HCA Holdings 2012 Annual Report Download - page 57
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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 continue to have influence over us and may have conflicts of interest with us in the future.
On February 15, 2013, upon completion of a secondary offering of our shares held by certain of the
Investors, we ceased to qualify as a “controlled company” under applicable New York Stock Exchange listing
standards and are required to appoint a board of directors comprised of a majority of independent members
within one year, which will necessitate a transition in our existing governance structure. However, as of
February 15, 2013, the Investors continued to indirectly own approximately 39% of our capital stock. In addition,
representatives of the Investors have the continued right to designate certain of the members of our Board of
Directors. As a result, the Investors have the continued ability to influence our decisions to enter into corporate
transactions (and the terms thereof) and to potentially prevent changes in the composition of our Board of
Directors and any transaction that requires stockholder approval.
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.
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