-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HldPvHdBrcm5QxWTFcd9I5wDDrUIqsYps4smZGOtMKN6Py63IWaNgSgdUd9k0Mwg i/Kljk7AdAQXzY1TCCn3PA== 0000950144-08-009487.txt : 20081222 0000950144-08-009487.hdr.sgml : 20081222 20081222170713 ACCESSION NUMBER: 0000950144-08-009487 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20081222 DATE AS OF CHANGE: 20081222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNITY HEALTH SYSTEMS INC CENTRAL INDEX KEY: 0001108109 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 133893191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-15925 FILM NUMBER: 081264503 BUSINESS ADDRESS: STREET 1: 4000 MERIDIAN BOULEVARD CITY: FRANKLIN STATE: TN ZIP: 37067 BUSINESS PHONE: 615-465-7000 MAIL ADDRESS: STREET 1: 4000 MERIDIAN BOULEVARD CITY: FRANKLIN STATE: TN ZIP: 37067 FORMER COMPANY: FORMER CONFORMED NAME: COMMUNITY HEALTH SYSTEMS INC/ DATE OF NAME CHANGE: 20000229 10-Q/A 1 g16942qae10vqza.htm FORM 10-Q/A Form 10-Q/A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 10-Q/A
Amendment No. 1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2008
Commission file number 001-15925
COMMUNITY HEALTH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
     
Delaware
(State or other jurisdiction of
incorporation or organization) 		  13-3893191
(I.R.S. Employer
Identification Number)
4000 Meridian Boulevard
Franklin, Tennessee
(Address of principal executive offices)
37067
(Zip Code)
615-465-7000
(Registrant’s telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ           No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
             
Large accelerated filer þ    Accelerated filer o    Non-accelerated filer   o
(Do not check if a smaller reporting company)		   Smaller reporting company o 
Indicated by check mark whether the registrant is a shell company (as defined in Rule 126-2 of the Exchange Act).
Yes o           No þ
As of April 21, 2008, there were outstanding 96,231,791 shares of the Registrant’s Common Stock, $.01 par value.
 
 

 

 

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Community Health Systems, Inc.
Form 10-Q/A
For the Three Months Ended March 31, 2008
         
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 EX-31.1
 EX-31.2
 EX-32.1
 EX-32.2

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EXPLANATORY NOTE
      The Company is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q/A for the three months ended March 31, 2008 that was originally filed on May 2, 2008 (the “original Form 10-Q”) to conform Part I, Item 1 (Financial Statements) of the original Form 10-Q to reflect revisions previously made in the Company’s quarterly filings on Form 10-Q for the periods ended June 30, 2008 and September 30, 2008 (see Notes 1 and 17). This Amendment No. 1 will subsequently be incorporated by reference into a Registration Statement on Form S-3ASR. Absent the filing of a registration statement under the Securities Act of 1933, the revisions were deemed to be immaterial and would not otherwise have required an amendment to the original Form 10-Q, and would have instead been reflected in the Company’s Quarterly Report on Form 10-Q for the three months ending March 31, 2009.
      Other than as specified above, this Amendment No. 1 on Form 10-Q/A does not modify, update or affect any other disclosures or financial statements set forth in the original Form 10-Q. Furthermore, this Amendment No. 1 on Form 10-Q/A does not purport to provide a general update or discussion of any developments of the Company subsequent to the filing of the original Form 10-Q. Accordingly, the original Form 10-Q as amended by this Amendment No. 1 on Form 10-Q/A, should be read in conjunction with the Company’s filings made with the Securities and Exchange Commission subsequent to the date of the original Form 10-Q.

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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
                 
    March 31,     December 31,  
    2008     2007  
ASSETS
                
Current assets
                
Cash and cash equivalents
   $ 164,353     $ 132,874  
Patient accounts receivable, net of allowance for doubtful accounts of $1,036,766 and $1,033,516 at March 31, 2008, and December 31, 2007, respectively
     1,625,658       1,533,798  
Supplies
     264,061       262,903  
Prepaid income taxes
     110,160       99,417  
Deferred income taxes
     113,741       113,741  
Prepaid expenses and taxes
     83,852       70,339  
Other current assets
     244,567       339,826  
 
            
Total current assets
     2,606,392       2,552,898  
 
            
Property and equipment
     6,338,689       6,310,240  
Less accumulated depreciation and amortization
     (900,292 )     (797,666 )
 
            
Property and equipment, net
     5,438,397       5,512,574  
 
            
Goodwill
     4,375,293       4,247,714  
 
            
Other assets, net
     912,267       1,180,457  
 
            
Total assets
   $ 13,332,349     $ 13,493,643  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities
                
Current maturities of long-term debt
   $ 19,476     $ 20,710  
Accounts payable
     461,437       492,693  
Current income taxes payable
     —       —  
Accrued interest
     90,442       153,832  
Accrued liabilities
     731,271       780,700  
 
            
Total current liabilities
     1,302,626       1,447,935  
 
            
Long-term debt
     8,886,355       9,077,367  
 
            
Deferred income taxes
     407,947       407,947  
 
            
Other long-term liabilities
     679,722       483,459  
 
            
Minority interests in equity of consolidated subsidiaries
     384,129       366,131  
 
            
Stockholders’ equity
                
Preferred stock, $.01 par value per share, 100,000,000 shares authorized, none issued
     —       —  
Common stock, $.01 par value per share, 300,000,000 shares authorized; 97,195,340 shares issued and 96,219,791 shares outstanding at March 31, 2008, and 96,611,085 shares issued and 95,635,536 shares outstanding at December 31, 2007
     972       966  
Additional paid-in capital
     1,247,241       1,240,308  
Treasury stock, at cost, 975,549 shares at March 31, 2008 and December 31, 2007
     (6,678 )     (6,678 )
Accumulated other comprehensive income
     (188,037 )     (81,737 )
Retained earnings
     618,072       557,945  
 
            
Total stockholders’ equity
     1,671,570       1,710,804  
 
            
Total liabilities and stockholders’ equity
   $ 13,332,349     $ 13,493,643  
 
            
See accompanying notes to the condensed consolidated financial statements.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2008     2007  
Net operating revenues
   $ 2,727,554     $ 1,154,278  
 
            
 
                
Operating costs and expenses:
                
Salaries and benefits
     1,087,770       462,765  
Provision for bad debts
     297,080       128,054  
Supplies
     386,409       134,294  
Other operating expenses
     526,167       234,165  
Rent
     59,857       24,756  
Depreciation and amortization
     122,715       48,497  
 
            
Total operating costs and expenses
     2,479,998       1,032,531  
 
            
Income from operations
     247,556       121,747  
Interest expense, net
     165,702       28,433  
Loss from early extinguishment of debt
     1,328       —  
Minority interest in earnings
     9,682       193  
Equity in earnings of unconsolidated affiliates
     (12,884 )     —  
 
            
Income from continuing operations before income taxes
     83,728       93,121  
Provision for income taxes
     32,235       35,832  
 
            
Income from continuing operations
     51,493       57,289  
 
            
Discontinued operations, net of taxes:
                
Loss from operations of hospitals sold and hospital held for sale
     (983 )     (2,965 )
Gain on sale of hospitals, net
     9,617       —  
 
            
Income (loss) on discontinued operations
     8,634       (2,965 )
 
            
Net income
   $ 60,127     $ 54,324  
 
            
Income from continuing operations per common share:
                
Basic
   $ 0.55     $ 0.61  
 
            
Diluted
   $ 0.54     $ 0.61  
 
            
Net income per common share:
                
Basic
   $ 0.64     $ 0.58  
 
            
Diluted
   $ 0.63     $ 0.58  
 
            
Weighted-average number of shares outstanding:
                
Basic
     94,107,532       93,402,545  
 
            
Diluted
     95,006,721       94,365,292  
 
            
See accompanying notes to the condensed consolidated financial statements.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2008     2007  
Cash flows from operating activities
                
Net income
   $ 60,127     $ 54,324  
Adjustments to reconcile net income to net cash provided by operating activities:
                
Depreciation and amortization
     122,478       51,270  
Minority interest in earnings
     9,682       193  
Stock-based compensation expense
     13,246       6,330  
Gain on sale of hospitals, net
     (12,885 )     —  
Excess tax benefits relating to stock-based compensation
     947       (758 )
Other non-cash expenses, net
     2,770       132  
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
                
Patient accounts receivable
     (100,057 )     (33,322 )
Supplies, prepaid expenses and other current assets
     (26,584 )     (7,867 )
Accounts payable, accrued liabilities and income taxes
     (81,965 )     45,688  
Other
     67,374       4,357  
 
            
Net cash provided by operating activities
     55,133       120,347  
 
            
Cash flows from investing activities
                
Acquisitions of facilities and other related equipment
     (1,705 )     (44,039 )
Purchases of property and equipment
     (141,693 )     (44,789 )
Disposition of hospitals
     365,680       —  
Proceeds from sale of property and equipment
     13,717       134  
Increase in other assets
     (98,182 )     (7,051 )
 
            
Net cash provided by (used in) investing activities
     137,817       (95,745 )
 
            
Cash flows from financing activities
                
Proceeds from exercise of stock options
     94       3,311  
Excess tax benefits relating to stock-based compensation
     (947 )     758  
Deferred financing costs
     (2,232 )     (14 )
Proceeds from minority investors in joint ventures
     12,881       1,019  
Redemption of minority investments in joint ventures
     —       (1,253 )
Distributions to minority investors in joint ventures
     (7,524 )     (1,079 )
Borrowings under credit agreement
     25,000       —  
Repayments of long-term indebtedness
     (188,743 )     (5,032 )
 
            
Net cash used in financing activities
     (161,471 )     (2,290 )
 
            
Net change in cash and cash equivalents
     31,479       22,312  
Cash and cash equivalents at beginning of period
     132,874       40,566  
 
            
Cash and cash equivalents at end of period
   $ 164,353     $ 62,878  
 
            
See accompanying notes to the condensed consolidated financial statements.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of Community Health Systems, Inc. and its subsidiaries (the “Company”) as of March 31, 2008 and for the three month periods ended March 31, 2008 and March 31, 2007, have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. All intercompany transactions and balances have been eliminated. The results of operations for the three months ended March 31, 2008, are not necessarily indicative of the results to be expected for the full fiscal year ending December 31, 2008. Certain information and disclosures normally included in the notes to consolidated financial statements have been condensed or omitted as permitted by the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company believes the disclosures are adequate to make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2007, contained in the Company’s Annual Report on Form 10-K.
The presentation of gross property and equipment and accumulated depreciation and amortization at March 31, 2008 and December 31, 2007 has been corrected to reflect certain assets acquired from Triad Hospitals, Inc. (“Triad”). This correction increased both gross property and equipment and accumulated depreciation and amortization by $108.3 million and did not impact the net balance of property and equipment as previously presented on the accompanying condensed consolidated balance sheets. The correction of assets of hospitals held for sale at December 31, 2007 on the accompanying condensed consolidated balance sheet decreased the assets held for sale by $54.6 million and increased investments in unconsolidated affiliates by $54.6 million, related to those hospitals sold during the first quarter of 2008. This correction did not change the consolidated total of Other assets, net as presented in the accompanying condensed consolidated balance sheet. Note 5 (Acquisitions and Divestitures) and Note 11 (Equity Investments) were revised accordingly to reflect this correction. The condensed consolidated statement of cash flows for the three months ended March 31, 2008 was revised to reflect the reclassification of $46.3 million of expenditures for computer hardware and internal-use software resulting in a reduction of net cash provided by investing activities with a corresponding increase to net cash provided by operating activities, which was previously corrected beginning in the six-month period ended June 30, 2008 (also see Note 17).
2. ACCOUNTING FOR STOCK-BASED COMPENSATION
Stock-based compensation awards are granted under the Community Health Systems, Inc. Amended and Restated 2000 Stock Option and Award Plan (the “2000 Plan”). The 2000 Plan allows for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, as well as stock options which do not so qualify, stock appreciation rights, restricted stock, performance units and performance shares, phantom stock awards and share awards. Persons eligible to receive grants under the 2000 Plan include the Company’s directors, officers, employees and consultants. To date, the options granted under the 2000 Plan have all been “nonqualified” stock options for tax purposes. Generally, vesting of these granted options occurs in one third increments on each of the first three anniversaries of the award date. Options granted prior to 2005 have a 10 year contractual term, options granted in 2005 through 2007 have an 8 year contractual term and options granted in 2008 have a 10 year contractual term. The exercise price of options granted to employees under the 2000 Plan were equal to the fair value of the Company’s common stock on the option grant date. As of March 31, 2008, 3,525,142 shares of unissued common stock remain reserved for future grants under the 2000 Plan.
The following table reflects the impact of total compensation expense related to stock-based equity plans under the Statement of Financial Accounting Standards (“SFAS”) No. 123(R), on the reported operating results for the respective periods (in thousands, except per share data):
                 
    Three months ended  
    March 31,  
    2008     2007  
Effect on income from continuing operations before income taxes
   $ (13,246 )   $ (6,330 )
 
            
 
                
Effect on net income
   $ (8,047 )   $ (3,845 )
 
            
 
                
Effect on net income per share-diluted
   $ (0.08 )   $ (0.04 )
 
            
SFAS No. 123(R) also requires the benefits of tax deductions in excess of the recognized tax benefit on compensation expense to be reported as a financing cash flow, rather than as an operating cash flow as required under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations. This requirement increased the Company’s net operating cash flows and decreased the Company’s financing cash flows by $0.9 million for the three months ended March 31, 2008. This requirement reduced the Company’s net operating cash flows and increased the Company’s financing cash flows by $0.8 million for the three months ended March 31, 2007.
At March 31, 2008, $98.1 million of unrecognized stock-based compensation expense from all outstanding unvested stock options and restricted stock is expected to be recognized over a weighted-average period of 22 months.
The fair value of stock options was estimated using the Black Scholes option pricing model during the three months ended March 31, 2008 and 2007, with the following assumptions:

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
2. ACCOUNTING FOR STOCK-BASED COMPENSATION (Continued)
                 
    Three months ended
    March 31,
    2008   2007
Expected volatility
     24.1 %     25.6 %
Expected dividends
     0       0  
Expected term
   4 years     4 years  
Risk-free interest rate
     2.57 %     4.48 %
In determining expected return, the Company examined concentrations of option holdings, historical patterns of option exercises and forfeitures, as well as forward looking factors, in an effort to determine if there were any discernable employee populations. From this analysis, the Company identified two employee populations, one consisting primarily of certain senior executives and the other consisting of all other recipients.
The expected volatility rate was estimated based on historical volatility. In determining expected volatility, the Company also reviewed the market-based implied volatility of actively traded options of its common stock and determined that historical volatility did not differ significantly from the implied volatility.
The expected life computation is based on historical exercise and cancellation patterns and forward looking factors, where present, for each population identified. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant. The pre-vesting forfeiture rate is based on historical rates and forward looking factors for each population identified. The Company adjusts the estimated forfeiture rate to its actual experience. Options outstanding and exercisable under the 2000 Plan as of March 31, 2008, and changes during the three months then ended were as follows (in thousands, except share and per share data):
                                 
                    Weighted        
                    average        
            Weighted     remaining     Aggregate  
            average     contractual     intrinsic  
            exercise     term     value as of  
    Shares     price     (in years)     March 31, 2008  
Outstanding at December 31, 2007
     8,439,015     $ 30.90                  
Granted
     996,500       32.28                  
Exercised
     (11,666 )     23.26                  
Forfeited and cancelled
     (172,600 )     35.02                  
 
                              
 
                                
Outstanding at March 31, 2008
     9,251,249     $ 30.98     6.4 years   $ 43,418  
 
                        
 
                                
Exercisable at March 31, 2008
     4,805,509     $ 25.64     5.5 years   $ 41,971  
 
                        
The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2008, was $7.55. The aggregate intrinsic value (the number of in-the-money stock options multiplied by the difference between the Company’s closing stock price on the last trading day of the reporting period ($33.57) and the exercise price of the respective stock options) in the table above represents the amount that would have been received by the option holders had all option holders exercised their options on March 31, 2008. This amount changes based on the market value of the Company’s common stock. The aggregate intrinsic value of options exercised during the three months ended March 31, 2008 was $0.1 million and the aggregate intrinsic value of options exercised during the three months ended March 31, 2007 was $1.4 million. The aggregate intrinsic value of options vested and expected to vest approximates that of the outstanding options.
The Company has also awarded restricted stock under the 2000 Plan to its directors and various subsidiaries’ employees. The restrictions on these shares generally lapse in one-third increments on each of the first three anniversaries of the award date, except for restricted stock granted on July 25, 2007, which restrictions generally lapse equally on the first two anniversaries of the award date. Certain of the restricted stock awards granted to the Company’s senior executives also contain a performance objective that must be met in addition to the vesting requirements. If the performance objective is not attained the awards will be forfeited in their entirety. Once the performance objective has been attained, restrictions will lapse in one-third increments on

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
2. ACCOUNTING FOR STOCK-BASED COMPENSATION (Continued)
each of the first three anniversaries of the award date with the exception of the July 25, 2007 restricted stock awards, which have no additional time vesting restrictions. Notwithstanding the above mentioned performance objectives and vesting requirements, the restrictions will lapse earlier in the event of death, disability, termination of employment of the holder of the restricted stock by employer for any reason other than for cause or in the event of change in control of the Company. Restricted stock awards subject to performance standards are not considered outstanding for purposes of determining earnings per share until the performance objectives have been satisfied.
Restricted stock outstanding under the 2000 Plan as of March 31, 2008, and changes during the three months then ended are as follows:
                 
            Weighted
            average
            fair
    Shares   value
Unvested at December 31, 2007
     1,956,543     $ 38.04  
Granted
     748,500       32.38  
Vested
     (592,505 )     36.09  
Forfeited
     (3,000 )     37.20  
 
                
Unvested at March 31, 2008
     2,109,538       36.58  
 
                
As of March 31, 2008, there was $64.8 million of unrecognized stock-based compensation expense related to unvested restricted stock expected to be recognized over a weighted-average period of 21 months.
Under the Director’s Fee Deferral Plan, the Company’s outside directors may elect to receive share equivalent units in lieu of cash for their director’s fee. Share equivalent units are calculated by dividing the deferred directors’ fees by the closing market price of the Company’s common stock on the last trading day of the reporting period. These units are held in the plan until the director electing to receive the share equivalent units retires or otherwise terminates his/her directorship with the Company. Share equivalent units are converted to shares of common stock of the Company at the time of distribution. The following table represents the amount of directors’ fees which were deferred and the equivalent units into which they converted for each of the respective periods:
                 
    Three months ended  
    March 31,  
    2008     2007  
Directors’ fees earned and deferred into plan
   $ 40,875     $ 35,875  
 
            
 
                
Equivalent units
     1,217.605       1,017.731  
 
            
At March 31, 2008, there are a total of 14,626.137 units deferred in the plan with an aggregate fair value of $0.5 million, based on the closing market price of the Company’s common stock on the last trading day of the reporting period of $33.57.
3. COST OF REVENUE
The majority of the Company’s operating costs and expenses are “cost of revenue” items. Operating costs that could be classified as general and administrative by the Company would include the Company’s corporate office costs at the Company’s Franklin, Tennessee office, which were $38.1 million and $23.1 million for the three month periods ended March 31, 2008 and 2007, respectively. Included in these amounts is stock-based compensation expense of $13.2 million and $6.3 million for the three month periods ended March 31, 2008 and 2007, respectively.
4. USE OF ESTIMATES
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements. Actual results could differ from these estimates.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
5. ACQUISITIONS AND DIVESTITURES
Triad Acquisition
On July 25, 2007, the Company completed its acquisition of Triad. Triad owned and operated 50 hospitals in non-urban and middle market communities in 17 states, as well as the Republic of Ireland. Immediately following the acquisition, on a combined basis, the Company owned and operated 128 hospitals in 28 states, as well as the Republic of Ireland. As of December 31, 2007, two hospitals acquired from Triad had been sold and six hospitals acquired from Triad were classified as held for sale. During the three months ended March 31, 2008, the Company completed the sale of five of the six former Triad hospitals held for sale at December 31, 2007. The Company also provides management and consulting services on a contract basis to independent hospitals, through its subsidiary, Quorum Health Resources, LLC, which was acquired as part of the acquisition of Triad. The Company acquired Triad for approximately $6.836 billion, including the assumption of $1.686 billion of existing indebtedness.
In connection with the consummation of the acquisition of Triad, the Company obtained $7.215 billion of senior secured financing under a new credit facility (the “New Credit Facility”) and its wholly-owned subsidiary CHS/Community Health Systems, Inc. (“CHS”) issued $3.021 billion aggregate principal amount of 8.875% senior notes due 2015 (the “Notes”). The Company used the net proceeds of $3.000 billion from the Notes offering and the net proceeds of $6.065 billion of term loans under the New Credit Facility to acquire the outstanding shares of Triad, to refinance certain of Triad’s indebtedness and the Company’s indebtedness, to complete certain related transactions, to pay certain costs and expenses of the transactions and for general corporate uses. This New Credit Facility also provides an additional $750 million revolving credit facility and a $300 million delayed draw term loan facility for future acquisitions, working capital and general corporate purposes. The delayed draw term loan was reduced from $400 million to $300 million at the request of the Company in the fourth quarter of 2007.
The total cost of the Triad acquisition has been allocated to the assets acquired and liabilities assumed based upon their respective preliminary estimated fair values in accordance with SFAS No. 141. The purchase price represented a premium over the fair value of the net tangible and identifiable intangible assets acquired for reasons such as:
•   strategically, Triad had operations in five states in which the Company previously had no operations;
 
•   the combined company has smaller concentrations of credit risk through greater geographic diversification;
 
•   many support functions will be centralized; and
 
•   duplicate corporate functions will be eliminated.
The allocation process requires the analysis of acquired fixed assets, contracts, contractual commitments, and legal contingencies to identify and record the fair value of all assets acquired and liabilities assumed. The values of certain assets and liabilities are based on preliminary valuations and are subject to adjustment as additional information is obtained. Such additional information includes, but is not limited to: valuations of property and equipment, valuation of equity investments and intangible assets, valuation of contractual commitments, finalization of involuntary termination of employees, and review of open cost report settlement periods. The Company is also negotiating the termination of certain assumed contracts it deems unfavorable, such as various physician and service contracts. Under GAAP, the Company has up to twelve months from the closing of the acquisition to complete its valuations and complete contract terminations in order for these terminations to be considered in the allocation process. The Company expects to complete the allocation of the total cost of the Triad acquisition in the second quarter of 2008. Material adjustments to goodwill may result upon the completion of these matters.
Other Acquisitions
Effective April 1, 2007, the Company completed its acquisition of Lincoln General Hospital (157 licensed beds), located in Ruston, Louisiana. The total consideration for this hospital was approximately $49.4 million, of which $44.7 million was paid in cash and $4.7 million was assumed in liabilities. On May 1, 2007, the Company completed its acquisition of Porter Health (301 licensed beds), located in Valparaiso, Indiana, with a satellite campus in Portage, Indiana and outpatient medical campuses located in Chesterton, Demotte, and Hebron, Indiana. As part of this acquisition, the Company has agreed to construct a 225-bed replacement facility for the Valparaiso hospital no later than April 2011. The total consideration for Porter Health was approximately $113.4 million, of which $88.9 million was paid in cash and $24.5 million was assumed in liabilities. The Company has estimated its purchase price allocation relating to these acquisitions resulting in approximately $8.1 million of goodwill being recorded. The allocation of Porter Health is preliminary pending, among other things, finalization of valuation of tangible and intangible assets. These acquisition transactions were accounted for using the purchase method of accounting. The

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
5. ACQUISITIONS AND DIVESTITURES (Continued)
allocation of the purchase price has been determined by the Company based upon available information and is subject to settling amounts related to purchased working capital and in some instances final appraisals. Adjustments to the purchase price allocation are not expected to be material.
Discontinued Operations
Effective March 1, 2008, the Company sold Woodland Medical Center (100 licensed beds) located in Cullman, Alabama; Parkway Medical Center (108 licensed beds) located in Decatur, Alabama; Hartselle Medical Center (150 licensed beds) located in Hartselle, Alabama; Jacksonville Medical Center (89 licensed beds) located in Jacksonville, Alabama; National Park Medical Center (166 licensed beds) located in Hot Springs, Arkansas; St. Mary’s Regional Medical Center (170 licensed beds) located in Russellville, Arkansas; Mineral Area Regional Medical Center (135 licensed beds) located in Farmington, Missouri; Willamette Valley Medical Center (80 licensed beds) located in McMinnville, Oregon; and White County Community Hospital (60 licensed beds) located in Sparta, Tennessee, to Capella Healthcare, Inc., headquartered in Franklin, Tennessee. The proceeds from this sale were $315 million in cash.
Effective February 21, 2008, the Company sold THI Ireland Holdings Limited, a private limited company incorporated in the Republic of Ireland, which leased and managed the operations of Beacon Medical Center (122 licensed beds) located in Dublin, Ireland, to Beacon Medical Group Limited, headquartered in Dublin, Ireland. The proceeds from this sale were $1.5 million in cash.
Effective February 1, 2008, the Company sold Russell County Medical Center (78 licensed beds) located in Lebanon, Virginia to Mountain States Health Alliance, headquartered in Johnson City, Tennessee. The proceeds from this sale were $48.6 million in cash.
Effective November 30, 2007, the Company sold Barberton Citizens Hospital (312 licensed beds) located in Barberton, Ohio to Summa Health System of Akron, Ohio. The proceeds from this sale were $53.8 million in cash.
Effective October 31, 2007, the Company sold its 60% membership interest in Northeast Arkansas Medical Center, a 104 bed facility in Jonesboro, Arkansas to Baptist Memorial Health Care (“Baptist”), headquartered in Memphis, Tennessee for $16.8 million. In connection with this transaction, the Company also sold real estate and other assets to a subsidiary of Baptist for $26.2 million in cash.
Effective September 1, 2007, the Company sold its partnership interest in River West L.P., which owned and operated River West Medical Center (an 80 bed facility) located in Plaquemine, Louisiana to an affiliate of Shiloh Health Services, Inc. of Lubbock, Texas. The proceeds from this sale were $0.3 million in cash.
As of March 31, 2008, the Company had one hospital classified as held for sale.
In connection with the above actions and in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” the Company has classified the results of operations of the above mentioned hospitals as discontinued operations in the accompanying condensed consolidated statements of income.
Net operating revenues and income (loss) on discontinued operations for the respective periods are as follows (in thousands):
                 
    Three months ended  
    March 31,  
    2008     2007  
Net operating revenues
   $ 106,633     $ 49,719  
 
            
Loss from operations of hospitals sold or held for sale before income taxes
     (789 )     (4,789 )
Gain on sale of hospitals, net
     17,724       —  
 
            
Income from discontinued operations before taxes
     16,935       (4,789 )
Income tax (expense) benefit
     (8,301 )     1,824  
 
            
Income (loss) on discontinued operations, net of tax
   $ 8,634     $ (2,965 )
 
            

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
5. ACQUISITIONS AND DIVESTITURES (Continued)
The computation of income from discontinued operations, before taxes, for the three months ended March 31, 2008 includes the net write-off of $96.3 million of tangible assets and $32.5 million of goodwill (including $21.3 million of goodwill included in non-current assets held for sale at December 31, 2007) at the hospitals sold during the three months ended March 31, 2008.
Interest expense was allocated to discontinued operations based on estimated sale proceeds available for debt repayment.
The assets and liabilities of one hospital held for sale as of March 31, 2008 are included in the accompanying condensed consolidated balance sheet as follows: current assets of $19.7 million, included in other current assets; net property and equipment of $53.3 million and other long-term assets of $0.1 million, included in other assets; and current liabilities of $23.5 million, included in other accrued liabilities.
The assets and liabilities of the hospitals held for sale as of December 31, 2007 are included in the accompanying condensed consolidated balance sheet as follows: current assets of $118.9 million, included in other current assets; net property and equipment of $331.1 million and other long-term assets of $31.4 million, included in other assets; and current liabilities of $67.6 million, included in accrued liabilities.
6. INCOME TAXES
The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), on January 1, 2007. The total amount of unrecognized benefit that would affect the effective tax rate, if recognized, is approximately $5.9 million as of March 31, 2008. It is the Company’s policy to recognize interest and penalties accrued related to unrecognized benefits in its condensed consolidated statements of income as income tax expense. During the three months ended March 31, 2008, the Company recorded approximately $0.2 million in interest and penalties related to prior state income tax returns through its income tax provision from continuing operations and which are included in its FIN 48 liability at March 31, 2008. A total of approximately $1.9 million of interest and penalties is included in the amount of FIN 48 liability at March 31, 2008.
The Company’s unrecognized tax benefits consist primarily of state exposure items. The Company believes that it is reasonably possible that approximately $1.2 million of its current unrecognized tax benefit may decrease within the next twelve months as a result of a lapse of the statute of limitations and settlements with taxing authorities.
The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal or state income tax examinations for years prior to 2003.
The IRS has concluded an examination of the federal income tax returns of Triad for the short taxable years ended April 27, 2001, June 30, 2001 and December 31, 2001, and the taxable years ended December 31, 2002 and 2003. The Company has received a closing letter from the IRS with respect to the examination for those tax years. The settlement was not material to the Company’s consolidated results of operations or consolidated financial position.
Cash paid for income taxes, net of refunds received, resulted in a net cash refund of $2.8 million for the three months ended March 31, 2008 and net cash paid of $13.2 million during the three months ended March 31, 2007.
7. GOODWILL AND OTHER INTANGIBLE ASSETS
The changes in the carrying amount of goodwill for the three months ended March 31, 2008, are as follows (in thousands):
         
Balance as of December 31, 2007
   $ 4,247,714  
Goodwill acquired as part of acquisitions during 2008
     114  
Consideration adjustments and finalization of purchase price allocations for acquisitions completed prior to 2008
     138,626  
Goodwill written-off as part of disposals
     (11,161 )
 
      
Balance as of March 31, 2008
   $ 4,375,293  
 
      
Goodwill related to the former Triad hospitals of $3.039 billion has not been allocated to the reporting unit level as of March 31, 2008 because the final purchase price allocation has not been completed (see Note 5).
The Company completed its most recent annual goodwill impairment test as required by SFAS No. 142, “Goodwill and Other Intangible Assets,” during 2007, using a measurement date of September 30, 2007. Based on the results of the impairment test, the Company was not required to recognize an impairment of goodwill in 2007.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
7. GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)
The gross carrying amount of the Company’s other intangible assets was $202.3 million at March 31, 2008 and $194.6 million at December 31, 2007, and the net carrying amount was $187.1 million at March 31, 2008 and $181.0 million at December 31, 2007. Other intangible assets are included in other assets, net on the Company’s condensed consolidated balance sheets.
The weighted-average amortization period for the intangible assets subject to amortization is approximately eight years. There are no expected residual values related to these intangible assets. Amortization expense on these intangible assets during the three months ended March 31, 2008 and March 31, 2007 was $2.4 million and $0.5 million, respectively. Amortization expense on intangible assets is estimated to be $11.6 million for the remainder of 2008, $14.0 million in 2009, $13.0 million in 2010, $11.9 million in 2011, $9.7 million in 2012, and $0.3 million in 2013 and thereafter.
8. EARNINGS PER SHARE
The following table sets forth the components of the numerator and denominator for the computation of basic and diluted income from continuing operations per share (in thousands, except share data):
                 
    Three months ended March 31,  
    2008     2007  
Numerator:
                
Numerator for basic earnings per share -
                
Income from continuing operations available to common stockholders – basic
   $ 51,493     $ 57,289  
 
            
Numerator for diluted earnings per share -
                
Income from continuing operations available to common stockholders – diluted
   $ 51,493     $ 57,289  
 
            
Denominator:
                
Weighted-average number of shares outstanding – basic
     94,107,532       93,402,545  
Effect of dilutive securities:
                
Non-employee director options
     —       11,826  
Restricted stock awards
     77,299       36,235  
Employee options
     821,890       914,686  
 
            
Weighted-average number of shares outstanding – diluted
     95,006,721       94,365,292  
 
            
Dilutive securities outstanding not included in the computation of earning per share because their effect is antidilutive:
                
Employee options
     4,361,131       1,926,567  
9. STOCKHOLDER’S EQUITY
Authorized capital shares of the Company include 400,000,000 shares of capital stock consisting of 300,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each of the aforementioned classes of capital stock has a par value of $.01 per share. Shares of preferred stock, none of which are outstanding as of March 31, 2008 may be issued in one or more series having such rights, preferences and other provisions as determined by the Board of Directors without approval by the holders of common stock.
On January 14, 2006, the Company commenced an open market repurchase program for up to 5,000,000 shares of the Company’s common stock, not to exceed $200 million in repurchases. Under this program, the Company repurchased the entire 5,000,000 shares at a weighted average price of $35.23. This program concluded on November 8, 2006 when the maximum number of shares had been repurchased. This repurchase plan followed a prior repurchase plan for up to 5,000,000 shares which concluded on January 13, 2006. The Company repurchased 3,029,700 shares at a weighted average price of $31.20 per share under this program. On December 13, 2006, the Company commenced another open market repurchase program for up to 5,000,000 shares of the Company’s common stock, not to exceed $200 million in repurchases. This program will conclude at the earlier of three years or when the maximum number of shares has been repurchased. As of March 31, 2008, the Company has not repurchased any shares under this program.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
10. COMPREHENSIVE INCOME
The following table presents the components of comprehensive income, net of related taxes. The net change in fair value of interest rate swap agreements is a function of the spread between the fixed interest rate of each swap and the underlying variable interest rate under the Company’s New Credit Facility, the change in fair value of available for sale securities is the unrealized gain (losses) on the related investments and the amortization of unrecognized pension cost components is the amortization of prior service costs and credits and actuarial gains and losses (in thousands):
                 
    Three months ended  
    March 31,  
    2008     2007  
Net income
   $ 60,127     $ 54,324  
Net change in fair value of interest rate swaps
     (104,554 )     (3,870 )
Net change in fair value of available for sale securities
     (753 )     (213 )
Amortization of unrecognized pension components
     (993 )     —  
 
            
Comprehensive income
   $ (46,173 )   $ 50,241  
 
            
The net change in fair value of the interest rate swaps, the net change in fair value of available for sale securities and amortization of unrecognized pension cost components are included in stockholders’ equity on the accompanying condensed consolidated balance sheets.
11. EQUITY INVESTMENTS
The Company owns equity interests of 27.5% in four hospitals in Las Vegas, Nevada, and 26.1% in one hospital in Las Vegas, Nevada in which Universal Health Systems, Inc. owns the majority interest; an equity interest of 38.0% in a hospital in Macon, Georgia in which HCA Inc. owns the majority interest; and an equity interest of 50.0% in a hospital in El Dorado, Arkansas in which the SHARE Foundation, a not-for-profit foundation, owns the remaining 50.0%. These equity investments were acquired as part of the acquisition of Triad. The Company uses the equity method of accounting for its investments in these entities. The balance of the Company’s investment in unconsolidated affiliates is $276.5 million and $267.8 million at March 31, 2008 and December 31, 2007, respectively, and is included in other assets in the accompanying condensed consolidated balance sheets. Included in the Company’s results of operations for the quarter ended March 31, 2008, is $12.9 million representing the Company’s equity in pre-tax earnings from investments in unconsolidated affiliates.
Summarized combined financial information for the three months ended March 31, 2008, for the unconsolidated entities in which the Company owns an equity interest is as follows (in thousands):
         
    For the three months ended
    March 31, 2008
Revenues
   $ 363,667  
Net income
     50,955  
12. LONG-TERM DEBT
Terminated Credit Facility and Notes
On August 19, 2004, CHS entered into a $1.625 billion senior secured credit facility with a consortium of lenders which was subsequently amended on December 16, 2004, July 8, 2005 and December 13, 2006 (the “Terminated Credit Facility”). The purpose of the Terminated Credit Facility was to refinance and replace the Company’s previous credit agreement, repay specified other indebtedness, and fund general corporate purposes, including amending the credit facility to permit declaration and payment of cash dividends, to repurchase shares or make other distributions, subject to certain restrictions. The Terminated Credit Facility consisted of a $1.2 billion term loan that was due to mature in 2011 and a $425 million revolving credit facility that was due to mature in 2009. The First Incremental Facility Amendment, dated as of December 13, 2006, increased the Company’s term loans by $400 million (the “Incremental Term Loan Facility”) and also gave the Company the ability to add up to $400 million of additional term loans. The full amount of the Incremental Term Loan Facility was funded on December 13, 2006, and the proceeds were used to repay the full outstanding amount (approximately $326 million) of the revolving credit facility under the Terminated Credit Agreement and the balance was available to be used for general corporate purposes. The Company was able to elect from time to time an interest rate per annum for the borrowings under the term loan, including the incremental term loan,

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
12. LONG-TERM DEBT (Continued)
and revolving credit facility equal to (a) an alternate base rate, which would have been equal to the greatest of (i) the Prime Rate (as defined) in effect and (ii) the Federal Funds Effective Rate (as defined), plus 50 basis points, plus (1) 75 basis points for the term loan and (2) the Applicable Margin (as defined) for revolving credit loans or (b) the Eurodollar Rate (as defined) plus (1) 175 basis points for the term loan and (2) the Applicable Margin for Eurodollar revolving credit loans. The Company also paid a commitment fee for the daily average unused commitments under the revolving credit facility. The commitment fee was based on a pricing grid depending on the Applicable Margin for Eurodollar revolving credit loans and ranged from 0.250% to 0.500%. The commitment fee was payable quarterly in arrears and on the revolving credit termination date with respect to the available revolving credit commitments. In addition, the Company paid fees for each letter of credit issued under the credit facility.
On December 16, 2004, the Company issued $300 million 6-1/2% senior subordinated notes due 2012. On April 8, 2005, the Company exchanged these notes for notes having substantially the same terms as the outstanding notes, except the exchanged notes were registered under the Securities Act of 1933, as amended (the “1933 Act”). The debt was repaid in 2007.
New Credit Facility and Notes
On July 25, 2007, the New Credit Facility was entered into with a syndicate of financial institutions led by Credit Suisse, as administrative agent and collateral agent. The New Credit Facility consists of a $6.065 billion funded term loan facility with a maturity of seven years, a $400 million delayed draw term loan facility with a maturity of seven years and a $750 million revolving credit facility with a maturity of six years. As of December 31, 2007, the $400 million delayed draw term loan had been reduced to $300 million at the request of the Company. The revolving credit facility also includes a subfacility for letters of credit and a swingline subfacility. As previously disclosed, in connection with the consummation of the acquisition of Triad, the Company used a portion of the net proceeds from its New Credit Facility and the Notes offering to repay its outstanding debt under the Terminated Credit Facility, the 6-1/2% Notes and certain of Triad’s existing indebtedness. During the third quarter of 2007, the Company recorded a pre-tax write-off of approximately $13.9 million in deferred loan costs relative to the early extinguishment of the debt under the Terminated Credit Facility and incurred tender and solicitation fees of approximately $13.4 million on the early repayment of the Company’s $300 million aggregate principal amount of 6-1/2% Senior Subordinated Notes due 2012 through a cash tender offer and consent solicitation.
The New Credit Facility requires quarterly amortization payments of each term loan facility equal to 0.25% of the outstanding amount of the term loans, if any, with the outstanding principal balance payable on July 25, 2014.
The term loan facility must be prepaid in an amount equal to (1) 100% of the net cash proceeds of certain asset sales and dispositions by the Company and its subsidiaries, subject to certain exceptions and reinvestment rights, (2) 100% of the net cash proceeds of issuances of certain debt obligations or receivables based financing by the Company and its subsidiaries, subject to certain exceptions, and (3) 50%, subject to reduction to a lower percentage based on the Company’s leverage ratio (as defined in the New Credit Facility generally as the ratio of total debt on the date of determination to the Company’s EBITDA, as defined, for the four quarters most recently ended prior to such date), of excess cash flow (as defined) for any year, commencing in 2008, subject to certain exceptions. Voluntary prepayments and commitment reductions are permitted in whole or in part, without any premium or penalty, subject to minimum prepayment or reduction requirements.
The obligor under the New Credit Facility is CHS. All of the obligations under the New Credit Facility are unconditionally guaranteed by the Company and certain existing and subsequently acquired or organized domestic subsidiaries. All obligations under the New Credit Facility and the related guarantees are secured by a perfected first priority lien or security interest in substantially all of the assets of the Company, CHS and each subsidiary guarantor, including equity interests held by the Company, CHS or any subsidiary guarantor, but excluding, among others, the equity interests of non-significant subsidiaries, syndication subsidiaries, securitization subsidiaries and joint venture subsidiaries.
The loans under the New Credit Facility will bear interest on the outstanding unpaid principal amount at a rate equal to an applicable percentage plus, at the Company’s option, either (a) an Alternate Base Rate (as defined) determined by reference to the greater of (1) the Prime Rate (as defined) announced by Credit Suisse or (2) the Federal Funds Effective Rate (as defined) plus one-half of 1.0%, or (b) a reserve adjusted London interbank offered rate for dollars (Eurodollar Rate) (as defined). The applicable percentage for term loans is 1.25% for Alternate Base Rate loans and 2.25% for Eurodollar rate loans. The applicable percentage for revolving loans is initially 1.25% for Alternate Base Rate revolving loans and 2.25% for Eurodollar revolving loans, in each case subject to reduction based on the Company’s leverage ratio. Loans under the swingline subfacility bear interest at the rate applicable to Alternate Base Rate loans under the revolving credit facility.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
12. LONG-TERM DEBT (Continued)
CHS has agreed to pay letter of credit fees equal to the applicable percentage then in effect with respect to Eurodollar rate loans under the revolving credit facility times the maximum aggregate amount available to be drawn under all letters of credit outstanding under the subfacility for letters of credit. The issuer of any letter of credit issued under the subfacility for letters of credit will also receive a customary fronting fee and other customary processing charges. CHS is initially obligated to pay commitment fees of 0.50% per annum (subject to reduction based upon the Company’s leverage ratio) on the unused portion of the revolving credit facility. For purposes of this calculation, swingline loans are not treated as usage of the revolving credit facility. CHS is also obligated to pay commitment fees of 0.50% per annum for the first six months after the closing of the New Credit Facility, 0.75% per annum for the next three months thereafter and 1.0% per annum thereafter, in each case on the unused amount of the delayed draw term loan facility. The Company paid arrangement fees on the closing of the New Credit Facility and will pay an annual administrative agent fee.
The New Credit Facility contains customary representations and warranties, subject to limitations and exceptions, and customary covenants restricting, subject to certain exceptions, the Company’s and its subsidiaries’ ability to, among other things (1) declare dividends, make distributions or redeem or repurchase capital stock, (2) prepay, redeem or repurchase other debt, (3) incur liens or grant negative pledges, (4) make loans and investments and enter into acquisitions and joint ventures, (5) incur additional indebtedness or provide certain guarantees, (6) make capital expenditures, (7) engage in mergers, acquisitions and asset sales, (8) conduct transactions with affiliates, (9) alter the nature of the Company’s businesses, (10) grant certain guarantees with respect to physician practices, (11) engage in sale and leaseback transactions or (12) change the Company’s fiscal year. The Company is also required to comply with specified financial covenants (consisting of a leverage ratio and an interest coverage ratio) and various affirmative covenants.
Events of default under the New Credit Facility include, but are not limited to, (1) the Company’s failure to pay principal, interest, fees or other amounts under the credit agreement when due (taking into account any applicable grace period), (2) any representation or warranty proving to have been materially incorrect when made, (3) covenant defaults subject, with respect to certain covenants, to a grace period, (4) bankruptcy events, (5) a cross default to certain other debt, (6) certain undischarged judgments (not paid within an applicable grace period), (7) a change of control, (8) certain ERISA-related defaults, and (9) the invalidity or impairment of specified security interests, guarantees or subordination provisions in favor of the administrative agent or lenders under the New Credit Facility.
The Notes were issued by CHS in connection with the Triad acquisition in the principal amount of $3.021 billion. These Notes will mature on July 15, 2015. The Notes bear interest at the rate of 8.875% per annum, payable semiannually in arrears on January 15 and July 15, commencing January 15, 2008. Interest on the Notes accrue from the date of original issuance. Interest will be calculated on the basis of 360-day year comprised of twelve 30-day months.
Except as set forth below, CHS is not entitled to redeem the Notes prior to July 15, 2011.
On and after July 15, 2011, CHS is entitled, at its option, to redeem all or a portion of the Notes upon not less than 30 nor more than 60 days notice, at the redemption prices (expressed as a percentage of principal amount on the redemption date), plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on July 15 of the years set forth below:
         
Period   Redemption Price
2011
     104.438 %
2012
     102.219 %
2013 and thereafter
     100.000 %

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
12. LONG-TERM DEBT (Continued)
In addition, any time prior to July 15, 2010, CHS is entitled, at its option, on one or more occasions to redeem the Notes (which include additional Notes (the “Additional Notes”), if any which may be issued from time to time under the indenture under which the Notes were issued) in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the Notes (which includes Additional Notes, if any) originally issued at a redemption price (expressed as a percentage of principal amount) of 108.875%, plus accrued and unpaid interest to the redemption date, with the Net Cash Proceeds (as defined) from one or more Public Equity Offerings (as defined) (provided that if the Public Equity Offering is an offering by the Company, a portion of the Net Cash Proceeds thereof equal to the amount required to redeem any such Notes is contributed to the equity capital of CHS); provided, however, that:
  1)   at least 65% of such aggregate principal amount of Notes originally issued remains outstanding immediately after the occurrence of each such redemption (other than the Notes held, directly or indirectly, by the Company or its subsidiaries); and
 
  2)   each such redemption occurs within 90 days after the date of the related Public Equity Offering.
CHS is entitled, at its option, to redeem the Notes, in whole or in part, at any time prior to July 15, 2011, upon not less than 30 or more than 60 days notice, at a redemption price equal to 100% of the principal amount of Notes redeemed plus the Application Premium (as defined), and accrued and unpaid interest, if any, as of the applicable redemption date.
Pursuant to a registration rights agreement entered into at the time of the issuance of the Notes as a result of an exchange offer made by CHS, substantially all of the Notes issued in July 2007 were exchanged in November 2007 for new notes (the “Exchange Notes”) having terms substantially identical in all material respects to the Notes (except that the Exchange Notes were issued under a registration statement pursuant to the 1933 Act). References to the Notes shall also be deemed to include Exchange Notes unless the context provides otherwise.
During the quarter ended March 31, 2008, the Company repurchased on the open market and cancelled $62.7 million of the Notes. This resulted in a loss from early extinguishment of debt of $1.3 million with an after-tax impact of $0.9 million.
As of March 31, 2008, the availability for additional borrowings under the New Credit Facility was $1.050 billion (consisting of a $750 million revolving credit facility and a $300 million delayed draw term loan facility), of which $35 million was set aside for outstanding letters of credit. CHS also has the ability to add up to $300 million of borrowing capacity from receivable transactions (including securitizations) under the New Credit Facility which has not yet been accessed. CHS also has the ability to amend the New Credit Facility to provide for one or more tranches of term loans in an aggregate principal amount of $600 million, which CHS has not yet accessed. As of March 31, 2008, the weighted-average interest rate under the New Credit Facility was 5.7%.
Cash paid for interest, net of interest income, was $229.1 million and $25.9 million during the three months ended March 31, 2008 and 2007, respectively.
13. RECENT ACCOUNTING PRONOUNCEMENTS
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 expands the use of fair value accounting but does not affect existing standards that require assets or liabilities to be carried at fair value. SFAS No. 159 permits an entity, on a contract-by-contract basis, to make an irrevocable election to account for certain types of financial instruments and warranty and insurance contracts at fair value, rather than historical cost, with changes in the fair value, whether realized or unrealized, recognized in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company adopted SFAS No. 159 as of January 1, 2008. The adoption of this statement has not had a material effect on the Company’s consolidated results of operations or consolidated financial position.

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
13. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) replaces SFAS No. 141 and addresses the recognition and accounting for identifiable assets acquired, liabilities assumed, and noncontrolling interests in business combinations. This standard will require more assets and liabilities to be recorded at fair value and will require expense recognition (rather than capitalization) of certain pre-acquisition costs. This standard also will require any adjustments to acquired deferred tax assets and liabilities occurring after the related allocation period to be made through earnings. Furthermore, this standard requires this treatment of acquired deferred tax assets and liabilities also be applied to acquisitions occurring prior to the effective date of this standard. SFAS No. 141(R) is effective for fiscal years beginning after December 15, 2008 and is required to be adopted prospectively with no early adoption permitted. SFAS No. 141(R) will be adopted by the Company in the first quarter of 2009. The Company is currently assessing the potential impact that SFAS No. 141(R) will have on its consolidated results of operations or financial position.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS No. 160”). SFAS No. 160 addresses the accounting and reporting framework for noncontrolling ownership interests in consolidated subsidiaries of the parent. SFAS No. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent company and the interests of the noncontrolling owners and that require minority ownership interests be presented separately within equity in the consolidated financial statements. SFAS No. 160 is effective for fiscal years beginning after December 15, 2008, and will be adopted by the Company in the first quarter of 2009. The Company is currently assessing the potential impact that SFAS No. 160 will have on its consolidated results of operations or financial position.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS No. 161”). SFAS No. 161 expands the disclosure requirements for derivative instruments and for hedging activities in order to provide additional understanding of how an entity uses derivative instruments and how they are accounted for and reported in an entity’s financial statements. The new disclosure requirements for SFAS No. 161 are effective for fiscal years beginning after November 15, 2008, and will be adopted by the Company in the first quarter of 2009.
14. SEGMENT INFORMATION
The Company operates in three distinct operating segments, represented by the hospital operations (which includes our general acute care hospitals and related healthcare entities that provide inpatient and outpatient health care services), the home health agencies operations (which provide in-home outpatient care), and our hospital management services business (which provides executive management and consulting services to non-affliated acute care hospitals). Only the hospital operations segment meets the criteria in SFAS No. 131, “Disclosure about Segments of an Enterprise and Related Information” (“SFAS No. 131”), as a separate reportable segment. The financial information for the home health agencies and management services segments do not meet the quantitative thresholds defined in SFAS No. 131 and are combined into the corporate and all other reportable segment.
The distribution between reportable segments of our revenues and income from continuing operations before income taxes is summarized in the following tables (in thousands):
                 
    For the Three Months Ended March 31,  
    2008     2007  
Revenues:
                
Hospital operations
   $ 2,664,016     $ 1,130,207  
Corporate and all other
     63,538       24,071  
 
            
 
   $ 2,727,554     $ 1,154,278  
 
            
 
                
Income from continuing operations before income taxes:
                
Hospital operations
   $ 117,892     $ 113,529  
Corporate and all other
     (34,164 )     (20,408 )
 
            
 
   $ 83,728     $ 93,121  
 
            
15. FAIR VALUE
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, provides a framework for measuring fair value, and expands disclosures required for fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require fair value measurement; it does not require any new fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and was adopted by the Company as of January 1, 2008. The adoption of this statement has not had a material effect on the Company’s consolidated results of operations or consolidated financial position.
In February 2008, the FASB issued FASB Statement of Position No.157-2, “Effective Date of FASB Statement No. 157,” (“FSP 157-2”). FSP 157-2 deferred the effective date of the provisions of SFAS No. 157 for all non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008, and will be adopted by the Company in the first quarter of 2009. The Company is currently assessing the potential impact of SFAS No. 157 for non-financial assets and non-financial liabilities on its consolidated statements of financial position and results of operations.
Fair Value Hierarchy
SFAS No. 157 classifies the inputs used to measure fair value into the following hierarchy:
     
Level 1:
  Quoted market prices in active markets for identical assets or liabilities.
Level 2:
  Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3:
  Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 includes values determined using pricing models, discounted cash flow methodologies, or similar techniques reflecting the Company’s own assumptions.
The following table sets forth, by level within the fair value hierarchy, the financial assets and liabilities recorded at fair value on a recurring basis as of March 31, 2008 (in thousands):
                                 
    March 31,                    
    2008     Level 1     Level 2     Level 3  
Available-for-sale securities
   $ 7,968     $ 7,968     $ —     $ —  
Trading securities
     31,749       31,749       —       —  
 
                        
Total assets
   $ 39,717     $ 39,717     $ —     $ —  
Fair value of interest
                                
rate swap agreements
   $ 290,553     $ —     $ 290,553     $ —  
 
                        
Total liabilities
   $ 290,553     $ —     $ 290,553     $ —  
Available-for-sale securities and trading securities classified as Level 1 are measured using quoted market prices. The fair value of the Company’s interest rate swap agreements are classified as Level 2, and are estimated using an income approach based on the LIBOR swap rate, which is observable at commonly quoted intervals for the full term of the swap.
16. CONTINGENCIES
The Company is a party to various legal proceedings incidental to its business. In the opinion of management, any ultimate liability with respect to these actions will not have a material adverse effect on the Company’s consolidated financial position, cash flows or results of operations. In addition, in connection with the closing of the Triad acquisition on July 25, 2007, the

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)— (Continued)
16. CONTINGENCIES (Continued)
Company has assumed both recorded and unrecorded contingencies of Triad. The Company’s management is not aware of any unrecorded contingencies assumed in connection with the Triad acquisition, whose ultimate outcome will have a material adverse effect on the Company’s consolidated financial position, cash flows or results of operations.
In a letter dated October 4, 2007, the Civil Division of the Department of Justice notified the Company that, as a result of an investigation into the way in which different state Medicaid programs apply to the federal government for matching or supplemental funds that are ultimately used to pay for a small portion of the services provided to Medicaid and indigent patients, it believes the Company and three of its New Mexico hospitals have caused the State of New Mexico to submit improper claims for federal funds in violation of the federal False Claims Act. In a letter dated January 22, 2008, the Civil Division notified the Company that based on its investigation, it has calculated that these three hospitals received ineligible federal participation payments from August 2000 to June 2006 of approximately $27.5 million. The Civil Division also advised the Company that were it to proceed to trial, it would seek treble damages plus an appropriate penalty for each of the violations of the False Claims Act. The Company continues to believe that it has not violated the False Claims Act, and is continuing discussions with the Civil Division in an effort to resolve this matter.
17. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
 
In connection with the consummation of the Triad acquisition in July 2007, the Company obtained $7.215 billion of senior secured financing under the New Credit Facility and CHS issued the Notes in the aggregate principal amount of $3.021 billion. The Notes are senior unsecured obligations of CHS and are guaranteed on a senior basis by the Company and by certain existing and subsequently acquired or organized 100% owned domestic subsidiaries.
 
The Notes are fully and unconditionally guaranteed on a joint and several basis. The following condensed consolidating financial statements present Community Health Systems, Inc. (as parent guarantor), CHS (as the issuer), the subsidiary guarantors, the subsidiary non-guarantors and eliminations. These supplemental condensed consolidating financial statements have been prepared and presented in accordance with SEC Regulation S-X Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered”.
 
The presentation of intercompany balances and allocated income tax expense in the Company’s previously issued supplemental condensed consolidating financial statements is being corrected as follows:
 
  •  Intercompany receivables and payables are presented gross in the supplemental consolidating balance sheets; the intercompany balances were previously reported net as “intercompany (receivable) payable”. In addition, a portion of the intercompany (receivable) payable was netted against “long-term debt payable (receivable)” of the issuer and other guarantors.
 
  •  Cash flows from intercompany transactions are presented in cash flows from financing activities, as changes in intercompany balances with affiliates, net; these cash flows were previous reported in cash flows from operating activities as “advances to subsidiaries, net of return of investment” and “other” operating cash flows.
 
  •  Income tax expense is allocated from the parent guarantor to the income producing operations (other guarantors and non-guarantors) and the issuer through a deemed capital contribution; income tax expense was previously allocated entirely to the parent guarantor, which is the tax paying entity. As this approach represents an allocation, the income tax expense allocation is considered non-cash for statement of cash flow purposes.
 
  •  Interest expense, net has been presented to reflect net interest expense and interest income from outstanding long-term debt and intercompany balances; these interest expense and interest income amounts were previously netted within certain subsidiaries.
 
Additionally, cash flows from expenditures for computer hardware and internal-use software have been reclassified to a reduction of net cash provided by investing activities with a corresponding increase to net cash provided by operating activities (see Note 1).
 
The Company’s intercompany activity consists primarily of daily cash transfers for purposes of cash management, the allocation of certain expenses and expenditures paid for by the parent on behalf of the subsidiaries, and the push down of investment in its subsidiaries. The Company’s subsidiaries generally do not purchase services from one another and therefore the intercompany transactions do not represent revenue generating transactions. All intercompany transactions eliminate in consolidation. Therefore, the aforementioned corrections do not impact the Company’s consolidated balance sheet, consolidated statement of income or consolidated statement of cash flows for any period presented. Management believes the effects of these corrections are not material to the Company’s previously issued consolidated financial statements. The following table discloses the impact of these corrections on each of the respective line items of the supplemental condensed consolidating financial statements as of March 31, 2008 and December 31, 2007 and for the periods ending March 31, 2008 and 2007 (in thousands).

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
 
                                                 
    Parent
 		          Other
 		    Non-
 		             
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
 
Condensed Consolidating Balance Sheet
                                               
As of March 31, 2008
                                               
As reported
                                               
Prepaid expenses and taxes
  $ —     $ 58     $ 180,024     $ 13,930     $ —     $ 194,012  
Total current assets
    113,741       448       1,709,370       832,359       (49,526 )     2,606,392  
Intercompany receivables (non-current)
    —       —       —       —       —       —  
Goodwill
    21,126       —       2,435,773       1,918,394       —       4,375,293  
Net investment in subsidiaries
    1,506,013       1,234,270       3,680,406       —       (6,420,689 )     —  
Total Assets
    1,640,880       1,420,794       11,656,624       5,084,266       (6,470,215 )     13,332,349  
Long-term debt
    4       4,325,296       4,509,849       51,206       —       8,886,355  
Intercompany payables (non-current)
    (438,836 )     (4,698,000 )     4,841,662       4,101,680       (3,806,506 )     —  
Additional paid-in capital
    1,247,241       —       —       —       —       1,247,241  
Retained earnings
    618,072       1,694,047       1,232,700       (118,796 )     (2,807,951 )     618,072  
Total stockholders’ equity
    1,671,570       1,506,010       1,226,967       (118,794 )     (2,614,183 )     1,671,570  
Total liabilities and stockholders’ equity
    1,640,880       1,420,794       11,656,624       5,084,266       (6,470,215 )     13,332,349  
As adjusted(1)
                                               
Prepaid expenses and taxes
    110,160       58       69,864       13,930       —       194,012  
Total current assets
    223,901       448       1,599,210       832,359       (49,526 )     2,606,392  
Intercompany receivables (non-current)
    928,672       9,198,002       10,361,700       1,937,602       (22,425,976 )     —  
Goodwill
    —       —       2,456,899       1,918,394       —       4,375,293  
Net investment in subsidiaries
    1,473,779       4,194,870       2,380,982       —       (8,049,631 )     —  
Total Assets
    2,626,352       13,579,396       20,629,866       7,021,868       (30,525,133 )     13,332,349  
Long-term debt
    4       8,825,296       54,667       6,388       —       8,886,355  
Intercompany payables (non-current)
    546,636       2,992,838       18,370,619       6,084,100       (27,994,193 )     —  
Additional paid-in capital
    1,247,241       639,797       435,885       —       (1,075,682 )     1,247,241  
Retained earnings
    618,072       1,022,014       696,282       (118,796 )     (1,599,500 )     618,072  
Total stockholders’ equity
    1,671,570       1,473,774       1,126,434       (118,794 )     (2,481,414 )     1,671,570  
Total liabilities and stockholders’ equity
    2,626,352       13,579,396       20,629,866       7,021,868       (30,525,133 )     13,332,349  
                                                 
Condensed Consolidating Statement of Cash Flows
                                               
For the three months ended March 31, 2008
                                               
As reported
                                               
Net cash provided by (used in) operating activities
    853       164,026       321,361       (427,836 )     (49,526 )     8,878  
Purchases of property and equipment
    —       —       (84,607 )      (52,464 )      —       (137,071 )
Investments in other assets
    —       —       (12,889 )      (43,660 )      —       (56,549 ) 
Net cash provided by (used in) investing activities
    —       —       (98,277 )     282,349     —     184,072  
Changes in intercompany balances with affiliates, net
    —       —       —       —       —       —  
Net cash provided by (used in) financing
                                               
activities
    (853 )     (164,026 )     (123,280 )     126,688       —       (161,471 )
As adjusted(1)
                                               
Net cash provided by (used in) operating activities
    (45,719 )     (102,699 )     366,178       (113,101 )     (49,526 )     55,133  
Purchases of property and equipment
    —       —       (89,229 )      (52,464 )      —       (141,693 )
Investments in other assets
    —       —       (54,522 )      (43,660 )      —       (98,182 ) 
Net cash provided by (used in) investing activities
    —       —       (144,532 )     282,349     —     137,817  
Changes in intercompany balances with affiliates, net
    46,572       266,725       (43,380 )     (269,917 )     —       —  
Net cash provided by (used in) financing activities
    45,719       102,699       (121,842 )     (188,047 )     —       (161,471 )
                                                 
Condensed Consolidating Statement of Income
                                               
For the three months ended March 31, 2008
                                               
As reported
                                               
Interest expense, net
    —       72,577       75,937       17,188       —       165,702  
Equity in earnings of unconsolidated affiliates
    (92,362 )     (166,267 )     (20,967 )     —       266,712       (12,884 )
Income (loss) from continuing operations before income taxes
    92,362       92,362       166,029       (313 )     (266,712 )     83,728  
Provision for income taxes
    32,235       —       —       —       —       32,235  
Income (loss) from continuing operations
    60,127       92,362       166,029       (313 )     (266,712 )     51,493  
Net income
    60,127       92,362       166,029       8,321       (266,712 )     60,127  
As adjusted(1)
                                               
Interest expense, net
    —       12,924       135,591       17,187       —       165,702  
Equity in earnings of unconsolidated affiliates
    (60,127 )     (65,733 )     (21,088 )     —       134,064       (12,884 )
Income (loss) from continuing operations before income taxes
    60,127       51,481       106,496       (312 )     (134,064 )     83,728  
Provision for income taxes
    —       (8,646 )     41,001       (120 )     —       32,235  
Income (loss) from continuing operations
    60,127       60,127       65,495       (192 )     (134,064 )     51,493  
Net income
  $ 60,127     $ 60,127     $ 65,495     $ 8,442     $ (134,064 )   $ 60,127  
 


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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
 
                                                 
    Parent
 		          Other
 		    Non-
 		             
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
 
Condensed Consolidating Balance Sheet
                                                
As of December 31, 2007
                                                
As reported
                                                
Prepaid expenses and taxes
   $ —     $ 102     $ 156,733     $ 12,921     $ —     $ 169,756  
Total current assets
     113,741       102       1,518,022       921,033       —       2,552,898  
Intercompany receivables (non-current)
     —       —       —       —       —       —  
Goodwill
     96,671       —       2,162,601       1,988,442       —       4,247,714  
Net investment in subsidiaries
     1,519,952       1,464,944       4,968,905       —       (7,953,801 )     —  
Total Assets
     1,730,364       1,654,186       12,593,604       5,469,290       (7,953,801 )     13,493,643  
Long-term debt
     4       4,487,090       4,633,801       (43,528 )     —       9,077,367  
Intercompany payables (non-current)
     (385,872 )     (4,627,439 )     5,956,358       4,562,215       (5,505,262 )     —  
Other long-term liabilities
     (2,519 )     121,482       188,316       176,180       —       483,459  
Additional paid-in capital
     1,240,308       —       —       —       —       1,240,308  
Retained earnings
     557,945       1,601,686       1,066,671       (134,094 )     (2,534,263 )     557,945  
Total stockholders’ equity
     1,710,804       1,519,949       1,062,682       (134,092 )     (2,448,539 )     1,710,804  
Total liabilities and stockholders’ equity
     1,730,364       1,654,186       12,593,604       5,469,290       (7,953,801 )     13,493,643  
As adjusted(l)
                                                
Prepaid expenses and taxes
     99,417       102       57,316       12,921       —       169,756  
Total current assets
     213,158       102       1,418,605       921,033       —       2,552,898  
Intercompany receivables (non-current)
     1,085,684       9,129,859       18,854,467       884,296       (29,954,306 )     —  
Goodwill
     —       —       2,259,113       1,988,601       —       4,247,714  
Net investment in subsidiaries
     957,750       4,168,316       2,485,035       —       (7,611,101 )     —  
Total Assets
     2,256,592       13,487,417       28,961,296       6,353,745       (37,565,407 )     13,493,643  
Long-term debt
     4       8,987,090       62,792       27,481       —       9,077,367  
Intercompany payables (non-current)
     137,837       3,267,993       27,008,767       5,378,021       (35,792,618 )     —  
Other long-term liabilities
     —       121,482       188,316       173,661       —       483,459  
Additional paid-in capital
     1,240,308       434,505       398,338       —       (832,843 )     1,240,308  
Retained earnings
     557,945       604,980       554,624       (133,935 )     (1,025,669 )     557,945  
Total stockholders’ equity
     1,710,804       957,748       948,974       (133,933 )     (1,772,789 )     1,710,804  
Total liabilities and stockholders’ equity
     2,256,592       13,487,417       28,961,296       6,353,745       (37,565,407 )     13,493,643  
 
Condensed Consolidating Statement of Cash Flows
                                                
For the three months ended March 31, 2007
                                                
As reported
                                                
Net cash provided by (used in) operating activities
     (4,158 )     4,014       108,210       12,281       —       120,347  
Changes in intercompany balances with affiliates, net
     —       —       —       —       —       —  
Net cash provided by (used in) financing activities
     4,158     (4,014 )     (827 )     (1,607 )     —       (2,290 )
As adjusted (1)
                                                
Net cash provided by (used in) operating activities
     26,447       (2,561 )     104,366       (7,905 )     —       120,347  
Changes in intercompany balances with affiliates, net
     (30,605 )     6,575       3,844       20,186       —       —  
Net cash provided by (used in) financing activities
     (26,447 )     2,561       3,017       18,579       —       (2,290 )
 
                                                
Condensed Consolidating Statement of Income
                                                
For the three months ended March 31, 2007
                                                
As reported
                                                
Interest expense, net
     —       —       21,681       6,752       —       28,433  
Equity in earnings of unconsolidated affiliates
     (90,156 )     (90,156 )     6,499       —       173,813       —  
Income (loss) from continuing operations before income taxes
     90,156       90,156       89,641       (3,019 )     (173,813 )     93,121  
Provision for income taxes
     35,832       —       —       —       —       35,832  
Income (loss) from continuing operations
     54,324       90,156       89,641       (3,019 )     (173,813 )     57,289  
Net income
     54,324       90,156       89,641       (5,984 )     (173,813 )     54,324  
As adjusted (1)
                                                
Interest expense, net
     —       1,369       20,312       6,752       —       28,433  
Equity in earnings of unconsolidated affiliates
     (54,324 )     (57,291 )     5,339       —       106,276       —  
Income (loss) from continuing operations before income taxes
     54,324       55,922       92,170       (3,019 )     (106,276 )     93,121  
Provision for income taxes
     —       1,598       35,393       (1,159 )     —       35,832  
Income (loss) from continuing operations
     54,324       54,324       56,777       (1,860 )     (106,276 )     57,289  
Net income
     54,324       54,324       56,777       (4,825 )     (106,276 )     54,324  
 
(1)   Includes effects of reclassification for discontinued operations and for conforming corrections as applied to other periods presented.
 

20

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Condensed Consolidated Balance Sheet
March 31, 2008
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands, except share data)  
ASSETS
                                                
Current assets
                                                
Cash and cash equivalents
   $ —     $ —     $ 213,879     $ —     $ (49,526 )   $ 164,353  
Patient accounts receivable, net of allowance for doubtful accounts
     —       —       1,021,244       604,414       —       1,625,658  
Supplies
     —       —       164,622       99,439       —       264,061  
Deferred income taxes
     113,741       —       —       —       —       113,741  
Prepaid expenses and taxes
     110,160       58       69,864       13,930       —       194,012  
Other current assets
     —       390       129,601       114,576       —       244,567  
 
                                    
Total current assets
     223,901       448       1,599,210       832,359       (49,526 )     2,606,392  
 
                                    
Intercompany receivable
     928,672       9,198,002       10,361,700       1,937,602       (22,425,976 )     —  
 
                                    
Property and equipment, net
     —       —       3,343,680       2,094,717       —       5,438,397  
 
                                    
Goodwill
     —       —       2,456,899       1,918,394       —       4,375,293  
 
                                    
Other assets, net
     —       186,076       487,395       238,796       —       912,267  
 
                                    
Net investment in subsidiaries
     1,473,779       4,194,870       2,380,982       —       (8,049,631 )     —  
 
                                    
Total assets
   $ 2,626,352     $ 13,579,396     $ 20,629,866     $ 7,021,868     $ (30,525,133 )   $ 13,332,349  
 
                                    
 
                                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                
Current liabilities
                                                
Current maturities of long-term debt
   $ —     $ —     $ 14,667     $ 4,809     $ —     $ 19,476  
Accounts payable
     —       41       339,276       171,646       (49,526 )     461,437  
Current income taxes payable
     —       —       —       —       —       —  
Accrued liabilities
     —       —       434,906       296,365       —       731,271  
Interest payable (receivable)
     —       2,599       88,205       (362 )     —       90,442  
 
                                    
Total current liabilities
     —       2,640       877,054       472,458       (49,526 )     1,302,626  
 
                                    
Long-term debt payable
     4       8,825,296       54,667       6,388       —       8,886,355  
 
                                    
Intercompany payable
     546,636       2,992,838       18,370,619       6,084,100       (27,994,193 )     —  
 
                                    
Deferred income taxes
     407,947       —       —       —       —       407,947  
 
                                    
Other long-term liabilities
     195       284,848       198,936       195,743       —       679,722  
 
                                    
Minority interests in equity of consolidated subsidiaries
     —       —       2,156       381,973       —       384,129  
 
                                    
Stockholders’ equity
                                                
Preferred stock
     —       —       —       —       —       —  
Common stock
     972       —       1       2       (3 )     972  
Additional paid-in capital
     1,247,241       639,797       435,885       —       (1,075,682 )     1,247,241  
Treasury stock, at cost, 975,549 shares
     (6,678 )     —       —       —       —       (6,678 )
Accumulated other comprehensive income (loss)
     (188,037 )     (188,037 )     (5,734 )     —       193,771       (188,037 )
Retained earnings
     618,072       1,022,014       696,282       (118,796 )     (1,599,500 )     618,072  
 
                                    
Total stockholders’ equity
     1,671,570       1,473,774       1,126,434       (118,794 )     (2,481,414 )     1,671,570  
 
                                    
Total liabilities and stockholders’ equity
   $ 2,626,352     $ 13,579,396     $ 20,629,866     $ 7,021,868     $ (30,525,133 )   $ 13,332,349  
 
                                    

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Condensed Consolidated Balance Sheet
December 31, 2007
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands, except share data)  
ASSETS
                                                
Current assets
                                                
Cash and cash equivalents
   $ —     $ —     $ 114,075     $ 18,799     $ —     $ 132,874  
Patient accounts receivable, net of allowance for doubtful accounts
     —       —       954,106       579,692       —       1,533,798  
Supplies
     —       —       163,961       98,942       —       262,903  
Deferred income taxes
     113,741       —       —       —       —       113,741  
Prepaid expenses and taxes
     99,417       102       57,316       12,921       —       169,756  
Other current assets
     —       —       129,147       210,679       —       339,826  
 
                                    
Total current assets
     213,158       102       1,418,605       921,033       —       2,552,898  
 
                                    
Intercompany receivable
     1,085,684       9,129,859       18,854,467       884,296       (29,954,306 )     —  
 
                                    
Property and equipment, net
     —       —       3,667,487       1,845,087       —       5,512,574  
 
                                    
Goodwill
     —       —       2,259,113       1,988,601               4,247,714  
 
                                    
Other assets, net
     —       189,140       276,589       714,728               1,180,457  
 
                                    
Net investment in subsidiaries
     957,750       4,168,316       2,485,035       —       (7,611,101 )     —  
 
                                    
Total assets
   $ 2,256,592     $ 13,487,417     $ 28,961,296     $ 6,353,745     $ (37,565,407 )   $ 13,493,643  
 
                                    
 
                                                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                
Current liabilities
                                                
Current maturities of long-term debt
   $ —     $ —     $ 16,603     $ 4,107     $ —     $ 20,710  
Accounts payable
     —       19       276,503       216,171       —       492,693  
Current income taxes payable
     —       —       —       —       —       —  
Deferred income taxes — current
     —       —       —       —       —       —  
Accrued liabilities
     —       —       437,808       342,892       —       780,700  
Interest payable (receivable)
     —       153,085       8,042       (7,295 )     —       153,832  
 
                                    
Total current liabilities
     —       153,104       738,956       555,875       —       1,447,935  
 
                                    
Long-term debt payable (receivable)
     4       8,987,090       62,792       27,481     —       9,077,367  
 
                                    
Intercompany payable
     137,837     3,267,993     27,008,767       5,378,021       (35,792,618 )     —  
 
                                    
Deferred income taxes
     407,947       —       —       —       —       407,947  
 
                                    
Other long-term liabilities
     —       121,482       188,316       173,661       —       483,459  
 
                                    
Minority interests in equity of consolidated subsidiaries
     —       —       13,491       352,640       —       366,131  
 
                                    
Stockholders’ equity
                                                
Preferred stock
     —       —       —       —       —       —  
Common stock
     966       —       1       2       (3 )     966  
Additional paid-in capital
     1,240,308       434,505       398,338       —       (832,843 )     1,240,308  
Treasury stock, at cost, 975,549 shares
     (6,678 )     —       —       —       —       (6,678 )
Accumulated other comprehensive income (loss)
     (81,737 )     (81,737 )     (3,989 )     —       85,726       (81,737 )
Retained earnings
     557,945       604,980       554,624       (133,935 )     (1,025,669 )     557,945  
 
                                    
Total stockholders’ equity
     1,710,804       957,748       948,974       (133,933 )     (1,772,789 )     1,710,804  
 
                                    
Total liabilities and stockholders’ equity
   $ 2,256,592     $ 13,487,417     $ 28,961,296     $ 6,353,745     $ (37,565,407 )   $ 13,493,643  
 
                                    

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Condensed Consolidated Statement of Income
Three Months Ended March 31, 2008
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands)  
Net operating revenues
   $ —     $ —     $ 1,688,744     $ 1,038,810     $ —     $ 2,727,554  
 
                                    
Operating costs and expenses:
                                                
Salaries and benefits
     —       —       638,641       449,129       —       1,087,770  
Provision for bad debts
     —       —       193,890       103,190       —       297,080  
Supplies
     —       —       226,130       160,279       —       386,409  
Other operating expenses
     —       —       300,191       225,976       —       526,167  
Rent
     —       —       31,301       28,556       —       59,857  
Depreciation and amortization
     —       —       77,785       44,930       —       122,715  
 
                                    
Total operating costs and expenses
     —       —       1,467,938       1,012,060       —       2,479,998  
 
                                    
Income from operations
     —       —       220,806       26,750       —       247,556  
 
                                    
 
                                                
Interest expense, net
     —       12,924       135,591       17,187       —       165,702  
Loss from early extinguishment of debt
     —       1,328       —       —       —       1,328  
Minority interest in earnings
     —       —       (193 )     9,875       —       9,682  
Equity in earnings of subsididary
     (60,127 )     (65,733 )     (21,088 )     —       134,064       (12,884 )
 
                                    
Income (loss) from continuing operations before income taxes
     60,127       51,481       106,496       (312 )     (134,064 )     83,728  
Provision for income taxes
     —       (8,646 )     41,001       (120 )     —       32,235  
 
                                    
Income (loss) from continuing operations
     60,127       60,127       65,495       (192 )     (134,064 )     51,493  
 
                                                
Discontinued operations, net of taxes:
                                                
Loss from operations of hospitals sold and held for sale
     —       —       —       (983 )     —       (983 )
Gain on sale of hospitals, net
     —       —       —       9,617       —       9,617  
 
                                    
Income on discontinued operations
     —       —       —       8,634       —       8,634  
 
                                    
Net income
   $ 60,127     $ 60,127     $ 65,495     $ 8,442     $ (134,064 )   $ 60,127  
 
                                    

23

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Condensed Consolidated Statement of Income
Three Months Ended March 31, 2007
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands)  
Net operating revenues
   $ —     $ —     $ 921,231     $ 233,047     $ —     $ 1,154,278  
 
                                    
Operating costs and expenses:
                                                
Salaries and benefits
     —       —       352,482       110,283       —       462,765  
Provision for bad debts
     —       —       105,540       22,514       —       128,054  
Supplies
     —       —       107,117       27,177       —       134,294  
Other operating expenses
     —       —       180,001       54,164       —       234,165  
Rent
     —       —       17,679       7,077       —       24,756  
Depreciation and amortization
     —       —       40,591       7,906       —       48,497  
 
                                    
Total operating costs and expenses
     —       —       803,410       229,121       —       1,032,531  
 
                                    
Income from operations
     —       —       117,821       3,926       —       121,747  
 
                                    
 
                                                
Interest expense, net
     —       1,369       20,312       6,752       —       28,433  
Equity in earnings of subsididary
     (54,324 )     (57,291 )     5,339       —       106,276       —  
Minority interest in earnings
     —       —       —       193       —       193  
 
                                    
Income (loss) from continuing operations before income taxes
     54,324       55,922       92,170       (3,019 )     (106,276 )     93,121  
Provision for income taxes
     —       1,598       35,393       (1,159 )     —       35,832  
 
                                    
Income (loss) from continuing operations
     54,324       54,324       56,777       (1,860 )     (106,276 )     57,289  
 
                                                
Discontinued operations, net of taxes:
                                                
Loss from operations of hospitals sold and held for sale
     —       —       —       (2,965 )     —       (2,965 )
Loss on sale of hospitals
     —       —       —       —       —       —  
 
                                    
Loss on discontinued operations
     —       —       —       (2,965 )     —       (2,965 )
 
                                    
Net income
   $ 54,324     $ 54,324     $ 56,777     $ (4,825 )   $ (106,276 )   $ 54,324  
 
                                    

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — (Continued)
Condensed Consolidated Statement of Cash Flows
Three Months Ended March 31, 2008
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands)  
Cash flows from operating activities:
                                                
Net cash provided by (used in) operating activities
   $ (45,719 )   $ (102,699 )   $ 366,178     $ (113,101 )   $ (49,526 )   $ 55,133  
 
                                    
 
                                                
Cash flows from investing activities:
                                                
Acquisitions of facilities and other related equipment
     —       —       (1,685 )     (20 )     —       (1,705 )
Purchases of property and equipment
     —       —       (89,229 )     (52,464 )     —       (141,693 )
Disposition of hospitals
     —       —       —       365,680       —       365,680  
Proceeds from sale of property and equipment
     —       —       904       12,813       —       13,717  
Investment in other assets
     —       —       (54,522 )     (43,660 )     —       (98,182 )
 
                                    
Net cash provided by (used in) investing activities
     —       —       (144,532 )     282,349       —       137,817  
 
                                    
 
                                                
Cash flows from financing activities:
                                                
Proceeds from exercise of stock options
     94       —       —       —       —       94  
Deferred financing costs
     —       (2,232 )     —       —       —       (2,232 )
Excess tax benefits relating to stock-based compensation
     (947 )     —       —       —       —       (947 )
Proceeds from minority investors in joint ventures
     —       —       —       12,881       —       12,881  
Redemption of minority investments in joint ventures
     —       —       —       —       —       —  
Distributions to minority investors in joint ventures
     —       —       —       (7,524 )     —       (7,524 )
Changes in intercompany balances with affiliates, net
     46,572       266,725       (43,380 )     (269,917 )     —       —  
Borrowings under credit agreement
     —       25,000       44,818       (44,818 )     —       25,000  
(Repayments) borrowings of long-term indebtedness
     —       (186,794 )     (123,280 )     121,331       —       (188,743 )
 
                                    
Net cash provided by (used in) financing activities
     45,719     102,699     (121,842 )     (188,047 )     —       (161,471 )
 
                                    
Net change in cash and cash equivalents
     —       —       99,804       (18,799 )     (49,526 )     31,479  
Cash and cash equivalents at beginning of period
     —       —       114,075       18,799       —       132,874  
 
                                    
Cash and cash equivalents at end of period
   $ —     $ —     $ 213,879     $ —     $ (49,526 )   $ 164,353  
 
                                    

25

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COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statement of Cash Flows
Three Months Ended March 31, 2007
                                                 
    Parent             Other     Non-              
    Guarantor     Issuer     Guarantors     Guarantors     Eliminations     Consolidated  
    (In thousands)  
Cash flows from operating activities:
                                                
Net cash provided by (used in) operating activities
   $ 26,447   $ (2,561 )   $ 104,366     $ (7,905 )     —       120,347  
 
                                    
 
                                                
Cash flows from investing activities:
                                                
Acquisitions of facilities and other related equipment
     —       —       (41,141 )     (2,898 )     —       (44,039 )
Purchases of property and equipment
     —       —       (37,521 )     (7,268 )     —       (44,789 )
Disposition of hospitals
     —       —       —       —       —       —  
Proceeds from sale of property and equipment
     —       —       77       57       —       134  
Investment in other assets
     —       —       (6,570 )     (481 )     —       (7,051 )
 
                                    
Net cash provided by (used in) investing activities
     —       —       (85,155 )     (10,590 )     —       (95,745 )
 
                                    
 
                                                
Cash flows from financing activities:
                                                
Proceeds from exercise of stock options
     3,311       —       —       —       —       3,311  
Deferred financing costs
     —       (14 )     —       —       —       (14 )
Excess tax benefits relating to stock-based compensation
     758       —       —       —       —       758  
Proceeds from minority investors in joint ventures
     89       —       —       930       —       1,019  
Redemption of minority investments in joint ventures
     —       —       —       (1,253 )     —       (1,253 )
Distributions to minority investors in joint ventures
     —       —       —       (1,079 )     —       (1,079 )
Changes in intercompany balances with affiliates, net
     (30,605 )     6,575       3,844       20,186       —       —  
Borrowings under credit agreement
     —       —       —       —       —       —  
Repayments of long-term indebtedness
     —       (4,000 )     (827 )     (205 )     —       (5,032 )
 
                                    
Net cash provided by (used in) financing activities
     (26,447 )     2,561     3,017     18,579     —       (2,290 )
 
                                    
Net change in cash and cash equivalents
     —       —       22,228       84       —       22,312  
Cash and cash equivalents at beginning of period
     —       —       28,560       12,006       —       40,566  
 
                                    
Cash and cash equivalents at end of period
   $ —     $ —     $ 50,788     $ 12,090     $ —     $ 62,878  
 
                                    

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Table of Contents

     
Item 6.   Exhibits
 
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
31.2   Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
32.1   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 
32.2   Certification of Chief Executive Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

27

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q/A to be signed on its behalf by the undersigned, thereunto duly authorized.
             
    COMMUNITY HEALTH SYSTEMS, INC.    
 
      
(Registrant)
    
 
            
 
   By:   /s/ Wayne T. Smith
 
Wayne T. Smith 		   
 
       Chairman of the Board, President and Chief Executive Officer
(principal executive officer)		    
 
            
 
   By:   /s/ W. Larry Cash
 
W. Larry Cash 		   
 
       Executive Vice President, Chief Financial Officer and Director    
 
       (principal financial officer)    
 
            
 
   By:   /s/ T. Mark Buford
 
T. Mark Buford
Vice President and Corporate Controller 		   
 
       (principal accounting officer)    
 
Date: December 22, 2008        

28

Table of Contents

Index to Exhibits
     
No.   Description
31.1
  Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
    
31.2
  Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
    
32.1
  Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
    
32.2
  Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

29

EX-31.1 2 g16942qaexv31w1.htm EX-31.1 EX-31.1
Exhibit 31.1
I, Wayne T. Smith, certify that:
1.   I have reviewed this quarterly report on Form 10-Q/A of Community Health Systems, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
    a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
    b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
    c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
 
    a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
Date: December 22, 2008
  /s/ Wayne T. Smith
 
Wayne T. Smith
Chairman of the Board, President and Chief Executive Officer 		   

EX-31.2 3 g16942qaexv31w2.htm EX-31.2 EX-31.2
Exhibit 31.2
I, W. Larry Cash, certify that:
1.   I have reviewed this quarterly report on Form 10-Q/A of Community Health Systems, Inc.;
 
2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
    a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
    b) designed such internal controls over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
    c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
    d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
 
5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
 
    a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
    b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
         
Date: December 22, 2008
  /s/ W. Larry Cash
 
    
 
  W. Larry Cash
Executive Vice President, Chief Financial Officer and Director		    

EX-32.1 4 g16942qaexv32w1.htm EX-32.1 EX-32.1
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     In connection with the Quarterly Report of Community Health Systems, Inc. (the “Company”) on Form 10-Q/A for the period ending March 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Wayne T. Smith, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
  (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
     
/s/ Wayne T. Smith
 
Wayne T. Smith
    
Chairman of the Board, President and Chief Executive Officer
December 22, 2008
A signed original of this written statement required by Section 906 has been provided to Community Health Systems, Inc. and will be retained by Community Health Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 5 g16942qaexv32w2.htm EX-32.2 EX-32.2
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
     In connection with the Quarterly Report of Community Health Systems, Inc. (the “Company”) on Form 10-Q/A for the period ending March 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, W. Larry Cash, Executive Vice President, Chief Financial Officer and Director of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
  (1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
  (2)   The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
     
/s/ W. Larry Cash
 
W. Larry Cash
   
Executive Vice President, Chief Financial Officer and Director
December 22, 2008
A signed original of this written statement required by Section 906 has been provided to Community Health Systems, Inc. and will be retained by Community Health Systems, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

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