4,267,506

Pledges Receivable, Net - - - - - - 722,935 - - - - - 722,935

Other Assets 1,315,566 - 3,003,293 355,971 271,608 - 24,094 - - 539,188 - - 5,509,720

Beneficial Interest in Net Assets

of Affiliate - - 7,178,506 9,446,030 - - - - - - - (16,624,536) -

Note Receivable, Affiliate - - 2,966,343 - - - - - - - - (2,966,343) -

Beneficial Interest in Perpetual Trusts - - - 2,261,137 - - - 2,066,367 - - - - 4,327,504

Due from Affiliates 212,974 2,000,000 910,180 32,762 92,817 - 242,948 100,639 4,260 6,989,033 1,434 (10,587,047) -

Total 7,469,806$ 35,922,256$ 254,943,530$ 30,806,415$ 2,653,665$ 145,786$ 8,130,010$ 10,792,628$ 26,412,319$ 30,233,357$ 2,853,802$ (34,126,478)$ 376,237,096$

Healthshare Foundation Foundation Eliminations Consolidated

December 31, 2011

JFK Health System, Inc and Controlled EntitiesSchedule of Consolidating Information, Balance Sheet

JFK Muhlenberg Consolidation

42


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JFK Atlantic JFK

Health Insurance Medical Hartwyck Hartwyck Hartwyck

System Exchange Center MRMC Lifestyle Oak Tree West at JFKHealthshare Foundation Foundation Eliminations Consolidated

December 31, 2011

JFK Health System, Inc and Controlled EntitiesSchedule of Consolidating Information, Balance Sheet

JFK Muhlenberg Consolidation

Liabilities and Net (Deficit) Assets

Current Liabilities

Current maturities of long-term debt -$ -$ -$ -$ 116,875$ -$ -$ -$ -$ 849,781$ -$ -$ 966,656$

Current maturities of capital lease obligations - - 1,673,125 - - - - - - - - - 1,673,125Funds held for residents - - - - - - - - 91,007 134,229 - - 225,236

Accounts payable 604,640 - 28,799,310 312,868 18,083 - 41,685 - 877,303 335,367 - (862,221) 30,127,035

Accrued expenses 59,967 2,242,156 27,134,574 116,101 4,049 2,698 12,309 9,597 3,817,534 1,071,459 - (2,606,592) 31,863,852

Estimated third-party payor settlements - - 5,096,710 4,431,325 - - - - 595,658 177,960 - - 10,301,653Accrued postretirement benefits - - 602,389 116,472 - - - - - - - - 718,861Other current liabilities - - 2,466,048 - - - - - - 50,750 - - 2,516,798

Notes payable to affiliates - - - - - - - - 186,000 - - (186,000) -Due to affiliates - 373,840 - - 17 - - - - - - (373,857) -

Total current liabilities 664,607 2,615,996 65,772,156 4,976,766 139,024 2,698 53,994 9,597 5,567,502 2,619,546 - (4,028,670) 78,393,216

Long-Term Debt - - 119,636,336 17,275,000 233,749 - - - 16,013,664 18,133,445 - - 171,292,194

Capital Lease Obligations - - 4,862,723 - - - - - - - - - 4,862,723

Estimated Third-Party Payor

Settlements - - 11,522,917 2,937,494 - - - - 2,230,571 593,331 - - 17,284,313

Self-insurance Reserves - 24,147,699 - - - - - - - - - - 24,147,699

Accrued Pension Cost - - 67,347,794 15,000,469 - - - - - - - - 82,348,263

Accrued Postretirement Benefits - - 933,233 231,095 - - - - - - - - 1,164,328

Other Liabilities 1,418,275 - 5,572,455 36,334 38,707 - - - - 539,188 - - 7,604,959

Note Payable, Affiliate - - - - - - - - 2,873,343 - - (2,873,343) -

Due to Affiliates 34,541,961 - - 41,938,173 252,571 19,562 566,725 2,036,496 6,981,986 78,193 2,853,802 (89,269,469) -

Total liabilities 36,624,843 26,763,695 275,647,614 82,395,331 664,051 22,260 620,719 2,046,093 33,667,066 21,963,703 2,853,802 (96,171,482) 387,097,695


Unrestricted (29,155,037) 9,158,561 (27,882,590) (64,883,131) 1,989,614 123,526 330,785 (699,495) (7,254,747) 8,269,654 - 78,355,219 (31,647,641)

Temporarily restricted - - 7,178,506 5,864,831 - - 7,178,506 5,605,842 - - - (12,470,027) 13,357,658Permanently restricted - - - 7,429,384 - - - 3,840,188 - - - (3,840,188) 7,429,384

Total net (deficit) assets (29,155,037) 9,158,561 (20,704,084) (51,588,916) 1,989,614 123,526 7,509,291 8,746,535 (7,254,747) 8,269,654 - 62,045,004 (10,860,599)

Total 7,469,806$ 35,922,256$ 254,943,530$ 30,806,415$ 2,653,665$ 145,786$ 8,130,010$ 10,792,628$ 26,412,319$ 30,233,357$ 2,853,802$ (34,126,478)$ 376,237,096$

43


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JFK Atlantic JFK

Health Insurance Medical Hartwyck Hartwyck

System Exchange Center MRMC Lifestyle Oak Tree West

Unrestricted Revenues, Gains,

and Other Support:

Net patient service revenues -$ -$ 431,482,321$ -$ -$ 930,156$ -$ -$ 40,906,496$ 9,385,182$ -$ -$ 482,704,155$Other revenues 4,053,844 (1,809,020) 16,073,820 2,980,457 541,646 1,527 531,005 - 396,885 - - (3,859,848) 18,910,316Resident fees - - - - - - - - - 6,835,570 - - 6,835,570Special events - - - - - - 209,715 - - - - - 209,715Net assets released from restrictions

used in operations - - 101,866 97,062 - - 245,609 110,370 - - - - 554,907Contributions - - - - - - 33,274 336,853 - - - - 370,127

Total unrestricted revenues,gains, and other support 4,053,844 (1,809,020) 447,658,007 3,077,519 541,646 931,683 1,019,603 447,223 41,303,381 16,220,752 - (3,859,848) 509,584,790

Expenses

Salaries and wages - - 197,007,810 1,189,578 35,044 111,853 44,300 62,363 18,586,884 7,175,645 - - 224,213,477Employee benefits - - 39,715,879 131,509 7,793 19,889 9,883 13,864 4,444,622 1,987,029 - (24,000) 46,306,468Supplies and expenses 2,780,270 167,151 150,475,375 2,543,735 389,502 450,689 684,354 142,863 15,186,183 4,630,295 - (2,891,340) 174,559,077Special events - unrestricted - - - - - - 101,507 - - - - - 101,507Provision for doubtful collections - - 31,068,503 107,719 (5,569) - 9,350 - 2,025,346 521,942 - - 33,727,291Depreciation and amortization 426 - 13,732,473 532,144 124,416 - 1,251 - 1,234,262 722,709 - - 16,347,681Interest - - 6,470,250 933,006 20,907 - - - 1,022,436 700,949 - (155,077) 8,992,471

Total expenses 2,780,696 167,151 438,470,290 5,437,691 572,093 582,431 850,645 219,090 42,499,733 15,738,569 - (3,070,417) 504,247,972

Operating Income (Loss) 1,273,148 (1,976,171) 9,187,717 (2,360,172) (30,447) 349,252 168,958 228,133 (1,196,352) 482,183 - (789,431) 5,336,818

Loss on Sale of Property - - - (30,909) - - - - - - - - (30,909)

Provision for Doubtful Collections

on Related Party Receivables 2,529,365 - 461,942 - - - - - - - - (2,991,307) -

Pension Settlement and Curtailment Changes - - 2,692,503 - - - - - - - - - 2,692,503

Investment Income - 835,988 507,260 257,159 - - 972 107,612 14,881 8,205 - (155,077) 1,577,000

Change in Net Unrealized Gains and

Losses on Trading Securities (25,031) 1,223,008 33,206 (170,037) - - - (8,705) - - - - 1,052,441

Other Gain (Loss) - - - - (34,625) - - - - - - - (34,625)

Revenues in Excess of (Less Than) Expenses 3,777,482 82,825 12,882,628 (2,303,959) (65,072) 349,252 169,930 327,040 (1,181,471) 490,388 - (3,935,815) 10,593,228

-Pension/Postretirement Liability Adjustment - - 322,399 (417,918) - - - - - - - - (95,519)

Net Assets Released from Restrictions

for Capital Purchases - - 365,790 28,275 - - - - - - - - 394,065

Distributions (231,555) - - - - - - - - - - - (231,555)

Transfers (To) From Affiliates (119,097) - (2,646,689) 3,006,689 - (360,000) - - 108,965 134,524 - (124,392) -

Decrease (Increase) in Unrestricted Net Deficit

from Continuing Operations 3,426,830 82,825 10,924,128 313,087 (65,072) (10,748) 169,930 327,040 (1,072,506) 624,912 - (4,060,207) 10,660,219

Loss From Discontinued Operations - - - (287,218) - - - - - - - - (287,218)

Decrease (Increase) in

Unrestricted Net (Deficit) 3,426,830$ 82,825$ 10,924,128$ 25,869$ (65,072)$ (10,748)$ 169,930$ 327,040$ (1,072,506)$ 624,912$ -$ (4,060,207)$ 10,373,001$

at JFK Eliminations ConsolidatedHealthshare Foundation Foundation

Year Ended December 31, 2011Schedule of Consolidating Information, Statement of Operations


JFK Muhlenberg Hartwyck Consolidation

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Health Insurance Medical Hartwyck

System Exchange Center MRMC Lifestyle West

Unrestricted Net Assets

Revenues in excess of (less than) expenses 3,777,482$ 82,825$ 12,882,628$ (2,303,959)$ (65,072)$ 349,252$ 169,930$ 327,040$ (1,181,471)$ 490,388$ -$ (3,935,815)$ 10,593,228$

Transfers (to) from affiliates (119,097) - (2,646,689) 3,006,689 - (360,000) - - 108,965 134,524 - (124,392) -

Minimum pension liability adjustment - - 322,399 (417,918) - - - - - - - - (95,519)

Distributions (231,555) - - - - - - - - - - - (231,555)

Net assets released from restrictionsfor capital purchases - - 365,790 28,275 - - - - - - - - 394,065

Decrease (increase) in unrestricted netdeficit from continuous operations 3,426,830 82,825 10,924,128 313,087 (65,072) (10,748) 169,930 327,040 (1,072,506) 624,912 - (4,060,207) 10,660,219

Loss from discontinued operations - - - (287,218) - - - - - - - - (287,218)

Decrease (increase) in unrestrictednet deficit 3,426,830 82,825 10,924,128 25,869 (65,072) (10,748) 169,930 327,040 (1,072,506) 624,912 - (4,060,207) 10,373,001

Temporarily Restricted Net Assets

Net assets released from restrictionsfor capital purchases - - (365,790) (28,275) - - - - - - - - (394,065)

Contributions - - - - - - 1,452,731 311,899 - - - - 1,764,630Special events, net - - - - - - 268,420 31,640 - - - - 300,060Investment income - - - 15,474 - - 54,464 106,069 - - - - 176,007

Transfers from (to) affiliates - - 467,656 125,337 - - (269,963) (447,421) - - - 124,391 -

Net realized and unrealized gains oninvestments - - - - - - (16,280) (88,356) - - - - (104,636)

Change in provision for doubtful accounts - - - - - - (95,447) - - - - - (95,447)

Net assets released from restrictionsfor use in operations - - (101,866) (97,062) - - (245,609) (110,370) - - - - (554,907)

Change in beneficial interest in net assets ofaffiliate - - 1,148,316 (196,539) - - - - - - - (951,777) -

Increase (decrease) in temporarilyrestricted net assets - - 1,148,316 (181,065) - - 1,148,316 (196,539) - - - (827,386) 1,091,642

Permanently Restricted Net Assets

Contributions - - - - - - - 11,560 - - - - 11,560

Change in beneficial interest in net assets ofaffiliate - - - (23,233) - - - - - - - 23,233 -

Change in valuation of beneficial interest trusts - - - (90,638) - - - (34,793) - - - - (125,431)

(Decrease) increase in permanently -

restricted net assets - - - (113,871) - - - (23,233) - - - 23,233 (113,871)

Increase/Decrease in Net (Deficit) Assets 3,426,830 82,825 12,072,444 (269,067) (65,072) (10,748) 1,318,246 107,268 (1,072,506) 624,912 - (4,864,360) 11,350,772

Net (Deficit) Assets, Beginning (32,581,867) 9,075,736 (32,776,528) (51,319,849) 2,054,686 134,274 6,191,045 8,639,267 (6,182,241) 7,644,742 - 66,909,364 (22,211,371)

Net (Deficit) Assets, Ending (29,155,037)$ 9,158,561$ (20,704,084)$ (51,588,916)$ 1,989,614$ 123,526$ 7,509,291$ 8,746,535$ (7,254,747)$ 8,269,654$ -$ 62,045,004$ (10,860,599)$

at JFK Entries

Consolidated

BalanceHealthshare Foundation Foundation at Oak Tree

JFK Muhlenberg Hartwyck Hartwyck Consolidating

Year Ended December 31, 2011Schedule of Consolidating Information, Changes in Net (Deficit) Assets


Eliminating

and

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Assets

Current Assets

Cash and cash equivalents 674,994$ -$ 24,552,857$ 1,441,971$ 216,710$ 59,861$ 2,939,946$ 3,249,322$ 3,342,559$ 4,263,189$ -$ -$ 40,741,409$Funds held for residents - - - - - - - - 80,594 155,581 - - 236,175Investments - - 16,175,528 283,528 - - 1,454,906 842,257 - - - - 18,756,219

Assets whose use is limited - - 2,214,214 - - - - - - - - - 2,214,214Accounts receivable, patients (net of

estimated allowance for doubtfulcollections of $12,175,000) - - 52,395,715 727,584 - 77,459 - - 8,908,955 2,383,491 - - 64,493,204

Inventories of drugs and supplies - - 6,086,762 - - - 25,712 - 172,478 39,397 - - 6,324,349Prepaid expenses and other current assets 2,348,593 3,830,934 6,122,442 82,920 135,745 37,180 155,704 81,109 23,663 13,009 2,713 (3,868,114) 8,965,898Note receivable, affiliate - - 93,000 - - - - - - - - (93,000) -Due from affiliates - - 682,422 539,552 - - - - 78,726 - - (1,300,700) -

Total current assets 3,023,587 3,830,934 108,322,940 3,075,555 352,455 174,500 4,576,268 4,172,688 12,606,975 6,854,667 2,713 (5,261,814) 141,731,468

Investments - - - - - - 70,050 2,489,128 - - - - 2,559,178

Assets Whose Use is Limited 1,505,169 24,854,633 19,596,767 1,886,177 - - 1,129,126 1,742,908 - - - - 50,714,780

Property and Equipment, Net 727,902 - 102,682,857 15,259,120 2,002,871 - 378,609 - 15,773,222 15,475,863 2,848,615 - 155,149,059

Property and Equipment Held For Sale, Net - - - 3,930,481 - - - - - - - - 3,930,481

Deferred Financing Costs, Net - - 3,609,755 423,962 - - - - 393,924 195,445 - - 4,623,086

Pledges Receivable, Net - - - - - - 231,146 - - - - - 231,146

Other Assets 1,359,626 - - 258,018 271,608 - 157,890 - - 419,559 - - 2,466,701

Beneficial Interest in Net Assets

of Affiliate - - 6,030,190 9,665,802 - - - - - - - (15,695,992) -

Note Receivable, Affiliate - - 3,059,343 - - - - - - - - (3,059,343) -

Beneficial Interest in Perpetual Trusts - - - 2,351,775 - - - 2,101,160 - - - - 4,452,935

Due From Affiliates 206,849 5,470,000 633,332 61,007 193,791 - 242,948 155,110 4,260 7,419,851 1,434 (14,388,582) -

Total 6,823,133$ 34,155,567$ 243,935,184$ 36,911,897$ 2,820,725$ 174,500$ 6,786,037$ 10,660,994$ 28,778,381$ 30,365,385$ 2,852,762$ (38,405,731)$ 365,858,834$

December 31, 2010

JFK Health System, Inc and Controlled Entities

Schedule of Consolidating Information, Balance Sheet

Healthshare Foundation Foundation at JFK Eliminations Consolidated


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December 31, 2010

JFK Health System, Inc and Controlled Entities

Schedule of Consolidating Information, Balance Sheet

Healthshare Foundation Foundation at JFK Eliminations Consolidated


Liabilities and Net (Deficit) Assets

Current Liabilities

Current maturities of long-term debt -$ -$ -$ -$ 448,019$ -$ -$ -$ -$ 667,396$ -$ -$ 1,115,415$Current portion of capital lease obligations - - 1,153,507 - - - - - - - - - 1,153,507Funds held for residents - - - - - - - - 80,594 155,581 - - 236,175

Accounts payable 902,546 - 29,252,882 654,299 7,978 - 20,811 - 1,149,338 362,416 - - 32,350,270Accrued expenses 75,000 2,150,912 28,178,271 851,097 4,023 3,558 16,850 11,106 3,908,334 1,069,751 - (3,907,279) 32,361,623Estimated third-party payor settlements - - 1,882,050 2,918,059 - - - - 426,710 88,472 - - 5,315,291

Accrued pension cost - - - - - - - - - - - - -Accrued postretirement benefits - - 751,493 130,156 - - - - - - - - 881,649Other current liabilities - - 2,069,872 - - - - - - 43,750 - - 2,113,622Notes payable to affiliates - - - - - - - - 93,000 - - (93,000) -Due to affiliates - 1,210,863 138,065 - - - - - 20,867 - - (1,369,795) -

Total current liabilities 977,546 3,361,775 63,426,140 4,553,611 460,020 3,558 37,661 11,106 5,678,843 2,387,366 - (5,370,074) 75,527,552

Long-term Debt - - 119,636,336 17,275,000 - - - - 16,013,664 19,032,285 - - 171,957,285

Estimated Third-party Payor

Settlements - - 8,582,783 4,476,293 - - - - 1,889,765 880,000 - - 15,828,841

Capital Lease Obligations - - 4,131,589 - - - - - - - - - 4,131,589

Self-insurance Reserves - 21,718,056 - - - - - - - - - - 21,718,056

Accrued Pension Cost - - 69,057,945 15,569,070 - - - - - - - - 84,627,015

Accrued Postretirement Benefits - - 11,876,919 1,382,080 - - - - - - - - 13,258,999

Other Liabilities 453,878 - - 110,251 37,180 - - - - 419,559 - - 1,020,868

Note Payable, Affiliate - - - - - - - - 3,059,343 - - (3,059,343) -

Due to Affiliates 37,973,576 - - 44,865,441 268,839 36,668 557,331 2,010,621 8,319,007 1,433 2,852,762 (96,885,678) -

Total liabilities 39,405,000 25,079,831 276,711,712 88,231,746 766,039 40,226 594,992 2,021,727 34,960,622 22,720,643 2,852,762 (105,315,095) 388,070,205


Unrestricted (32,581,867) 9,075,736 (38,806,718) (64,909,000) 2,054,686 134,274 160,855 (1,026,535) (6,182,241) 7,644,742 - 82,415,426 (42,020,642)Temporarily restricted - - 6,030,190 6,045,896 - - 6,030,190 5,802,381 - - (11,642,641) 12,266,016Permanently restricted - - - 7,543,255 - - - 3,863,421 - - - (3,863,421) 7,543,255

Total net (deficit) assets (32,581,867) 9,075,736 (32,776,528) (51,319,849) 2,054,686 134,274 6,191,045 8,639,267 (6,182,241) 7,644,742 - 66,909,364 (22,211,371)

Total 6,823,133$ 34,155,567$ 243,935,184$ 36,911,897$ 2,820,725$ 174,500$ 6,786,037$ 10,660,994$ 28,778,381$ 30,365,385$ 2,852,762$ (38,405,731)$ 365,858,834$

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Unrestricted Revenues, Gains,

and Other Support

Net patient service revenues -$ -$ 413,398,234$ 6,725,960$ -$ 819,037$ -$ -$ 41,060,852$ 9,120,766$ -$ -$ 471,124,849$Other revenues 2,425,201 4,905,494 13,369,076 3,045,832 585,599 3,132 537,024 - 372,000 1,743 - (3,509,857) 21,735,244

Resident fees - - - - - - - - - 6,770,008 - - 6,770,008Net assets released from restrictions

used in operations - - 364,742 77,153 - - 207,251 120,638 - - - - 769,784

Special Events - - - - - - 230,750 - - - - - 230,750

Contributions - - - - - - 90,375 309,839 - - - - 400,214

Total unrestricted revenues,

gains, and other support 2,425,201 4,905,494 427,132,052 9,848,945 585,599 822,169 1,065,400 430,477 41,432,852 15,892,517 - (3,509,857) 501,030,849

Expenses

Salaries and wages - - 201,710,743 6,385,825 25,253 113,213 43,563 119,200 18,476,635 7,239,628 - - 234,114,060Employee benefits - - 41,418,061 1,445,144 5,646 19,576 9,497 25,985 4,260,929 1,913,421 - (24,000) 49,074,259

Supplies and expenses 1,471,286 169,985 140,890,549 2,904,901 325,869 489,517 651,936 153,459 15,058,266 4,168,685 - (2,956,485) 163,327,968Special events - unrestricted - - - - - - 115,742 - - - - - 115,742

Provision for doubtful collections - - 27,093,267 21,440 (20,070) - 1,500 - 2,101,296 409,391 - - 29,606,824

Depreciation and amortization - - 12,743,015 590,491 127,321 - 1,509 - 1,312,024 754,064 - - 15,528,424Interest - - 6,161,731 933,006 14,722 - - - 1,025,284 837,393 - (158,332) 8,813,804

Total expenses 1,471,286 169,985 430,017,366 12,280,807 478,741 622,306 823,747 298,644 42,234,434 15,322,582 - (3,138,817) 500,581,081

Operating Income (Loss) 953,915 4,735,509 (2,885,314) (2,431,862) 106,858 199,863 241,653 131,833 (801,582) 569,935 - (371,040) 449,768

Provision For Doubtful Collections On

Related Party Receivables 431,285 - 815,147 - - - - - - - - (1,246,432) -

Gain on Sale of Home Health Program - - - 4,619,185 - - - - - - - - 4,619,185

Investment Income (Loss) 945,309 543,383 110,281 - - 1,392 91,877 16,995 10,665 - (158,332) 1,561,570

Change In Net Unrealized Gains

and Losses on Trading Securities (15,881) 487,654 75,111 43,683 - - - 40,849 - - - - 631,416

Other Gain (Loss) - - - - (99,855) - - - - - - - (99,855)

Revenues in Excess of (Less Than)

Expenses 1,369,319 6,168,472 (1,451,673) 2,341,287 7,003 199,863 243,045 264,559 (784,587) 580,600 - (1,775,804) 7,162,084

Pension/Postretirement Liability Adjustment - - (16,414,404) (2,984,908) - - - - - - - - (19,399,312)

Net Assets Released from Restrictions for Capital

Purchases - - 203,320 58,868 - - - - - - - - 262,188

Transfers (to) from Affiliates - - 185,000 - - (185,000) - - 40,860 7,710 - (48,570) -

jfk financial statements dec 31, 2011 and 2010

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