SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HEALTHSOUTH CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of Filing Fee (Check appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11: (Set forth the amount on which the filing fee is
calculated and state how it was determined.)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
HEALTHSOUTH CORPORATION
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
February 10, 1997
A Special Meeting of Stockholders of HEALTHSOUTH Corporation (the "Company")
will be held at the corporate offices of the Company, One HealthSouth Parkway,
Birmingham, Alabama 35243, on Wednesday, March 12, 1997, at 2:00 p.m., C.S.T.,
for the following purposes:
1. To vote on an Amendment to the Restated Certificate of Incorporation of
the Company to increase the authorized Common Stock of the Company to
500,000,000 shares of Common Stock, par value $.01 per share.
2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
Stockholders of record at the close of business on February 7, 1997, are
entitled to notice of, and to vote at, the Special Meeting or any adjournment
thereof.
If you cannot attend the Special Meeting in person, please date and execute
the accompanying Proxy and return it promptly to the Company. If you attend the
Special Meeting, you may revoke your Proxy and vote in person if you desire to
do so, but attendance at the Special Meeting does not of itself serve to revoke
your Proxy.
ANTHONY J. TANNER
Secretary
<PAGE>
HEALTHSOUTH CORPORATION
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share, of HEALTHSOUTH Corporation (the "Company") in connection with
the solicitation of Proxies by and on behalf of the Board of Directors of the
Company for use at a Special Meeting of Stockholders to be held on March 12,
1997 or any adjournment thereof. A form of Proxy for use at the Special Meeting
is also enclosed. Any such Proxy may be revoked by a stockholder at any time
before it is exercised by either giving written notice of such revocation to the
Secretary of the Company or submitting a later-dated Proxy to the Company prior
to the Special Meeting. A stockholder attending the Special Meeting may revoke
his Proxy and vote in person if he desires to do so, but attendance at the
Special Meeting will not of itself revoke the Proxy.
The Company's principal executive offices are currently located at Two
Perimeter Park South, Birmingham, Alabama 35243. The Company's principal
executive offices will relocate, effective March 3, 1997, to One HealthSouth
Parkway, Birmingham, Alabama 35243. The Company's telephone number is (205)
967-7116.
Proxy materials will be mailed to stockholders by the Management of the
Company on or about February 10, 1997. The Company has retained Morrow & Co.
("Morrow") to solicit proxies on its behalf and will pay Morrow a fee of $6,000
for those services. The Company will reimburse Morrow for out-of-pocket expenses
incurred in connection with such solicitation. Additional solicitation may be
made by mail, telephone or telegram by the officers or regular employees of the
Company, who will receive no additional compensation therefor. Arrangements will
also be made with brokerage houses, custodians, nominees and fiduciaries for the
forwarding of proxy materials to the beneficial owners of Common Stock held of
record by such persons, and the Company will reimburse such brokerage houses,
custodians, nominees and fiduciaries for reasonable out-of-pocket expenses
incurred by them in connection therewith. The entire expense of solicitation,
including the cost of preparing, assembling and mailing the proxy materials,
will be borne by the Company.
The purpose of the Special Meeting of Stockholders is to approve and adopt an
Amendment to the Restated Certificate of Incorporation of the Company to
increase the authorized Common Stock of the Company to 500,000,000 shares of
Common Stock, par value $.01 per share. The Company is not aware at this time of
any other matters that will come before the Special Meeting. If any other
matters properly come before the Special Meeting, it is the intention of the
persons designated as proxies to vote in accordance with their judgment on such
matters. Shares represented by executed and unrevoked Proxies will be voted in
accordance with instructions contained therein or, in the absence of such
instructions, in accordance with the recommendations of the Board of Directors.
Abstentions and broker non-votes will not be counted for purposes of determining
whether any given proposal has been approved by the stockholders of the Company.
Because the proposal to amend the Company's Restated Certificate of
Incorporation requires the affirmative vote of a majority of the issued and
outstanding shares of Common Stock of the Company, abstentions and broker
non-votes will be the equivalents of votes against this proposal.
As to all matters that may come before the Special Meeting, each stockholder
will be entitled to one vote for each share of Common Stock of the Company held
by him at the close of business on February 7, 1997. The holders of a majority
of the shares of Common Stock of the Company present in person or by proxy and
entitled to vote will constitute a quorum at the Special Meeting. Abstentions
and broker non-votes will be counted for purposes of determining the presence of
a quorum. At February 7, 1997, the record date for the Special Meeting, there
were 156,638,143 shares of Common Stock outstanding.
DISSENTERS' RIGHTS OF APPRAISAL
There are no dissenters' rights of appraisal in connection with the vote of
stockholders to be taken with respect to the proposed Amendment to the Company's
Restated Certificate of Incorporation.
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PROPOSALS BY STOCKHOLDERS
Any proposals by stockholders of the Company intended to be presented at the
1997 Annual Meeting of Stockholders must have been received by the Company for
inclusion in the Company's Proxy Statement and form of Proxy by December 3,
1996. No such proposals were received.
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
At a meeting of the Board of Directors of the Company on January 16, 1997,
the Board of Directors approved an Amendment (the "Amendment") to Article FOURTH
of the Company's Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock of the Company from 250,000,000 to 500,000,000
shares of Common Stock, par value $.01 per share. Such approval was subject to
the approval of the Amendment by the holders of a majority of the outstanding
shares of Common Stock.
In connection with such proposal, the following resolution will be introduced
at the Special Meeting:
RESOLVED, that the first paragraph of Article FOURTH of the Restated
Certificate of Incorporation of this Corporation be amended to read as follows:
"FOURTH. The total number of shares of stock which the Corporation shall have
authority to issue is Five Hundred One Million Five Hundred Thousand
(501,500,000) shares, consisting of Five Hundred Million (500,000,000) shares of
Common Stock, par value One Cent ($.01) per share, and One Million Five Hundred
Thousand (1,500,000) shares of Preferred Stock, par value Ten Cents ($.10) per
share."
As described below, at the same meeting, the Board of Directors approved a
two-for-one stock split (the "Stock Split"), to be effected in the form of a
100% stock dividend, payable to holders of record of the Company's Common Stock
on March 13, 1997, subject to approval of the proposed Amendment.
INCREASE IN AUTHORIZED COMMON STOCK
The Board of Directors recommends that the Company's stockholders approve the
proposed Amendment to the Restated Certificate of Incorporation to increase the
authorized Common Stock of the Company to 500,000,000 shares of Common Stock,
par value $.01 per share, because it considers such proposal to be in the best
long-term and short-term interests of the Company, its stockholders and its
other constituencies. Without limiting the generality of the foregoing, the
Board of Directors believes that the proposed Stock Split is in the best
long-term and short-term interests of the Company, its stockholders and its
other constituencies, for the reasons set forth below under " -- The Stock
Split". In addition, the proposed increase in the number of shares of authorized
Common Stock will ensure that a sufficient number of shares will be available,
if needed, for issuance in connection with any possible future transactions
approved by the Board of Directors, including, among others, additional stock
splits, stock dividends, acquisitions, financings and other corporate purposes.
The Board of Directors believes that the availability of the additional shares
of Common Stock for such purposes without delay or the necessity for a special
stockholders' meeting (except as may be required by applicable law or regulatory
authorities or by the rules of any stock exchange on which the Company's
securities may then be listed) will be beneficial to the Company by providing it
with the flexibility required to consider and respond to future business
opportunities and needs as they arise. The availability of additional authorized
shares of Common Stock will also enable the Company to act promptly when the
Board of Directors determines that the issuance of additional shares of Common
Stock is advisable. It is possible that shares of Common Stock may be issued at
a time and under circumstances that may increase or decrease earnings per share
and increase or decrease the book value per share of shares presently held.
The Company has entered into a Plan and Agreement of Merger with Health
Images, Inc. ("Health Images") pursuant to which the Company will acquire Health
Images in a stock-for-stock merger which is expected to be consummated on or
about March 3, 1997. Without giving effect to the proposed Stock Split,
approximately 5,675,761 shares of the Company's Common Stock are expected to be
issued in the
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Health Images merger. Except for issuance in connection with the Stock Split,
the Health Images merger and the various convertible debentures, stock options
and stock purchase warrants referred to in this Proxy Statement, the Company
does not have any immediate plans, agreements, arrangements, commitments or
understandings with respect to the issuance of any of the remaining additional
shares of Common Stock which would be authorized by the proposed Amendment to
the Certificate of Incorporation.
Under the Restated Certificate of Incorporation, the Corporation presently
has authority to issue 250,000,000 shares of Common Stock, par value $.01 per
share, of which 156,638,143 shares were issued and outstanding on February 7,
1997. In addition, as of January 31, 1997, approximately (a) 6,102,272 shares of
Common Stock were reserved for issuance upon conversion of the Company's 5%
Convertible Subordinated Debentures due 2001, (b) 18,393,631 shares of Common
Stock were reserved for issuance under the Company's Stock Option Plans, under
which options to purchase a total of 15,394,806 shares of Common Stock were
outstanding and (c) 244,658 shares were reserved for issuance pursuant to the
exercise of outstanding stock purchase warrants. Approximately 62,945,535 shares
were available for issuance on February 7, 1997. All such share numbers will be
adjusted to reflect the Stock Split, as will the conversion and exercise prices
of the debentures, options and warrants.
THE STOCK SPLIT
At its January 16, 1997 meeting, the Board of Directors authorized a
two-for-one stock split of the Common Stock (the "Stock Split", as defined
above") to be effected in the form of a 100% stock dividend, subject to
stockholder approval of the Amendment. If such proposal is adopted, it is
expected that the record date for the Stock Split will be March 13, 1997. On or
before such date, the Amendment to the Restated Certificate of Incorporation
increasing the number of authorized shares of Common Stock will be filed with
the Secretary of the State of Delaware and become effective. Each holder of
shares of Common Stock at the close of business on the record date for the Stock
Split will be entitled to receive, for each share held of record, one additional
share of Common Stock, par value $.01 per share. If the Amendment is adopted,
existing certificates representing shares of Common Stock prior to the Stock
Split will continue to evidence the same number of shares of Common Stock.
Certificates representing the additional shares to which a stockholder is
entitled after the Stock Split will be mailed as soon as practicable following
the record date for the Stock Split. Stockholders should retain their
certificates and will receive new certificates representing one additional share
for each share held at the close of business on the record date. IN CONNECTION
WITH THE PROPOSED STOCK SPLIT, STOCKHOLDERS SHOULD NOT SEND THEIR CERTIFICATES
FOR SHARES OF COMMON STOCK TO THE COMPANY OR ITS TRANSFER AGENT FOR EXCHANGE.
A stockholder's equity interest in the Corporation or other relative rights
or interest of such stockholder will not change as a result of the Stock Split,
because each stockholder will receive additional shares of Common Stock in
direct proportion to his or her current holdings. The par value of the Common
Stock will continue to be $.01 per share. The additional shares resulting from
the Stock Split will be identical in all respects to the existing shares of
Common Stock (the holders of which do not have any preemptive rights to
subscribe for or purchase any securities of the Company of any kind or class).
All outstanding shares of Common Stock will continue to have one vote per share.
The Board of Directors believes that the Stock Split is in the best long-term
and short-term interests of the Company, its stockholders and its other
constituencies because the increase in the number of outstanding shares of
Common Stock and the lower market price per share resulting from the Stock Split
is expected to broaden the market for and improve the marketability of the
Common Stock and increase the number of stockholders. While the impact on the
market price of the shares of Common Stock cannot be predicted with certainty,
it is likely that the Stock Split will initially result in the market price of
each share being approximately one-half of the market price before the Stock
Split, although the market value of all shares held by a particular stockholder
should remain approximately the same. Because of the greater number of shares of
Common Stock outstanding after the Stock Split, brokerage commissions (which may
be subject to negotiation), applicable stock transfer taxes and other expenses
associated with sales or purchases of Common Stock may be somewhat higher than
before the Stock
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Split in certain transactions involving the purchase or sale of shares of Common
Stock having an equivalent value. However, the Stock Split should reduce the
expenses of buying or selling shares in cases where a single "round lot" will
result because of the Stock Split.
ADDITIONAL CONSIDERATIONS
The Company has been advised that the Stock Split will not result in any
taxable gain or loss to its stockholders under the current federal income tax
laws. For tax purposes, the cost basis of each outstanding share of Common Stock
will be divided proportionally between such shares and the additional shares
issued pursuant to the Stock Split. For purposes of determining the nature of
any gain or loss upon the disposition thereof, the holding period for each
additional share issued will be deemed to have commenced on the date when the
previously outstanding share or shares were acquired.
Although the Stock Split will be effected in the form of a stock dividend,
there will be no change in the dividend policy of the Company. That is, the
Company has never paid cash dividends on its Common Stock and does not
anticipate the payment of cash dividends in the foreseeable future. The Company
currently anticipates that any future earnings will be retained to finance the
Company's operations.
Because the Stock Split will be effected in the form of a stock dividend and
because the par value of the Common Stock will not be changed, the Company will
be required to transfer from retained earnings to the Common Stock Account an
amount equal to the aggregate par value of the shares distributed as a result of
the Stock Split. Although capitalization of earnings will be required, the
Preferred Stock Account, the Additional Paid-in Capital Account and Total
Stockholders' Equity will not change.
The Company intends to apply to the New York Stock Exchange, on which the
shares of Common Stock are currently listed, for the listing hereon of the
additional shares to be issued and reserved for future issuance upon the
approval of the Amendment to the Restated Certificate of Incorporation.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that stockholders vote FOR the adoption of
the Amendment to the Certificate of Incorporation to increase the authorized
shares of Common Stock to 500,000,000 shares of Common Stock, par value $.01 per
share. The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock entitled to vote at the Special Meeting will be necessary
for the approval of the Amendment to the Restated Certificate of Incorporation.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1996, (a) by each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock, (b) by each of the Company's Directors and (c) by the
Company's five most highly compensated executive officers for the year ended
December 31, 1995 and all executive officers and Directors as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE
NAME AND BENEFICIALLY OF
ADDRESS OF OWNER OWNED(1) COMMON STOCK
- ---------------------------------------------- ------------------- ---------------
<S> <C> <C>
Richard M. Scrushy............................ 7,238,329 (2) 4.44%
Two Perimeter Park South
Birmingham, Alabama 35243
John S. Chamberlin............................ 61,000 (3) *
C. Sage Givens................................ 170,000 (4) *
Charles W. Newhall III........................ 330,888 (5) *
George H. Strong.............................. 250,846 (6) *
Phillip C. Watkins, M.D....................... 351,365 (7) *
Richard F. Celeste............................ 80,000 (4) *
Aaron Beam, Jr................................ 131,810 (8) *
James P. Bennett.............................. 485,000 (9) *
Larry R. House................................ 204,800 (10) *
Anthony J. Tanner............................. 446,904 (11) *
P. Daryl Brown................................ 496,500 (12) *
Joel C. Gordon................................ 1,997,236 (13) 1.28%
Raymond J. Dunn, III......................... 1,619,749 (14) 1.04%
Thomas W. Carman.............................. 420,000 (4) *
Michael D. Martin............................. 153,504 (15) *
FMR Corp...................................... 9,967,400 (16) 6.38%
82 Devonshire Street
Boston, Massachusetts 02109
All Executive Officers and Directors as a Group
(20 persons) ............................ 15,112,131 (17) 9.05%
</TABLE>
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(1) The persons named in the table have sole voting and investment power
with respect to all shares of Common Stock shown as beneficially owned
by them, except as otherwise indicated.
(2) Includes 6,936,262 shares subject to currently exercisable stock
option.
(3) Includes 25,000 shares subject to currently exercisable stock options.
(4) All of the shares are subject to currently exercisable stock options.
(5) Includes 405 shares owned by members of Mr. Newhall's immediate family
and 330,000 shares subject to currently exercisable stock options.
(6) Includes 51,831 shares owned by a trust of which Mr. Strong is a
trustee and claims shared voting and investment power and 100,000
shares subject to currently exercisable stock options.
(7) Includes 250,000 shares subject to currently exercisable stock options.
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(8) Includes 130,000 shares subject to currently exercisable stock options.
(9) Includes 430,000 shares subject to currently exercisable stock options.
(10) Includes 203,998 shares subject to currently exercisable stock options.
(11) Includes 36,000 shares held in trust by Mr. Tanner for his children
and 380,000 shares subject to currently exercisable stock options.
(12) Includes 467,500 shares subject to currently exercisable stock options.
(13) Includes 204,670 shares owned by his spouse, 235,350 shares owned
by trusts of which he is a trustee and 167,260 shares subject to
currently exercisable stock options.
(14) Includes 31,666 shares owned by a charitable foundation of which Mr.
Dunn is a trustee.
(15) Includes 152,500 shares subject to currently exercisable stock options.
(16) Shares held by various investment funds for which affiliates of FMR
Corp. act as investment advisor. FMR Corp. or its affiliates claim sole
power to vote 21,100 of the shares and sole power to dispose of all of
the shares.
(17) Includes 10,913,270 shares subject to currently exercisable stock
options held by officers and Directors.
* Less than 1%
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OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the Company
does not know of any business which will be presented for consideration at the
Special Meeting other than that specified herein and in the Notice of Special
Meeting of Stockholders, but if other matters are presented, it is the intention
of the persons designated as proxies to vote in accordance with their judgment
on such matters.
The consolidated financial statements of the Company and its subsidiaries for
the fiscal years ended December 31, 1993, 1994 and 1995 and Management's
Discussion and Analysis of Financial Condition and Results of Operations
contained in Items 8 and 7, respectively, of the Company's Annual Report on Form
10-K for the Fiscal Year Ended December 31, 1995, as amended, as filed with the
Securities and Exchange Commission, are hereby incorporated by reference in this
Proxy Statement.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES THERETO, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE
FURNISHED WITHOUT CHARGE TO ANY STOCK-HOLDER OF THE COMPANY WHOSE PROXY IS
SOLICITED BY THE FOREGOING PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH
PERSON ADDRESSED TO ANTHONY J. TANNER, SECRETARY, HEALTHSOUTH Corporation, TWO
PERIMETER PARK SOUTH, BIRMINGHAM, ALABAMA 35243 (or, if mailed to arrive on or
after March 3, 1997, ONE HEALTHSOUTH PARKWAY, BIRMINGHAM, ALABAMA 35243). SUCH A
REQUEST FROM A BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK MUST CONTAIN A
GOOD-FAITH REPRESENTATION BY SUCH PERSON THAT, AS OF FEBRUARY 7, 1997, HE WAS A
BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK.
Please SIGN and RETURN the enclosed Proxy promptly.
By Order of the Board of Directors:
ANTHONY J. TANNER
Secretary
February 10, 1997
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PROXY
HEALTHSOUTH CORPORATION
SPECIAL MEETING OF STOCKHOLDERS -- MARCH 12, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints RICHARD M. SCRUSHY and AARON BEAM, JR. or
, and each of them, with several powers of substitution, proxies to
vote the shares of Common Stock, par value $.01 per share, of HEALTHSOUTH
Corporation which the undersigned could vote if personally present at the
Special Meeting of Stockholders of HEALTHSOUTH Corporation to be held at One
HealthSouth Parkway, Birmingham, Alabama 35243, on Wednesday, March 12, 1997, at
2:00 p.m., C.S.T., and any adjournment thereof:
1. Adoption and approval of an Amendment to the Restated Certificate of
Incorporation of the Company to increase the authorized Common Stock of
the Company to 500,000,000 shares of Common Stock, par value $.01 per
share.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. In their discretion, to act upon any matters incidental to the foregoing
and such other business as may properly come before the Special Meeting
or any adjournment thereof.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this Proxy will
be voted FOR Item 1 above. Any stockholder who wishes to withhold the
discretionary authority referred to in Item 2 above should mark a line through
the entire Item.
DATED , 1997
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Signature(s)
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(Please sign exactly and as fully as your
name appears on your stock certificate. If
shares are held jointly, each stockholder
should sign.)
PLEASE MARK, SIGN, DATE AND RETURN PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED.
