<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transaction period from ____ to ____
Commission File Number 000-18799
-----------
HEALTH MANAGEMENT ASSOCIATES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 61-0963645
-------------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5811 Pelican Bay Boulevard, Suite 500, Naples, Florida 34108-2710
--------------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(941)598-3131
----------------------------------------------------
(Registrant's telephone number, including area code)
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
--- ---
At May 1, 2000, the following shares of the Registrant were outstanding:
Class A Common Stock 249,340,239 shares
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
INDEX
-----
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Statements of Income--
Three Months Ended March 31, 2000 and 1999.................... 3
Consolidated Statements of Income--
Six Months Ended March 31, 2000 and 1999...................... 4
Condensed Consolidated Balance Sheets--
March 31, 2000 and September 30, 1999......................... 5
Condensed Consolidated Statements of Cash Flows--
Six Months Ended March 31, 2000 and 1999...................... 6
Notes to Interim Condensed Consolidated Financial
Statements..................................................... 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 9-13
PART II. OTHER INFORMATION......................................... 14-15
Signatures........................................................... 16
Index To Exhibits.................................................... 17-18
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
--------------------
2000 1999
-------- --------
Net patient service revenue........................ $408,655 $339,748
Costs and expenses:
Salaries and benefits............................. 143,179 114,673
Supplies and other expenses....................... 115,183 93,745
Provision for doubtful accounts................... 32,885 29,877
Depreciation and amortization..................... 18,534 14,344
Rent expense...................................... 9,268 7,893
Interest, net..................................... 6,503 682
-------- --------
Total costs and expenses......................... 325,552 261,214
-------- --------
Income before income taxes......................... 83,103 78,534
Provision for income taxes ........................ 32,616 30,827
-------- --------
Net income ........................................ $ 50,487 $ 47,707
======== ========
Net income per share:
Basic............................................. $ .21 $ .19
======== ========
Diluted........................................... $ .21 $ .19
======== ========
Weighted average number of shares outstanding:
Basic............................................. 241,064 251,905
======== ========
Diluted .......................................... 244,979 256,497
======== ========
See accompanying notes.
3
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Six months ended
March 31,
------------------
2000 1999
-------- --------
Net patient service revenue........................ $778,749 $645,244
Costs and expenses:
Salaries and benefits............................. 279,607 228,316
Supplies and other expenses....................... 225,129 182,106
Provision for doubtful accounts................... 67,058 58,972
Depreciation and amortization..................... 36,666 28,851
Rent expense...................................... 18,542 15,470
Interest, net..................................... 12,193 2,042
-------- --------
Total costs and expenses......................... 639,195 515,757
-------- --------
Income before income taxes......................... 139,554 129,487
Provision for income taxes ........................ 54,775 50,825
-------- --------
Net income ........................................ $ 84,779 $ 78,662
======== ========
Net income per share:
Basic............................................. $ .35 $ .31
======== ========
Diluted........................................... $ .35 $ .31
======== ========
Weighted average number of shares outstanding:
Basic............................................. 241,492 251,778
======== ========
Diluted........................................... 244,863 257,480
======== ========
See accompanying notes.
4
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS
------
March 31, September 30,
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................... $ 24,400 $ 12,926
Receivables--net.................................... 351,741 338,905
Supplies, prepaids and other assets................. 50,495 41,362
Funds held by trustee............................... 1,917 1,764
Deferred income taxes............................... 30,515 30,515
---------- ----------
Total current assets.............................. 459,068 425,472
Property, plant and equipment........................ 1,190,760 1,142,456
Less accumulated depreciation and amortization...... 260,146 229,967
---------- ----------
Net property, plant and equipment................. 930,614 912,489
Other assets:
Funds held by trustee............................... 3,215 4,131
Excess of cost over acquired assets, net............ 159,279 158,499
Deferred charges and other assets................... 20,042 16,709
---------- ----------
Total............................................. 182,536 179,339
---------- ----------
$1,572,218 $1,517,300
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable.................................... $ 76,468 $ 73,595
Accrued expenses and other liabilities.............. 57,227 71,997
Income taxes--currently payable and deferred........ 7,767 20,278
Current maturities of long-term debt................ 16,880 9,351
---------- ----------
Total current liabilities......................... 158,342 175,221
Deferred income taxes................................ 32,579 32,579
Other long-term liabilities.......................... 17,932 17,455
Long-term debt....................................... 430,354 401,522
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000
shares authorized.................................. - -
Common stock, Class A, $.01 par value, 750,000,000
shares authorized, 253,600,000 and 253,405,000
shares issued and outstanding at March 31,
2000 and September 30, 1999, respectively.......... 2,536 2,534
Additional paid-in capital.......................... 294,685 294,579
Retained earnings................................... 747,281 662,502
---------- ----------
1,044,502 959,615
Less treasury stock, 12,500,000 shares at cost...... (111,491) (69,092)
---------- ----------
Total stockholders' equity........................ 933,011 890,523
---------- ----------
$1,572,218 $1,517,300
========== ==========
</TABLE>
See accompanying notes.
5
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six months ended
March 31,
-------------------
2000 1999
-------- --------
Cash flows from operating activities:
Net income........................................ $ 84,779 $ 78,662
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................... 36,666 28,851
Loss on sale of fixed assets.................... 16 14
Changes in assets and liabilities:
Receivables--net............................... (26,437) (31,387)
Other current assets........................... (9,133) (5,537)
Deferred charges and other assets.............. (6,943) (664)
Accounts payable............................... 2,873 12,755
Accrued expenses and other liabilities......... 3,148 (725)
Income taxes--
currently payable and deferred................ (12,511) 25,956
Other long term liabilities.................... 477 (514)
-------- --------
Net cash provided by operating activities . 72,935 107,411
-------- --------
Cash flows from investing activities:
Acquisition of facility, net of cash acquired..... - (7,265)
Additions to property, plant and equipment........ (56,442) (77,321)
Proceeds from sale of equipment................... 148 71
-------- --------
Net cash used in investing activities........ (56,294) (84,515)
-------- --------
Cash flows from financing activities:
Proceeds from long-term borrowings................ 47,810 343
Principal payments on debt........................ (11,449) (9,881)
Decrease (increase) in funds held by trustee...... 763 (606)
Purchases of treasury stock....................... (42,399) (8,101)
Proceeds from issuance of common stock,
net of costs................................... 108 2,849
-------- --------
Net cash used in financing activities........ (5,167) (15,396)
-------- --------
Net increase in cash....................... 11,474 7,500
Cash and cash equivalents at beginning of period... 12,926 12,685
-------- --------
Cash and cash equivalents at end of period......... $ 24,400 $ 20,185
======== ========
See accompanying notes.
6
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
- ------------------------
The condensed consolidated balance sheet as of September 30, 1999 has been
derived from the audited consolidated financial statements included in Health
Management Associates, Inc.'s (the Company's) 1999 Annual Report. The interim
condensed consolidated financial statements at March 31, 2000 and for the three
and six month periods ended March 31, 2000 and 1999 are unaudited; however, such
interim statements reflect all adjustments (consisting only of a normal
recurring nature) which are, in the opinion of management, necessary for a fair
presentation of the financial position and results of operations for the interim
periods presented. The results of operations for the interim periods presented
are not necessarily indicative of the results to be expected for the full year.
The interim financial statements should be read in conjunction with the audited
consolidated financial statements of the Company included in its 1999 Annual
Report.
2. Use of Estimates
- ---------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the amounts reported in the condensed
consolidated financial statements. Actual results could differ from the
estimates.
3. Earnings Per Share
- ----------------------
The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
------------------ ----------------
2000 1999 2000 1999
------ ------ ------ ------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 50,487 $ 47,707 $84,779 $78,662
======== ======== ======= =======
Denominator:
Denominator for basic earnings
Per share-weighted average shares 241,064 251,905 241,492 251,778
Effect of dilutive securities-
employee stock options 3,915 4,592 3,371 5,702
-------- -------- ------- -------
Denominator for diluted
earnings per share 244,979 256,497 244,863 257,480
======== ======== =======
Basic earnings per share $ .21 $ .19 $ .35 $ .31
======== ======== ======= =======
Diluted earnings per share $ .21 $ .19 $ .35 $ .31
======== ======== ======= =======
</TABLE>
7
<PAGE>
HEALTH MANAGEMENT ASSOCIATES, INC.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Earnings Per Share (continued)
- ---------------------------------
In September 1999 the Board of Directors approved a stock repurchase
program of up to 25 million shares of common stock. On October 14, 1999 the
Company executed a share repurchase agreement with an independent third party,
whereby the third party agreed to "sell short" 5 million shares of the Company's
common stock to the Company. As of October 19, 1999 the 5 million shares were
delivered to the Company and became treasury stock. From October 15, 1999 to
December 15, 1999, a period of 60 days, the third party covered the "short sale"
by buying shares on the open market. On December 15, 1999 the Company
reimbursed the third party the cost of the common stock purchased plus a
commission plus interest (at LIBOR) on the outstanding balance of funds used to
purchase the common stock. The total cost for the purchase of the 5 million
shares of treasury stock was approximately $42 million.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
---------------------
Three months ended March 31, 2000 compared
------------------------------------------
to three months ended March 31, 1999
------------------------------------
Net patient service revenue for the three months ended March 31,
2000 ("2000 Period") was $408.7 million as compared to $339.7 million for
the three months ended March 31, 1999 ("1999 Period"). This represented
an increase in net patient service revenue of $69.0 million or 20.3%.
Hospitals in operation for the entire 2000 Period and 1999 Period ("same
hospitals") provided $15.3 million of the increase in net patient service
revenue, which resulted primarily from inpatient and outpatient volume
increases. The remaining increase of $53.7 million included $54.8
million of net patient service revenue from the April 1999 acquisition of
a 473-bed hospital system, the May 1999 acquisition of a 167-bed hospital
system and the July 1999 acquisition of a 204-bed hospital, offset by a
decrease of $1.1 million in Corporate and other revenue.
During the 2000 Period the Company's hospitals generated total
patient days of service and an occupancy rate of 213,763 and 50.4%,
respectively, versus 188,740 and 55.0%, respectively, for the 1999
Period. Same hospital patient days and occupancy for the 2000 Period were
174,669 and 54.4%, respectively, versus 171,322 and 54.0%, respectively
for the 1999 Period. Same hospital admissions for the Company during the
2000 Period were 37,671, up 1.8% from the 37,010 admissions during the
1999 Period.
The Company's operating expenses (salaries and benefits, supplies
and other expenses, provision for doubtful accounts and rent expense) for
the 2000 Period were $300.5 million or 73.5% of net patient service
revenue as compared to $246.2 million or 72.5% of net patient service
revenue for the 1999 Period. Of the total $54.3 million increase,
approximately $12.3 million related to same hospitals, which was largely
attributable to the increased patient volumes. Another $41.3 million
of increased operating expense related to the acquisitions mentioned
previously. The remaining increase of $.7 million represented an
increase in Corporate and other operating expenses.
The Company's depreciation and amortization costs increased by $4.2
million and interest expense increased by $5.8 million. The increase in
depreciation and amortization resulted primarily from the acquisitions
mentioned previously. The increase in interest expense was due primarily
to acquisition related debt and lower investment income in the 2000
Period (which is netted against interest expense).
9
<PAGE>
Item 2. Management's discussion and Analysis of Financial
Condition and Results of Operations (continued)
The Company's income before income taxes was $83.1 million for the
2000 Period as compared to $78.5 million for the 1999 Period, an increase
of $4.6 million or 5.8%. The increase resulted primarily from same
hospital volume increases and the acquisitions mentioned previously. The
Company's provision for income taxes was $32.6 million for the 2000 Period
as compared to $30.8 million for the 1999 Period. These provisions reflect
effective income tax rates of 39.25% for both periods. As a result of the
foregoing, the Company's net income was $50.5 million for the 2000 Period
as compared to $47.7 million for the 1999 Period.
Results of Operations
---------------------
Six months ended March 31, 2000 compared
----------------------------------------
to six months ended March 31, 1999
----------------------------------
Net patient service revenue for the six months ended March 31, 2000
("2000 Six Month Period") was $778.7 million, as compared to $645.2 million
for the six months ended March 31, 1999 ("1999 Six Month Period"). This
represented an increase in net patient service revenue of $133.5 million,
or 20.7%. Same hospitals provided $27.2 million of the increase in net
patient service revenue, which resulted primarily from inpatient and
outpatient volume increases. The remaining increase of $106.3 million
included $107.6 million of net patient service revenue from the
acquisitions mentioned previously, offset by a decrease of $1.3 million in
Corporate and other revenue.
During the 2000 Six Month Period the Company's hospitals generated
408,023 total patient days of service and an occupancy rate of 47.8%,
respectively, versus 350,655 and 50.5%, respectively, for the 1999 Six
Month Period. Same hospital patient days and occupancy for the 2000 Six
Month Period were 326,914 and 50.6%, respectively, versus 317,343 and
49.4%, respectively, for the 1999 Six Month Period. Same hospital
admissions for the Company during the 2000 Six Month Period were 72,202 up
3.7% from the 69,596 admissions during the 1999 Six Month Period.
The Company's operating expenses for the 2000 Six Month Period were
$590.3 million, or 75.8% of net patient service revenue as compared to
$484.9 million or 75.1% of net patient service revenue for the 1999 Six
Month Period. Of the total $105.4 million increase, approximately $22.4
million related to same hospitals, which was largely attributable to
increased patient volumes. Another $81.6 million of increased operating
expense related to the hospital acquisitions mentioned previously. The
remaining increase of $1.4 million represented an increase in Corporate
and other operating expenses.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
The Company's depreciation and amortization costs increased by $7.8
million and interest expense increased by $10.2 million. The increase in
depreciation and amortization resulted primarily from the acquisitions
previously mentioned. The increase in interest expense was due primarily
to acquisition related debt and lower investment income in the 2000 Six
Month Period (which is netted against interest expense).
The Company's income before income taxes was $139.6 million for the
2000 Six Month Period as compared to $129.5 million for the 1999 Six Month
Period, an increase of $10.1 million, or 7.8%. The increase resulted
primarily from same hospital volume increases and the acquisitions
mentioned previously. The Company's provision for income taxes was
$54.8 million for the 2000 Six Month Period as compared to $50.8 million
for the 1999 Six Month Period. These provisions reflect effective income
tax rates of 39.25% for both periods. As a result of the foregoing, the
Company's net income was $84.8 million for the 2000 Six Month Period as
compared to $78.9 million for the 1999 Six Month Period.
Liquidity and Capital Resources
-------------------------------
2000 Six Month Period Cash Flows compared to 1999 Six Month Period
Cash Flows
The Company's operating cash flows totaled $72.9 million for the
2000 Six Month Period as compared to $107.4 million for the 1999 Six Month
Period. The continued positive cash flows from operating activities
results from the Company's profitability and management of its working
capital. The Company's investing activities used $56.3 million and $84.5
million for the 2000 Six Month Period and 1999 Six Month Period,
respectively. Construction costs related to the replacement of existing
hospitals accounted for the majority of the expenditures in both periods.
Financing activities used net cash of $5.2 million for the 2000 Six Month
Period and $15.4 million for the 1999 Six Month Period. Increased
borrowings and the purchase of the Company's common stock accounted for
the majority of the change from the 1999 Six Month Period to the 2000 Six
Month Period. See the Condensed Consolidated Statements of Cash Flows for
the six months ended March 31, 2000 and 1999 at page 6 of this Report.
Capital Resources
During November 1999 the Company closed on a $600 million Credit
Agreement (the "Agreement"), thereby refinancing and replacing its
existing $300 million Credit Agreement ("Credit Agreement") which expired
on November 30, 1999. The Agreement is an unsecured revolving
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
credit loan, comprised of a $150 million 364-day credit loan and a $450
million 5-year credit loan. Similar to the Credit Agreement, the new
Agreement permits the Company to borrow under either loan at any time
through the respective loan's termination date, at which time all
outstanding revolving credit loans become due and payable. Under either
loan, the Company may choose a Base Rate Loan (prime interest rate) or a
Eurodollar Rate Loan (LIBOR interest rate). The initial interest rate
for a Eurodollar Rate Loan is set at LIBOR plus 1.00 percent, and will
increase or decrease in relation to a change in the Company's credit
rating. As of April 30, 2000 the outstanding balance was $330 million.
The Company also has an annual revolving credit facility with a bank
which provides a $15 million unsecured line of credit commitment through
December 31, 2000 (increased from $10 million as of March 23, 2000).
Interest on the outstanding loans is payable at the bank's Index Rate
(prime) less 1/4%. As of April 30, 2000 there were no amounts
outstanding under this line.
The Company is obligated to pay certain commitment fees based upon
amounts borrowed and available for borrowing during the terms of both
such credit facilities ("Credit Facilities").
The Company's Credit Facilities contain certain covenants which,
without prior consent of the banks, limit certain activities of the
Company and its subsidiaries, including those relating to merger,
consolidation and the Company's ability to secure indebtedness, make
guarantees, and grant security interests. The Company must also maintain
minimum levels of consolidated tangible net worth, interest coverage and
debt to cash flow.
Year 2000 Update
----------------
As described in the Company's Annual Report on Form 10-K for the
year ended September 30, 1999, the Company had implemented its plan to
address possible exposures related to the impact of Year 2000 computer
issues on its computer systems, its equipment and third parties with
which the Company's systems interface. Since entering the year 2000, the
Company has not experienced any disruptions to its business nor is it
aware of any significant year 2000-related disruptions impacting its
third party payors or vendors. The Company will continue to monitor its
critical systems but does not anticipate any significant impacts due to
Year 2000 exposures from its internal systems as well as from third
parties.
Costs incurred to achieve Year 2000 readiness included the use of
both internal and external resources. Such costs have been expensed as
incurred, and have not had a material adverse effect on the Company's
results of operations.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations (Continued)
Forward-Looking Statements
--------------------------
Certain statements contained in this Form 10-Q, including, without
limitation, statements containing the words "believes," "anticipates," "
intends," " expects" and words of similar import, constitute "forward-
looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause
the actual results, performance or achievements of the Company or
industry results to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: general
economic and business conditions, both nationally and in the regions in
which the Company operates; industry capacity; demographic changes;
existing governmental regulations and changes in, or the failure to
comply with, governmental regulations; legislative proposals for health
care reform; the ability to enter into managed care proposals for health
care reform; the ability to enter into Medicare and Medicaid payment
levels; liability and other claims asserted against the Company;
competition; the loss of any significant ability to attract and retain
qualified personnel, including physicians; the availability and terms of
capital to fund additional acquisitions or replacement facilities. Given
these uncertainties, prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims
any obligation to update any such factors or to publicly announce the
results of any revision to any of the forward-looking statements
contained herein to reflect future events or developments.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities.
---------------------
None.
Item 3. Defaults upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
At the Annual Meeting of Stockholders of the Company on February 15,
2000, the stockholders of the Company adopted proposals to:
a) elect six directors of the Company
Votes For Withheld
----------- --------
William J. Schoen 227,222,836 947,901
Kent P. Dauten 227,223,285 947,452
Robert A. Knox 227,223,202 947,535
Charles R. Lees 226,497,163 1,673,574
Kenneth D. Lewis 227,223,285 947,452
William E. Mayberry M.D. 227,221,631 949,106
b) approve an amendment to the Company's 1996 executive Incentive
Compensation Plan to increase the base number of shares of common
stock available to awards thereunder from 16,875,000 shares to
34,875,000 shares (167,272,978 votes for; 29,360,426 votes
against; 489,623 votes abstained)
c) approve and ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending
September 30, 2000 (227,860,959 votes for; 196,847 votes against;
112,931 votes abstained)
Item 5. Other Information.
-----------------
None.
14
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
a. Exhibits:
--------
See Index to Exhibits located on page 17.
b. Reports on Form 8-K:
-------------------
None.
15
<PAGE>
SIGNATURES
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, thereunto duly authorized.
HEALTH MANAGEMENT ASSOCIATES, INC.
DATE: May 7, 2000 BY: /s/ Stephen M. Ray
--------------------------------
Stephen M. Ray
Executive Vice President-Finance
(Duly authorized officer and
Principal Financial Officer)
16
<PAGE>
INDEX TO EXHIBITS
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession.
Not applicable.
(3) (i) Articles of Incorporation
3.1 The Fifth Restated Certificate of Incorporation, previously filed and
included as Exhibit 3.1 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995, is incorporated herein by
reference.
3.2 Certificate of Amendment to Fifth Restated Certificate of
Incorporation, previously filed and included as Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the year ended September 30,
1999, is incorporated herein by reference.
(ii) By-laws
The By-laws, as amended, previously filed and included as Exhibit 3.3
to the Company's Quarterly Report on Form 10-Q for the quarter ended
December 31, 1995, is incorporated herein by reference.
(4) Instruments defining the rights of security holders, including indentures.
The Exhibits referenced under (3) of this Index to Exhibits are
incorporated herein by reference.
Credit Agreement by and among Health Management Associates, Inc., as
Borrower, Bank of America, N.A., as Administrative Agent and as Lender,
First Union National Bank, as Syndication Agent and as Lender, and the
Chase Manhattan Bank, as Syndication Agent and as Lender, and The Lenders
Party Hereto From Time To Time, dated November 30, 1999, previously filed
and included as Exhibit 4.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1999, is incorporated herein by
reference.
Credit Agreement dated March 23, 2000 between First Union National Bank and
Health Management Associates, Inc., pertaining to a $15 million working
capital and cash management line of credit is included herein as Exhibit
4.1 at page 19 of this Report.
(10) Material contracts.
Not applicable.
17
<PAGE>
INDEX TO EXHIBITS (Continued)
(11) Statement re computation of per share earnings.
Not applicable.
(15) Letter re unaudited interim financial information.
Not applicable.
(18) Letter re change in accounting principles.
Not applicable.
(19) Report furnished to security holders.
Not applicable.
(22) Published report regarding matters submitted to vote of security holders.
Not applicable.
(23) Consents of experts and counsel.
Not applicable.
(24) Power of attorney.
Not applicable.
(27) Financial Data Schedule.
Financial Data Schedule is included herein as Exhibit 27.1 at page 32 of
this report.
(99) Additional exhibits.
Not applicable.
18
<PAGE>
Exhibit 4.1
March 23, 2000
Health Management Associates, Inc.
5811 Pelican Bay Blvd., Suite 500
Naples, FL 34108-2710
Attn: Robert E. Farnham
Gentlemen:
This letter agreement (this "Agreement") documents the parties'
understandings relative to an extension of credit by FIRST UNION NATIONAL BANK
("Bank"), a national banking association, to HEALTH MANAGEMENT ASSOCIATES, INC.
("Borrower"), a Delaware corporation. Bank and Borrower agree as follows:
1. Definitions. As used in this Agreement, the capitalized terms defined
-----------
below have the respective meanings ascribed to them:
"Advance" means an advance to Borrower of proceeds of the Loan
-------
pursuant to this Agreement, on any given Advance Date.
"Advance Date" means the date as of which an Advance is made.
------------
"Business Day" means a weekday on which commercial banks are open for
------------
business in Tampa, Florida.
"Commitment Expiration" means December 31, 2000, or such earlier date
---------------------
that Borrower terminates its cash management arrangements with Bank.
"Default" has the meaning set forth in section 8.
-------
"Default Rate" means the highest lawful rate of interest, under
------------
Florida law, per annum specified in any Note to apply after a default under such
Note or, if no such rate is specified, a rate equal to the lesser of (a) two (2)
percentage points above the contract rate on the Loan otherwise in effect from
time to time or (b) the highest rate of interest allowed by law.
"GAAP" means Generally Accepted Accounting Principles as defined by
----
the Financial Accounting Standards Board or its successor as in effect at the
time any calculation is required to be made under this Agreement or any
financial statement or report is prepared pursuant to it.
19
<PAGE>
Health Management Associates, Inc.
March 23, 2000
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions pertaining to
government.
"Liabilities" means all current and future liabilities, obligations,
-----------
and indebtedness (including interest thereon and any renewals, extensions, or
modifications) of Borrower owing to Bank pursuant to the Loan, the Note, this
Agreement, or the Loan Documents, whether now due or to become due, and whether
now existing or later created, advanced or contracted.
"Loan" means the loan or loans from Bank to Borrower described in
----
section 2 and evidenced by the Note.
"Loan Commitment" means the obligation of Bank to make Advances with
---------------
respect to the Loan pursuant to section 2 of this Agreement.
"Loan Documents" mean the Note, this Agreement, and all other
--------------
documents and agreements necessary or appropriate to document and effectuate the
Loan.
"Master Credit Facility" means the credit facility established by
----------------------
Borrower pursuant to the Credit Agreement dated November 30, 1999, and any
amendments, renewals, and substitutions for that facility.
"Maximum Loan Amount" means $15,000,000 or such other amount to which
-------------------
Bank consents in writing from time to time.
"Note" means the promissory note dated the same date at this
----
Agreement, executed by Borrower in favor of Bank, in the face amount of the
Maximum Loan Amount, and any renewal, modification, extension, or consolidation
of the Note.
"Permitted Liens" means
---------------
(a) Liens securing the Liabilities;
(b) Liens securing Borrower's obligations under the Master Credit
Facility;
(c) Liens for taxes and other statutory liens, landlord's liens, and
similar liens arising by operation of law, so long as the obligations
secured thereby are not past due or are being contested as permitted
herein;
(d) Liens permitted under the Master Credit Facility; and
20
<PAGE>
Health Management Associates, Inc.
March 23, 2000
(e) such other Liens to which Bank consents in writing from time to
time.
"Person" means any natural person, corporation, unincorporated
------
organization, trust, joint-stock company, joint venture, association, company,
limited or general partnership, limited liability company, any government, or
any agency or political subdivision of any government.
"Prime Rate" means that index rate of interest per annum announced
----------
from time to time by Bank (or its successor) as its "Prime Rate" or "Prime
Lending Rate" (which rate shall not necessarily be the best or lowest rate for
any particular type of loan or for loans to any particular class or category of
customer). A change in the Prime Rate will become effective from the beginning
of the day on which such change is announced by Bank.
"Requirement of Law" means, as to any Person, the articles of
------------------
incorporation and bylaws or other organizational or governing documents of the
person, and any law, treaty, rule, or regulation or determination of an
arbitrator or a court or other Governmental Authority in each case applicable to
or binding on the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" means a financial officer of Borrower.
-------------------
"Subsidiary" means any corporation, partnership, or other Person in
----------
which Borrower, directly or indirectly, owns more than fifty percent (50%) of
the stock, capital, or income interests, or other beneficial interests, or which
is effectively controlled by Borrower.
2. Loan. Subject to the terms and conditions of this Agreement,
----
Bank shall make available to Borrower loans for short-term working capital in a
total principal amount not to exceed the Maximum Loan Amount (the "Loan"). The
Loan is to be used by Borrower solely to facilitate day-to-day cash management
needs in conjunction with services provided by Bank. Borrower shall execute and
deliver to Bank the Note, which will evidence the outstanding principal balance
of the Loan, as it may change from time to time, and provide for accrual and
payment of interest and repayment in accordance with the terms of this
Agreement. Advances under the Loan will be subject to the following terms:
(a) Borrower may borrow, repay, and reborrow from time to time from
the Loan for a period from the date of this Agreement to the earlier of the
Commitment Expiration or the termination of the Loan Commitment pursuant to
section 8 of this Agreement.
(b) The outstanding balance of the Loan may increase and decrease from
time to time, and Advances thereunder may be repaid and reborrowed, but the
total of Advances outstanding at any one time under the Loan shall never
exceed the Maximum
21
<PAGE>
Health Management Associates, Inc.
March 23, 2000
Loan Amount. Borrower immediately shall pay to Bank any such excess. Bank
may, in its discretion, make or permit to remain outstanding Advances to
Borrower under the Loan in excess of the Maximum Loan Amount, which will
become part of the Loan and the indebtedness under the Note, bear interest
as provided in the Note, be payable upon demand, and be entitled to all
rights and benefits under this Agreement and under all other Loan
Documents.
(c) Borrower shall repay on the Commitment Expiration all Advances and
accrued interest under the Loan not previously repaid.
(d) Borrower shall make all payments of interest and principal under
the Note without setoff or counterclaim, in immediately available funds, at
Bank's offices set forth in this Agreement, and in such coin or currency of
the United States of America that at the time of payment is legal tender
for the payment of public and private debt.
(e) Borrower may prepay the principal balance of the Loan, in whole or
in part, at any time without premium or penalty.
3. Computation and Payment of Interest.
-----------------------------------
(a) From the date of this Agreement to and including the Commitment
Expiration, the outstanding principal balance of the Loan shall bear interest
until paid in full at a rate per annum equal to the Prime Rate minus one-quarter
of one percent ( 1/4%).
(b) Borrower shall pay interest monthly on the outstanding principal
balance of the Loan, on the last day of each month beginning on the first of
such days to occur after an Advance has been made.
(c) All interest and fees under the Note or this Agreement will be
calculated on a 365-day year for the actual number of days elapsed in an
interest period (actual/365 method).
(d) Any payments not made as and when due (whether at stated maturity,
by acceleration, or otherwise) shall bear interest at the Default Rate from the
date due until paid, payable on demand.
4. Conditions Precedent to Initial Advance. In addition to any
---------------------------------------
other requirement set forth in this Agreement, Bank will not make the initial
Advance under the Loan unless and until the following conditions have been
satisfied, in the sole opinion of Bank and its counsel:
(a) Cash Management System. Borrower has entered into the cash
----------------------
management system with Bank contemplated by this Agreement.
22
<PAGE>
Health Management Associates, Inc.
March 23, 2000
(b) Loan Documents. Borrower and each other party to any Loan
--------------
Documents, as applicable, have executed and delivered this Agreement and
the Note.
(c) Closing Certificate. Borrower has delivered to Bank an incumbency
-------------------
certificate and certified resolutions of the board of directors (or other
appropriate persons) of Borrower authorizing the execution, delivery, and
performance of the Loan Documents.
(d) Opinion Letter. Borrower has delivered to Bank a favorable
--------------
opinion letter of Borrower's general counsel in form and substance
satisfactory to Bank and its counsel.
(e) Additional Matters. All corporate and other proceedings, and all
------------------
documents, instruments, and other legal matters in connection with the
transactions contemplated by this Agreement and the Loan Documents, must be
satisfactory in form and substance to Bank, and Bank must have received any
of the documents, legal opinions, and other opinions pertaining to any
aspect or consequence of the transaction contemplated by this Agreement
that it reasonably requests.
5. Conditions Precedent to Each Advance. The following conditions,
------------------------------------
in addition to any other requirement set forth in this Agreement, must have been
satisfied or performed by each Advance Date, in the sole opinion of Bank and its
counsel:
(a) Accuracy of Representations. All representations and warranties
---------------------------
made by Borrower in this Agreement or otherwise in writing in connection
with this Agreement are true and correct as if made on and as of the
proposed Advance Date, and at Bank's request, Borrower has so certified in
an Advance Request.
(b) No Default. No Default has occurred and is continuing, and
----------
Borrower has so certified in the Advance Request.
6. Representations and Warranties. Unless otherwise specified, the
------------------------------
following representations and warranties will be deemed made as of the date of
this Agreement and as of the Advance Date of any Advance by Bank to Borrower.
Borrower represents and warrants to Bank as follows:
(a) Financial Condition. The financial statements of Borrower, copies
-------------------
of which have been furnished to Bank, are complete and correct and fairly
represent the financial condition of Borrower as of that date and the
results of its operations and its cash flow for the applicable fiscal year
or interim period then ended. As of the date of its most recent balance
sheet, December 31, 1999, furnished by Borrower to Bank (the "Balance Sheet
Date"), Borrower had no other material liabilities or obligations
23
<PAGE>
Health Management Associates, Inc.
March 23, 2000
(including contingent, indemnity, or suretyship obligations, liabilities
for taxes, long-term leases or unusual forward or long-term commitments)
not reflected in the balance sheet or in the notes to it. All financial
statements of Borrower previously furnished to Bank were prepared in
accordance with GAAP applied on a consistent basis. Since the Balance
Sheet Date, there has not been any material adverse change in the financial
condition of Borrower.
(b) Corporate Organization and Authority; Compliance with Law.
---------------------------------------------------------
Borrower (i) is a corporation duly organized and validly existing in good
standing under the laws of the jurisdiction of its incorporation and (ii)
has all requisite power and authority, and the legal right to own its
assets and to conduct its business as now conducted and to execute,
deliver, and perform this Agreement and the other Loan Documents, and to
borrow under this Agreement. Borrower further (x) is in compliance in all
material respects with all Requirements of Law applicable to it, (y)
possesses all governmental franchises, licenses, and permits that are
necessary to own or lease its assets and to carry on its business as now
conducted, and (z) is qualified to transact business as a foreign
corporation or organization in any jurisdiction in which such qualification
is necessary.
(c) Authorization and Validity of Agreements. The execution, delivery
----------------------------------------
and performance by Borrower of the Loan Documents and Borrower's borrowings
pursuant to this Agreement: (i) have been duly authorized by all requisite
action of Borrower; (ii) will not conflict with the articles of
incorporation or bylaws of Borrower; and (iii) will not require any
registration with, or consent or approval of, or other act by any
Government Authority. This Agreement has been, and each other Loan
Document to which it is a party will be, duly executed and delivered to
Bank on behalf of Borrower. In addition, the Note, this Agreement, and the
other Loan Documents, when executed and delivered to Bank, will be valid
and legally binding obligations of Borrower enforceable against Borrower in
accordance with their terms.
(d) No Legal Bar. The execution, delivery, and performance by
------------
Borrower of this Agreement and the other Loan Documents, Borrower's
borrowings pursuant to this Agreement, and use of the loan proceeds, will
not to the best knowledge of Borrower violate any Requirement of Law
applicable to Borrower or constitute a breach or violation of, a default
under, or require any consent under, any of its material contractual
obligations.
(e) No Material Litigation. No litigation, investigation, or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending
or, to the knowledge of Borrower, threatened by or against Borrower or
against any of its respective businesses, properties, or revenues (i) with
respect to any of the Loan Documents or any of the transactions
contemplated by them, or (ii) which could have a material adverse effect on
the assets, business, operations, property, or condition (financial or
other) of Borrower.
24
<PAGE>
Health Management Associates, Inc.
March 23, 2000
(f) No Default. To the best knowledge of Borrower, no Default or
----------
event that with notice or the passage of time or both would constitute a
Default has occurred and is continuing. Borrower is not in default under
or with respect to the Master Credit Facility or any material Contractual
Obligations.
(g) Full Disclosure. All information furnished by Borrower to Bank
---------------
concerning Borrower, its financial condition, or otherwise for the purpose
of obtaining credit for the Borrower is, or will be at the time the same is
furnished, accurate and correct in all material respects.
7. Covenants. From the date of this Agreement and until payment in
---------
full of the Liabilities and formal termination of this Agreement, Borrower shall
comply fully with the following provisions:
(a) Investigation of Borrower. Borrower shall: (i) give agents and
-------------------------
representatives of Bank, upon reasonable notice, access during normal
business hours to its business premises, offices, properties, books,
records, and information; (ii) permit agents and representatives of Bank to
make such audit and examination thereof, and conduct such other
investigation, as they consider appropriate to determine and verify its
assets, business, operation, property, or condition (financial or other)
and to consummate the transactions contemplated by this Agreement; and
(iii) furnish to Bank and its agents and representatives such additional
information with respect to its business and affairs as Bank or they
reasonably request from time to time. Borrower shall bear the costs of
such audits, reports, and inspections.
(b) Conduct of Business. Borrower shall (i) conduct and maintain its
-------------------
present business in the ordinary course; (ii) maintain itself at all times
as a corporation organized and validly existing in good standing under the
laws of its state of incorporation; and (iii) comply in all material
respects with all Requirements of Law and Contractual Obligations
applicable to it and its business and properties.
(c) Use of Loan Proceeds. Borrower shall use the proceeds of the Loan
--------------------
only to facilitate the cash management arrangement contemplated by this
Agreement and furnish to Bank all evidence that it may reasonably require
with respect to such use.
(d) Notices. Borrower promptly shall notify Bank of: (i) any
-------
Default, (ii) a default in the performance of, or compliance with, any
Requirement of Law or Contractual Obligation of Borrower that might
reasonably be expected to have a material adverse effect on Borrower; (iii)
any litigation, dispute, or proceeding that is pending or known by
Borrower's officers to be threatened against Borrower and that might
involve a claim for damages or a request for injunctive, enforcement, or
other relief that, if granted, might reasonably be expected to have a
material adverse effect on Borrower; (iv) a change in either the name or
the principal place of business of
25
<PAGE>
Health Management Associates, Inc.
March 23, 2000
Borrower or the office where its books and records are kept; and (v) a
material adverse change in the assets, business, operations, property, or
condition (financial or other) of Borrower. Borrower shall provide with
each notice pursuant to this section a statement of a Responsible Officer
setting forth details of the occurrence referred to in the notice and
stating what action Borrower proposes to take with respect to it.
(e) Financial Statements and Periodic Reports. Borrower shall keep
-----------------------------------------
true books, records, and accounts that completely, accurately, and fairly
reflect all dealings and transactions relating to its assets, business, and
activities and shall record all transactions in such manner as is necessary
to permit preparation of its financial statements in accordance with GAAP
applied on a Consistent Basis. Borrower shall furnish to Bank:
(i) Quarterly Reports. As soon as available and in any event within
-----------------
45 days after the end of each calendar quarter, an income statement
and a balance sheet of Borrower prepared in accordance with GAAP
applied on a Consistent Basis as of the end of such month and year-to-
date, each certified by a Responsible Officer of Borrower as being
true and accurate;
(ii) Annual Reports. Within 90 days after the end of each fiscal
--------------
year, an income statement and a reconciliation of surplus statement of
Borrower for such year, and a balance sheet as of the end of such
year, prepared in accordance with GAAP applied on a Consistent Basis,
certified without qualification by Borrower's independent accountants.
The financial statements required above shall be in consolidated and, if
required by Bank, consolidating form for Borrower and all Subsidiaries required
by GAAP to be consolidated for financial reporting purposes. In addition to the
financial statements required herein, Bank reserves the right to require from
time to time other or additional financial or other information concerning
Borrower.
(f) Certificates; Other Information. Borrower shall furnish to Bank:
-------------------------------
(i) concurrently with the delivery of the annual financial
statements referred to in section 6(e)(ii), a certificate from its
independent accountants stating that after reviewing the financial
statements, the accountants do not know of any Default by Borrower
under this Agreement or the other Loan Documents;
(ii) concurrently with the delivery of the annual and quarterly
financial statements referred to in section 7(e), a certificate from a
Responsible Officer (x) containing computations confirming Borrower's
compliance with the financial covenants in the Master Credit Facility,
and (y) stating that the officer
26
<PAGE>
Health Management Associates, Inc.
March 23, 2000
does not know of any Default by Borrower under this Agreement or the
other Loan Documents; and
(iii) all other information regarding the affairs of Borrower
that Bank from time to time reasonably requests.
(g) Payment of Debt, Taxes, and Other Obligations. Borrower shall (i)
---------------------------------------------
pay and perform all of its indebtedness and obligations promptly and in
accordance with normal terms; and (ii) pay and discharge or cause to be
paid and discharged promptly when due and payable and before they are in
default, all taxes, assessments, and other governmental charges or levies
imposed on it or its income, profits, property, or business, and all lawful
claims for labor, material and supplies, or other goods or services which,
if unpaid, might become a lien or charge on its properties. However, any
tax, assessment, charge, levy, or claim need not be paid if its validity is
being contested in good faith by appropriate proceedings, Borrower has made
adequate reserves for it on its books in accordance with GAAP applied on a
consistent basis and no lien resulting therefrom attaches to any property
of Borrower and becomes enforceable by its creditors.
(h) Limitation on Liens. Borrower shall not create or permit to exist
-------------------
any Liens on any of its property, except Permitted Liens.
(i) Margin Stock. Borrower shall not use any proceeds of the Loan to
------------
purchase or carry any margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System) or extend credit to
others for the purpose of purchasing or carrying any margin stock.
(j) Further Assurances. Borrower shall take such further action,
------------------
execute such further agreements, and provide to Bank such further
assurances as may be reasonably requested to ensure compliance with the
intent of this Agreement and the other Loan Documents.
8. Default. The occurrence of one or more of the following events
-------
constitutes a Default under this Agreement and with respect to the other Loan
Documents:
(a) Nonpayment. Borrower fails to pay any principal or interest on
----------
the Note within 3 days of when the same becomes due and payable in
accordance with its terms or fails to pay any other Liabilities when the
same becomes due and payable, subject to any applicable cure periods or
grace periods; or
(b) Representation False. Any representation or warranty made by
--------------------
Borrower or any other party to any Loan Document (other than Bank) herein
or therein or in any certificate or report furnished in connection herewith
or therewith shall prove to have
27
<PAGE>
Health Management Associates, Inc.
March 23, 2000
been untrue or incorrect in any material respect when made; or
(c) Other Covenants. Borrower fails to observe or perform any
---------------
agreement, covenant, or obligation contained in this Agreement or any other
Loan Document not provided for elsewhere in this section 8 and such default
is not cured within 20 days of receipt by Borrower of written notice of any
breach; or
(d) Other Debts. Borrower shall be in default under the Master Credit
-----------
Facility or any material Contractual Obligation; or
(e) Voluntary Proceedings. Borrower shall (i) voluntarily liquidate
---------------------
or terminate operations or apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator
of such Person or of all or of a substantial part of its assets, (ii) admit
in writing its inability, or be generally unable, to pay its debts as the
debts become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the federal Bankruptcy Code
(as now or hereafter in effect), (v) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, (vi)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
Bankruptcy Code, or (vii) take any corporate action for the purpose of
effecting any of the foregoing; or
(f) Judgments. Judgments in excess of $5,000,000 in the aggregate
---------
shall be rendered against Borrower and shall remain undischarged,
undismissed, and unstayed for more than 30 days (except judgments validly
covered by insurance) or there shall occur any levy upon, or attachment,
garnishment or other seizure of, any material portion of the assets of
Borrower, by reason of the issuance of any tax levy, judicial attachment or
garnishment or levy of execution; or
(g) Material Adverse Change. Borrower suffers a material adverse
-----------------------
change in its assets, business, operation, property, or condition
(financial or other), or any material loss, theft, damage, or destruction
of the assets of Borrower, which loss is not fully insured and which could
have material adverse effect on the business, operations, property, or
condition (financial or other) of Borrower, or
If any Default occurs, Bank may, without notice to Borrower, at its option,
terminate the Loan Commitment and withhold further Advances to Borrower, and may
declare any or all Liabilities to be immediately due and payable (if not earlier
demanded), bring suit against Borrower to collect the Liabilities, exercise any
remedy available to Bank hereunder and take any action or exercise any remedy
provided herein or in any other Loan Document or under applicable law. No
remedy shall be exclusive of other remedies or impair the right of Bank to
exercise any other remedies.
28
<PAGE>
Health Management Associates, Inc.
March 23, 2000
9. Expenses. Borrower shall pay on demand (i) all of Bank's costs
--------
and expenses in connection with the negotiation, preparation, execution,
delivery, administration of, and any amendment, supplement, or modification to,
the Note, this Agreement, and the other Loan Documents including the reasonable
fees and out-of-pocket expenses of counsel for Bank with respect thereto and all
reasonable costs and expenses incurred in enforcing or preserving Bank's rights
under the foregoing documents (including all reasonable attorney's fees and
expenses) incurred in all matters of enforcement, negotiation, interpretation,
and collection, before, during, and after demand, suit, proceeding, trial,
appeal, and post-judgment collection efforts, and any bankruptcy,
reorganization, or similar proceeding (including efforts to obtain relief from
any stay) if Borrower or any other Person or entity liable for the Loan becomes
involved in any bankruptcy, reorganization, or similar proceeding, (ii) any and
all stamp and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing, and recording of the Note, this
Agreement, and the other Loan Documents, and Borrower shall save Bank harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission by Borrower to pay such taxes and fees. Bank's
legal fees in connection with preparation of this Agreement will not exceed
$2,500. The agreements in this section will survive the repayment of the
Liabilities and the termination of this Agreement.
10. Waiver and Modification; Remedies Cumulative. A waiver,
--------------------------------------------
amendment, discharge, extension, termination, or modification of this Agreement
or the other Loan Documents will be valid and effective only if it is in writing
and signed by all the parties to the agreement. A written waiver by the Bank of
a Default under any provision of this Agreement or the other Loan Documents will
not operate as a waiver of either any other Default or a succeeding Default
under the same provision or as a waiver of the provision itself. No delay or
course of dealing by the Bank will operate as a waiver of any right, power, or
remedy of the Bank, except to the extent manifested in writing by the Bank and
except when this Agreement or the other Loan Documents expressly requires a
right, power, or remedy to be exercised within a specified time.
11. Notices. Every demand, consent, notice, or approval required or
-------
permitted to be given by a party under this Agreement or the other Loan
Documents will be valid only if it is in writing (whether or not the applicable
provision of this Agreement or the other Loan Documents state that it must be in
writing) and delivered personally or by telecopy, commercial courier, or first
class, postage prepaid, United States mail (whether or not certified or
registered
29
<PAGE>
Health Management Associates, Inc.
March 23, 2000
and regardless of whether a return receipt is requested or received by the
sender), and addressed by the sender as follows:
(a) If to Borrower:
--------------
Health Management Associates, Inc.
5811 Pelican Bay Blvd., Suite 500
Naples, FL 34108
Attention: Robert E. Farnham
(b) If to Bank:
----------
First Union National Bank
5th Floor
One First Union Center
301 South College Street
Charlotte, North Carolina 28288
Attention: Ann M. Dodd
or to such other address as Bank or Borrower may designate by notice given to
the other parties in accordance with this section. A validly given demand,
consent, notice, or approval will be effective on its receipt. The Bank and
Borrower shall promptly notify each other of any change in their respective
mailing addresses that are listed in this Agreement.
12. Governing Law. The validity, construction, enforcement, and
-------------
interpretation of this Agreement will be governed by the laws of the State of
Florida and the federal laws of the United States of America, excluding the laws
of those jurisdiction pertaining to the resolution of conflicts of laws with
other jurisdictions.
13. Miscellaneous. Time is of the essence with respect to the
-------------
performance or satisfaction by Borrower of every term, condition, covenant,
agreement, and obligation under the Loan Documents. The Loan Documents are not
assignable by Borrower, and any purported assignment will be invalid and
unenforceable against Bank. This Agreement is binding on the respective heirs,
assignees, successors, and personal representatives of the parties to it and
inures to the benefit of Bank's assignees, successors, and legal representatives
and any subsequent holder of the Note. If this Agreement calls for the approval
or consent of Bank, such approval or consent may be given or withheld in the
discretion of Bank unless otherwise specified in this Agreement. The parties
may execute each Loan Document in counterparts. Each executed counterpart will
constitute an original document, and all of them, together, will constitute the
same agreement.
30
<PAGE>
Health Management Associates, Inc.
March 23, 2000
14. Waiver of Jury Trial. BORROWER AND BANK WAIVE TRIAL BY JURY IN
--------------------
CONNECTION WITH LITIGATION ARISING IN CONNECTION WITH THIS AGREEMENT.
-------------------------
If this Agreement accurately states our understandings and agreements with you,
please so signify by signing in the space provided below for your signature in
the presence of a notary public, and have the notary contemporaneously sign this
Agreement in the space provided below.
Sincerely yours,
FIRST UNION NATIONAL BANK
By: /s/ Ann M. Dodd
--------------------------------------
Name: Ann M. Dodd
----------------------------
Title: Senior Vice President
----------------------------
` Accepted and Approved:
HEALTH MANAGEMENT ASSOCIATES,
INC.
By: /s/ Robert E. Farnham
--------------------------------------
Name: Robert E. Farnham
----------------------------
Title: Vice President
----------------------------
Corporate Controller
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements included within the Company's March 31, 2000 Form 10-Q and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 24,400
<SECURITIES> 0
<RECEIVABLES> 462,620
<ALLOWANCES> 110,879
<INVENTORY> 34,322
<CURRENT-ASSETS> 459,068
<PP&E> 1,190,760
<DEPRECIATION> 260,146
<TOTAL-ASSETS> 1,572,218
<CURRENT-LIABILITIES> 158,342
<BONDS> 430,354
0
0
<COMMON> 2,536
<OTHER-SE> 930,475
<TOTAL-LIABILITY-AND-EQUITY> 1,572,218
<SALES> 0
<TOTAL-REVENUES> 778,749
<CGS> 0
<TOTAL-COSTS> 504,736
<OTHER-EXPENSES> 55,208
<LOSS-PROVISION> 67,058
<INTEREST-EXPENSE> 12,193
<INCOME-PRETAX> 139,554
<INCOME-TAX> 54,775
<INCOME-CONTINUING> 84,779
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84,779
<EPS-BASIC> .35
<EPS-DILUTED> .35
</TABLE>
