Tenet Healthcare - 10-Q quarterly report FY

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

TENET HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)

3820 State Street
Santa Barbara, CA 93105
(Address of principal executive offices)

(805) 563-7000
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days:    Yes X    No

        As of March 31, 2002 there were 325,866,355 shares of $0.075 par value common stock outstanding.

TABLE OF CONTENTS

Note: Item 3 of Part I and Items 2, 3, 4 and 5 of Part II are omitted because they are not applicable.

1

CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in Millions

See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of Operations.

2

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three and Nine Months ended February 28, 2001 and 2002
Dollars in Millions, Except Per Share Amounts

See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of Operations.

3

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Nine Months ended February 28, 2001 and 2002
Dollars in Millions

See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of Operations.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended February 28, 2001 and 2002
Dollars in Millions

4

See accompanying Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of Operations.

5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1

        The financial information furnished herein is unaudited; however, in the opinion of management, the information reflects all adjustments that are necessary to fairly state the consolidated financial position of Tenet Healthcare Corporation (together with its subsidiaries, "Tenet" or the "Company"), the results of its operations and cash flows for the interim periods indicated. All the adjustments are of a normal recurring nature.

        The Company presumes that users of this interim financial information have read or have access to the Company's audited financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations for the preceding fiscal year, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnotes and other disclosures that would substantially duplicate the disclosures contained in the Company's most recent annual report to security holders have been omitted.

        Patient volumes and net operating revenues of the Company's hospitals are subject to seasonal variations caused by a number of factors, including, but not necessarily limited to, seasonal cycles of illness, climate and weather conditions, vacation patterns of both hospital patients and admitting physicians and other factors relating to the timing of elective hospital procedures. Quarterly operating results are not necessarily representative of operations for a full year for various reasons, including levels of occupancy, interest rates, acquisitions, disposals, revenue allowance and discount fluctuations, the timing of price changes, unusual or non-recurring items and fluctuations in quarterly tax rates. These same considerations apply to all year-to-year comparisons.

Note 2

        During the nine months ended February 28, 2002 the Company's subsidiaries acquired five general hospitals: two in West Palm Beach, Florida, one in St. Louis, Missouri and two in Southern California. A subsidiary of the Company and its joint venture partner also opened a new general hospital in Weston, Florida. The Company also sold one general hospital in Texas and three long-term-care facilities. The aggregate purchase price of the acquired hospitals was approximately $317 million in cash. The acquisitions have been accounted for as purchases. The results of operations of the acquired businesses have been included in the Company's consolidated financial statements from the dates of acquisition.

Note 3

        The Company will adopt Statement of Financial Accounting Standards No. 142 (SFAS 142), "Accounting for Goodwill and Other Intangible Assets," as of June 1, 2002, however, the Company has followed the required exception to this effective date as provided by SFAS 142. Accordingly, goodwill associated with acquisitions after June 30, 2001 has not been amortized. The table below shows the Company's income before extraordinary charges and net income for the nine months ended

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February 28, 2001 and 2002 on a pro forma basis as if the cessation of goodwill amortization required by the new standard had occurred as of June 1, 2000:

Note 4

        The following table sets forth the changes in consolidated shareholders' equity during the nine months ended February 28, 2002 (in millions of dollars):

Note 5

        During the quarter ended February 28, 2002, the Company repurchased the remaining $65 million of its 8⁵/8% Senior Subordinated Notes due 2007, $56 million of its 8¹/8% Senior Subordinated Notes due 2008 and $24 million of its 6% Exchangeable Subordinated Notes due 2005. In connection therewith, the Company recorded an extraordinary charge from early extinguishment of debt in the amount of $8 million, net of tax benefits of $4 million. The extraordinary charge from early extinguishment of debt for the nine-month period ended February 28, 2002 was $180 million, net of tax benefits of $107 million.

        On February 28, 2002 the Company renewed its $500 million 364-day revolving credit agreement for another 364 days. The Company's $1.5 billion revolving credit agreement expires on March 1, 2006.

7

        The table below sets forth the Company's long-term debt as of May 31, 2001 and February 28, 2002:

        Subsequent to the end of the quarter the Company sold $600 million of new 6¹/2% Senior Notes due 2012 and repurchased $839 million of the remaining $841 million of the Company's 8¹/8% Senior Subordinated Notes due 2008. The new Senior Notes are unsecured senior obligations of the Company, ranking equally with all of the Company's other unsecured senior indebtedness and are redeemable at any time at the option of the Company.

Note 6

        During the nine months ended February 28, 2002, the Company, acting under a July 25, 2001 authorization of the Board of Directors to repurchase up to 10 million shares of its common stock to offset the dilutive effect of employee stock option exercises, purchased 8,370,500 shares for approximately $480 million at an average cost of $57.34 per share, as shown in the following table:

        In March 2002, the Company purchased an additional 1 million shares for approximately $62 million. All purchased shares are held as treasury stock. On February 14, 2002, the Board of Directors authorized the repurchase of an additional 10 million shares of common stock, intended to offset the dilutive effect of anticipated employee stock option exercises. These purchases are expected to be funded by proceeds of option exercises and free cash flow. The Company has not purchased, nor does it intend to purchase, any shares from its officers or employees.

8

        Subsequent to February 28, 2002 the Company established forward agreements with three counter parties for the purchase of $336 million of stock (5.5 million shares at an average cost of $61.30 per share). The Company expects to settle the majority of these agreements within the next year. The Company, at its option, can settle these forward agreements through full physical, net-share or net-cash settlements. Since these contracts do not involve an exchange of consideration until actual settlement, these agreements are not reflected in the Company's consolidated balance sheet until that time. The contract terms provide for maximum numbers of shares that may be required to be issued in net-share settlements with each counter party, which maximum currently is 37.4 million shares.

Note 7

        There have been no material changes to the description of professional and general liability insurance or other claims and lawsuits set forth in Note 8 of Notes to Consolidated Financial Statements for the fiscal year ended May 31, 2001.

Note 8

        The table below provides a reconciliation between net income and net cash provided by operating activities for the nine months ended February 28, 2001 and 2002:

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Note 9

        The following table presents a reconciliation of beginning and ending liability balances in connection with impairment and other unusual charges as of May 31, 2001 and February 28, 2002:

(1)

The above liability balances are included in other current liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets. Cash payments to be applied against these accruals are expected to approximate $26 million in the remainder of fiscal 2002 and $76 million thereafter.

(2)

Other items primarily include write-offs of long-lived assets, including property and equipment, goodwill and other assets.

(3)

During the quarter ended November 30, 2001 the Company recorded impairment and other unusual charges of $99 million primarily relating to the planned closure of two general hospitals and the sales of certain other health care businesses.

Note 10

        The following is a reconciliation of the numerators and the denominators of the Company's basic and diluted earnings per common share computations for income before extraordinary charge for the

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three months and nine months ended February 28, 2001 and 2002. Income is expressed in millions and weighted average shares are expressed in thousands:

        Outstanding options to purchase 3,858,854 and 145,333 shares of common stock were not included in the computation of earnings per share for the nine-month periods ended February 28, 2001 and 2002, respectively, because the options' exercise prices were greater than the average market price of the common stock during the nine-month periods.

Note 11

        The following table sets forth the tax effects allocated to each component of other comprehensive income for the nine months ended February 28, 2001 and 2002:

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        The following table sets forth the accumulated other comprehensive loss balances, by component, as of February 28, 2001 and 2002:

12

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Highlights

        Operating results for the quarter and nine months ended February 28, 2002 included the following highlights:

•

Growth in patient volumes and revenues



•

Improvements in operating margins



•

Improvements in cash flows from operations

        On a same-facility basis, admissions improved 2.1% over the prior-year quarter, net patient revenues were up 11.5% and net inpatient revenues per admission were up 10.8%. Total-company EBITDA (earnings before interest, taxes, depreciation and amortization and impairment and other unusual charges) rose by 24.7% in the current quarter and operating income rose by 29.2%. EBITDA margins increased from 19.0% to 20.7%. Operating margins also increased, from 14.5% in the year-ago quarter to 16.3% in the current quarter. Net cash provided by operating activities increased by $555 million over the prior-year nine-month period. For the latest 12-month period, cash flows from operating activities were $2.4 billion. The Company has reduced its debt by $573 million since the end of the year-ago quarter.

Critical Accounting Policies

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management of the Company to make assumptions, estimates and judgments that affect the amounts reported in the financial statements, including the notes thereto, and related disclosures of commitments and contingencies, if any.

        The Company considers its critical accounting policies to be those that require the more significant judgments and estimates in the preparation of the Company's financial statements, including the following: recognition of net operating revenues, including contractual allowances; impairment of long-lived assets; accounting for expenses in connection with exit plans; provisions for doubtful accounts; accounting for income taxes; and reserves for losses and expenses related to professional and comprehensive general liability risks. Management relies on historical experience and on other assumptions believed to be reasonable under the circumstances in making its judgment and estimates. Actual results could differ materially from those estimates. There have been no significant changes in assumptions, estimates and judgments in the preparation of these quarterly financial statements from the assumptions, estimates and judgments used in the preparation of the Company's latest audited financial statements.

Results of Operations

        The Company reported income before income taxes of $490 million in the quarter ended February 28, 2002 and $332 million in the quarter ended February 28, 2001. For the nine-month periods ended February 28, 2002 and 2001, income before income taxes was $1.2 billion and $881 million, respectively. The 2002 nine-month period includes impairment and other unusual charges of $99 million. The charges amounted to $66 million after tax, or $0.20 per share.

        Results of operations for the quarter ended February 28, 2002 include the operations of six general hospitals acquired and a new 51% owned general hospital opened after February 28, 2001 and exclude the operations of one general hospital sold and certain other facilities closed since then.

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        The following is a summary of consolidated operations for the three and nine months ended February 28, 2001 and 2002:

        Net operating revenues of domestic general hospitals in the table above include inpatient and outpatient revenues, as well as nonpatient revenues, primarily rental income and services such as cafeteria, gift shops, parking and other miscellaneous revenue. Net operating revenues of other operations consist primarily of revenues from: (i) physician practices, (ii) rehabilitation hospitals, long-term-care facilities, psychiatric and specialty hospitals, all of which are located on or near the same campuses as the Company's general hospitals; (iii) the Company's hospital in Barcelona, Spain; (iv) health care joint ventures operated by the Company; (v) subsidiaries of the Company offering managed care and indemnity insurance products; and (vi) equity in earnings of unconsolidated affiliates.

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        The table below sets forth certain selected historical operating statistics for the Company's domestic general hospitals:

(1)

The change is the difference between 2001 and 2002 amounts shown.

        The table below sets forth certain selected operating statistics for the Company's domestic general hospitals on a same-facility basis:

(1)

The change is the difference between 2001 and 2002 amounts shown.

15

        The table below sets forth the sources of net patient revenues for the Company's domestic general hospitals for the three-month and nine-month periods ended February 28, 2001 and 2002, expressed as percentages of net patient revenues from all sources:

(1)

The change is the difference between 2001 and 2002 amounts shown.

        The Company's focus on expansions and additions of core services, such as cardiology, orthopedics and neurology, has led to increases in inpatient acuity and intensity of services. Total-facility admissions increased by 7.4% during the quarter ended February 28, 2002 over the year-ago quarter. For the nine months ended February 28, 2002, the increase was 6.4%. The Company experienced a 3.2% decline in same-facility outpatient visits during the quarter ended February 28, 2002 compared to the year-ago quarter and a 1.8% decline for the comparable nine-month period. The Company continues to see declines in outpatient visits due to the consolidation or closure of the majority of the Company's home health agencies in response to the changes in Medicare payments to home health agencies mandated by the Balanced Budget Act of 1997 (BBA). The Company's outpatient revenue on a same-facility basis increased by 7.7% over the year-ago quarter and by 8.7% for the nine-month period. The Company is continuing to see increased outpatient surgery and outpatient diagnostic trends which provide higher per visit revenue, along with a declining home health business which provides lower per visit revenue.

        One of the most significant trends in recent years has been in net inpatient revenue per admission which continues to improve, although at a slower rate than in certain recent quarters. On a total-facility basis this statistic increased 9.4% and on a same-facility basis it increased by 10.8% over the year-ago quarter. For the corresponding nine-month periods the increases were 11.7% and 13.0%, respectively. Some of the improvement is attributable to benefits from contract changes that are essentially one-time events that effectively raise overall pricing beyond the actual contract rate increase. Because of the one-time events and other factors, growth in revenue per admission may moderate going forward. Some improvement can be attributable to the growth in certain core services, which are higher acuity and higher revenue services. Driven by reductions in Medicare payments under the BBA, the Company's Medicare revenues declined steadily through the end of September 2000. As a result of the Balanced Budget Refinement Act, the Company began to receive improved Medicare payments on October 1, 2000. This trend continues with the implementation of the new Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000, which became effective in April 2001.

        The pricing environment for managed care and other nongovernment payors has improved and the Company expects continuing benefits as it renegotiates and renews contracts with improved terms. The Company believes that this trend will remain positive throughout this fiscal year and into the next fiscal year.

        In fiscal 2000 the Company implemented a program designed to improve patient, physician and employee satisfaction by building a true customer-service culture. This program, which is called Target 100, consists of action teams in each hospital that address the concerns of the patients, physicians and employees—the Company's customers. The Company believes the recent improvement in volume trends is attributable, in part, to the implementation of this new program. In addition, the Company continues to experience significant admission growth in the baby boomer age groups. As these baby boomers continue to age, the Company believes their demand for health care will continue to grow.

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        To address all the changes impacting the health care industry, while continuing to provide quality care to patients, the Company has implemented strategies to reduce inefficiencies, create synergies, obtain additional business and control costs. Such strategies have included the enhancement of integrated health care delivery systems and hospital cost-control programs. Further consolidations and implementation of additional cost-control programs and other operating efficiencies may be undertaken in the future.

        Net operating revenues from the Company's other domestic operations were $118 million for the three months ended February 28, 2001, compared to $98 million for the current quarter. The decrease is primarily the result of disposing of physician practices. The Company has exited most of the physician practices it had owned.

        Salaries and benefits expense as a percentage of net operating revenues was 38.8% in both the quarter ended February 28, 2001 and in the current quarter. This is primarily the result of cost-control measures, improved labor productivity and reduced employee turnover, which have mitigated the salary and benefit increases, especially for nurses.

        Supplies expense as a percentage of net operating revenues was 13.8% in the quarter ended February 28, 2001 and 14.2% in the current-year quarter. The percentage increase reflects recent shifts to higher-acuity and more supply-intensive care at most of the Company's hospitals. The Company controls supplies expense through improved utilization, improving the supply chain process and by developing and expanding programs designed to improve the purchasing of supplies through Broadlane, Inc., its majority-owned subsidiary that provides group-purchasing and other supplies-management services.

        The provision for doubtful accounts as a percentage of net operating revenues was 7.2% in the quarter ended February 28, 2001 and 6.8% in the current quarter. The shift in the Company's payor mix away from Medicare to managed care has increased bad debt expense, but the Company's cash flow initiatives have more than offset the effects of that trend. Accounts receivable days outstanding declined from 78.5 days at February 28, 2001 to 64.0 days at the end of the current quarter.

        Other operating expenses as a percentage of net operating revenues were 21.1% for the quarter ended February 28, 2001 and 19.5% for the quarter ended February 28, 2002. The decrease is primarily because many of these expenses are fixed and, as a result, the percentage has declined with the increase in revenues over the year-ago quarter.

        The percentages of the above operating expense categories to net operating revenues for the nine-month periods ended February 28, 2002 and 2001 are comparable to those for the respective quarters. The explanations for the changes in the nine-month percentages are also comparable to those for the quarterly changes.

        Interest expense, net of capitalized interest, was $113 million in the quarter ended February 28, 2001 and $75 million in the current quarter. The decrease is primarily due to the reduction of debt subsequent to end of the prior-year quarter and lower interest rates. The Company has reduced its debt by $573 million since the end of the year-ago quarter.

        Taxes on income as a percentage of income before income taxes and the effect of impairment and other unusual charges were 40.4% for the three months ended February 28, 2001 and 41.2% in the current quarter, which is in line with the Company's expectations of approximately 41% for fiscal 2002.

Liquidity and Capital Resources

        The Company's liquidity for the nine-month period ended February 28, 2002 was derived primarily from net cash provided by operating activities, proceeds from the sale of new Senior Notes, and borrowings under its unsecured revolving credit agreements. The revolving credit agreements allow the

17

Company to borrow, repay and reborrow up to $500 million prior to March 1, 2003 and to borrow, repay and reborrow up to $1.5 billion prior to March 1, 2006.

        Net cash provided by operating activities for the nine months ended February 28, 2002 was $1.55 billion before net expenditures of $59 million for discontinued operations and impairment and other unusual charges. Net cash provided by operating activities for the nine months ended February 28, 2001 was $1.05 billion before $107 million in expenditures for such charges.

        Management believes that future cash provided by operating activities, the availability of credit under the credit agreements and, depending on capital market conditions, other borrowings or the sale of equity securities should be adequate to meet known debt service requirements and to finance planned capital expenditures, acquisitions and other presently known operating needs over the next three years.

        Subsequent to the end of the quarter the Company sold $600 million of new 6¹/2% Senior Notes due 2012 and repurchased $839 million of the remaining $841 million of the Company's 8¹/8% Senior Subordinated Notes due 2008 for $916 million. This transaction will result in an extraordinary charge from early extinguishment of debt in the quarter ending May 31, 2002 of approximately $59 million net of taxes.

        Capital expenditures were $583 million in the nine months ended February 28, 2002, compared to $396 million in the corresponding prior-year period. The Company expects to spend approximately $800 million in fiscal 2002 on capital expenditures, before any significant acquisitions of facilities and other health care operations. Such capital expenditures primarily relate to the development of integrated health care systems in selected geographic areas, design and construction of new buildings, expansion and renovation of existing facilities, equipment and systems additions and replacements, introduction of new medical technologies and various other capital improvements.

        In July 2001 and in February 2002, the Board of Directors authorized the Company to repurchase an aggregate of up to 20 million shares of the Company's common stock. The action was intended to offset the dilutive effect of anticipated employee stock option exercises. With the authorization, the Company may, from time to time as market conditions warrant, repurchase shares either on the open market or through other means. Through the end of February 2002, the Company had purchased 8,370,500 shares of it common stock for $480 million at an average cost of $57.34. The Company purchased an additional 1 million shares on March 2, 2002, for $62 million and has established forward agreements with three counterparties for the purchase of another $336 million of stock (5.5 million shares at an average cost of $61.30 per share). The Company expects to settle the majority of these agreements within the next year. The Company, at its option, may settle these forward agreements through full physical, net-share or net-cash settlements.

        The Company's obligations to make future cash payments under contracts such as debt and lease agreements are summarized in the tables below, as of February 28, 2002 and in millions of dollars:

        Other commercial commitments, such as guarantees and letters of credit, are not significant.

        The Company's strategy continues to include the prudent development of integrated health care delivery systems, including the possible acquisition of general hospitals and related health care

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businesses or joining with others to develop integrated health care delivery networks. These strategies may be financed by net cash provided by operating activities, the availability of credit under the credit agreements, the sale of assets and, depending on capital market conditions, the sale of additional debt or equity securities or other bank borrowings. The Company's unused borrowing capacity under the credit agreements was $1.55 billion as of March 31, 2002.

        With the retirement or substantial retirement of seven issues of Senior Notes and Senior Subordinated Notes since May 31, 2001, the Company has eliminated substantially all of the restrictive covenants associated with debt issued when the Company was considered a "high yield" issuer. During this fiscal year, the Company's Senior Notes and Senior Subordinated Notes were upgraded to investment grade. The Company's credit agreements, and the indentures governing the Company's new and remaining Senior Notes contain typical investment grade affirmative, negative and financial covenants with which the Company must continue to comply. The Company is in compliance with all of its loan covenants.

Business Outlook

        For many years, significant unused capacity at U.S. hospitals, payor-required preadmission authorization and payor pressure to maximize outpatient and alternative health care delivery services for less acutely ill patients created an environment where hospital admissions and length of stay declined significantly. More recently, admissions have begun to increase as the baby boomer generation enters the stage of life where hospital utilization increases. Admissions to Tenet hospitals during the nine months ended February 28, 2002 increased the most in the baby boomer age groups. The Company anticipates a long period of increasing demand for hospital services as this population group continues to age and increases its utilization of health care services.

        The Company has experienced eleven consecutive quarters of significant increases in same-facility inpatient revenue per admission. Given the current outlook for government reimbursement rates and managed care contracting rates, combined with the strong competitive positioning of the Company's integrated health care delivery systems, the Company expects continued increases in same-facility inpatient revenue per admission, but at lesser rates of increase than experienced this fiscal year to date.

        The ongoing challenge facing the Company and the health care industry as a whole is to continue to provide quality patient care in a competitive environment, to attain reasonable rates for the services it provides and to manage its costs. The primary cost pressure facing the Company and the industry is the ongoing increase of labor costs due to a nationwide shortage of nurses. The Company expects the nursing shortage to continue and has implemented various initiatives to better position its hospitals to attract and retain qualified nursing personnel, improve productivity and otherwise manage labor-cost pressures.

Forward-Looking Statements

        Certain statements contained in this Quarterly Report on Form 10-Q, including, without limitation, statements containing the words believes, anticipates, expects, will, may, might, should, surmises, estimates, intends, appears and words of similar import, and statements regarding the Company's business strategy and plans, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and involve known and unknown risks, uncertainties and other factors, many of which the Company is unable to predict or control, that may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions, both nationally and regionally; industry capacity; demographic changes; changes in, or the failure to comply with, laws and

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governmental regulations; the ability to enter into managed care provider arrangements on acceptable terms; changes in Medicare and Medicaid payment or reimbursement, including those resulting from a shift from traditional reimbursement to managed care plans; liability and other claims asserted against the Company; competition; the loss of any significant customers; technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, health care; a shortage of raw materials; a breakdown in the distribution process or other factors that may increase the Company's costs of supplies; changes in business strategy or development plans; the ability to attract and retain qualified personnel, including physicians, nurses and other health care professionals; the significant indebtedness of the Company; the availability of suitable acquisition opportunities and the length of time it takes to accomplish acquisitions; the Company's ability to integrate new business with its existing operations; and the availability and terms of capital to fund the expansion of the Company's business, including the acquisition of additional facilities and other factors referenced in this Quarterly Report on Form 10-Q and the Company's Annual Report on Form 10-K. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

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OTHER INFORMATION

Item 1. Legal Proceedings

        Material Developments in Previously Reported Legal Proceedings:

        There have been no material developments in the legal proceedings previously described in the Company's Annual Report on Form 10-K for its fiscal year ended May 31, 2001.

        Items 2, 3, 4 and 5 are not applicable.

Item 6. Exhibits and Reports on Form 8-K

(a)

Exhibits



(4)

Instruments Defining the Rights of Security Holders, Including Indentures



(a)

Fourth Supplemental Indenture, dated March 7, 2002, between Tenet and The Bank of New York, as Trustee, relating to 6¹/2% Senior Notes due 2012 (Incorporated by reference to Registrant's Current Report on Form 8-K, dated March 7, 2002)



(b)

First Supplemental Indenture, dated March 18, 2002, between Tenet and The Bank of New York, as Trustee, relating to 8¹/8% Senior Subordinated Notes due 2008




(10)

Material Contracts



(a)

$500,000,000 364-Day Credit Agreement, dated as of March 1, 2001, as amended by Amendment No 1, dated as of October 10, 2001 and amended and restated as of February 28, 2002, among the Company, as Borrower, the Lenders, Managing Agents and Co-Agents party thereto, The Bank of New York, The Bank of Nova Scotia, Salomon Smith Barney Inc., as Documentation Agents, Bank of America, N.A., as Syndication Agent and Morgan Guaranty Trust Company of New York as Administrative Agent




(b)

Reports on Form 8-K



(1)

Current Report on Form 8-K, filed with the Securities and Exchange Commission on March 7, 2002

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SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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