HCA Holdings 2011 Annual Report Download - page 85

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Contractual Obligations and Off-Balance Sheet Arrangements
As of December 31, 2011, maturities of contractual obligations and other commercial commitments are
presented in the table below (dollars in millions):
Payments Due by Period
Contractual Obligations(a) Total Current 2-3 Years 4-5 Years After 5 Years
Long-term debt including interest, excluding the senior
secured credit facilities(b) ....................... $28,545 $2,248 $4,089 $4,063 $18,145
Loans outstanding under the senior secured credit
facilities, including interest(b) .................... 11,560 860 2,931 3,384 4,385
Operating leases(c) ............................... 1,934 280 482 302 870
Purchase and other obligations(c) ................... 27 19 8 — —
Total contractual obligations ....................... $42,066 $3,407 $7,510 $7,749 $23,400
Commitment Expiration by Period
Other Commercial Commitments Not Recorded on the
Consolidated Balance Sheet Total Current 2-3 Years 4-5 Years After 5 Years
Surety bonds(d) .................................... $ 52 $51 $ 1 $— $—
Letters of credit(e) .................................. 65 7 15 43 —
Physician commitments(f) ............................ 24 17 7 — —
Guarantees(g) ..................................... 2 — — — 2
Total commercial commitments ....................... $143 $75 $23 $43 $ 2
(a) We have not included obligations to pay net estimated professional liability claims ($1.252 billion at December 31, 2011,
including net reserves of $410 million relating 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 ($628 million at December 31, 2011). We also have not included obligations
related to unrecognized tax benefits of $494 million at December 31, 2011, 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, 2011, 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 practice during the recruitment agreement payment
period. The physician commitments reflected were based on our maximum exposure on effective agreements at
December 31, 2011.
(g) We have entered into guarantee agreements related to certain leases.
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