- 26 -
each range of values as a single estimate of the fair market
value of the Securities, which in the aggregate totaled
$299,500,000.
On the Form 10-Q filed with the SEC for the quarter ended
September 30, 1987, petitioners showed an aggregate value for the
Securities of $300 million. During January 1988, the SEC
questioned whether HCA should have recognized any gain from the
sale of the Subsidiaries on that Form 10-Q inasmuch as it
appeared to the SEC that petitioners continued to be
substantially at risk for the operations of the Subsidiaries
because of the Guarantee Agreement and the Make Well Agreement
and because of the Securities held by petitioners. Accordingly,
petitioners agreed during February 1988 to defer for financial
reporting purposes the gain on the sale of the Subsidiaries, and
they restated the results of the third quarter 1987 to reflect
that deferral.
J.C. Bradford Valuation
During October 1987, HealthTrust retained the investment
banking firm of J.C. Bradford & Co. (J.C. Bradford) to value the
Securities for accounting and reporting purposes (J.C. Bradford
Valuation). J.C. Bradford concluded that as of September 17,
1987, the fair market value of the class A preferred stock was
$212 million, the fair market value of the class B preferred
stock was $114 million, and the fair market value of the Common
Page: Previous 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 NextLast modified: May 25, 2011