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HEALTHSOUTH CORP 8-K (Events or Changes Between Quarterly Reports) 2009-02-23

HEALTHSOUTH CORP 8-K (Events or Changes Between Quarterly Reports) 2009-02-23

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HEALTHSOUTH CORP 8-K (Events or Changes Between Quarterly Reports) 2009-02-23
HEALTHSOUTH CORP 8-K (Events or Changes Between Quarterly Reports) 2009-02-23

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Published by: http://secwatch.com on Feb 24, 2009
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05/10/2014

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\ue000
UNITED\ue000 STATES
SECURITIES\ue000 AND\ue000 EXCHANGE\ue000 COMMISSION
WASHINGTON,\ue000 D.C.\ue000 20549
\ue000
FORM\ue000 8-K
CURRENT\ue000 REPORT
Pursuant\ue000 To\ue000 Section\ue000 13\ue000 or\ue000 15(d)\ue000 of\ue000 the\ue000 Securities\ue000 Exchange\ue000 Act\ue000 of\ue000 1934
Date\ue000 of\ue000 Report\ue000 (date\ue000 of\ue000 earliest\ue000 event\ue000 reported):\ue000 February\ue000 23,\ue000 2009
\ue000
HealthSouth\ue000 Corporation
(Exact\ue000 name\ue000 of\ue000 Registrant\ue000 as\ue000 specified\ue000 in\ue000 its\ue000 Charter)
Delaware
(State\ue000 or\ue000 Other\ue000 Jurisdiction\ue000 of\ue000 Incorporation)
\ue000
\ue000
\ue000
001-10315
63-0860407
(Commission\ue000 File\ue000 Number)
(IRS\ue000 Employer\ue000 Identification\ue000 No.)
\ue000
\ue000
3660\ue000 Grandview\ue000 Parkway,\ue000 Suite\ue000 200,\ue000 Birmingham,\ue000 Alabama\ue000 35243
(Address\ue000 of\ue000 Principal\ue000 Executive\ue000 Offices,\ue000 Including\ue000 Zip\ue000 Code)
(205)\ue000 967-7116
(Registrant\u2019s\ue000 Telephone\ue000 Number,\ue000 Including\ue000 Area\ue000 Code)
Check\ue000 the\ue000 appropriate\ue000 box\ue000 below\ue000 if\ue000 the\ue000 Form\ue000 8-K\ue000 filing\ue000 is\ue000 intended\ue000 to\ue000 simultaneously\ue000 satisfy\ue000 the\ue000 filing\ue000 obligation\ue000 of\ue000 the\ue000 registrant\ue000 under\ue000 any\ue000 of
the\ue000 following\ue000 provisions:
o
Written\ue000 communication\ue000 pursuant\ue000 to\ue000 Rule\ue000 425\ue000 under\ue000 the\ue000 Securities\ue000 Act\ue000 (17\ue000 CFR\ue000 230.425)
o
Soliciting\ue000 material\ue000 pursuant\ue000 to\ue000 Rule\ue000 14a-12\ue000 under\ue000 the\ue000 Exchange\ue000 Act\ue000 (17\ue000 CFR\ue000 240.14a-12)
o
Pre-commencement\ue000 communications\ue000 pursuant\ue000 to\ue000 Rule\ue000 14d-2(b)\ue000 under\ue000 the\ue000 Exchange\ue000 Act\ue000 (17\ue000 CFR\ue000 240.14d-2(b))
o
Pre-commencement\ue000 communications\ue000 pursuant\ue000 to\ue000 Rule\ue000 13e-4(c)\ue000 under\ue000 the\ue000 Exchange\ue000 Act\ue000 (17\ue000 CFR\ue000 240.13e-4(c))
\ue000
\ue000
\ue000
\ue000
\ue000
Processed and formatted by SEC Watch - Visit SECWatch.com
ITEM\ue000 2.02.\ue000Results\ue000 of\ue000 Operations\ue000 and\ue000 Financial\ue000 Condition.

The\ue000 information\ue000 contained\ue000 herein\ue000 is\ue000 being\ue000 furnished\ue000 pursuant\ue000 to\ue000 Item\ue000 2.02\ue000 of\ue000 Form\ue000 8-K,\ue000 \u201cResults\ue000 of\ue000 Operations\ue000 and\ue000 Financial
Condition,\u201d\ue000 and\ue000 Item\ue000 7.01\ue000 of\ue000 Form\ue000 8-K,\ue000 \u201cRegulation\ue000 FD\ue000 Disclosure.\u201d\ue000 This\ue000 information\ue000 shall\ue000 not\ue000 be\ue000 deemed\ue000 \u201cfiled\u201d\ue000 for\ue000 purposes\ue000 of\ue000 Section\ue000 18\ue000 of
the\ue000 Securities\ue000 Exchange\ue000 Act\ue000 of\ue000 1934,\ue000 as\ue000 amended\ue000 (the\ue000 \u201cExchange\ue000 Act\u201d),\ue000 or\ue000 incorporated\ue000 by\ue000 reference\ue000 in\ue000 any\ue000 filing\ue000 under\ue000 the\ue000 Securities\ue000 Act\ue000 of
1933,\ue000 as\ue000 amended,\ue000 or\ue000 the\ue000 Exchange\ue000 Act,\ue000 except\ue000 as\ue000 shall\ue000 be\ue000 expressly\ue000 set\ue000 forth\ue000 by\ue000 specific\ue000 reference\ue000 in\ue000 such\ue000 a\ue000 filing.

On\ue000 February\ue000 23,\ue000 2009,\ue000 HealthSouth\ue000 Corporation\ue000 (the\ue000 \u201cCompany\u201d)\ue000 issued\ue000 a\ue000 press\ue000 release\ue000 reporting\ue000 the\ue000 financial\ue000 results\ue000 of\ue000 the
Company\ue000 for\ue000 the\ue000 three\ue000 months\ue000 and\ue000 year\ue000 ended\ue000 December\ue000 31,\ue000 2008.\ue000 A\ue000 copy\ue000 of\ue000 the\ue000 press\ue000 release\ue000 is\ue000 attached\ue000 to\ue000 this\ue000 report\ue000 as\ue000 Exhibit\ue000 99.1\ue000 and
incorporated\ue000 herein\ue000 by\ue000 reference.

In\ue000 addition,\ue000 a\ue000 copy\ue000 of\ue000 the\ue000 supplemental\ue000 slides\ue000 which\ue000 will\ue000 be\ue000 discussed\ue000 during\ue000 the\ue000 Company\u2019s\ue000 earnings\ue000 call\ue000 at\ue000 9:30\ue000 a.m.\ue000 Eastern\ue000 Time
on\ue000 Tuesday,\ue000 February\ue000 24,\ue000 2009\ue000 is\ue000 attached\ue000 to\ue000 this\ue000 report\ue000 as\ue000 Exhibit\ue000 99.2\ue000 and\ue000 incorporated\ue000 herein\ue000 by\ue000 reference.
ITEM\ue000 7.01.\ue000Regulation\ue000 FD\ue000 Disclosure.
See\ue000 Item\ue000 2.02,\ue000 \u201cResults\ue000 of\ue000 Operations\ue000 and\ue000 Financial\ue000 Condition,\u201d\ue000 above.
N
ote\ue000 Regarding\ue000 Presentation\ue000 of\ue000 Non-GAAP\ue000 Financial\ue000 Measures

The\ue000 financial\ue000 data\ue000 contained\ue000 in\ue000 the\ue000 press\ue000 release\ue000 and\ue000 supplemental\ue000 slides\ue000 includes\ue000 non-GAAP\ue000 financial\ue000 measures,\ue000 including
\u201cAdjusted\ue000 Consolidated\ue000 EBITDA.\u201d\ue000 The\ue000 Company\ue000 continues\ue000 to\ue000 believe\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 as\ue000 defined\ue000 in\ue000 its\ue000 Credit\ue000 Agreement\ue000 is\ue000 a
measure\ue000 of\ue000 leverage\ue000 capacity,\ue000 its\ue000 ability\ue000 to\ue000 service\ue000 its\ue000 debt,\ue000 and\ue000 its\ue000 ability\ue000 to\ue000 make\ue000 capital\ue000 expenditures.

The\ue000 Company\ue000 uses\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 on\ue000 a\ue000 consolidated\ue000 basis\ue000 as\ue000 a\ue000 liquidity\ue000 measure.\ue000 The\ue000 Company\ue000 believes\ue000 this
financial\ue000 measure\ue000 on\ue000 a\ue000 consolidated\ue000 basis\ue000 is\ue000 important\ue000 in\ue000 analyzing\ue000 its\ue000 liquidity\ue000 because\ue000 it\ue000 is\ue000 the\ue000 key\ue000 component\ue000 of\ue000 certain\ue000 material\ue000 covenants
contained\ue000 within\ue000 the\ue000 Company\u2019s\ue000 Credit\ue000 Agreement,\ue000 which\ue000 is\ue000 discussed\ue000 in\ue000 more\ue000 detail\ue000 in\ue000 Note\ue000 8,\ue000Long-term\ue000 Debt,\ue000 to\ue000 the\ue000 consolidated\ue000 financial
statements\ue000 included\ue000 in\ue000 its\ue000 Annual\ue000 Report\ue000 on\ue000 Form\ue000 10-K\ue000 for\ue000 the\ue000 year\ue000 ended\ue000 December\ue000 31,\ue000 2008\ue000 (the\ue000 \u201c2008\ue000 Form\ue000 10-K\u201d),\ue000 when\ue000 filed.\ue000 These
covenants\ue000 are\ue000 material\ue000 terms\ue000 of\ue000 the\ue000 Credit\ue000 Agreement,\ue000 and\ue000 the\ue000 Credit\ue000 Agreement\ue000 represents\ue000 a\ue000 substantial\ue000 portion\ue000 of\ue000 the\ue000 Company\u2019s
capitalization.\ue000 Non-compliance\ue000 with\ue000 these\ue000 financial\ue000 covenants\ue000 under\ue000 the\ue000 Credit\ue000 Agreement\ue000 \u2013\ue000 its\ue000 interest\ue000 coverage\ue000 ratio\ue000 and\ue000 its\ue000 leverage\ue000 ratio\ue000 \u2013
could\ue000 result\ue000 in\ue000 the\ue000 Company\u2019s\ue000 lenders\ue000 requiring\ue000 the\ue000 Company\ue000 to\ue000 immediately\ue000 repay\ue000 all\ue000 amounts\ue000 borrowed.\ue000 If\ue000 the\ue000 Company\ue000 anticipated\ue000 a
potential\ue000 covenant\ue000 violation,\ue000 it\ue000 would\ue000 seek\ue000 relief\ue000 from\ue000 its\ue000 lenders,\ue000 which\ue000 would\ue000 have\ue000 some\ue000 cost\ue000 to\ue000 the\ue000 Company,\ue000 and\ue000 such\ue000 relief\ue000 might\ue000 not\ue000 be
on\ue000 terms\ue000 as\ue000 favorable\ue000 to\ue000 those\ue000 in\ue000 the\ue000 Company\u2019s\ue000 existing\ue000 Credit\ue000 Agreement.\ue000 In\ue000 addition,\ue000 if\ue000 the\ue000 Company\ue000 cannot\ue000 satisfy\ue000 these\ue000 financial
covenants,\ue000 it\ue000 would\ue000 be\ue000 prohibited\ue000 under\ue000 the\ue000 Credit\ue000 Agreement\ue000 from\ue000 engaging\ue000 in\ue000 certain\ue000 activities,\ue000 such\ue000 as\ue000 incurring\ue000 additional\ue000 indebtedness,
making\ue000 certain\ue000 payments,\ue000 and\ue000 acquiring\ue000 and\ue000 disposing\ue000 of\ue000 assets.\ue000 Consequently,\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 is\ue000 critical\ue000 to\ue000 the\ue000 Company\u2019s
assessment\ue000 of\ue000 its\ue000 liquidity.

In\ue000 general\ue000 terms,\ue000 the\ue000 definition\ue000 of\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA,\ue000 per\ue000 the\ue000 Credit\ue000 Agreement,\ue000 allows\ue000 the\ue000 Company\ue000 to\ue000 add\ue000 back\ue000 to
Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 all\ue000 unusual\ue000 noncash\ue000 items\ue000 or\ue000 non-recurring\ue000 charges.\ue000 These\ue000 items\ue000 include,\ue000 but\ue000 may\ue000 not\ue000 be\ue000 limited\ue000 to,
(1)\ue000 amounts\ue000 associated\ue000 with\ue000 government,\ue000 class\ue000 action,\ue000 and\ue000 related\ue000 settlements,\ue000 (2)\ue000 fees,\ue000 costs,\ue000 and\ue000 expenses\ue000 related\ue000 to\ue000 the\ue000 Company\u2019s
recapitalization\ue000 transactions,\ue000 (3)\ue000 any\ue000 losses\ue000 from\ue000 discontinued\ue000 operations\ue000 and\ue000 closed\ue000 locations,\ue000 (4)\ue000 charges\ue000 in\ue000 respect\ue000 of\ue000 professional\ue000 fees\ue000 for
reconstruction\ue000 and\ue000 restatement\ue000 of\ue000 financial\ue000 statements,\ue000 including\ue000 fees\ue000 paid\ue000 to\ue000 outside\ue000 professional\ue000 firms\ue000 for\ue000 matters\ue000 related\ue000 to\ue000 internal\ue000 controls
and\ue000 legal\ue000 fees\ue000 for\ue000 continued\ue000 litigation\ue000 defense\ue000 and\ue000 support\ue000 matters\ue000 discussed\ue000 in\ue000 Note\ue000 20,\ue000Settlements,\ue000 and\ue000 Note\ue000 21,\ue000Contingencies\ue000 and\ue000 Other

Commitments,\ue000 to\ue000 the\ue000 consolidated\ue000 financial\ue000 statements\ue000 included\ue000 in\ue000 the\ue000 2008\ue000 Form\ue000 10-K,\ue000 when\ue000 filed,\ue000 (5)\ue000 compensation\ue000 expense\ue000 recorded\ue000 in
accordance\ue000 with\ue000 Financial\ue000 Accounting\ue000 Standards\ue000 Board\ue000 Statement\ue000 No.\ue000 123(R),\ue000Share-Based\ue000 Payment,\ue000 (6)\ue000 investment\ue000 and\ue000 other\ue000 income
(including\ue000 interest\ue000 income),\ue000 and\ue000 (7)\ue000 fees\ue000 associated\ue000 with\ue000 the\ue000 Company\u2019s\ue000 divestiture\ue000 activities.

However,\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 is\ue000 not\ue000 a\ue000 measure\ue000 of\ue000 financial\ue000 performance\ue000 under\ue000 generally\ue000 accepted\ue000 accounting\ue000 principles
in\ue000 the\ue000 United\ue000 States\ue000 of\ue000 America\ue000 (\u201cGAAP\u201d),\ue000 and\ue000 the\ue000 items\ue000 excluded\ue000 from\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 are\ue000 significant\ue000 components\ue000 in
understanding\ue000 and\ue000 assessing\ue000 financial\ue000 performance.\ue000 Therefore,

\ue000
Processed and formatted by SEC Watch - Visit SECWatch.com

Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 should\ue000 not\ue000 be\ue000 considered\ue000 a\ue000 substitute\ue000 for\ue000 net\ue000 income\ue000 (loss)\ue000 or\ue000 cash\ue000 flows\ue000 from\ue000 operating,\ue000 investing,\ue000 or
financing\ue000 activities.\ue000 The\ue000 Company\ue000 reconciles\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 to\ue000 net\ue000 income\ue000 (loss),\ue000 which\ue000 reconciliation\ue000 is\ue000 set\ue000 forth\ue000 in\ue000 the
press\ue000 release\ue000 attached\ue000 as\ue000 Exhibit\ue000 99.1,\ue000 and\ue000 to\ue000 net\ue000 cash\ue000 provided\ue000 by\ue000 operating\ue000 activities,\ue000 which\ue000 reconciliation\ue000 is\ue000 set\ue000 forth\ue000 below.\ue000 Because
Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 is\ue000 not\ue000 a\ue000 measurement\ue000 determined\ue000 in\ue000 accordance\ue000 with\ue000 GAAP\ue000 and\ue000 is\ue000 thus\ue000 susceptible\ue000 to\ue000 varying\ue000 calculations,
Adjusted\ue000 Consolidated\ue000 EBITDA,\ue000 as\ue000 presented,\ue000 may\ue000 not\ue000 be\ue000 comparable\ue000 to\ue000 other\ue000 similarly\ue000 titled\ue000 measures\ue000 of\ue000 other\ue000 companies.\ue000 Revenues\ue000 and
expenses\ue000 are\ue000 measured\ue000 in\ue000 accordance\ue000 with\ue000 the\ue000 policies\ue000 and\ue000 procedures\ue000 described\ue000 in\ue000 the\ue000 2008\ue000 Form\ue000 10-K.

The\ue000 Company\ue000 also\ue000 uses\ue000 adjusted\ue000 income\ue000 (loss)\ue000 from\ue000 continuing\ue000 operations\ue000 and\ue000 the\ue000 related\ue000 per\ue000 share\ue000 amounts\ue000 as\ue000 analytical\ue000 indicators
to\ue000 assess\ue000 its\ue000 performance.\ue000 Management\ue000 believes\ue000 the\ue000 presentation\ue000 of\ue000 adjusted\ue000 income\ue000 (loss)\ue000 from\ue000 continuing\ue000 operations\ue000 and\ue000 the\ue000 related\ue000 per
share\ue000 amounts\ue000 provides\ue000 useful\ue000 information\ue000 to\ue000 management\ue000 and\ue000 investors\ue000 about\ue000 the\ue000 Company\u2019s\ue000 operating\ue000 business\ue000 before\ue000 taking\ue000 into\ue000 account
certain\ue000 items\ue000 that\ue000 are\ue000 non-operational\ue000 or\ue000 infrequent\ue000 in\ue000 nature.\ue000 These\ue000 measures\ue000 are\ue000 not\ue000 defined\ue000 measures\ue000 of\ue000 financial\ue000 performance\ue000 under\ue000 GAAP
and\ue000 should\ue000 not\ue000 be\ue000 considered\ue000 as\ue000 alternatives\ue000 to\ue000 net\ue000 income\ue000 (loss)\ue000 and\ue000 net\ue000 income\ue000 (loss)\ue000 per\ue000 share\ue000 available\ue000 to\ue000 common\ue000 shareholders.\ue000 Because
these\ue000 measures\ue000 are\ue000 not\ue000 measures\ue000 determined\ue000 in\ue000 accordance\ue000 with\ue000 GAAP\ue000 and\ue000 are\ue000 susceptible\ue000 to\ue000 varying\ue000 calculations,\ue000 they\ue000 may\ue000 not\ue000 be
comparable\ue000 to\ue000 other\ue000 similarly\ue000 titled\ue000 measures\ue000 presented\ue000 by\ue000 other\ue000 companies.\ue000 See\ue000 the\ue000 condensed\ue000 consolidated\ue000 statements\ue000 of\ue000 operations
included\ue000 in\ue000 the\ue000 press\ue000 release\ue000 attached\ue000 as\ue000 Exhibit\ue000 99.1\ue000 for\ue000 the\ue000 GAAP\ue000 measures\ue000 of\ue000 net\ue000 income\ue000 (loss),\ue000 income\ue000 (loss)\ue000 from\ue000 continuing\ue000 operations,
and\ue000 basic\ue000 and\ue000 diluted\ue000 earnings\ue000 (loss)\ue000 per\ue000 common\ue000 share.\ue000 A\ue000 reconciliation\ue000 of\ue000 net\ue000 income\ue000 (loss)\ue000 to\ue000 adjusted\ue000 income\ue000 (loss)\ue000 from\ue000 continuing
operations,\ue000 and\ue000 the\ue000 related\ue000 per\ue000 share\ue000 amounts,\ue000 is\ue000 included\ue000 in\ue000 the\ue000 earnings\ue000 release\ue000 attached\ue000 as\ue000 Exhibit\ue000 99.1\ue000 and\ue000 the\ue000 supplemental\ue000 slides\ue000 attached

as\ue000 Exhibit\ue000 99.2.

The\ue000 Company\ue000 also\ue000 uses\ue000 adjusted\ue000 free\ue000 cash\ue000 flow\ue000 as\ue000 an\ue000 analytical\ue000 indicator\ue000 to\ue000 assess\ue000 its\ue000 performance.\ue000 Given\ue000 the\ue000 Company\u2019s\ue000 high
leverage,\ue000 management\ue000 believes\ue000 the\ue000 presentation\ue000 of\ue000 adjusted\ue000 free\ue000 cash\ue000 flow\ue000 provides\ue000 investors\ue000 an\ue000 efficient\ue000 means\ue000 by\ue000 which\ue000 they\ue000 can\ue000 evaluate
the\ue000 Company\u2019s\ue000 capacity\ue000 to\ue000 reduce\ue000 debt\ue000 and\ue000 pursue\ue000 development\ue000 activities.\ue000 The\ue000 calculation\ue000 of\ue000 adjusted\ue000 free\ue000 cash\ue000 flow\ue000 is\ue000 included\ue000 in\ue000 the
supplemental\ue000 slides\ue000 attached\ue000 as\ue000 Exhibit\ue000 99.2.\ue000 This\ue000 measure\ue000 is\ue000 not\ue000 a\ue000 defined\ue000 measure\ue000 of\ue000 financial\ue000 performance\ue000 under\ue000 GAAP\ue000 and\ue000 should\ue000 not\ue000 be
considered\ue000 as\ue000 an\ue000 alternative\ue000 to\ue000 net\ue000 cash\ue000 provided\ue000 by\ue000 operating\ue000 activities.\ue000 Our\ue000 definition\ue000 of\ue000 adjusted\ue000 free\ue000 cash\ue000 flow\ue000 is\ue000 limited\ue000 and\ue000 does\ue000 not
represent\ue000 residual\ue000 cash\ue000 flows\ue000 available\ue000 for\ue000 discretionary\ue000 spending.\ue000 Because\ue000 this\ue000 measure\ue000 is\ue000 not\ue000 determined\ue000 in\ue000 accordance\ue000 with\ue000 GAAP\ue000 and\ue000 is
susceptible\ue000 to\ue000 varying\ue000 calculations,\ue000 it\ue000 may\ue000 not\ue000 be\ue000 comparable\ue000 to\ue000 other\ue000 similarly\ue000 titled\ue000 measures\ue000 presented\ue000 by\ue000 other\ue000 companies.\ue000 See\ue000 the
consolidated\ue000 statements\ue000 of\ue000 cash\ue000 flows\ue000 included\ue000 in\ue000 the\ue000 2008\ue000 Form\ue000 10-K,\ue000 when\ue000 filed,\ue000 for\ue000 the\ue000 GAAP\ue000 measures\ue000 of\ue000 cash\ue000 flows\ue000 from\ue000 operating,
investing,\ue000 and\ue000 financing\ue000 activities.\ue000 A\ue000 reconciliation\ue000 of\ue000 cash\ue000 provided\ue000 by\ue000 operating\ue000 activities\ue000 to\ue000 Adjusted\ue000 Consolidated\ue000 EBITDA\ue000 and\ue000 adjusted
free\ue000 cash\ue000 flow\ue000 is\ue000 presented\ue000 below.

\ue000
\ue000
\ue000
\ue000
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