Delaware
(State or other jurisdiction of incorporation or organization) |
8062
(Primary Standard Industrial Classification Code Number) |
27-3865930
(I.R.S. Employer Identification Number) |
Joseph H. Kaufman, Esq. | J. Page Davidson, Esq. | James J. Clark, Esq. | ||
Simpson Thacher & Bartlett LLP | Ryan D. Thomas, Esq. | Jonathan A. Schaffzin, Esq. | ||
425 Lexington Avenue | Bass, Berry & Sims PLC | William J. Miller, Esq. | ||
New York, New York 10017-3954 | 150 Third Avenue South, Suite 2800 | Cahill Gordon & Reindel llp | ||
(212) 455-2000 | Nashville, Tennessee 37201-2017 | Eighty Pine Street | ||
(615) 742-6200 | New York, New York 10005-1702 | |||
(212) 701-3000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
Proposed Maximum
|
Proposed Maximum
|
|||||||||||||||||||
Title of Each Class of
|
Amount to
|
Aggregate Offering
|
Aggregate Offering
|
Amount of
|
||||||||||||||||
Securities to be Registered | be Registered(1) | Price per Share | Price(1)(2) | Registration Fee(3) | ||||||||||||||||
Common Stock, par value $0.01 per share
|
142,600,000 shares | $ | 30.00 | $ | 4,278,000,000 | $ | 327,980 | |||||||||||||
(1) | Includes shares to be sold upon exercise of the underwriters option. See Underwriting. | |
(2) | Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. |
(3) | A filing fee of $327,980 has already been paid with respect to unissued securities under HCA Inc.s (the predecessor to HCA Holdings, Inc.) Registration Statement on Form S-1 (File No. 333-166610) filed on May 7, 2010. Pursuant to 457(p) under the Securities Act of 1933, as amended, all of these unused filing fees are being used to offset against the registration fee due for this offering. The filing fee has been applied in connection with this Registration Statement based on the fee rate in effect on December 22, 2010 at the time of filing the initial registration statement. |
The
information in this preliminary prospectus is not complete and
may be changed. We and the selling stockholders may not sell
these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This
preliminary prospectus is not an offer to sell these securities,
and it is not soliciting an offer to buy these securities in any
jurisdiction where the offer or sale is not permitted.
|
Per Share | Total | |||||||
Initial price to public
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to HCA Holdings, Inc.
|
$ | $ | ||||||
Proceeds, before expenses, to the selling stockholders
|
$ | $ |
BofA Merrill Lynch
|
Citi | J.P. Morgan |
Barclays Capital |
Credit Suisse |
Deutsche Bank Securities |
Goldman, Sachs & Co. |
Morgan Stanley |
Wells Fargo Securities |
Credit Agricole CIB | Mizuho Securities USA Inc. | RBC Capital Markets | ||
RBS | SMBC Nikko | SunTrust Robinson Humphrey |
Avondale Partners | Baird | Cowen and Company | CRT Capital Group LLC |
Lazard Capital Markets | Leerink Swann | Morgan Keegan | Oppenheimer & Co. |
Raymond James | Susquehanna Financial Group, LLLP |
1 | ||||||||
13 | ||||||||
29 | ||||||||
31 | ||||||||
32 | ||||||||
33 | ||||||||
35 | ||||||||
36 | ||||||||
38 | ||||||||
57 | ||||||||
81 | ||||||||
97 | ||||||||
110 | ||||||||
141 | ||||||||
144 | ||||||||
149 | ||||||||
159 | ||||||||
165 | ||||||||
167 | ||||||||
170 | ||||||||
178 | ||||||||
178 | ||||||||
179 | ||||||||
F-1 | ||||||||
EX-1.1 | ||||||||
EX-3.1 | ||||||||
EX-3.2 | ||||||||
EX-4.1 | ||||||||
EX-5.1 | ||||||||
EX-10.11.B | ||||||||
EX-10.32.A | ||||||||
EX-10.38 | ||||||||
EX-10.39 | ||||||||
EX-23.3 |
i
10
130
142
F-27
F-35
II-4
II-5
II-6
II-7
II-8
II-9
II-10
II-11
II-12
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our substantial debt could limit our ability to pursue our
growth strategy;
our debt agreements contain restrictions that may limit our
flexibility in operating our business;
the current economic climate and general economic factors may
adversely affect our performance;
we face intense competition that could limit our growth
opportunities;
we are required to comply with extensive laws and regulations
that could impact our operations;
legal proceedings and governmental investigations could
negatively impact our business; and
uninsured and patient due accounts could adversely affect our
results of operations.
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Common stock offered by HCA
87,719,300 shares
Common stock offered by selling stockholders
36,280,700 shares
Common stock to be outstanding after this
offering
515,205,100 shares
Use of Proceeds
We estimate that the net proceeds to us from this offering,
after deducting underwriting discounts and estimated offering
expenses, will be approximately $2.4 billion, assuming the
shares are offered at $28.50 per share, which is the mid-point
of the estimated offering price range set forth on the cover
page of this prospectus.
We intend to use the anticipated net proceeds to repay certain
of our existing indebtedness, as will be determined following
completion of this offering, and for general corporate purposes.
Pending such application, we intend to use the anticipated
proceeds to temporarily reduce amounts under our asset-based
revolving credit facility and our senior secured revolving
credit facility. As a result of this application of proceeds,
this offering is subject to the conflict of interest
provisions of Rule 5121 of the Financial Industry
Regulatory Authority, Inc. Conduct Rules (FINRA Rule
5121).
We will not receive any proceeds from the sale of shares of our
common stock by the selling stockholders. The selling
stockholders include the Sponsors, the Sponsor Assignees and
certain members of management.
Underwriters option
The selling stockholders have granted the underwriters a
30-day
option to purchase up to 18,600,000 additional shares of our
common stock at the initial public offering price.
Dividend policy
We do not intend to pay dividends on our common stock for the
foreseeable future following completion of the offering.
Risk Factors
You should carefully read and consider the information set forth
under Risk Factors beginning on page 13 of this
prospectus and all other information set forth in this
prospectus before investing in our common stock.
Conflicts of Interest
Certain of the underwriters and their respective affiliates
have, from time to time, performed, and may in the future
perform, various financial advisory, investment banking,
commercial banking and other services for us for which they
received or will receive customary fees and expenses. See
Underwriting.
Merrill Lynch, Pierce, Fenner & Smith Incorporated and/or
its affiliates indirectly own in excess of 10% of our issued and
outstanding common stock, and is therefore deemed to be one of
our affiliates and have a conflict of
interest within the meaning of FINRA Rule 5121.
Additionally, because we expect that more than 5% of the net
proceeds of this offering may be received by certain
underwriters in this offering or their affiliates that are
lenders under the senior secured credit facilities, this
offering is
7
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being conducted in accordance with FINRA Rule 5121
regarding the underwriting of securities.
FINRA Rule 5121 requires that a qualified
independent underwriter as defined by the FINRA rules
participate in the preparation of the registration statement of
which this prospectus forms a part and perform its usual
standard of due diligence with respect thereto. Barclays Capital
Inc. (Barclays Capital) has agreed to serve as the
qualified independent underwriter for the offering. In addition,
in accordance with FINRA Rule 5121, if Merrill Lynch,
Pierce, Fenner & Smith Incorporated and/or its affiliates
receives more than 5% of the net proceeds from this offering, it
will not confirm sales to discretionary accounts without the
prior written consent of its customers. See
Underwriting Conflicts of Interest.
Proposed NYSE ticker symbol
HCA
assumes (1) no exercise of the underwriters option to
purchase additional shares of our common stock; and (2) an
initial public offering price of $28.50 per share, the midpoint
of the initial public offering range indicated on the cover of
this prospectus;
reflects the 4.505 to 1 stock split that we will effectuate
prior to the pricing of this offering; and
does not reflect (1) 50,525,942 shares of our common
stock issuable upon the exercise of outstanding stock options at
a weighted average exercise price of $8.58 per share as of
December 31, 2010, of which 23,834,766 were then
exercisable; and (2) 41,497,181 shares of our common
stock reserved for future grants under our stock incentive plans
effective upon the consummation of this offering.
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As of and for the
Years Ended December 31,
2010
2009
2008
(Dollars in millions, except per share amounts)
$
30,683
$
30,052
$
28,374
12,484
11,958
11,440
4,961
4,868
4,620
5,004
4,724
4,554
2,648
3,276
3,409
(282
)
(246
)
(223
)
1,421
1,425
1,416
2,097
1,987
2,021
(4
)
15
(97
)
123
43
64
28,452
28,050
27,204
2,231
2,002
1,170
658
627
268
1,573
1,375
902
366
321
229
$
1,207
$
1,054
$
673
$
2.83
$
2.48
$
1.59
$
2.76
$
2.44
$
1.56
426,424
425,567
423,699
437,347
432,227
430,982
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As of and for the
Years Ended December 31,
2010
2009
2008
(Dollars in millions, except per share amounts)
$
3,085
$
2,747
$
1,990
(1,039
)
(1,035
)
(1,467
)
(1,947
)
(1,865
)
(451
)
$
5,383
$
5,093
$
4,378
5,868
5,472
4,574
1,325
1,317
1,600
156
155
158
97
97
97
38,827
38,839
38,504
38,655
38,825
38,422
1,554,400
1,556,500
1,541,800
2,468,400
2,439,000
2,363,600
4.8
4.8
4.9
20,523
20,650
20,795
53
%
53
%
54
%
5,706,200
5,593,500
5,246,400
783,600
794,600
797,400
487,100
494,500
493,100
46
45
49
$
125,640
$
115,682
$
102,843
38
%
38
%
37
%
$
2,650
$
2,264
$
2,391
11,352
11,427
11,529
411
312
465
23,852
24,131
24,280
28,225
25,670
26,989
141
147
155
(11,926
)
(8,986
)
(10,255
)
1,132
1,008
995
(10,794
)
(7,978
)
(9,260
)
(1)
EBITDA, a measure used by management to evaluate operating
performance, is defined as net income attributable to HCA
Holdings, Inc. plus (i) provision for income taxes,
(ii) interest expense and (iii) depreciation and
amortization. EBITDA is not a recognized term under GAAP and
does not purport to be an alternative to net income as a measure
of operating performance or to cash flows from operating
activities as a measure of liquidity. Additionally, EBITDA is
not intended to be a measure of free cash flow available for
managements discretionary use, as it does not consider
certain cash requirements such as interest payments, tax
payments and other debt service requirements. Management
believes EBITDA is helpful to investors and our management in
highlighting trends because EBITDA excludes the results
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of decisions outside the control of operating management and
that can differ significantly from company to company depending
on long-term strategic decisions regarding capital structure,
the tax jurisdictions in which companies operate and capital
investments. Management compensates for the limitations of using
non-GAAP financial measures by using them to supplement GAAP
results to provide a more complete understanding of the factors
and trends affecting the business than GAAP results alone.
Because not all companies use identical calculations, our
presentation of EBITDA may not be comparable to similarly titled
measures of other companies.
Adjusted EBITDA is defined as EBITDA, adjusted to exclude net
income attributable to noncontrolling interests, losses (gains)
on sales of facilities and impairments of long-lived assets. We
believe Adjusted EBITDA is an important measure that supplements
discussions and analysis of our results of operations. We
believe it is useful to investors to provide disclosures of our
results of operations on the same basis used by management.
Management relies upon Adjusted EBITDA as the primary measure to
review and assess operating performance of its hospital
facilities and their management teams. Adjusted EBITDA target
amounts are the performance measures utilized in our annual
incentive compensation programs and are vesting conditions for a
portion of our stock option grants. Management and investors
review both the overall performance (GAAP net income
attributable to HCA Holdings, Inc.) and operating performance
(Adjusted EBITDA) of our health care facilities. Adjusted EBITDA
and the Adjusted EBITDA margin (Adjusted EBITDA divided by
revenues) are utilized by management and investors to compare
our current operating results with the corresponding periods
during the previous year and to compare our operating results
with other companies in the health care industry. It is
reasonable to expect that losses (gains) on sales of facilities
and impairment of long-lived assets will occur in future
periods, but the amounts recognized can vary significantly from
period to period, do not directly relate to the ongoing
operations of our health care facilities and complicate period
comparisons of our results of operations and operations
comparisons with other health care companies. Adjusted EBITDA is
not a measure of financial performance under accounting
principles generally accepted in the United States, and should
not be considered an alternative to net income attributable to
HCA Holdings, Inc. as a measure of operating performance or cash
flows from operating, investing and financing activities as a
measure of liquidity. Because Adjusted EBITDA is not a
measurement determined in accordance with generally accepted
accounting principles and is susceptible to varying
calculations, Adjusted EBITDA, as presented, may not be
comparable to other similarly titled measures presented by other
companies.
EBITDA and Adjusted EBITDA are calculated as follows:
Years Ended December 31,
2010
2009
2008
(Dollars in millions)
$
1,207
$
1,054
$
673
658
627
268
2,097
1,987
2,021
1,421
1,425
1,416
5,383
5,093
4,378
366
321
229
(4
)
15
(97
)
123
43
64
$
5,868
$
5,472
$
4,574
(i)
Represents the add-back of net income attributable to
noncontrolling interests.
(ii)
Represents the elimination of losses (gains) on sales of
facilities.
(iii)
Represents the add-back of impairments of long-lived assets.
(2)
The operating data set forth in this table includes only those
facilities that are consolidated for financial reporting
purposes.
11
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(3)
Excludes eight facilities in 2010, 2009 and 2008 that are not
consolidated (accounted for using the equity method) for
financial reporting purposes.
(4)
Excludes nine facilities in 2010 and eight facilities in 2009
and 2008 that are not consolidated (accounted for using the
equity method) for financial reporting purposes.
(5)
Licensed beds are those beds for which a facility has been
granted approval to operate from the applicable state licensing
agency.
(6)
Represents the average number of licensed beds, weighted based
on periods owned.
(7)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
(8)
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenues and gross outpatient revenues and then
dividing the resulting amount by gross inpatient revenues. The
equivalent admissions computation equates outpatient
revenues to the volume measure (admissions) used to measure
inpatient volume, resulting in a general measure of combined
inpatient and outpatient volume.
(9)
Represents the average number of days admitted patients stay in
our hospitals.
(10)
Represents the average number of patients in our hospital beds
each day.
(11)
Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide
measures of the utilization of inpatient rooms.
(12)
Represents the number of patients treated in our emergency rooms.
(13)
Represents the number of surgeries performed on patients who
were not admitted to our hospitals. Pain management and
endoscopy procedures are not included in outpatient surgeries.
(14)
Represents the number of surgeries performed on patients who
have been admitted to our hospitals. Pain management and
endoscopy procedures are not included in inpatient surgeries.
(15)
Revenues per day is calculated by dividing the revenues for the
period by the days in the period. Days revenues in accounts
receivable is then calculated as accounts receivable, net of the
allowance for doubtful accounts, at the end of the period
divided by revenues per day.
(16)
Gross patient revenues are based upon our standard charge
listing. Gross charges/revenues do not reflect what our hospital
facilities are paid. Gross charges/revenues are reduced by
contractual adjustments, discounts and charity care to determine
reported revenues.
(17)
Represents the percentage of patient revenues related to
patients who are not admitted to our hospitals.
(18)
We define working capital as current assets minus current
liabilities.
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how many previously uninsured individuals will obtain coverage
as a result of the Health Reform Law (while the Congressional
Budget Office (CBO) estimates 32 million, CMS
estimates almost 34 million; both agencies made a number of
assumptions to derive that figure, including how many
individuals will ignore substantial subsidies and decide to pay
the penalty rather than obtain health insurance and what
percentage of people in the future will meet the new Medicaid
income eligibility requirements);
what percentage of the newly insured patients will be covered
under the Medicaid program and what percentage will be covered
by private health insurers;
the extent to which states will enroll new Medicaid participants
in managed care programs;
the pace at which insurance coverage expands, including the pace
of different types of coverage expansion;
the change, if any, in the volume of inpatient and outpatient
hospital services that are sought by and provided to previously
uninsured individuals;
the rate paid to hospitals by private payers for newly covered
individuals, including those covered through the newly created
Exchanges and those who might be covered under the Medicaid
program under contracts with the state;
the rate paid by state governments under the Medicaid program
for newly covered individuals;
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how the value-based purchasing and other quality programs will
be implemented;
the percentage of individuals in the Exchanges who select the
high deductible plans, since health insurers offering those
kinds of products have traditionally sought to pay lower rates
to hospitals;
whether the net effect of the Health Reform Law, including the
prohibition on excluding individuals based on pre-existing
conditions, the requirement to keep medical costs at or above a
specified minimum percentage of premium revenue, other health
insurance reforms and the annual fee applied to all health
insurers, will be to put pressure on the bottom line of health
insurers, which in turn might cause them to seek to reduce
payments to hospitals with respect to both newly insured
individuals and their existing business; and
the possibility that implementation of the provisions expanding
health insurance coverage or the entire Health Reform Law will
be delayed due to court challenges or revised or eliminated as a
result of court challenges and efforts to repeal or amend the
law. More than 20 challenges to the Health Reform Law have
been filed in federal courts. Some federal district courts have
upheld the constitutionality of the Health Reform Law or
dismissed cases on procedural grounds. Others have held
unconstitutional the requirement that individuals maintain
health insurance or pay a penalty and have either found the
Health Reform Law void in its entirety or left the remainder of
the law intact. These lawsuits are subject to appeal, and
several are currently on appeal, including those that hold the
law unconstitutional.
the amount of overall revenues we will generate from Medicare
and Medicaid business when the reductions are implemented;
whether reductions required by the Health Reform Law will be
changed by statute or by judicial decision prior to becoming
effective;
the size of the Health Reform Laws annual productivity
adjustment to the market basket beginning in 2012 payment years;
the amount of the Medicare DSH reductions that will be made,
commencing in federal fiscal year 2014;
the allocation to our hospitals of the Medicaid DSH reductions,
commencing in federal fiscal year 2014;
what the losses in revenues will be, if any, from the Health
Reform Laws quality initiatives;
how successful ACOs, in which we anticipate participating, will
be at coordinating care and reducing costs or whether they will
decrease reimbursement;
the scope and nature of potential changes to Medicare
reimbursement methods, such as an emphasis on bundling payments
or coordination of care programs;
whether our revenues from upper payment limit (UPL)
programs will be adversely affected, because there may be fewer
indigent, non-Medicaid patients for whom the Company provides
services pursuant to UPL programs; and
reductions to Medicare payments CMS may impose for
excessive readmissions.
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billing and coding for services and properly handling
overpayments;
relationships with physicians and other referral sources;
necessity and adequacy of medical care;
quality of medical equipment and services;
qualifications of medical and support personnel;
confidentiality, maintenance, data breach, identity theft and
security issues associated with health-related and personal
information and medical records;
screening, stabilization and transfer of individuals who have
emergency medical conditions;
licensure and certification;
hospital rate or budget review;
preparing and filing of cost reports;
operating policies and procedures;
activities regarding competitors; and
addition of facilities and services.
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accounting and financial reporting;
billing and collecting accounts;
coding and compliance;
clinical systems;
medical records and document storage;
inventory management;
negotiating, pricing and administering managed care contracts
and supply contracts; and
monitoring quality of care and collecting data on quality
measures necessary for full Medicare payment updates.
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increasing our vulnerability to downturns or adverse changes in
general economic, industry or competitive conditions and adverse
changes in government regulations;
requiring a substantial portion of cash flow from operations to
be dedicated to the payment of principal and interest on our
indebtedness, therefore reducing our ability to use our cash
flow to fund our operations, capital expenditures and future
business opportunities;
exposing us to the risk of increased interest rates as certain
of our unhedged borrowings are at variable rates of interest;
limiting our ability to make strategic acquisitions or causing
us to make nonstrategic divestitures;
limiting our ability to obtain additional financing for working
capital, capital expenditures, product or service line
development, debt service requirements, acquisitions and general
corporate or other purposes; and
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limiting our ability to adjust to changing market conditions and
placing us at a competitive disadvantage compared to our
competitors who are less highly leveraged.
incur additional indebtedness or issue certain preferred shares;
pay dividends on, repurchase or make distributions in respect of
our capital stock or make other restricted payments;
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make certain investments;
sell or transfer assets;
create liens;
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets; and
enter into certain transactions with our affiliates.
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quarterly variations in our results of operations;
results of operations that vary from the expectations of
securities analysts and investors;
results of operations that vary from those of our competitors;
changes in expectations as to our future financial performance,
including financial estimates by securities analysts and
investors;
announcements by us, our competitors or our vendors of
significant contracts, acquisitions, joint marketing
relationships, joint ventures or capital commitments;
announcements by third parties or governmental entities of
significant claims or proceedings against us;
new laws and governmental regulations applicable to the health
care industry, including the Health Reform Law;
a default under the agreements governing our indebtedness;
future sales of our common stock by us, directors, executives
and significant stockholders; and
changes in domestic and international economic and political
conditions and regionally in our markets.
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the requirement that a majority of the Board of Directors
consist of independent directors;
the requirement that we have a nominating/corporate governance
committee that is composed entirely of independent directors
with a written charter addressing the committees purpose
and responsibilities;
the requirement that we have a compensation committee that is
composed entirely of independent directors with a written
charter addressing the committees purpose and
responsibilities; and
the requirement for an annual performance evaluation of the
nominating/corporate governance and compensation committees.
28
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the ability to recognize the benefits of the Recapitalization;
the impact of the substantial indebtedness incurred to finance
the Recapitalization and distributions to stockholders and the
ability to refinance such indebtedness on acceptable terms;
the effects related to the enactment of the Health Reform Law,
the possible enactment of additional federal or state health
care reforms and possible changes to the Health Reform Law and
other federal, state or local laws or regulations affecting the
health care industry;
increases in the amount and risk of collectibility of uninsured
accounts and deductibles and copayment amounts for insured
accounts;
the ability to achieve operating and financial targets, attain
expected levels of patient volumes and control the costs of
providing services;
possible changes in the Medicare, Medicaid and other state
programs, including Medicaid supplemental payments pursuant to
UPL programs, that may impact reimbursements to health care
providers and insurers;
the highly competitive nature of the health care business;
changes in revenue mix, including potential declines in the
population covered under managed care agreements and the ability
to enter into and renew managed care provider agreements on
acceptable terms;
the efforts of insurers, health care providers and others to
contain health care costs;
the outcome of our continuing efforts to monitor, maintain and
comply with appropriate laws, regulations, policies and
procedures;
increases in wages and the ability to attract and retain
qualified management and personnel, including affiliated
physicians, nurses and medical and technical support personnel;
the availability and terms of capital to fund the expansion of
our business and improvements to our existing facilities;
changes in accounting practices;
changes in general economic conditions nationally and regionally
in our markets;
future divestitures which may result in charges and possible
impairments of long-lived assets;
changes in business strategy or development plans;
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delays in receiving payments for services provided;
the outcome of pending and any future tax audits, appeals and
litigation associated with our tax positions;
potential adverse impact of known and unknown government
investigations, litigation and other claims that may be made
against us; and
other risk factors described in this prospectus.
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on an actual basis; and
on an as adjusted basis to give effect to (1) the issuance
of common stock in this offering and the application of proceeds
from the offering as described in Use of Proceeds as
if each had occurred on December 31, 2010, (2) the
4.505 to 1 stock split that will be effectuated prior to
the pricing of this offering, and (3) the payment of
approximately $208 million in fees under our management
agreement with the Sponsors in connection with this offering and
the termination of the agreement. See Certain
Relationships and Related Party Transactions Sponsor
Management Agreement.
December 31, 2010
Actual
As Adjusted
(In millions)
$
411
$
411
$
10,134
$
7,942
4,075
4,075
6,079
6,079
322
322
7,615
7,615
28,225
26,033
141
141
4
5
386
2,760
(428
)
(428
)
(11,888
)
(12,039
)
(11,926
)
(9,702
)
1,132
1,132
(10,794
)
(8,570
)
$
17,572
$
17,604
(1)
Consists of, (i) a $2.000 billion asset-based
revolving credit facility maturing on November 16, 2012
(the asset-based revolving credit facility)
($1.875 billion outstanding at December 31, 2010);
(ii) a $2.000 billion senior secured revolving credit
facility maturing on November 17, 2012 and to be extended
to November 17, 2015 pursuant to the amended and restated
joinder agreement entered into on November 8, 2010 (see
Description of Indebtedness) (the senior
secured revolving credit facility) ($729 million
outstanding at December 31, 2010, without giving effect to
outstanding letters of credit); (iii) a $2.750 billion
senior secured term loan A facility maturing on
November 17, 2012 ($1.618 billion outstanding at
December 31, 2010); (iv) an $8.800 billion senior
secured term loan B facility consisting of a $6.800 billion
senior secured term loan B-1 facility maturing on
November 17, 2013 and a $2.000 billion
33
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senior secured term loan B-2 facility maturing on
March 31, 2017 ($3.525 billion outstanding under term
loan B-1 facility at December 31, 2010 and
$2.000 billion outstanding under term loan B-2
facility at December 31, 2010); and (v) a
1.000 billion senior secured European term loan
facility maturing on November 17, 2013
(291 million, or $387 million-equivalent,
outstanding at December 31, 2010). We refer to the
facilities described under (ii) through (v) above,
collectively, as the cash flow credit facility and,
together with the asset-based revolving credit facility, the
senior secured credit facilities. We intend to use
the net proceeds received by us in connection with our sale of
87,719,300 shares of our common stock to temporarily reduce
obligations under our revolving credit facilities. See Use
of Proceeds.
(2)
In April 2009, we issued $1.500 billion aggregate principal
amount of first lien notes at a price of 96.755% of their face
value, resulting in $1.451 billion of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after the payment of related fees and expenses. In
August 2009, we issued $1.250 billion aggregate principal
amount of first lien notes at a price of 98.254% of their face
value, resulting in $1.228 billion of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after the payment of related fees and expenses. In
March 2010, we issued $1.400 billion aggregate principal
amount of first lien notes at a price of 99.095% of their face
value, resulting in approximately $1.387 billion of gross
proceeds, which were used to repay obligations under our cash
flow credit facility after the payment of related fees and
expenses. In each case, the discount will accrete and be
included in interest expense until the applicable first lien
notes mature. As of December 31, 2010, there was
$75 million of unamortized discount.
(3)
Consists of $4.200 billion of second lien notes (comprised
of $1.000 billion of
9
1
/
8
% notes
due 2014 and $3.200 billion of
9
1
/
4
% notes
due 2016) and $1.578 billion of
9
5
/
8
%/10
3
/
8
%
second lien toggle notes (which allow us, at our option, to pay
interest in kind during the first five years at the higher
interest rate of
10
3
/
8
%)
due 2016. In addition, in February 2009 we issued
$310 million aggregate principal amount of
9
7
/
8
%
second lien notes due 2017 at a price of 96.673% of their face
value, resulting in $300 million of gross proceeds, which
were used to repay obligations under our cash flow credit
facility after payment of related fees and expenses. The
discount on the 2009 second lien notes will accrete and be
included in interest expense until those 2009 second lien notes
mature. As of December 31, 2010, there was $9 million
of unamortized discount.
(4)
Consists of (i) an aggregate principal amount of
$246 million medium-term notes with maturities in 2014 and
2025 and a weighted average interest rate of 8.28%; (ii) an
aggregate principal amount of $886 million debentures with
maturities ranging from 2015 to 2095 and a weighted average
interest rate of 7.55%; (iii) an aggregate principal amount
of $4.967 billion senior notes with maturities ranging from
2011 to 2033 and a weighted average interest rate of 6.62%;
(iv) $1.525 billion of
7
3
/
4
%
senior notes due 2021 and (v) $9 million of
unamortized debt discounts that reduce the existing
indebtedness. For more information regarding our unsecured and
other indebtedness, see Description of Indebtedness.
(5)
Subsequent to December 31, 2010, approximately
27,000 shares were issued upon exercise of outstanding
options.
(6)
A $1.00 increase (decrease) in the assumed initial public
offering price of $28.50 per share would increase
(decrease) each of total long-term obligations and total
capitalization by $84 million, assuming the number of
shares offered by us, as set forth on the cover page of this
prospectus, remains the same and after deducting the estimated
underwriting discounts and commissions and estimated expenses
payable by us.
50,525,942 shares of our common stock issuable upon the
exercise of outstanding stock options at a weighted average
exercise price of $8.58 per share as of December 31,
2010, of which 23,834,766 were then exercisable; and
41,497,181 shares of our common stock reserved for future
grants under our stock incentive plans, effective upon the
consummation of this offering.
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$
28.50
$
(32.10
)
$
(22.66
)
$
(51.16
)
Shares of our
Average Price Per
Common Stock Purchased
Total Consideration
Share of our
Number
Percent
Amount
Percent
Common Stock
391,178,100(1
)
76
%
$
4.428 billion
56
%
$
11.32
124,000,000(1
)
24
%
3.534 billion
44
%
$
28.50
515,178,100
100
%
$
7.962 billion
100
%
$
15.45
(1)
Reflects 36,280,700 shares owned by selling shareholders
that will be purchased by new investors as a result of this
offering.
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As of and for the Years Ended December 31,
2010
2009
2008
2007
2006
(Dollars in millions, except per share amounts)
$
30,683
$
30,052
$
28,374
$
26,858
$
25,477
12,484
11,958
11,440
10,714
10,409
4,961
4,868
4,620
4,395
4,322
5,004
4,724
4,554
4,233
4,056
2,648
3,276
3,409
3,130
2,660
(282
)
(246
)
(223
)
(206
)
(197
)
(243
)
1,421
1,425
1,416
1,426
1,391
2,097
1,987
2,021
2,215
955
(4
)
15
(97
)
(471
)
(205
)
123
43
64
24
24
442
28,452
28,050
27,204
25,460
23,614
2,231
2,002
1,170
1,398
1,863
658
627
268
316
626
1,573
1,375
902
1,082
1,237
366
321
229
208
201
$
1,207
$
1,054
$
673
$
874
$
1,036
$
2.83
$
2.48
$
1.59
$
2.07
(a)
$
2.76
$
2.44
$
1.56
$
2.03
(a)
$
9.43
(a)
$
23,852
$
24,131
$
24,280
$
24,025
$
23,675
2,650
2,264
2,391
2,356
2,502
28,225
25,670
26,989
27,308
28,408
141
147
155
164
125
1,132
1,008
995
938
907
(10,794
)
(7,978
)
(9,260
)
(9,600
)
(10,467
)
$
3,085
$
2,747
$
1,990
$
1,564
$
1,988
(1,039
)
(1,035
)
(1,467
)
(479
)
(1,307
)
(1,325
)
(1,317
)
(1,600
)
(1,444
)
(1,865
)
(1,947
)
(1,865
)
(451
)
(1,326
)
(383
)
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As of and for the Years Ended December 31,
2010
2009
2008
2007
2006
(Dollars in millions, except per share amounts)
156
155
158
161
166
97
97
97
99
98
38,827
38,839
38,504
38,405
39,354
38,655
38,825
38,422
39,065
40,653
1,554,400
1,556,500
1,541,800
1,552,700
1,610,100
2,468,400
2,439,000
2,363,600
2,352,400
2,416,700
4.8
4.8
4.9
4.9
4.9
20,523
20,650
20,795
21,049
21,688
53
%
53
%
54
%
54
%
53
%
5,706,200
5,593,500
5,246,400
5,116,100
5,213,500
783,600
794,600
797,400
804,900
820,900
487,100
494,500
493,100
516,500
533,100
46
45
49
53
53
$
125,640
$
115,682
$
102,843
$
92,429
$
84,913
38
%
38
%
37
%
37
%
36
%
(a)
Due to our November 2006 Merger and
Recapitalization, our capital structure and share-based
compensation plans for periods before and after the
Recapitalization are not comparable; therefore, we are
presenting earnings and dividends declared per share information
only for periods subsequent to the Recapitalization.
(b)
Excludes eight facilities in 2010,
2009, 2008 and 2007 and seven facilities in 2006 that are not
consolidated (accounted for using the equity method) for
financial reporting purposes.
(c)
Excludes nine facilities in 2010,
2007 and 2006 and eight facilities in 2009 and 2008 that are not
consolidated (accounted for using the equity method) for
financial reporting purposes.
(d)
Licensed beds are those beds for
which a facility has been granted approval to operate from the
applicable state licensing agency.
(e)
Represents the average number of
licensed beds, weighted based on periods owned.
(f)
Represents the total number of
patients admitted to our hospitals and is used by management and
certain investors as a general measure of inpatient volume.
(g)
Equivalent admissions are used by
management and certain investors as a general measure of
combined inpatient and outpatient volume. Equivalent admissions
are computed by multiplying admissions (inpatient volume) by the
sum of gross inpatient revenue and gross outpatient revenue and
then dividing the resulting amount by gross inpatient revenue.
The equivalent admissions computation equates
outpatient revenue to the volume measure (admissions) used to
measure inpatient volume, resulting in a general measure of
combined inpatient and outpatient volume.
(h)
Represents the average number of
days admitted patients stay in our hospitals.
(i)
Represents the average number of
patients in our hospital beds each day.
(j)
Represents the percentage of
hospital licensed beds occupied by patients. Both average daily
census and occupancy rate provide measures of the utilization of
inpatient rooms.
(k)
Represents the number of patients
treated in our emergency rooms.
(l)
Represents the number of surgeries
performed on patients who were not admitted to our hospitals.
Pain management and endoscopy procedures are not included in
outpatient surgeries.
(m)
Represents the number of surgeries
performed on patients who have been admitted to our hospitals.
Pain management and endoscopy procedures are not included in
inpatient surgeries.
(n)
Revenues per day is calculated by
dividing the revenues for the period by the days in the period.
Days revenues in accounts receivable is then calculated as
accounts receivable, net of the allowance for doubtful accounts,
at the end of the period divided by revenues per day.
(o)
Gross patient revenues are based
upon our standard charge listing. Gross charges/revenues
typically do not reflect what our hospital facilities are paid.
Gross charges/revenues are reduced by contractual adjustments,
discounts and charity care to determine reported revenues.
(p)
Represents the percentage of
patient revenues related to patients who are not admitted to our
hospitals.
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
38
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39
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40
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2010
2009
2008
$
2,648
$
3,276
$
3,409
4,641
2,935
1,853
2,337
2,151
1,747
$
9,626
$
8,362
$
7,009
% of Accounts Receivable
Under 91 Days
91180 Days
Over 180 Days
14
%
1
%
1
%
21
4
4
17
8
30
52
%
13
%
35
%
12
%
1
%
1
%
18
4
4
13
8
39
43
%
13
%
44
%
41
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2010
2009
2008
$
1,269
$
1,330
$
1,469
272
258
239
(50
)
(47
)
(64
)
222
211
175
7
4
7
236
268
307
243
272
314
$
1,248
$
1,269
$
1,330
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Years Ended December 31,
2010
2009
2008
34
%
34
%
35
%
10
10
9
9
9
8
8
7
7
32
34
35
7
6
6
100
%
100
%
100
%
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Years Ended December 31,
2010
2009
2008
31
%
31
%
31
%
9
8
8
9
8
7
4
4
4
44
44
44
3
5
6
100
%
100
%
100
%
(a)
Increases in discounts to uninsured revenues have resulted in
declines in the percentage of our inpatient revenues related to
the uninsured, as the percentage of uninsured admissions
compared to total admissions has increased slightly.
45
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2010
2009
2008
Amount
Ratio
Amount
Ratio
Amount
Ratio
$
30,683
100.0
$
30,052
100.0
$
28,374
100.0
12,484
40.7
11,958
39.8
11,440
40.3
4,961
16.2
4,868
16.2
4,620
16.3
5,004
16.3
4,724
15.7
4,554
16.1
2,648
8.6
3,276
10.9
3,409
12.0
(282
)
(0.9
)
(246
)
(0.8
)
(223
)
(0.8
)
1,421
4.6
1,425
4.8
1,416
5.0
2,097
6.8
1,987
6.6
2,021
7.1
(4
)
15
(97
)
(0.3
)
123
0.4
43
0.1
64
0.2
28,452
92.7
28,050
93.3
27,204
95.9
2,231
7.3
2,002
6.7
1,170
4.1
658
2.2
627
2.1
268
0.9
1,573
5.1
1,375
4.6
902
3.2
366
1.2
321
1.1
229
0.8
$
1,207
3.9
$
1,054
3.5
$
673
2.4
2.1
%
5.9
%
5.6
%
11.5
71.1
(16.3
)
14.5
56.7
(23.0
)
(0.1
)
1.0
(0.7
)
1.2
3.2
0.5
0.9
2.6
5.2
2.1
6.1
7.0
0.1
1.2
0.9
1.4
3.4
1.9
0.6
2.6
5.1
(a)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
(b)
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing
the resulting amount by gross inpatient revenue. The equivalent
admissions computation equates outpatient revenue to
the volume measure (admissions) used to measure inpatient
volume, resulting in a general measure of combined inpatient and
outpatient volume.
(c)
Same facility information excludes the operations of hospitals
and their related facilities that were either acquired, divested
or removed from service during the current and prior year.
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Table of Contents
Operating Measures on a Cash Revenues Basis
(Dollars in millions)
2010
2009
2008
Non-
Non-
Non-
GAAP %
GAAP %
GAAP %
GAAP %
GAAP %
GAAP %
of Cash
of
of Cash
of
of Cash
of
Revenues
Revenues
Revenues
Revenues
Revenues
Revenues
Amount
Ratios(b)
Ratios(b)
Amount
Ratios(b)
Ratios(b)
Amount
Ratios(b)
Ratios(b)
$
30,683
100.0
%
$
30,052
100.0
%
$
28,374
100.0
%
2,648
3,276
3,409
28,035
100.0
%
26,776
100.0
%
24,965
100.0
%
12,484
44.5
40.7
11,958
44.7
39.8
11,440
45.8
40.3
4,961
17.7
16.2
4,868
18.2
16.2
4,620
18.5
16.3
5,004
17.9
16.3
4,724
17.6
15.7
4,554
18.3
16.1
2.1
%
5.9
%
5.6
%
4.7
7.2
5.2
0.9
2.6
5.2
3.5
3.9
4.7
(a)
Cash revenues is defined as
reported revenues less the provision for doubtful accounts. We
use cash revenues as an analytical indicator for purposes of
assessing the effect of uninsured patient volumes, adjusted for
the effect of both the revenue deductions related to uninsured
accounts (charity care and uninsured discounts) and the
provision for doubtful accounts (which relates primarily to
uninsured accounts), on our revenues and certain operating
expenses, as a percentage of cash revenues. Variations in the
revenue deductions related to uninsured accounts generally have
the inverse effect on the provision for doubtful accounts.
During 2010, uninsured discounts increased $1.706 billion
and the provision for doubtful accounts declined
$628 million, compared to 2009. During 2009, uninsured
discounts increased $1.082 billion and the provision for
doubtful accounts declined $133 million, compared to 2008.
Cash revenues is commonly used as an analytical indicator within
the health care industry. Cash revenues should not be considered
as a measure of financial performance under generally accepted
accounting principles. Because cash revenues is not a
measurement determined in accordance with generally accepted
accounting principles and is thus susceptible to varying
calculations, cash revenues, as presented, may not be comparable
to other similarly titled measures of other health care
companies.
(b)
Salaries and benefits, supplies and
other operating expenses, as a percentage of cash revenues (a
non-GAAP financial measure), present the impact on these ratios
due to the adjustment of deducting the provision for doubtful
accounts from reported revenues and results in these ratios
being non-GAAP financial measures. We believe these non-GAAP
financial measures are useful to investors to provide
disclosures of our results of operations on the same basis as
that used by management. Management uses this information to
compare certain operating expense categories as a percentage of
cash revenues. Management finds this information useful to
evaluate certain expense category trends without the influence
of whether adjustments related to revenues for uninsured
accounts are recorded as revenue adjustments (charity care and
uninsured discounts) or operating expenses (provision for
doubtful accounts), and thus the expense category trends are
generally analyzed as a percentage of cash revenues. These
non-GAAP financial measures should not be considered
alternatives to GAAP financial measures. We believe this
supplemental information provides management and the users of
our financial statements with useful information for
period-to-period
comparisons. Investors are encouraged to use GAAP measures when
evaluating our overall financial performance.
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Payments Due by Period
Total
Current
2-3 Years
4-5 Years
After 5 Years
$
29,803
$
1,845
$
4,824
$
5,053
$
18,081
12,013
848
7,828
1,147
2,190
1,876
269
466
293
848
225
37
44
36
108
$
43,917
$
2,999
$
13,162
$
6,529
$
21,227
Other Commercial Commitments Not Recorded on the
Commitment Expiration by Period
Total
Current
2-3 Years
4-5 Years
After 5 Years
$
59
$
52
$
6
$
1
$
82
9
41
32
33
26
7
2
2
$
176
$
87
$
54
$
33
$
2
(a)
We have not included obligations to pay estimated professional
liability claims ($1.248 billion at December 31, 2010,
including net reserves of $452 million related to the
wholly-owned insurance subsidiary) in this table. The
estimated professional liability claims, which occurred prior to
2007, are expected to be funded by the designated investment
securities that are restricted for this purpose
($742 million at December 31, 2010). We also have not
included obligations related to unrecognized tax benefits of
$413 million at December 31, 2010, as we cannot
reasonably estimate the timing or amounts of cash payments, if
any, at this time.
(b)
Estimates of interest payments assume that interest rates,
borrowing spreads and foreign currency exchange rates at
December 31, 2010, remain constant during the period
presented.
(c)
Amounts relate to future operating lease obligations, purchase
obligations and other obligations and are not recorded in our
consolidated balance sheet. Amounts also include physician
commitments that are recorded in our consolidated balance sheet.
(d)
Amounts relate primarily to instances in which we have agreed to
indemnify various commercial insurers who have provided surety
bonds to cover self-insured workers compensation claims,
utility deposits and damages for malpractice cases which were
awarded to plaintiffs by the courts. These cases are currently
under appeal and the bonds will not be released by the courts
until the cases are closed.
(e)
Amounts relate primarily to various insurance programs and
employee benefit plan obligations for which we have letters of
credit outstanding.
(f)
In consideration for physicians relocating to the communities in
which our hospitals are located and agreeing to engage in
private practice for the benefit of the respective communities,
we make advances to physicians, normally over a period of one
year, to assist in establishing the physicians practices.
The actual amount of these commitments to be advanced often
depends upon the financial results of the physicians
private practices during the recruitment agreement payment
period. The physician commitments reflected were based on our
maximum exposure on effective agreements at December 31,
2010.
(g)
We have entered into guarantee agreements related to certain
leases.
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Operations
: We plan to focus on our core
operations: the provision of high quality, cost-effective health
care in large, high growth urban communities, primarily in the
southern and western regions of the United States. Our specific
policies designed to maintain this focus include:
using investments in new and expanded services to drive use of
our facilities;
seeking rate increases from managed care payers commensurate
with increases in our underlying costs to provide high quality
services;
managing operating expenses by, among other methods, leveraging
our scale;
seeking cost savings by reducing variations in our patient care
and support processes and reducing our discretionary operating
expenses; and
considering divesting non-core assets, where appropriate.
Leverage
: We expect to have significant
indebtedness for the foreseeable future. However, we expect to:
manage our floating interest rate exposure through our
$7.1 billion aggregate notional amount of pay-fixed rate
swap agreements related to our senior secured credit facilities
debt at December 31, 2010; and
endeavor to improve our credit quality over time.
Capital Expenditures
: We plan to maintain a
disciplined capital expenditure approach by:
targeting new investments with potentially high returns;
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Table of Contents
deploying capital strategically to improve our competitive
position and market share and to enhance our operations; and
managing discretionary capital expenditures based on the
strength of our cash flows.
Volume Measures
:
admissions, which is the total number of patients admitted to
our hospitals and which we use as a measure of inpatient volume;
equivalent admissions, which is a measure of patient volume that
takes into account both inpatient and outpatient volume;
the payer mix of our admissions, i.e., the percentage of our
admissions related to Medicare, Medicaid, managed Medicare,
managed Medicaid, managed care and other insurers, and uninsured
patients;
emergency room visits;
inpatient and outpatient surgeries; and
the average daily census of patients in our hospital beds.
Pricing Measures
:
revenue per equivalent admission; and
revenue, minus our provision for doubtful accounts, per
equivalent admission.
Expense Measures
:
salaries and benefits per equivalent admission;
supply costs per equivalent admission;
other operating expenses (including contract services,
professional fees, repairs and maintenance, rents and leases,
utilities, insurance and nonincome taxes) per equivalent
admission; and
operating expenses, minus our provision for doubtful accounts,
per equivalent admission.
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Western Group
. The Western Group was comprised
of the markets in Alaska, California, Colorado, Idaho, Kansas
(south central portion), Nevada, Oklahoma, Texas and Utah. As of
December 31, 2010, there were 56 consolidating
hospitals within the Western Group. The Western Group includes
seven of our non-consolidating hospitals, with respect to which
major strategic and operating decisions are shared equally with
non-HCA partners. For the year ended December 31, 2010, the
Western Group generated revenues of $13.467 billion.
Central Group
. The Central Group was comprised
of the markets in Indiana, Georgia (northern portion), Kansas
(eastern portion), Kentucky, Louisiana, Mississippi, Missouri,
New Hampshire, Tennessee and Virginia. As of December 31,
2010, there were 46 consolidating hospitals within the
Central Group. The Central Group includes one of our
non-consolidating hospitals, with respect to which major
strategic and operating decisions are shared equally with
non-HCA partners. For the year ended December 31, 2010, the
Central Group generated revenues of $7.222 billion.
Eastern Group
. The Eastern Group was comprised
of the markets in Florida, Georgia (southern portion) and South
Carolina. As of December 31, 2010, there were 48
consolidating hospitals within the Eastern Group. For the year
ended December 31, 2010, the Eastern Group generated
revenues of $9.006 billion.
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Year Ended
December 31,
2010
2009
2008
24
%
23
%
23
%
7
7
6
6
6
5
4
4
3
53
52
53
6
8
10
100
%
100
%
100
%
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Years Ended December 31,
2010
2009
2008
2007
2006
156
155
158
161
166
97
97
97
99
98
38,827
38,839
38,504
38,405
39,354
38,655
38,825
38,422
39,065
40,653
1,554,400
1,556,500
1,541,800
1,552,700
1,610,100
2,468,400
2,439,000
2,363,600
2,352,400
2,416,700
4.8
4.8
4.9
4.9
4.9
20,523
20,650
20,795
21,049
21,688
53
%
53
%
54
%
54
%
53
%
5,706,200
5,593,500
5,246,400
5,116,100
5,213,500
783,600
794,600
797,400
804,900
820,900
487,100
494,500
493,100
516,500
533,100
(a)
Excludes eight facilities in 2010, 2009, 2008 and 2007 and seven
facilities in 2006 that are not consolidated (accounted for
using the equity method) for financial reporting purposes.
(b)
Excludes nine facilities in 2010, 2007 and 2006 and eight
facilities in 2009 and 2008 that are not consolidated (accounted
for using the equity method) for financial reporting purposes.
(c)
Licensed beds are those beds for which a facility has been
granted approval to operate from the applicable state licensing
agency.
(d)
Represents the average number of licensed beds, weighted based
on periods owned.
(e)
Represents the total number of patients admitted to our
hospitals and is used by management and certain investors as a
general measure of inpatient volume.
(f)
Equivalent admissions are used by management and certain
investors as a general measure of combined inpatient and
outpatient volume. Equivalent admissions are computed by
multiplying admissions (inpatient volume) by the sum of gross
inpatient revenue and gross outpatient revenue and then dividing
the resulting amount by gross inpatient revenue. The equivalent
admissions computation equates outpatient revenue to
the volume measure (admissions) used to measure inpatient
volume, resulting in a general measure of combined inpatient and
outpatient volume.
(g)
Represents the average number of days admitted patients stay in
our hospitals.
(h)
Represents the average number of patients in our hospital beds
each day.
(i)
Represents the percentage of hospital licensed beds occupied by
patients. Both average daily census and occupancy rate provide
measures of the utilization of inpatient rooms.
(j)
Represents the number of patients treated in our emergency rooms.
(k)
Represents the number of surgeries performed on patients who
were not admitted to our hospitals. Pain management and
endoscopy procedures are not included in outpatient surgeries.
(l)
Represents the number of surgeries performed on patients who
have been admitted to our hospitals. Pain management and
endoscopy procedures are not included in inpatient surgeries.
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Hospitals
Beds
1
250
5
1,637
7
2,259
38
9,808
11
1,946
2
481
1
278
4
1,286
2
384
6
1,264
1
130
6
1,055
3
1,074
2
295
2
793
3
740
12
2,345
36
10,410
6
968
10
3,089
6
704
164
41,196
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how many previously uninsured individuals will obtain coverage
as a result of the Health Reform Law (while the CBO estimates
32 million, CMS estimates almost 34 million; both
agencies made a number of assumptions to derive that figure,
including how many individuals will ignore substantial subsidies
and decide to pay the penalty rather than obtain health
insurance and what percentage of people in the future will meet
the new Medicaid income eligibility requirements);
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what percentage of the newly insured patients will be covered
under the Medicaid program and what percentage will be covered
by private health insurers;
the extent to which states will enroll new Medicaid participants
in managed care programs;
the pace at which insurance coverage expands, including the pace
of different types of coverage expansion;
the change, if any, in the volume of inpatient and outpatient
hospital services that are sought by and provided to previously
uninsured individuals;
the rate paid to hospitals by private payers for newly covered
individuals, including those covered through the newly created
Exchanges and those who might be covered under the Medicaid
program under contracts with the state;
the rate paid by state governments under the Medicaid program
for newly covered individuals;
how the value-based purchasing and other quality programs will
be implemented;
the percentage of individuals in the Exchanges who select the
high deductible plans, since health insurers offering those
kinds of products have traditionally sought to pay lower rates
to hospitals;
whether the net effect of the Health Reform Law, including the
prohibition on excluding individuals based on pre-existing
conditions, the requirement to keep medical costs at or above a
specified minimum percentage of premium revenue, other health
insurance reforms and the annual fee applied to all health
insurers, will be to put pressure on the bottom line of health
insurers, which in turn might cause them to seek to reduce
payments to hospitals with respect to both newly insured
individuals and their existing business; and
the possibility that implementation of the provisions expanding
health insurance coverage or the entire Health Reform Law will
be delayed due to court challenges or revised or eliminated as a
result of court challenges and efforts to repeal or amend the
law. More than 20 challenges to the Health Reform Law have
been filed in federal courts. Some federal district courts have
upheld the constitutionality of the Health Reform Law or
dismissed cases on procedural grounds. Others have held
unconstitutional the requirement that individuals maintain
health insurance or pay a penalty and have either found the
entire Health Reform Law void in its entirety or left the
remainder of the Health Reform Law intact. These lawsuits are
subject to appeal, and several are currently on appeal,
including those that hold the law unconstitutional.
the amount of overall revenues the Company will generate from
Medicare and Medicaid business when the reductions are
implemented;
whether reductions required by the Health Reform Law will be
changed by statute or by judicial decision prior to becoming
effective;
the size of the Health Reform Laws annual productivity
adjustment to the market basket beginning in 2012 payment years;
the amount of the Medicare DSH reductions that will be made,
commencing in federal fiscal year 2014;
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the allocation to our hospitals of the Medicaid DSH reductions,
commencing in federal fiscal year 2014;
what the losses in revenues will be, if any, from the Health
Reform Laws quality initiatives;
how successful ACOs, in which we anticipate participating, will
be at coordinating care and reducing costs or whether they will
decrease reimbursement;
the scope and nature of potential changes to Medicare
reimbursement methods, such as an emphasis on bundling payments
or coordination of care programs;
whether the Companys revenues from UPL programs will be
adversely affected, because there may be fewer indigent,
non-Medicaid patients for whom the Company provides services
pursuant to UPL programs; and
reductions to Medicare payments CMS may impose for
excessive readmissions.
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Director
58
2002
Chairman of the Board and Chief Executive Officer
54
2009
President, Chief Financial Officer and Director
56
2006
Director
45
2006
Director
51
2009
Director
60
2009
Director
42
2006
Director
41
2009
Director
38
2006
Director
59
2006
Director
39
2006
Director
56
2006
Director
57
2006
Director
69
Director Nominee
66
Director Nominee
(1)
As of February 11, 2011.
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63
Senior Vice President Finance and Treasurer
64
Senior Vice President
52
Senior Vice President Communications
49
Group President
57
Group President
50
President Operations
50
Group President Service Line and Operations
Integration
49
President Clinical and Physician Services Group and
Chief Medical Officer
56
Group President
54
Senior Vice President and Chief Development Officer
56
Senior Vice President Internal Audit Services
55
Senior Vice President Human Resources
54
Senior Vice President and Controller
50
Senior Vice President Strategic Pricing and Analytics
60
President NewCo Business Solutions
57
Senior Vice President, General Counsel and Chief Labor Relations
Officer
55
Senior Vice President and Chief Information Officer
61
Senior Vice President and Chief Ethics and Compliance Officer
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the requirement that a majority of the Board of Directors
consist of independent directors;
the requirement that we have a nominating and corporate
governance committee that is composed entirely of independent
directors with a written charter addressing the committees
purpose and responsibilities;
the requirement that we have a compensation committee that is
composed entirely of independent directors with a written
charter addressing the committees purpose and
responsibilities; and
the requirement for an annual performance evaluation of the
nominating and corporate governance and compensation committees.
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Patient
Nominating and
Safety and
Audit and
Corporate
Quality of
Compliance
Compensation
Governance
Care
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
*
Indicates management director.
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selecting the independent auditors,
pre-approving all audit engagement fees and terms, as well as
audit and permitted non-audit services to be provided by the
independent auditors,
at least annually, obtaining and reviewing a report of the
independent auditors describing the audit firms internal
quality-control procedures and any material issues raised by its
most recent review of internal quality controls,
evaluating the qualifications, performance and independence of
the independent auditors,
reviewing with the independent auditor any difficulties the
independent auditor encountered during the course of the audit
work, including any restrictions in the scope of activities or
access to requested information or any significant disagreements
with management and managements responses to such matters,
setting policies regarding the hiring of current and former
employees of the independent auditors,
reviewing and discussing the annual audited and quarterly
unaudited financial statements with management and the
independent auditor,
discussing earnings press releases and the financial information
and earnings guidance provided to analysts and rating agencies,
discussing policies governing the process by which risk
assessment and risk management is to be undertaken,
reviewing disclosures made by the CEO and CFO regarding any
significant deficiencies or material weaknesses in our internal
control over financial reporting,
reviewing with the independent auditor the internal audit
responsibilities, budget and staffing, as well as procedures for
implementing recommendations made by the independent auditor and
any significant matters contained in reports from the internal
audit department,
establishing procedures for receipt, retention and treatment of
complaints we receive regarding accounting, auditing or internal
controls and the confidential, anonymous submission of anonymous
employee concerns regarding questionable accounting and auditing
matters,
discussing with our general counsel legal or regulatory matters
that could reasonably be expected to have a material impact on
business or financial statements,
annually evaluating performance of the Audit and Compliance
Committee and periodically reviewing and reassessing the Audit
and Compliance Committee charter,
providing information to our Board that may assist the Board in
fulfilling its responsibility to oversee the integrity of the
Companys financial statements, the Companys
compliance with legal and regulatory requirements, the
independent auditors qualifications and independence and
the performance of the Companys internal audit function
and independent auditor, and
preparing the report required by the SEC to be included in our
annual report on Form 10-K or our proxy or information
statement.
executive compensation strategy and philosophy,
compensation arrangements for executive management,
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design and administration of the annual cash-based Senior
Officer Performance Excellence Program,
design and administration of our equity incentive plans,
executive benefits and perquisites (including the HCA
Restoration Plan and the Supplemental Executive Retirement
Plan), and
any other executive compensation or benefits related items
deemed noteworthy by the Compensation Committee.
review and advise on the Companys executive compensation
programs, including base salaries, short- and long-term
incentives, and other benefits, if any,
review and analyze peer proxy officer compensation, compensation
survey data, and other publicly available data,
review and analyze management prepared market pricing analysis
(i.e., review compensation surveys used, job matches, survey
weightings, and
year-over-year
change in analysis results), and
advise on current trends in compensation including design and
pay levels.
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Call the HCA Ethics Line at
1-800-455-1996
Write to the Audit and Compliance Committee at: Audit and
Compliance Committee Chairman, HCA Holdings, Inc.,
c/o General
Counsel, One Park Plaza, Nashville, TN 37203
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Executive compensation strategy and philosophy;
Compensation arrangements for executive management;
Design and administration of the annual Senior Officer
Performance Excellence Program (PEP);
Design and administration of our equity incentive plans;
Executive benefits and perquisites (including the HCA
Restoration Plan and the Supplemental Executive Retirement
Plan); and
Any other executive compensation or benefits related items
deemed appropriate by the Committee.
Richard M. Bracken,
Chairman and Chief Executive Officer;
R. Milton Johnson,
Executive Vice President and Chief
Financial Officer;
Samuel N. Hazen,
President Western Group;
Beverly B. Wallace,
President Shared Services
Group; and
W. Paul Rutledge,
President Central Group.
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Reinforces HCAs strategic initiatives;
Aligns the economic interests of our executives with those of
our stockholders; and
Encourages attraction and long-term retention of key
contributors.
Base Salary
Annual Incentives (offered through our PEP)
Long-Term Equity Incentives
Retirement Plans
Limited Perquisites and Other Personal Benefits
Severance Benefits
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Greater than $20B
$10B - $25B
Greater than $25B
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It effectively measures overall Company performance;
It can be considered an important surrogate for cash flow, a
critical metric related to paying down the Companys
significant debt obligation;
It is the key metric driving the valuation in the internal
Company model, consistent with the valuation approach used by
industry analysts; and
It is consistent with the metric used for the vesting of the
financial performance portion of our option grants.
2010 Adjusted
2010 Actual
EBITDA Target
Adjusted EBITDA
$
5.752 billion
$
5.901 billion
$
2.993 billion
$
3.086 billion
$
1.392 billion
$
1.272 billion
2010 Actual PEP
2010 Target PEP
Award
(% of Salary)
(% of Salary)
130
%
197
%
80
%
121
%
66
%
104
%
66
%
100
%
66
%
50
%
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Promote our long term financial interests and growth by
attracting and retaining management and other personnel and key
service providers with the training, experience and abilities to
enable them to make substantial contributions to the success of
our business;
Motivate management personnel by means of growth-related
incentives to achieve long range goals; and
Further the alignment of interests of participants with those of
our stockholders through opportunities for increased stock or
stock-based ownership in the Company.
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Recognize significant long-term contributions and commitments by
executives to the Company and to performance over an extended
period of time;
Induce our executives to continue in our employ through a
specified normal retirement age (initially 62 through 65,
but reduced to 60 upon the change in control at the time of the
Merger in 2006); and
Provide a competitive benefit to aid in attracting and retaining
key executive talent.
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Subject to restrictive covenants and the signing of a general
release of claims, an amount equal to two times for
Messrs. Hazen and Rutledge and Ms. Wallace and three
times in the case of Messrs. Bracken and Johnson the sum of
base salary plus the annual PEP incentive paid or payable in
respect of the fiscal year immediately preceding the fiscal year
in which termination occurs, payable over a two year period;
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Pro-rata bonus; and
Continued coverage under our group health plans during the
period over which the cash severance is paid.
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Changes in
Pension
Non-Equity
Value and
Incentive
Nonqualified
Option
Plan
Deferred
All Other
Salary
Awards
Compensation
Compensation
Compensation
Year
($)
($)(1)
($)(2)
Earnings ($)(3)
($)(4)
Total ($)
2010
$
1,324,975
$
2,614,824
$
9,250,610
$
25,010,638
$
38,201,047
2009
$
1,324,975
$
3,361,016
$
3,445,000
$
4,096,368
$
25,532
$
12,252,891
2008
$
1,060,872
$
694,370
$
1,740,620
$
31,781
$
3,527,643
2010
$
849,984
$
1,032,267
$
3,524,104
$
16,520,422
$
21,926,777
2009
$
849,984
$
2,520,714
$
1,360,000
$
2,032,089
$
17,674
$
6,780,461
2008
$
786,698
$
355,491
$
1,871,790
$
38,769
$
3,052,748
2010
$
788,672
$
816,431
$
2,637,016
$
10,759,757
$
15,001,876
2009
$
788,672
$
997,771
$
1,041,067
$
1,725,405
$
16,499
$
4,569,414
2008
$
788,672
$
350,807
$
810,462
$
15,651
$
1,965,592
2010
$
700,000
$
701,348
$
3,293,981
$
8,538,321
$
13,233,650
2009
$
700,000
$
997,771
$
924,018
$
2,047,036
$
16,500
$
4,685,325
2008
$
700,000
$
314,992
$
2,080,836
$
15,651
$
3,111,479
2010
$
693,740
$
350,667
$
2,598,032
$
7,944,136
$
11,586,575
2009
$
675,000
$
997,771
$
891,017
$
1,510,040
$
16,500
$
4,090,328
(1)
Option Awards for 2009 include the aggregate grant date fair
value of the stock option awards granted during fiscal year 2009
in accordance with ASC 718 with respect to the 2x Time
Options to purchase shares of our common stock awarded to the
named executive officers in fiscal year 2009 under the 2006 Plan.
(2)
Non-Equity Incentive Plan Compensation for 2010 reflects amounts
earned for the year ended December 31, 2010 under the 2010
PEP, which amounts will be paid in cash up to the target level
and 50% in cash and 50% through the grant of RSU awards in the
first quarter of 2011 pursuant to the terms of the 2010 PEP. For
2010, the Company achieved its target performance level, but not
did not reach its
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maximum performance level, as adjusted, with respect to the
Companys EBITDA; therefore, pursuant to the terms of the
2010 PEP, 2010 awards under the 2010 PEP will be paid out to the
named executive officers at approximately 151.8% of each such
officers respective target amount, with the exception of
Mr. Hazen, whose award will be paid out at approximately
156.9% his target amount, due to the 50% of his PEP based on the
Western Group EBITDA, which also exceeded the target performance
level but did not reach the maximum performance level, and
Mr. Rutledge, whose award will be paid out at approximately
75.9% of his target amount, due to the 50% of his PEP based on
the Central Group EBITDA, which did not reach the threshold
performance level.
Non-Equity Incentive Plan Compensation for 2009 reflects amounts
earned for the year ended December 31, 2009 under the
2008-2009
PEP, which amounts were paid in the first quarter of 2010
pursuant to the terms of the
2008-2009
PEP. For 2009, the Company exceeded its maximum performance
level, as adjusted, with respect to the Companys EBITDA
and the Central and Western Group EBITDA; therefore, pursuant to
the terms of the
2008-2009
PEP, awards under the
2008-2009
PEP were paid out to the named executive officers, at the
maximum level of 200% of their respective target amounts.
Non-Equity Incentive Plan Compensation for 2008 reflects amounts
earned for the year ended December 31, 2008 under the
2008-2009
PEP, which amounts were paid in the first quarter of 2009
pursuant to the terms of the
2008-2009
PEP. For 2008, the Company did not achieve its target
performance level, but exceeded its threshold performance level,
as adjusted, with respect to the Companys EBITDA;
therefore, pursuant to the terms of the
2008-2009
PEP, 2008 awards under the
2008-2009
PEP were paid out to the named executive officers at
approximately 68.2% of each such officers respective
target amount, with the exception of Mr. Hazen, whose award
was paid out at approximately 67.4% of his target amount, due to
the 50% of his PEP based on the Western Group EBITDA, which also
exceeded the threshold performance level but did not reach the
target performance level.
(3)
All amounts for 2010 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled 2010 Pension
Benefits. The changes in the SERP benefit value during
2010 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service plus actual investment
return and (ii) the discount rate changing from 5.00% to
4.25%, which resulted in an increase in the value. The impact of
these events on the SERP benefit values was:
Bracken
Johnson
Hazen
Wallace
Rutledge
$
6,851,260
$
2,181,373
$
1,351,824
$
2,240,652
$
1,617,037
$
2,399,350
$
1,342,731
$
1,285,192
$
1,053,329
$
980,995
All amounts for 2009 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled 2010 Pension
Benefits. The changes in the SERP benefit value during
2009 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service plus actual investment
return and (ii) the discount rate changing from 6.25% to
5.00%, which resulted in an increase in the value. The impact of
these events on the SERP benefit values was:
Bracken
Johnson
Hazen
Wallace
Rutledge
$
1,655,097
$
618,320
$
343,653
$
788,376
$
420,979
$
2,441,271
$
1,413,769
$
1,381,752
$
1,258,660
$
1,089,061
All amounts for 2008 are attributable to changes in value of the
SERP benefits. Assumptions used to calculate these figures are
provided under the table titled 2010 Pension
Benefits. The changes in the SERP benefit value during
2008 were impacted mainly by: (i) the passage of time which
reflects another year of pay and service plus actual investment
return and (ii) the discount rate changing from 6.00% to
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6.25%, which resulted in a decrease in the value. The impact of
these events on the SERP benefit values was:
Bracken
Johnson
Hazen
Wallace
$
2,142,217
$
2,100,290
$
1,037,631
$
2,301,107
$
(401,597
)
$
(228,500
)
$
(227,169
)
$
(220,271
)
(4)
2010 amounts generally consist of:
Distributions paid in 2010 on vested stock options held by the
named executive officers on the applicable distribution record
dates. Distributions of $3.88, $1.11 and $4.44, respectively,
per share of common stock subject to such outstanding vested
stock options held on the February 1, May 6 and
November 24, 2010 record dates, respectively, were paid to
the named executive officers in 2010. The total cash
distributions received on vested stock options by the named
executive officers in 2010 were:
Bracken
Johnson
Hazen
Wallace
Rutledge
$
21,752,083
$
14,193,133
$
9,264,688
$
7,228,640
$
6,630,283
Distributions that will become payable to the named executive
officers upon the vesting of the applicable unvested stock
option awards held by the named executive officers on the
November 24, 2010 record date. In accordance with the award
agreements governing the New Option awards held by the named
executive officers, the Company reduced the per share exercise
price of any unvested option outstanding as of the
November 24, 2010 record date by the per share distribution
amount ($4.44 per share) to the extent the per share exercise
price could be reduced under applicable tax rules. Pursuant to
such award agreements, to the extent the per share exercise
price could not be reduced by the full $4.44 per share
distribution, the Company will pay the named executive officers
an amount on a per share basis equal to the balance of the per
share distribution amount not permitted to be applied to reduce
the exercise price of the applicable option in respect of each
share of common stock subject to such unvested option
outstanding as of the November 24, 2010 record date upon
the vesting of such option. The total cash distributions
attributable to the November 24, 2010 record date
distribution (such amounts representing the balance of the
distribution amount by which the exercise price of such options
could not be reduced under applicable tax rules) that will
become payable upon vesting of the applicable unvested stock
options awards held by the named executive officers on
November 24, 2010 are:
Bracken
Johnson
Hazen
Wallace
Rutledge
$
3,232,926
$
2,309,235
$
1,477,896
$
1,293,161
$
1,293,161
Matching Company contributions to our 401(k) Plan as set forth
below.
Bracken
Johnson
Hazen
Wallace
Rutledge
$
16,500
$
16,500
$
16,499
$
16,500
$
16,499
Personal use of corporate aircraft. In 2010,
Messrs. Bracken, Johnson and Rutledge were allowed personal
use of Company aircraft with an estimated incremental cost of
$6,149, $1,554 and $2,339, respectively, to the Company.
Ms. Wallace and Mr. Hazen did not have any personal
travel on Company aircraft in 2010. We calculate the aggregate
incremental cost of the personal use of Company aircraft based
on a methodology that includes the average aggregate cost, on a
per nautical mile basis, of variable expenses incurred in
connection with personal plane usage, including trip-related
maintenance, landing fees, fuel, crew hotels and meals, on-board
catering, trip-related hangar and parking costs and other
variable costs. Because our aircraft are used primarily for
business travel, our incremental cost methodology does not
include fixed costs of owning and operating aircraft that do not
change based on usage. We grossed up the income attributed to
Mr. Bracken with respect to certain trips on Company
aircraft. The additional income attributed to him as a result of
gross ups was $1,891.
123
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In addition, we will pay the expenses of our executives
spouses associated with travel to
and/or
attendance at business related events at which spouse attendance
is appropriate. We paid approximately $692, $495 and $1,178 for
travel
and/or
other
expenses incurred by Messrs. Bracken, Hazen and
Rutledges spouses, respectively, for such business related
events, and additional income of $397, $179 and $676 was
attributed to Messrs. Bracken, Hazen and Rutledge,
respectively, as a result of the gross up on such amounts.
Matching Company contributions to our 401(k) Plan as set forth
below.
Bracken
Johnson
Hazen
Wallace
Rutledge
$
16,500
$
16,500
$
16,499
$
16,500
$
16,500
Personal use of corporate aircraft. In 2009,
Messrs. Bracken and Johnson were allowed personal use of
Company aircraft with an estimated incremental cost of $5,025
and $1,129, respectively, to the Company. Ms. Wallace and
Messrs. Hazen and Rutledge did not have any personal travel
on Company aircraft in 2009. We calculate the aggregate
incremental cost of the personal use of Company aircraft based
on a methodology that includes the average aggregate cost, on a
per nautical mile basis, of variable expenses incurred in
connection with personal plane usage, including trip-related
maintenance, landing fees, fuel, crew hotels and meals, on-board
catering, trip-related hangar and parking costs and other
variable costs. Because our aircraft are used primarily for
business travel, our incremental cost methodology does not
include fixed costs of owning and operating aircraft that do not
change based on usage. We grossed up the income attributed to
Mr. Bracken with respect to certain trips on Company
aircraft. The additional income attributed to him as a result of
gross ups was $594. In addition, we will pay the expenses of our
executives spouses associated with travel to
and/or
attendance at business related events at which spouse attendance
is appropriate. We paid approximately $2,477 for travel
and/or
other
expenses incurred by Mr. Brackens spouse for such
business related events, and additional income of $891 was
attributed to Mr. Bracken as a result of the gross up on
such amount.
Company contributions to our former Retirement Plan and matching
Company contributions to our 401(k) Plan as set forth below.
Bracken
Johnson
Hazen
Wallace
$
3,163
$
3,163
$
3,163
$
3,163
$
12,488
$
12,488
$
12,488
$
12,488
Personal use of corporate aircraft. In 2008,
Messrs. Bracken and Johnson were allowed personal use of
Company aircraft with an estimated incremental cost of $15,233
and $4,546, respectively, to the Company. Ms. Wallace and
Mr. Hazen did not have any personal travel on Company
aircraft in 2008. We calculate the aggregate incremental cost of
the personal use of Company aircraft based on a methodology that
includes the average aggregate cost, on a per nautical mile
basis, of variable expenses incurred in connection with personal
plane usage, including trip-related maintenance, landing fees,
fuel, crew hotels and meals, on-board catering, trip-related
hangar and parking costs and other variable costs. Because our
aircraft are used primarily for business travel, our incremental
cost methodology does not include fixed costs of owning and
operating aircraft that do not change based on usage. We grossed
up the income attributed to Mr. Bracken with respect to
certain trips on Company aircraft. The additional income
attributed to him as a result of gross ups was $599. In
addition, we will pay the expenses of our executives
spouses associated with travel to
and/or
attendance at business related events at which spouse attendance
is appropriate. We paid approximately $189 and $13,660 for
travel
and/or
other
expenses incurred by Messrs. Brackens and
Johnsons spouses, respectively, for such business related
events, and additional income of $109 and $4,912 was attributed
to Messrs. Bracken and Johnson, respectively, as a result
of the gross up on such amounts.
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All Other
Option
Estimated Possible Payouts
Estimated Possible Payouts
Awards:
Exercise or
Under Non-Equity Incentive
Under Equity Incentive
Number of
Base Price
Grant Date
Plan Awards ($)(1)
Plan Awards (#)
Securities
of Option
Fair Value
Grant
Threshold
Target
Maximum
Threshold
Target
Maximum
Underlying
Awards
of Option
Date
($)
($)
($)
(#)
(#)
(#)
Options(2)
($/sh)
Awards
N/A
$
430,625
$
1,722,500
$
3,445,000
N/A
$
170,000
$
680,000
$
1,360,000
N/A
$
130,133
$
520,534
$
1,041,067
N/A
$
115,502
$
462,009
$
924,018
N/A
$
115,500
$
462,000
$
924,000
(1)
Non-equity incentive awards granted to each of the named
executive officers pursuant to our 2010 PEP for the 2010 fiscal
year, as described in more detail under Compensation
Discussion and Analysis Annual Incentive
Compensation: PEP. The amounts shown in the
Threshold column reflect the threshold payment,
which is 25% of the amount shown in the Target
column. The amount shown in the Maximum column is
200% of the target amount. Pursuant to the terms of the 2010
PEP, the Company achieved its target performance level, as
adjusted, but not did not reach its maximum performance level,
as adjusted, with respect to the Companys EBITDA and the
Western Group EBITDA; however, the Company did not reach the
threshold performance level, as adjusted, with respect to the
Central Group EBITDA. Therefore, 2010 awards under the 2010 PEP
will be paid out to the named executive officers at
approximately 151.8% of each such officers respective
target amount, with the exception of Mr. Hazen, whose award
will be paid out at approximately 156.9% his target amount, due
to the 50% of his PEP based on the Western Group EBITDA, and
Mr. Rutledge, whose award will be paid out at approximately
75.9% of his target amount, due to the 50% of his PEP based on
the Central Group EBITDA (including the International Division).
Under the 2010 PEP for the 2010 fiscal year,
Messrs. Bracken, Johnson, Hazen and Rutledge and
Ms. Wallace will receive cash payments of $2,168,662,
$856,134, $668,482, $350,667 and $581,678, respectively, and
approximately $446,162, $176,133, $147,949, $0 and $119,670,
respectively, payable in RSU awards at a grant price to be
determined by the Board of Directors in consultation with the
CEO in accordance with the 2010 PEP and our equity award policy,
which RSU awards will vest 50% on the second anniversary of
grant date and 50% on the third anniversary of the grant date.
Such amounts are reflected in the Non-Equity Incentive
Plan Compensation column of the Summary Compensation Table.
125
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126
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127
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128
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Equity Incentive
Number of
Number of
Plan Awards:
Securities
Securities
Number of
Underlying
Underlying
Securities
Unexercised
Unexercised
Underlying
Option
Options
Options
Unexercised
Exercise
Option
Exercisable
Unexercisable
Unearned
Price
Expiration
(#)(1)(2)(3)
(#)(2)(3)
Options(#)(2)
($)(4)(5)(6)
Date
134,852
$
2.83
1/24/2012
182,407
$
2.83
1/29/2013
136,208
$
2.83
1/29/2014
48,378
$
2.83
1/27/2015
31,961
$
2.83
1/26/2016
105,011
210,032
630,078
$
5.31
1/30/2017
630,068
$
11.32
1/30/2017
284,490
$
13.21
10/6/2019
284,481
$
17.65
10/6/2019
853,445
$
22.64
10/6/2019
43,153
$
2.83
1/24/2012
41,689
$
2.83
1/29/2013
36,319
$
2.83
1/29/2014
117,188
$
2.83
7/22/2014
29,016
$
2.83
1/27/2015
19,374
$
2.83
1/26/2016
75,008
150,021
450,057
$
5.31
1/30/2017
450,048
$
11.32
1/30/2017
213,365
$
13.21
10/6/2019
213,356
$
17.65
10/6/2019
640,070
$
22.64
10/6/2019
86,306
$
2.83
1/24/2012
104,232
$
2.83
1/29/2013
75,670
$
2.83
1/29/2014
29,016
$
2.83
1/27/2015
19,374
$
2.83
1/26/2016
48,005
96,015
288,031
$
5.31
1/30/2017
288,030
$
11.32
1/30/2017
84,464
$
13.21
10/6/2019
84,450
$
17.65
10/6/2019
253,352
$
22.64
10/6/2019
62,538
$
2.83
1/29/2013
51,456
$
2.83
1/29/2014
20,726
$
2.83
1/27/2015
16,032
$
2.83
1/26/2016
42,004
84,013
252,027
$
5.31
1/30/2017
252,026
$
11.32
1/30/2017
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Table of Contents
Equity Incentive
Number of
Number of
Plan Awards:
Securities
Securities
Number of
Underlying
Underlying
Securities
Unexercised
Unexercised
Underlying
Option
Options
Options
Unexercised
Exercise
Option
Exercisable
Unexercisable
Unearned
Price
Expiration
(#)(1)(2)(3)
(#)(2)(3)
Options(#)(2)
($)(4)(5)(6)
Date
84,464
$
13.21
10/6/2019
84,450
$
17.65
10/6/2019
253,352
$
22.64
10/6/2019
37,756
$
2.83
1/24/2012
41,689
$
2.83
1/29/2013
24,214
$
2.83
1/29/2014
10,346
$
2.83
1/27/2015
24,304
$
2.83
10/1/2015
19,374
$
2.83
1/26/2016
42,004
84,013
252,027
$
5.31
1/30/2017
252,026
$
11.32
1/30/2017
84,464
$
13.21
10/6/2019
84,450
$
17.65
10/6/2019
253,352
$
22.64
10/6/2019
(1)
Reflects Rollover Options, as further described under
Narrative Disclosure to Summary Compensation Table and
2010 Grants of Plan-Based Awards Table
Options, the 60% of the named executive officers
time vested New Options, comprised of the 20% that vested as of
January 30, 2008, January 30, 2009 and
January 30, 2010, respectively, the 80% of the named
executive officers EBITDA-based performance vested New
Options, comprised of the 20% that vested as of
December 31, 2007, December 31, 2008,
December 31, 2009 and December 31, 2010, respectively
(upon the Committees determination that the Company
achieved the 2007, 2008, 2009 and 2010 EBITDA performance
targets under the option awards, as adjusted, as described in
more detail under Compensation Discussion and
Analysis Long Term Equity Incentive Awards:
Options) and the 80% of the named executive officers
vested 2x Time Options, comprised of the 40% that were vested on
the grant date and the 20% that vested on November 17, 2009
and November 17, 2010, respectively.
(2)
Reflects New Options awarded in January 2007 under the 2006 Plan
by the Compensation Committee as part of the named executive
officers long term equity incentive award. The New Options
granted in 2007 are structured so that
1/3
are time
vested options (vesting in five equal installments on the first
five anniversaries of the January 30, 2007 grant date),
1/3
are
EBITDA-based performance vested options (vesting in equal
increments of 20% at the end of fiscal years 2007, 2008, 2009,
2010 and 2011 if certain annual EBITDA performance targets are
achieved, subject to catch up vesting, such that,
options that were eligible to vest but failed to vest due to our
failure to achieve prior EBITDA targets will vest if at the end
of any subsequent year or at the end of fiscal year 2012, the
cumulative total EBITDA earned in all prior years exceeds the
cumulative EBITDA target at the end of such fiscal year) and
1/3
are
performance options that vest based on investment return to the
Sponsors (vesting with respect to 10% of the common stock
subject to such options at the end of fiscal years 2007, 2008,
2009, 2010 and 2011 if the Investor Return is at least $22.64
and with respect to an additional 10% at the end of fiscal years
2007, 2008, 2009, 2010 and 2011 if the Investor Return is at
least $28.30, subject to catch up vesting if the
relevant Investor Return is achieved at any time occurring prior
to January 30, 2017, so long as the named executive officer
remains employed by the Company). The time vested options are
reflected in the Number of Securities Underlying
Unexercised Options Unexercisable column (with the
exception of the 60% of the time vested options that were vested
as of December 31, 2010, which are reflected in the
Number of Securities Underlying Unexercised Options
Exercisable column), and the EBITDA-based
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performance vested options and investment return performance
vested options are both reflected in the Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised
Unearned Options column (with the exception of the 80% of
the EBITDA-based performance vested options that were vested as
of December 31, 2010, which are reflected in the
Number of Securities Underlying Unexercised Options
Exercisable column). The terms of these option awards are
described in more detail under Narrative Disclosure to
Summary Compensation Table and 2010 Grants of Plan-Based Awards
Table Options.
(3)
Reflects 2x Time Options awarded in October 2009 under the 2006
Plan by the Compensation Committee, pursuant to the named
executive officers employment agreement, as part of the
named executive officers long term equity incentive award.
The 2x Time Options are structured, pursuant to the named
executive officers respective employment agreements, so
that 40% were vested on the grant date, an additional 20% vested
on November 17, 2009 and November 17, 2010,
respectively, and an additional 20% will vest on
November 17, 2011. The 80% of the 2x Time Options that were
vested as of December 31, 2010 are reflected in the
Number of Securities Underlying Unexercised Options
Exercisable column, and the 20% of the 2x Time Options
that were not vested as of December 31, 2010 are reflected
in the Number of Securities Underlying Unexercised Options
Unexercisable column. The terms of these option awards are
described in more detail under Narrative Disclosure to
Summary Compensation Table and 2010 Grants of Plan-Based Awards
Table Options.
(4)
Immediately after the consummation of the Merger, all Rollover
Options (other than those with an exercise price below $2.83)
were adjusted such that they retained the same spread
value (as defined below) as immediately prior to the
Merger, but the new per share exercise price for all Rollover
Options would be $2.83. The term spread value means
the difference between (x) the aggregate fair market value
of the common stock (determined using the Merger consideration
of $11.32 per share) subject to the outstanding options held by
the participant immediately prior to the Merger that became
Rollover Options, and (y) the aggregate exercise price of
those options.
(5)
The exercise price for the New Options granted under the 2006
Plan to the named executive officers on January 30, 2007
was equal to the fair value of our common stock on the date of
the grant, as determined by our Board of Directors in
consultation with our Chief Executive Officer and other
advisors, pursuant to the terms of the 2006 Plan. Pursuant to
the New Options award agreements, in connection with the
distributions of $3.88, $1.11 and $4.44, respectively, per share
of outstanding common stock and outstanding vested stock option
held on the February 1, May 6 and November 24, 2010
record dates, respectively, the Company reduced the per share
exercise price of any unvested New Options outstanding as of the
applicable record dates by the per share distribution amount to
the extent the per share exercise price could be reduced under
applicable tax rules. With respect to the November 24, 2010
distribution and pursuant the New Option award agreements, to
the extent the per share exercise price could not be reduced by
the full $4.44 per share distribution, the Company will pay the
named executive officers an amount on a per share basis equal to
the balance of the per share distribution amount not permitted
to be applied to reduce the exercise price of the applicable
option in respect of each share of common stock subject to such
unvested option outstanding as of the November 24, 2010
record date upon the vesting of such option. The total cash
distributions attributable to the November 24, 2010 record
date distribution (such amounts representing the balance of the
distribution amount by which the exercise price of such options
could not be reduced under applicable tax rules) that will
become payable upon vesting of the applicable unvested stock
options awards held by the named executive officers on
November 24, 2010 are reflected in the All Other
Compensation column of the Summary Compensation Table.
(6)
The exercise price for the 2x Time Options granted under the
2006 Plan to the named executive officers on October 6,
2009 was $22.64, pursuant to the named executive officers
employment agreements. Pursuant to the New Options award
agreements, in connection with the distributions of $3.88, $1.11
and $4.44, respectively, per share of outstanding common stock
and outstanding vested stock option held on the February 1,
May 6 and November 24, 2010 record dates, respectively, the
Company reduced the per share exercise price of any unvested 2x
Time Options outstanding as of the applicable record dates by
the per share distribution amount to the extent the per share
exercise price could be reduced under applicable tax rules.
131
Table of Contents
Option Awards
Number of Shares
Acquired on
Value Realized on
Exercise(1)
Exercise ($)(2)
154,521
$
3,137,421
15,173
$
552,387
86,328
$
1,752,840
70,358
$
1,428,578
(1)
Messrs. Bracken and Hazen and Ms. Wallace elected a
cash exercise of 154,521, 86,328 and 70,358 stock options,
respectively, resulting in net shares realized of 154,521,
86,328 and 70,358, respectively. Mr. Johnson elected a
cashless exercise of 27,205 stock options, resulting in net
shares realized of 15,173.
(2)
Represents the difference between the exercise price of the
options and the fair market value of the common stock on the
date of exercise, as determined by our Board of Directors in
consultation with our Chief Executive Officer and other advisors.
Plan
Number of Years
Present Value of
Payments During
Name
Credited Service
Accumulated Benefit
Last Fiscal Year
SERP
29
$
23,554,306
SERP
28
$
9,877,428
SERP
28
$
7,967,999
SERP
27
$
11,990,524
SERP
29
$
8,102,058
132
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133
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Executive
Registrant
Aggregate
Aggregate
Contributions
Contributions
Earnings
Aggregate
Balance
in Last
in Last
in Last
Withdrawals/
at Last
Fiscal Year
Fiscal Year
Fiscal Year
Distributions
Fiscal Year End
$
206,549
$
1,624,946
$
84,699
$
666,338
$
113,066
$
889,505
$
69,780
$
548,966
$
62,128
$
488,770
Restoration Contribution
2001
2002
2003
2004
2005
2006
2007
$
87,924
$
146,549
$
162,344
$
192,858
$
172,571
$
409,933
$
91,946
$
71,441
$
212,109
$
57,792
$
79,510
$
101,488
$
97,331
$
247,060
$
62,004
$
52,250
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Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
$
14,310,001
$
14,310,001
$
2,614,824
$
2,614,824
$
2,614,824
$
2,614,824
$
2,614,824
$
2,614,824
$
2,614,824
$
2,614,824
$
17,800,598
$
22,425,973
$
22,425,973
$
22,425,973
$
22,425,973
$
22,425,973
$
22,425,973
$
19,717,244
$
2,901,084
$
2,901,084
$
2,901,084
$
2,901,084
$
2,901,084
$
2,901,084
$
2,901,084
$
2,901,084
$
1,727,128
$
1,401,000
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
183,462
$
28,125,343
$
28,125,343
$
5,699,370
$
42,435,344
$
25,510,519
$
42,435,344
$
29,852,471
$
26,817,614
$
20,415,422
(1)
Represents amounts Mr. Bracken would be entitled to receive
pursuant to his employment agreement. See Narrative
Disclosure to Summary Compensation Table and 2010 Grants of
Plan-Based Awards Table Executive Employment
Agreements.
(2)
Represents the amount Mr. Bracken would be entitled to
receive for the 2010 fiscal year pursuant to the 2010 PEP and
his employment agreement, which amount is also included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. Under the 2010 PEP, incentive
payouts up to the target will be paid in cash during the first
quarter of 2011. Payouts above the target will be paid 50% in
cash and 50% in RSUs. See Narrative Disclosure to Summary
Compensation Table and 2010 Grants of Plan-Based Awards
Table Executive Employment Agreements.
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Brackens unvested New Options and the fair value
price of our common stock on December 31, 2010 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($23.13 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $11.32 at the end of the 2010 fiscal
year.
(4)
Reflects the actual lump sum value of the SERP based on the 2010
interest rate of 4.01%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Bracken would be
entitled. The value includes $1,276,138 from the HCA 401(k) Plan
(which represents the value of the Companys contributions)
and $1,624,946 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Bracken would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
135
Table of Contents
age 66, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the 180 day
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Bracken.
Mr. Brackens payment upon death while actively
employed includes $1,326,000 of Company-paid life insurance and
$75,000 from the Executive Death Benefit Plan.
Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
$
6,630,001
$
6,630,001
$
1,032,267
$
1,032,267
$
1,032,267
$
1,032,267
$
1,032,267
$
1,032,267
$
1,032,267
$
1,032,267
$
12,815,562
$
10,627,544
$
10,627,544
$
10,627,544
$
10,627,544
$
10,627,544
$
9,724,399
$
1,789,401
$
1,789,401
$
1,789,401
$
1,789,401
$
1,789,401
$
1,789,401
$
1,789,401
$
1,789,401
$
2,047,604
$
851,000
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
117,692
$
13,566,904
$
2,939,360
$
2,939,360
$
20,196,905
$
12,534,637
$
20,196,905
$
15,614,508
$
13,514,759
$
13,847,829
(1)
Represents amounts Mr. Johnson would be entitled to receive
pursuant to his employment agreement. See Narrative
Disclosure to Summary Compensation Table and 2010 Grants of
Plan-Based Awards Table Executive Employment
Agreements.
(2)
Represents the amount Mr. Johnson would be entitled to
receive for the 2010 fiscal year pursuant to the 2010 PEP and
his employment agreement, which amount is also included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. Under the 2010 PEP, incentive
payouts up to the target will be paid in cash during the first
quarter of 2011. Payouts above the target will be paid 50% in
cash and 50% in RSUs. See Narrative Disclosure to Summary
Compensation Table and 2010 Grants of Plan-Based Awards
Table Executive Employment Agreements.
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Johnsons unvested New Options and the fair value
price of our common stock on December 31, 2010 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($23.13 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $11.32 at the end of the 2010 fiscal
year.
(4)
Reflects the actual lump sum value of the SERP based on the 2010
interest rate of 4.01%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Johnson would be
entitled. The value includes $1,123,063 from the HCA 401(k) Plan
(which represents the value of the Companys contributions)
and $666,338 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Johnson would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66 and 4 months, and monthly benefits of $10,000
per month from our Supplemental Insurance Program payable after
the 180 day elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Johnson.
Mr. Johnsons payment upon death while actively
employed with the Company includes $851,000 of Company-paid life
insurance.
136
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Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
$
3,659,479
$
3,659,479
$
816,431
$
816,431
$
816,431
$
816,431
$
816,431
$
816,431
$
816,431
$
816,431
$
7,684,802
$
8,384,265
$
8,384,265
$
8,384,265
$
8,384,265
$
8,384,265
$
8,059,608
$
1,533,429
$
1,533,429
$
1,533,429
$
1,533,429
$
1,533,429
$
1,533,429
$
1,533,429
$
1,533,429
$
2,380,816
$
789,000
$
109,203
$
109,203
$
109,203
$
109,203
$
109,203
$
109,203
$
109,203
$
109,203
$
10,843,328
$
2,459,063
$
2,459,063
$
14,502,807
$
10,026,897
$
14,502,807
$
13,224,144
$
11,307,671
$
8,501,233
(1)
Represents amounts Mr. Hazen would be entitled to receive
pursuant to his employment agreement. See Narrative
Disclosure to Summary Compensation Table and 2010 Grants of
Plan-Based Awards Table Executive Employment
Agreements.
(2)
Represents the amount Mr. Hazen would be entitled to
receive for the 2010 fiscal year pursuant to the 2010 PEP and
his employment agreement, which amount is also included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. Under the 2010 PEP, incentive
payouts up to the target will be paid in cash during the first
quarter of 2011. Payouts above the target will be paid 50% in
cash and 50% in RSUs. See Narrative Disclosure to Summary
Compensation Table and 2010 Grants of Plan-Based Awards
Table Executive Employment Agreements.
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Hazens unvested New Options and the fair value
price of our common stock on December 31, 2010 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($23.13 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $11.32 at the end of the 2010 fiscal
year.
(4)
Reflects the actual lump sum value of the SERP based on the 2010
interest rate of 4.01%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Hazen would be
entitled. The value includes $643,924 from the HCA 401(k) Plan
(which represents the value of the Companys contributions)
and $889,505 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Hazen would be entitled to receive under
our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 67, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the 180 day
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Hazen. Mr. Hazens
payment upon death while actively employed with the Company
includes $789,000 of Company-paid life insurance.
137
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Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
$
3,248,035
$
3,248,035
$
701,348
$
701,348
$
701,348
$
701,348
$
701,348
$
701,348
$
701,348
$
701,348
$
6,829,019
$
10,679,246
$
10,679,246
$
10,679,246
$
10,679,246
$
10,679,246
$
10,679,246
$
9,554,436
$
1,084,745
$
1,084,745
$
1,084,745
$
1,084,745
$
1,084,745
$
1,084,745
$
1,084,745
$
1,084,745
$
1,235,049
$
701,000
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
96,925
$
12,562,264
$
12,562,264
$
1,883,018
$
15,810,299
$
11,860,916
$
15,810,299
$
13,797,313
$
12,138,454
$
7,530,367
(1)
Represents amounts Ms. Wallace would be entitled to receive
pursuant to her employment agreement. See Narrative
Disclosure to Summary Compensation Table and 2010 Grants of
Plan-Based Awards Table Executive Employment
Agreements.
(2)
Represents the amount Ms. Wallace would be entitled to
receive for the 2010 fiscal year pursuant to the 2010 PEP and
her employment agreement, which amount is also included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. Under the 2010 PEP, incentive
payouts up to the target will be paid in cash during the first
quarter of 2011. Payouts above the target will be paid 50% in
cash and 50% in RSUs. See Narrative Disclosure to Summary
Compensation Table and 2010 Grants of Plan-Based Awards
Table Executive Employment Agreements.
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Ms. Wallaces unvested New Options and the fair value
price of our common stock on December 31, 2010 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($23.13 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $11.32 at the end of the 2010 fiscal
year.
(4)
Reflects the actual lump sum value of the SERP based on the 2010
interest rate of 4.01%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Ms. Wallace would be
entitled. The value includes $535,779 from the HCA 401(k) Plan
(which represents the value of the Companys contributions)
and $548,966 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Ms. Wallace would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66, and monthly benefits of $10,000 per month from our
Supplemental Insurance Program payable after the 180 day
elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Ms. Wallace.
Ms. Wallaces payment upon death while actively
employed includes $701,000 of Company-paid life insurance.
138
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Involuntary
Voluntary
Termination
Termination
Voluntary
Early
Normal
Without
Termination
for Good
Change in
Termination
Retirement
Retirement
Cause
for Cause
Reason
Disability
Death
Control
$
3,182,034
$
3,182,034
$
350,667
$
350,667
$
350,667
$
350,667
$
350,667
$
350,667
$
350,667
$
350,667
$
6,829,019
$
8,479,517
$
8,479,517
$
8,479,517
$
8,479,517
$
8,479,517
$
8,479,517
$
7,673,752
$
1,308,476
$
1,308,476
$
1,308,476
$
1,308,476
$
1,308,476
$
1,308,476
$
1,308,476
$
1,308,476
$
1,770,423
$
776,000
$
96,923
$
96,923
$
96,923
$
96,923
$
96,923
$
96,923
$
96,923
$
96,923
$
10,235,583
$
10,235,583
$
1,756,066
$
13,417,617
$
9,884,916
$
13,417,617
$
12,006,006
$
10,205,818
$
7,179,686
(1)
Represents amounts Mr. Rutledge would be entitled to
receive pursuant to his employment agreement. See
Narrative Disclosure to Summary Compensation Table and
2010 Grants of Plan-Based Awards Table Executive
Employment Agreements.
(2)
Represents the amount Mr. Rutledge would be entitled to
receive for the 2010 fiscal year pursuant to the 2010 PEP and
his employment agreement, which amount is also included in the
Non-Equity Incentive Plan Compensation column of the
Summary Compensation Table. See Narrative Disclosure to
Summary Compensation Table and 2010 Grants of Plan-Based Awards
Table Executive Employment Agreements.
(3)
Represents the intrinsic value of all unvested stock options,
which will become vested upon the Change in Control, calculated
as the difference between the exercise price of
Mr. Rutledges unvested New Options and the fair value
price of our common stock on December 31, 2010 as
determined by our Board of Directors in consultation with our
Chief Executive Officer and other advisors for internal purposes
($23.13 per share). For the purposes of this calculation, it is
assumed that the Company achieved an Investor Return of at least
2.5 times the Base Price of $11.32 at the end of the 2010 fiscal
year.
(4)
Reflects the actual lump sum value of the SERP based on the 2010
interest rate of 4.01%.
(5)
Reflects the estimated lump sum present value of qualified and
nonqualified retirement plans to which Mr. Rutledge would
be entitled. The value includes $819,706 from the HCA 401(k)
Plan (which represents the value of the Companys
contributions) and $488,770 from the HCA Restoration Plan.
(6)
Reflects the estimated lump sum present value of all future
payments which Mr. Rutledge would be entitled to receive
under our disability program, including five months of salary
continuation, monthly long term disability benefits of $10,000
per month payable after the five-month elimination period until
age 66 and 2 months, and monthly benefits of $10,000
per month from our Supplemental Insurance Program payable after
the 180 day elimination period to age 65.
(7)
No post-retirement or post-termination life insurance or death
benefits are provided to Mr. Rutledge.
Mr. Rutledges payment upon death while actively
employed includes $701,000 of Company-paid life insurance and
$75,000 from the Executive Death Benefit Plan.
139
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$100,000 annual retainer for service as a Board member (prorated
for partial years);
$15,000 annual retainer for service as a member of the Audit and
Compliance Committee;
$10,000 annual retainer for service as a member on each of the
Compensation Committee, Nominating and Corporate Governance
Committee or Patient Safety and Quality of Care Committee;
$20,000 annual retainer for service as Chairman of the Audit and
Compliance Committee; and
$12,500 annual retainer for service as Chairman on each of the
Compensation Committee, Nominating and Corporate Governance
Committee or Patient Safety and Quality of Care Committee.
140
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Percentage
of Common
Shares of Common
Percentage of
Shares of
Stock
Shares of
Shares of
Stock Beneficially
Common Stock
Common Stock
Beneficially
Common
Common
Owned After this
Beneficially Owned
Beneficially
Owned
Stock
Stock
Offering
After this Offering
Owned Prior to
Prior to this
Being
Subject to
Without
With
Without
With
this Offering
Offering
Offered
Option
Option
Option
Option
Option
413,764,840
(1)
96.8
%
35,898,717
17,863,330
377,866,123
360,002,793
73.3
%
69.8
%
2,805,407
(2)
*
222,766
70,702
2,582,641
2,511,939
*
*
1,501,632
(3)
*
159,217
69,990
1,342,415
1,272,425
*
*
(1)
3,033,420
(4)
*
3,033,420
3,033,420
*
*
(1)
(1)
(1)
(1)
(1)
(1)
1,948,092
(5)
*
1,948,092
1,948,092
*
*
(1)
(1)
(1)
(1)
335,092
(6)
*
28,246
335,092
306,846
*
*
541,081
(7)
*
41,066
541,081
500,015
*
*
179,968
(8)
*
17,622
179,968
162,346
*
*
1,275,811
(9)
*
80,372
1,275,811
1,195,439
*
*
752,039
(10)
*
42,303
752,039
709,736
*
*
295,025
(11)
*
19,693
295,025
275,332
*
*
979,054
(12)
*
98,098
979,054
880,956
*
*
330,929
(13)
*
41,551
330,929
289,378
*
*
237,321
(14)
*
29,256
237,321
208,065
*
*
905,756
(15)
*
82,654
905,756
823,102
*
*
842,578
(16)
*
75,783
842,578
766,795
*
*
299,459
(17)
*
23,844
299,459
275,615
*
*
173,771
(18)
*
15,490
173,771
158,281
*
*
141
Table of Contents
Percentage
of Common
Shares of Common
Percentage of
Shares of
Stock
Shares of
Shares of
Stock Beneficially
Common Stock
Common Stock
Beneficially
Common
Common
Owned After this
Beneficially Owned
Beneficially
Owned
Stock
Stock
Offering
After this Offering
Owned Prior to
Prior to this
Being
Subject to
Without
With
Without
With
this Offering
Offering
Offered
Option
Option
Option
Option
Option
13,490,368
(19)
3.1
%
595,978
13,490,368
12,894,390
2.4
%
2.3
%
*
Less than 1%.
(1)
Hercules Holding holds 413,764,840 shares, or approximately
96.8%, of our outstanding common stock. Hercules Holding is held
by a private investor group, including affiliates of Bain
Capital, KKR and MLGPE, now BAML Capital Partners (the private
equity arm of Merrill Lynch & Co., Inc., which is a
wholly-owned subsidiary of Bank of America Corporation), and
affiliates of our founder Dr. Thomas F. Frist, Jr.,
including Mr. Thomas F. Frist III and Mr. William
R. Frist, who serve as directors. Messrs. Connaughton,
Gordon and Pagliuca are affiliated with Bain Capital, whose
affiliated funds may be deemed to have indirect beneficial
ownership of 105,296,865 shares, or 24.6%, of our
outstanding common stock (with 11,164,514 of such shares to be
sold in the offering and 4,629,984 of such shares subject to
option) through their interests in Hercules Holding. Prior to
the completion of the offering, Hercules Holding may make a
distribution of shares of our common stock to funds advised by
Bain Capital, which funds may make a further distribution of
shares to certain partners and other employees of Bain Capital
who may make subsequent distributions of such shares to one or
more charities. In such case, a recipient charity, if it chooses
to participate in the offering, will be the selling shareholder
with respect to the donated shares. Messrs. Michelson,
Momtazee and Freeman are affiliated with KKR, which indirectly
holds 105,296,860 shares, or 24.6%, of our outstanding
common stock (with 11,164,514 of such shares to be sold in the
offering and 4,629,984 of such shares subject to option) through
the interests of certain of its affiliated funds in Hercules
Holding. Messrs. Birosak, Forbes and Thorne are affiliated
with Bank of America Corporation, which indirectly through
MLGPE, now BAML Capital Partners, holds 105,296,865 shares,
or 24.6%, of our outstanding common stock (with 11,164,514 of
such shares to be sold in the offering and 7,262,405 of such
shares subject to option) through the interests of certain of
its affiliated funds in Hercules Holding. Thomas F.
Frist III and William R. Frist may each be deemed to
indirectly, beneficially hold 80,207,583 shares, or 18.8%,
of our outstanding common stock (with 531,994 of such shares to
be sold in the offering and 204,106 of such shares subject to
the overallotment option) through their interests in Hercules
Holding. Each of such persons, other than Hercules Holding,
disclaims membership in any such group and disclaims beneficial
ownership of these securities, except to the extent of its
pecuniary interest therein. The principal office addresses of
Hercules Holding are
c/o Bain
Capital Partners, LLC, 111 Huntington Avenue, Boston, MA 02199;
c/o Kohlberg
Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite
200, Menlo Park, CA 94025;
c/o
BAML
Capital Partners, 767 Fifth Avenue, 7th Floor, New York, NY
10153; and
c/o Dr. Thomas
F. Frist, Jr., 3100 West End Ave., Suite 500,
Nashville, TN 37203.
(2)
Includes 1,457,941 shares issuable upon exercise of options.
(3)
Includes shares owned by the selling shareholders other than
those named in the table that in the aggregate beneficially own
less than 1.0% of our common stock as of February 11, 2011.
(4)
Includes 2,511,819 shares issuable upon exercise of options.
(5)
Includes 1,740,228 shares issuable upon exercise of options.
(6)
Includes 262,220 shares issuable upon exercise of options.
(7)
Includes 228,630 shares issuable upon exercise of options.
(8)
Includes 167,291 shares issuable upon exercise of options.
(9)
Includes 1,036,439 shares issuable upon exercise of options.
(10)
Includes 639,106 shares issuable upon exercise of options.
Table of Contents
(11)
Includes 295,025 shares issuable upon exercise of options.
(12)
Includes 831,516 shares issuable upon exercise of options.
(13)
Includes 239,050 shares issuable upon exercise of options.
(14)
Includes 195,416 shares issuable upon exercise of options.
(15)
Includes 824,585 shares issuable upon exercise of options.
(16)
Includes 359,260 shares issuable upon exercise of options.
(17)
Includes 196,971 shares issuable upon exercise of options.
(18)
Includes 173,771 shares issuable upon exercise of options.
(19)
Includes 10,773,814 shares issuable upon exercise of
options.
143
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144
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145
Table of Contents
any merger, consolidation, recapitalization, liquidation, or
sale of us or all or substantially all of our assets;
initiating any liquidation, dissolution or winding up or other
bankruptcy proceeding involving us or any of our subsidiaries;
we or any of our subsidiaries entering into any business or
operations other than those businesses and operations of a same
or similar nature to those which are currently conducted by us
or our subsidiaries.
146
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147
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148
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$12.800 billion-equivalent in term loan facilities,
comprised of a $2.750 billion senior secured term loan A
facility maturing on November 17, 2012, a
$8.800 billion senior secured term loan B facility
consisting of a $6.800 billion senior secured term loan
B-1
facility
maturing on November 17, 2013 and a $2.000 billion
senior secured term loan
B-2
facility
maturing on March 31, 2017 and a 1.000 billion
senior secured European term loan facility maturing on
November 17, 2013; and
$4.000 billion in revolving credit facilities, comprised of
a $2.000 billion senior secured asset-based revolving
credit facility available in dollars maturing on
November 16, 2012 and a $2.000 billion senior secured
revolving credit facility available in dollars, euros and pounds
sterling currently maturing on November 17, 2012 and to be
extended to November 17, 2015 pursuant to the amended and
restated joinder agreement entered into on November 8, 2010
as described below. Availability under the asset-based revolving
credit facility is subject to a borrowing base of 85% of
eligible accounts receivable less customary reserves.
149
Table of Contents
As to refinancing term loans, (1) the proceeds from such
refinancing term loans be used to repay in full the initial term
loans before being used to repay any previously issued
refinancing term loans; (2) the refinancing term loans
mature no earlier than the latest maturity date of any of the
initial term loans; (3) the weighted average life to
maturity for the refinancing term loans be no shorter than the
remaining weighted average life to maturity of the
tranche B term loan under the cash flow credit facility
measured at the time such refinancing term loans are incurred;
and (4) refinancing term loans will not share in mandatory
prepayments resulting from the creation or issuance of extended
term loans
and/or
first
lien notes until the initial term loans are repaid in full but
will share in other mandatory prepayments such as those from
asset sales.
As to replacement revolvers, terms of such replacement revolver
be substantially identical to the commitments being replaced,
other than with respect to maturity, size of any swingline loan
and/or
letter of credit subfacilities and pricing.
As to extended term loans, (1) any offer to extend must be
made to all lenders under the term loan being extended, and, if
such offer is oversubscribed, the extension will be allocated
ratably to the lenders according to the respective amounts then
held by the accepting lenders; (2) each series of extended
term loans having the same interest margins, extension fees and
amortization schedule shall be a separate class of term loans;
and (3) extended term loans will not share in mandatory
prepayments resulting from the creation or issuance of
refinancing term loans
and/or
first
lien notes until the initial term loans are repaid in full but
will share in other mandatory prepayments such as those from
asset sales.
Any refinancing term loans and any obligations under replacement
revolvers will have a
pari passu
claim on the collateral
securing the initial term loans and the initial revolver.
150
Table of Contents
50% (which percentage will be reduced to 25% if HCA Inc.s
total leverage ratio is 5.50x or less and to 0% if HCA
Inc.s total leverage ratio is 5.00x or less) of HCA
Inc.s annual excess cash flow;
100% of the compensation for any casualty event, proceeds from
permitted
sale-leasebacks
and the net cash proceeds of all nonordinary course asset sales
or other dispositions of property, other than the Receivables
Collateral, as defined below, if HCA Inc. does not
(1) reinvest or commit to reinvest those proceeds in assets
to be used in our business or to make certain other permitted
investments within 15 months as long as, in the case of any
such commitment to reinvest or make certain other permitted
investments, such investment is completed within such
15-month
period or, if later, within 180 days after such commitment
is made or (2) apply such proceeds within 15 months to
repay debt of HCA Inc. that was outstanding on the effective
date of the Recapitalization scheduled to mature prior to the
earliest final maturity of the senior secured credit facilities
then outstanding; and
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100% of the net cash proceeds of any incurrence of debt, other
than proceeds from the receivables facilities and other debt
permitted under the senior secured credit facilities.
the term loan A facility amortizes in quarterly installments
such that the aggregate amount of the original funded principal
amount of such facility repaid pursuant to such amortization
payments in each year, commencing with the year ending
December 31, 2007, is equal to $112.5 million in years
1 and 2, $225 million in years 3 and 4, $450 million
in year 5 and $1.625 billion in year 6;
each of the term loan
B-1
facility
and the European term loan facility amortizes in equal quarterly
installments that commenced on March 31, 2007 in aggregate
annual amounts equal to 1% of the original funded principal
amount of such facility, with the balance being payable on the
final maturity date of such term loans; and
the term loan B-2 facility amortizes in equal quarterly
installments commencing December 31, 2013 in aggregate
annual amounts equal to 1% of the original funded principal
amount of such facility, with the balance payable on the final
maturity date of such term loans.
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a first-priority lien on the capital stock owned by HCA Inc. or
by any U.S. guarantor in each of their respective
first-tier subsidiaries (limited, in the case of foreign
subsidiaries, to 65% of the voting stock of such subsidiaries);
a first-priority lien on substantially all present and future
assets of HCA Inc. and of each U.S. guarantor other than
(i) Principal Properties (as defined in the
1993 Indenture), except for certain Principal
Properties the aggregate amount of indebtedness secured
thereby in respect of the cash flow credit facility and the
first lien notes and any future first lien obligations, taken as
a whole, do not exceed 10% of Consolidated Net Tangible
Assets (as defined under the 1993 Indenture),
(ii) certain other real properties and (iii) deposit
accounts, other bank or securities accounts, cash, leaseholds,
motor-vehicles and certain other exceptions (such collateral
under this and the preceding bullet, the Non-Receivables
Collateral); and
a second-priority lien on certain of the Receivables Collateral
(such portion of the Receivables Collateral, the Shared
Receivables Collateral; the Receivables Collateral that
does not secure such cash flow credit facility on a
second-priority basis is referred to as the Separate
Receivables Collateral).
incur additional indebtedness;
create liens;
enter into sale and leaseback transactions;
engage in mergers or consolidations;
sell or transfer assets;
pay dividends and distributions or repurchase capital stock;
make investments, loans or advances;
prepay certain subordinated indebtedness, the second lien notes
and certain other indebtedness existing on the effective date of
the Recapitalization (Retained Indebtedness),
subject to exceptions, including for repayments of Retained
Indebtedness maturing prior to the senior secured credit
facilities and, in certain cases, to satisfaction of a maximum
first lien leverage condition;
make certain acquisitions;
engage in certain transactions with affiliates;
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make certain material amendments to agreements governing certain
subordinated indebtedness, the second lien notes or Retained
Indebtedness; and
change lines of business.
in the case of the asset-based revolving credit facility, a
minimum interest coverage ratio (applicable only when
availability under such facility is less than 10% of the
borrowing base thereunder); and
in the case of the other senior secured credit facilities, a
maximum total leverage ratio.
$1.500 billion aggregate principal amount of
8
1
/
2
% senior
secured notes due 2019 issued on April 22, 2009 at a price
of 96.755% of their face value, resulting in $1.451 billion
of gross proceeds;
$1.250 billion aggregate principal amount of
7
7
/
8
% senior
secured notes due 2020 issued on August 11, 2009 at a price
of 98.254% of their face value, resulting in $1.228 billion
of gross proceeds; and
$1.400 billion aggregate principal amount of
7
1
/
4
% senior
secured first lien notes due 2020 issued on March 10, 2010
at a price of 99.095% of their face value, resulting in
$1.387 billion of gross proceeds.
$4.200 billion of second lien notes (comprised of
$1.000 billion of
9
1
/
8
% notes
due 2014 and $3.200 billion of
9
1
/
4
% notes
due 2016) and $1.578 billion of
9
5
/
8
%
cash/10
3
/
8
%
pay-in-kind
second lien toggle notes due 2016 (which toggle notes allow us,
at HCA Inc.s option, to pay interest in-kind during the
first five years at the higher interest rate of
10
3
/
8
%).
HCA Inc. elected in November 2008 to pay interest in-kind in the
amount of $78 million for the interest period ending in May
2009.
$310 million aggregate principal amount of
9
7
/
8
% senior
secured notes due 2017.
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incur additional debt or issue certain preferred stock;
pay dividends on or make certain distributions of our capital
stock or make other restricted payments;
create certain liens or encumbrances;
sell certain assets;
enter into certain transactions with affiliates;
make certain investments; and
consolidate, merge, sell or otherwise dispose of all or
substantially all of our assets.
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$273,321,000 aggregate principal amount of 7.875% Senior
Notes due 2011;
$402,499,000 aggregate principal amount of 6.95% Senior
Notes due 2012;
$500,000,000 aggregate principal amount of 6.30% Senior
Notes due 2012;
$500,000,000 aggregate principal amount of 6.25% Senior
Notes due 2013;
$500,000,000 aggregate principal amount of 6.75% Senior
Notes due 2013;
$500,000,000 aggregate principal amount of 5.75% Senior
Notes due 2014;
$750,000,000 aggregate principal amount of 6.375% Senior
Notes due 2015;
$1,000,000,000 aggregate principal amount of 6.50% Senior
Notes due 2016;
$291,436,000 aggregate principal amount of 7.69% Notes due
2025;
$250,000,000 aggregate principal amount of 7.50% Senior
Notes due 2033;
$150,000,000 aggregate principal amount of 7.19% Debentures
due 2015;
$135,645,000 aggregate principal amount of 7.50% Debentures
due 2023;
$150,000,000 aggregate principal amount of 8.36% Debentures
due 2024;
$150,000,000 aggregate principal amount of 7.05% Debentures
due 2027;
$100,000,000 aggregate principal amount of 7.75% Debentures
due 2036; and
$200,000,000 aggregate principal amount of 7.50% Debentures
due 2095.
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assume or guarantee indebtedness or obligation secured by
mortgages, liens, pledges or other encumbrances;
enter into sale and lease-back transactions with respect to any
Principal Property (as such term is defined in the
1993 Indenture);
create, incur, issue, assume or otherwise become liable with
respect to, extend the maturity of, or become responsible for
the payment of, any debt or preferred stock; and
consolidate, merge, sell or otherwise dispose of all or
substantially all of HCA Inc.s assets.
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pay dividends on or make other distributions in respect of our
capital stock or make other restricted payments;
create liens on certain assets to secure debt;
enter into certain sale and lease-back transactions; and
consolidate, merge, sell or otherwise dispose of all or
substantially all of HCA Holdings, Inc.s assets.
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1,800,000,000 shares of common stock, par value $.01 per
share, of which 427,485,800 shares were issued and
outstanding as of February 11, 2011, and;
200,000,000 shares of preferred stock, of which no shares
are issued and outstanding.
159
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160
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in the case of an annual meeting, no earlier than 120 days
and no later than 90 days prior to the first anniversary of
the date of the preceding years annual meeting; provided,
however, that if (A) the annual meeting is advanced by more
than 30 days, or delayed by more than 60 days, from
the first anniversary of the preceding years annual
meeting, or (B) no annual meeting was held during the
preceding year, to be timely the stockholder notice must be
received no earlier than 120 days before such annual
meeting and no later than the later of 90 days before such
annual meeting or the tenth day after the day on which public
disclosure of the date of such meeting is first made; and
in the case of a nomination of a person or persons for election
to the Board of Directors at a special meeting of the
stockholders called for the purpose of electing directors, no
earlier than 120 days before
161
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such special meeting and no later than the later of 90 days
before such annual or special meeting or the tenth day after the
day on which public disclosure of the date of such meeting is
first made.
162
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prior to such time the board of directors of the corporation
approved either the business combination or transaction which
resulted in the stockholder becoming an interested stockholder;
163
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upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding shares owned by persons who are directors and also
officers and employee stock plans in which participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer; or
at or subsequent to such time, the business combination is
approved by the board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent,
by the affirmative vote of
66
2
/
3
%
of the outstanding voting stock which is not owned by the
interested stockholder.
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8,155,275 shares will be eligible for sale at various times
after the date of this prospectus pursuant to
Rule 144; and
383,049,792 shares subject to the
lock-up
agreements will be eligible for sale at various times beginning
180 days after the date of this prospectus pursuant to
Rule 144.
1% of the number of shares of our common stock then outstanding,
which was equal to approximately 4,274,588 shares as of
December 31, 2010; or
165
Table of Contents
the average weekly trading volume of our common stock on the New
York Stock Exchange during the four calendar weeks preceding the
filing of a notice on Form 144 with respect to the sale.
during the last 17 days of the 180-day restricted period we
issue an earnings release or material news or a material event
relating to us occurs; or
prior to the expiration of the 180-day restricted period, we
announce that we will release earnings results or become aware
that material news or a material event will occur during the
16-day
period beginning on the last day of the 180-day period,
166
Table of Contents
TO
NON-U.S.
HOLDERS
an individual who is a citizen or resident of the United States;
a corporation (or any other entity treated as a corporation for
United States federal income tax purposes) created or organized
in or under the laws of the United States, any state thereof or
the District of Columbia;
a partnership (including any entity or arrangement treated as a
partnership for United States federal income tax purposes);
an estate the income of which is subject to United States
federal income taxation regardless of its source; or
a trust if it (1) is subject to the primary supervision of
a court within the United States and one or more United States
persons have the authority to control all substantial decisions
of the trust or (2) has a valid election in effect under
applicable United States Treasury regulations to be treated as a
United States person.
167
Table of Contents
the gain is effectively connected with a trade or business of
the
non-U.S. holder
in the United States;
the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of that disposition,
and certain other conditions are met; or
we are or have been a United States real property holding
corporation for United States federal income tax purposes
at any time during the shorter of the five-year period ending on
the date of the disposition or the period that the
non-U.S. holder
held our common stock.
168
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169
Table of Contents
Number
of Shares
Incorporated
124,000,000
170
Table of Contents
and legal opinions. The underwriters reserve the right to
withdraw, cancel or modify offers to the public and to reject
orders in whole or in part.
Per Share
Without Option
With Option
$
$
$
$
$
$
$
$
$
$
$
$
offer, pledge, sell or contract to sell any common stock,
sell any option or contract to purchase any common stock,
purchase any option or contract to sell any common stock,
grant any option, right or warrant for the sale of any common
stock,
lend or otherwise dispose of or transfer any common stock,
171
Table of Contents
request or demand that we file a registration statement related
to the common stock, or
enter into any swap or other agreement that transfers, in whole
or in part, the economic consequence of ownership of any common
stock whether any such swap or transaction is to be settled by
delivery of shares or other securities, in cash or otherwise.
the valuation multiples of publicly traded companies that the
representatives believe to be comparable to us,
our financial information,
the history of, and the prospects for, the Company and the
industry in which we compete,
an assessment of our management, its past and present
operations, and the prospects for, and timing of, our future
revenues,
the present state of our development, and
the above factors in relation to market values and various
valuation measures of other companies engaged in activities
similar to ours.
172
Table of Contents
173
Table of Contents
174
Table of Contents
175
Table of Contents
176
Table of Contents
177
Table of Contents
178
Table of Contents
179
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
F-4
Table of Contents
CONSOLIDATED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009
AND 2008
(Dollars in millions, except per share amounts)
2010
2009
2008
$
30,683
$
30,052
$
28,374
12,484
11,958
11,440
4,961
4,868
4,620
5,004
4,724
4,554
2,648
3,276
3,409
(282
)
(246
)
(223
)
1,421
1,425
1,416
2,097
1,987
2,021
(4
)
15
(97
)
123
43
64
28,452
28,050
27,204
2,231
2,002
1,170
658
627
268
1,573
1,375
902
366
321
229
$
1,207
$
1,054
$
673
$
2.83
$
2.48
$
1.59
$
2.76
$
2.44
$
1.56
426,424
425,567
423,699
437,347
432,227
430,982
F-5
Table of Contents
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2010 AND 2009
(Dollars in millions)
2010
2009
$
411
$
312
3,832
3,692
897
802
931
1,192
848
579
6,919
6,577
1,215
1,202
9,438
9,108
14,310
13,575
678
784
25,641
24,669
(14,289
)
(13,242
)
11,352
11,427
642
1,166
869
853
2,693
2,577
374
418
1,003
1,113
$
23,852
$
24,131
LIABILITIES AND STOCKHOLDERS DEFICIT
$
1,537
$
1,460
895
849
1,245
1,158
592
846
4,269
4,313
27,633
24,824
995
1,057
1,608
1,768
141
147
4
4
386
223
(428
)
(450
)
(11,888
)
(8,763
)
(11,926
)
(8,986
)
1,132
1,008
(10,794
)
(7,978
)
$
23,852
$
24,131
F-6
Table of Contents
CONSOLIDATED STATEMENTS OF STOCKHOLDERS
DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in millions)
Equity (Deficit) Attributable to HCA Holdings, Inc.
Accumulated
Equity
Common Stock
Capital in
Other
Attributable to
Shares
Par
Excess of
Comprehensive
Retained
Noncontrolling
(000)
Value
Par Value
Loss
Deficit
Interests
Total
424,291
$
4
$
109
$
(172
)
$
(10,479
)
$
938
$
(9,600
)
673
229
902
(44
)
(44
)
(62
)
(62
)
(62
)
(62
)
(264
)
(264
)
(432
)
673
229
470
834
40
40
(178
)
(178
)
13
(11
)
6
8
425,125
4
162
(604
)
(9,817
)
995
(9,260
)
1,054
321
1,375
44
44
25
25
85
85
154
1,054
321
1,529
1,216
47
47
(330
)
(330
)
14
22
36
426,341
4
223
(450
)
(8,763
)
1,008
(7,978
)
1,207
366
1,573
(8
)
(8
)
(16
)
(16
)
(37
)
(37
)
83
83
22
1,207
366
1,595
1,118
43
43
(4,332
)
(342
)
(4,674
)
57
57
120
43
163
427,459
$
4
$
386
$
(428
)
$
(11,888
)
$
1,132
$
(10,794
)
F-7
Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
(Dollars in millions)
2010
2009
2008
$
1,573
$
1,375
$
902
(2,789
)
(3,180
)
(3,328
)
(287
)
(191
)
159
229
280
(198
)
2,648
3,276
3,409
1,421
1,425
1,416
27
(520
)
(448
)
(4
)
15
(97
)
123
43
64
81
80
79
32
40
32
58
31
46
3,085
2,747
1,990
(1,325
)
(1,317
)
(1,600
)
(233
)
(61
)
(85
)
37
41
193
472
303
21
10
(1
)
4
(1,039
)
(1,035
)
(1,467
)
2,912
2,979
1,889
(1,335
)
700
(2,268
)
(3,103
)
(960
)
(342
)
(330
)
(178
)
57
(50
)
(70
)
(4,257
)
114
(2
)
(6
)
(13
)
(1,947
)
(1,865
)
(451
)
99
(153
)
72
312
465
393
$
411
$
312
$
465
$
1,994
$
1,751
$
1,979
$
517
$
1,147
$
716
F-8
Table of Contents
NOTE 1
ACCOUNTING
POLICIES
F-9
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
2010
Ratio
2009
Ratio
2008
Ratio
$
7,203
23.5
%
$
6,866
22.8
%
$
6,550
23.1
%
2,162
7.0
2,006
6.7
1,696
6.0
1,962
6.4
1,691
5.6
1,408
5.0
1,165
3.8
1,113
3.7
895
3.2
15,675
51.1
15,324
51.1
14,355
50.5
784
2.6
702
2.3
775
2.7
28,951
94.4
27,702
92.2
25,679
90.5
1,732
5.6
2,350
7.8
2,695
9.5
$
30,683
100.0
%
$
30,052
100.0
%
$
28,374
100.0
%
F-10
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
2010
Ratio
2009
Ratio
2008
Ratio
$
2,337
24
%
$
2,151
26
%
$
1,747
25
%
4,641
48
2,935
35
1,853
26
2,648
28
3,276
39
3,409
49
$
9,626
100
%
$
8,362
100
%
$
7,009
100
%
2010
2009
2008
$
125,640
$
115,682
$
102,843
23,870
22,975
22,030
19.0
%
19.9
%
21.4
%
$
9,626
$
8,362
$
7,009
19.0
%
19.9
%
21.4
%
$
1,829
$
1,664
$
1,500
F-11
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
F-12
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
F-13
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
F-14
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
F-15
Table of Contents
NOTE 1
ACCOUNTING
POLICIES (Continued)
NOTE 2
SHARE-BASED
COMPENSATION
F-16
Table of Contents
NOTE 2
SHARE-BASED
COMPENSATION (Continued)
2010
2009
2008
2.07
%
1.45
%
2.50
%
35
%
35
%
30
%
5
5
4
Weighted
Weighted
Average
Average
Aggregate
Stock
Exercise
Remaining
Intrinsic Value
Options
Price
Contractual Term
(dollars in millions)
50,316
$
9.66
1,610
12.93
(2,163
)
3.33
(1,857
)
11.36
47,906
9.99
8,045
19.70
(2,278
)
3.81
(1,756
)
11.56
51,917
11.72
964
15.73
(1,726
)
4.06
(629
)
7.96
50,526
8.58
6.3 years
$
736
23,835
$
11.35
6.0 years
$
281
F-17
Table of Contents
NOTE 2
SHARE-BASED
COMPENSATION (Continued)
NOTE 3
ACQUISITIONS
AND DISPOSITIONS
NOTE 4
IMPAIRMENTS
OF LONG-LIVED ASSETS
F-18
Table of Contents
NOTE 5
INCOME
TAXES
2010
2009
2008
$
401
$
809
$
699
26
75
56
33
21
25
161
(274
)
(505
)
17
(37
)
(29
)
20
33
22
$
658
$
627
$
268
2010
2009
2008
35.0
%
35.0
%
35.0
%
2.7
3.2
3.7
0.3
(0.2
)
(7.4
)
0.4
0.4
(0.4
)
(0.8
)
(2.5
)
(5.8
)
(6.0
)
(5.6
)
(2.3
)
(0.3
)
(0.7
)
29.5
%
31.3
%
22.9
%
2010
2009
Assets
Liabilities
Assets
Liabilities
$
$
211
$
$
258
329
288
1,011
1,453
202
190
776
400
740
336
$
2,318
$
611
$
2,671
$
594
F-19
Table of Contents
NOTE 5
INCOME
TAXES (Continued)
2010
2009
$
485
$
482
(18
)
44
61
11
(78
)
(33
)
(134
)
(8
)
(3
)
(11
)
$
313
$
485
NOTE 6
EARNINGS PER SHARE
F-20
Table of Contents
NOTE 6
EARNINGS PER SHARE (Continued)
2010
2009
2008
$
1,207
$
1,054
$
673
426,424
425,567
423,699
10,923
6,660
7,283
437,347
432,227
430,982
$
2.83
$
2.48
$
1.59
$
2.76
$
2.44
$
1.56
NOTE 7
INVESTMENTS
OF INSURANCE SUBSIDIARY
2010
Unrealized
Amortized
Amounts
Fair
Cost
Gains
Losses
Value
$
312
$
12
$
(1
)
$
323
251
(1
)
250
26
1
(1
)
26
135
135
724
13
(3
)
734
8
1
(1
)
8
$
732
$
14
$
(4
)
742
(100
)
$
642
2009
Unrealized
Amortized
Amounts
Fair
Cost
Gains
Losses
Value
$
668
$
30
$
(3
)
$
695
401
(5
)
396
43
(1
)
42
176
176
1,288
30
(9
)
1,309
8
1
(2
)
7
$
1,296
$
31
$
(11
)
1,316
(150
)
$
1,166
F-21
Table of Contents
NOTE 7
INVESTMENTS
OF INSURANCE SUBSIDIARY (Continued)
Amortized
Fair
Cost
Value
$
148
$
148
166
173
117
120
16
17
447
458
251
250
26
26
$
724
$
734
2010
2009
2008
$
329
$
141
$
23
14
1
1
$
$
3
$
4
1
2
2
F-22
Table of Contents
NOTE 8
FINANCIAL
INSTRUMENTS
Notional
Fair
Amount
Maturity Date
Value
$
7,100
November 2011
$
(277
)
3,000
December 2016
(114
)
Notional
Fair
Amount
Maturity Date
Value
$
500
March 2011
$
(3
)
500
March 2011
900
November 2011
(35
)
900
November 2011
3
Notional
Fair
Amount
Maturity Date
Value
351 Euro
December 2011
$
39
F-23
Table of Contents
NOTE 8
FINANCIAL
INSTRUMENTS (Continued)
Location of Loss
Amount of Loss
Amount of Loss (Gain)
Reclassified from
Reclassified from
Recognized in OCI on
Accumulated OCI
Accumulated OCI
Derivatives, Net of Tax
into Operations
into Operations
$
170
Interest expense
$
384
(9
)
Interest expense
$
161
$
384
Location of Loss
Amount of Loss
Recognized in
Recognized in
Operations on
Operations on
Derivatives
Derivatives
Other operating expenses
$
3
Other operating expenses
40
NOTE 9
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE
F-24
Table of Contents
NOTE 9
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE (Continued)
F-25
Table of Contents
NOTE 9
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE (Continued)
December 31, 2010
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Significant
and Liabilities
Observable Inputs
Unobservable Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
$
323
$
$
323
$
250
250
26
26
135
135
734
135
349
250
8
2
5
1
742
137
354
251
(100
)
(100
)
$
642
$
37
$
354
$
251
$
39
$
$
39
$
$
426
$
$
426
$
F-26
Table of Contents
NOTE 9
ASSETS
AND LIABILITIES MEASURED AT FAIR VALUE (Continued)
December 31, 2009
Fair Value Measurements Using
Quoted Prices in
Active Markets for
Identical Assets
Significant Other
Significant
and Liabilities
Observable Inputs
Unobservable Inputs
Fair Value
(Level 1)
(Level 2)
(Level 3)
$
695
$
$
695
$
396
396
42
42
176
176
1,309
176
737
396
7
2
4
1
1,316
178
741
397
(150
)
(150
)
$
1,166
$
28
$
741
$
397
$
79
$
$
79
$
$
528
$
$
528
$
13
13
$
397
4
(150
)
$
251
Table of Contents
NOTE 10
LONG-TERM
DEBT
2010
2009
$
1,875
$
715
729
7,530
8,987
4,075
2,682
322
362
14,531
12,746
4,501
4,500
1,578
1,578
6,079
6,078
7,615
6,846
28,225
25,670
592
846
$
27,633
$
24,824
F-28
Table of Contents
NOTE 10
LONG-TERM
DEBT (Continued)
F-29
Table of Contents
NOTE 10
LONG-TERM
DEBT (Continued)
a first-priority lien on the capital stock owned by HCA Inc., or
by any U.S. guarantor, in each of their respective
first-tier subsidiaries;
a first-priority lien on substantially all present and future
assets of HCA Inc. and of each U.S. guarantor other than
(i) Principal Properties (as defined in the
1993 Indenture), (ii) certain other real properties and
(iii) deposit accounts, other bank or securities accounts,
cash, leaseholds, motor-vehicles and certain other
exceptions; and
a second-priority lien on certain of the Receivables Collateral.
NOTE 11
CONTINGENCIES
F-30
Table of Contents
NOTE 11
CONTINGENCIES
(Continued)
NOTE 12
CAPITAL
STOCK
F-31
Table of Contents
NOTE 13
EMPLOYEE
BENEFIT PLANS
NOTE 14
SEGMENT
AND GEOGRAPHIC INFORMATION
F-32
Table of Contents
NOTE 14
SEGMENT
AND GEOGRAPHIC INFORMATION (Continued)
F-33
Table of Contents
NOTE 14
SEGMENT
AND GEOGRAPHIC INFORMATION (Continued)
For the Years Ended December 31,
2010
2009
2008
$
9,006
$
8,807
$
8,570
7,222
7,225
6,740
13,467
13,140
12,118
988
880
946
$
30,683
$
30,052
$
28,374
$
(3
)
$
(3
)
$
(2
)
(1
)
(2
)
(2
)
(278
)
(241
)
(219
)
$
(282
)
$
(246
)
$
(223
)
$
1,580
$
1,469
$
1,288
1,272
1,325
1,061
3,107
2,867
2,270
(91
)
(189
)
(45
)
$
5,868
$
5,472
$
4,574
$
354
$
364
$
358
352
352
359
581
578
552
134
131
147
$
1,421
$
1,425
$
1,416
$
5,868
$
5,472
$
4,574
1,421
1,425
1,416
2,097
1,987
2,021
(4
)
15
(97
)
123
43
64
$
2,231
$
2,002
$
1,170
F-34
Table of Contents
NOTE 14
SEGMENT
AND GEOGRAPHIC INFORMATION (Continued)
As of December 31,
2010
2009
$
4,922
$
5,018
5,271
5,173
9,169
8,847
4,490
5,093
$
23,852
$
24,131
Eastern
Central
Western
Corporate
Group
Group
Group
and Other
Total
$
596
$
1,018
$
742
$
221
$
2,577
14
65
46
125
(14
)
(14
)
(2
)
1
8
(2
)
5
$
608
$
1,019
$
815
$
251
$
2,693
Table of Contents
NOTE 14
SEGMENT
AND GEOGRAPHIC INFORMATION (Continued)
NOTE 15
OTHER
COMPREHENSIVE LOSS
Change
Unrealized
Foreign
in Fair
Gains (Losses) on
Currency
Defined
Value of
Available-for-Sale
Translation
Benefit
Derivative
Securities
Adjustments
Plans
Instruments
Total
$
14
$
34
$
(44
)
$
(176
)
$
(172
)
(44
)
(44
)
(62
)
(62
)
(68
)
(68
)
(334
)
(334
)
6
70
76
(30
)
(28
)
(106
)
(440
)
(604
)
44
44
25
25
(10
)
(10
)
(133
)
(133
)
10
218
228
14
(3
)
(106
)
(355
)
(450
)
1
1
(16
)
(16
)
(48
)
(48
)
(161
)
(161
)
(9
)
11
244
246
$
6
$
(19
)
$
(143
)
$
(272
)
$
(428
)
F-36
Table of Contents
NOTE 16
ACCRUED
EXPENSES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
2010
2009
$
268
$
265
309
283
197
190
471
420
$
1,245
$
1,158
Provision
Accounts
Balance at
for
Written off,
Balance
Beginning
Doubtful
Net of
at End
of Year
Accounts
Recoveries
of Year
$
3,711
$
3,409
$
(2,379
)
$
4,741
4,741
3,276
(3,157
)
4,860
4,860
2,648
(3,569
)
3,939
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION
F-37
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING INCOME STATEMENT
For The Year Ended December 31, 2010
(Dollars in millions)
HCA
Subsidiary
Holdings, Inc.
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
$
$
17,647
$
13,036
$
$
30,683
7,315
5,169
12,484
2,825
2,136
4,961
5
2,634
2,365
5,004
1,632
1,016
2,648
(1,215
)
(107
)
(175
)
1,215
(282
)
782
639
1,421
12
2,700
(761
)
146
2,097
(4
)
(4
)
58
65
123
(454
)
454
(1,203
)
2,705
13,924
11,811
1,215
28,452
1,203
(2,705
)
3,723
1,225
(1,215
)
2,231
(4
)
(955
)
1,299
318
658
1,207
(1,750
)
2,424
907
(1,215
)
1,573
44
322
366
$
1,207
$
(1,750
)
$
2,380
$
585
$
(1,215
)
$
1,207
F-38
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING INCOME STATEMENT
For The Year Ended December 31, 2009
(Dollars in millions)
Subsidiary
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
$
17,584
$
12,468
$
$
30,052
7,149
4,809
11,958
2,846
2,022
4,868
14
2,497
2,213
4,724
2,043
1,233
3,276
(2,540
)
(95
)
(151
)
2,540
(246
)
787
638
1,425
2,356
(500
)
131
1,987
17
(2
)
15
34
9
43
(443
)
443
(170
)
14,335
11,345
2,540
28,050
170
3,249
1,123
(2,540
)
2,002
(884
)
1,189
322
627
1,054
2,060
801
(2,540
)
1,375
61
260
321
$
1,054
$
1,999
$
541
$
(2,540
)
$
1,054
F-39
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING INCOME STATEMENT
For The Year Ended December 31, 2008
(Dollars in millions)
Subsidiary
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
$
16,507
$
11,867
$
$
28,374
6,846
4,594
11,440
2,671
1,949
4,620
(6
)
2,445
2,115
4,554
2,073
1,336
3,409
(2,100
)
(82
)
(141
)
2,100
(223
)
776
640
1,416
2,190
(328
)
159
2,021
(5
)
(92
)
(97
)
64
64
(426
)
426
84
13,970
11,050
2,100
27,204
(84
)
2,537
817
(2,100
)
1,170
(757
)
803
222
268
673
1,734
595
(2,100
)
902
53
176
229
$
673
$
1,681
$
419
$
(2,100
)
$
673
F-40
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2010
(Dollars in millions)
F-41
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2009
(Dollars in millions)
Subsidiary
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
$
95
$
217
$
$
312
2,135
1,557
3,692
489
313
802
1,192
1,192
81
148
350
579
1,273
2,867
2,437
6,577
7,034
4,393
11,427
1,166
1,166
244
609
853
1,641
936
2,577
418
418
21,830
(21,830
)
963
19
131
1,113
$
24,484
$
11,805
$
9,672
$
(21,830
)
$
24,131
LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY
$
$
908
$
552
$
$
1,460
542
307
849
282
293
583
1,158
802
9
35
846
1,084
1,752
1,477
4,313
24,427
103
294
24,824
6,636
(10,387
)
3,751
1,057
1,057
1,176
421
171
1,768
33,323
(8,111
)
6,750
31,962
147
147
(8,986
)
19,787
2,043
(21,830
)
(8,986
)
129
879
1,008
(8,986
)
19,916
2,922
(21,830
)
(7,978
)
$
24,484
$
11,805
$
9,672
$
(21,830
)
$
24,131
F-42
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For The Year Ended December 31, 2010
(Dollars in millions)
HCA
Subsidiary
Holdings, Inc.
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
1,207
$
(1,750
)
$
2,424
$
907
$
(1,215
)
$
1,573
12
13
(1,759
)
(1,113
)
(2,847
)
1,632
1,016
2,648
782
639
1,421
27
27
(4
)
(4
)
58
65
123
81
81
32
32
(1,215
)
1,215
31
31
63
(1,625
)
3,137
1,510
3,085
(602
)
(723
)
(1,325
)
(21
)
(212
)
(233
)
29
8
37
1
471
472
(3
)
13
10
(596
)
(443
)
(1,039
)
1,525
1,387
2,912
1,889
1,889
(2,164
)
(32
)
(72
)
(2,268
)
(61
)
(281
)
(342
)
57
57
(23
)
(27
)
(50
)
(4,257
)
(4,257
)
114
114
2,590
556
(2,387
)
(759
)
(6
)
(16
)
20
(2
)
(57
)
1,625
(2,480
)
(1,035
)
(1,947
)
6
61
32
99
95
217
312
$
6
$
$
156
$
249
$
$
411
F-43
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For The Year Ended December 31, 2009
(Dollars in millions)
Subsidiary
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
1,054
$
2,060
$
801
$
(2,540
)
$
1,375
90
(1,882
)
(1,299
)
(3,091
)
2,043
1,233
3,276
787
638
1,425
(520
)
(520
)
17
(2
)
15
34
9
43
80
80
40
40
58
58
(2,540
)
2,540
50
(2
)
(2
)
46
(1,688
)
3,057
1,378
2,747
(720
)
(597
)
(1,317
)
(38
)
(23
)
(61
)
21
20
41
(7
)
310
303
(1
)
(1
)
(744
)
(291
)
(1,035
)
2,979
2,979
(1,335
)
(1,335
)
(2,972
)
(7
)
(124
)
(3,103
)
(70
)
(260
)
(330
)
(70
)
(70
)
3,107
(2,275
)
(832
)
(21
)
15
(6
)
1,688
(2,352
)
(1,201
)
(1,865
)
(39
)
(114
)
(153
)
134
331
465
$
$
95
$
217
$
$
312
F-44
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For The Year Ended December 31, 2008
(Dollars in millions)
Subsidiary
HCA Inc.
Subsidiary
Non-
Condensed
Issuer
Guarantors
Guarantors
Eliminations
Consolidated
$
673
$
1,734
$
595
$
(2,100
)
$
902
(11
)
(2,085
)
(1,271
)
(3,367
)
2,073
1,336
3,409
776
640
1,416
(448
)
(448
)
(5
)
(92
)
(97
)
64
64
79
79
32
32
(2,100
)
2,100
(19
)
19
(1,775
)
2,474
1,291
1,990
(927
)
(673
)
(1,600
)
(34
)
(51
)
(85
)
27
166
193
(26
)
47
21
(4
)
8
4
(964
)
(503
)
(1,467
)
700
700
(851
)
(4
)
(105
)
(960
)
(32
)
(146
)
(178
)
1,935
(1,505
)
(430
)
(9
)
(4
)
(13
)
1,775
(1,541
)
(685
)
(451
)
(31
)
103
72
165
228
393
$
$
134
$
331
$
$
465
F-45
Table of Contents
NOTE 17
SUPPLEMENTAL
CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER
COLLATERAL-RELATED INFORMATION (Continued)
2010
2009
2008
$
43
$
47
$
40
120
14
2
$
163
$
61
$
42
$
$
$
(9
)
$
$
$
(9
)
NOTE 18
SUBSEQUENT
EVENT
F-46
Table of Contents
QUARTERLY CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED)
(Dollars in millions)
2010
First
Second
Third
Fourth
$
7,544
$
7,756
$
7,647
$
7,736
$
476
(a)
$
378
(b)
$
325
(c)
$
394
(d)
$
388
(a)
$
293
(b)
$
243
(c)
$
283
(d)
$
0.91
$
0.69
$
0.57
$
0.66
$
0.89
$
0.67
$
0.55
$
0.65
2009
First
Second
Third
Fourth
$
7,431
$
7,483
$
7,533
$
7,605
$
432
(e)
$
365
(f)
$
274
(g)
$
304
(h)
$
360
(e)
$
282
(f)
$
196
(g)
$
216
(h)
$
0.84
$
0.67
$
0.46
$
0.51
$
0.83
$
0.66
$
0.45
$
0.50
(a)
First quarter results include $12 million of costs related
to the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(b)
Second quarter results include $57 million of costs related
to the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(c)
Third quarter results include $1 million of losses on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $6 million of costs related to
the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(d)
Fourth quarter results include $3 million of gains on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $2 million of costs related to
the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(e)
First quarter results include $3 million of losses on sales
of facilities (See NOTE 3 of the notes to consolidated
financial statements) and $6 million of costs related to
the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(f)
Second quarter results include $2 million of losses on
sales of facilities (See NOTE 3 of the notes to
consolidated financial statements) and $2 million of costs
related to the impairments of long-lived assets (See NOTE 4
of the notes to consolidated financial statements).
(g)
Third quarter results include $2 million of costs related
to the impairments of long-lived assets (See NOTE 4 of the
notes to consolidated financial statements).
(h)
Fourth quarter results include $4 million of losses on
sales of facilities (See NOTE 3 of the notes to
consolidated financial statements) and $24 million of costs
related to the impairments of long-lived assets (See NOTE 4
of the notes to consolidated financial statements).
F-47
Table of Contents
Table of Contents
Item 13.
Other
Expenses of Issuance and Distribution.
$
327,980
75,500
250,000
2,500
30,000
400,000
4,000,000
200,000
1,714,020
$
7,000,000
Item 14.
Indemnification
of Directors and Officers.
II-1
Table of Contents
Item 15.
Recent
Sales of Unregistered Securities.
II-2
Table of Contents
Item 16.
Exhibits
and Financial Statement Schedules.
1
.1
Form of Underwriting Agreement.
2
.1**
Agreement and Plan of Merger, dated July 24, 2006, by and
among HCA Inc., Hercules Holding II, LLC and Hercules
Acquisition Corporation (filed as Exhibit 2.1 to the
Companys Current Report on
Form 8-K
filed July 25, 2006, and incorporated herein by reference).
II-3
Table of Contents
2
.2**
Merger Agreement, dated November 22, 2010, by and among
HCA Inc., HCA Holdings, Inc., and HCA Merger Sub LLC (filed
as Exhibit 2.1 to the Companys Current Report on
Form 8-K filed November 24, 2010, and incorporated
herein by reference).
3
.1
Amended and Restated Certificate of Incorporation of the Company.
3
.2
Amended and Restated Bylaws of the Company.
4
.1
Specimen Certificate for shares of Common Stock, par value $0.01
per share, of the Company.
4
.2**
Indenture, dated November 17, 2006, among HCA Inc., the
guarantors party thereto and The Bank of New York, as trustee
(filed as Exhibit 4.1 to the Companys Current Report
on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.3**
Security Agreement, dated as of November 17, 2006, among
HCA Inc., the subsidiary grantors party thereto and The Bank of
New York, as collateral agent (filed as Exhibit 4.2 to the
Companys Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.4**
Pledge Agreement, dated as of November 17, 2006, among HCA
Inc., the subsidiary pledgors party thereto and The Bank of New
York, as collateral agent (filed as Exhibit 4.3 to the
Companys Current Report of
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.5(a)**
Form of
9
1
/
8
% Senior
Secured Notes due 2014 (included in Exhibit 4.2).
4
.5(b)**
Form of
9
1
/
4
% Senior
Secured Notes due 2016 (included in Exhibit 4.2).
4
.5(c)**
Form of
9
5
/
8
%/10
3
/
8
% Senior
Secured Toggle Notes due 2016 (included in Exhibit 4.2).
4
.6**
Indenture, dated February 19, 2009, among HCA Inc., the
guarantors party thereto, The Bank of New York Mellon, as
collateral agent and The Bank of New York Mellon
Trust Company, N.A., as trustee (filed as Exhibit 4.1
to the Companys Current Report on
Form 8-K
filed February 25, 2009, and incorporated herein by
reference).
4
.7**
Form of
9
7
/
8
% Senior
Secured Notes due 2017 (included in Exhibit 4.6).
4
.8(a)**
$13,550,000,000 1,000,000,000 Credit
Agreement, dated as of November 17, 2006, among HCA Inc.,
HCA UK Capital Limited, the lending institutions from time to
time parties thereto, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Citigroup Global Markets Inc.
and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and joint bookrunners,
Bank of America, N.A., as administrative agent, JPMorgan Chase
Bank, N.A. and Citicorp North America, Inc., as co-syndication
agents and Merrill Lynch Capital Corporation, as documentation
agent (filed as Exhibit 4.8 to the Companys Current
Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.8(b)**
Amendment No. 1 to the Credit Agreement, dated as of
February 16, 2007, among HCA Inc., HCA UK Capital Limited,
the lending institutions from time to time parties thereto, Bank
of America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
Exhibit 4.7(b) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
4
.8(c)**
Amendment No. 2 to the Credit Agreement, dated as of
March 2, 2009, among HCA Inc., HCA UK Capital Limited, the
lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
exhibit 4.8(c) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
Table of Contents
4
.8(d)**
Amendment No. 3 to the Credit Agreement, dated as of
June 18, 2009, among HCA Inc., HCA UK Capital Limited, the
lending institutions from time to time parties thereto, Bank of
America, N.A., as administrative agent, JPMorgan Chase Bank,
N.A., and Citicorp North America, Inc., as Co-Syndication
Agents, Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Citigroup Global Markets Inc. and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, as joint
lead arrangers and bookrunners, Deutsche Bank Securities and
Wachovia Capital Markets LLC, as joint bookrunners and Merrill
Lynch Capital Corporation, as documentation agent (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed June 22, 2009, and incorporated herein by reference).
4
.8(e)**
Extension Amendment No. 1 to the Credit Agreement, dated as
of April 6, 2010, among HCA Inc., HCA UK Capital Limited,
the lending institutions from time to time parties thereto, Bank
of America, N.A., as administrative agent and collateral agent
(filed as Exhibit 10.1 to the Companys Current Report
on
Form 8-K
filed April 8, 2010, and incorporated herein by reference).
4
.8(f)**
Amended and Restated Joinder Agreement No. 1, dated as of
November 8, 2010, by and among each of the financial
institutions listed as a Replacement-1 Revolving Credit
Lender on Schedule A thereto, HCA INC., Bank of
America, N.A., as Administrative Agent and as Collateral Agent,
and the other parties listed on the signature pages thereto
(filed as Exhibit 4.1 to the Companys Quarterly
Report on Form 10-Q filed November 9, 2010, and
incorporated herein by reference).
4
.9**
U.S. Guarantee, dated November 17, 2006, among HCA Inc.,
the subsidiary guarantors party thereto and Bank of America,
N.A., as administrative agent (filed as Exhibit 4.9 to the
Companys Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.10**
Indenture, dated as of April 22, 2009, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.11**
Security Agreement, dated as November 17, 2006, and amended
and restated as of March 2, 2009, among the Company, the
Subsidiary Grantors named therein and Bank of America, N.A., as
Collateral Agent (filed as Exhibit 4.10 to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.12**
Pledge Agreement, dated as of November 17, 2006, and
amended and restated as of March 2, 2009, among the
Company, the Subsidiary Pledgors named therein and Bank of
America, N.A., as Collateral Agent (filed as Exhibit 4.11
to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.13**
Form of
8
1
/
2
% Senior
Secured Notes due 2019 (included in Exhibit 4.10).
4
.14**
Indenture, dated as of August 11, 2009, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
4
.15**
Form of
7
7
/
8
% Senior
Secured Notes due 2020 (included in Exhibit 4.14).
4
.16**
Indenture, dated as of March 10, 2010, among HCA Inc., the
guarantors party thereto, Deutsche Bank Trust Company
Americas, as paying agent, registrar and transfer agent, and Law
Debenture Trust Company of New York, as trustee (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed March 12, 2010, and incorporated herein by reference).
4
.17**
Form of
7
1
/
4
% Senior
Secured Notes due 2020 (included in Exhibit 4.16).
Table of Contents
4
.18(a)**
$2,000,000,000 Amended and Restated Credit Agreement, dated as
of June 20, 2007, among HCA Inc., the subsidiary borrowers
parties thereto, the lending institutions from time to time
parties thereto, Banc of America Securities LLC,
J.P. Morgan Securities Inc., Citigroup Global Markets Inc.
and Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as joint lead arrangers and joint bookrunners,
Bank of America, N.A., as administrative agent, JPMorgan Chase
Bank, N.A. and Citicorp North America, Inc., as co-syndication
agents, and Merrill Lynch Capital Corporation, as documentation
agent (filed as Exhibit 4.1 to the Companys Current
Report on
Form 8-K
filed June 26, 2007, and incorporated herein by reference).
4
.18(b)**
Amendment No. 1 to the $2,000,000,000 Amended and Restated
Credit Agreement, dated as of March 2, 2009, among HCA
Inc., the subsidiary borrowers parties thereto, the lending
institutions from time to time parties thereto, Banc of America
Securities LLC, J.P. Morgan Securities Inc., Citigroup
Global Markets Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as joint lead arrangers
and joint bookrunners, Bank of America, N.A., as administrative
agent, JPMorgan Chase Bank, N.A. and Citicorp North America,
Inc., as co-syndication agents, and Merrill Lynch Capital
Corporation, as documentation agent (filed as
exhibit 4.12(b) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
4
.19**
Security Agreement, dated as of November 17, 2006, among
HCA Inc., the subsidiary borrowers party thereto and Bank of
America, N.A., as collateral agent (filed as Exhibit 4.13
to the Companys Current Report on
Form 8-K
filed November 24, 2006, and incorporated herein by
reference).
4
.20(a)**
General Intercreditor Agreement, dated as of November 17,
2006, between Bank of America, N.A., as First Lien Collateral
Agent, and The Bank of New York, as Junior Lien Collateral Agent
(filed as Exhibit 4.13(a) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.20(b)**
Additional General Intercreditor Agreement, dated as of
April 22, 2009, by and among Bank of America, N.A., in its
capacity as First Lien Collateral Agent, The Bank of New York
Mellon, in its capacity as Junior Lien Collateral Agent and in
its capacity as 2006 Second Lien Trustee and The Bank of New
York Mellon Trust Company, N.A., in its capacity as 2009
Second Lien Trustee (filed as Exhibit 4.6 to the
Companys Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.20(c)**
Additional General Intercreditor Agreement, dated as of
August 11, 2009, by and among Bank of America, N.A., in its
capacity as First Lien Collateral Agent, The Bank of New York
Mellon, in its capacity as Junior Lien Collateral Agent and in
its capacity as trustee for the Second Lien Notes issued on
November 17, 2006, and The Bank of New York Mellon
Trust Company, N.A., in its capacity as trustee for the
Second Lien Notes issued on February 19, 2009 (filed as
Exhibit 4.6 to the Companys Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
4
.20(d)**
Receivables Intercreditor Agreement, dated as of
November 17, 2006, among Bank of America, N.A., as ABL
Collateral Agent, Bank of America, N.A., as CF Collateral Agent
and The Bank of New York, as Bonds Collateral Agent (filed as
Exhibit 4.13(b) to the Companys Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.20(e)**
Additional Receivables Intercreditor Agreement, dated as of
April 22, 2009, by and between Bank of America, N.A. as ABL
Collateral Agent, and Bank of America, N.A. as New First Lien
Collateral Agent (filed as Exhibit 4.7 to the
Companys Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by reference).
4
.20(f)**
Additional Receivables Intercreditor Agreement, dated as of
August 11, 2009, by and between Bank of America, N.A., as
ABL Collateral Agent, and Bank of America, N.A., as New First
Lien Collateral Agent (filed as Exhibit 4.7 to the
Companys Current Report on
Form 8-K
filed August 17, 2009, and incorporated herein by
reference).
4
.20(g)**
First Lien Intercreditor Agreement, dated as of April 22,
2009, among Bank of America, N.A. as Collateral Agent, Bank of
America, N.A. as Authorized Representative under the Credit
Agreement and Law Debenture Trust Company of New York as
the Initial Additional Authorized Representative (filed as
Exhibit 4.5 to the Companys Current Report on
Form 8-K
filed April 28, 2009, and incorporated herein by
reference).
Table of Contents
4
.21**
Registration Rights Agreement, dated as of November 22,
2010, among HCA Holdings, Inc., Hercules Holding II, LLC and
certain other parties thereto (filed as Exhibit 4.4 to the
Companys Current Report on
Form 8-K
filed November 24, 2010, and incorporated herein by
reference).
4
.22**
Registration Rights Agreement, dated as of March 16, 1989,
by and among HCA-Hospital Corporation of America and the persons
listed on the signature pages thereto (filed as
Exhibit 4.14 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.23**
Assignment and Assumption Agreement, dated as of
February 10, 1994, between HCA-Hospital Corporation of
America and the Company relating to the Registration Rights
Agreement, as amended (filed as Exhibit 4.15 to the
Companys Registration Statement on
Form S-4
(File No. 333-145054),
and incorporated herein by reference).
4
.24(a)**
Indenture, dated as of December 16, 1993 between the
Company and The First National Bank of Chicago, as Trustee
(filed as Exhibit 4.16(a) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(b)**
First Supplemental Indenture, dated as of May 25, 2000
between the Company and Bank One Trust Company, N.A., as
Trustee (filed as Exhibit 4.16(b) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(c)**
Second Supplemental Indenture, dated as of July 1, 2001
between the Company and Bank One Trust Company, N.A., as
Trustee (filed as Exhibit 4.16(c) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(d)**
Third Supplemental Indenture, dated as of December 5, 2001
between the Company and The Bank of New York, as Trustee (filed
as Exhibit 4.16(d) to the Companys Registration
Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.24(e)**
Fourth Supplemental Indenture, dated as of November 14,
2006, between the Company and The Bank of New York, as Trustee
(filed as Exhibit 4.1 to the Companys Current Report
on
Form 8-K
filed November 16, 2006, and incorporated herein by
reference).
4
.25**
Form of 7.5% Debentures due 2023 (filed as
Exhibit 4.17 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.26**
Form of 8.36% Debenture due 2024 (filed as
Exhibit 4.18 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.27**
Form of Fixed Rate Global Medium-Term Note (filed as
Exhibit 4.19 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.28**
Form of Floating Rate Global Medium-Term Note (filed as
Exhibit 4.20 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.29**
Form of 7.69% Note due 2025 (filed as Exhibit 4.10 to
the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2004, and
incorporated herein by reference).
4
.30**
Form of 7.19% Debenture due 2015 (filed as
Exhibit 4.22 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.31**
Form of 7.50% Debenture due 2095 (filed as
Exhibit 4.23 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.32**
Form of 7.05% Debenture due 2027 (filed as
Exhibit 4.24 to the Companys Registration Statement
on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.33
[reserved]
4
.34(a)**
7
7
/
8
% Note
in the principal amount of $100,000,000 due 2011 (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed January 31, 2001, and incorporated herein by
reference).
4
.34(b)**
7
7
/
8
% Note
in the principal amount of $400,000,000 due 2011 (filed as
Exhibit 4.2 to the Companys Current Report on
Form 8-K
filed January 31, 2001, and incorporated herein by
reference).
Table of Contents
4
.35(a)**
6.95% Note due 2012 in the principal amount of $400,000,000
(filed as Exhibit 4.29(a) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.35(b)**
6.95% Note due 2012 in the principal amount of $100,000,000
(filed as Exhibit 4.29(b) to the Companys
Registration Statement on
Form S-4
(File
No. 333-145054),
and incorporated herein by reference).
4
.36(a)**
6.30% Note due 2012 in the principal amount of $400,000,000
(filed as Exhibit 4.1 to the Companys Current Report
on
Form 8-K
filed September 25, 2002, and incorporated herein by
reference).
4
.36(b)**
6.30% Note due 2012 in the principal amount of $100,000,000
(filed as Exhibit 4.2 to the Companys Current Report
on
Form 8-K
filed September 25, 2002, and incorporated herein by
reference).
4
.37(a)**
6.25% Note due 2013 in the principal amount of $400,000,000
(filed as Exhibit 4.1 to the Companys Current Report
on
Form 8-K
filed February 12, 2003, and incorporated herein by
reference).
4
.37(b)**
6
3
/
4
% Note
due 2013 in the principal amount of $100,000,000 (filed as
Exhibit 4.2 to the Companys Current Report on
Form 8-K
filed February 12, 2003, and incorporated herein by
reference).
4
.38(a)**
6
3
/
4
% Note
due 2013 in the principal amount of $400,000,000 (filed as
Exhibit 4.1 to the Companys Current Report on
Form 8-K
filed July 29, 2003, and incorporated herein by reference).
4
.38(b)**
6
3
/
4
% Note
due 2013 in the principal amount of $100,000,000 (filed as
Exhibit 4.2 to the Companys Current Report on
Form 8-K
filed July 29, 2003, and incorporated herein by reference).
4
.39**
7.50% Note due 2033 in the principal amount of $250,000,000
(filed as Exhibit 4.2 to the Companys Current Report
on
Form 8-K
filed November 6, 2003, and incorporated herein by
reference).
4
.40**
5.75% Note due 2014 in the principal amount of $500,000,000
(filed as Exhibit 4.1 to the Companys Current Report
on
Form 8-K
filed March 11, 2004, and incorporated herein by reference).
4
.41(a)**
6.375% Note due 2015 in the principal amount of
$500,000,000 (filed as Exhibit 4.2 to the Companys
Current Report on
Form 8-K
filed November 19, 2004, and incorporated herein by
reference).
4
.41(b)**
6.375% Note due 2015 in the principal amount of
$250,000,000 (filed as Exhibit 4.3 to the Companys
Current Report on
Form 8-K
filed November 19, 2004, and incorporated herein by
reference).
4
.42(a)**
6.500% Note due 2016 in the principal amount of
$500,000,000 (filed as Exhibit 4.1 to the Companys
Current Report on
Form 8-K
filed February 8, 2006, and incorporated herein by
reference).
4
.42(b)**
6.500% Note due 2016 in the principal amount of
$500,000,000 (filed as Exhibit 4.2 to the Companys
Current Report on
Form 8-K
filed February 8, 2006, and incorporated herein by
reference).
4
.43**
Indenture, dated as of November 23, 2010, among HCA
Holdings, Inc., Deutsche Bank Trust Company Americas, as paying
agent, registrar and transfer agent, and Law Debenture Trust
Company of New York, as trustee (filed as Exhibit 4.1 to
the Companys Current Report on Form 8-K filed
November 24, 2010, and incorporated herein by reference).
4
.44**
Form of
7
3
/
4
%
Senior Notes due 2021 (included in Exhibit 4.43).
5
.1
Opinion of Simpson Thacher & Bartlett LLP.
10
.1(a)**
Amended and Restated Columbia/HCA Healthcare Corporation 1992
Stock and Incentive Plan (filed as Exhibit 10.7(b) to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 1998, and
incorporated herein by reference).
Table of Contents
10
.1(b)**
First Amendment to Amended and Restated Columbia/HCA Healthcare
Corporation 1992 Stock and Incentive Plan (filed as
Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1999, and incorporated
herein by reference).
10
.2**
HCA-Hospital Corporation of America Nonqualified Initial Option
Plan (filed as Exhibit 4.6 to the Companys
Registration Statement on
Form S-3
(File
No. 33-52379),
and incorporated herein by reference).
10
.3**
Form of Indemnity Agreement with certain officers and directors
(filed as Exhibit 10.3 to the Companys Registration
Statement on
Form S-4
(File
No. 333-145054)
and incorporated herein by reference).
10
.4**
Form of Galen Health Care, Inc. 1993 Adjustment Plan (filed as
Exhibit 4.15 to the Companys Registration Statement
on
Form S-8
(File
No. 33-50147)
and incorporated herein by reference).
10
.5**
Form of HCA-Hospital Corporation of America 1992 Stock
Compensation Plan (filed as Exhibit 4.2 to the
Companys Registration Statement on
Form S-8
(File
No. 33-52253),
and incorporated herein by reference).
10
.6**
Columbia/HCA Healthcare Corporation 2000 Equity Incentive Plan
(filed as Exhibit A to the Companys Proxy Statement
for the Annual Meeting of Stockholders on May 25, 2000, and
incorporated herein by reference).
10
.7**
Form of Non-Qualified Stock Option Award Agreement (Officers)
(filed as Exhibit 99.2 to the Companys Current Report
on
Form 8-K
filed February 2, 2005, and incorporated herein by
reference).
10
.8**
HCA 2005 Equity Incentive Plan (filed as Exhibit B to the
Companys Proxy Statement for the Annual Meeting of
Shareholders on May 26, 2005, and incorporated herein by
reference).
10
.9**
Form of 2005 Non-Qualified Stock Option Agreement (Officers)
(filed as Exhibit 99.2 to the Companys Current Report
on
Form 8-K
filed October 6, 2005, and incorporated herein by
reference).
10
.10**
Form of 2006 Non-Qualified Stock Option Award Agreement
(Officers) (filed as Exhibit 10.2 to the Companys
Current Report on
Form 8-K
filed February 1, 2006, and incorporated herein by
reference).
10
.11(a)**
2006 Stock Incentive Plan for Key Employees of HCA Inc. and its
Affiliates (filed as Exhibit 10.11 to the Companys
Annual Report on Form 10-K for the fiscal year ended
December 31, 2006, and incorporated herein by reference).
10
.11(b)
2006 Stock Incentive Plan for Key Employees of HCA Holdings,
Inc. and its Affiliates, as Amended and Restated.
10
.11(c)**
Form of Omnibus Amendment to Stock Option Agreements Issued
under the 2006 Stock Incentive Plan for Key Employees of HCA
Holdings, Inc. and its Affiliates, as amended, effective
February 16, 2011 (filed as Exhibit 10.38 to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, and
incorporated herein by reference).
10
.12**
Management Stockholders Agreement dated November 17,
2006 (filed as Exhibit 10.12 to the Companys Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.13**
Sale Participation Agreement dated November 17, 2006 (filed
as Exhibit 10.13 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.14**
Form of Option Rollover Agreement (filed as Exhibit 10.14
to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.15**
Form of Stock Option Agreement (2007) (filed as
Exhibit 10.15 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.16**
Form of Stock Option Agreement (2008) (filed as
Exhibit 10.16 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and
incorporated herein by reference).
Table of Contents
10
.17**
Form of Stock Option Agreement (2009) (filed as
Exhibit 10.17 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
10
.18**
Form of Stock Option Agreement (2010) (filed as
Exhibit 10.20 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, and
incorporated herein by reference).
10
.19**
Form of 2x Time Stock Option Agreement (filed as
Exhibit 10.2 to the Companys Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2009, and
incorporated herein by reference).
10
.20**
Exchange and Purchase Agreement (filed as Exhibit 10.16 to
the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.21**
Civil and Administrative Settlement Agreement, dated
December 14, 2000 between the Company, the United States
Department of Justice and others (filed as Exhibit 99.2 to
the Companys Current Report on
Form 8-K
dated December 20, 2000, and incorporated herein by
reference).
10
.22**
Plea Agreement, dated December 14, 2000 between the
Company, Columbia Homecare Group, Inc., Columbia Management
Companies, Inc. and the United States Department of Justice
(filed as Exhibit 99.3 to the Companys Current Report
on
Form 8-K
filed December 20, 2000, and incorporated herein by
reference).
10
.23**
Corporate Integrity Agreement, dated December 14, 2000
between the Company and the Office of Inspector General of the
United States Department of Health and Human Services (filed as
Exhibit 99.4 to the Companys Current Report on
Form 8-K
filed December 20, 2000, and incorporated herein by
reference).
10
.24**
Management Agreement, dated November 17, 2006, among HCA
Inc., Bain Capital Partners, LLC, Kohlberg Kravis
Roberts & Co. L.P., Dr. Thomas F. Frist, Jr.,
Patricia F. Elcan, William R. Frist and Thomas F.
Frist III, and Merrill Lynch Global Partners, Inc. (filed
as Exhibit 10.20 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.25**
Retirement Agreement between the Company and Thomas F. Frist,
Jr., M.D. dated as of January 1, 2002 (filed as
Exhibit 10.30 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2001, and
incorporated herein by reference).
10
.26**
Amended and Restated HCA Supplemental Executive Retirement Plan,
effective December 22, 2010, except as provided therein
(filed as Exhibit 10.26 to the Companys Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2010, and
incorporated herein by reference).
10
.27**
Amended and Restated HCA Restoration Plan, effective
December 22, 2010 (filed as Exhibit 10.27 to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, and
incorporated herein by reference).
10
.28(a)**
HCA Inc.
2008-2009
Senior Officer Performance Excellence Program (filed as
Exhibit 10.27 to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and
incorporated herein by reference).
10
.28(b)**
HCA Inc. Amendment No. 1 to the
2008-2009
Senior Officer Performance Excellence Program (filed as
Exhibit 10.28(b) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
10
.29(a)**
Employment Agreement dated November 16, 2006 (Richard M.
Bracken) (filed as Exhibit 10.27(b) to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.29(b)**
Employment Agreement dated November 16, 2006 (R. Milton
Johnson) (filed as Exhibit 10.27(c) to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.29(c)**
Employment Agreement dated November 16, 2006 (Samuel N.
Hazen) (filed as Exhibit 10.27(d) to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
Table of Contents
10
.29(d)**
Employment Agreement dated November 16, 2006 (William P.
Rutledge) (filed as Exhibit 10.27(e) to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2006, and
incorporated herein by reference).
10
.29(e)**
Employment Agreement dated November 16, 2006 (Beverly B.
Wallace) (filed as Exhibit 10.28(e) to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, and
incorporated herein by reference).
10
.29(f)**
Amended and Restated Employment Agreement dated October 27,
2008 (Jack O. Bovender, Jr.) (filed as
Exhibit 10.29(f) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
10
.29(g)**
Amendment to Employment Agreement effective January 1, 2009
(Richard M. Bracken) (filed as Exhibit 10.29(g) to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, and
incorporated herein by reference).
10
.29(h)**
Second Amendment to Employment Agreement effective
February 9, 2011 (Richard M. Bracken) (filed as
Exhibit 10.29(h) to the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and
incorporated herein by reference).
10
.29(i)**
Amendment to Employment Agreement effective February 9,
2011 (R. Milton Johnson) (filed as Exhibit 10.29(i) to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and
incorporated herein by reference).
10
.29(j)**
Amendment to Employment Agreement effective February 9,
2011 (Samuel N. Hazen) (filed as Exhibit 10.29(j) to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and
incorporated herein by reference).
10
.29(k)**
Amendment to Employment Agreement effective February 9,
2011 (Beverly B. Wallace) (filed as Exhibit 10.29(k) to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and
incorporated herein by reference).
10
.30**
Administrative Settlement Agreement dated June 25, 2003 by
and between the United States Department of Health and Human
Services, acting through the Centers for Medicare and Medicaid
Services, and the Company (filed as Exhibit 10.1 to the
Companys Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2003 (File
No. 001-11239),
and incorporated herein by reference).
10
.31**
Civil Settlement Agreement by and among the United States of
America, acting through the United States Department of
Justice and on behalf of the Office of Inspector General of the
Department of Health and Human Services, the TRICARE Management
Activity (filed as Exhibit 10.2 to the Companys
Quarterly Report of
Form 10-Q
for the quarter ended June 30, 2003, and incorporated
herein by reference).
10
.32**
Form of Amended and Restated Limited Liability Company Agreement
of Hercules Holding II, LLC dated as of November 17, 2006,
among Hercules Holding II, LLC and certain other parties thereto
(filed as Exhibit 10.3 to the Companys Registration
Statement on
Form 8-A,
filed April 29, 2008, and incorporated herein by reference).
10
.32(a)
Form of Amendment to the Amended and Restated Limited Liability
Company Agreement of Hercules Holding II, LLC.
10
.33**
Indemnification Priority and Information Sharing Agreement,
dated as of November 1, 2009, between HCA Inc. and certain
other parties thereto (filed as Exhibit 10.35 to the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, and
incorporated herein by reference).
10
.34**
HCA Inc. 2010 Senior Officer Performance Excellence Program
(filed as Exhibit 10.1 to the Companys Current Report
on
Form 8-K
filed April 6, 2010, and incorporated herein by reference).
10
.35**
Form of Restricted Share Unit Agreement (Officers) (filed as
Exhibit 10.2 to the Companys Current Report on
Form 8-K
filed April 6, 2010, and incorporated herein by reference).
10
.36**
Assignment and Assumption Agreement, dated November 22,
2010, by and among HCA Inc., HCA Holdings, Inc. and HCA Merger
Sub LLC (filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K filed November 24, 2010,
and incorporated herein by reference).
Table of Contents
10
.37**
Omnibus Amendment to Various Stock and Option Plans and the
Management Stockholders Agreement, dated November 22,
2010 (filed as Exhibit 10.2 to the Companys Current
Report on Form 8-K filed November 24, 2010, and
incorporated herein by reference).
10
.38
Form of Stockholders Agreement.
10
.39
Form of Omnibus Amendment to HCA Holdings, Incs Management
Stockholders Agreements.
21
.1**
List of Subsidiaries (filed as Exhibit 21 to the Companys
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 and
incorporated herein by reference).
23
.1
Consent of Simpson Thacher & Bartlett LLP (included as
part of its opinion filed as Exhibit 5.1 hereto).
23
.3
Consent of Ernst & Young LLP.
23
.4(a)**
Consent of Jay O. Light to be named as a director nominee.
23
.4(b)**
Consent of Geoffrey G. Meyers to be named as a director nominee.
24
.1**
Powers of Attorney (included in signature pages of the initial
registration statement).
Filed herewith.
**
Previously filed.
Item 17.
Undertakings.
Table of Contents
By:
Title:
Vice President and
II-13
Table of Contents
Director
March 9, 2011
Director
March 9, 2011
Director
March 9, 2011
*By:
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Very truly yours,
HCA HOLDINGS, INC. |
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By: | ||||
Name: | ||||
Title: | ||||
HERCULES HOLDING II, LLC
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By: | ||||
Name: | ||||
Title: | ||||
[SELLING SHAREHOLDERS]
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By: | ||||
As Attorney-in-Fact acting on behalf of the | ||||
Selling Shareholders named in Schedule B hereto |
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Sch A-1
Number of Initial | Maximum Number of Option | |||
Securities to be Sold | Securities to be Sold | |||
HCA Holdings, Inc.
|
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Hercules Holding II, LLC
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[Selling Shareholders]
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Total
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Sch B-1
1. | The Company and certain Selling Shareholders are selling [ ] shares of Common Stock. |
2. | The Selling Shareholders have granted an option to the Underwriters, severally and not jointly, to purchase up to an additional [ ] shares of Common Stock. |
3. | The initial public offering price per share for the Securities shall be $[ ]. |
Sch C-1-1
Sch C-2-1
Sch D-1
MERRILL LYNCH & CO.
|
Merrill Lynch, Pierce, Fenner & Smith
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Incorporated,
|
CITIGROUP GLOBAL MARKETS INC.
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J.P. MORGAN SECURITIES LLC
|
as Representatives of the several
|
Underwriters to be named in the
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within mentioned Underwriting Agreement
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c/o Merrill Lynch & Co.
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Merrill Lynch, Pierce, Fenner & Smith
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Incorporated
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One Bryant Park
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New York, New York 10036
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(i) | as a bona fide gift or gifts; or | ||
(ii) | to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned (for purposes of this lock-up agreement, immediate family shall mean any relationship by blood, marriage or adoption, not more remote than first cousin); or | ||
(iii) | as a distribution to limited partners, members or stockholders of the undersigned; or | ||
(iv) | to the undersigneds affiliates or to any investment fund or other entity controlled by the undersigned. |
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Very truly yours, | |||
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Signature: | |||
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Print Name: | |||
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HCA HOLDINGS, INC.
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By: | /s/ John M. Franck II | |||
John M. Franck II | ||||
Vice President Legal and Corporate Secretary | ||||
13
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i. | brought before the meeting by the Corporation and specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors or an authorized committee thereof, |
ii. | brought before the meeting by or at the direction of the Board of Directors or an authorized committee thereof, or |
iii. | otherwise properly brought before the meeting by a stockholder who: |
(a) | was a stockholder of record (and, with respect to any beneficial owner, if different, on whose behalf such nominations of persons for election to the Board of Directors or other business is proposed, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 11 and at the time of the meeting, |
(b) | is entitled to vote at the meeting, and |
(c) | has complied with this Section 11 as to such business. |
4
i. | in the case of an annual meeting, no earlier than 120 days and no later than 90 days prior to the first anniversary of the date of the preceding years annual meeting; provided, however, that if (A) the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding years annual meeting, or (B) no annual meeting was held during the preceding year, to be timely the Stockholder Notice must be received no earlier than 120 days before such annual meeting and no later than the later of 90 days before such annual meeting or the tenth day after the day on which Public Disclosure of the date of such meeting is first made; and |
ii. | in the case of a nomination of a person or persons for election to the Board of Directors at a special meeting of the stockholders called for the purpose of electing directors, no earlier than 120 days before such special meeting and no later than the later of 90 days before such annual or special meeting or the tenth day after the day on which Public Disclosure of the date of such meeting is first made. |
i. | set forth the name and address of the stockholder giving the Stockholder Notice (and any beneficial owner, if different, on whose behalf such Stockholder Notice is submitted) (the stockholder giving the Stockholder Notice, or, if the Stockholder Notice is submitted on behalf of a beneficial owner, such beneficial owner, is referred to herein as the Proponent) as they appear on the Corporations books and the name and address of any Stockholder Associated Person(s) for which disclosure is required by clause (ii) below, |
ii. | set forth the following information: |
(a) | the class and number of shares of capital stock of the Corporation that are owned beneficially (within the meaning of Rule 13d-3 under the |
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Exchange Act) and of record by the Proponent and any Stockholder Associated Person, |
(b) | the date such shares were acquired, |
(c) | a description in reasonable detail of any option, warrant, convertible security, stock appreciation right or similar right directly or indirectly owned by the Proponent or any Stockholder Associated Person with an exercise or conversion privilege or a settlement payment or mechanism at a price related to shares of any class or series of stock of the Corporation, or with a value derived in whole or in part from the price, value or volatility of shares of any class or series of stock of the Corporation, whether or not such instrument or right shall convey any voting rights in such shares, be subject to settlement in the underlying class or series of stock of the Corporation or be subject to other transactions that hedge or mitigate the economic effect of such transactions, or any other direct or indirect opportunity to profit from any increase or decrease in the value of shares of any class or series of stock of the Corporation (Derivative Interests), |
(d) | a description in reasonable detail of any proxy, contract, arrangement, understanding or other relationship pursuant to which the Proponent or any Stockholder Associated Person has a right to vote any shares of any class or series of stock of the Corporation (other than a revocable proxy or consent given in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), |
(e) | any agreement, arrangement, understanding or relationship, including any repurchase or so-called stock borrowing agreement or arrangement, engaged in directly or indirectly by the Proponent or any Stockholder Associated Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such Proponent or Stockholder Associated Person with respect to the shares of any class or series of stock of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of stock of the Corporation (Short Interests), |
(f) | any rights to dividends on the shares of any class or series of stock of the Corporation owned beneficially by the Proponent or any Stockholder Associated Person that are separated or separable from the underlying shares of stock of the Corporation, |
(g) | any performance-related fees (other than an asset-based fee) that the Proponent or any Stockholder Associated Person is entitled to based on any increase or decrease in the value of shares of any class or series of the stock of the Corporation or any Derivative Interest or Short Interest; |
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(h) | any arrangements, rights or other interests described in Section 11(D)(ii)(c)-(g) above held by members of the Proponents or any Stockholder Associated Persons immediate family sharing the same household; |
(i) | a representation that the Proponent intends to appear in person or by proxy at the meeting to nominate the person(s) named or propose the business specified in the Stockholder Notice and whether or not the Proponent intends to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporations outstanding shares of capital stock required to approve the nomination(s) or the business proposed and/or otherwise to solicit proxies or votes from stockholders in support of the nomination(s) or other business proposed; |
(j) | a certification regarding whether or not the Proponent and Stockholder Associated Person(s) have complied with all applicable federal, state and other legal requirements in connection with the Proponents and/or Stockholder Associated Persons acquisition of shares of capital stock or other securities of the Corporation and/or the Proponents and/or Stockholder Associated Persons acts or omissions as a stockholder of the Corporation, |
(k) | any other information relating to the Proponent that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder, and |
(l) | any other information as reasonably requested by the Corporation (the disclosures to be made pursuant to the foregoing causes (a) through (k) are referred to as Disclosable Interests; provided, however, that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proponent solely as a result of being the stockholder directed to prepare and submit the Stockholder Notice on behalf of a beneficial owner). |
Such information shall be provided as of the date of the Stockholder Notice and shall be supplemented by the Proponent not later than 10 days after the record date for the determination of stockholders entitled to notice of the meeting to disclose information as of the record date. |
iii. | if the Stockholder Notice relates to any business that the Proponent proposes to bring before the meeting other than a nomination of a person or persons for election to the Board of Directors, it must set forth: |
(a) | a brief description of the business that the Proponent proposes to bring before the meeting, the text of the proposal (including the text of any resolutions proposed for consideration and, if such business includes a proposal to amend the Certificate of Incorporation or Bylaws, the |
7
language of the proposed amendment) and the reasons for conducting such business at the meeting; |
(b) | any material interest in such business of the Proponent or any Stockholder Associated Person; and |
(c) | a reasonably detailed description of all agreements, arrangements and understandings between the Proponent or any Stockholder Associated Person and any other person (including their names) in connection with the proposed business. |
iv. | set forth, as to each person, if any, whom the Proponent proposes to nominate for election or reelection to the Board of Directors: |
(a) | all information relating to the nominee (including, without limitation, the nominees name, age, business and residence address and principal occupation or employment and the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the nominee) that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for an election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder (including such persons written consent to being named in the proxy statement as a nominee and to serving as a director if elected), |
(b) | a description of any agreements, arrangements and understandings between or among the Proponent or any Stockholder Associated Person, on the one hand, and any other persons (including any Stockholder Associated Person), on the other hand, in connection with the nomination of such person for election as a director, and |
(c) | a description of all direct and indirect compensation and other material monetary agreements, arrangements, and understandings during the past three years, and any other material relationships, between or among the Proponent or any Stockholder Associated Person, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the Proponent making the nomination or on whose behalf the nomination is made, if any, or any Stockholder Associated Person, were the registrant for purposes of Item 404 and the nominee were a director or executive officer of such registrant. |
v. | include a completed and signed questionnaire with respect to each nominee for election or reelection to the Board of Directors, in the form to be provided by the secretary of the Corporation upon request, setting forth the information described in clause (E) below. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of the proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholders understanding of the independence, or lack thereof, of the nominee. |
8
i. | is not and will not become a party to: |
(a) | any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how the person, if elected as a director of the Corporation, will act or vote on any issue or question (a Voting Commitment) that has not been disclosed to the Corporation, or |
(b) | any Voting Commitment that could limit or interfere with the persons ability to comply, if elected as a director of the Corporation, with the persons fiduciary duties under applicable law, |
ii. | is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director that has not been disclosed therein, and |
iii. | in the persons individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Corporation. |
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THIS CERTIFICATE IS TRANSFERABLE IN SOUTH SAINT PAUL, MN. HCA Hospital Corporation of America SM INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE SEE REVERSE SIDE FOR CERTAIN DEFINITIONS CUSIP 40412C 10 1 THIS CERTIFIES THAT is the owner of FULLY PAID AND NON-ASSESSABLE COMMON SHARES, $0.01 PAR VALUE, OF HCA HOLDINGS, INC. transferable on the books of the Corporation by the holder hereof in person or by Attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar. IN WITNESS WHEREOF, the said Corporation has caused this certificate to be signed by facsimile signatures of its duly authorized officers. Dated: SIG TO COME TITLE SIG TO COME TITLE AMERICAN FINANCIAL PRINTING INCORPORATED MINNEAPOLIS COUNTERSIGNED AND REGISTERED: WELLS FARGO BANK, N.A. BY TRANSFER AGENT AND REGISTRAR AUTHORIZED SIGNATURE |
THE BOARD OF THIS CORPORATION HAS THE AUTHORITY TO CREATE AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK OTHER THAN COMMON STOCK. THIS CORPORATION WILL FURNISH TO ANY SHAREHOLDER UPON WRITTEN REQUEST SENT TO ITS PRINCIPAL EXECUTIVE OFFICES, AND WITHOUT CHARGE, A FULL STATEMENT OF THE BOARDS AUTHORITY TO CREATE AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF CLASSES OR SERIES OF SHARES OF CAPITAL STOCK AS WELL AS THE DESIGNATIONS, PREFERENCES, LIMITATIONS AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR SERIES THEN OUTSTANDING OR AUTHORIZED TO BE ISSUED. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM as tenants in common TEN ENT as tenants by entireties JT TEN as joint tenants with right of survivorship and not as tenants in common UTMA ___ (Cust) (Minor) under Uniform Transfers to Minors Act ___ (State) For value received _____ hereby sell, assign, and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE) Shares of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated X X NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE GUARANTEED ALL GUARANTEES MUST BE MADE BY A FINANCIAL INSTITUTION (SUCH AS A BANK OR BROKER) WHICH IS A PARTICIPANT IN THE SECURITIES TRANSFER AGENTS MEDALLION PROGRAM (STAMP), THE NEW YORK STOCK EXCHANGE, INC. MEDALLION SIGNATURE PROGRAM (MSP), OR THE STOCK EXCHANGES MEDALLION PROGRAM (SEMP) AND MUST NOT BE DATED. GUARANTEES BY A NOTARY PUBLIC ARE NOT ACCEPTABLE. |
Very truly yours,
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/s/ Simpson Thacher & Bartlett LLP | ||||
SIMPSON THACHER & BARTLETT LLP | ||||
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KKR 2006 FUND L.P. | ||||||
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By: | KKR Associates 2006 L.P., its general partner | ||||
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By: | KKR 2006 GP LLC, its general partner | ||||
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KKR MILLENNIUM FUND L.P. | ||||||
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By: | KKR Associates Millennium L.P., its general partner | ||||
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By: | KKR Millennium GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
KKR PEI INVESTMENTS, L.P. | ||||||
|
||||||
|
By: | KKR PEI Associates, L.P., its general partner | ||||
|
||||||
|
By: | KKR PEI GP Limited, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
KKR PARTNERS III, L.P. | ||||||
|
||||||
|
By: | KKR III GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
OPERF CO-INVESTMENT LLC | ||||||
|
||||||
|
By: | KKR Associates 2006 L.P., its manager | ||||
|
||||||
|
By: | KKR 2006 GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
8 NORTH AMERICA INVESTOR L.P. | ||||||
|
||||||
|
By: | KKR Associates 8 NA L.P., its general partner | ||||
|
||||||
|
By: | KKR 8 NA Limited, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
BAIN CAPITAL INTEGRAL INVESTORS 2006, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
BCIP TCV, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
BAIN CAPITAL HERCULES INVESTORS, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
MERRILL LYNCH VENTURES L.P. 2001 | ||||||
|
||||||
|
By: | Merrill Lynch Ventures, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
ML GLOBAL PRIVATE EQUITY FUND, L.P. | ||||||
|
||||||
|
By: | MLGPE LTD, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
ML HCA CO-INVEST, L.P. | ||||||
|
||||||
|
By: | ML HCA Co-Invest LTD, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
2006 CO-INVESTMENT PORTFOLIO, L.P. | ||||||
|
||||||
|
By: | StepStone Co-Investment Funds GP, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
CITIGROUP CAPITAL PARTNERS II EMPLOYEE MASTER FUND, L.P. | ||||||
|
||||||
|
By: | Citigroup Private Equity LP, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
STEPSTONE CAPITAL PARTNERS II ONSHORE, L.P. | ||||||
|
||||||
|
By: | StepStone Co-Investment Funds GP, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
STEPSTONE CAPITAL PARTNERS II CAYMAN HOLDINGS, L.P. | ||||||
|
||||||
|
By: | StepStone Co-Investment Funds GP, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
BANC OF AMERICA CAPITAL INVESTORS, L.P. | ||||||
|
||||||
|
By: | Ridgemont Capital Management, L.P., its general partner | ||||
|
||||||
|
By: | REP I GP, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
BANC OF AMERICA CAPITAL INVESTORS V, L.P. | ||||||
|
||||||
|
By: | Ridgemont Capital Management V, L.P., its general partner | ||||
|
||||||
|
By: | REP I GP, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
FRISCO PARTNERS
|
||||
By: | ||||
Name: | Dr. Thomas F. Frist, Jr. | |||
Title: | Authorized Person | |||
Page | ||||
ARTICLE I DEFINITIONS
|
2 | |||
SECTION 1.1. Definitions
|
2 | |||
SECTION 1.2. Construction
|
4 | |||
ARTICLE II CORPORATE GOVERNANCE
|
5 | |||
SECTION 2.1. Board of Directors
|
5 | |||
SECTION 2.2. Committees
|
6 | |||
SECTION 2.3. Consent Rights
|
6 | |||
SECTION 2.4. VCOC Rights
|
7 | |||
ARTICLE III GENERAL PROVISIONS
|
7 | |||
SECTION 3.1. Notices
|
7 | |||
SECTION 3.2. Amendment; Waiver
|
10 | |||
SECTION 3.3. Further Assurances
|
10 | |||
SECTION 3.4. Assignment
|
10 | |||
SECTION 3.5. Third Parties
|
10 | |||
SECTION 3.6. Governing Law
|
10 | |||
SECTION 3.7. Jurisdiction
|
10 | |||
SECTION 3.8. Specific Performance
|
10 | |||
SECTION 3.9. Entire Agreement
|
11 | |||
SECTION 3.10. Severability
|
11 | |||
SECTION 3.11. No Waiver
|
11 | |||
SECTION 3.12. Table of Contents, Headings and Captions
|
11 | |||
SECTION 3.13. Grant of Consent
|
11 | |||
SECTION 3.14. Counterparts
|
12 | |||
SECTION 3.15. Effectiveness
|
12 | |||
SECTION 3.16. No Recourse
|
12 |
i
2
3
4
5
6
|
(i) | if to the Company: | ||
|
||||
|
HCA Holdings, Inc. | |||
|
||||
|
One Park Plaza | |||
|
Nashville, TN 37203 | |||
|
Attention: John M. Franck II | |||
|
Fax: (615) 344-1600 |
7
|
with a copy (which shall not constitute notice) to: | |||
|
||||
|
Simpson Thacher & Bartlett LLP | |||
|
425 Lexington Avenue | |||
|
New York, NY 10017 | |||
|
Attention: Joseph Kaufman | |||
|
Fax: (212) 455-2502 | |||
|
||||
|
(ii) | if to Parent: | ||
|
||||
|
c/o | |||
|
||||
|
Bain Capital Integral Investors 2006, LLC | |||
|
c/o Bain Capital Partners, LLC | |||
|
111 Huntington Avenue | |||
|
Boston, MA 02199 | |||
|
Attention: Chris Gordon | |||
|
Fax: (617) 516-2010 | |||
|
||||
|
c/o: | |||
|
||||
|
Dr. Thomas F. Frist, Jr. | |||
|
3100 West End Ave., Suite 500 | |||
|
Nashville, TN 37203 | |||
|
Fax: (615) 385-9101 | |||
|
||||
|
c/o: | |||
|
||||
|
KKR Millennium Fund, L.P. | |||
|
c/o Kohlberg Kravis Roberts & Co. L.P. | |||
|
2800 Sand Hill Road, Suite 200 | |||
|
Menlo Park, CA 94025 | |||
|
Attention: James C. Momtazee | |||
|
Fax: (650) 233-6584 | |||
|
||||
|
c/o: | |||
|
||||
|
ML Global Private Equity Fund, L.P. | |||
|
c/o BAML Capital Partners | |||
|
Four World Financial Center, Floor 23 | |||
|
New York, NY 10080 | |||
|
Attention: Christopher Birosak | |||
|
Fax: (212) 449-1119 |
8
|
(iii) | if to the Bain Group: | ||
|
||||
|
c/o: | |||
|
||||
|
Bain Capital Integral Investors 2006, LLC | |||
|
c/o Bain Capital Partners, LLC | |||
|
111 Huntington Avenue | |||
|
Boston, MA 02199 | |||
|
Attention: Chris Gordon | |||
|
Fax: (617) 516-2010 | |||
|
||||
|
(iv) | if to Frisco Inc.: | ||
|
||||
|
Dr. Thomas F. Frist, Jr. | |||
|
3100 West End Ave., Suite 500 | |||
|
Nashville, TN 37203 | |||
|
Fax: (615) 385-9101 | |||
|
||||
|
(v) | if to the KKR Group: | ||
|
||||
|
KKR Millennium Fund, L.P. | |||
|
c/o Kohlberg Kravis Roberts & Co. L.P. | |||
|
2800 Sand Hill Road, Suite 200 | |||
|
Menlo Park, CA 94025 | |||
|
Attention: James C. Momtazee | |||
|
Fax: (650) 233-6584 | |||
|
||||
|
(vi) | if to the BAML Group: | ||
|
||||
|
ML Global Private Equity Fund, L.P. | |||
|
c/o BAML Capital Partners | |||
|
Four World Financial Center, Floor 23 | |||
|
New York, NY 10080 | |||
|
Attention: Christopher Birosak | |||
|
Fax: (212) 449-1119 |
9
10
11
12
HCA HOLDINGS, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
HERCULES HOLDING II, LLC
|
||||
By: | ||||
Name: | ||||
Title: | ||||
KKR 2006 FUND L.P. | ||||||
|
||||||
|
By: | KKR Associates 2006 L.P., its general partner | ||||
|
||||||
|
By: | KKR 2006 GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
KKR MILLENNIUM FUND L.P. | ||||||
|
||||||
|
By: | KKR Associates Millennium L.P., its general partner | ||||
|
||||||
|
By: | KKR Millennium GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
KKR PEI INVESTMENTS, L.P. | ||||||
|
||||||
|
By: | KKR PEI Associates, L.P., its general partner | ||||
|
||||||
|
By: | KKR PEI GP Limited, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
KKR PARTNERS III, L.P. | ||||||
|
||||||
|
By: | KKR III GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
OPERF CO-INVESTMENT LLC | ||||||
|
||||||
|
By: | KKR Associates 2006 L.P., its manager | ||||
|
||||||
|
By: | KKR 2006 GP LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
8 NORTH AMERICA INVESTOR L.P. | ||||||
|
||||||
|
By: | KKR Associates 8 NA L.P., its general partner | ||||
|
||||||
|
By: | KKR 8 NA Limited, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
BAIN CAPITAL INTEGRAL INVESTORS 2006, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
BCIP TCV, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
BAIN CAPITAL HERCULES INVESTORS, LLC | ||||||
|
||||||
|
By: | Bain Capital Investors, LLC, its administrative member | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
MERRILL LYNCH VENTURES L.P. 2001 | ||||||
|
||||||
|
By: | Merrill Lynch Ventures, LLC, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
ML GLOBAL PRIVATE EQUITY FUND, L.P. | ||||||
|
||||||
|
By: | MLGPE LTD, its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: | |||||
|
||||||
ML HCA CO-INVEST, L.P. | ||||||
|
||||||
|
By: | ML HCA CO-INVEST LTD., its general partner | ||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
FRISCO INC. | ||||||
|
||||||
|
By: | |||||
|
|
|||||
|
Title: |
2
HCA HOLDINGS, INC.
|
||||
By: | ||||
Name: | ||||
Title: | ||||
3
Name: | ||||
4
/s/ Ernst & Young LLP |