HCA Holdings 2011 Annual Report Download - page 55
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December 31, 2011. These investments are carried at fair value, with changes in unrealized gains and losses
being recorded as adjustments to other comprehensive income. At December 31, 2011, we had a net unrealized
gain of $11 million on the insurance subsidiaries’ investment securities.
We are exposed to market risk related to market illiquidity. Investments in debt and equity securities of our
wholly-owned insurance subsidiaries could be impaired by the inability to access the capital markets. Should the
wholly-owned insurance subsidiaries require significant amounts of cash in excess of normal cash requirements
to pay claims and other expenses on short notice, we may have difficulty selling these investments in a timely
manner or be forced to sell them at a price less than what we might otherwise have been able to in a normal
market environment. We may be required to recognize other-than-temporary impairments on long-term
investments in future periods should issuers default on interest payments or should the fair market valuations of
the securities deteriorate due to ratings downgrades or other issue specific factors.
We are also exposed to market risk related to changes in interest rates, and we periodically enter into
interest rate swap agreements to manage our exposure to these fluctuations. Our interest rate swap agreements
involve the exchange of fixed and variable rate interest payments between two parties, based on common
notional principal amounts and maturity dates. The notional amounts of the swap agreements represent balances
used to calculate the exchange of cash flows and are not our assets or liabilities.
The Investors control us and may have conflicts of interest with us in the future.
As of December 31, 2011, the Investors indirectly owned approximately 62% of our capital stock. As a
result, the Investors have control over our decisions to enter into any significant corporate transaction and have
the ability to prevent any transaction that requires the approval of stockholders. For example, the Investors could
cause us to make acquisitions that increase the amount of our indebtedness or sell assets.
Additionally, the Investors are in the business of making investments in companies and may acquire and
hold interests in businesses that compete directly or indirectly with us. One or more of the Investors may also
pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition
opportunities may not be available to us. So long as investment funds associated with or designated by the
Investors continue to indirectly own a significant amount of the outstanding shares of our common stock, even if
such amount is less than 50%, the Investors will continue to be able to strongly influence or effectively control
our decisions.
Item 1B. Unresolved Staff Comments
None.
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