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A PERCENTAGE OF THIS AMOUNT WAS ESTIMATED TO BE ATTRIBUTABLE TO LOBBYING RELATED TO HEALTH CARE ADVOCACY AT THE FEDERAL, STATE, REGIONAL AND LOCAL LEVELS. 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SUCH DISTRIBUTIONS SHOULD: 1) ADDRESS COMMUNITY HEALTH CARE NEEDS; 2) ADHERE TO THE CORE MISSION OF THE HOSPITAL; OR 3) REFLECT PROJECTS THAT ARE DEEMED IN THE BEST INTEREST OF THE HOSPITAL. SCHEDULE D, PART X, LINE 2 UNCERTAIN TAX POSITIONS UNDER FIN 48 (ASC 740) IN ACCORDANCE WITH ACCOUNTING GUIDANCE, MANAGEMENT HAS REVIEWED ALL OPEN TAX YEARS AND HAS DETERMINED THAT THE CORPORATION HAS NO SIGNIFICANT UNCERTAIN TAX POSITIONS. 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X X X FLAGSTAFF MEDICAL CENTER 1 true true 125. true true X X X X X X true true true X true X X X X X X true X false false PART I, LINE 3B: EXPLANATION FOR VARIOUS PERCENTAGES USED: 125% OF THE FEDERAL POVERTY GUIDE = 100% CHARITY WRITE-OFF. 150% OF FPG = 75% WRITE-OFF. 175% OF FPG = 50% WRITE-OFF. 200% OF FPG = 25% WRITE-OFF. 300% OF FPG = 15% WRITE-OFF. PART I, LINE 3C: CHARITY CARE INCOME LEVELS ARE BASED ON THE FEDERAL POVERTY GUIDE PUBLISHED IN THE FEBRUARY FEDERAL REGISTER ON AN ANNUAL BASIS. A TIERED METHOD IS UTILIZED FOR DETERMINING WHETHER A PATIENT IS ELIGIBLE FOR 100%, 75%, 50%, 25%, OR 15% WRITE-OFF OF THE SELF PAY BALANCE. OTHER CONSIDERATIONS SUCH AS DISPOSABLE ASSETS ARE CONSIDERED IN THE EVALUATION OF ELIGIBILITY. A DISPOSABLE ASSET MAY BE EXPENSIVE JEWELRY, PLEASURE HORSES, RECREATIONAL VEHICLES, ETC. PART I, LINE 6A: THE INFORMATION FOR THE COMMUNITY BENEFITS REPORT IS GATHERED BY THE COMMUNITY RELATIONS DEPARTMENT WHICH IS A DEPARTMENT OF NORTHERN ARIZONA HEALTHCARE. FLAGSTAFF MEDICAL CENTER AND VERDE VALLEY MEDICAL CENTER ARE IDENTIFIED SEPARATELY ON THESE REPORTS. PART I, LINE 7G: FLAGSTAFF MEDICAL CENTER (FMC) OPERATES A STATE DESIGNATED LEVEL I TRAUMA CENTER WHICH IS SUBSIDIZED BY THE HOSPITAL. FMC WAS ONE OF THE ORIGINAL SEVEN LEVEL I TRAUMA CENTERS DESIGNATED BY THE STATE OF ARIZONA IN DECEMBER 2005. FMC IS THE ONLY LEVEL I TRAUMA CENTER IN NORTHERN ARIZONA AND IS CRUCIAL TO THE ARIZONA EMERGENCY MEDICAL AND TRAUMA SYSTEM ENSURING TRAUMA PATIENTS RECEIVE LIFE-SAVING SURGICAL TRAUMA CARE AS CLOSE TO THE "GOLDEN HOUR" AS POSSIBLE. FMC IS A NATIONALLY VERIFIED TRAUMA CENTER BY THE AMERICAN COLLEGE OF SURGEONS. TOTAL TRAUMA VOLUME HAS FLUCTUATED BETWEEN 1,200 - 1,500 PATIENTS PER YEAR FOR THE PAST FIVE YEARS. FMC COLLABORATES WITH ALL OF THE HOSPITALS AND LEVEL IV TRAUMA CENTERS IN NORTHERN ARIZONA TO PREVENT TRAUMA INJURY AND TO IMPROVE TRAUMA CARE. PART I, LINE 7, COL F COST TO CHARGE PERCENTS ARE BASED ON THE IRS WORKSHEET CALCULATIONS. PART III, LINE 4: THE FOOTNOTE TO THE FINANCIAL STATEMENTS INDICATES NET PATIENT ACCOUNTS RECEIVABLE AND NET PATIENT SERVICE REVENUE HAVE BEEN ADJUSTED TO THE ESTIMATED AMOUNTS EXPECTED TO BE RECEIVED. THESE ESTIMATED AMOUNTS ARE SUBJECT TO FURTHER ADJUSTMENTS UPON REVIEW BY THIRD-PARTY PAYORS. MANAGEMENT ESTIMATES THE ALLOWANCE FOR DOUBTFUL ACCOUNTS BASED UPON THE HISTORICAL COLLECTION EXPERIENCE. THE COSTING METHODOLOGY USED TO DETERMINE THE BAD DEBT COST COMES FROM THE PERCENTAGE CALCULATED IN SCHEDULE H PART I WORKSHEET 2. FLAGSTAFF MEDICAL CENTER CALCULATION OF FINANCIAL ASSISTANCE COST IS BASED ON ACTUAL FINANCIAL ASSISTANCE WRITE-OFFS BY THE BUSINESS OFFICE MULTIPLIED BY THE COST-TO-CHARGE RATIO. ALL OF THE FINANCIAL ASSISTANCE WRITE-OFFS ARE ATTRIBUTABLE TO PATIENTS WHO QUALIFIED UNDER THE FINANCIAL ASSISTANCE POLICY. AS A NOT-FOR-PROFIT ENTITY, SERVICES ARE PROVIDED TO ALL PATIENTS REGARDLESS OF THEIR ABILITY TO PAY AND MAKING THIS AVAILABLE TO THE COMMUNITY QUALIFIES BAD DEBT AS A COMMUNITY BENEFIT. PART III, LINE 8: IN YEARS WHEN THERE IS A SHORTFALL, THE ENTIRE MEDICARE SHORTFALL SHOULD BE CONSIDERED A COMMUNITY BENEFIT BECAUSE OUR MISSION IS TO IMPROVE THE HEALTH OF THE PEOPLE AND COMMUNITIES WE SERVE WHETHER OR NOT THIS SERVICE IS PROVIDED AT A LOSS TO THE HOSPITAL. MEDICARE REPRESENTS 37% OF THE HOSPITAL'S GROSS CHARGES AND IS A LOSS FOR THE HOSPITAL. THE HOSPITAL PROVIDES CARE REGARDLESS OF THIS SIGNIFICANT LOSS AND THEREBY RELIEVES THE FEDERAL GOVERNMENT OF THE BURDEN OF PAYING THE FULL COST OF THE MEDICARE BENEFICIARIES. MANY OF THESE PATIENTS WOULD QUALIFY FOR FINANCIAL ASSISTANCE IF THEY WERE NOT IN THE MEDICARE PROGRAM. PART III, LINE 9B: ACCORDING TO OUR FINANCIAL ASSISTANCE POLICY, THE FINANCIAL COUNSELORS ASSESS THE PATIENT'S ABILITY TO PAY AT TIME OF ADMISSION/REGISTRATION. IF THE PATIENT STATES THAT THEY ARE UNABLE TO PAY OUT-OF-POCKET EXPENSES, A DETERMINATION IS MADE WHETHER COVERAGE IS AVAILABLE THROUGH AHCCCS OR OTHER MEDICAID PROGRAMS. IF NO OUTSIDE ASSISTANCE IS AVAILABLE, AN APPLICATION IS GIVEN TO THE PATIENT TO BE SUBMITTED FOR FINANCIAL ASSISTANCE CONSIDERATION. IF PATIENT DOESN'T QUALIFY FOR FINANCIAL ASSISTANCE, INCOME LEVELS ARE ASSESSED TO DETERMINE IF THEY QUALIFY FOR LONG-TERM PAYMENT PROGRAM. IF THE FINANCIAL ASSISTANCE APPLICATION IS NOT TURNED IN AND PAYMENT HAS NOT BEEN MADE AFTER NUMEROUS FOLLOW UP PHONE CALLS, THE PATIENT ACCOUNT GOES TO BAD DEBT. BEFORE PRE-ADMISSION AND IF A PATIENT IS ELIGIBLE FOR FINANCIAL ASSISTANCE, FLAGSTAFF MEDICAL CENTER'S CASHIER COLLECTS 50% OF THE ESTIMATED LIABILITY. THE REST OF THE 50% IS SET UP ON A SIX-MONTH PAYMENT PLAN WITH A SELF-PAY REPRESENTATIVE OF THE CENTRAL BUSINESS OFFICE. NEEDS ASSESSMENT: FLAGSTAFF MEDICAL CENTER ASSESSES COMMUNITY HEALTHCARE NEEDS THROUGH A SURVEY DESIGNED AND ADMINISTERED BY THE PROFESSIONAL RESEARCH CONSULTANTS. THIS SURVEY WAS LAST CONDUCTED IN 2012 AND WAS A FOLLOW-UP TO OTHER SURVEYS THE HOSPITAL HAS CONDUCTED. THE SURVEY INSTRUMENT USED FOR THIS STUDY IS BASED LARGELY ON THE CENTERS FOR DISEASE CONTROL AND PREVENTION BEHAVIORAL RISK FACTOR SURVEILLANCE SYSTEM, AS WELL AS VARIOUS OTHER PUBLIC HEALTH SURVEYS AND CUSTOMIZED QUESTIONS ADDRESSING GAPS IN INDICATOR DATA RELATIVE TO HEALTH PROMOTION AND DISEASE PREVENTION OBJECTIVES AND OTHER RECOGNIZED HEALTH ISSUES. PATIENT EDUCATION OF ELIGIBILITY FOR ASSISTANCE: ACCORDING TO OUR FINANCIAL ASSISTANCE POLICY, THE FINANCIAL COUNSELORS ASSESS THE PATIENT'S ABILITY TO PAY AT TIME OF ADMISSION/REGISTRATION. IF THE PATIENT STATES THAT THEY ARE UNABLE TO PAY OUT-OF-POCKET EXPENSES, A DETERMINATION IS MADE WHETHER COVERAGE IS AVAILABLE THROUGH AHCCCS OR OTHER MEDICAID PROGRAMS. IF NO OUTSIDE ASSISTANCE IS AVAILABLE, AN APPLICATION IS GIVEN TO THE PATIENT TO BE SUBMITTED FOR FINANCIAL ASSISTANCE CONSIDERATION. IF PATIENT DOESN'T QUALIFY FOR FINANCIAL ASSISTANCE, INCOME LEVELS ARE ASSESSED TO DETERMINE IF THEY QUALIFY FOR LONG-TERM PAYMENT PROGRAM. IF THE CHARITY APPLICATION IS NOT TURNED IN AND PAYMENT HAS NOT BEEN MADE AFTER NUMEROUS FOLLOW UP PHONE CALLS, THE PATIENT ACCOUNT GOES TO BAD DEBT. FLAGSTAFF MEDICAL CENTER WEBSITE HAS A BILLING CONTACT NUMBER. BEFORE PRE-ADMISSION, PATIENTS ARE CONTACTED BY FMC'S CASHIER. WHEN PATIENTS ARE CONTACTED, THEY ARE EDUCATED ABOUT THE FINANCIAL ASSISTANCE POLICY. FMC FINANCIAL COUNSELORS ASSIGNED TO EACH NURSING UNIT ARE ABLE TO ANSWER OR ASSIST WITH BILLING QUESTIONS. AT EACH PATIENT REGISTRATION DESK ARE DISPLAYS AND BROCHURES OF THE BILLING INFORMATION, INCLUDING THE FINANCIAL ASSISTANCE POLICY. COMMUNITY INFORMATION: FLAGSTAFF MEDICAL CENTER IS A 267-BED ACUTE CARE HOSPITAL LOCATED IN FLAGSTAFF, AZ. FMC OPERATES AS A NOT-FOR-PROFIT TAX-EXEMPT CORPORATION. FMC PROVIDES GENERAL MEDICAL AND SURGICAL ACUTE CARE, BEHAVIORAL HEALTH SERVICES, AND A FULL RANGE OF OUTPATIENT SERVICES TO NORTHERN ARIZONA RESIDENTS AND VISITORS. KEY SERVICES PROVIDED TO THE COMMUNITY INCLUDE A REGIONAL TRAUMA CENTER, OPEN-HEART SURGERY, HIGH-TECH IMAGING, RADIATION/ONCOLOGY, SURGICAL SERVICES, ORTHOPEDIC SERVICES, AND WOMEN, INFANTS AND CHILDREN'S SERVICES. THE HOSPITAL GROSS PAYOR MIX IS AS FOLLOWS: MEDICARE 37%, AHCCCS/MEDICAID 26%, COMMERCIAL AND OTHER 31%, AND SELF PAY 6%. FLAGSTAFF MEDICAL CENTER IS ONE OF THE THREE LARGEST EMPLOYERS IN NORTHERN ARIZONA. PROMOTION OF COMMUNITY HEALTH: FLAGSTAFF MEDICAL CENTER SPONSORS VARIOUS COMMUNITY BUILDING ACTIVITIES. IN FISCAL YEAR 2011 THERE WERE MORE THAN 40 COMMUNITY ACTIVITIES THAT QUALIFIED AS COMMUNITY BUILDING ACTIVITIES, INCLUDING BUT NOT LIMITED TO, PHYSICIAN RECRUITMENT, A COMMUNITY NEEDS HEALTH ASSESSMENT, AND WORKING WITH VARIOUS COMMUNITY ORGANIZATIONS SUCH AS AMERICAN CANCER SOCIETY, MUSCULAR DYSTROPHY ASSOCIATION, YMCA, UNITED WAY, BIG BROTHERS AND BIG SISTERS, AND THE COALITION FOR CHILDREN AND YOUTH. THERE ARE MANY OTHER EXAMPLES OF HOW FLAGSTAFF MEDICAL CENTER FURTHERS ITS EXEMPT PURPOSE BY PROMOTING HEALTH IN THE COMMUNITY IT SERVES. THE FMC CANCER CENTER HOSTS A SERIES OF FREE OR LOW-COST SCREENINGS DESIGNED TO HELP RESIDENTS IN THE COMMUNITY TO IDENTIFY ISSUES AS SOON AS POSSIBLE. THIS IS BASED ON THE PREMISE THAT EARLY DETECTION IS OFTEN THE KEY TO SAVING THE LIVES OF CANCER PATIENTS. THERE IS A NAVAJO TRANSLATOR PROGRAM WHICH SERVES A LARGE NUMBER OF PATIENTS FROM THE NAVAJO RESERVATION. THE INTERPRETER PROGRAM HELPS NAVAJO PATIENTS FEEL AT EASE AS THEY CAN DISCUSS THEIR MEDICAL CONDITION IN THEIR NATIVE LANGUAGE. THERE IS ALSO A FIT KIDS OF ARIZONA PROGRAM WHICH STRIVES TO REDUCE THE HEALTH CONSEQUENCES OF CHILDHOOD OBESITY BY PROMOTING HEALTHY LIFESTYLES. AFFILIATED HEALTH CARE SYSTEM ROLES: FLAGSTAFF MEDICAL CENTER IS AFFILIATED WITH VERDE VALLEY MEDICAL CENTER. THE BOARD MEMBER MEETINGS ARE COMBINED. THE COMMUNITY BENEFIT REPORT IS SUMMARIZED TOGETHER AND POSTED ON THE HOSPITAL'S WEBSITE. true NORTHERN ARIZONA TENNIS ASSOCIATION PO BOX 3455 SEDONA AZ 86340 860995753 501(c)(3) 6000 TITLE SPONSORSHIP SEDONA INTERNATIONAL FILM FESTIVAL PO BOX 162 SEDONA AZ 86339 200351857 501(c)(3) 6333 SPONSORSHIP HOZHONI FOUNDATION 2133 N WALGREEN ST FLAGSTAFF AZ 86004 860255127 501(c)(3) 9000 GENERAL OPERATIONS SUPPORT COCONINO COUNTY COMMUNITY COLLEGE 3000 N 4TH ST FLAGSTAFF AZ 86004 860717956 SCHOOL 100000 FUNDING FOR THE NURSING PROGRAM JLB PROJECT PO BOX 537 FLAGSTAFF AZ 86002 273224466 501(c)(3) 8000 BEREAVEMENT SUPPORT NORTHERN ARIZONA UNIV SCHOOL OF NURSING PO BOX 15035 FLAGSTAFF AZ 86011 866004791 SCHOOL 86000 NURSING PROGRAM SUPPORT VICTIM WITNESS SERVICES COCONINO COUNTY 5200 E CORTLAND BLVD FLAGSTAFF AZ 86004 860481748 501(c)(3) 9740 CRISIS RESPONSE YMCA 1001 N TURQUOISE DR FLAGSTAFF AZ 86001 860096799 501(c)(3) 11540 CAPITAL CAMPAIGN NORTH COUNTY HEALTHCARE 2920 N 4TH ST FLAGSTAFF AZ 86004 860663432 501(c)(3) 18822 NACASA PROGRAM ASSISTANCE UNITED WAY OF NORTHERN ARIZONA 1515 E CEDAR AVE FLAGSTAFF AZ 86004 860211666 501(c)(3) 25000 ORGANIZATIONAL MATCH NAU ATHLETICS PO BOX 15400 FLAGSTAFF AZ 86001 866004791 SCHOOL 10000 SIGN AND GAME SPONSORSHIP FLAGSTAFF DOWNTOWN BUSINESS ALLIANCE PO BOX 1546 FLAGSTAFF AZ 86002 861033923 501(c)(3) 17685 SPONSORSHIP MOVIES ON THE SQUARE AMERICAN CANCER SOCIETY 4550 E BELL RD 126 PHOENIX AZ 85032 841316555 501(c)(3) 6750 FUNDRAISING SPONSORSHIP BIG BROTHERS BIG SISITERS PO BOX 1701 FLAGSTAFF AZ 86002 237170086 501(c)(3) 8000 SPONSORSHIP 14 0 SCHEDULE I, PART I, LINE 2 DESCRIPTION OF ORGANIZATION'S PROCEDURES FOR MONITORING THE USE OF GRANTS FLAGSTAFF MEDICAL CENTER FOUNDATION - GRANTS 1) INDIVIDUALS ON THE USER LEVEL ARE RESPONSIBLE FOR SCREENING AND IDENTIFYING THE NEEDS FOR DISTRIBUTION OF GRANT FUNDS. 2) DEPARTMENT HEADS AND/OR PROGRAM COORDINATORS MUST VALIDATE AND SIGN ALL REQUESTS FOR PAYMENT OR DISBURSEMENT OF THESE FUNDS. 3) WRITTEN REQUESTS ARE REVIEWED BY THE FOUNDATION SPECIALIST FOR OPERATIONS TO VERIFY AVAILABLE FUND BALANCES AND PROPER ACCOUNT NUMBERS. 4) THE FOUNDATION SPECIALIST FOR GRANTS THEN INITIALS THE DOCUMENTS AFTER VERIFYING THE CRITERIA FOR DISBURSEMENT. 5) THE VICE PRESIDENT OF DEVELOPMENT AUTHORIZES THE DISBURSEMENT OF FUNDS BY SIGNATURE. 6) THE FOUNDATION SCANS ALL DOCUMENTS AND SAVES THEM DIGITALLY ON A SECURE SERVER. 7) ALL ORIGINAL DOCUMENTS ARE SUBMITTED TO ACCOUNTS PAYABLE FOR FINAL RECORDING AND PAYMENT. 8) ORIGINAL DOCUMENTS ARE FILED AND ARCHIVED IN A SECURE LOCATION FOR THE REQUIRED LENGTH OF TIME. FMC RELIES ON THE GOVERNANCE PRACTICES OF THE RECIPIENT ORGANIZATION TO USE THE FUNDS FOR THE INTENDED PURPOSE. false false false false false false false false false WILLIAM T BRADEL 0 481998 0 99258 0 43508 0 9800 0 18053 0 652617 0 0 STEVEN W LEWIS MD 0 370726 0 60232 0 7604 0 9800 0 12867 0 461229 0 0 ROGER S SCHULER 0 210817 0 32709 0 23230 0 184444 0 13616 0 464816 0 0 MARILYNN P BELCHER 0 206825 0 33629 0 0 0 8277 0 17122 0 265853 0 0 RICHARD A SMITH 0 182374 0 24322 0 0 0 7299 0 7282 0 221277 0 0 KAI R MCSWAIN 0 198878 0 17961 0 0 0 7955 0 16293 0 241087 0 0 ERIC D COHEN MD 0 650000 0 0 0 3090 0 9800 0 15993 0 678883 0 0 STEVEN M PETERSON MD 0 599035 0 144830 0 0 0 9958 0 12269 0 766092 0 0 OMAR R WANI MD 0 600018 0 143656 0 0 0 10031 0 11577 0 765282 0 0 JAMES G DWYER MD 0 774384 0 0 0 2370 0 9800 0 12269 0 798823 0 0 MARK E DONNELLY MD 0 390000 0 354217 0 0 0 9800 0 15038 0 769055 0 0 GREGORY KUZMA 0 330585 0 70991 0 0 0 201289 0 11101 0 613966 0 0 JOHN J DEMPSEY 0 328790 0 94289 0 7903 0 158651 0 16553 0 606186 0 0 SCHEDULE J, PART I SUPPLEMENTAL COMPENSATION INFORMATION LINE 1A/B: ALL COMPENSATION, BENEFITS AND REIMBURSEMENTS ARE PAID BY NORTHERN ARIZONA HEALTHCARE, THE PARENT ORGANIZATION. BOARD MEMBER AND OFFICER BUSINESS TRAVEL EXPENSES, SUCH AS AIRLINE AND MEALS, FOR COMPANIONS WERE PAID AND REPORTED ON A W-2 OR 1099. GROSS-UP OF TAXES IS DONE ON ALL EMPLOYEE GIFT CERTIFICATES. CURRENTLY, THERE IS NO WRITTEN POLICY FOR THESE ITEMS. IN PRACTICE, THE BOARD MEMBER AND OFFICER BUSINESS TRAVEL EXPENSES ARE APPROVED BY THE NEXT HIGHEST LEVEL. LINE 3: CEO COMPENSATION IS DERIVED BY THE RELATED PARENT ENTITY - NORTHERN ARIZONA HEALTHCARE. SCHEDULE J, PART II THE FOLLOWING INDIVIDUALS PARTICIPATE IN A DEFINED BENEFIT RETIREMENT PLAN. AS SUCH, ACTUARIAL INCREASES IN THEIR ACCOUNTS ARE REPORTED ON PART II, COLUMN (C) AS DEFERRED COMPENSATION. FOR THE CURRENT YEAR, THE INCREASES WERE SUBSTANTIALLY MORE THAN NORMAL DUE TO A DECREASE IN THE DISCOUNT RATE USED IN THE ACTUARIAL ANALYSIS AS FOLLOWS: INCREASE DUE INCREASE DUE TO BENEFIT TO DECREASE IN ACCRUAL DISCOUNT RATE TOTAL JOHN J. DEMPSEY 57,015 101,636 158,651 GREGORY KUZMA 43,310 157,979 201,289 ROGER S. SCHULER 87,397 97,047 184,444 INDUSTRIAL DEVELOPMENT AUTHORITY OF YAVAPAI COUNTY 860376099 2008-07-25 45703133 SEE SCHEDULE O false false true INDUSTRIAL DEVELOPMENT AUTHORITY OF YAVAPAI COUNTY 860376099 985900BTS 2009-01-08 20326075 SEE SCHEDULE O false false false INDUSTRIAL DEVELOPMENT AUTHORITY OF YAVAPAI COUNTY 860376099 985900CXS 2011-10-12 65094379 SEE SCHEDULE O false false false 0 0 45703133 0 0 45697693 5440 0 0 0 0 0 true false true true 0 0 20326075 0 0 10012616 227246 0 12780 10073433 0 0 true false true true 0 0 65094379 0 0 64465319 629060 0 0 0 0 0 2011 true false true true false false true true false 0.00000 0.00000 0.00000 true false false true true false 0.00000 0.00000 0.00000 true false false false false 0.00970 0.00000 0.00970 true false true false 0 false 0 true true false true false 0 false 0 true false false false false 0 false 0 false false X SEE SCHEDULE O 0 FOREST COUNTRY ANESTHESIA CHRISTENSEN / PARTNER 2430000 MEDICAL SERVICES FOR FMC false VICKIE LEWIS STEVE LEWIS SPOUSE 181050 COMPENSATION false KATHY KUZMA GREGORY KUZMA SPOUSE 67522 COMPENSATION false GKC ENTERPRISES CHRISTENSEN / PARTNER 86123 REDEMPTION OF INTEREST false X 1610 OPINIONS OF EXPERTS X 5650 REPLACEMENT COST X 8603 REPLACEMENT COST X 3180 COST/SELLING PRICE X POST PARTUM KITS 110 27500 REPLACEMENT COST X HEARING AIDS 10 2300 OPINIONS OF EXPERTS X FIT KIDS PRIZES 0 3155 COST/SELLING PRICE X PLANTS, FLOWERS, & GIFTS 385 6380 COST/SELLING PRICE 0 false true false NUMBER OF CONTRIBUTIONS OR ITEMS CONTRIBUTED SCHEDULE M, PART I, COLUMN B THE NUMBER OF CONTRIBUTIONS OR ITEMS CONTRIBUTED IS NOT ASCERTAINABLE FOR THE FOLLOWING DUE TO VOLUME: ART - WORKS OF ART FOOD INVENTORY FIT KIDS PRIZES BOOKS, CLOTHING FORM 990, PART I, LINE 6 VOLUNTEER RESPONSIBILITIES FMC VOLUNTEERS PROVIDE CLERICAL ASSISTANCE IN MULTIPLE DEPARTMENTS AND SUPPORT SERVICES SUCH AS WHEELCHAIR ASSISTANCE AND ESCORTING PATIENTS AND FAMILIES WHO ENTER AT THE MAIN ENTRY. THEY VOLUNTEER AT THE INFORMATION DESK AND GIFT SHOP AND MAKE DELIVERIES OF GIFTS, READING MATERIALS AND MAIL TO PATIENT ROOMS. THEY PROVIDE LOBBY MUSIC, NAVAJO AND SPANISH INTERPRETATION, SPIRITUAL CARE, AND CARING CANINE AND CARING CLOWN VISITS TO PATIENTS. THEY ROCK BABIES IN THE SPECIAL CARE NURSERY, PROVIDE MENDED HEARTS PATIENT AND FAMILY SUPPORT, AND ASSIST IN THE FOUNDATION AND AT SPECIAL EVENTS. VOLUNTEERS ASSIST IN OTHER DEPARTMENTS SUCH AS THE CANCER CENTER, BIOMEDICAL ENGINEERING, MAIL ROOM, NUTRITION SERVICES, PHARMACY, WOMEN AND INFANTS' CENTER, PHYSICAL THERAPY, FIT KIDS, BARIATRIC CLINIC, EMERGENCY AND SURGICAL SERVICES AND THE TAYLOR HOUSE. FORM 990 PART III LINE 4A DESCRIPTION OF PROGRAM SERVICE ACCOMPLISHMENTS ONE OF THE NICEST THINGS ABOUT LIVING IN NORTHERN ARIZONA IS YOU DON'T HAVE TO TRAVEL TO GET EXCELLENT HEALTHCARE. SINCE 1936, FLAGSTAFF MEDICAL CENTER (FMC), A MEMBER OF NORTHERN ARIZONA HEALTHCARE, HAS PROVIDED HIGH QUALITY HEALTHCARE SERVICES TO RESIDENTS AND VISITORS TO NORTHERN ARIZONA. WE ARE DEDICATED TO PATIENT-CENTERED CARE WITH A PERSONAL TOUCH. FMC IS LICENSED BY MEDICARE AND THE STATE OF ARIZONA. FOUNDED BY DR. CHARLES SECHRIST AS FLAGSTAFF HOSPITAL, THE 25-BED HOSPITAL WAS DONATED TO THE COMMUNITY OF FLAGSTAFF IN 1955. TODAY, FLAGSTAFF MEDICAL CENTER REMAINS A NOT-FOR-PROFIT HOSPITAL, GOVERNED BY A VOLUNTEER BOARD OF DIRECTORS. WE TREAT EVERY PATIENT, REGARDLESS OF THEIR ABILITY TO PAY. EVERY YEAR, FLAGSTAFF MEDICAL CENTER INVESTS IN YOUR COMMUNITY HOSPITAL TO ENSURE WE ARE PROVIDING THE BEST, SAFEST CARE, CLOSE TO HOME. WE PROVIDE KEY SERVICES TO NORTHERN ARIZONA RESIDENTS AND VISITORS, INCLUDING A REGIONAL TRAUMA CENTER; OPEN-HEART SURGERY; HIGH-TECH IMAGING; A CANCER CENTER; SURGICAL SERVICES; ORTHOPEDIC SERVICES; WOMEN, INFANTS' AND CHILDREN'S SERVICES; AND MORE. FMC CURRENTLY HAS: - 267 INPATIENT BEDS - 223 PHYSICIANS ON OUR ACTIVE MEDICAL STAFF - 14,621 ANNUAL INPATIENT HOSPITAL ADMISSIONS - 60,150 INPATIENT DAYS - 107,498 ANNUAL OUTPATIENT HOSPITAL VISITS - 39,605 ANNUAL EMERGENCY DEPARTMENT VISITS - 1,244 BABIES BORN THIS YEAR AT FMC FLAGSTAFF MEDICAL CENTER'S MISSION AND VISION --------------------------------------------- VISION - NORTHERN ARIZONA HEALTHCARE, IN PARTNERSHIP WITH OUR COLLEAGUES AND PHYSICIANS, WILL BE THE HIGHEST QUALITY, COST-EFFECTIVE, PREFERRED HEALTHCARE DELIVERY SYSTEM IN NORTHERN AND CENTRAL ARIZONA. WE WILL EXCEED THE EXPECTATIONS OF THOSE WE SERVE BY: - DEVELOPING QUALITY HEALTHCARE SERVICES USING ADVANCED TECHNOLOGY TO IMPROVE THE HEALTH STATUS AND TO MEET THE GROWING NEEDS OF THE COMMUNITIES WE SERVE. - FOSTERING AN ORGANIZATIONAL CULTURE THAT ACTS AS A MAGNET FOR RECRUITING AND RETAINING HIGHLY QUALIFIED COLLEAGUES AND PHYSICIANS. - ENSURING EXCEPTIONAL VALUE FOR OUR PATIENTS AND FINANCIAL STRENGTH FOR OUR INSTITUTIONS. - DEVELOPING STRATEGIC ALLIANCES AND PARTNERSHIPS WITH PROVIDERS AND ORGANIZATIONS TO ENSURE COMPREHENSIVE SERVICES FOR OUR PATIENTS. VALUES - WE ARE COMMITTED TO MEETING THE NEEDS AND EXCEEDING THE EXPECTATIONS OF OUR PATIENTS. - COLLEAGUES - WE WILL CREATE AN ORGANIZATIONAL CULTURE WHERE COLLEAGUES FEEL VALUED AND TAKE A SENSE OF PRIDE IN THEIR WORK. - QUALITY - WE CONTINUOUSLY STRIVE TO ACHIEVE EXCELLENCE AT ALL LEVELS IN THE ORGANIZATION. - SAFETY - WE ARE COMMITTED TO MAINTAINING A SAFE ENVIRONMENT FOR OUR PATIENTS, VISITORS AND COLLEAGUES. - LEADERSHIP - WE PROMOTE LEADERSHIP AS AN ATTITUDE, NOT A POSITION, PUTTING VALUE ON BOTH PEOPLE AND THE WORK THEY DO. - TEAMWORK - WE ARE COLLEAGUES WORKING TOGETHER, SHARING KNOWLEDGE, TALENTS, AND SKILLS TO ACHIEVE COMMON GOALS. - INTEGRITY - WE WILL BE FORTHRIGHT, HONEST AND RESPECTFUL. - DIVERSITY - WE EMBRACE THE DIVERSITY OF OUR PEOPLE, PATIENTS AND THE COMMUNITIES WE SERVE. FORM 990, PART VI, QUESTION 6 DESCRIPTION OF THE MEMBERS OF THE ORGANIZATION AND THEIR RIGHTS NORTHERN ARIZONA HEALTHCARE CORPORATION IS THE SOLE CORPORATE MEMBER OF FLAGSTAFF MEDICAL CENTER. FORM 990, PART VI, QUESTION 7A DESCRIPTION OF CLASSES OF PERSONS AND THE NATURE OF THEIR RIGHTS THE FLAGSTAFF MEDICAL CENTER (FMC) GOVERNANCE COMMITTEE NOMINATES FOR POSITIONS ON THE FMC BOARD OF DIRECTORS. DIRECTORS ARE ELECTED BY THE BOARD OF DIRECTORS OF THE SOLE CORPORATE MEMBER FROM THE NOMINATIONS THAT HAVE BEEN PROVIDED. THE SOLE CORPORATE MEMBER ELECTS THOSE PERSONS NOMINATED UNLESS THE BOARD OF DIRECTORS OF THE SOLE CORPORATE MEMBER BY A SUPER MAJORITY VOTE DETERMINES THAT A NOMINEE'S ELECTION WOULD BE DETRIMENTAL TO THE BEST INTERESTS OF FMC OR THE SOLE CORPORATE MEMBER. FORM 990, PART VI, LINE 7B DECISIONS REQUIRING APPROVAL & TYPE OF VOTING RIGHTS AS SOLE CORPORATE MEMBER, NORTHERN ARIZONA HEALTHCARE CORPORATION APPROVES THE BOARD OF DIRECTORS THAT ARE ELECTED BY THIS ENTITY. ALSO AS SOLE CORPORATE MEMBER, NORTHERN ARIZONA HEALTHCARE CORPORATION HAS RESERVED THE RIGHT AND AUTHORITY TO APPROVE OR DISAPPROVE THOSE ACTS OR POWERS AS SET FORTH IN THE "RESERVED POWERS CHART" THAT IS PART OF THE BYLAWS. FORM 990, PART VI, QUESTION 11B REVIEW OF THE FORM 990 BY THE ORGANIZATION'S GOVERNING BODY THE FORM 990 IS PREPARED BY AN ACCOUNTING FIRM BASED ON DATA GATHERED BY THE CONTROLLER AND THE ORGANIZATION'S FINANCIAL OPERATIONS GROUP. THE CFO REVIEWS THE DRAFT FORM 990 AND PROVIDES ADDITIONAL COMMENTS. THE FINAL DRAFT VERSION OF THE FORM 990 IS PROVIDED TO THE BOARD OF DIRECTORS AND KEY OFFICERS PRIOR TO THE MAY 15 DUE DATE FOR THE FORM 990. ANY ADDITIONAL COMMENTS SUGGESTED BY THE GOVERNING BODY ARE THEN INCORPORATED INTO THE FINAL VERSION OF THE FORM 990 TO BE FILED WITH THE IRS BY THE FINAL DUE DATE. IF ANY SUGGESTED CHANGES ARE MATERIAL OR SIGNIFICANT, AN ADDITIONAL DRAFT IS DISTRIBUTED TO THE GOVERNING BODY PRIOR TO FILING. FORM 990, PART VI, QUESTION 12C DESCRIPTION OF PROCESS TO MONITOR TRANSACTIONS FOR CONFLICT OF INTEREST THE ORGANIZATION REGULARLY MONITORS AND ENFORCES COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY (BOARD POLICY 6.1). THIS IS ACCOMPLISHED BY A NUMBER OF MECHANISMS. FIRST, THE CONFLICT OF INTEREST QUESTIONNAIRE IS REVIEWED BY THE GOVERNANCE COMMITTEE OF THE BOARD. AS PART OF THE QUESTIONNAIRE, SELF-DISCLOSURE IS REQUIRED BY BOARD MEMBERS. IN ADDITION, INDIVIDUAL DISCLOSURE BY BOARD MEMBERS OCCURS AT BOARD MEETINGS WHEN NECESSARY (I.E. A BOARD MEMBER WILL EXCLUDE HIMSELF FROM VOTING ON AN ISSUE IN WHICH HE MAY HAVE A CONFLICT OF INTEREST). FORM 990, PART VI, QUESTIONS 15A & 15B COMPENSATION PROCESS THE PROCESS FOR DETERMINING COMPENSATION OF THE ORGANIZATION'S CEO AND OTHER OFFICERS INCLUDES THE PREPARATION OF COMPARABLE DATA BY TOWERS WATSON, AN INDEPENDENT CONSULTING FIRM. IN ADDITION, THIS INFORMATION IS REVIEWED BY THE GOVERNANCE COMMITTEE OF THE BOARD AND IS DOCUMENTED IN BOARD MINUTES. THE MOST RECENT REVIEW WAS PERFORMED IN AUGUST 2012. FORM 990, PART VI, QUESTION 19 AVAILABILITY OF CERTAIN DOCUMENTS TO THE GENERAL PUBLIC THE ORGANIZATION'S FINANCIAL STATEMENTS ARE AVAILABLE THROUGH THE ARIZONA DEPARTMENT OF HEALTH SERVICES. IN ADDITION, THEY ARE AVAILABLE THROUGH THE ELECTRONIC MUNICIPAL MARKET ACCESS (EMMA) AS PART OF THE ORGANIZATION'S CONTINUING DISCLOSURE DOCUMENTS THAT ARE REQUIRED BY ITS PUBLIC DEBT REQUIREMENTS. THE ORGANIZATION DOES NOT MAKE ITS GOVERNING DOCUMENTS OR ITS CONFLICT OF INTEREST POLICY AVAILABLE TO THE PUBLIC. FORM 990, PART VII HOURS DEVOTED TO RELATED ORGANIZATIONS CHRIS BAVASI SERVES ON THE BOARD OF NORTHERN ARIZONA HEALTHCARE CORPORATION ("NAHC") AND FLAGSTAFF MEDICAL CENTER ("FMC"). HE DEVOTED 2.5 HOURS PER WEEK TO EACH ORGANIZATION. GARY CHRISTENSEN SERVES ON THE BOARD OF NAHC AND FMC. HE DEVOTED 0.75 HOURS PER WEEK TO EACH ORGANIZATION. JAMES DORMAN SERVES ON THE BOARD OF NAHC AND FMC. HE DEVOTED 3 HOURS PER WEEK TO EACH ORGANIZATION. WAYNE FOX SERVES ON THE BOARD OF NAHC AND FMC. HE DEVOTED 1.75 HOURS PER WEEK TO EACH ORGANIZATION. ROBERT M. MONTOYA SERVES ON THE BOARD OF NAHC AND FMC. HE DEVOTED 2.75 HOURS PER WEEK TO EACH ORGANIZATION. MOLLY MUNGER SERVES ON THE BOARD OF NAHC AND FMC. SHE DEVOTED 0.75 HOURS PER WEEK TO EACH ORGANIZATION. BERT MCKINNON SERVES ON THE BOARD OF NAHC AND FMC. HE DEVOTED 1.9 HOURS PER WEEK TO FMC AND 4.0 HOURS TO NAHC. GREGORY KUZMA IS THE VP AND CHIEF FINANCIAL OFFICER OF NAHC, FMC AND VVMC. HE DEVOTED 20 HOURS PER WEEK TO NAHC, 14 HOURS TO FMC, AND 6 HOURS PER WEEK TO VERDE VALLEY MEDICAL CENTER ("VVMC"). WILLIAM BRADEL DEVOTED 30 HOURS PER WEEK TO FMC AS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER OF FMC. HE DEVOTED 10 HOURS PER WEEK TO NAHC AS CO-CEO. JOHN DEMPSEY IS THE EXECUTIVE VP OF LAW & ETHICS OF NAHC, FMC AND VVMC. HE DEVOTED 20 HOURS PER WEEK TO NAHC, 14 HOURS TO FMC, AND 6 HOURS PER WEEK TO VVMC. ALL COMPENSATION IS PAID BY NAHC. FORM 990, PART XI, LINE 5 EXPLANATION OF OTHER CHANGES IN NET ASSETS INCREASE IN UNFUNDED PENSION LIABILITY $(31,203,000) UNREALIZED GAIN/LOSS IN INVESTMENT (427,938) PARTNERSHIP K-1 BOOK AND TAX DIFFERENCES (65,353) ELIMINATIONS (313,736) -------------- TOTAL $(32,010,027) ============== SCHEDULE K, PART I SUPPLEMENTAL INFORMATION LINE A - THE NAME OF THE ISSUE IS HOSPITAL REVENUE REFUNDING BONDS (NORTHERN ARIZONA HEALTHCARE SYSTEM) SERIES 2008A. THIS ISSUE REFUNDS BONDS FROM 12/12/96 AND 10/31/02. TOTAL ISSUANCE PRICE WAS $57,096,705 WHICH WAS ALLOCATED $45,703,133 TO FLAGSTAFF MEDICAL CENTER AND $11,393,572 TO VERDE VALLEY MEDICAL CENTER. LINE B - THE NAME OF THE ISSUE IS $52,795,000 HOSPITAL REVENUE BONDS (NORTHERN ARIZONA HEALTHCARE SYSTEM) SERIES 2008B. THIS ISSUE REFUNDS BONDS FROM 1/27/05. TOTAL ISSUANCE PRICE WAS $52,795,000 WHICH WAS ALLOCATED $20,326,075 TO FLAGSTAFF MEDICAL CENTER AND $32,468,925 TO VERDE VALLEY MEDICAL CENTER. THE 2008B BONDS WERE ALSO USED, IN PART, TO FINANCE "NEW MONEY" PROJECTS. $10,073,432 WAS USED FOR BUILDINGS AND LONG-LIVED EQUIPMENT. LINE C - THE NAME OF THE ISSUE IS HOSPITAL REVENUE REFUNDING BONDS (NORTHERN ARIZONA HEALTHCARE SYSTEM) SERIES 2011. THIS ISSUE REFUNDS THE 1996A AND 1998 SERIES BONDS. TOTAL ISSUANCE PRICE WAS $78,923,520 WHICH WAS ALLOCATED $65,111,905 TO FLAGSTAFF MEDICAL CENTER AND $13,811,616 TO VERDE VALLEY MEDICAL CENTER. FORM 990, PART V, QUESTION 5A PARTY TO PROHIBITED TAX SHELTER TRANSACTION FLAGSTAFF MEDICAL CENTER IS FILING THREE FORMS 8886, REPORTABLE TRANSACTION DISCLOSURE STATEMENT, ON A PROTECTIVE BASIS TO REPORT ITS INTERESTS IN THE FOLLOWING LIMITED PARTNERSHIPS: JORDAN FAMILY INVESTMENTS LP, NAAM ENTERPRISES LP, AND GKC ENTERPRISES LP (INTEREST REDEEMED 1/9/2012). FLAGSTAFF MEDICAL CENTER IS FILING ONE FORM 8886 TO REPORT ITS INTEREST IN DUDDIE FAMILY LIMITED PARTNERSHIP. FLAGSTAFF MEDICAL CENTER IS NOT REQUIRED TO DISCLOSE THE DUDDIE FAMILY LP ON FORM 8886-T, DISCLOSURE BY TAX-EXEMPT ENTITY REGARDING PROHIBITED TAX SHELTER TRANSACTION, BECAUSE IT RECEIVED THE DONATED LIMITED PARTNERSHIP INTEREST PRIOR TO MAY 17, 2006. TREAS. REG. 1.6033-5(D)(4) ("[D]ISCLOSURE IS NOT REQUIRED WITH RESPECT TO ANY PROHIBITED TAX SHELTER TRANSACTION ENTERED INTO BY A TAX-EXEMPT ENTITY ON OR BEFORE MAY 17, 2006.") FORM 8886, 1 OF 4 THE DUDDIE FAMILY LIMITED PARTNERSHIP LINE 6 A-C NOTE: THE TAX ADVICE PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC (FKA POLSINELLI SHUGHART PC) WAS LIMITED TO ADVICE PERTAINING TO THE DISCLOSURE OF THE TRANSACTION DESCRIBED IN THIS FORM 8886. THE SERVICES PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC DID NOT INVOLVE ANY TAX ADVICE PERTAINING TO THE STRUCTURING OF THE TRANSACTION DISCLOSED IN THIS FORM 8886 OR ADVISING THE TAXPAYER BEYOND ITS REPORTABLE TRANSACTION DISCLOSURE AND RELATED OBLIGATIONS. THE FEES PAID BY THE TAXPAYER TO ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC RELATE ONLY TO POST-TRANSACTIONAL TAX ADVICE CONCERNING ITS DISCLOSURE OBLIGATIONS AND ITS WITHDRAWAL FROM THE DUDDIE FAMILY LIMITED PARTNERSHIP. LINE 7B - CONTINUATION FROM FORM 8886 (5) THE PETERSON GRANDCHILDREN'S TRUST (TRUST #2"). DONORS AND FOUNDATION ENTERED INTO THE TRANSACTION, THE PARTNERSHIP, ON OR ABOUT DECEMBER 31, 1990. ON OR ABOUT JANUARY 30, 1997, FOUNDATION, EIN 94-2540279, ADOPTED ARTICLES OF DISSOLUTION, AND ON OR ABOUT NOVEMBER 1, 2000, FOUNDATION, EIN 94-2540279, WAS ADMINISTRATIVELY DISSOLVED AND FLAGSTAFF MEDICAL CENTER INC. ("FLAGSTAFF"), EIN 86-0100232, THE THEN SOLE MEMBER OF THE FOUNDATION, SUCCEEDED TO THE INTERESTS OF THE FOUNDATION IN THE REMAINING ASSETS OF THE FOUNDATION AFTER PROVISION FOR ALL LIABILITIES OF THE FOUNDATION UPON ITS DISSOLUTION. FLAGSTAFF IS THE SUCESSOR ENTITY TO FOUNDATION FOR FEDERAL INCOME TAX PURPOSES. CONSEQUENTLY, FLAGSTAFF MEDICAL CENTER, INC. IS THE ENTITY RESPONSIBLE FOR DISCLOSING THIS TRANSACTION UNDER TREAS. REG. SECTION 1.6011-4, ET SEQ. THE DUDDIE FAMILY LIMITED PARTNERSHIP AGREEMENT (THE "AGREEMENT") DESCRIBES DONORS HAVING CONTRIBUTED $800,000 TO THE PARTNERSHIP AS AN INITIAL CAPITAL CONTRIBUTION. THE AGREEMENT FURTHER DESCRIBES TIMOTHY G. DUDDIE AND SHERYL P. DUDDIE CONTRIBUTING AN ADDITIONAL $200,000 TO THE PARTNERSHIP "ON BEHALF OF" FOUNDATION, RESULTING IN FOUNDATION OWNING APPROXIMATELY 20% OF THE LIMITED PARTNERSHIP INTERESTS. PER FOUNDATION'S 2009 SCHEDULE K-1 PROVIDED TO FLAGSTAFF BY PARTNERSHIP, FOUNDATION IS ALLOCATED 19.4% OF THE PROFIT, LOSS AND CAPITAL OF PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES. PURSUANT TO THE TERMS OF THE AGREEMENT, THE GENERAL PARTNERS HAVE FULL CONTROL OVER THE TIMING AND AMOUNT OF DISTRIBUTIONS FROM THE PARTNERSHIP. LIMITED PARTNERS IN THE PARTNERSHIP HAVE NO RIGHTS TO DEMAND DISTRIBUTIONS OR PARTAKE IN THE MANAGEMENT OF THE PARTNERSHIP. FLAGSTAFF, IN ITS CAPACITY AS AN ASSIGNEE OF FOUNDATION'S INTEREST IN THE PARTNERSHIP, DOES NOT HAVE ANY RIGHTS TO REVIEW THE BOOKS AND RECORDS OF THE PARTNERSHIP AND ITS RIGHTS ARE LIMITED TO RECEIVING ANY DISTRIBUTIONS ON ACCOUNT OF THE INTEREST. FOR FLAGSTAFF TO OBTAIN THE RIGHTS OF A LIMITED PARTNER, INCLUDING THE RIGHTS TO REVIEW THE BOOKS AND RECORDS OF THE PARTNERSHIP, FLAGSTAFF WOULD HAVE TO SATISFY CERTAIN CONDITIONS, INCLUDING THE PAYMENT OF A $20,000 FEE AND RIGHTS OF FIRST REFUSAL HELD BY THE GENERAL PARTNER AND THE LIMITED PARTNERS UNDER THE TERMS OF THE AGREEMENT. THE OPTION AGREEMENT (THE "OPTION"), EFFECTIVE DECEMBER 31, 1990, WAS ENTERED INTO BY TRUST #1 AND FOUNDATION. THE OPTION PROVIDES FOUNDATION THE RIGHT TO REQUIRE TRUST #1 TO PURCHASE ITS INTEREST IN PARTNERSHIP, AT THE GREATER OF FAIR MARKET VALUE OR THE ORIGINAL GIFT VALUE OF FOUNDATION'S LIMITED PARTNERSHIP INTEREST, WHICH WAS ESTABLISHED WHEN FOUNDATION RECEIVED ITS INTEREST IN THE PARTNERSHIP. THE RIGHT TO EXERCISE THE OPTION RUNS FOR 60 DAYS AFTER THE DATE OF DEATH OF THE LAST TO DIE OF "THE INSURED GENERAL PARTNERS OR GRANTORS, IF THE GENERAL PARTNERS ARE REVOCABLE FAMILY TRUSTS." THE OPTION ALSO PROVIDES THAT TRUST #1 "HAS OR WILL PROCURE LIFE INSURANCE ON THE LIVES OF THE GENERAL PARTNERS." FLAGSTAFF DOES NOT POSESS ENOUGH INFORMATION TO DETERMINE TO WHAT EXTENT, IF ANY, TRUST #2 HAS PARTICIPATED IN THE PARTNERSHIP WITHIN THE MEANING OF TREAS. REG. SECTION 1.6011-4, ET SEQ. PARTNERSHIP PROVIDED A 2009 SCHEDULE K-1 TO FLAGSTAFF INDICATING THAT TRUST #2 OWNS A 1.54% OF THE PROFIT, LOSS AND CAPITAL OF PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES. ON OR ABOUT OCTOBER 25, 2010 FLAGSTAFF FIRST BECAME AWARE THAT PARTNERSHIP MIGHT BE VIEWED AS SUBSTANTIALLY SIMILAR TO THE NOTICE 2004-30 TRANSACTION, AND THEREFORE MAY HAVE PARTICIPATED IN A LISTED TRANSACTION WITHIN THE MEANING OF TREAS. REG. SECTION 1.6011-4, ET SEQ. CONSEQUENTLY, FLAGSTAFF'S INITIAL DISCLOSURE OF PARTNERSHIP WAS FILED WITH THE 2009 FORM 990 WITH RESPECT TO FLAGSTAFF'S TAXABLE YEAR ENDED JUNE 30, 2010. FLAGSTAFF HAS RETAINED LEGAL COUNSEL AND, AFTER REPEATED ATTEMPTS TO NEGOTIATE WITHDRAWAL FROM THE PARTNERSHIP WERE UNSUCCESSFUL, FILED A LAWSUIT IN THE CALIFORNIA STATE COURTS SEEKING DISSOLUTION OF THE PARTNERSHIP AND OTHER RELIEF. FOUNDATION SOUGHT TO JOIN FLAGSTAFF AS A PLAINTIFF IN THE LAWSUIT AS DEEMED NECESSARY TO WIND UP AND LIQUIDATE FOUNDATION'S AFFAIRS IN FURTHERANCE OF FOUNDATION'S PRIOR DISSOLUTION. THE TRIAL COURT FOUND THAT FLAGSTAFF, AS A MERE ASSIGNEE OF FOUNDATION'S INTEREST IN THE PARTNERSHIP, LACKED STANDING TO ASSERT ITS CLAIMS, AND GRANTED DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS. THE TRIAL COURT FURTHER DENIED FLAGSTAFF'S MOTION TO AMEND THE PLEADINGS TO JOIN THE FOUNDATION AS A PLAINTIFF IN THE LAWSUIT. THE TRIAL COURT ENTERED JUDGMENT IN FAVOR OF THE DEFENDANTS. AS A RESULT OF THE TRIAL COURT'S RULING, FLAGSTAFF IS PRECLUDED FROM DISSOLVING THE PARTNERSHIP AND HAS NO RIGHTS TO REVIEW THE BOOKS AND RECORDS OF THE PARTNERSHIP. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFITS FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS AN ASSIGNEE OF FOUNDATION'S LIMITED PARTNER INTEREST IN THE PARTNERSHIP. THEREFORE, FLAGSTAFF IS UNABLE TO PROVIDE AN ESTIMATE OF ANY SUCH EXPECTED TAX BENEFITS. ADDITIONALLY, THERE SHOULD BE NO DISCLOSURE TO THE EXTENT THAT FLAGSTAFF IS VIEWED AS ENTERING INTO THE PARTNERSHIP SOLELY PRIOR TO FEBRUARY 28, 2000. THE ORIGINAL TEMP. TREAS. REGS. ISSUED FEBRUARY 28, 2000 UNDER TREAS. REG. SECTION 1.6011-4T MAY GOVERN FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP. THESE TREAS. REGS. REQUIRE DISCLOSURE ONLY FOR LARGE TRANSACTIONS THAT PROVIDE TAX SAVINGS IN EXCESS OF CERTAIN DOLLAR THRESHOLDS (THE "PROJECTED TAX EFFECT TEST"). THE PROJECTED TAX EFFECT TEST, AS DESCRIBED IN THESE REGULATIONS, REQUIRE A TRANSACTION TO BE REPORTED WHERE IT IS EXPECTED TO REDUCE THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY BY MORE THAN $1 MILLION IN ANY SINGLE TAXABLE YEAR OR BY A TOTAL OF $2 MILLION FOR ANY COMBINATION OF TAXABLE YEARS. HOWEVER, A LISTED TRANSACTION IS NOT TREATED AS A REPORTABLE TRANSACTION IF IT HAS AFFECTED THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY AS REPORTED ON ANY TAX RETURN FILED ON OR BEFORE FEBRUARY 28, 2000. BECAUSE FLAGSTAFF IS A TAX-EXEMPT I.R.C. SECTION 501(C)(3) ENTITY, FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP WAS NOT EXPECTED TO REDUCE ITS TAX LIABILITY AT ALL . THEREFORE, UNDER TEMP. TREAS. REG. SECTION 1.6011-4T, FLAGSTAFF MAY NOT HAVE A DISCLOSURE REQUIREMENT WITH RESPECT TO ITS INVESTMENT IN THE PARTNERSHIP PRIOR TO FEBRUARY 28, 2000.* * SINCE 2001, TEMP. TREAS. REG. SECTION 1.6011-4T HAS BEEN MODIFIED A NUMBER OF TIMES BEFORE BEING FINALIZED IN 2003. BASED ON THE VARIOUS EFFECTIVE DATES FOR THE DIFFERENT SECTIONS THAT HAVE CHANGED, IT APPEARS THAT THE FEBRUARY 28, 2000 INITIAL TEMP. TREAS. REG. SECTION 1.6011-4T IN T.D. 8877 MAY GOVERN THE DISCLOSURE OBLIGATIONS OF FLAGSTAFF WITH RESPECT TO ITS PARTICIPATION IN THE PARTNERSHIP THROUGH ITS LIMITED PARTNERSHIP INTEREST THAT WAS OBTAINED PRIOR TO FEBRUARY 28, 2000, ON OCTOBER 5, 1995. FLAGSTAFF HAS NOT, NOR DOES NOT, EXPECT ANY TAX BENEFIT FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS AN ASSIGNEE OF FOUNDATION'S LIMITED PARTNER INTEREST IN THE PARTNERSHIP. FORM 8886, 2 OF 4 GKC ENTERPRISES LTD PARTNERSHIP LINE 6 A-C NOTE: THE TAX ADVICE PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC (FKA POLSINELLI SHUGHART PC) WAS LIMITED TO ADVICE PERTAINING TO THE DISCLOSURE OF THE TRANSACTION DESCRIBED IN THIS FORM 8886. THE SERVICES PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC DID NOT INVOLVE ANY TAX ADVICE PERTAINING TO THE STRUCTURING OF THE TRANSACTION DISCLOSED IN THIS FORM 8886 OR ADVISING THE TAXPAYER BEYOND ITS REPORTABLE TRANSACTION DISCLOSURE AND RELATED OBLIGATIONS. THE FEES PAID BY THE TAXPAYER TO ERNST & YOUNG LLP, POLSINELLI PC AND FENNEMORE CRAIG, P.C. RELATE ONLY TO POST-TRANSACTIONAL TAX ADVICE CONCERNING ITS DISCLOSURE OBLIGATIONS AND ITS WITHDRAWAL FROM GKC ENTERPRISES LIMITED PARTNERSHIP. LINE 7B - CONTINUATION FROM FORM 8886 ON OR ABOUT DECEMBER 31, 1990, 66% OF GARY S. CHRISTENSEN'S OWNERSHIP, AS A LIMITED PARTNER, WAS TRANSFERRED TO THE FOUNDATION. SOME TIME AFTER THE TRANSACTION WAS ENTERED INTO, THE BOY SCOUTS OF AMERICA, MONTANA COUNCIL, WERE ADMITTED TO THE PARTNERSHIP AS A LIMITED PARTNER. ON OR ABOUT JANUARY 30, 1997, FOUNDATION, EIN 94-2540279, ADOPTED ARTICLES OF DISSOLUTION, AND ON OR ABOUT NOVEMBER 1, 2000, FOUNDATION, EIN 94-2540279, WAS ADMINSTRATIVELY DISSOLVED AND FLAGSTAFF MEDICAL CENTER, INC. ("FLAGSTAFF"), EIN 86-0100232, THE THEN SOLE MEMBER OF THE FOUNDATION, SUCCEEDED TO THE INTERESTS OF THE FOUNDATION IN THE REMAINING ASSETS OF THE FOUNDATION AFTER PROVISION FOR ALL LIABILITIES OF THE FOUNDATION UPON ITS DISSOLUTION. FLAGSTAFF IS THE SUCCESSOR ENTITY TO FOUNDATION FOR FEDERAL INCOME TAX PURPOSES. CONSEQUENTLY, FLAGSTAFF MEDICAL CENTER, INC. IS THE ENTITY RESPONSIBLE FOR DISCLOSING THIS TRANSACTION UNDER TREAS. REG. SECTION 1.6011-4, ET SEQ. GKC ENTERPRISES LIMITED PARTNERSHIP AGREEMENT, DATED DECEMBER 1, 1990, (THE "AGREEMENT") DESCRIBES DONORS AS HAVING CONTRIBUTED $100 TO THE PARTNERSHIP AS AN INITIAL CAPITAL CONTRIBUTION. PER FOUNDATION'S 2009 SCHEDULE K-1 PROVIDED TO FLAGSTAFF BY PARTNERSHIP, FOUNDATION IS ALLOCATED 36.6% OF THE PROFIT, LOSS AND CAPITAL OF PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES. PURSUANT TO THE TERMS OF THE AGREEMENT, THE GENERAL PARTNERS HAVE FULL CONTROL OVER THE TIMING AND AMOUNT OF DISTRIBUTIONS FROM THE PARTNERSHIP. FLAGSTAFF, IN ITS CAPACITY AS LIMITED PARTNER IN THE PARTNERSHIP, GENERALLY MAY NOT DEMAND DISTRIBUTIONS OR PARTAKE IN THE MANAGEMENT OF THE PARTNERSHIP. FLAGSTAFF MAY NOT TRANSFER ITS LIMITED PARTNERSHIP INTEREST WITHOUT SATISFYING CERTAIN CONDITIONS, INCLUDING RIGHTS OF FIRST REFUSAL HELD BY THE GENERAL PARTNERS AND THE LIMITED PARTNERS UNDER THE TERMS OF THE AGREEMENT. IT IS UNKNOWN IF AN OPTION AGREEMENT EXISTS, WHICH WOULD ALLOW A THIRD PARTY TO PURCHASE FOUNDATION'S INTEREST IN PARTNERSHIP UPON THE DEATH OF THE GENERAL PARTNER. ON OR ABOUT AUGUST 10, 2010 FLAGSTAFF FIRST BECAME AWARE THAT PARTNERSHIP MIGHT BE VIEWED AS SUBSTANTIALLY SIMILAR TO THE NOTICE 2004-30 TRANSACTION, AND THEREFORE MAY HAVE PARTICIPATED IN A LISTED TRANSACTION WITHIN THE MEANING OF TREAS. REG. SECTION 1.6011-4, ET SEQ. CONSEQUENTLY, FLAGSTAFF'S INITIAL DISCLOSURE OF PARTNERSHIP WAS FILED WITH THE 2009 FORM 990 WITH RESPECT TO FLAGSTAFF'S TAXABLE YEAR ENDED JUNE 30, 2010. FLAGSTAFF HAS RETAINED LEGAL COUNSEL AND HAS NEGOTIATED WITHDRAWAL FROM THE PARTNERSHIP. ON OR ABOUT FEBRUARY 14, 2012, THE PARTNERSHIP REDEEMED FLAGSTAFF'S INTEREST IN THE PARTNERSHIP UPON PAYMENT TO FLAGSTAFF OF THE REDEMPTION PRICE OF $86,122.90, PURSUANT TO AN AGREEMENT FOR REDEMPTION OF LIMITED PARTNERSHIP INTEREST DATED EFFECTIVE AS OF JANUARY 9, 2012. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFITS FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS A LIMITED PARTNER. THEREFORE, FLAGSTAFF IS UNABLE TO PROVIDE AN ESTIMATE OF ANY SUCH EXPECTED TAX BENEFITS. ADDITIONALLY, THERE SHOULD BE NO DISCLOSURE TO THE EXTENT THAT FLAGSTAFF IS VIEWED AS ENTERING INTO THE PARTNERSHIP SOLELY PRIOR TO FEBRUARY 28, 2000. THE ORIGINAL TEMP. TREAS. REGS. ISSUED FEBRUARY 28, 2000 UNDER TREAS. REG. SECTION 1.6011-4T MAY GOVERN FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP. THESE TREAS. REGS. REQUIRE DISCLOSURE ONLY FOR LARGE TRANSACTIONS THAT PROVIDE TAX SAVINGS IN EXCESS OF CERTAIN DOLLAR THRESHOLDS (THE "PROJECTED TAX EFFECT TEST"). THE PROJECTED TAX EFFECT TEST, AS DESCRIBED IN THESE REGULATIONS, REQUIRE A TRANSACTION TO BE REPORTED WHERE IT IS EXPECTED TO REDUCE THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY BY MORE THAN $1 MILLION IN ANY SINGLE TAXABLE YEAR OR BY A TOTAL OF $2 MILLION FOR ANY COMBINATION OF TAXABLE YEARS. HOWEVER, A LISTED TRANSACTION IS NOT TREATED AS A REPORTABLE TRANSACTION IF IT HAS AFFECTED THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY AS REPORTED ON ANY TAX RETURN FILED ON OR BEFORE FEBRUARY 28, 2000. BECAUSE FLAGSTAFF IS A TAX-EXEMPT I.R.C. SECTION 501(C)(3) ENTITY, FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP WAS NOT EXPECTED TO REDUCE ITS TAX LIABILITY AT ALL . THEREFORE, UNDER TEMP. TREAS. REG. SECTION 1.6011-4T, FLAGSTAFF MAY NOT HAVE A DISCLOSURE REQUIREMENT WITH RESPECT TO ITS INVESTMENT IN THE PARTNERSHIP PRIOR TO FEBRUARY 28, 2000.* * SINCE 2001, TEMP. TREAS. REG. SECTION 1.6011-4T HAS BEEN MODIFIED A NUMBER OF TIMES BEFORE BEING FINALIZED IN 2003. BASED ON THE VARIOUS EFFECTIVE DATES FOR THE DIFFERENT SECTIONS THAT HAVE CHANGED, IT APPEARS THAT THE FEBRUARY 28, 2000 INITIAL TEMP. TREAS. REG. SECTION 1.6011-4T IN T.D. 8877 MAY GOVERN THE DISCLOSURE OBLIGATIONS OF FLAGSTAFF WITH RESPECT TO ITS PARTICIPATION IN THE PARTNERSHIP THROUGH ITS LIMITED PARTNERSHIP INTEREST THAT WAS OBTAINED PRIOR TO FEBRUARY 28, 2000, ON OR ABOUT DECEMBER 31, 1990. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFIT FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS LIMITED PARTNER. FORM 8886, 3 OF 4 JORDAN FAMILY INVESTMENTS LIMITED PARTNERSHIP LINE 6 A-C NOTE: THE TAX ADVICE PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC (FKA POLSINELLI SHUGHART PC) WAS LIMITED TO RECENT ADVICE PERTAINING TO THE DISCLOSURE OF THE TRANSACTION DESCRIBED IN THIS FORM 8886. THE SERVICES PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC DID NOT INVOLVE ANY TAX ADVICE PERTAINING TO THE STRUCTURING OF THE TRANSACTION DISCLOSED IN THIS FORM 8886 OR ADVISING THE TAXPAYER BEYOND ITS REPORTABLE TRANSACTION DISCLOSURE AND RELATED OBLIGATIONS. THE FEES PAID BY THE TAXPAYER TO ERNST & YOUNG LLP, POLSINELLI PC, AND FENNEMORE CRAIG, P.C. RELATE ONLY TO POST-TRANSACTIONAL TAX ADVICE CONCERNING ITS DISCLOSURE OBLIGATIONS AND ITS WITHDRAWAL FROM THE JORDAN FAMILY INVESTMENTS LIMITED PARTNERSHIP. LINE 7B - CONTINUATION FROM FORM 8886 AT AN UNKNOWN DATE, MICHAEL E. JORDAN, AS A LIMITED PARTNER, TRANSFERRED A PERCENTAGE OF HIS OWNERSHIP INTEREST TO THE FOUNDATION. DONORS ENTERED INTO THE TRANSACTION, THE PARTNERSHIP, ON OR ABOUT DECEMBER 1, 1990. SOME TIME AFTER THE TRANSACTION WAS ENTERED INTO THE BOY SCOUTS OF AMERICA, MONTANA COUNCIL, WERE ADMITTED TO THE PARTNERSHIP AS A LIMITED PARTNER. ON OR ABOUT JANUARY 30, 1997, FOUNDATION, EIN 94-2540279, ADOPTED ARTICLES OF DISSOLUTION, AND ON OR ABOUT NOVEMBER 1, 2000 FOUNDATION, EIN 94-2540279, WAS ADMINISTRATIVELY DISSOLVED AND FLAGSTAFF MEDICAL CENTER, INC. ("FLAGSTAFF"), EIN 86-0110232, THE THEN SOLE MEMBER OF THE FOUNDATION, SUCCEEDED TO THE INTERESTS OF THE FOUNDATION IN THE REMAINING ASSETS OF THE FOUNDATION AFTER PROVISION FOR ALL LIABILITIES OF THE FOUNDATION UPON ITS DISSOLUTION. FLAGSTAFF IS THE SUCCESSOR ENTITY TO FOUNDATION FOR FEDERAL INCOME TAX PURPOSES. CONSEQUENTLY, FLAGSTAFF MEDICAL CENTER, INC. IS THE ENTITY RESPONSIBLE FOR DISCLOSING THIS TRANSACTION UNDER TREAS. REG. SECTION 1.6011-4, ET SEQ. THE JORDAN FAMILY INVESTMENTS LIMITED PARTNERSHIP AGREEMENT, DATED DECEMBER 1, 1990, (THE "AGREEMENT") DESCRIBES DONORS AS HAVING CONTRIBUTED $100 TO THE PARTNERSHIP AS AN INITIAL CAPITAL CONTRIBUTION. THE INITIAL PARTNERSHIP AGREEMENT LISTS MICHAEL E. JORDAN AS THE GENERAL PARTNER. ACCORDING TO THE PARTNERSHIP'S 2009 K-1, THE GENERAL PARTNER IS NOW WILLIAM J. JORDAN. CLIFFORD JORDAN AND THERESA JORDAN BECAME LIMITED PARTNERS PRIOR TO 2008. PER FOUNDATION'S 2010 SCHEDULE K-1 PROVIDED TO FLAGSTAFF BY PARTNERSHIP, FOUNDATION IS ALLOCATED 42.1% OF THE PROFIT, LOSS AND CAPITAL OF PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES. PURSUANT TO THE TERMS OF THE AGREEMENT, THE GENERAL PARTNERS HAVE FULL CONTROL OVER THE TIMING AND AMOUNT OF DISTRIBUTIONS FROM THE PARTNERSHIP. FLAGSTAFF, IN ITS CAPACITY AS LIMITED PARTNER IN THE PARTNERSHIP, GENERALLY MAY NOT DEMAND DISTRIBUTIONS OR PARTAKE IN THE MANAGEMENT OF THE PARTNERSHIP. FLAGSTAFF MAY NOT TRANSFER ITS LIMITED PARTNERSHIP INTEREST WITHOUT SATISFYING CERTAIN CONDITIONS, INCLUDING RIGHTS OF FIRST REFUSAL HELD BY THE GENERAL PARTNERS AND THE LIMITED PARTNERS UNDER THE TERMS OF THE AGREEMENT. IT IS UNKNOWN IF AN OPTION AGREEMENT EXISTS, WHICH ALLOWS A THIRD PARTY TO PURCHASE FOUNDATION'S INTEREST IN PARTNERSHIP UPON THE DEATH OF THE GENERAL PARTNER. ON OR ABOUT AUGUST 10, 2010 FLAGSTAFF FIRST BECAME AWARE THAT PARTNERSHIP MIGHT BE VIEWED AS SUBSTANTIALLY SIMILAR TO THE NOTICE 2004-30 TRANSACTION, AND THEREFORE MAY HAVE PARTICIPATED IN A LISTED TRANSACTION WITHIN THE MEANING OF TREAS. REG. SECTION 1.6011-4, ET SEQ. CONSEQUENTLY, FLAGSTAFF'S INITIAL DISCLOSURE OF PARTNERSHIP WAS FILED WITH THE 2009 FORM 990 WITH RESPECT TO FLAGSTAFF'S TAXABLE YEAR ENDED JUNE 30, 2010. FLAGSTAFF HAS RETAINED LEGAL COUNSEL AND IS NEGOTIATING WITHDRAWAL FROM THE PARTNERSHIP. FLAGSTAFF MAY SEEK A JUDICIAL REMEDY IF NECESSARY. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFITS FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS A LIMITED PARTNER. THEREFORE, FLAGSTAFF IS UNABLE TO PROVIDE AN ESTIMATE OF ANY SUCH EXPECTED TAX BENEFITS. ADDITIONALLY, THERE SHOULD BE NO DISCLOSURE TO THE EXTENT THAT FLAGSTAFF IS VIEWED AS ENTERING INTO THE PARTNERSHIP SOLELY PRIOR TO FEBRUARY 28, 2000. THE ORIGINAL TEMP. TREAS. REGS. ISSUED FEBRUARY 28, 2000 UNDER TREAS. REG. SECTION 1.6011-4T MAY GOVERN FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP. THESE TREAS. REGS. REQUIRE DISCLOSURE ONLY FOR LARGE TRANSACTIONS THAT PROVIDE TAX SAVINGS IN EXCESS OF CERTAIN DOLLAR THRESHOLDS (THE "PROJECTED TAX EFFECT TEST"). THE PROJECTED TAX EFFECT TEST, AS DESCRIBED IN THESE REGULATIONS, REQUIRE A TRANSACTION TO BE REPORTED WHERE IT IS EXPECTED TO REDUCE THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY BY MORE THAN $1 MILLION IN ANY SINGLE TAXABLE YEAR OR BY A TOTAL OF $2 MILLION FOR ANY COMBINATION OF TAXABLE YEARS. HOWEVER, A LISTED TRANSACTION IS NOT TREATED AS A REPORTABLE TRANSACTION IF IT HAS AFFECTED THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY AS REPORTED ON ANY TAX RETURN FILED ON OR BEFORE FEBRUARY 28, 2000. BECAUSE FLAGSTAFF IS A TAX-EXEMPT I.R.C. SECTION 501(C)(3) ENTITY, FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP WAS NOT EXPECTED TO REDUCE ITS TAX LIABILITY AT ALL . THEREFORE, UNDER TEMP. TREAS. REG. SECTION 1.6011-4T, FLAGSTAFF MAY NOT HAVE A DISCLOSURE REQUIREMENT WITH RESPECT TO ITS INVESTMENT IN THE PARTNERSHIP PRIOR TO FEBRUARY 28, 2000.* * SINCE 2001, TEMP. TREAS. REG. SECTION 1.6011-4T HAS BEEN MODIFIED A NUMBER OF TIMES BEFORE BEING FINALIZED IN 2003. BASED ON THE VARIOUS EFFECTIVE DATES FOR THE DIFFERENT SECTIONS THAT HAVE CHANGED, IT APPEARS THAT THE FEBRUARY 28, 2000 INITIAL TEMP. TREAS. REG. SECTION 1.6011-4T IN T.D. 8877 MAY GOVERN THE DISCLOSURE OBLIGATIONS OF FLAGSTAFF WITH RESPECT TO ITS PARTICIPATION IN THE PARTNERSHIP THROUGH ITS LIMITED PARTNERSHIP INTEREST THAT WAS OBTAINED PRIOR TO FEBRUARY 28, 2000, ON OR ABOUT DECEMBER 31, 1990. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFIT FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS LIMITED PARTNER. FORM 8886, 4 OF 4 NAAM ENTERPRISES LIMITED PARTNERSHIP LINE 6 A-C NOTE: THE TAX ADVICE PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC (FKA POLSINELLI SHUGHART PC) WAS LIMITED TO RECENT ADVICE PERTAINING TO THE DISCLOSURE OF THE TRANSACTION DESCRIBED IN THIS FORM 8886. THE SERVICES PROVIDED BY ERNST & YOUNG LLP, FENNEMORE CRAIG, P.C., AND POLSINELLI PC DID NOT INVOLVE ANY TAX ADVICE PERTAINING TO THE STRUCTURING OF THE TRANSACTION DISCLOSED IN THIS FORM 8886 OR ADVISING THE TAXPAYER BEYOND ITS REPORTABLE TRANSACTION DISCLOSURE AND RELATED OBLIGATIONS. THE FEES PAID BY THE TAXPAYER TO ERNST & YOUNG LLP, POLSINELLI PC, AND FENNEMORE CRAIG, P.C. RELATE ONLY TO POST-TRANSACTIONAL TAX ADVICE CONCERNING ITS DISCLOSURE OBLIGATIONS AND ITS WITHDRAWAL FROM NAAM ENTERPRISES LIMITED PARTNERSHIP. LINE 7B - CONTINUATION FROM FORM 8886 AT AN UNKNOWN DATE, HARI BHAJAN SINGH KHALSA AND HARI BHAJAN KAUR KHALSA, IN THEIR CAPACITY AS LIMITED PARTNERS, TRANSFERRED A PERCENTAGE OF THEIR OWNERSHIP INTEREST TO THE FOUNDATION. DONORS ENTERED INTO THE TRANSACTION, THE PARTNERSHIP, ON OR ABOUT DECEMBER 1, 1990. ON OR ABOUT NOVEMBER 1, 2000, FOUNDATION, EIN 94-2540279, WAS ADMINISTRATIVELY DISSOLVED AND FLAGSTAFF MEDICAL CENTER, INC. ("FLAGSTAFF"), EIN 86-0110232, THE THEN SOLE MEMBER OF THE FOUNDATION, SUCCEEDED TO THE INTERESTS OF THE FOUNDATION IN THE REMAINING ASSETS OF THE FOUNDATION AFTER PROVISION FOR ALL LIABILITIES OF THE FOUNDATION UPON ITS DISSOLUTION. FLAGSTAFF IS THE SUCCESSOR ENTITY TO FOUNDATION FOR FEDERAL INCOME TAX PURPOSES. CONSEQUENTLY, FLAGSTAFF MEDICAL CENTER, INC. IS THE ENTITY RESPONSIBLE FOR DISCLOSING THIS TRANSACTION UNDER TREAS. REG. SECTION 1.6011-4, ET SEQ. NAAM ENTERPRISES LIMITED PARTNERSHIP AGREEMENT (THE "AGREEMENT") DESCRIBES DONORS AS HAVING CONTRIBUTED $100 TO THE PARTNERSHIP AS AN INITIAL CAPITAL CONTRIBUTION. PER FOUNDATION'S 2010 SCHEDULE K-1 PROVIDED TO FLAGSTAFF BY PARTNERSHIP, FOUNDATION IS ALLOCATED 22% OF THE PROFIT, LOSS AND CAPITAL OF PARTNERSHIP FOR FEDERAL INCOME TAX PURPOSES. PURSUANT TO THE TERMS OF THE AGREEMENT, THE GENERAL PARTNERS HAVE FULL CONTROL OVER THE TIMING AND AMOUNT OF DISTRIBUTIONS FROM THE PARTNERSHIP. FLAGSTAFF, IN ITS CAPACITY AS LIMITED PARTNER IN THE PARTNERSHIP, GENERALLY MAY NOT DEMAND DISTRIBUTIONS OR PARTAKE IN THE MANAGEMENT OF THE PARTNERSHIP. FLAGSTAFF MAY NOT TRANSFER ITS LIMITED PARTNERSHIP INTEREST WITHOUT SATISFYING CERTAIN CONDITIONS, INCLUDING RIGHTS OF FIRST REFUSAL HELD BY THE GENERAL PARTNERS AND THE LIMITED PARTNERS UNDER THE TERMS OF THE AGREEMENT. IT IS UNKNOWN IF AN OPTION AGREEMENT EXISTS, WHICH ALLOWS A THIRD PARTY TO PURCHASE FOUNDATION'S INTEREST IN PARTNERSHIP UPON THE DEATH OF THE GENERAL PARTNER. ON OR ABOUT AUGUST 10, 2010 FLAGSTAFF FIRST BECAME AWARE THAT PARTNERSHIP MIGHT BE VIEWED AS SUBSTANTIALLY SIMILAR TO THE NOTICE 2004-30 TRANSACTION, AND THEREFORE MAY HAVE PARTICIPATED IN A LISTED TRANSACTION WITHIN THE MEANING OF TREAS. REG. SECTION 1.6011-4, ET SEQ. CONSEQUENTLY, FLAGSTAFF'S INITIAL DISCLOSURE OF PARTNERSHIP WAS FILED WITH THE 2009 FORM 990 WITH RESPECT TO FLAGSTAFF'S TAXABLE YEAR ENDED JUNE 30, 2010. FLAGSTAFF HAS RETAINED LEGAL COUNSEL AND IS NEGOTIATING WITHDRAWAL FROM THE PARTNERSHIP. FLAGSTAFF MAY SEEK A JUDICIAL REMEDY IF NECESSARY. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFITS FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS A LIMITED PARTNER. THEREFORE, FLAGSTAFF IS UNABLE TO PROVIDE AN ESTIMATE OF ANY SUCH EXPECTED TAX BENEFITS. ADDITIONALLY, THERE SHOULD BE NO DISCLOSURE TO THE EXTENT THAT FLAGSTAFF IS VIEWED AS ENTERING INTO THE PARTNERSHIP SOLELY PRIOR TO FEBRUARY 28, 2000. THE ORIGINAL TEMP. TREAS. REGS. ISSUED FEBRUARY 28, 2000 UNDER TREAS. REG. SECTION 1.6011-4T MAY GOVERN FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP. THESE TREAS. REGS. REQUIRE DISCLOSURE ONLY FOR LARGE TRANSACTIONS THAT PROVIDE TAX SAVINGS IN EXCESS OF CERTAIN DOLLAR THRESHOLDS (THE "PROJECTED TAX EFFECT TEST"). THE PROJECTED TAX EFFECT TEST, AS DESCRIBED IN THESE REGULATIONS, REQUIRE A TRANSACTION TO BE REPORTED WHERE IT IS EXPECTED TO REDUCE THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY BY MORE THAN $1 MILLION IN ANY SINGLE TAXABLE YEAR OR BY A TOTAL OF $2 MILLION FOR ANY COMBINATION OF TAXABLE YEARS. HOWEVER, A LISTED TRANSACTION IS NOT TREATED AS A REPORTABLE TRANSACTION IF IT HAS AFFECTED THE TAXPAYER'S FEDERAL INCOME TAX LIABILITY AS REPORTED ON ANY TAX RETURN FILED ON OR BEFORE FEBRUARY 28, 2000. BECAUSE FLAGSTAFF IS A TAX-EXEMPT I.R.C. SECTION 501(C)(3) ENTITY, FLAGSTAFF'S PARTICIPATION IN THE PARTNERSHIP WAS NOT EXPECTED TO REDUCE ITS TAX LIABILITY AT ALL . THEREFORE, UNDER TEMP. TREAS. REG. SECTION 1.6011-4T, FLAGSTAFF MAY NOT HAVE A DISCLOSURE REQUIREMENT WITH RESPECT TO ITS INVESTMENT IN THE PARTNERSHIP PRIOR TO FEBRUARY 28, 2000.* * SINCE 2001, TEMP. TREAS. REG. SECTION 1.6011-4T HAS BEEN MODIFIED A NUMBER OF TIMES BEFORE BEING FINALIZED IN 2003. BASED ON THE VARIOUS EFFECTIVE DATES FOR THE DIFFERENT SECTIONS THAT HAVE CHANGED, IT APPEARS THAT THE FEBRUARY 28, 2000 INITIAL TEMP. TREAS. REG. SECTION 1.6011-4T IN T.D. 8877 MAY GOVERN THE DISCLOSURE OBLIGATIONS OF FLAGSTAFF WITH RESPECT TO ITS PARTICIPATION IN THE PARTNERSHIP THROUGH ITS LIMITED PARTNERSHIP INTEREST THAT WAS OBTAINED PRIOR TO FEBRUARY 28, 2000, ON OR ABOUT DECEMBER 31, 1990. FLAGSTAFF HAS NOT, NOR DOES IT, EXPECT ANY TAX BENEFIT FROM THE TRANSACTION, INCLUDING DEDUCTIONS, EXCLUSIONS FROM GROSS INCOME, NONRECOGNITION OF GAIN, TAX CREDITS, ADJUSTMENTS (OR THE ABSENCE OF ADJUSTMENTS) TO THE BASIS OF PROPERTY, LOSS, OR TAX CREDITS. FLAGSTAFF IS EXEMPT FROM FEDERAL INCOME TAXATION UNDER I.R.C. SECTION 501(C)(3). FLAGSTAFF ONLY EXPECTS DISTRIBUTIONS FROM THE PARTNERSHIP IN ITS CAPACITY AS LIMITED PARTNER. NORTHERN ARIZONA HEALTHCARE POST OFFICE BOX 1268 FLAGSTAFF AZ 86001 742410946 HEALTHCARE AZ 501(C)(3) 9 NA false VERDE VALLEY MEDICAL CENTER 269 SOUTH CANDY LANE COTTONWOOD AZ 86326 860100882 HEALTHCARE AZ 501(C)(3) 3 NAH true ALLIANCE MED LAB 200584165 DISSOLVED 3/26/12 AZ NA RELATED 0 0 false 0 0.00000 TASC LLC 860913157 AMBULATORY SV AZ NA RELATED -48713 850190 false 0 true 0.67000 false false false false false false false false true true false false false true false true true false VERDE VALLEY MEDICAL CENTER P 14781602 FINANCIAL STMT.