HCA Holdings 2012 Annual Report Download - page 87

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources (continued)
and 2011, respectively. Our facilities are insured by our wholly-owned insurance subsidiary for losses up to
$50 million per occurrence; however, this coverage is subject to a $5 million per occurrence self-insured
retention. Net reserves for the self-insured professional liability risks retained were $896 million and
$842 million at December 31, 2012 and 2011, respectively. Claims payments, net of reinsurance recoveries,
during the next 12 months are expected to approximate $292 million. We estimate that approximately
$237 million of the expected net claim payments during the next 12 months will relate to claims subject to the
self-insured retention.
Financing Activities
We are a highly leveraged company with significant debt service requirements. Our debt totaled
$28.930 billion and $27.052 billion at December 31, 2012 and 2011, respectively. Our interest expense was
$1.798 billion for 2012 and $2.037 billion for 2011.
During June 2011, we redeemed all $1.000 billion aggregate principal amount of our 9
1
⁄ 8 % senior secured
second lien notes due 2014, at a redemption price of 104.563% of the principal amount, and $108 million
aggregate principal amount of our 9
7
⁄ 8 % senior secured second lien notes due 2017, at a redemption price of
109.875% of the principal amount.
During August 2011, we issued $5.000 billion aggregate principal amount of notes, comprised of
$3.000 billion of 6.50% senior secured first lien notes due 2020 and $2.000 billion of 7.50% senior unsecured
notes due 2022. After the payment of related fees and expenses, we used the net proceeds from these debt
issuances to redeem all of our outstanding $1.578 billion 9
5
⁄ 8 %/10
3
⁄ 8 % second lien toggle notes due 2016, at a
redemption price of 106.783% of the principal amount, and all of our outstanding $3.200 billion 9
1
⁄ 4 % second
lien notes due 2016, at a redemption price of 106.513% of the principal amount.
On September 21, 2011, we repurchased 80,771,143 shares of our common stock beneficially owned by
affiliates of Bank of America Corporation at a purchase price of $18.61 per share, the closing price of the
Company’s common stock on the New York Stock Exchange on September 14, 2011. The repurchase was
financed using a combination of cash on hand and borrowings under available credit facilities. The shares
repurchased represented approximately 15.6% of our total shares outstanding.
During October 2011, we issued $500 million aggregate principal amount of 8.00% senior unsecured notes
due 2018. After the payment of related fees and expenses, we used the net proceeds for general corporate
purposes, which included funding a portion of the acquisition of the Colorado Health Foundation’s approximate
40% remaining ownership interest in the HCA-HealthONE LLC joint venture, which was purchased during
October 2011 for $1.450 billion.
During February 2012, we issued $1.350 billion aggregate principal amount of 5.875% senior secured first
lien notes due 2022. After the payment of related fees and expenses, we used the net proceeds for general
corporate purposes.
During October 2012, we issued $2.500 billion aggregate principal amount of notes, comprised of
$1.250 billion of 4.75% senior secured first lien notes due 2023 and $1.250 billion of 5.875% senior unsecured
notes due 2023. After the payment of related fees and expenses, we used the net proceeds for general corporate
purposes, which included the repayment of an existing term loan due November 2013.
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