UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 29, 2006
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HealthSouth Corporation
(Exact Name of Registrant as Specified in Charter)
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Delaware 000-14940 63-0860407
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
One HealthSouth Parkway
Birmingham, Alabama 35243
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (205) 967-7116
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02. Results of Operations and Financial Condition.
On March 29, 2006, HealthSouth Corporation (the "Company") issued a press
release, a copy of which is attached as Exhibit 99, announcing that it had filed
its Annual Report on Form 10-K, including its audited financial statements, for
the year ended December 31, 2005 (the "2005 Form 10-K"), and that it will hold a
conference call, which will also be webcast live, to review its 2005 Form 10-K.
The release also provides an overview of certain information contained in the
2005 Form 10-K, including certain financial results for the year ended December
31, 2005.
Note Regarding Presentation of Non-GAAP Financial Measures
The financial data contained in the press release includes non-GAAP financial
measures, including "Adjusted EBITDA", to assist in assessing projected and
actual operating performance and to facilitate quantification of planned
business activities. " The Company continues to believe that an understanding of
Consolidated Adjusted EBITDA is an important measure of operating performance,
leverage capacity, its ability to service its debt, and its ability to make
capital expenditures for its stakeholders. The Company believes it is meaningful
because it provides investors with a measure used by its internal decision
makers for evaluating its business. The Company's internal decision makers
believe Consolidated Adjusted EBITDA is a meaningful measure, because it
represents a transparent view of the Company's recurring operating performance
and allows the Company's management to readily view operating trends, perform
analytical comparisons and perform benchmarking between segments. Additionally,
the Company's management believes the inclusion of professional fees associated
with litigation, financial restructuring, government investigations, forensic
accounting, creditor advisors, accounting reconstruction, audit and tax work
associated with the reconstruction process, the implementation of Section 404 of
the Sarbanes-Oxley Act of 2002, and non-ordinary course charges incurred after
March 19, 2003 and related to its overall corporate restructuring distort,
within EBITDA, their ability to efficiently assess and view the core operating
trends on a consolidated basis and within segments. Additionally, the Company
uses Consolidated Adjusted EBITDA as a significant criterion in its
determination of performance-based cash bonuses and stock awards. The Company
reconciles Consolidated Adjusted EBITDA to loss from continuing operations,
which reconciliation is set forth in the release.
The Company also uses Consolidated Adjusted EBITDA on a consolidated basis as a
liquidity measure. The Company believes this financial measure on a consolidated
basis is important in analyzing its liquidity because it is also a component of
certain material covenants contained within the documents governing its
long-term indebtedness, as discussed in more detail in the 2005 Form 10-K. These
covenants are material terms of these agreements because they govern several of
its credit agreements, which in turn represent a substantial portion of its
capitalization. Non-compliance with these financial covenants under its credit
facilities - its interest coverage ratio and its leverage ratio - could result
in the lenders requiring us to immediately repay all amounts borrowed. In
addition, if the Company cannot satisfy these financial covenants in its credit
agreements, it cannot engage in certain activities, such as incurring additional
indebtedness, making certain payments, and acquiring and disposing of assets.
Consequently, Consolidated Adjusted EBITDA is critical to the company's
assessment of its liquidity.
In general terms, the definition of Consolidated Adjusted EBITDA, per the
documents governing the company's long-term indebtedness, allow us to add back
to Consolidated Adjusted EBITDA charges classified as "Restructuring Charges."
Costs which the Company classifies as "Restructuring Charges" include
professional fees associated with certain litigation, financial restructuring,
government investigations, forensic accounting, creditor advisors, accounting
reconstruction, audit and tax work associated with the reconstruction process,
compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and non-ordinary
course charges incurred after March 19, 2003 related to the Company's overall
corporate restructuring.
Consolidated Adjusted EBITDA is not a measure of financial performance under
generally accepted accounting principles in the United States of America, and
the items excluded from Consolidated Adjusted EBITDA are significant components
in understanding and assessing financial performance. Therefore, Consolidated
Adjusted EBITDA should not be considered a substitute for net loss from
continuing operations or cash flows from operating, investing, or financing
activities. Because Consolidated Adjusted EBITDA is not a measurement determined
in accordance with generally accepted accounting principles in the United States
of America and is thus susceptible to varying calculations, Consolidated
Adjusted EBITDA, as presented, may not be comparable to other similarly titled
measures of other companies. Revenue and expenses are measured in accordance
with the policies and procedures described in the 2005 Form 10-K.
ITEM 9.01. Financial Statements and Exhibits.
(c) Exhibits.
See Exhibit Index.
SIGNATURE
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 hereunto duly authorized.
HEALTHSOUTH CORPORATION
By: /s/ Gregory L. Doody
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Name: Gregory L. Doody
Title: Executive Vice President,
General Counsel and Secretary
Date: March 29, 2006
EXHIBIT INDEX
Exhibit No. Description
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99 Press Release dated March 29, 2006.