Tenet Announces Results for Second Quarter Ended June 30, 2004.Aug. 3, 2004--Tenet Healthcare Corporation (NYSE NYSE See: New York Stock Exchange :THC THC tetrahydrocannabinol. THC n. Tetrahydrocannabinol; a compound that is obtained from cannabis or is made synthetically; it is the primary intoxicant in marijuana and hashish. ) reported a net loss of $426 million, or $0.91 per share for its second quarter ended June June: see month. 30, 2004, compared to a net loss of $195 million, or $0.42 per share in the second quarter of 2003. The net loss of $0.91 per share for the current quarter is comprised of net losses of $0.45 per share related to continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , including nine items with an aggregate negative net impact of $0.39 per share described below, and net losses related to discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $0.46 per share, including three items with an aggregate negative net impact of $0.39 per share described below. "As I look at the quarter, a number of items are evident demonstrating both interim success stories as well as highlighting areas where more work needs to be done," said Trevor Trev·or , William Originally William Trevor Cox. Born 1928. Irish writer noted for his darkly comedic stories and novels, including The Old Boys (1964) and The Day We Got Drunk on Cake (1967). Fetter, Tenet's president and chief executive officer. "Volume growth was negative for the current quarter versus a very strong performance for the same period in 2003 when same store core admissions grew by 3.4 percent. But compared to volumes in 2002, we are achieving growth more consistent with others in the industry. Our core hospitals are retaining payor payor (payer) n. The one who must make payment on a promissory note. , physician and patient relationships despite the challenges we've we've Contraction of we have. we've have faced in renegotiating virtually every customer relationship we have, not to mention the legal and investigative cloud cloud, aggregation of minute particles of water or ice suspended in the air. Formation of Clouds Clouds are formed when air containing water vapor is cooled below a critical temperature called the dew point and the resulting moisture condenses into that has been hanging over the company. "Managed care pricing has improved on a relative basis in each of the past two quarters. While we absorbed Absorbed 1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices. 2. In underwriting, when an issue has been completely sold to the public. 3. a roughly 8 percent year-over-year decline in the fourth quarter of 2003 in pricing from managed care payors, this decline was reduced to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 5 percent in the first quarter of this year. Now, in the current quarter, we have achieved essentially flat year-over-year pricing with our managed care business partners. This exceeds my recent expectations for the time it would take to rebuild our managed care relationships and bodes well for our revenue growth going forward. "Our cost control initiatives are meeting aggressive interim objectives and are creating a much more efficient operating platform going forward. In addition, bad debt and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying performance are somewhat better than we had anticipated as we implement new programs regarding in-take procedures, service utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be , and collections. While much remains to be done, the current quarter demonstrates that we are on the right track, and that our people can take pride in the progress that has been achieved thus far," Fetter said. "We initiated pricing discounts in connection with Tenet's Compact With Uninsured Patients during the second quarter, introducing fresh, innovative thinking to address an issue of growing national prominence prominence /prom·i·nence/ (prom´i-nins) a protrusion or projection. frontonasal prominence ," said Reynold Reynold is an English masculine name derived from an Old High German personal name made up of the elements "ragin" (advice, decision) and "wald" (ruler). It is a cognate of Rögnvaldr. Jennings Jennings, city (1990 pop. 11,305), seat of Jefferson Davis parish, SW La., on the Mermentau River; inc. 1888. Cotton and rice are grown, there is a bottling plant, and drugs, machinery, apparel, and water-treatment systems are manufactured. , Tenet's chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "The Compact represents a creative means to address the issue of the uninsured and has been well-received in the communities where we have introduced it. Our plan is to complete implementation in all markets where we have the requisite governmental approvals for such discounts by the end of the year, and thereby share the benefits of this program with the greatest number of our uninsured patients." "With approximately $1.2 billion in cash, our liquidity was strengthened significantly in the second quarter," said Stephen Stephen, 1097?–1154, king of England (1135–54). The son of Stephen, count of Blois and Chartres, and Adela, daughter of William I of England, he was brought up by his uncle, Henry I of England, who presented him with estates in England and France and Farber Farber may refer to:
2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies a portion of our near-term near-term adj. Of, for, or involving a short period of time in the near future. debt maturities. At this point we have less than $600 million of debt due between now and November November: see month. 2011. Our program of asset sales also continues to show good progress. Although this is a highly fluid process with multiple offers from multiple parties, we are pleased to report that the offers we have received, and continue to receive, are still meeting our overall expectations and plans." Continuing Operations Items The net loss of $0.45 per share from continuing operations for the current quarter includes the following nine items with an aggregate negative net impact totaling $277 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta , $183 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. , or $0.39 per share: (1) a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $204 million pre-tax, $125 million after-tax, or $0.27 per share, to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. self-pay patient accounts receivable to their estimated net realizable value Net realizable value (NRV) is a commonly used method of evaluating an asset's worth in the field of inventory accounting. NRV is part of GAAP rules that apply to valuing inventory, so as to not overstate or understate the value of inventory goods. , described in detail below; (2) a non-cash loss from the early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt of approximately $5 million pre-tax, $3 million after-tax, or $0.01 per share, due to the write-down of unamortized financing costs associated with the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of $450 million in senior notes; (3) a non-cash impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge for long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets in continuing operations of $21 million pre-tax, $24 million after-tax, or $0.05 per share; (4) restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $22 million pre-tax, $14 million after-tax, or $0.03 per share, primarily comprised of employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when costs and non-cash stock compensation costs associated with terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: employees; (5) reduced net operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $23 million pre-tax, $14 million after-tax, or $0.03 per share resulting from patient discounts provided as a result of newly implemented pricing discounts related to Tenet's Compact With Uninsured Patients in certain hospitals; (6) litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and investigation costs of $9 million pre-tax, $6 million after-tax, or $0.01 per share; (7) a loss of $17 million pre-tax (before any additional bad debt charge as described in item (1), above, and before impairment and restructuring charges described in items (3) and (4), above), $11 million after-tax, or $0.02 per share from the operations of three hospitals (Medical College of Pennsylvania Medical College of Pennsylvania, formerly in Philadelphia; chartered and opened 1850 as the Female Medical College of Pennsylvania; became Woman's Medical College of Pennsylvania 1867, Medical College of Pennsylvania 1970. Hospital ("MCPH MCPH Maine Center for Public Health MCPH Maintenance Cost Per Hour MCPH Microcephaly, Primary Autosomal Recessive MCPH Motion-Compensated Phase History "), Doctors Medical Center-San Pablo/Pinole, and Suburban Medical Center) reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") in continuing operations, but considered non-core hospitals by Tenet since the company does not plan on operating these hospitals by the end of 2004; (8) a gain on sale of certain home health agencies and hospices of approximately $18 million pre-tax, $11 million after-tax, or $0.02 per share, which was recorded as an offset to other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. ; and (9) a gain on the sales of various long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments of approximately $6 million pre-tax, $3 million after-tax, or $0.01 per share. Discontinued Operations Items The net loss of $0.46 per share from discontinued operations for the current quarter includes the following three items with an aggregate net negative impact totaling $266 million pre-tax, $183 million after-tax, or $0.39 per share: (1) non-cash charges of $247 million pre-tax, $155 million after-tax, or $0.33 per share for the impairment of long-lived assets held for sale and restructuring charges; (2) a non-cash charge of $50 million pre-tax, $31 million after-tax, or $0.07 per share, to write-down self-pay patient accounts receivable to their estimated net realizable value (described in detail below); (3) an aggregate pre-tax gain in discontinued operations of approximately $31 million, $3 million after-tax, or $0.01 per share, primarily from the sale of two hospitals (Brownsville Brownsville, city (1990 pop. 98,962), seat of Cameron co., extreme S Tex., on the Rio Grande c.17 mi (30 km) from its mouth at the Gulf of Mexico; inc. 1850. It is an important port of entry across the river from Matamoros, Mexico. Medical Center and the company's hospital in Barcelona Barcelona (bär'səlō`nə, Catalan bär'səlō`nə, Span. bär'thālō`nä), city (1990 pop. 4,738,354), capital of Barcelona prov. and chief city of Catalonia, NE Spain, on the Mediterranean Sea. , Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. ). Admissions Admissions for the most recent quarter were adversely impacted by the results of three hospitals (MCPH, Doctors Medical Center-San Pablo/Pinole, and Suburban Medical Center) which the company has previously announced it no longer plans to operate by the end of 2004, but which are included in continuing operations in conformity with generally accepted accounting principles. Including the impact of these hospitals, same-store acute admissions for continuing operations were 173,262 in the second quarter, a decrease of 5,415 admissions, or 3.0 percent compared to the second quarter of 2003. Excluding the impact of these three hospitals same-store admissions were 169,027 in the second quarter, a decrease of 3,447, or 2.0 percent compared to the second quarter of 2003. To put this change in context, the second quarter of 2003 had admissions growth on the same basis of 3.4 percent compared to the second quarter of 2002. Same-store outpatient outpatient /out·pa·tient/ (-pa-shent) a patient who comes to the hospital, clinic, or dispensary for diagnosis and/or treatment but does not occupy a bed. out·pa·tient n. visits, including the results from these three hospitals, were down 3.3 percent in the current quarter relative to the second quarter of 2003. Excluding the impact of these three hospitals, same-store outpatient visits were down 2.9 percent in the current quarter relative to the second quarter of 2003. The sale of the company's home health agencies, which is not captured in the same store adjustment, was a significant factor constituting the majority of this decline in outpatient visits. Uninsured patients represented approximately 3.5 percent of admissions in the second quarter as compared to 3.2 percent in the first quarter of 2004. Admissions through the emergency department comprised 51 percent of total admissions for the quarter, compared to 52 percent of first quarter 2004 admissions. Uninsured patients treated and released through the emergency department were 92,423 for the quarter, an increase of 4,486 patients being treated and released through the emergency department over the first quarter, or a 5 percent increase, representing 23 percent of all patients treated and released through the emergency department in the quarter. Pricing On a same-store basis, net inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. revenue per admission for continuing operations increased 1.3 percent compared to the second quarter of 2003. On a sequential One after the other in some consecutive order such as by name or number. quarter basis, net inpatient revenue per admission increased 2.2 percent. Excluding the three hospitals identified above, same-store net inpatient revenue per admission increased by 1.8 percent for the second quarter compared to the same period last year, and increased 2.4 percent on a sequential basis Same-store outpatient revenue per visit for continuing operations was down 3.4 percent year-over-year and was flat on a sequential basis. Excluding the three hospitals identified above, same-store outpatient revenue per visit was down 3.3 percent, compared to last year's second quarter but up 0.4 percent on a sequential basis. Revenues Net operating revenues for the quarter were $2,570 million, a decline of $87 million, or 3.3 percent, from $2,657 million in the second quarter of 2003. The loss of $23 million in revenue from the implementation of the Compact comprised 26 percent of this decline. Other factors contributing to the decline included admissions and pricing trends described above. Provisions in the Compact provide discounts to uninsured patients at managed care-style rates established by each hospital. There were no Compact discounts in any prior quarter. Discounts under the Compact are expected to grow materially in the third quarter, and in the future, as the company continues to implement the discounting provisions in the hospitals under the Compact. Under the Compact, the discount offered to uninsured patients is recognized as a contractual allowance, which reduces net patient revenues at the time self-pay accounts are recorded and should reduce Tenet's provision for doubtful accounts in the future. At the same time, this expected reduction in the provision for doubtful accounts should substantially offset the net operating revenue reduction and corresponding impact on earnings from implementing the discounting components of the Compact. Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. outlier outlier /out·li·er/ (out´li-er) an observation so distant from the central mass of the data that it noticeably influences results. outlier an extremely high or low value lying beyond the range of the bulk of the data. revenue did not contribute to this year-over-year decline in net operating revenue. Medicare outlier revenue for continuing operations increased from $12 million in the second quarter of 2003 to $14 million in the second quarter of 2004. Approximately $141 million in charity care was provided in the second quarter of 2004, as compared to $149 million in the first quarter of 2004, and $150 million in the second quarter of 2003. Total uncompensated care uncompensated care, n health care services provided by a hospital, physician, dental professional, or other health care professional for which no charge is made and for which no payment is expected. for continuing operations, which is defined as the sum of charity care and provision for doubtful accounts, was $640 million in the second quarter of 2004, which includes the additional non-cash charge for provisions for doubtful accounts of $204 million. Excluding the charge, total uncompensated care was approximately 17 percent of the sum of net operating revenues plus charity care. In the first quarter of 2004, total uncompensated care as previously defined was $440 million, or approximately 16 percent of the sum of net operating revenues plus charity care. Controllable Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. Controllable operating expenses (consisting of salaries and benefits, supplies, and other operating expenses) were $2,178 million in the second quarter, an increase of $40 million, or 1.9 percent, as compared with $2,138 million in the first quarter. Approximately $37 million of this increase was due to an increase in medical malpractice Improper, unskilled, or negligent treatment of a patient by a physician, dentist, nurse, pharmacist, or other health care professional. insurance expense, offset in part by the $18 million gain on sale of certain home health agencies and hospices described above. Excluding these items the sequential increase in controllable operating costs operating costs npl → gastos mpl operacionales was approximately 1.0 percent. Salaries, wages, and benefits were $1,131 million, or 44.0 percent of net operating revenues in the second quarter, down $6 million, or 0.5 percent, on a sequential basis from $1,137 million in the first quarter of 2004. Supplies expense was $437 million in the second quarter, or 17.0 percent of net operating revenues, compared to $445 million in the first quarter, or 16.8 percent of net operating revenues. Other operating expense was $610 million in the quarter, or 23.7 percent of net operating revenues in the second quarter, up from $556 million, or 21 percent of net operating revenues in the first quarter. Included in the current quarter is $102 million in malpractice malpractice, failure to provide professional services with the skill usually exhibited by responsible and careful members of the profession, resulting in injury, loss, or damage to the party contracting those services. expense, an increase of $37 million, or 57 percent, from $65 million in the first quarter of 2004. The increase in malpractice expense is primarily as a result of strengthening of reserves reflecting adverse loss development and changes in claim payment patterns and discount rate. As mentioned above, other operating expense includes an $18 million net gain from the sale of certain home health agencies and hospices. Provision for Doubtful Accounts Provision for doubtful accounts, or bad debt expense, was $499 million in the second quarter, which included an additional non-cash charge of $204 million related to self-pay accounts receivables, including balance after insurance. The implementation of the discounting component of the Compact, as well as other factors, has caused the company to change its assessment of determining the net realizable value of its self-pay accounts receivable resulting in this additional charge being recorded in the second quarter. Prior to this quarter, the company wrote down self-pay accounts to their estimated net realizable value on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis over a period of 120 days. The company will no longer use this practice as the company will estimate the net realizable value of its self-pay accounts receivable when they are recorded without utilizing the 120-day straight-line methodology. This change is only applicable to self-pay accounts including balance after insurance accounts. The company made no change in how it estimates the net realizable value of receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed from managed care payors. Excluding the additional charge of $204 million, bad debt expense was approximately $295 million, or 11.5 percent of net operating revenues in the second quarter 2004, compared to $291 million, or 11.0 percent of net operating revenues, in the first quarter of 2004. In the second quarter of 2003 bad debt expense was $236 million, or 8.9 percent of net operating revenues. Impairment and Restructuring Charges During the quarter ended June 30, 2004, impairment charges of $21 million and restructuring charges of $22 million were recorded in continuing operations. The impairment charge of $21 million was primarily for the write-down of long-lived assets to their estimated fair values at MCPH, where the intent to close or sell had been previously announced. The restructuring charge of $22 million consists of $8 million in employee severance costs, $8 million in non-cash costs for the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of stock options for terminated employees, and $6 million in contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). and consulting costs. A $244 million impairment charge for long-lived assets was recorded in discontinued operations to write down the value of those assets to be disposed dis·pose v. dis·posed, dis·pos·ing, dis·pos·es v.tr. 1. To place or set in a particular order; arrange. 2. to their estimated fair value, less estimated cost to sell. The company cautions that there may be additional long-lived asset impairment charges and restructuring charges in future periods. Accounts Receivable Accounts receivable from continuing operations were $1,585 million at June 30, 2004, a decrease of $304 million from $1,889 million at March 31, 2004. Accounts receivable for discontinued operations also declined in the quarter, falling to $344 million at June 30, 2004, a decline of $114 million, from the $458 million balance at March 31, 2004. This decrease included $26 million from retained accounts receivable from the divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of 14 hospitals initiated in March 2003, the last of which was sold in February February: see month. 2004. Accounts receivable days outstanding from continuing operations declined to 56.1 days at June 30, 2004, from 64.8 days at March 31, 2004. Approximately 7.2 days of this 8.7-day decline results from the $204 million write-down of self-pay accounts receivable described above. Hospital Openings and Divestitures Tenet operated 71 hospitals at March 31, 2004, and 72 hospitals on June 30, 2004, excluding hospitals operated and included in discontinued operations. Tenet opened two new hospitals during the quarter: the 90-bed Saint Francis Saint Francis, city, United States Saint Francis, city (1990 pop. 9,245), Milwaukee co., SE Wis., a residential suburb of Milwaukee on Lake Michigan; inc. 1951. There is meat processing and the manufacture of plastic and metal products. Hospital-Bartlett in Bartlett, Tenn., and the 118-bed Centennial Medical Center in Frisco, Texas Frisco is a city in Collin County and Denton County, Texas (USA). It is a northern suburb of Dallas. As of the 2000 census, the city population was 33,714, while according to 2007 estimate, the city's population is approximately 95,000. , a suburb suburb, a community in an outlying section of a city or, more commonly, a nearby, politically separate municipality with social and economic ties to the central city. In the 20th cent. of Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. . Tenet also ceased operation of Century City Hospital, in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , in April 2004. Three hospitals remained in continuing operations at June 30, 2004, pending lease expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created or closing. One of these three hospitals, Doctors Medical Center-San Pablo/Pinole, was reported in continuing operations in the second quarter; however, as previously announced, Tenet terminated its lease and returned the hospital to the health care district that owns it on July July: see month. 31, 2004. As discussed above, MCPH at June 30 was part of continuing operations, but is expected to move to discontinued operations in the third quarter as the divesture Di`ves´ture n. 1. Divestiture. of this hospital is anticipated to be completed by the end of the third quarter. The third hospital, Suburban Medical Center, is expected to cease operations under Tenet ownership by the end of October October: see month. 2004, as Tenet has not renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. its lease. Once these hospitals are divested, Tenet will operate 69 hospitals, as previously announced. Tenet divested two hospitals, Brownsville Medical Center and its hospital in Barcelona, Spain, during the quarter, generating an aggregate pre-tax gain of approximately $29 million and approximately $127 million in cash proceeds. In July 2004, subsequent to the close of the second quarter, Tenet completed the sale of Redding Redding, city (1990 pop. 66,462), seat of Shasta co., N central Calif., on the Sacramento River; inc. 1872. A principal tourist center for a mountain and lake region, it also has lumbering, food-processing, and diverse manufacturing. Medical Center. The approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. $55 million in proceeds generated by this sale are being retained at this time by Redding Medical Center, Inc., the subsidiary which previously owned the hospital, and which also retained substantially all of the hospital's pre-closing liabilities. Capital Expenditures Capital expenditures in the quarter were $136 million comprised of $131 million for continuing operations (including $38 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the construction of the Bartlett and Centennial hospitals) and $5 million for discontinued operations. For the six months ended June 30, 2004, capital expenditures totaled $250 million. Tenet reaffirmed that it expects total capital expenditures for 2004 to approximate $600 million. Cash Flow Cash balances were $1,193 million at June 30, 2004, up $686 million from the cash position of $507 million at March 31, 2004. This cash balance does not include a 1031 exchange fund used to fund construction costs at certain of our hospitals, which was approximately $12 million on June 30, 2004. Net cash provided by operating activities contributed $144 million in cash for the quarter, and $85 million in the six months ended June 30, 2004. In accordance with generally accepted accounting principles, this figure excludes capital expenditures, proceeds of asset sales, and certain other items. Proceeds from assets sales added $127 million to cash in the quarter and $190 million year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. . The issuance of 10-year senior, unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. added $954 million after deducting discounts and related cash expenses for both the quarter and year-to-date, and $450 million of the cash proceeds were used to repurchase senior notes of shorter maturity. There was $56 million in cash outflows related to previously accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. reserves in the second quarter and $244 million year-to-date. The year-to-date cash outflow included $163 million related to a legal judgment involving a former executive paid in the first quarter and $32 million of government settlements announced in March but paid in the second quarter. Liquidity On June 15, $1 billion of senior unsecured debt was issued with a coupon A certificate evidencing the obligation to pay an installment of interest or a dividend that must be cut and presented to its issuer for payment when it is due. Coupons are usually attached to a document, such as a promissory note, bond, share of stock, or a bearer of 9.875 percent. A portion of the proceeds from this offering was used to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. $450 million of existing debt with maturities scheduled in 2006 and 2007. There were no outstanding cash draws on the company's revolver revolver: see small arms. revolver Pistol with a revolving cylinder that provides multishot action. Some early versions, known as pepperboxes, had several barrels, but as early as the 17th century pistols were being made with a revolving chamber to credit line at June 30, 2004, but there was approximately $221 million of letters of credit outstanding at that date. Total debt was $4.5 billion at June 30, 2004, up from $4.0 billion a year ago, but net debt, defined as debt less cash, declined to $3.3 billion at the end of the second quarter of 2004, down from $3.8 billion at June 30, 2003. Tenet Healthcare Tenet Healthcare Corporation (THC) is an operating company that owns and operates 57 hospitals in the United States [1]. It is based in Dallas, Texas. Its stock ticker symbol on the New York Stock Exchange is NYSE: THC. Corporation, through its subsidiaries, owns and operates acute care hospitals and related health care services. Tenet's hospitals aim to provide the best possible care to every patient who comes through their doors, with a clear focus on quality and service. Tenet can be found on the World Wide Web at www.tenethealth.com. Some of the statements in this release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Such statements are based on our current expectations and could be affected by numerous factors and are subject to various risks and uncertainties discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended Dec. 31, 2003, our quarterly reports on Form 10-Q Form 10-Q See 10-Q. and periodic reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Do not rely on any forward-looking statement, as we cannot predict or control many of the factors that ultimately may affect our ability to achieve the results estimated. We make no promise to update any forward-looking statement, whether as a result of changes in underlying factors, new information, future events, or otherwise.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30,
(Dollars in millions except
per share amounts) 2004 % 2003(1) % Change
----------------------------- -------- ------- -------- ------ -------
Net operating revenues $2,570 100.0% $2,657 100.0% (3.3%)
Operating expenses:
Salaries and benefits (1,131) 44.0% (1,143) 43.0% (1.0%)
Supplies (437) 17.0% (414) 15.6% 5.6%
Provision for doubtful
accounts (2) (499) 19.4% (236) 8.9% 111.4%
Other operating expenses (3) (610) 23.7% (567) 21.3% 7.6%
Depreciation (90) 3.5% (92) 3.5% (2.2%)
Amortization (5) 0.2% (6) 0.2% (16.7%)
Impairment of long-lived
assets and goodwill, and
restructuring charges (4) (43) 1.7% (155) 5.8%
Costs of litigation and
investigations (5) (9) 0.4% (68) 2.6%
Loss from early
extinguishment of debt (6) (5) 0.2% -- --
Operating loss (259) (10.1%) (24) (0.9%) 979.2%
Interest expense (73) (75)
Investment earnings 3 4
Minority interests -- (7)
Net gain on sale of
subsidiary common stock and
long-term investments 6 9
Impairment of investment
securities -- (5)
Loss from continuing
operations before income
taxes (323) (98)
Income tax benefit 110 31
Loss from continuing
operations (213) (67)
Discontinued operations:
Income (loss) from operations
of asset group (96) 31
Impairment of long-lived
assets and goodwill, and
restructuring charges (7) (247) (124)
Net gain on sales of asset
group 31 --
Income tax benefit (expense) 99 (35)
Loss from discontinued
operations (213) (128)
Net loss (426) (195)
Diluted loss per common share
and common equivalent share:
Continuing Operations (0.45) (0.14)
Discontinued Operations (0.46) (0.28)
-------- --------
(0.91) (0.42)
Weighted average shares and
dilutive securities
outstanding (in thousands): 465,922 465,110
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Six Months Ended June 30,
(Dollars in millions except
per share amounts) 2004 % 2003(1) % Change
----------------------------- -------- ------ -------- ------ --------
Net operating revenues $5,221 100.0% $5,387 100.0% (3.1%)
Operating expenses:
Salaries and benefits (2,268) 43.4% (2,269) 42.1% (0.0%)
Supplies (882) 16.9% (830) 15.4% 6.3%
Provision for doubtful
accounts (2) (790) 15.1% (462) 8.6% 71.0%
Other operating expenses (3) (1,166) 22.3% (1,105) 20.5% 5.5%
Depreciation (181) 3.5% (184) 3.4% (1.6%)
Amortization (10) 0.2% (11) 0.2% (9.1%)
Impairment of long-lived
assets and goodwill, and
restructuring charges (4) (102) 2.0% (351) 6.5%
Costs of litigation and
investigations (5) (19) 0.4% (74) 1.4%
Loss from early
extinguishment of debt (6) (5) 0.1% -- --
Operating income (loss) (202) (3.9%) 101 1.9% (300.0%)
Interest expense (150) (146)
Investment earnings 7 10
Minority interests (5) (15)
Net gain on sale of
subsidiary common stock and
long-term investments 6 9
Impairment of investment
securities -- (5)
Loss from continuing
operations before income
taxes (344) (46)
Income tax (expense) benefit 114 (17)
Loss from continuing
operations (230) (63)
Discontinued operations:
Income (loss) from
operations of asset group (158) 62
Impairment of long-lived
assets and goodwill, and
restructuring charges (7) (334) (185)
Net gain on sales of asset
group 29 --
Income tax (expense) benefit 145 (29)
Loss from discontinued
operations (318) (152)
Net loss (548) (215)
Diluted loss per common share
and common equivalent share:
Continuing operations (0.50) (0.13)
Discontinued operations (0.68) (0.33)
-------- --------
(1.18) (0.46)
Weighted average shares and
dilutive securities
outstanding (in thousands): 465,609 467,796
BALANCE SHEET DATA
Dollars in millions
(Unaudited)
June 30, 2004 December 31, 2003
----------------- ------------------
Cash and cash equivalents $1,193 $619
Net accounts receivable 1,929 2,415
Assets held for sale 670 129
Other current assets 1,136 1,085
----------------- ------------------
Current assets 4,928 4,248
Current liabilities (2,073) (2,394)
----------------- ------------------
Net working capital 2,855 1,854
Investments and other assets 305 386
Net property and equipment 4,823 5,557
Goodwill 1,913 1,949
Net intangible assets 181 158
Long-term debt, excluding current
portion (4,488) (4,039)
Other long-term liabilities (1,702) (1,504)
Shareholders' equity (3,887) (4,361)
CASH FLOW DATA
Dollars in millions
(Unaudited)
Six Months Ended Six Months Ended
June 30, 2004 June 30, 2003
-------------------- ---------------------
Net cash provided by
operating activities $85 $583
Cash flow from investing
activities:
Purchases of property and
equipment (250) (418)
Proceeds from sales of
facilities and other
assets 190 3
Cash released from escrow
account to fund
construction costs 76 --
Investment in hospital
authority bonds (2) (105)
Other items (21) 25
Cash flows from financing
activities:
Proceeds from borrowings -- 49
Payment of borrowings (13) (906)
Sale of new senior notes 954 979
Repurchases of senior
notes (450) --
Repurchases of common
stock -- (208)
Other items 5 9
-------------------- ---------------------
Net increase in cash and
cash equivalents 574 11
-------------------- ---------------------
Supplemental disclosures:
Interest paid (137) (103)
Income taxes paid, net of
refunds received (53) (314)
GENERAL HOSPITALS
Selected Statistics - Continuing Operations
(Unaudited)
(Dollars in millions except for net inpatient revenue per patient
day and per admission)
Three Months Ended June 30,
2004 2003(1) Change
---------- ---------- ---------
Net inpatient revenues $1,690 $1,710 (1.2%)
Net outpatient revenues $781 $819 (4.6%)
Number of hospitals (at end of period) 72 70 2
Licensed beds (at end of period) 18,784 18,595 1.0%
Average licensed beds 18,647 18,607 0.2%
Utilization of licensed beds 52.9% 55.0% (2.1%)(a)
Patient days 897,777 931,788 (3.7%)
Equivalent patient days 1,259,222 1,295,837 (2.8%)
Net inpatient revenue per patient day $1,883 $1,835 2.6%
Admissions 174,079 178,677 (2.6%)
Equivalent admissions 246,174 250,727 (1.8%)
Net inpatient revenue per admission $9,709 $9,570 1.5%
Average length of stay (days) 5.2 5.2 -
Outpatient visits 1,513,651 1,544,612 (2.0%)
Sources of net patient revenues
--------------------------------------
Medicare 25.9% 25.7%
Medicaid 7.2% 8.1%
Managed care 49.1% 50.1%
Indemnity, self-pay and other 17.8% 16.1%
Same facilities
--------------------------------------
Net inpatient revenues $1,680 $1,710 (1.8%)
Net outpatient revenues $765 $819 (6.6%)
Number of hospitals (at end of period) 70 70 -
Average licensed beds 18,517 18,607 (0.5%)
Patient days 893,223 931,788 (4.1%)
Net inpatient revenue per patient day $1,881 $1,835 2.5%
Admissions 173,262 178,677 (3.0%)
Net inpatient revenue per admission $9,697 $9,570 1.3%
Average length of stay (days) 5.2 5.2 -
Outpatient visits 1,493,452 1,544,612 (3.3%)
Six Months Ended June 30,
2004 2003(1) Change
---------- ---------- ---------
Net inpatient revenues $3,442 $3,487 (1.3%)
Net outpatient revenues $1,584 $1,651 (4.1%)
Number of hospitals (at end of period) 72 70 2
Licensed beds (at end of period) 18,784 18,595 1.0%
Average licensed beds 18,612 18,614 0.0%
Utilization of licensed beds 55.1% 56.7% (1.6%)(a)
Patient days 1,867,880 1,908,948 (2.2%)
Equivalent patient days 2,593,007 2,638,261 (1.7%)
Net inpatient revenue per patient day $1,843 $1,827 0.9%
Admissions 358,242 362,735 (1.2%)
Equivalent admissions 500,987 506,058 (1.0%)
Net inpatient revenue per admission $9,608 $9,613 (0.1%)
Average length of stay (days) 5.2 5.3 (0.1)(a)
Outpatient visits 3,078,494 3,093,343 (0.5%)
Sources of net patient revenues
--------------------------------------
Medicare 25.9% 25.7%
Medicaid 7.4% 7.9%
Managed care 49.2% 50.7%
Indemnity, self-pay and other 17.5% 15.7%
Same facilities
--------------------------------------
Net inpatient revenues $3,421 $3,487 (1.9%)
Net outpatient revenues $1,556 $1,651 (5.8%)
Number of hospitals (at end of period) 70 70 -
Average licensed beds 18,518 18,614 (0.5%)
Patient days 1,859,160 1,908,948 (2.6%)
Net inpatient revenue per patient day $1,840 $1,827 0.7%
Admissions 356,756 362,735 (1.6%)
Net inpatient revenue per admission $9,588 $9,613 (0.3%)
Average length of stay (days) 5.2 5.3 (0.1)(a)
Outpatient visits 3,040,546 3,093,343 (1.7%)
(a) This change is the difference between the 2004 and 2003 amounts
shown.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Calendar 2004 by Quarter
(Unaudited)
3 Months Ended 6 Months Ended
--------------------- ----------------
(Dollars in millions except per
share amounts) 3/31/04(1) 6/30/04 6/30/04
---------- ---------- ----------------
Net operating revenues $2,651 $2,570 $5,221
Operating expenses:
Salaries and benefits (1,137) (1,131) (2,268)
Supplies (445) (437) (882)
Provision for doubtful
accounts (291) (499) (790)
Other operating expenses (556) (610) (1,166)
Depreciation (91) (90) (181)
Amortization (5) (5) (10)
Impairment and restructuring
charges (59) (43) (102)
Costs of litigation and
investigations (10) (9) (19)
Loss from early extinguishment
of debt -- (5) (5)
Operating income (loss) 57 (259) (202)
Interest expense (77) (73) (150)
Investment earnings 4 3 7
Minority interests (5) -- (5)
Net gain on sale of subsidiary
common stock and long-term
investments -- 6 6
Loss from continuing operations
before income taxes (21) (323) (344)
Income tax benefit 4 110 114
Loss from continuing operations (17) (213) (230)
Discontinued operations:
Loss from operations of asset
group (62) (96) (158)
Impairment of long-lived
assets and goodwill, and
restructuring charges (87) (247) (334)
Net gain (loss) on sales of
asset group (2) 31 29
Income tax benefit 46 99 145
Loss from discontinued
operations (105) (213) (318)
Net loss (122) (426) (548)
Diluted loss per common share
and common equivalent share:
Continuing operations (0.03) (0.45) (0.50)
Discontinued operations (0.23) (0.46) (0.68)
---------- ---------- ----------------
(0.26) (0.91) (1.18)
Weighted average shares and
dilative securities
outstanding (in thousands): 465,296 465,922 465,609
GENERAL HOSPITALS
SELECTED STATISTICS - CONTINUING OPERATIONS
Calendar 2004 by Quarter
(Unaudited)
(Dollars in millions except for net inpatient revenue per patient
day and per admission)
3 Months Ended 6 Months Ended
--------------------- ----------------
3/31/04(1) 6/30/04 6/30/04
Net inpatient revenues $1,752 $1,690 $3,442
Net outpatient revenues $803 $781 $1,584
Facilities owned or operated 70 72 72
Licensed beds at end of period 18,578 18,784 18,784
Average licensed beds 18,578 18,647 18,612
Utilization of licensed beds 58.0% 52.9% 55.4%
Patient days 970,103 897,777 1,867,880
Equivalent patient days 1,333,785 1,259,222 2,593,007
Net inpatient revenue per
patient day $1,806 $1,883 $1,843
Admissions 184,163 174,079 358,242
Equivalent admissions 254,813 246,174 500,987
Net inpatient revenue per
admission $9,513 $9,709 $9,608
Average length of stay (days) 5.3 5.2 5.2
Outpatient visits 1,564,843 1,513,651 3,078,494
Sources of net patient revenue
------------------------------------------
Medicare 25.9% 25.9% 25.9%
Medicaid 7.6% 7.2% 7.4%
Managed care 49.2% 49.1% 49.2%
Indemnity, self-pay and other 17.3% 17.8% 17.5%
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Calendar 2003 by Quarter
(Refer to Explanatory Note 1) (Unaudited)
3 Months Ended Year
Ended
(Dollars in millions
except per share
amounts) 3/31/03 6/30/03 9/30/03 12/31/03 12/31/03
----------------------- -------- -------- -------- --------- ---------
Net operating revenues $2,730 $2,657 $2,593 $2,530 $10,510
Operating expenses:
Salaries and benefits (1,126) (1,143) (1,088) (1,087) (4,444)
Supplies (416) (414) (408) (423) (1,661)
Provision for doubtful
accounts (226) (236) (433) (304) (1,199)
Other operating
expenses (538) (567) (573) (540) (2,218)
Depreciation (92) (92) (88) (92) (364)
Amortization (5) (6) (5) (4) (20)
Impairment and
restructuring charges (196) (155) (9) (1,071) (1,431)
Costs of litigation
and investigations (6) (68) (253) 45 (282)
Operating income (loss) 125 (24) (264) (946) (1,109)
Interest expense (71) (75) (74) (74) (294)
Investment earnings 6 4 3 4 17
Minority interests (8) (7) (6) -- (21)
Net gain on sale of
subsidiary common
stock and long-term
investments -- 9 -- 7 16
Impairment of
investment securities -- (5) -- -- (5)
Income (loss) from
continuing operations
before income taxes 52 (98) (341) (1,009) (1,396)
Income tax benefit
(expense) from
continuing operations (48) 31 125 162 270
Income (loss) from
continuing operations 4 (67) (216) (847) (1,126)
Discontinued
operations:
Income (loss) from
operations of asset
group 31 31 (42) (45) (25)
Impairment of long-
lived assets and
goodwill, and
restructuring charges (61) (124) (99) (368) (652)
Net gains on sales of
asset group -- -- -- 274 274
Income tax benefit
(expense) 6 (35) 49 32 52
Loss from discontinued
operations (24) (128) (92) (107) (351)
Net loss (20) (195) (308) (954) (1,477)
Diluted earnings (loss)
per common share and
common equivalent
share:
Continuing operations 0.01 (0.14) (0.46) (1.82) (2.42)
Discontinued
operations (0.05) (0.28) (0.20) (0.23) (0.75)
-------- -------- -------- --------- ---------
(0.04) (0.42) (0.66) (2.05) (3.17)
Weighted average shares
and dilutive
securities (if
applicable)
outstanding (in
thousands): 472,325 465,110 463,629 464,549 465,927
GENERAL HOSPITALS
SELECTED STATISTICS - CONTINUING OPERATIONS
Calendar 2003 by Quarter
(Refer to Explanatory Note 1) (Unaudited)
(Dollars in millions except for net inpatient revenue per patient
day and per admission)
3 Months Ended Year
Ended
3/31/03 6/30/03 9/30/03 12/31/03 12/31/03
---------- ---------- ---------- ---------- ----------
Net inpatient
revenues $1,777 $1,710 $1,672 $1,638 $6,797
Net outpatient
revenues $832 $819 $820 $781 $3,252
Facilities
owned or
operated 70 70 70 70 70
Licensed beds
at end of
period 18,613 18,595 18,531 18,579 18,579
Average
licensed beds 18,621 18,607 18,559 18,535 18,580
Utilization of
licensed beds 58.3% 55.0% 53.3% 54.4% 55.3%
Patient days 977,160 931,788 910,258 928,170 3,747,376
Equivalent
patient days 1,342,424 1,295,837 1,270,959 1,282,948 5,192,169
Net inpatient
revenue per
patient day $1,819 $1,835 $1,837 $1,765 $1,814
Admissions 184,058 178,677 179,052 179,828 721,615
Equivalent
admissions 255,331 250,727 252,116 250,242 1,008,416
Net inpatient
revenue per
admission $9,655 $9,570 $9,338 $9,109 $9,419
Average length
of stay (days) 5.3 5.2 5.1 5.2 5.2
Outpatient
visits 1,548,731 1,544,612 1,522,372 1,511,640 6,127,355
Sources of net patient
revenues
--------------------------
Medicare 25.7% 25.7% 24.9% 24.3% 25.1%
Medicaid 7.7% 8.1% 7.9% 8.1% 8.0%
Managed care 51.3% 50.1% 50.3% 50.5% 50.6%
Indemnity,
self-pay and
other 15.3% 16.1% 16.9% 17.1% 16.3%
Explanatory Notes
1. Certain calendar year 2003 information has been reclassified to
conform to the current period's presentation. These
reclassifications, primarily for discontinued operations, have no
impact on total assets, liabilities, shareholders' equity, net loss
or cash flows.
2. During the quarter ended June 30, 2004, we recorded additional
provisions for doubtful accounts in the amount of $254 million, of
which $204 million is for continuing operations and $50 million is
for discontinued operations, to write down our self-pay patient
accounts receivable to their estimated net realizable value. The
additional provisions for doubtful accounts resulted primarily from
changes in how we estimate the net realizable value of self-pay
accounts by further accelerating the write-down of those accounts.
Prior to the quarter ended September 30, 2003, we had employed a
methodology that utilized graduated write-downs that escalated
toward the end of a 120-day aging period. As a result of evaluating
and analyzing recent collection trends of our self-pay accounts, we
changed to a straight-line write-down methodology during the
quarter ended September 30, 2003. During the quarter ended June 30,
2004, we further modified our approach to writing down these
self-pay accounts by eliminating the utilization of a straight-line
methodology to estimate the net realizable value of all existing
self-pay accounts (and all future self-pay accounts receivable when
they are recorded). This change in how we estimate the net
realizable value of self-pay accounts is attributable to an adverse
change in our business mix as admissions of uninsured patients have
grown and the fact that we began to phase in the price discounting
components of our Compact with Uninsured Patients ("Compact") at
many of our hospitals during the quarter ended June 30, 2004.
3. Other operating expenses include malpractice insurance expense of
$102 million for the quarter ended June 30, 2004, and $66 million
for the prior-year quarter. The Company continues to experience
unfavorable trends in professional and general liability risks, as
well as increases in the size of claim settlements and awards in
this area.
4. During the quarter ended June 30, 2004, we recorded impairment
charges of $21 million, primarily for the write-down of long-lived
assets to their estimated values at Medical College of Pennsylvania
Hospital, which we previously announced our intent to divest. We
also recorded $22 million in restructuring charges consisting of
$8 million in employee severance costs, $8 million in non-cash
stock option modification costs related to terminated employees,
and $6 million in contract termination and consulting costs.
During the quarter ended March 31, 2004, we recorded impairment
charges of $2 million for the write-down of long-lived assets and
restructuring charges of $57 million, consisting of $9 million in
employee severance costs and $48 million in closure costs related
to an academic affiliation agreement between Medical College of
Pennsylvania Hospital and Drexel University College of Medicine in
Philadelphia. In connection with our intent to divest the hospital,
we are contractually responsible for certain university costs.
During the quarter ended March 31, 2003, we recorded goodwill
impairment charges of $187 million related to our Central-Northeast
region. During the quarters ended March 31, 2003, and June 30,
2003, we recorded restructuring charges of $9 million and $76
million, respectively. The combined charges consisted of $54
million in employee severance, benefits and relocation costs,
$31 million in non-cash stock option modification costs related to
terminated employees, and $6 million in contract termination and
consulting costs and a $6 million reduction in reserves for
restructuring charges recorded in prior periods.
5. Costs of litigation and investigations for the quarter ended June
30, 2004, were $9 million and consisted primarily of miscellaneous
settlements and costs to defend the Company against a number of
lawsuits and investigations arising primarily after October 2002.
We recorded $68 million in the prior-year quarter, which included
$54 million related to the settlement of federal and state
investigations regarding allegations of unnecessary cardiac
procedures performed by two physicians at Redding Medical Center in
Redding, Calif.
6. During the quarter ended June 30, 2004, we sold $1 billion in new
Senior Notes and received net proceeds of approximately $954
million after deducting discounts and related expenses. A portion
of the proceeds from the offering were used to repurchase $260
million of our outstanding 5 3/8% Senior Notes due 2006 and $190
million of our 5% Senior Notes due 2007. As a result of these
repurchases, we recorded a $5 million loss from early
extinguishment of debt. The remaining portion of the net proceeds
will be used for general corporate purposes, which may include the
repurchase or repayment of other outstanding debt.
7. During the quarters ended June 30, 2004, and March 31, 2004, we
recorded in discontinued operations, (i) $244 million and $86
million of impairment charges, respectively, primarily for the
write-down of long-lived assets and goodwill to their estimated
fair value, less estimated costs to sell, and (ii) $3 million and
$1 million of restructuring charges, respectively.
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