<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-K/A
(Amendment No. 1)
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File Number 1-8895
HEALTH CARE PROPERTY INVESTORS, INC.
(Exact name of registrant as specified in its charter)
Maryland 33-0091377
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
10990 Wilshire Boulevard, Suite 1200
Los Angeles, California 90024
(Address of principal executive offices)
Registrant's telephone number: (310) 473-1990
------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -----------------------
Common Stock* New York Stock Exchange
*The Common Stock has stock purchase rights attached which are registered
pursuant to Section 12(b) of the Act and listed on the New York Stock Exchange.
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 (or for such shorter period that the
registration was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 18, 1997 there were 28,708,284 shares of Common Stock
outstanding. The aggregate market value of the shares of Common Stock held by
non-affiliates of the registrant, based on the closing price of these shares on
March 18, 1997 on the New York Stock Exchange, was approximately $957,000,000.
Portions of the definitive Proxy Statement for the registrant's 1997 Annual
Meeting of Stockholders have been incorporated by reference into Part III of
this Report.
<PAGE>
PART II
ITEM 6. SELECTED FINANCIAL DATA
Set forth below is selected financial data with respect to the Company for
the years ended December 31, 1996, 1995, 1994, 1993, and 1992.
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995 1994 1993 1992
-------------------------------------------------
(Amounts in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total Revenue $120,393 $105,696 $ 98,996 $ 92,549 $ 83,727
Net Income 60,641 80,266 49,977 44,087 35,715
Net Income Per Share 2.12 2.83 1.87 1.66 1.38
Balance Sheet Data:
Total Assets 753,653 667,831 573,826 549,638 509,150
Debt Obligations 379,504 299,084 271,463 245,291 205,760
Stockholders' Equity 336,806 339,460 269,403 269,873 271,375
Other Data:
Funds From Operations (1) 80,517 72,911 65,274 59,201 51,866
Cash Flows From Operating
Activities 90,585 71,164 65,519 62,707 52,008
Cash Flows Used In Investing
Activities 104,797 80,627 61,383 29,315 69,087
Cash Flows Provided By (Used
In) Financing Activities 15,023 8,535 (24,418) (8,832) 16,645
Dividends Paid 65,905 60,167 52,831 49,030 44,136
Dividends Paid Per Share 2.3000 2.1400 1.9800 1.8450 1.7250
</TABLE>
- ---------------------------
(1) The Company believes that Funds From Operations ("FFO") is an important
supplemental measure of operating performance. The Company adopted the new
definition of FFO prescribed by the National Association of Real Estate Invest-
ment Trusts (NAREIT). FFO is now defined as Net Income (computed in accordance
with generally accepted accounting principles), excluding gains (or losses) from
debt restructuring and sales of property, plus real estate depreciation, and
after adjustments for unconsolidated partnerships and joint ventures. FFO does
not, and is not intended to, represent cash generated from operating activities
in accordance with generally accepted accounting principles, is not necessarily
indicative of cash available to fund cash needs and should not be considered as
an alternative to Net Income. FFO, as defined by the Company may not be
comparable to similarly entitled items reported by other REITs that do not
define it in accordance with the definition prescribed by NAREIT. FFO for the
years presented has been restated for the new definition. The following table
represents items and amounts being aggregated to compute FFO.
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Income $60,641 $80,266 $49,977 $44,087 $35,715
Real Estate Depreciation 20,700 16,691 15,829 15,636 16,348
Partnership Adjustments (824) (496) (532) (522) (197)
Gain on sale of Real Estate
Properties -- (23,550) -- -- --
------- ------- ------- ------- -------
$80,517 $72,911 $65,274 $59,201 $51,866
======= ======= ======= ======= =======
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company is in the business of acquiring health care facilities that it
leases on a long-term basis to health care providers. On a more limited basis,
the Company has provided mortgage financing on health care facilities. As of
December 31, 1996, the Company's portfolio of properties, including equity
investments, consisted of 214 facilities located in 38 states. These facilities
are comprised of 135 long-term care facilities, 52 congregate care and assisted
living facilities, 12 medical office buildings, six acute care hospitals, six
rehabilitation facilities, two physician group practice clinics and one
psychiatric care facility. The gross acquisition price of the properties, which
includes partnership acquisitions, was approximately $915,260,000 at December
31, 1996.
Results of Operations
Year Ended December 31, 1996 Vs. Year Ended December 31, 1995
Net Income for the year ended December 31, 1996 totaled $60,641,000 or
$2.12 per share on revenue of $120,393,000. This compares to Net Income of
$80,266,000 or $2.83 per share on revenue of $105,696,000 for the corresponding
period in 1995. Included in Net Income and Net Income Per Share for the year
ended December 31, 1995 is the Gain on the Sale of Real Estate Properties of
$23,550,000 or $0.83 per share. Net Income for the year ended December 31, 1996
was favorably influenced in the amount of $2,061,000, or $0.07 per share,
attributable to the payoff of two mortgage loans which had been purchased at a
discount by the Company in 1992.
Base Rental Income for the year ended December 31, 1996 increased by
$14,985,000 to $83,702,000. The majority of this increase was generated by rents
on $117,000,000 of equity investments made in 1996 and a full year of rents on
$98,000,000 of equity investments made in 1995. The increase in revenue was
also assisted by higher Additional Rental and Interest Income from the existing
portfolio for the year ended December 31, 1996 of $2,847,000 to $20,925,000.
The growth in Base Rental Income and Additional Rental and Interest Income for
1996 was moderated by the sale and concurrent financing of certain real estate
properties in 1995, which converted the character of the returns on those assets
from rental income to interest income. The increases noted above were offset by
a decrease in Interest and Other Income for the year ended December 31, 1996 of
$2,394,000 to $15,766,000, due in part to the payoff of certain mortgage loans.
Interest Expense for the year ended December 31, 1996 increased by
$7,062,000 to $26,401,000. The increase in Interest Expense is primarily due
to the Company's February 1996 issuance of $115,000,000 6.5% Senior Notes due
2006, the proceeds of which were invested in new long-term investments. The
increase in Depreciation/Non Cash Charges of $3,941,000 to $23,149,000 for the
year ended December 31, 1996, is related to the new investments discussed above.
In 1996, the Company adopted the new definition of Funds From Operations
("FFO") prescribed by the National Association of Real Estate Investment Trusts
("NAREIT"). FFO is now defined as Net Income (computed in accordance with
generally accepted accounting principles), excluding gains (or losses) from debt
restructuring and sales of property, plus real estate depreciation, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to reflect FFO on
the same basis. FFO does not represent cash generated from operating activities
in accordance with generally accepted accounting principles, is not necessarily
indicative of cash available to fund cash needs and should not be considered as
an alternative to Net Income. FFO for the years ended December 31, 1995 and
1994 has been restated for this new definition.
<PAGE>
The Company believes that FFO is an important supplemental measure of
operating performance. Historical cost accounting for real estate assets
implicitly assumes that the value of real estate assets diminishes predictably
over time. Since real estate values instead have historically risen and fallen
with market conditions, presentations of operating results for a real estate
investment trust that use historical cost accounting for depreciation could be
uninformative. The term FFO was designed by the Real Estate Investment Trust
("REIT") industry to address this problem. FFO, as defined by the Company in
accordance with the NAREIT prescription may not be comparable to similarly
entitled items reported by other REITs that do not define it in accordance with
the NAREIT definition.
Funds From Operations for the years ended December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
(Amounts in thousands)
<S> <C> <C>
Net Income $ 60,641 $ 80,266
Real Estate Depreciation 20,700 16,691
Partnership Adjustments (824) (496)
Gain on Sale of Real Estate Properties -- (23,550)
-------- --------
Funds From Operations $ 80,517 $ 72,911
======== ========
</TABLE>
FFO for the year ended December 31, 1996, increased $7,606,000 or 10.4%
from the comparable period in the prior year. The increases are attributable to
increases in Base Rental Income, Additional Rental and Interest Income, as
offset by increases in Interest Expense and Other Expenses and decreases in
Interest and Other Income all of which are discussed in more detail above.
Year Ended December 31, 1995 Vs. Year Ended December 31, 1994
Net Income for the year ended December 31, 1995 was $80,266,000, or $2.83
per share, on revenue of $105,696,000. This is compared to Net Income for the
prior year of $49,977,000, or $1.87 per share, on revenue of $98,996,000. Net
Income and Net Income Per Share for the year ended December 31, 1995 included a
$23,550,000, or $0.83 per share, Gain on the Sale of 10 leased real estate
properties. Under the terms of the sale, the Company received net cash proceeds
of $8,387,000 and is providing a 15 year mortgage in the initial amount of
$34,760,000. Additionally, Net Income for the year ended December 31, 1994 was
favorably influenced by a $1,000,000 final settlement related to a partnership
investment.
The increase in total revenue of $6,700,000, or 6.8%, is due primarily to
increased Base Rental Income from facilities acquired in 1995 and a full year's
rents on the 1994 acquisitions. In addition, the increases in Additional Rental
and Interest Income of $1,371,000 were the result of increases at most of the
facilities that are eligible to pay such rents. The growth in Additional Rental
and Interest Income was slowed somewhat by the sale and concurrent financing of
certain real estate properties. Those sales converted the character of the
returns on the assets from Base and Additional Rental Income to Interest Income.
Interest and Other Income increased $3,118,000 primarily as a result of the
addition of approximately $42,954,000 in loans receivable during 1995.
<PAGE>
Interest Expense decreased $794,000, or 3.9%, to $19,339,000 for the year
ended December 31, 1995 as compared to $20,133,000 for the prior year. The
decrease is primarily due to lower interest rates and lower average borrowings
from the Company redeeming in March 1995, without penalty, $75,000,000 of 9-7/8%
Senior Notes that were due in 1998. This was offset by the Company issuing
approximately $78,000,000 in Senior Notes during 1995 with interest rates
averaging 7.8%.
Funds From Operations for the years ended December 31, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
(Amounts in thousands)
<S> <C> <C>
Net Income $ 80,266 $ 49,977
Real Estate Depreciation 16,691 15,829
Partnership Adjustments (496) (532)
Gain on Sale of Real Estate Properties (23,550) --
-------- --------
Funds From Operations $ 72,911 $ 65,274
======== ========
</TABLE>
FFO for the year ended December 31, 1995, increased $7,637,000 or 11.7%
from the comparable period in the prior year. The increases are attributable to
increases in Base Rental Income, Additional Rental and Interest Income, and
Interest and Other Income, as off-set by increases in Other Expenses all of
which are discussed in more detail above.
Liquidity and Capital Resources
The Company has financed acquisitions through the sale of common stock, the
issuance of long-term debt, the assumption of mortgage debt, the use of short-
term bank lines and internally generated cash flow. Facilities under
construction are generally financed by means of cash on hand or short-term
borrowings under the Company's existing bank lines. In the future, the Company
may use its Medium-Term Note ("MTN") program to finance a portion of the costs
of construction. At the completion of construction and commencement of the
lease, short-term borrowings used in the construction phase are generally
refinanced with new long-term debt or equity offerings.
On February 15, 1996, the Company issued $115,000,000 in Unsecured Senior
Notes due 2006 bearing a coupon of 6.5%. The majority of the proceeds from this
debt issuance was used to retire short-term bank debt and to fund acquisitions
made during 1996. At December 31, 1996, Stockholders' Equity in the Company
totaled $336,806,000 and the debt to equity ratio was 1.13 to 1. For the year
ended December 31, 1996, Funds From Operations covered Interest Expense 4.1 to
1.
At December 31, 1996, the Company had approximately $50,975,000 available
under its MTN program, registered pursuant to a shelf registration statement,
for future issuance of MTNs based on Company needs and then existing market
conditions. In September 1995, the Company registered $200,000,000 of debt
and equity securities under a shelf registration statement filed with the
Securities and Exchange Commission of which $85,000,000 in debt or equity
securities remains available to be offered by the Company. As of December 31,
1996, the Company had $100,000,000 available on its revolving line of credit.
This line of credit with a group of six domestic and international banks expires
on March 31, 2000. The Company's debt securities have been rated investment
grade by debt rating agencies since 1986. Current ratings of the Company's
Senior and Convertible Subordinated Notes are as follows:
<PAGE>
<TABLE>
<CAPTION>
Moody's Standard & Poor's Duff & Phelps
-------- ----------------- --------------
<S> <C> <C> <C>
Senior Notes Baa1 BBB+ A-
Convertible
Subordinated Notes Baa2 BBB BBB+
</TABLE>
Since inception in May 1985, the Company has recorded approximately
$510,771,000 in cumulative Funds From Operations. Of this amount, through
December 31, 1996, a total of $427,514,000 has been distributed to stockholders
as dividends. The balance of $83,257,000 has been retained, and has been an
additional source of capital for the Company. Dividends paid or payable as a
percentage of Funds From Operations were 82%, 83% and 81% for the years ended
December 31, 1996, 1995 and 1994. Since commencing business in 1985, the
Company has paid dividends equal to approximately 84% of Funds From Operations.
The Company has outstanding commitments on closed and to-be-closed
development transactions of approximately $39 million and $63 million,
respectively. The Company is also committed to acquire approximately $122
million of existing health care facilities. The Company expects that a
significant portion of these commitments will be funded; however, experience
suggests that some committed transactions will not close. Transactions do not
close for various reasons including unsatisfied pre-closing conditions,
competitive financing sources, final negotiation differences and the operator's
inability to obtain required internal or governmental approvals.
At December 31, 1996, the Company had approximately $32,800,000 in
irrevocable letters of credit from commercial banks to secure the obligations of
many lessees' lease and borrowers' loan obligations. The Company may draw upon
the letters of credit if there are any defaults under the leases and/or loans.
Amounts available under letters of credit change from time to time and such
changes may be material.
The Company and an affiliate of HealthSouth Corporation have exchanged the
Company's closed Dallas Rehabilitation Institute for the HealthSouth Sunrise
Rehabilitation Hospital in Fort Lauderdale, Florida. The Sunrise Rehabilitation
Hospital, which is licensed as a 108 bed acute rehabilitation hospital,
specializes in programs for burn patients, spinal and hand rehabilitation, and
pediatric trauma treatment and functions at a very high percentage of occupancy.
The Dallas facility lease was scheduled to expire in June 1999 with annual rent
aggregating approximately $3,100,000. Annual rent on the Florida property will
aggregate $2,250,000 with a fifteen year primary term. The Company began
recording the rent reduction in the second quarter of 1996. The lease
obligations are guaranteed by HealthSouth Corporation. The property exchange was
finalized during March 1997. The Company invested approximately $18,000,000 in
the Dallas facility when it was purchased in 1985.
The Company has concluded a significant number of "facility rollover"
transactions in 1995 and 1996 on properties that have been under long-term
leases and mortgages. "Facility rollover" transactions principally include lease
renewals and renegotiations, exchanges, sales of properties, and to a lesser
extent, payoffs on mortgage receivables. In 1995, the Company completed 20
facility rollovers including the sale of ten facilities with concurrent "seller
financing" for a gain of $23,550,000. The 1995 facility rollovers generated an
increase of $900,000 in Funds From Operations on an annualized basis. During
the year ended December 31, 1996, the Company completed or agreed in principle
to complete 20 facility rollovers including the sale of nine facilities in
Missouri and the exchange of the Dallas Rehabilitation Institute. The 1996
facility rollovers through December 31, 1996, resulted in a decrease of
$1,200,000 in Funds From Operations on an annualized basis. Through December
31, 1999, the Company has 68 more facilities which are subject to lease
expiration, mortgage maturities and purchase options. The 1998 group includes
14, 10, and five long-term care facilities leased to Vencor, Beverly and
Horizon, respectively. The Company has completed certain facility rollovers
earlier than the scheduled lease expirations or mortgage maturities and will
continue to pursue such opportunities where it is advantageous to do so.
Management believes that the Company's liquidity and sources of capital are
adequate to finance its operations as well as its future investments in
additional facilities.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: July 17, 1997
HEALTH CARE PROPERTY INVESTORS, INC.
(Registrant)
/s/ Kenneth B. Roath
----------------------------------------------
Kenneth B. Roath, Chairman of the Board of
Directors, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date Signature and Title
- ------ ------------------------
/s/ Kenneth B. Roath
July 17, 1997 ------------------------------------------------
Kenneth B. Roath, Chairman of the Board of
Directors, President and Chief Executive Officer
(Principal Executive Officer)
/s/ James G. Reynolds
July 17, 1997 ------------------------------------------------
James G. Reynolds, Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
/s/ Devasis Ghose
July 17, 1997 ------------------------------------------------
Devasis Ghose, Senior Vice President- Finance
and Treasurer (Principal Accounting Officer)
/s/ Paul V. Colony
July 17, 1997 ------------------------------------------------
Paul V. Colony, Director
/s/ Robert R. Fanning
July 17, 1997 ------------------------------------------------
Robert R. Fanning, Jr., Director
<PAGE>
/s/ Michael D. McKee
July 17, 1997 ------------------------------------------------
Michael D. McKee, Director
/s/ Orville E. Melby
July 17, 1997 ------------------------------------------------
Orville E. Melby, Director
/s/ Harold M. Messmer
July 17, 1997 ------------------------------------------------
Harold M. Messmer, Jr., Director
/s/ Peter L. Rhein
July 17, 1997 ------------------------------------------------
Peter L. Rhein, Director
<PAGE>
APPENDIX I
TENET HEALTHCARE CORPORATION
SET FORTH BELOW IS CERTAIN CONDENSED FINANCIAL DATA OF TENET HEALTHCARE
CORPORATION ("TENET") WHICH IS TAKEN FROM TENET'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED MAY 31, 1996 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
(THE "COMMISSION") UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE
"EXCHANGE ACT"), AND THE TENET QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER
ENDED NOVEMBER 30, 1996 AS FILED WITH THE COMMISSION.
The information and financial data contained herein concerning Tenet was
obtained and has been condensed from Tenet's public filings under the Exchange
Act. The Tenet financial data presented includes only the most recent interim
and fiscal year end reporting periods. The Company can make no representation
as to the accuracy and completeness of Tenet's public filings but has no reason
not to believe the accuracy and completeness of such filings. It should be
noted that Tenet has no duty, contractual or otherwise, to advise the Company of
any events which might have occurred subsequent to the date of such publicly
available information which could affect the significance or accuracy of such
information.
Tenet is subject to the information filing requirements of the Exchange
Act, and, in accordance therewith, is obligated to file periodic reports, proxy
statements and other information with the Commission relating to its business,
financial condition and other matters. Such reports, proxy statements and other
information may be inspected at the offices of the Commission at 450 Fifth
Street, N.W. Washington D.C., and should also be available at the following
Regional Offices of the Commission: Room 1400, 75 Park Place, New York, New
York 10007 and Suite 1400, Northwestern Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661. Such reports and other information concerning Tenet
can also be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, Room 1102, New York, New York 10005.
i
<PAGE>
TENET HEALTHCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollar amounts in millions, except par values)
<TABLE>
<CAPTION>
November 30, May 31,
1996 1996
------------- --------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 57 $ 89
Short-term investments in debt securities 103 112
Accounts and notes receivable, less
allowance for doubtful accounts
($182 at November 30 and $156 at May 31) 1,006 838
Inventories of supplies, at cost 135 128
Deferred income taxes 254 279
Assets held for sale --- 39
Prepaid expenses and other assets 81 60
------- -------
Total current assets $ 1,636 $ 1,545
------- -------
Investments and other assets 506 518
Property, plant and equipment net 3,738 3,648
Intangible assets, at cost
Less accumulated amortization
($161 at November 30 and $123 at May 31) 2,693 2,621
------- -------
$ 8,573 $ 8,332
======= =======
</TABLE>
ii
<PAGE>
TENET HEALTHCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollar amounts in millions, except par values and share amounts)
<TABLE>
<CAPTION>
November 30, May 31,
1996 1996
------------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 42 $ 60
Accounts payable 267 380
Employee compensation and benefits 136 120
Other current liabilities 500 574
------- -------
Total current liabilities 945 1,134
------- -------
Long-Term debt, net of current portion 3,333 3,191
Other long-term liabilities and minority interests 1,024 977
Deferred income taxes 425 394
Common stock, $.075 par value; authorized
450,000,000 shares; 218,713,406 shares issued at
November 30, 1996 and at May 31,1996 16 16
Other shareholders' equity 2,869 2,660
Treasury stock, at cost, 15,159,055 shares at
November 30, 1995 and 18,755,274 at May 31, 1995 (39) (40)
------- -------
Total stockholders' equity 2,846 2,636
------- -------
$ 8,573 $ 8,332
======= =======
</TABLE>
iii
<PAGE>
TENET HEALTHCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Six Months Ended Year Ended,
November 30, 1996 May 31, 1996
------------------ ------------
<S> <C> <C>
Net operating revenues $ 2,915 $ 5,559
-------- --------
Operating and amortization (2,340) (4,460)
Depreciation and amortization (170) (407)
Interest expense, net of capitalized portion (141) (312)
-------- --------
Total costs and expenses (2,651) (5,179)
-------- --------
Investment earnings 10 22
Equity in earnings of unconsolidated affiliates 1 20
Minority interests in income of consolidated subsidiaries (10) (22)
Net gain on disposals of facilities
and long-term investments --- 329
Gain on sale of subsidiary's common stock --- 17
-------- --------
Income from continuing operations before income taxes 265 746
Taxes on income (116) (348)
-------- --------
Income from continuing operations 149 398
-------- --------
Discontinued operations --- (25)
Extraordinary charge from early extinguishment of debt --- (23)
-------- --------
Net income $ 149 $ 350
======== ========
</TABLE>
iv
<PAGE>
TENET HEALTHCARE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Six Months Ended Year Ended,
November 30, 1996 May 31, 1996
------------------ ------------
<S> <C> <C>
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES $ (14) $ 195
(Includes changes in all operating assets and liabilities): -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (95) (370)
Purchase of new businesses, net of cash acquired (160) (410)
Proceeds from sales of facilities, investments and other assets 40 548
Other items 67 (36)
-------- --------
Net cash provided by (used in) investing activities (148) (268)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of other borrowings (636) (3,187)
Proceeds from other borrowings 751 2,961
Proceeds from exercises of performance options --- 203
Proceeds from stock options exercised 15 30
-------- --------
Net cash used in financing activities 130 7
-------- --------
Net decrease in cash and cash equivalents (32) (66)
Cash and cash equivalents at beginning of year 89 155
-------- --------
Cash and cash equivalents at end of year $ 57 $ 89
======== ========
</TABLE>
v
