HEALTHSOUTH SHOWS PITFALLS OF
IGNORING CEO SHAREHOLDER LETTERS

New York, NY March 25, 2003 - Astute readers of HealthSouth's 2001 CEO shareholder letter would have detected potential financial problems according to L.J. Rittenhouse, President of New York-based andBEYOND Communications Inc., which conducts an annual survey of Fortune 500 CEO shareholder letters. The HealthSouth letter fails three simple tests of financial reporting integrity:

1. Fails to distinguish between GAAP and Pro-forma Earnings: The 14 percent earnings per share increase touted in CEO Richard M. Scrushy's letter is not supported by the annual report's GAAP income statement, which shows a 27 percent decline in earnings for stockholders.

2. Fails to demonstrate capital stewardship: The effort reported in the letter to strengthen HealthSouth's balance sheet ratios by adding notes "that better diversified our debt maturities" is more likely to weaken the balance sheet without adding more equity.

3. Boasts of meeting Wall Street's expectations: HealthSouth celebrated their record of having "the second-longest streak of meeting or exceeding analyst's expectations" among Fortune 500 companies, but failed to provide specific, credible evidence of how they did this.

The Rittenhouse Rankings show that 35 percent of CEOs in the survey excluded earnings numbers in their 2001 letters. "It's shameful not to discuss what happened to earnings," remarked Rittenhouse, the author of Do Business with People You Can Tru$t. "It's like saying you graduated without producing a diploma. Investors deserve better." Additionally, 22 percent of the letters reported pro-forma numbers without explaining how these differed from the GAAP financial statements. Less than half the companies reported earnings numbers in the letter that could be found in the financial statements.

"Some companies in our 2001 survey, such as General Motors and Merrill Lynch, did not boast of meeting analyst expectations, but failed the other two tests," said Rittenhouse. "In 2002, Merrill Lynch passed the GAAP earnings and analyst expectation tests, but again offered no detailed evidence of capital stewardship. GM's 2002 annual report has not yet been published."

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