Other Operating Results

    Depreciation and amortization expense increased $3 million to $108 million in 1999 and increased $24 million to $105 million in 1998 as compared to $81 million in 1997. The increase during 1998 as compared to 1997 was due primarily to the four acute care hospitals acquired/opened during the first four months of 1998 (three in Puerto Rico and one in Las Vegas) and a full year of depreciation expense on two acute care facilities opened during the third and fourth quarters of 1997.

    Interest expense remained unchanged at $27 million in 1999 and 1998. Interest expense increased $8 million to $27 million in 1998 as compared to $19 million in 1997 due primarily to increased borrowings used to finance the 1998 purchase of the three acute care hospitals located in Puerto Rico.

    During the fourth quarter of 1999, the Company decided to close/sell one of its specialized women’s health centers and as a result, the Company recorded a $5.3 million nonrecurring charge to reduce the carrying value of the facility to its estimated realizable value of approxi-mately $9 million, based on an independent appraisal. The Company is involved in litigation with respect to this facility and may incur additional charges in the event it is unable to close or sell the facility for a signifi-cant period of time or suffers an unfavorable outcome from this litigation.

    The effective tax rate was 36.7% in 1999, 35.3% in 1998 and 36.5% in 1997. The increase in the effective tax rate during 1999 as compared to 1998 was due to a reduction in the tax benefits related to the financing of employee benefit programs. The reduction in the effective tax rate during 1998 as compared to 1997 was due to a reduction in the effective state income tax rate and benefits related to wage tax credits.

    The Company did not experience any significant Year 2000 computer related issues as a result of the turn of the century.