Consolidated Financial Statements for 2009
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DRAFT FOR DISCUSSION 6/18/09 10:12 AM Consolidated Financial Statements of THE OTTAWA HOSPITAL Year ended March 31, 2009 AUDITORS' REPORT TO THE BOARD OF GOVERNORS We have audited the consolidated statement of financial position of The Ottawa Hospital as at March 31, 2009 and the consolidated statements of operations, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the Hospital’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all material respects, the financial position of the Hospital as at March 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants, Licensed Public Accountants Ottawa, Canada May 11, 2009 DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Consolidated Statement of Financial Position March 31, 2009, with comparative figures for 2008 (In thousands of dollars) 2009 2008 (As restated, note 2(a)) Assets Current assets: Short-term investments $ 860 $ 16 Accounts receivable (note 4(a)) 40,258 48,220 Inventories 10,028 10,040 Prepaid expenses 4,526 4,309 55,672 62,585 Capital grants receivable (note 4(b)) 15,407 13,499 Investments 61,392 43,459 Capital assets (note 5) 506,517 481,601 Receivable from Royal Ottawa Health Care Group – vested benefits (note 6) 493 493 Cash held in trust (note 11(a)) 22,822 20,228 $ 662,303 $ 621,865 Liabilities, Deferred Contributions and Net Assets Current liabilities: Bank indebtedness (note 7) $ 36,431 $ 46,619 Accounts payable and accrued liabilities 206,378 196,348 Payable to The Ottawa Hospital Residence Corporation (note 16(d)) 1,929 2,389 Current portion of obligation under capital lease (note 10) 319 570 Current portion of long-term debt (note 9) 1,292 1,292 246,349 247,218 Long-term liabilities: Employee future benefits (note 8) 19,467 17,427 Obligation under capital lease (note 10) 494 488 Long-term debt (note 9) 11,257 12,549 31,218 30,464 Deferred contributions related to capital assets (note 11(b)) 324,540 295,925 Deferred contributions related to trust funds (note 11(a)) 22,822 20,228 Net assets (note 12): Investment in capital assets (note 13(a)) 193,659 188,171 Unrestricted deficiency (156,285) (160,141) 37,374 28,030 Commitments, contingencies and guarantees (note 18) $ 662,303 $ 621,865 See accompanying notes to consolidated financial statements. On behalf of the Board: ____________________ Chairman ____________________ President and CEO DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Consolidated Statement of Operations Year ended March 31, 2009, with comparative figures for 2008 (In thousands of dollars) 2009 2008 (As restated, note 2(a)) Revenue: Patient care: Ministry of Health and Long-Term Care $ 854,222 $ 810,085 Other 126,958 114,728 Other funding 16,151 17,197 Marketed services 8,479 8,398 Amortization of deferred contributions related to equipment (note 11(b)) 9,078 9,631 Recoveries and other 42,617 40,367 Investment 1,289 777 1,058,794 1,001,183 Expenses: Salaries and wages 535,367 498,048 Employee benefits 131,295 130,714 Medical staff remuneration 72,422 69,544 Medical and surgical 81,707 72,800 Drugs 57,494 54,967 Supplies and other 145,327 145,263 Amortization of equipment 27,546 23,740 Interest 950 1,799 1,052,108 996,875 Excess of revenue over expenses before undernoted items 6,686 4,308 Parking operations 10,282 10,005 Amortization of deferred contributions related to buildings (note 11(b)) 10,818 10,068 Amortization of buildings and land improvements (19,302) (17,045) Excess of revenue over expenses $ 8,484 $ 7,336 See accompanying notes to consolidated financial statements. DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Consolidated Statement of Changes in Net Assets Year ended March 31, 2009, with comparative figures for 2008 (In thousands of dollars) Investment in capital assets Total Total (note 13) Unrestricted 2009 2008 (As restated, note 2(a)) Balance, beginning of year $ 182,369 $ (154,120) $ 28,249 $ 20,948 Consolidation of the University of Ottawa Heart Institute (note 2(a)) 5,802 (6,021) (219) (254) Balance, beginning of year, as restated 188,171 (160,141) 28,030 20,694 Excess of revenue over expenses – 8,484 8,484 7,336 Change in unrealized gain on short-term investments – 860 860 – Net change in investment in capital assets (note 13(b)) 5,488 (5,488) – – Balance, end of year $ 193,659 $ (156,285) $ 37,374 $ 28,030 See accompanying notes to consolidated financial statements. DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Consolidated Statement of Cash Flows Year ended March 31, 2009, with comparative figures for 2008 (In thousands of dollars) 2009 2008 Cash provided by (used for): Operating activities: Excess of revenue over expenses $ 8,484 $ 7,336 Items not involving cash: Amortization of capital assets 46,848 40,785 Amortization of deferred contributions related to capital assets (19,896) (19,695) Loss on disposal of assets – 14 Net increase in employee future benefits (note 8) 2,040 2,330 Net change in non-cash working capital (note 17) 15,209 (21,206) 52,685 9,564 Financing and investing activities: Purchase of capital assets (71,764) (68,561) Net increase in capital grants receivable (1,908) (8,107) Deferred contributions related to capital assets received 48,511 32,546 Repayment of long-term debt (1,292) (1,365) Repayment of obligation under capital lease (656) (597) Increase in capital leases 411 – Increase in deferred contributions related to trust funds 2,594 1,487 Increase (decrease) in payable to The Ottawa Hospital Residence Corporation (460) 660 Net decrease (increase) in investments (17,933) 3,958 (42,497) (39,979) Net decrease (increase) in bank indebtedness 10,188 (30,415) Bank indebtedness, beginning of year (46,619) (16,204) Bank indebtedness, end of year $ (36,431) $ (46,619) See accompanying notes to consolidated financial statements. DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Notes to Consolidated Financial Statements Year ended March 31, 2009 (In thousands of dollars) The Ottawa Hospital (the “Hospital”) is an academic health sciences centre and is principally involved in providing health care services to the City of Ottawa. The Hospital is a registered charity under the Income Tax Act and accordingly is exempt from income taxes. 1. Significant accounting policies: The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles. (a) Basis of presentation: These consolidated financial statements reflect the assets, liabilities and operations of the Hospital. The Hospital consolidates the financial activities of controlled entities that provide clinical services. These financial statements include the assets, liabilities and operations of the University of Ottawa Heart Institute, a controlled entity. The University of Ottawa Heart Institute provides cardiac services to the patients of the Hospital. The business relationship between the Hospital and the University of Ottawa Heart Institute is governed by a service agreement pursuant to which clinical and administrative support is provided at fair market value, and premises provided at no charge by the Hospital. The University of Ottawa Heart Institute is incorporated under the laws of Ontario and is a registered charity under the Income Tax Act and, accordingly, is exempt from income taxes. These financial statements do not include the assets, liabilities or operations of The Ottawa Hospital Residence Corporation, a controlled entity, nor the following entities where the Hospital has an economic interest including; The Ottawa Hospital Foundation, Ottawa Health Research Institute, its auxiliaries, Hospital Food Services – Ontario Inc., Ottawa Regional Hospital Linen Services Incorporated and Eastern Ontario Regional Laboratory Association Inc. (b) Revenue recognition: The Hospital follows the deferral method of accounting for contributions. Under the Health Insurance Act and Regulations thereto, the Hospital is funded, primarily by the Province of Ontario, in accordance with budget arrangements established by the Ministry of Health and Long-Term Care. Operating grants are recorded as revenue in the period to which they relate. Grants approved but not received at the end of an accounting period are accrued. Where a portion of a grant relates to a future period, it is deferred and recognized in that subsequent period. DRAFT FOR DISCUSSION 6/18/09 10:12 AM THE OTTAWA HOSPITAL Notes to Consolidated Financial Statements, page 2 Year ended March 31, 2009 (In thousands of dollars) 1. Significant accounting policies (continued): (b) Revenue recognition (continued): The Hospital receives funding for operations for certain programs from the Ministry of Health and Long-Term Care of Ontario. The final amount of operating revenue recorded cannot be determined until the Ministry of Health and Long-Term Care of Ontario has reviewed the Hospital’s financial and statistical returns for the year. Any adjustments arising from the Ministry of Health and Long-Term Care of Ontario review is recorded in the period in which the adjustment is made.