TORRANCE MEMORIAL MEDICAL CENTER Annual Financial Information & Operating Data FY 2015 (Rule 15c2-12)

CITY OF TORRANCE REVENUE BONDS SERIES 2010A, 20108, 2010C

(i) TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

FACILITIES - Projected Capital Spending 2016 - 2025 (in millions)

Remaining Expected New Tower Project Related Costs - (2016 - 2017)

Routine Capital Equ ipment/Refurbishment (2016 - 2025)

Other Projects/Initiatives (2016- 2019)

Total Estimated Capital Spending (2016- 2025)

Annual201 OABCBondFiling2015 #1 .xls

Total

$11 ,582

59,000

92,801

$163,383

(i)(b TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

Operating Cash Flow

Capital Campaign

Total Sources

estimated estimated estimated estimated estimated

FACILITIES - Funding Sources of Projected Capital Spending

(in millions)

Projected Cash Flow Foundation

2016 60,642 2,000 2017 63,343 4,000 2018 67,454 4,000 2019 72,007 4,000 2020 76,661 4,000

Total Available Funds 340, 107 18,000

$ 340

18

$ 358

Total

62,642 67,343 71,454 76,007 80,661

358,107

Annual201 OABCBondFiling2015 #1 .xls

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(ii) "SERVICE AREA AND COMPETITION - Market Share and Competition"

Largest Hospitals Ranked by Acute Hospital Discharges South Bay Service Area

2015 Hospital Discharges

Hospital

1. Torrance Memorial Medical Center 25,238

2. Los Angeles County Harbor/UCLA Medical Center 18, 145

3. Providence Little Company of Mary Torrance 22,350

4. Kaiser Foundation Hospital - Harbor City 12,241

5. Memorial of Gardena 6,613

6. Providence Little Company of Mary San Pedro 7,887

Source: State of California Office of Statewide Health Planning & Development, Annual Utilization Report of Hospitals, 2015.

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(ii)(b) "SERVICE AREA AND COMPETITION - Market Share and Competition"

Acute Hospitals in Service Area

Hospital 2012 2013 Torrance Memorial Medical Center 37.7% 37.5% Providence Little Company of Mary Torrance 25.3% 25.9% Kaiser Foundation Hospital-Harbor City 8.1% 7.5% Los Angeles County Harbor/UCLA Medical Center 4.2% 4 .5% Cedars Sinai Medical Center 4 .0% 3.9% Little Company of Mary - San Pedro 2.2% 2.2% UCLA Medical Center 2.2% 2.1%

Source: lntellimed (Office of Statewide Health Planning & Development, State of California) Based on latest report as of 4th Qtr 2014.

2014 38.5% 24.5%

7.8% 4 .3% 4.1% 2.3% 2.0%

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(ii)(c) "SERVICE AREA AND COMPETITION - Utilization"

Medical Center Utilization Statistics

December 31 2013 2014 2015

ln~atient Activit~

Acute 361 406 609 SNF 40 40 40

Licensed Beds 401 446 649

Acute 337 338 367 SNF 40 40 40

Available Beds ( 1) 377 378 407

Acute 21,730 22,550 24,096 SNF 1,485 1,414 1, 142

Discharges 23,215 23,964 25,238

Acute 82,875 84,392 95,894 SNF 12,509 12,818 13,379

Patients Days 95,384 97,210 109,273

Average Daily Census 261.4 266.3 299.4 Average Length of Stay - Acute 3.9 3.8 4 Occupancy rate (Licensed Beds) 65.2 59.7 46 Occupancy Rate (Available Beds) 69.3 70.5 74 Inpatient Surgery Cases 6,284 6,409 6,979 Out~atient Activit~

Hospital Outpatient Total 285, 180 352,499 381 ,055 Outpatient Surgery Cases (2) 10,996 10,787 9,825 Emergency Services 63,730 70,478 77,618

Source: Corporation (1) 24 licensed inpatient beds are not available for inpatient use because they are used for outpatient

procedures and other non-acute services (2) Outpatient Surgery cases performed at the Medical Center

Primary Specialty Description

Allergy

Anesthesiology

Burn & Wound

Cardiology

Cardiothoracic Surgery

Colon & Rectal Surgery

Dentistry

Dermatology

Electrophysiology

Emergency Medicine

Endocrinology

Family Practice

Gastroenterology

General Surgery

Gynecology

Infectious Diseases

Infertility

Internal Medicine

lnterventional Cardiology

Neonatology

Nephrology

Neurology

Neurosurgery

OB/GYN

Oncology

Ophthalmology

Oral Surgery

Orthopedics

Otolaryngology

Pain Management

Palliative Care

Pathology

Pediatric Alergy

Pediatric Cardiology

Pediatric Critical Care

Pediatric Dentistry

Pediatric Endocrinology

Pediatric Gastroenterology

Pediatric Infectious Disease

Pediatric Ophthalmology

Pediatric Orthopedic

Pediatric Otolaryngology

Pediatric Pulmonology

Pediatric Surgery

Pediatric Urology

Pediatrics

Perinatology

Physical Medicine

Plastic Surgery

Podiatry

Psychiatry

Pu I mono logy

Radiation Oncology

Radiology

Reproductive Endocrinology

Reheumatology

Teleneurology

Teleradiology

Thoracic Surgery

Urology

Vascular Surgery

Grand Total

Torrance Memorial Medical Center

Medical Staff by Specialty

As of December 31, 2015

ACTIVE OTHER TOTAL AVERAGE AGE

0 8 8 54

25 26 51 49 1 0 1 44

2 17 19 56 1 11 12 57

2 1 3 45

0 2 2 65

0 22 22 53 3 1 4 50

24 8 32 45

3 14 17 47

10 64 74 56 19 10 29 54 14 6 20 55

9 2 11 59 8 2 10 51

0 2 2 68 57 112 169 47 15 3 18 54

5 5 10 52

11 6 17 57 7 8 15 54

3 1 4 62

35 10 45 56 10 11 21 51 15 26 41 54 0 9 9 55

25 29 54 53 9 14 23 58 0 11 11 47 0 1 1 62 4 0 4 51 0 2 2 68 2 3 5 50 1 1 2 61 2 3 5 52 0 7 7 47 1 12 13 45 0 4 4 51 0 3 3 42 0 1 1 42 0 5 5 44 0 3 3 40 2 2 4 50 0 2 2 45

30 61 91 52 1 9 10 48 2 6 8 51 9 13 22 55 3 24 27 48 0 12 12 66 9 5 14 59 3 1 4 55

23 6 29 57 0 7 7 50 2 10 12 52 0 9 9 41 6 4 10 49 0 2 2 50

13 7 20 55 4 0 4 44

430 666 1096 52

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(iv) "SUMMARY OF OPERATIONS AND FINANCIAL POSITION"

Corporation Summary Statements of Operations and Changes in Net Assets

(dollars in thousands)

Fiscal year ended December 31

2013 Revenues

Total unrestricted revenues ( 1) $476,227 Operating Expenses

Salaries, wages, and employee benefits 253,740 Purchased services, supplies, and other costs 184,379 Depreciation 25,781 Interest 3,415

Total operating expenses 467,315 Income from Operations 8,912

Nonoperating income (loss) : Investment income (loss): 14,794 Unrealized gain (loss) on trading portfolio (2) 908 Other (2,982~

Excess (deficit) of revenues over 21 ,632 expenses

Other changes in unrestricted net assets (3) 52, 192 Increase in unrestricted net assets 73,824

Changes in restricted net assets 41 ,080 Total increase (decrease) in net assets 114,904

(1) Provision for doubtful accounts is netted in Total Unrestricted Revenues (2) Represents Unrealized Gains and Losses in the Investment Portfolio

(audited) 2014

$509,720

259,891 198,780 28,765 4,448

491 ,884 17,836

15,731 (3 ,559) ~3,418~ 26,590

~18,321~ 8,269

~22,476~ (14,207)

(3) Changes to the Minimum Pension Liability and Foundation Transfers to the Corporation

Annual201 OABCBondFiling2015 #1 .xls

2015

$578,961

297,139 220,029 43,387 10,697

571,252 7,709

4,628 (7,380) (3,523) 1,434

1,880 3,314 2,786 6,100

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(iv)(b) "SUMMARY OF OPERATIONS AND FINANCIAL POSITION" Summary Statements of Financial Position

Corporation Summary Balance Sheets

(dollars in thousands)

Assets Current Assets:

Cash and cash equivalents Patient accounts receivable, net Assets limited as to use Other current assets Total current assets

Assets limited as to use Property, plant and equipment, net Interest in net assets of Foundation Other assets

Total assets

Liabilities and Net Assets Current liabilities

Current portion of long-term debt Accounts payable and accrued liabilities Accrued salaries & other employee benefits Risk pool liabilities Self insurance liabilities Estimated third-party payor settlements

Total current liabilities Liabilities for pension benefits Self insured liabilities Long-term debt, less current portion Total liabilities Net Assets:

Unrestricted Temporarily restricted Permanently restricted

Total net assets Total liabilities and net assets

2013

$14,977 73,334

185,977 33, 110

307,398 121,358 567,054

67, 170 14,670

1,077,650

101,660 43,054 24,175

108,522 7,526 6,769

291,706 18,844 20,155

183,470 514,175

461 ,708 98,400

3,367 563,475

1,077,650

December 31, (audited)

2014

$52,768 64,979 88,574 78, 156

284,477 148,281 650,886

79,232 15,980

1, 178,856

1,755 67, 155 26,679

139,241 8,011 7,905

250,746 79, 109 18,018

281 ,715 629,588

469,977 75,908

3,383 549,268

1,178,856

2015

$41,666 71 ,520 89,529 31,216

233,931 179,032 633,867

80,691 12,934

1, 140,455

4,405 39,616 29,371

133,143 6,737 3,170

216,442 77,230 14,105

277,310 585,087

473,291 78,759

3,318 555,368

1,140,455

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(iv)(c) "SUMMARY OF OPERATIONS AND FINANCIAL POSITION- Sources of Revenue"

HCP/ THIPA ---Full and Shared Risk (1) Medicare Managed Care (non Medicare) Medi-Cal Self Pay Other Workers' Compensation Total

Payor Mix

Fiscal Year ended December 31, 2013 2014 2015

36.0% 36.4% 36.6% 31 .2% 28.0% 29.6% 23.1% 25.0% 23.3% 4.6% 5.3% 6.1% 2.6% 2.1% 1.7% 2.1% 2.7% 2.1% 0.4% 0.5% 0.7%

100.0% 100.0% 100.0%

(1) Represents total gross revenue from HCP and THIPA group members. The gross revenues represent patient charges to their members enrolled in full risk (capitated) agreements with the Corporation and shared risk agreements with Health Plans whereby the Corporation is paid by the Health Plans on a fee-for-service basis.

#1 Copy of Annual201 OABCBondFiling2015

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(iv)(d) "SUMMARY OF OPERATIONS AND FINANCIAL POSITION- Capitalization"

Long-Term Debt, including current portion Series 2001A Bonds Series 201 O Bonds

Total Long-Term Debt Unrestricted Net Assets ( 1) Total Capitalization

Long-Term Debt to Capitalization Ratio

Corporation Capitalization

(dollars in thousands)

2013

50, 130 235,000 285, 130 461 ,708 746,838

38.2%

December 31 2014

48,470 235,000 283,470 469,977 753,447

37.6%

2015

46,715 235,000 281 ,715 473,291 755,006

37.3%

(1) Unrestricted Net Assets of the Corporation does not include Torrance Memorial Medical Center Health Care Foundation temporarily restricted assets or permanently restricted assets of $78,759 and $3,318, respectively for 2015.

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(v) "MAXIMUM ANNUAL DEBT SERVICE COVERAGE"

Corporation Maximum Annual Debt Service Coverage

(dollars in thousands)

Fiscal Year Ended December 31 2013 2014 2015

Historical : Excess (deficit) of revenues over expenses Plus: Depreciation Plus: Interest Plus: Unrealized loss (gain) on trading portfolio Plus: Loss (gain) on disposal of property and equipment

Income Available for Debt Service Maximum annual debt service requirement Maximum annual debt service coverage ratio

(1)

(2)

$ 21 ,632 25,781

3,415 (908)

19

49,939 16,329

3.06

(1) Represents Unrealized Gains and Losses in the Investment Portfolio.

$ 26,590 28,765

4,448 3,559

63 ,362 16,329

3.88

$ 1,434 43 ,387 10,697 7,380

39

62 ,937 16,329

3.85

(2) For purposes of calculating interest on the Series 201 OA Bonds, the Series 201 OA Bonds actual rates were used. For purposes of calculating interest on the Series 201 OB and Series 201 OC Bonds, an assumed annual interest of 2.74% was used, which is the average of the SIFMA Index over the last twenty years.

(1)

TORRANCE MEMORIAL MEDICAL CENTER ANNUAL REPORT 2015

(v)(b) "LIQUIDITY AND CAPITAL RESOURCES"

Corporation Liquidity Position (dollars in thousands)

December 31, 2013 2014

Cash and cash equivalents (2) $ 60,445 $ 79,443 $ Short-term fixed income (3) 48,830 32,934 investments Long-term investments (4) 201,903 177,246

Total cash and investments 311,178 289,623 Less: Investments restricted as to 85,317 87,819 use

Total unrestricted cash and 225,861 201 ,804 investments

Days cash on hand (5) 191 177

Source: Corporation

(1) The Corporation's Assets do not include Foundation investments.

2015

(2) Includes debt securities with maturities less than three months. Excludes investments restricted to use.

50,217 34,655

225,355 310,227

95, 167

215,060

149

(3) Includes fixed income investments with maturities less than one year. Excludes investments restricted to use.

(4) Includes all fixed income investments with maturities greater than one year, mutual funds and equities. (5) Total unrestricted cash and investments, divided by the calculation of total operating expenses, minus depreciation , divided by 365.