UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-11239
COLUMBIA/HCA HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 75-2497104
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
201 West Main Street, Louisville, Kentucky 40202
(Address of principal executive offices) (Zip Code)
(502) 572-2000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the
past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding at
Class of Common Stock October 31, 1994
Voting common stock, $.01 par value 347,900,500 shares
Nonvoting common stock, $.01 par value 14,190,000 shares
1 of 26
COLUMBIA/HCA HEALTHCARE CORPORATION
FORM 10-Q
September 30, 1994
Page of
Part I: Financial Information Form 10-Q
Item 1. Financial Statements
Condensed Consolidated Statement of Income - for the
quarters and nine months ended September 30, 1994
and 1993 .................................................... 3
Condensed Consolidated Balance Sheet - September 30, 1994
and December 31, 1993 ....................................... 4
Consolidated Statement of Cash Flows - for the nine months
ended September 30, 1994 and 1993 ........................... 5
Notes to Condensed Consolidated Financial Statements ........ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ......................... 15
Part II: Other Information
Items 1 to 6 ......................................................... 22
COLUMBIA/HCA HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the quarters and nine months ended September 30, 1994 and 1993
Unaudited
(Dollars in millions, except per share amounts)
Quarter Nine Months
1994 1993 1994 1993
Revenues ....................................... $ 2,728 $ 2,491 $ 8,195 $ 7,681
Salaries, wages and benefits ................... 1,132 1,034 3,335 3,155
Supplies ....................................... 406 405 1,254 1,251
Other operating expenses ....................... 529 474 1,533 1,413
Provision for doubtful accounts ................ 169 152 470 410
Depreciation and amortization .................. 152 140 440 414
Interest expense ............................... 62 81 182 251
Investment income .............................. (15) (18) (50) (45)
Non-recurring transactions ..................... - 151 159 151
2,435 2,419 7,323 7,000
Income from continuing operations before
minority interests and income taxes .......... 293 72 872 681
Minority interests in earnings of consolidated
entities ..................................... 4 3 13 10
Income from continuing operations before
income taxes ................................. 289 69 859 671
Provision for income taxes ..................... 113 41 341 272
Income from continuing operations .............. 176 28 518 399
Income from operations of discontinued
health plan segment, net of income taxes ..... - - - 16
Extraordinary loss on extinguishment of
debt, net of income tax benefit .............. (23) (84) (115) (84)
Net income (loss) ......................... $ 153 $ (56)$ 403 $ 331
Earnings (loss) per common and common
equivalent share:
Income from continuing operations ............ $ .50 $ .08 $ 1.50 $ 1.18
Income from operations of discontinued
health plan segment ........................ - - - .04
Extraordinary loss on extinguishment of
debt ....................................... (.06) (.24) (.33) (.24)
Net income (loss) ......................... $ .44 $ (.16)$ 1.17 $ .98
Cash dividends per common share ................ $ .03 $ .03 $ .09 $ .03
Shares used in earnings per common and common
equivalent share computation (000) ........... 351,139 340,145 344,954 338,744
See accompanying notes.
COLUMBIA/HCA HEALTHCARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited
(Dollars in millions, except per share amounts)
September 30, December 31,
ASSETS 1994 1993
Current assets:
Cash and cash equivalents .......................... $ 25 $ 224
Accounts receivable less allowance for loss of
$594 - September 30, 1994 and $513 -
December 31, 1993 ................................ 1,628 1,566
Inventories ........................................ 273 245
Other .............................................. 499 453
2,425 2,488
Property and equipment, at cost ...................... 9,365 8,392
Accumulated depreciation ............................. (3,154) (2,792)
6,211 5,600
Investments of professional liability insurance
subsidiaries........................................ 739 700
Intangible assets .................................... 2,206 1,232
Other ................................................ 258 196
$ 11,839 $ 10,216
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 401 $ 445
Salaries, wages and other compensation ............. 264 232
Other accrued expenses ............................. 889 853
Income taxes ....................................... 21 22
Long-term debt due within one year ................. 49 363
1,624 1,915
Long-term debt ....................................... 3,709 3,335
Deferred credits and other liabilities ............... 1,454 1,438
Minority interests in equity of consolidated
entities ........................................... 204 57
Contingencies
Common stockholders' equity:
Common stock, $.01 par; authorized 800,000,000
voting shares and 25,000,000 nonvoting
shares; issued and outstanding 347,845,300
voting shares and 14,190,000 nonvoting shares
- September 30, 1994 and 317,686,800 voting
shares and 18,990,000 nonvoting shares -
December 31, 1993 ................................ 4 3
Other .............................................. 4,844 3,468
4,848 3,471
$ 11,839 $ 10,216
See accompanying notes.
COLUMBIA/HCA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended September 30, 1994 and 1993
Unaudited
(Dollars in millions)
1994 1993
Cash flows from continuing operations:
Net income ............................................. $ 403 $ 331
Adjustments to reconcile net income to net
cash provided by operating activities:
Income from discontinued operations ................. - (16)
Non-recurring transactions .......................... 159 151
Depreciation and amortization ....................... 440 414
Deferred income taxes ............................... (88) (62)
Change in operating assets and liabilities:
Decrease in accounts receivable ................... 32 43
(Increase) decrease in inventories and other
assets ......................................... (54) 9
Increase (decrease) in income taxes ............... (1) 10
Decrease in other liabilities ..................... (118) (24)
Extraordinary loss on extinguishment of debt ........ 187 135
Other ............................................... 25 51
Net cash provided by continuing operations ........ 985 1,042
Cash flows from investing activities:
Purchase of property and equipment ..................... (693) (630)
Cash acquired in connection with Medical Care
America, Inc. merger transaction ..................... 106 -
Acquisition of hospitals and health care facilities .... (213) (78)
Disposition of property and equipment .................. 78 170
Change in investments .................................. (63) -
Other .................................................. (72) (15)
Net cash used in investing activities ............. (857) (553)
Cash flows from financing activities:
Issuance of long-term debt ............................. 1,035 1,178
Net changes in commercial paper borrowings and lines
of credit ............................................ 1,022 219
Repayment of long-term debt ............................ (2,387) (1,851)
Payment of cash dividends .............................. (25) (36)
Issuance of common stock ............................... 18 38
Payment to Humana Inc. in spinoff transaction .......... - (135)
Other .................................................. 10 (6)
Net cash used in financing activities ............. (327) (593)
Change in cash and cash equivalents ..................... (199) (104)
Cash and cash equivalents at beginning of period ........ 224 217
Cash and cash equivalents at end of period .............. $ 25 $ 113
Interest payments ....................................... $ 218 $ 207
Income tax payments, net of refunds ..................... 358 266
See accompanying notes.
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
NOTE 1 - REPORTING ENTITY
Columbia/HCA Healthcare Corporation ("Columbia/HCA") is a Delaware
corporation that operates hospitals and ancillary health care facilities
through either (i) wholly owned subsidiaries or (ii) ownership of controlling
interests in various partnerships in which subsidiaries of Columbia/HCA serve
as the managing general partner.
In September 1994, Columbia/HCA completed a merger transaction with Medical
Care America, Inc. ("MCA")(the "MCA Merger"). See Note 4 for a description
of the specific terms of the MCA Merger.
In February 1994, Columbia Healthcare Corporation ("Columbia") merged with
HCA - Hospital Corporation of America ("HCA")(the "HCA Merger") to form
Columbia/HCA. See Note 5 for a description of the specific terms of the HCA
Merger.
Prior to the HCA Merger, Columbia was formed in September 1993 as a result
of a merger involving a wholly owned subsidiary of Columbia Hospital
Corporation ("CHC") and Galen Health Care, Inc. ("Galen") (the "Galen
Merger"). See Note 6 for a description of the specific terms of the Galen
Merger.
NOTE 2 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements do not include
all of the disclosures normally required by generally accepted accounting
principles or those normally required in annual reports filed on Form 10-K.
Accordingly, these financial statements should be read in conjunction with
the audited consolidated financial statements of Columbia/HCA for the year
ended December 31, 1993 filed on Form 10-K with the Securities and Exchange
Commission.
The financial information has been prepared in accordance with Columbia/HCA's
customary accounting practices and has not been audited. Management believes
that the financial information presented reflects all adjustments necessary
for a fair statement of interim results. All such adjustments are of a
normal and recurring nature.
The MCA Merger and various other acquisitions and joint venture transactions
have been accounted for under the purchase method. Accordingly, the accounts
of these entities have been consolidated with those of Columbia/HCA since the
acquisition of controlling interest.
For accounting purposes, the HCA and Galen Mergers have been treated as
poolings of interests. Accordingly, these financial statements give
retroactive effect to the mergers and include the combined operations of the
respective former entities for all periods presented. In addition, the
historical financial information related to Galen (which prior to the Galen
Merger was reported on a fiscal year ending August 31) has been recast to
conform to Columbia/HCA's annual reporting period ending December 31.
NOTE 3 - EARNINGS PER SHARE
Earnings per common and common equivalent share are based upon weighted
average common shares outstanding adjusted for the dilutive effect of common
stock equivalents consisting primarily of stock options. Fully diluted
earnings per common and common equivalent share are not presented because
such amounts approximate earnings per common and common equivalent share.
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 4 - MCA MERGER
On September 1, 1994, the shareholders of MCA approved the MCA Merger,
effective as of September 16, 1994. MCA was a national provider of
alternative-site healthcare services through the operation of freestanding
surgical centers and certain other outpatient ancillary facilities.
In connection with the MCA Merger, all outstanding shares of MCA common stock
were converted on a tax-free basis into approximately 21,265,000 shares of
Columbia/HCA voting common stock (an exchange ratio of 0.7042 of a share of
Columbia/HCA common stock for each share of MCA common stock). The following
is a summary of the aggregate purchase price (dollars in millions, except per
share data):
Fair value of Columbia/HCA common stock
($42.25 per share) issued in exchange for all
outstanding MCA common stock .................... $899
Fair value of options to purchase Columbia/HCA
common stock issued in exchange for all
outstanding options to purchase MCA common
stock ........................................... 33
Transaction costs ................................. 10
$942
The MCA Merger has been accounted for by the purchase method and,
accordingly, the results of operations of MCA have been included with those
of Columbia/HCA since September 1, 1994. The excess of the aggregate
purchase price over the estimated fair value of net assets acquired
approximated $871 million.
The following unaudited pro forma information reflects the combined operating
results of Columbia/HCA and MCA as if the MCA Merger had occurred at the
beginning of the periods indicated (dollars in millions, except per share
data).
Three Months Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Revenues ............................ $2,802 $2,596 $8,493 $7,995
Income(loss) from continuing
operations ......................... 181 (8) 541 378
Net income (loss).................... 158 (197) 514 207
Earnings (loss) per common and
common equivalent share:
Income (loss) from continuing
operations ...................... .49 (.02) 1.48 1.04
Net income (loss) ................. .43 (.54) 1.41 .57
NOTE 5 - HCA MERGER
The HCA Merger was completed on February 10, 1994. In connection therewith,
Columbia stockholders approved an amendment to Columbia's Certificate of
Incorporation changing the name of the corporation to "Columbia/HCA
Healthcare Corporation". HCA was then merged into a wholly owned subsidiary
of Columbia/HCA. Shares of HCA Class A voting common stock and Class B
nonvoting common stock were converted on a tax-free basis into approximately
166,846,000 shares of Columbia/HCA voting common stock and approximately
18,990,000 shares of Columbia/HCA nonvoting common stock, respectively (an
exchange ratio of 1.05 shares of Columbia/HCA common stock for each share of
HCA voting and nonvoting common stock).
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 5 - HCA MERGER (Continued)
The HCA Merger has been accounted for as a pooling of interests, and
accordingly, the condensed consolidated financial statements give retroactive
effect to the HCA Merger and include the combined operations of Columbia and
HCA for all periods presented. The following is a summary of the results of
operations of the separate entities for periods prior to the HCA Merger
(dollars in millions):
Columbia HCA Consolidated
One month ended January 31, 1994:
Revenues ........................... $ 480 $ 460 $ 940
Net income ......................... 33 44 77
Three months ended September 30, 1993:
Revenues ........................... $1,238 $1,253 $2,491
Net income (loss):
Continuing operations ............ $ (45) $ 73 $ 28
Extraordinary loss on
extinguishment of debt ......... (70) (14) (84)
$ (115) $ 59 $ (56)
Nine months ended September 30, 1993:
Revenues ........................... $3,829 $3,852 $7,681
Net income:
Continuing operations ............ $ 115 $ 284 $ 399
Discontinued operations .......... 16 - 16
Extraordinary loss on
extinguishment of debt ......... (70) (14) (84)
$ 61 $ 270 $ 331
NOTE 6 - GALEN MERGER
On August 31, 1993, the stockholders of both CHC and Galen approved the Galen
Merger, effective as of September 1, 1993. In connection with the Galen
Merger, CHC, a Nevada corporation, was merged into Columbia. Each CHC share
of common stock was converted on a tax-free basis into one share of Columbia
common stock. Immediately subsequent thereto, a wholly owned subsidiary of
Columbia was merged into Galen, at which time Galen became a wholly owned
subsidiary of Columbia. In connection with this transaction, Columbia issued
approximately 123,830,000 shares of common stock in a tax-free exchange for
all of the outstanding common shares of Galen (an exchange ratio of 0.775 of
a share of Columbia common stock for each share of Galen common stock).
The Galen Merger has been accounted for as a pooling of interests, and
accordingly, the condensed consolidated financial statements give retroactive
effect to the Galen Merger and include the combined operations of CHC and
Galen for all periods presented. The following is a summary of the results
of operations of the separate entities for the respective 1993 periods
(dollars in millions):
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 6 - GALEN MERGER (Continued)
CHC Galen Consolidated
Two months ended August 31, 1993:
Revenues ........................... $ 199 $ 633 $ 832
Net income (loss) .................. (3) 36 33
Eight months ended August 31, 1993:
Revenues ........................... $ 823 $2,600 $3,423
Net income:
Continuing operations ............ $ 17 $ 176 $ 193
Discontinued operations .......... - 16 16
$ 17 $ 192 $ 209
NOTE 7 - SPINOFF TRANSACTION AND DISCONTINUED OPERATIONS
Prior to the Galen Merger, Galen began operating its hospital business as an
independent publicly held corporation on March 1, 1993 as a result of a
spinoff transaction by Humana Inc. ("Humana")(the "Spinoff"), which retained
its managed care health plan business. The Spinoff separated Humana's
previously integrated hospital and managed care health plan businesses and
was effected through the distribution of Galen common stock to then current
Humana stockholders on a one-for-one basis.
For accounting purposes, because of the relative significance of the hospital
business, the consolidated financial statements of Galen (and now those of
Columbia/HCA) include the separate results of Humana's hospital business,
while the operations and net assets of Humana's managed care health plans
have been classified as discontinued operations.
Revenues of the discontinued managed care health plan business (included in
discontinued operations in the condensed consolidated statement of income)
were $523 million for the nine months ended September 30, 1993.
NOTE 8 - NON-RECURRING TRANSACTIONS AND EXTINGUISHMENT OF DEBT
Non-recurring Transactions
In the first quarter of 1994 Columbia/HCA recorded the following charges in
connection with the HCA Merger (dollars in millions):
Employee benefit and certain severance actions ........... $ 40
Investment advisory and professional fees ................ 12
Costs of information systems consolidations
primarily related to the writedown of assets ........... 42
Writedown of assets in connection with
consolidation of duplicative facilities ................ 53
Other .................................................... 12
$ 159
In addition to employee severance costs above, Columbia/HCA is a party to
employment agreements with certain key employees as a result of the Galen and
HCA Mergers. Future severance payments under these agreements, which may
occur as a result of continued consolidation activities, will be charged to
earnings as incurred.
Results of operations in the third quarter of 1993 include $151 million
(before income taxes) of charges related primarily to the Galen Merger.
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 8 - NON-RECURRING TRANSACTIONS AND EXTINGUISHMENT OF DEBT (Continued)
Extinguishment of Debt
In connection with the Galen and HCA Mergers, substantial amounts of high-
coupon fixed and floating rate long-term debt have been refinanced to reduce
future interest costs and eliminate certain restrictive covenants.
In the third quarter of 1994, net income was reduced by $23 million or $.06
per share in connection with the refinancing of $136 million of long-term
debt. Net income in the first quarter of 1994 includes a loss of $92 million
or $.27 per share related to the refinancing of approximately $2 billion of
long-term debt.
During the third quarter of 1993, Columbia/HCA effected the refinancing of
$787 million of its long-term debt and renegotiated HCA's bank credit
agreement (subsequently replaced upon consummation of the HCA Merger).
After-tax losses from these refinancing activities aggregated $84 million or
$.24 per share.
NOTE 9 - OTHER BUSINESS COMBINATIONS
The following is a summary of acquisitions and joint ventures (excluding the
MCA, HCA and Galen Mergers) consummated during the respective nine month
periods (dollars in millions):
1994 1993
Number of hospitals ............................... 9 3
Number of licensed beds ........................... 2,535 903
Purchase price information:
Fair value of assets acquired ................... $ 403 $ 164
Liabilities assumed ............................. ( 60) ( 48)
Net assets acquired ........................... 343 116
Net assets sold in exchange for acquired
properties .................................... (45) -
Contributions from minority partners ............ (79) (28)
Net cash acquired ............................... (6) (10)
Net cash paid for acquisitions ............. $ 213 $ 78
NOTE 10 - INCOME TAXES
The Internal Revenue Service (the "IRS") has issued statutory notices of
deficiency in connection with its examinations of HCA's federal income tax
returns for 1981 through 1988. Columbia/HCA is currently contesting these
claimed deficiencies in the United States Tax Court (the "Tax Court"). In
addition, the IRS has proposed certain adjustments in connection with its
examinations of HCA's 1989 and 1990 federal income tax returns. The
following is a discussion of the disputed items.
Method of Accounting
For years 1981 through 1986, most of HCA's hospital subsidiaries (the
"Subsidiaries") reported taxable income primarily using the cash method of
accounting. This method was prevalent within the hospital industry and the
Subsidiaries applied the method in accordance with prior agreements with the
IRS. The IRS now asserts that the accrual method of accounting should have
been used by the Subsidiaries. The Tax Reform Act of
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 10 - INCOME TAXES (Continued)
Method of Accounting (Continued)
1986 (the "1986 Act") requires the use of the accrual method of accounting
beginning in 1987. Consequently, the Subsidiaries changed to the accrual
method of accounting beginning January 1, 1987. In accordance with the
provisions of the 1986 Act, income that had been deferred at the end of 1986
is being recognized as taxable income by the Subsidiaries in equal annual
installments over ten years. If the IRS should ultimately prevail in its
claim that the Subsidiaries should have used the accrual method for 1981
through 1986, the claim would be reduced to the extent that HCA has
recognized as taxable income a portion of such deferred income taxes since
1986. In addition, the sale by HCA of numerous Subsidiaries in 1987 that had
been using the cash method resulted in the recognition of a substantial gain
that would not have been recognized had the Subsidiaries been using the
accrual method. If the IRS were successful with respect to this issue,
Columbia/HCA would owe an additional $110 million in income taxes and $472
million in interest as of September 30, 1994.
Hospital Acquisitions
In connection with hospitals acquired by HCA in 1981 and 1985, the IRS has
asserted that a portion of the costs allocated to identifiable assets with
ascertainable useful lives should be reclassified as nondeductible goodwill.
If the IRS ultimately prevails in this regard, Columbia/HCA would owe an
additional $113 million in income taxes and $158 million in interest as of
September 30, 1994.
Insurance Subsidiary
Based on a Sixth Circuit Court of Appeals decision (the Court having
jurisdiction over the HCA issues), HCA has claimed that insurance premiums
paid to its wholly owned insurance subsidiary ("Parthenon") are deductible,
while the IRS asserts that such premiums are not deductible and that
corresponding losses are only deductible at the time and to the extent that
claims are actually paid. HCA has claimed the additional deductions in its
Tax Court petitions. Through September 30, 1994, Columbia/HCA is seeking a
refund totaling $51 million in income taxes and $100 million in interest in
connection with this issue.
As an alternative to its position, HCA has asserted that in connection with
the sale of hospitals to HealthTrust, Inc. - The Hospital Company ("HTI") in
1987, premiums paid to Parthenon by the sold hospitals, if not deductible as
discussed above, became deductible at the time of the sale. Accordingly, HCA
claimed such deduction in its 1987 federal income tax return. The IRS has
disallowed the deduction and is claiming an additional $5 million in income
taxes and $17 million in interest. A final determination that the premiums
are not deductible either when paid to Parthenon or upon the sale of certain
hospitals to HTI would increase the taxable basis in the hospitals sold,
thereby reducing HCA's gain realized on the sale.
HTI Sale
In connection with its sale of certain Subsidiaries to HTI in 1987 in
exchange for cash, HTI preferred stock and stock purchase warrants, HCA
calculated its gain based on the valuation of such stock and warrants by an
independent appraiser. The IRS claims a higher aggregate valuation, based
on the face amount of the preferred stock and a separate appraisal HTI
obtained for the stock purchase warrants. Application of the higher valuation
would increase the gain recognized by HCA on the sale. However, if the IRS
succeeds in its assertion, HCA's tax basis in its HTI preferred stock and
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 10 - INCOME TAXES (Continued)
HTI Sale (Continued)
warrants will be increased accordingly, thereby substantially reducing the
tax from the sale of such preferred stock and warrants by a corresponding
amount. By December 31, 1992, HCA had sold its entire interest in the HTI
preferred stock and warrants. Including the effect of the sales of these
securities, the IRS is claiming additional interest of $70 million through
September 30, 1994.
Also in connection with the 1987 sale of certain Subsidiaries to HTI, the IRS
claims that HCA's basis in the stock of the Subsidiaries sold to HTI should
be calculated by adjusting such basis to reflect accelerated rather than
straight-line depreciation, which would reduce HCA's basis in the stock sold
and increase the taxable gain on the sale. The IRS position is contrary to
a Tax Court decision in a similar case. The IRS is claiming additional
income taxes of $79 million and interest of $76 million through September
30, 1994.
In connection with the 1987 HTI transactions, the IRS further asserts that,
to the extent the Subsidiaries were properly on the cash method through 1986,
and therefore properly recognizing taxable income over the ten-year
transition period, HCA should have additional income in 1987 equal to the
unamortized portion of the deferred income. It is HCA's position that no
additional income need be included in 1987 and that the deferred income
continues to qualify for the ten-year transition period after the sale.
Should the IRS prevail, Columbia/HCA would owe $11 million of additional
income taxes and $19 million of interest through September 30, 1994. The
position of the IRS is an alternative to its denial of the use of the cash
method of accounting previously discussed.
Doubtful Accounts
The IRS is asserting that in 1986 HCA was not entitled to include charity
care writeoffs in the formula used to calculate its deduction for doubtful
accounts. For years 1987 and 1988, the IRS is asserting that HCA was not
entitled to exclude from income amounts which are unlikely to be collected.
Management believes that such exclusions are permissible under the accrual
method of accounting, and because HCA is a "service business" and not a
"merchandising business," it is entitled to a special exclusion provided to
service businesses by the 1986 Act. The IRS disagrees, asserting that HCA
is engaged, at least in part, in a merchandising business. Notwithstanding
this assertion, the IRS contends that the exclusion taken by HCA is excessive
under applicable Temporary Treasury Regulations. Columbia/HCA believes that
the calculation of the exclusion is inaccurate since it does not permit the
exclusion in accordance with the controlling statute. If the IRS prevails,
Columbia/HCA would owe additional income taxes of $102 million and interest
of $58 million through September 30, 1994.
Leveraged Buy-out Expenses
The IRS has asserted that no deduction is allowed for various expenses
incurred in connection with HCA's leveraged buy-out transaction in 1989,
including the amortization of loan costs incurred to borrow funds to acquire
the stock of the former shareholders, certain fees incurred by the Special
Committee of HCA's Board of Directors to evaluate the buy-out proposal,
compensation payments to cancel employee stock plans, and various other costs
incurred after the buy-out which have been treated as part of the transaction
by the IRS. Columbia/HCA believes that all of these costs are deductible.
If the IRS prevails on these issues, Columbia/HCA would owe income taxes of
$94 million and interest of $32 million through September 30, 1994.
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 10 - INCOME TAXES (Continued)
Other Issues
Additional federal income tax issues primarily concern disputes over the
depreciable lives utilized by HCA for constructed hospital facilities,
investment tax credits, vacation pay deductions and income from foreign
operations. Many of these items, including depreciation, investment tax
credits and foreign issues, have been resolved favorably in previous
settlements. The IRS is claiming an additional $44 million in income taxes
and $29 million in interest through September 30, 1994.
On March 24, 1994, Columbia/HCA made an advance payment to the IRS of
approximately $75 million in connection with certain disputed prior years
income taxes and related interest. This payment will not have a material
effect on 1994 earnings.
In September 1994, Columbia/HCA presented its case in Tax Court for all
issues other than the deductibility of insurance premiums paid to Parthenon,
which is expected to be presented in the fourth quarter of 1994. A Tax Court
decision is expected in 1995. Resolution of disputed income tax issues by
the Tax Court will not be affected by the proposed merger with HTI discussed
in Note 12.
Management believes that HCA had properly reported its income and paid its
taxes in accordance with applicable laws and agreements established with the
IRS during previous examinations, and that final resolution of these disputes
will not have a material adverse effect on the results of operations or
financial position of Columbia/HCA.
NOTE 11 - CONTINGENCIES
Management continually evaluates contingencies based upon the best available
evidence. In addition, allowances for loss are provided currently for
disputed items that have continuing significance, such as certain third-party
reimbursements and deductions that continue to be claimed in current cost
reports and tax returns.
Management believes that allowances for loss have been provided to the extent
necessary and that its assessment of contingencies is reasonable. Management
believes that resolution of contingencies will not materially affect
Columbia/HCA's financial position or results of operations.
Principal contingencies are described below:
Revenues
Certain third-party payments are subject to examination by agencies
administering the programs. Columbia/HCA is contesting certain issues raised
in audits of prior year cost reports.
Professional Liability Risks
Columbia/HCA has provided for loss for professional liability risks based
upon actuarially determined estimates. Actual settlements and expenses
incident thereto may differ from the provisions for loss.
Income Taxes
Columbia/HCA is contesting adjustments proposed by the IRS.
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Unaudited
NOTE 11 - CONTINGENCIES (Continued)
Spinoff
Certain subsidiaries of Columbia/HCA are parties to risk-sharing arrangements
with Humana.
Regulatory Review
Federal regulators are investigating certain financial arrangements with
physicians at two psychiatric hospitals.
Litigation
Various suits and claims arising in the ordinary course of business are
pending against Columbia/HCA.
Columbia/HCA is a party to a class action lawsuit originally initiated
against certain subsidiaries, directors and officers of MCA alleging
violation of various sections of the Securities Acts of 1933 and 1934 as well
as various provisions of state law. The litigation is generally based on
claims that the defendants knew or should have known earlier than reported
that MCA's earnings for the quarter ended September 30, 1992 would be below
analysts' published expectations and that the defendants made false and
misleading statements concerning MCA's earnings prospects, leading to the
subsequent loss in the value of MCA common stock. The litigation seeks to
recover monetary damages in unspecified amounts and is in the early stages
of discovery.
NOTE 12 - SUBSEQUENT EVENT
On October 4, 1994, Columbia/HCA entered into a definitive agreement to merge
with HTI in a tax-free, stock-for-stock transaction.
Under the terms of the merger agreement which was approved by the boards of
both companies, HTI stockholders would receive 0.88 of a share of
Columbia/HCA common stock in exchange for each HTI share held, which would
result in outstanding Columbia/HCA common shares of approximately 452
million. Columbia/HCA expects that the merger will be tax-free to HTI
stockholders and accounted for as a pooling of interests. It is also
anticipated that the combined entity will continue Columbia/HCA's existing
quarterly dividend policy of $.03 per common share.
The proposed merger is subject to various conditions, including confirmation
that the proposed merger qualifies as a pooling of interests for accounting
purposes, expiration or termination of the waiting period applicable to the
consummation of the merger under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, and approval of the proposed transaction by stockholders of both
companies. The combined entity would operate approximately 311 hospitals
containing over 60,000 licensed beds, over 125 outpatient ancillary
facilities located in 37 states and two foreign countries with annual
revenues in excess of $15 billion.
A proxy statement detailing the proposed merger will be distributed to
stockholders of both companies. Stockholder meetings to vote on the proposed
merger are anticipated to occur in the first quarter of 1995. If approved,
the transaction should be completed shortly thereafter.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Background Information and Business Strategy
Proposed HTI Merger
On October 4, 1994, Columbia/HCA entered into a definitive agreement to merge
with HTI in a tax-free, stock-for-stock transaction. See Note 12 of the
Notes to Condensed Consolidated Financial Statements.
MCA Merger
The MCA Merger was completed in September 1994. As discussed in Note 4 of
the Notes to Condensed Consolidated Financial Statements, the MCA Merger was
accounted for by the purchase method, and accordingly, the accompanying
condensed consolidated financial statements and financial and operating data
included in this discussion and analysis include the operations of MCA since
September 1, 1994.
HCA Merger
As discussed in Note 5 of the Notes to Condensed Consolidated Financial
Statements, the HCA Merger was completed on February 10, 1994. For
accounting purposes, this transaction was treated as a pooling of interests.
Accordingly, the accompanying condensed consolidated financial statements and
financial and operating data included in this discussion and analysis give
retroactive effect to the HCA Merger and include the combined operations of
Columbia and HCA for all periods presented.
Galen Merger
The Galen Merger was completed on September 1, 1993 and was also accounted
for as a pooling of interests. See Note 6 of the Notes to Condensed
Consolidated Financial Statements for a discussion of the Galen Merger. The
accompanying condensed consolidated financial statements and financial and
operating data included in this discussion and analysis give retroactive
effect to the Galen Merger and include the combined operations of CHC and
Galen for all periods presented. In addition, the historical financial
information related to Galen (which prior to the Galen Merger was reported
on a fiscal year ending August 31) has been recast to conform to
Columbia/HCA's annual reporting period ending December 31.
Spinoff Transaction
Prior to the merger with CHC, Galen became a publicly held corporation as a
result of the Spinoff which was completed on March 1, 1993. See Note 7 of
the Notes to Condensed Consolidated Financial Statements for a discussion of
the Spinoff. The Spinoff separated Humana's previously integrated hospital
and managed care health plan businesses and was effected through the
distribution of Galen common stock to then current Humana common stockholders
on a one-for-one basis. For accounting purposes, because of the relative
significance of the hospital business, the pre-Spinoff financial statements
of Galen (and now those of Columbia/HCA) include the separate results of
Humana's hospital business, while the operating results and net assets of
Humana's managed care health plans have been classified as discontinued
operations.
Business Strategy
Columbia/HCA primarily operates hospitals and ancillary health care
facilities through either (i) wholly owned subsidiaries or (ii) ownership of
controlling interests in various partnerships in which subsidiaries of
Columbia/HCA serve as the managing general partner. Columbia/HCA's business
strategy centers on the development of comprehensive, integrated healthcare
delivery networks with physicians and other healthcare providers in targeted
markets, which typically involves significant health care facility
acquisitions and consolidation activities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Background Information and Business Strategy (Continued)
Business Strategy (Continued)
During the past several years, hospital industry inpatient admission trends
have been adversely impacted by cost containment efforts initiated by federal
and state governments and various third-party payers, including health
maintenance organizations, preferred provider organizations, commercial
insurance companies and employer-sponsored networks. In addition, a
significant number of medical procedures have shifted from inpatient to less
expensive outpatient settings as a result of both cost containment pressures
and advances in medical technology.
In response to changes in the health care industry, Columbia/HCA has
developed the following strategy to provide the highest quality health care
services at the lowest possible cost:
Become a significant provider of services - Columbia/HCA attempts to (i)
consolidate services to reduce costs and (ii) develop the geographic
coverage necessary for inclusion in most managed care and employer-sponsored
networks in each market.
Provide a comprehensive range of services - In addition to the operation of
general, acute care hospitals, Columbia/HCA also operates psychiatric and
rehabilitation facilities, outpatient surgery and diagnostic centers, home
health agencies and other services. This strategy enables Columbia/HCA to
attract business from managed care plans and major employers seeking
efficient access to a wide array of health care services.
Deliver high quality services - Through the use of clinical information
systems and continuous quality enhancement programs, Columbia/HCA focuses on
patient outcomes and strives to continuously improve the quality of care and
service provided to patients.
Integrate fragmented delivery systems - Through its networks, Columbia/HCA
focuses on coordinating pricing, contracting, information systems, economic
incentives and quality assurance activities among providers in each market.
Results of Operations
Revenues increased 9% to $2.7 billion in the third quarter of 1994 and 7% to
$8.2 billion for the nine months ended September 30, 1994 compared to the
respective periods last year, primarily as a result of acquisitions, growth
in inpatient and outpatient volumes and price increases. On a same-hospital
basis, admissions increased 1.9% and 1.4% for the third quarter and nine
months periods, respectively, and outpatient visits increased 52.2% and 31.7%
for the respective periods compared to 1993. The increase in outpatient
visits is primarily a result of expanding home health and other outpatient
ancillary services.
Despite a continued increase in discounted business, income from continuing
operations before non-recurring transactions, depreciation, interest expense,
minority interests, income taxes and amortization ("EBDITA") increased 14%
to $507 million in third quarter 1994 from $444 million last year and 10% to
$1.7 billion for the for the nine month period from $1.5 billion last year.
The increase in EBDITA margins to 18.6% and 20.2% in the third quarter and
nine months ended September 30, 1994, respectively, from 17.9% and 19.5% last
year, respectively, resulted primarily from volume growth, increased
discounts on medical supplies and other operating efficiencies related to
growth in
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
volume of services. Medicare admissions as a percentage of total admissions
grew from 37% for the third quarter of 1993 to 38% in 1994, while discounted
and managed care admissions increased from 36% to 40%, respectively. For the
nine month periods, Medicare admissions as a percentage of total admissions
increased from 38% in 1993 to 39% in 1994, and discounted and managed care
admissions grew from 34% last year to 39% this year.
During the first quarter of 1994, Columbia/HCA recorded $159 million (before
income taxes) of certain non-recurring charges in connection with the HCA
Merger. In addition to investment and advisory fees associated with the HCA
Merger, these charges reflect management's actions to reduce overhead costs,
eliminate duplicative operating facilities in certain markets and consolidate
management information systems. These cost-saving measures should be
completed during 1994. Management believes that these actions related to the
HCA Merger, combined with cost reductions from renegotiations of medical
supply contracts and interest savings from the 1994 refinancings of long-term
debt, could result in annual pretax savings of approximately $130 million,
of which as much as $75 million could be realized in 1994.
Excluding the effects of non-recurring transactions, income from continuing
operations increased 28% to $176 million ($.50 per share) in the third
quarter of 1994 from $137 million ($.40 per share) last year, and 22% to $620
million ($1.80 per share) for the nine months ended September 30, 1994 from
$508 million ($1.50 per share) for the same period last year. The increase
in both periods was attributable to the previously discussed growth of EBDITA
and declines in interest expense resulting from refinancing activities.
The freestanding surgical center business acquired in connection with the MCA
Merger in September 1994 increased revenues by $39 million. The MCA Merger
had no material effect on third quarter 1994 earnings.
Results of operations for the periods prior to the Spinoff in 1993 include
income from discontinued operations of $16 million or $.04 per share related
to Humana's health plan business. See Note 7 of the Notes to Condensed
Consolidated Financial Statements.
In connection with the Galen and HCA Mergers, substantial amounts of high-
coupon long-term debt have been refinanced to reduce future interest expense
and eliminate certain restrictive covenants. During the third quarter of
1994, Columbia/HCA incurred an after-tax loss of $23 million or $.06 per
share in connection with the refinancing of $136 million of long-term debt.
In the first quarter of 1994, Columbia/HCA refinanced approximately $2
billion of long-term debt resulting in an after-tax loss of $92 million or
$.27 per share. Losses from refinancings of $787 million of long-term debt
and a revolving credit agreement in the third quarter of 1993 reduced net
income by $84 million or $.24 per share.
In connection with the Galen Merger, Columbia/HCA recorded charges in the
third quarter of 1993 totaling $151 million (before income taxes) for
management actions similar to those previously discussed as part of the HCA
Merger. Consolidation and cost-saving activities related to these charges
have been substantially completed. Management believes that these actions
related to the Galen Merger, combined with cost reductions from
renegotiations of medical supply contracts and interest savings from the
third quarter 1993 refinancing of long-term debt, could result in annual
pretax savings in 1994 of approximately $30 million.
Liquidity
Cash provided by continuing operations totaled $985 million for the nine
months ended September 30, 1994 compared to $1 billion last year. Cash flows
in 1994 were reduced
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Liquidity (Continued)
by approximately $75 million in connection with the payment to the IRS
related to disputed prior year income taxes and interest. In both periods,
cash flows in excess of Columbia/HCA's capital expenditure program were used
primarily to finance acquisitions, reduce long-term debt and, in 1993,
finance a payment of $135 million to Humana in connection with the Spinoff.
Working capital totaled $801 million at September 30, 1994 compared to $573
million at December 31, 1993. Management believes that cash flows from
operations and amounts available under Columbia/HCA's revolving credit
facilities and related commercial paper programs are sufficient to meet
expected future liquidity needs.
A substantial portion of the non-recurring transactions recorded in the first
quarter of 1994 comprises the writedown of recorded assets and, accordingly,
management does not expect that these transactions will have a material
adverse effect on cash flows from continuing operations in 1994.
Investments of Columbia/HCA's professional liability insurance subsidiaries
to maintain statutory equity and pay claims totaled $825 million at September
30, 1994 and $778 million at December 31, 1993.
Capital Resources
Excluding acquisitions, capital expenditures totaled $693 million for the
nine months ended September 30, 1994 compared to $630 million for the same
period in 1993. Planned capital expenditures in 1994 (excluding
acquisitions) are expected to approximate $950 million. Management believes
that its capital expenditure program is adequate to expand, improve and equip
existing health care facilities.
Columbia/HCA also expended $213 million and $78 million for acquisitions and
joint ventures (excluding the MCA, HCA and Galen Mergers) during the
respective nine month periods of 1994 and 1993. See Note 9 of the Notes to
Condensed Consolidated Financial Statements for a description of these
activities. As part of its business strategy, Columbia/HCA intends to
acquire (either through purchase or joint venture transactions) additional
health care facilities in the future.
Columbia/HCA intends to finance all capital expenditures with internally
generated and borrowed funds. Available sources of capital include public
or private debt, commercial paper, unused bank revolving credits and equity.
At September 30, 1994, there were projects under construction which had an
estimated additional cost to complete of approximately $285 million.
On April 29, 1994, Columbia/HCA filed a registration statement on Form S-3
with the Securities and Exchange Commission in connection with the planned
public offering of up to approximately $1.5 billion of long-term debt. The
proceeds from the sales of such securities will be used for general corporate
purposes, which may include repayment of commercial paper and other
indebtedness, additional capitalization of Columbia/HCA's subsidiaries,
capital expenditures and possible acquisitions. In the third quarter of
1994, the Company issued $555 million of fixed and floating rate medium term
notes, the proceeds from which were used primarily to repay commercial paper
and bank borrowings.
Other Information
As discussed in Note 10 of the Notes to Condensed Consolidated Financial
Statements, Columbia/HCA is contesting certain income taxes and related
interest aggregating $1.4 billion at September 30, 1994 proposed by the IRS
for prior years. Management believes that final resolution of these disputes
will not have a material adverse effect on the financial position, results
of operations or liquidity of Columbia/HCA. However, if
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Other Information (Continued)
all or a majority of the positions of the IRS are upheld, the financial
position, results of operations and liquidity of Columbia/HCA would be
materially adversely affected.
On March 24, 1994, Columbia/HCA made an advance payment to the IRS of
approximately $75 million in connection with certain disputed prior year
income taxes and related interest. This payment will not have a material
effect on 1994 earnings.
Resolution of various other loss contingencies, including litigation pending
against Columbia/HCA in the ordinary course of business, is not expected to
have a material adverse effect on its financial position or results of
operations.
Agreements relating to long-term debt require, among other things,
maintenance of certain levels of interest coverage and provide limitations
on long-term debt, sales of assets, mergers, changes in ownership and certain
other financing activities. Columbia/HCA was in compliance with all such
covenants at September 30, 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Operating Data
1994 1993
Number of hospitals in operation at:
March 31 ...................................... 196 197
June 30 ....................................... 196 195
September 30 .................................. 195 191
December 31 ................................... 193
Number of freestanding outpatient surgical
centers in operation at:
March 31 ...................................... 6 4
June 30 ....................................... 6 4
September 30 .................................. 103 5
December 31 ................................... 6
Licensed hospital beds at:
March 31 ...................................... 43,171 42,786
June 30 ....................................... 43,092 42,576
September 30 .................................. 43,669 42,170
December 31 ................................... 42,237
Weighted average hospital bed capacity:
Quarter:
First ........................................ 41,955 41,525
Second ....................................... 42,237 41,824
Third ........................................ 42,456 41,149
Fourth ....................................... 41,221
Year .......................................... 41,263
Average daily census:
Quarter:
First ........................................ 20,341 20,880
Second ....................................... 18,272 18,634
Third ........................................ 17,445 17,425
Fourth ....................................... 17,917
Year .......................................... 18,702
Admissions:
Quarter:
First ........................................ 309,800 306,200
Second ....................................... 292,300 286,500
Third ........................................ 288,400 278,600
Fourth ....................................... 287,100
Year .......................................... 1,158,400
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Operating Data
1994 1993
Length of stay:
Quarter:
First ........................................ 5.9 6.1
Second ....................................... 5.7 5.9
Third ........................................ 5.6 5.8
Fourth ....................................... 5.7
Year .......................................... 5.9
Outpatient visits:
Quarter:
First ........................................ 1,522,500 (a) 1,378,500
Second ....................................... 1,766,400 1,411,800
Third ........................................ 2,073,600 1,311,600
Fourth ....................................... 1,389,000
Year .......................................... 5,490,900
Emergency room visits:
Quarter:
First ........................................ 788,300 791,900
Second ....................................... 816,300 792,600
Third ........................................ 811,100 778,500
Fourth ....................................... 776,700
Year .......................................... 3,139,700
(a) Restated to reflect visits related to the acquisition of a home health agency.
Part II: Other Information
Item 1: Legal Proceedings.
A class action, In re Medical Care America, Inc. Securities Litigation, is
pending in the United States District Court for the Northern District of
Texas, Dallas Division (Civil Action No. 3-92-CV-1996-R). A class has been
certified by the Court consisting of all persons who owned securities of MCA
at the close of trading on September 24, 1992 and who acquired those
securities either in purchases in the open market following the September 9,
1992 merger of Medical Care International, Inc. ("MCI") and Critical Care
America, Inc. ("CCA") or through exchange of their securities in said
companies pursuant to the merger, and who sustained damages as a result of
such purchases, subject to certain exclusions (the "Class Members" or the
"Class"). The named defendants include MCA, MCI, CCA, as well as certain
officers and/or directors of MCA, MCI, or CCA. The plaintiffs seek to
recover damages sustained by Class Members as a result of alleged violations
by the defendants of Section 11 of the Securities Act and Section 10(b) of
the Exchange Act and Rule 10b-5 promulgated thereunder. In addition, the
complaint asserts claims under the state law of Texas which have not been
certified for class treatment at the present time, without prejudice to any
party's rights regarding certification of such claims in the future. The
complaint alleges a course of conduct in which the defendants knowingly or
recklessly failed to state material information and released false and
misleading information to the investing public, regarding the earnings,
profitability and business prospects of MCA and of MCI and CCA prior to their
merger. The plaintiffs allege that, as a result of this false and misleading
information, the market price of MCA securities was artificially inflated
throughout the class period. The plaintiffs further allege that, upon the
dissemination on September 25, 1992 of the true facts concerning MCA's
earnings, profitability and business prospects, the market price of MCA
Common Stock dropped precipitously, resulting in a significant market loss
of over $1 billion, and causing damages to plaintiffs and the other Class
Members. The litigation is in the early stages of discovery. Management
believes the lawsuit is without merit and intends to vigorously defend the
same.
Item 5: Other Information.
Columbia/HCA's ratio of earnings to fixed charges was 4.49 and 1.71 for the
three months ended September 30, 1994 and 1993, respectively, and 4.55 and
3.18 for the nine months ended September 30, 1994 and 1993, respectively.
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits:
Exhibit 11 - Statement re Computation of Earnings Per Common and Common
Equivalent Share.
Exhibit 12 - Statement re Computation of Ratio of Earnings to Fixed
Charges.
Exhibit 27 - Financial Data Schedule (included only in filings under
the Electronic Data, Gathering, Analysis, and Retrieval system)
(b) Reports on Form 8-K:
On September 16, 1994, Columbia/HCA filed a report on Form 8-K
announcing the completion of the merger with MCA. A copy of the press
release issued by Columbia/HCA was included in the report.
On October 4, 1994, Columbia/HCA filed a report on Form 8-K announcing
the signing of a definitive agreement between Columbia/HCA and HTI to
merge in a tax-free, stock-for-stock transaction. A copy of the press
release issued by Columbia/HCA was included in the report.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLUMBIA/HCA HEALTHCARE CORPORATION
Date: November 14, 1994 /s/ David C. Colby
David C. Colby
Senior Vice President,
Chief Financial
Officer and Treasurer
(Principal Financial
Officer)
Date: November 14, 1994 /s/ Richard A. Lechleiter
Richard A. Lechleiter
Vice President and
Controller
(Principal Accounting
Officer)