GVHR » Topics » Restricted Cash

These excerpts taken from the GVHR 10-K filed Mar 17, 2008.

Restricted Cash

        The Company is required to collateralize its obligations under its workers' compensation and certain general insurance coverage. The Company uses its marketable securities to collateralize these obligations as more fully described below. Marketable securities used to collateralize these obligations are designated as restricted in the Company's consolidated financial statements.

        At December 31, 2007, the Company had $20.0 million in total cash and cash equivalents and restricted marketable securities, of which $10.0 million was unrestricted. At December 31, 2007, the Company had pledged $8.6 million of restricted marketable securities in collateral trust arrangements issued in connection with the Company's workers' compensation and general insurance coverage and had $1.4 million held in escrow in connection with various purchase price contingencies related to the HRA acquisition as follows:

 
  December 31,
2007

  December 31,
2006

 
  (In thousands)

Short-term marketable securities—restricted:            
  General insurance collateral obligations—AIG   $ 4,702   $ 4,478
  HRA Escrow     1,400    
   
 
Total short-term marketable securities—restricted     6,102     4,478
   
 

Long-term marketable securities restricted:

 

 

 

 

 

 
  Workers' compensation collateral—AIG     3,934     3,747
   
 
Total long-term marketable securities—restricted     3,934     3,747
   
 
Total restricted assets   $ 10,036   $ 8,225
   
 

        The Company's obligation to BCBSF/HOI under its current contract may require an irrevocable letter of credit ("LOC") in favor of BCBSF/HOI if a coverage ratio, as set forth in the BCBSF/HOI agreement, is not maintained. The coverage ratio is calculated quarterly. If the Company's coverage ratio does not meet the minimum requirements, the Company must provide an LOC valued at up to two months of projected claims (average monthly claims approximated $9.4 million during the last twelve months). On February 25, 2008, the Company and BCBSF/HOI entered into the Second Amendment to Agreement to Provide Comprehensive Health Care Benefits (the "Second Amendment") amending the Agreement to Provide Comprehensive Health Care Benefits, dated as of October 1, 2005, between the parties, restating the definition of coverage ratio to exclude certain non-cash asset and goodwill impairment charges commencing with the fiscal quarter ending December 31, 2007. As of December 31, 2007, the minimum coverage ratio was met and no LOC was

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required. If current trends continue, the Company will not be able to maintain the minimum coverage ratio through the end of the current contract with BCBSF/HOI and will need to either seek modifications or provide an LOC as discussed above. If such modifications are not obtained or an LOC is required, this may have a material impact on the Company's cash flow and ability to conduct its operations.

        The Company was not required to collateralize the Aetna program for 2006 and 2007. The Company does not anticipate any additional collateral obligations to be required in 2008 for its workers' compensation arrangements.

        As of December 31, 2007, the Company has recorded a $122.3 million receivable from AIG representing workers' compensation premium payments made to AIG related to program years 2000 through 2007 in excess of the present value of the estimated claims liability and the related accrued interest receivable. This receivable represents a significant concentration of credit risk for the Company.

Restricted Cash





        The Company is required to collateralize its obligations under its workers' compensation and certain general insurance coverage. The Company uses its marketable
securities to collateralize these obligations as more fully described below. Marketable securities used to collateralize these obligations are designated as restricted in the Company's consolidated
financial statements.



        At
December 31, 2007, the Company had $20.0 million in total cash and cash equivalents and restricted marketable securities, of which $10.0 million was unrestricted.
At December 31, 2007, the Company had pledged $8.6 million of restricted marketable securities in collateral trust arrangements issued in connection with the Company's workers'
compensation and general insurance coverage and had $1.4 million held in escrow in connection with various purchase price contingencies related to the HRA acquisition as follows:































































































































 
 December 31,

2007

 December 31,

2006

 
 (In thousands)

Short-term marketable securities—restricted:      
 General insurance collateral obligations—AIG $4,702 $4,478
 HRA Escrow  1,400  
  
 
Total short-term marketable securities—restricted  6,102  4,478
  
 


Long-term marketable securities restricted:

 

 


 

 

 


 
 Workers' compensation collateral—AIG  3,934  3,747
  
 
Total long-term marketable securities—restricted  3,934  3,747
  
 
Total restricted assets $10,036 $8,225
  
 




        The
Company's obligation to BCBSF/HOI under its current contract may require an irrevocable letter of credit ("LOC") in favor of BCBSF/HOI if a coverage ratio, as set forth in the
BCBSF/HOI agreement, is not maintained. The coverage ratio is calculated quarterly. If the Company's coverage ratio does not meet the minimum requirements, the Company must provide an LOC valued at up
to two months of projected claims (average monthly claims approximated $9.4 million during the last twelve months). On February 25, 2008, the Company and BCBSF/HOI entered into the
Second Amendment to Agreement to Provide Comprehensive Health Care Benefits (the "Second Amendment") amending the Agreement to Provide Comprehensive Health Care Benefits, dated as of October 1,
2005, between the parties, restating the definition of coverage ratio to exclude certain non-cash asset and goodwill impairment charges commencing with the fiscal quarter ending
December 31, 2007. As of December 31, 2007, the minimum coverage ratio was met and no LOC was



52











required.
If current trends continue, the Company will not be able to maintain the minimum coverage ratio through the end of the current contract with BCBSF/HOI and will need to either seek
modifications or provide an LOC as discussed above. If such modifications are not obtained or an LOC is required, this may have a material impact on the Company's cash flow and ability to conduct its
operations.



        The
Company was not required to collateralize the Aetna program for 2006 and 2007. The Company does not anticipate any additional collateral obligations to be required in 2008 for its
workers' compensation arrangements.



        As
of December 31, 2007, the Company has recorded a $122.3 million receivable from AIG representing workers' compensation premium payments made to AIG related to program
years 2000 through 2007 in excess of the present value of the estimated claims liability and the related accrued interest receivable. This receivable represents a significant concentration of credit
risk for the Company.





This excerpt taken from the GVHR 10-K filed Mar 16, 2007.
Restricted Cash
 
The Company is required to collateralize its obligations under its workers’ compensation and health benefit plans and certain general insurance coverage. The Company uses its marketable securities and used its certificate of deposit to collateralize these obligations as more fully described below. Marketable securities and the certificate of deposit used to collateralize these obligations are designated as restricted in the Company’s consolidated financial statements.
 
At December 31, 2006, the Company had $44.5 million in total cash and cash equivalents and restricted marketable securities, of which $36.3 million was unrestricted. At December 31, 2006, the Company had pledged $8.2 million of restricted marketable securities in collateral trust arrangements issued in connection with the Company’s workers’ compensation and general insurance coverage as follows:
 
                 
    December 31,
    December 31,
 
    2006     2005  
    (In thousands)  
 
Certificates of deposit — restricted:
               
Other
  $     $ 33  
                 
Total certificates of deposit — restricted
          33  
                 
Short-term marketable securities — restricted:
               
General insurance collateral obligations — AIG
    4,478       4,281  
                 
Total short-term marketable securities — restricted
    4,478       4,281  
                 
Long-term marketable securities restricted:
               
Workers’ compensation collateral — AIG
    3,747       3,582  
Rabbi trust
          4,309  
                 
Total long-term marketable securities — restricted
    3,747       7,891  
                 
Total restricted assets
  $ 8,225     $ 12,205  
                 
 
During the third quarter of 2006, the Company terminated its non-qualified deferred compensation plan and the restricted assets held in the related rabbi trust were distributed to the plan participants.
 
The Company’s obligation to BCBSFL under its current contract may require an irrevocable letter of credit (“LOC”) in favor of BCBSFL if a coverage ratio, as set forth in the BCBSFL agreement, is not maintained. The coverage ratio is calculated quarterly. If the Company’s coverage ratio does not meet the minimum requirements, the Company must provide an LOC valued at up to two months of projected claims (average monthly claims approximated $9.3 million during the last twelve months). As of December 31, 2006, the minimum coverage ratio


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Table of Contents

was met and no LOC was required. The Company was not required to collateralize the Aetna program for 2005 and 2006.
 
The Company does not anticipate any additional collateral obligations to be required in 2007 for its workers’ compensation arrangements.
 
As of December 31, 2006, the Company has recorded a $121.2 million receivable from AIG representing workers’ compensation premium payments made to AIG related to program years 2000 through 2006 in excess of the present value of the estimated claims liability and the related accrued interest receivable. This receivable represents a significant concentration of credit risk for the Company.
 
This excerpt taken from the GVHR 10-Q filed Jul 28, 2005.

        Restricted Cash

        The Company is required to collateralize its obligations under its workers’ compensation and health benefit plans and certain general insurance coverage. The Company uses its certificates of deposit and marketable securities to collateralize these obligations as more fully described below. Certificates of deposit and marketable securities used to collateralize these obligations are designated as restricted in the Company’s condensed consolidated financial statements.

        At June 30, 2005, the Company had $71.1 million in total cash and cash equivalents, restricted certificates of deposit and restricted marketable securities, of which $53.0 million was unrestricted. At June 30, 2005, the Company had pledged $18.1 million of restricted certificates of deposit and restricted marketable securities as collateral for certain standby letters of credit, in collateral trust arrangements issued in connection with the Company’s workers’ compensation and health benefit plans, and in a rabbi trust in connection with a deferred compensation plan assumed in the EPIX client portfolio acquisition as follows:

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  June 30,
2005

December 31, 2004
(in thousands)
Certificates of deposit - restricted:              
   BCBSFL standby letter of credit   $ 6,000   $ 6,000  
   Other    33    33  


Total certificates of deposit - restricted    6,033    6,033  


Short-term marketable securities - restricted:            
   General insurance collateral obligations - AIG    4,213    4,168  


Total short-term marketable securities - restricted    4,213    4,168  


Long-term marketable securities restricted:            
    Workers' compensation collateral - AIG    3,526    3,488  
     Rabbi trust    4,347    4,947  


Total long-term marketable securities - restricted    7,873    8,435  


Total restricted assets   $ 18,119   $ 18,636  


        The amount of collateral required to be provided to Blue Cross/Blue Shield of Florida (“BCBSFL”) may increase based in part on the increase in plan participation and the requirement by BCBSFL to increase the Company’s collateralized obligations from one month’s estimate of claims payment to two months. The Company was not required to collateralize the Aetna program for 2005 and 2004.

        As of June 30, 2005, the Company has recorded a $138.8 million receivable from AIG representing premium payments made to AIG in excess of the present value of the estimated claims liability. This receivable represents a significant concentration of credit risk for the Company.

        The Company does not anticipate any additional collateral obligations to be required in 2005 for its workers’ compensation arrangements.

This excerpt taken from the GVHR 10-Q filed May 9, 2005.

         Restricted Cash

        The Company is required to collateralize its obligations under its workers’ compensation and health benefit plans and certain general insurance coverage. The Company uses its certificates of deposit and marketable securities to collateralize these obligations as more fully described below. Certificates of deposit and marketable securities used to collateralize these obligations are designated as restricted in the Company’s condensed consolidated financial statements.

        At March 31, 2005, the Company had $84.9 million in total cash and cash equivalents, restricted certificates of deposit and restricted marketable securities, of which $66.8 million was unrestricted. At March 31, 2005, the Company had pledged $18.2 million of restricted certificates of deposit and restricted marketable securities as collateral for certain standby letters of credit, in collateral trust arrangements issued in connection with the Company’s workers’ compensation and health benefit plans, and in a rabbi trust in connection with a deferred compensation plan assumed in the EPIX acquisition as follows:

  March 31,
2005

December 31, 2004
  (in thousands)
Certificates of deposit - restricted:                
   BCBSFL standby letter of credit     $ 6,000   $ 6,000  
   Other       33     33  


Total certificates of deposit - restricted       6,033     6,033  


Short-term marketable securities - restricted:                
   General insurance collateral obligations - AIG       4,188     4,168  


Total short-term marketable securities - restricted       4,188     4,168  


Long-term marketable securities restricted:                
    Workers' compensation collateral - AIG       3,504     3,488  
     Rabbi trust       4,443     4,947  


Total long-term marketable securities - restricted       7,947     8,435  


Total restricted assets     $ 18,168   $ 18,636  


        The amount of collateral required to be provided to Blue Cross/Blue Shield of Florida (“BCBSFL”) may increase based in part on the increase in plan participation and the requirement by BCBSFL to increase the Company’s collateralized obligations from one month’s estimate of claims payment to two months. The Company was not required to collateralize the Aetna program for 2005 and 2004.

        As of March 31, 2005, the Company has recorded a $126.8 million receivable from AIG representing premium payments made to AIG in excess of the present value of the estimated claims liability. This receivable represents a significant concentration of credit risk for the Company.

        The Company does not anticipate any additional collateral obligations to be required in 2005 for its workers’ compensation arrangements.

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