Community Health Systems 2015 Annual Report Download - page 95

• redeem debt that is subordinated in right of payment to our outstanding notes;
• create liens;
• sell or otherwise dispose of assets, including capital stock of subsidiaries;
• enter into agreements that restrict dividends from subsidiaries;
• merge, consolidate, sell or otherwise dispose of substantially all of our assets;
• enter into transactions with affiliates; and
• guarantee certain obligations.
In addition, our Credit Facility contains restrictive covenants and requires us to maintain specified financial
ratios and satisfy other financial condition tests. Our ability to meet these restricted covenants and financial ratios
and tests can be affected by events beyond our control, and we cannot assure you that we will meet those tests. A
breach of any of these covenants could result in a default under our Credit Facility and/or our outstanding notes.
Upon the occurrence of an event of default under our Credit Facility or our outstanding notes, all amounts
outstanding under our Credit Facility and the notes may become immediately due and payable and all
commitments under the Credit Facility to extend further credit may be terminated.
We believe that internally generated cash flows, availability for additional borrowings under our Credit
Facility of $841 million (consisting of a $1.0 billion Revolving Facility, of which $66 million is set aside for
outstanding letters of credit and $159 million was outstanding at December 31, 2015) and our ability to amend
the Credit Facility to provide for one or more tranches of term loans in an aggregate principal amount of $1.5
billion, and our continued access to the bank credit and capital markets will be sufficient to finance acquisitions,
capital expenditures and working capital requirements through the next 12 months.
On May 6, 2015, we filed a universal automatic shelf registration statement on Form S-3ASR that will permit
us, from time to time, in one or more public offerings, to offer debt securities, common stock, preferred stock,
warrants, depositary shares, or any combination of such securities. The shelf registration statement will also
permit our subsidiary, CHS, to offer debt securities that would be guaranteed by us, from time to time in one or
more public offerings. The terms of any such future offerings would be established at the time of the offering.
The ratio of earnings to fixed charges is a measure of our ability to meet our fixed obligations related to our
indebtedness. The following table shows the ratio of earnings to fixed charges for the periods indicated:
Year Ended December 31,
2011 2012 2013 2014 2015
Ratio of earnings to fixed charges (1) 1.63x 1.69x 1.51x 1.29x 1.36x
(1) Fixed charges include interest expensed and capitalized during the year plus an estimate of the interest
component of rent expense. There are no shares of preferred stock outstanding. See exhibit 12 filed as part of
this Report for the calculation of this ratio.
Off-balance Sheet Arrangements
In the past, we have utilized operating leases as a financing tool for obtaining the operations of specified
hospitals without acquiring, through ownership, the related assets of the hospital and without a significant outlay
of cash at the front end of the lease. We utilize the same operating strategies to improve operations at those
hospitals held under operating leases as we do at those hospitals that we own. We have not entered into any
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