Filed Pursuant to Rule 424(b)(2)
Registration No. 333-51540
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED DECEMBER 19, 2000
HCA INC.
$500,000,000
6.95% NOTES DUE 2012
MATURITY
- The Notes will mature on May 1, 2012.
INTEREST
- Interest on the Notes is payable on May 1 and November 1 of each year,
beginning November 1, 2002.
- Interest will accrue from April 26, 2002.
REDEMPTION
- We may at our option redeem the Notes at any time at the price described under
"Description of the Notes" at page S-12 of this prospectus supplement.
- There is no sinking fund.
RANKING
- The Notes are senior unsecured obligations. The Notes rank equally with all of
our existing and future unsecured senior debt and senior to all of our
existing and future subordinated debt.
LISTING
- We do not intend to list the Notes on any securities exchange.
THE COMPANY
- Our principal office is located at One Park Plaza, Nashville, Tennessee 37203.
Our telephone number is (615) 344-9551.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR DETERMINED THAT THIS
PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PER NOTE TOTAL
Initial Price to Public 99.835% $499,175,000
Underwriting Discount 0.650% $ 3,250,000
Proceeds to Us (Before Expenses) 99.185% $495,925,000
- The Notes will be delivered to you in global form through the book-entry
delivery system of The Depository Trust Company on or about April 26, 2002.
- The Underwriters listed below will purchase the Notes from us on a firm
commitment basis and offer them to you, subject to certain conditions.
Joint Lead-Managers
DEUTSCHE BANK SECURITIES JPMORGAN
Senior Co-Managers
BANC OF AMERICA SECURITIES LLC FLEET SECURITIES, INC. MIZUHO INTERNATIONAL PLC
SCOTIA CAPITAL SUNTRUST ROBINSON HUMPHREY
Co-Managers
BNY CAPITAL MARKETS, INC. WACHOVIA SECURITIES
The date of this Prospectus Supplement is April 23, 2002.
YOU SHOULD READ THIS PROSPECTUS SUPPLEMENT ALONG WITH THE PROSPECTUS THAT
FOLLOWS. BOTH DOCUMENTS CONTAIN INFORMATION THAT YOU SHOULD CONSIDER WHEN MAKING
YOUR INVESTMENT DECISION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED
PROSPECTUS. WE HAVE NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER
PERSON TO PROVIDE YOU WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH
DIFFERENT OR INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT,
AND THE UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD ASSUME THAT
THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE ATTACHED
PROSPECTUS IS ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS
SUPPLEMENT ONLY. OUR BUSINESS, FINANCIAL POSITION, RESULTS OF OPERATIONS AND
PROSPECTS MAY HAVE CHANGED SINCE THAT DATE.
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Forward-Looking Statements.................................. S-3
Prospectus Supplement Summary............................... S-5
Ratio of Earnings to Fixed Charges.......................... S-10
Use of Proceeds............................................. S-10
Capitalization.............................................. S-11
Description of the Notes.................................... S-12
Underwriting................................................ S-18
PROSPECTUS
Where You Can Find More Information......................... 2
The Company................................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Use of Proceeds............................................. 3
Description of the Debt Securities.......................... 4
Plan of Distribution........................................ 11
Legal Opinions.............................................. 11
Experts..................................................... 11
S-2
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the attached prospectus include certain
disclosures which contain "forward-looking statements." Forward-looking
statements include all statements that do not relate solely to historical or
current facts, and can be identified by the use of words such as "may,"
"believe," "will," "expect," "project," "estimate," "anticipate," "plan,"
"initiative," or "continue." These forward-looking statements address, among
other things, strategic objectives and the anticipated effects of the offering.
See "Prospectus Supplement Summary." These forward-looking statements are based
on our current plans and expectations and are subject to a number of known and
unknown uncertainties and risks, many of which are beyond our control, that
could significantly affect current plans and expectations and our future
financial position and results of operations. These factors include, but are not
limited to,
- the outcome of the known and unknown litigation and the governmental
investigations and litigation involving our business practices, including
the ability to negotiate, execute and timely consummate definitive
settlement agreements in the government's remaining civil cases and to
obtain court approval thereof,
- the ability to consummate the understanding with the Centers for Medicare
and Medicaid Services (formerly known as the Health Care Financing
Administration),
- the highly competitive nature of the health care business,
- the efforts of insurers, health care providers and others to contain
health care costs,
- possible changes in the Medicare and Medicaid programs that may limit
reimbursements to health care providers and insurers,
- changes in federal, state or local regulations affecting the health care
industry,
- the possible enactment of federal or state health care reform,
- the ability to attract and retain qualified management and personnel,
including affiliated physicians, nurses and medical support personnel,
- liabilities and other claims asserted against us,
- fluctuations in the market value of our common stock,
- changes in accounting practices,
- changes in general economic conditions,
- future divestitures which may result in additional charges,
- changes in revenue mix and the ability to enter into and renew managed
care provider arrangements on acceptable terms,
- the availability, terms and cost of capital,
- changes in business strategy or development plans,
- slowness of reimbursement,
- the ability to implement our shared services and other initiatives and
realize decreases in administrative, supply and infrastructure costs,
- the outcome of pending and any future tax audits, appeals and litigation
associated with our tax positions,
- the outcome of our continuing efforts to monitor, maintain and comply
with appropriate laws, regulations, policies and procedures and our
corporate integrity agreement with the government,
S-3
- increased reviews of our cost reports,
- the ability to maintain and increase patient volumes and control the
costs of providing services, and
- other risk factors described in this prospectus supplement, the attached
prospectus or the documents incorporated by reference in this prospectus
supplement and the attached prospectus.
As a consequence, current plans, anticipated actions and future financial
position and results of operations may differ from those expressed in any
forward-looking statements we make. You should not unduly rely on these
forward-looking statements when evaluating the information presented in this
prospectus supplement, the attached prospectus or the documents incorporated by
reference in this prospectus supplement and the attached prospectus.
S-4
PROSPECTUS SUPPLEMENT SUMMARY
You should read the following summary information together with the
detailed information included in this prospectus supplement, the attached
prospectus and the documents incorporated by reference in this prospectus
supplement and the attached prospectus. As used in this prospectus supplement
and the attached prospectus, the terms "HCA," "Company" and "we" refer to HCA
Inc. (formerly known as HCA - The Healthcare Company) and its affiliates. The
term "affiliates" includes our direct and indirect subsidiaries and partnerships
and joint ventures in which our subsidiaries are partners.
HCA
OVERVIEW
We operate the largest chain of general acute care hospitals in the United
States along with an expansive network of outpatient surgery centers and other
related health care operations. At March 31, 2002, our affiliates owned and
operated 175 hospitals and 74 freestanding surgery centers. Our affiliates are
also partners in several 50/50 joint ventures that own and operate six hospitals
and three freestanding surgery centers, which are accounted for using the equity
method. Our facilities are located in 23 states, England and Switzerland.
Our hospitals provide a comprehensive array of services including internal
medicine, cardiology, oncology, obstetrics, general surgery, neurosurgery and
orthopedics, as well as diagnostic and emergency services. We also provide
outpatient and ancillary services through our acute care hospitals and
outpatient facilities, including outpatient surgery and diagnostic centers,
rehabilitation and other facilities.
OUR BUSINESS STRATEGY
Our business strategy is to be a comprehensive provider of quality health
care services in the most cost-effective manner and consistent with our ethics
and compliance program, applicable government regulations and guidelines and
industry standards. We also seek to enhance financial performance by increasing
utilization of our facilities and improving operating efficiencies. To achieve
these objectives, we pursue the following strategies:
- emphasize a "patients first" philosophy and a commitment to ethics and
compliance;
- focus on strong assets in select, core communities;
- develop comprehensive local health care networks with a broad range of
health care services;
- grow through increased patient volume, expansion of specialty services
and emergency departments and selective acquisitions;
- improve operating efficiencies through enhanced cost management and
resource utilization, and the implementation of shared services
initiatives;
- recruit, develop and maintain relationships with physicians;
- streamline and decentralize management, consistent with our local focus;
and
- effectively allocate capital to maximize return on investments.
INVESTIGATIONS AND LITIGATION
We continue to be the subject of governmental investigations and litigation
relating to our business practices. Additionally, we are a defendant in several
qui tam actions brought by private parties on behalf of the United States of
America.
In December 2000, we entered into a plea agreement with the Criminal
Division of the Department of Justice and various U.S. Attorney's Offices and a
civil and administrative settlement agreement with the Civil Division of the
Department of Justice. The agreements
S-5
resolve all federal criminal issues outstanding against us and certain issues
involving federal civil claims by or on behalf of the government against us
relating to DRG coding, outpatient laboratory billing and home health issues.
The civil issues that are not covered by the civil agreement and remain
outstanding include claims related to cost reports and physician relations
issues. The civil agreement was approved by the Federal District Court of the
District of Columbia in August 2001. We paid the government $95 million, as
provided by the plea agreement, during the first quarter of 2001 and paid $745
million (plus $60 million of accrued interest), as provided by the civil
agreement, during the third quarter of 2001. We also entered into a corporate
integrity agreement with the Office of Inspector General of the Department of
Health and Human Services.
We remain the subject of a formal order of investigation by the Securities
and Exchange Commission. We understand that the SEC investigation includes the
anti-fraud, insider trading, periodic reporting and internal accounting control
provisions of the federal securities laws.
We continue to cooperate in government investigations. Given the scope of
the investigations and current litigation, we anticipate continued investigative
activity to occur in these and other jurisdictions in the future.
While we remain unable to predict the outcome of any of the investigations
and litigation or the initiation of any additional investigations or litigation,
were we to be found in violation of federal or state laws relating to Medicare,
Medicaid or similar programs or breach of the corporate integrity agreement, we
could be subject to substantial monetary fines, civil and criminal penalties
and/or exclusion from participation in the Medicare and Medicaid programs. Any
such sanctions or expenses could have a material adverse effect on our financial
position, results of operations and liquidity. See our Annual Report on Form
10-K for the year ended December 31, 2001 for more detailed discussions of the
risks and potential impact of these actions.
S-6
THE OFFERING
TERMS OF THE NOTES:
Notes offered............... $500,000,000 aggregate principal amount of
6.95% Notes due 2012.
Maturity date............... The Notes will mature on May 1, 2012.
Interest payment dates...... May 1 and November 1 of each year,
beginning November 1, 2002.
Ranking..................... The Notes are senior unsecured obligations.
The Notes rank equally with all of our
existing and future unsecured senior debt
and are senior to all of our existing and
future subordinated debt.
Redemption and sinking
fund........................ We may at our option redeem the Notes at
any time at the price described under
"Description of the Notes" at page S-12 of
this prospectus supplement. There is no
sinking fund.
Form of Notes............... One or more global securities, held in the
name of Cede & Co., the nominee of The
Depository Trust Company.
Settlement and payment...... Same-day -- immediately available funds.
Use of proceeds............. We estimate that the net proceeds from the
offering will be approximately $496
million. We intend to use the net proceeds
to pay down amounts outstanding under our
bank revolving credit facility and for
general corporate purposes. See "Use of
Proceeds."
For additional information with respect to the Notes, see "Description of the
Notes."
S-7
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA
The following table sets forth our summary historical consolidated
financial data for the years ended December 31, 2001, 2000 and 1999 and certain
selected ratios for the years ended December 31, 2001, 2000 and 1999 and our
financial position at December 31, 2001. This financial data has been derived
from, and should be read in conjunction with, our audited consolidated financial
statements and the related notes filed as part of our Annual Report on Form 10-K
for the year ended December 31, 2001.
YEAR ENDED
DECEMBER 31,
----------------------------------------
2001 2000 1999
---------- ---------- ----------
(DOLLARS IN MILLIONS)
INCOME STATEMENT DATA:
Revenues............................................ $ 17,953 $ 16,670 $ 16,657
Interest expense.................................... 536 559 471
Income before extraordinary charge.................. 903 219 657
Net income.......................................... 886 219 657
OPERATING DATA:
EBITDA(a)........................................... $ 3,421 $ 3,177 $ 2,888
Number of hospitals at end of period(b)............. 178 187 195
Number of licensed beds at end of period(c)......... 40,112 41,009 42,484
Admissions(d)....................................... 1,564,100 1,553,500 1,625,400
Equivalent admissions(e)............................ 2,311,700 2,300,800 2,425,100
Average length of stay (days)(f).................... 4.9 4.9 4.9
Average daily census(g)............................. 21,160 20,952 22,002
PERCENTAGE CHANGE FROM PRIOR YEAR PERIOD:
Revenues............................................ 7.7% 0.1% (10.8)%
Admissions(d)....................................... 0.7 (4.4) (14.1)
Equivalent admissions(e)............................ 0.5 (5.1) (15.7)
Revenue per equivalent admission.................... 7.2 5.5 5.7
YEAR ENDED
DECEMBER 31,
----------------------------------------
2001 2000 1999
---------- ---------- ----------
SELECTED RATIOS:
Ratio of EBITDA to interest expense................. 6.4x 5.7x 6.1x
Ratio of total debt to EBITDA....................... 2.2x 2.1x 2.2x
Ratio of total debt to total capitalization(h)...... 56% 54% 50%
Ratio of earnings to fixed charges.................. 3.4x 1.9x 3.1x
AT
DECEMBER 31,
2001
------------
FINANCIAL POSITION:
Assets.................................................... $ 17,730
Working capital........................................... 957
Long-term debt, including amounts due within one year..... 7,360
Minority interests in equity of consolidated entities..... 563
Company-obligated mandatorily redeemable securities of
affiliate holding solely Company securities............. 400
Stockholders' equity...................................... 4,762
------------
(a) EBITDA is defined as income before extraordinary charge, depreciation and
amortization, interest expense, gains on sales of facilities, impairment of
long-lived assets, settlement with federal government, restructuring of
operations and investigation related costs, minority interests and income
taxes. EBITDA is commonly used as an analytical indicator within the health
care industry, and also serves as a measure of leverage capacity and debt
service ability. You should not consider EBITDA as a measure of financial
performance under generally accepted accounting principles. The items
excluded from EBITDA are significant components in understanding and
assessing financial performance. You should not consider EBITDA in isolation
or as an alternative to net income, cash flows generated by operating,
investing or financing activities or other financial statement data
presented in the financial
S-8
statements as an indicator of financial performance or liquidity. Because
EBITDA is not a measurement determined in accordance with generally accepted
accounting principles and is thus susceptible to varying calculations,
EBITDA as presented may not be comparable to other similarly titled measures
of other companies.
(b) Excludes six facilities at December 31, 2001, nine facilities at December
31, 2000, and 12 facilities at December 31, 1999 that are not consolidated
(accounted for using the equity method) for financial reporting purposes.
(c) Licensed beds are those beds for which a facility has been granted approval
to operate from the applicable state licensing agency.
(d) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to our hospitals. Management and certain
investors use admissions as a general measure of inpatient volume.
(e) Management and certain investors use equivalent admissions as a general
measure of combined inpatient and outpatient volume. Equivalent admissions
are computed by multiplying admissions (inpatient volume) by the sum of
gross inpatient revenue and gross outpatient revenue and then dividing the
resulting amount by gross inpatient revenue. The equivalent admissions
computation "equates" outpatient revenue to the volume measure (admissions)
used to measure inpatient volume resulting in a general measure of combined
inpatient and outpatient volume.
(f) Represents the average number of days admitted patients stay in our
hospitals.
(g) Represents the average number of patients in our hospital beds each day.
(h) Total capitalization includes total debt, minority interests in equity of
consolidated entities, Company-obligated mandatorily redeemable securities
of affiliate holding solely Company securities, forward purchase contracts
and put options and stockholders' equity.
S-9
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our consolidated earnings to
fixed charges for the periods presented.
YEAR ENDED DECEMBER 31,
--------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
3.43x 1.85x 3.11x 2.58x 1.81x
For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income from continuing operations before minority
interests, income taxes and fixed charges. "Fixed charges" consist of interest
expense, debt amortization costs and one-third of rent expense, which
approximates the interest portion of rent expense.
USE OF PROCEEDS
We estimate that the net proceeds from the offering of the Notes, after
deducting the underwriting discount and estimated expenses of the offering, will
be approximately $496 million. We intend to use the net proceeds from the sale
of the Notes to repay a portion of the amounts outstanding under our $1.75
billion bank revolving credit facility and for general corporate purposes. As of
March 31, 2002, we had approximately $410 million outstanding under our
revolving credit facility. Based on our current credit ratings, borrowings under
the revolving credit facility bear interest at a rate equal to LIBOR plus 1.00%
per annum (2.88% at March 31, 2002). Amounts repaid under the bank revolving
credit facility may be reborrowed.
S-10
CAPITALIZATION
The following table sets forth our total capitalization as of December 31,
2001 and as adjusted to give effect to the offering of Notes by this prospectus
supplement.
AS OF DECEMBER 31, 2001
---------------------------
PRO FORMA
AS
HISTORICAL ADJUSTED
---------- -----------
(UNAUDITED)
(DOLLARS IN MILLIONS)
Long-term debt due within one year.......................... $ 807 $ 807
------- -------
Long-term debt:
Senior collateralized debt due through 2034............... 134 134
Senior debt (fixed rate) due through 2095................. 4,677 5,177
Senior debt (floating rate) due through 2004.............. 275 275
Bank term loan............................................ 712 712
Bank revolving credit facility............................ 755 259
------- -------
Total long-term debt................................... 6,553 6,557
------- -------
Total debt........................................ 7,360 7,364
------- -------
Minority interests in equity of consolidated entities....... 563 563
------- -------
Company-obligated mandatorily redeemable securities of
affiliate holding solely Company obligations.............. 400 400
------- -------
Stockholders' equity:
Common stock $.01 par value per share; authorized
1,600,000,000 voting shares and 50,000,000 nonvoting
shares; outstanding 488,297,200 voting shares and
21,000,000 nonvoting shares............................ 5 5
Other..................................................... 7 7
Accumulated other comprehensive income.................... 18 18
Retained earnings......................................... 4,732 4,732
------- -------
Total stockholders' equity............................. 4,762 4,762
------- -------
Total capitalization.............................. $13,085 $13,089
======= =======
S-11
DESCRIPTION OF THE NOTES
We will issue the Notes under an indenture, dated as of December 16, 1993,
between us and The First National Bank of Chicago. We will refer to the
indenture, together with all supplements, as the "Indenture." Bank One Trust
Company, N.A. succeeded The First National Bank of Chicago as Trustee, which
fact is reflected in the First Supplemental Indenture to the Indenture, dated as
of May 25, 2000. The Bank of New York then succeeded Bank One Trust Company,
N.A. as Trustee, which fact is reflected in the Third Supplemental Indenture to
the Indenture, dated as of December 5, 2001. We will call The Bank of New York
the "Trustee."
A form of the Indenture is filed as an exhibit to the registration
statement, of which the accompanying prospectus is a part. The following is a
summary of certain provisions of the Indenture and of the Notes (or debt
securities, as they are referred to in the accompanying prospectus). This
summary does not purport to be complete and is subject to, and qualified by, the
Indenture.
The Notes will mature on May 1, 2012. The Notes will bear interest at the
rate per year shown on the cover of this prospectus supplement, computed on the
basis of a 360-day year of twelve 30-day months. The period during which the
Notes will earn interest will begin on April 26, 2002 or from the most recent
interest payment date to which interest has been paid or provided for. The
interest will be payable twice a year on May 1 and November 1, beginning on
November 1, 2002. Interest payable on any Note that is punctually paid or duly
provided for on any interest payment date shall be paid to the person in whose
name such Note is registered at the close of business on April 15 and October
15, as the case may be, preceding such interest payment date. We may pay
interest, at our option, by checks mailed to the registered holders of the
Notes.
All of the debt securities of this series need not be issued at the same
time. This series may be reopened for issuance of additional debt securities of
such series without notice to any holder of Notes.
The Notes will be issued in book-entry form only.
You can find more detailed information regarding the terms of the Notes in
the prospectus under the heading "Description of the Debt Securities."
BOOK-ENTRY SYSTEM
The Depository Trust Company, New York, New York, will act as the
Depositary for the Notes. The Notes will be represented by one or more global
securities registered in the name of Cede & Co., the nominee of the Depositary.
The provisions described under "Description of the Debt Securities -- Book-Entry
System" in the accompanying prospectus will apply to the Notes. Accordingly,
beneficial interests in the Notes will be shown on, and transfers thereof will
be effected only through, records maintained by the Depositary and its
participants.
The Depositary has advised us and the Underwriters that it is:
- a limited purpose trust company organized under the New York Banking Law,
- a "banking organization" within the meaning of the New York Banking Law,
- a member of the United States Federal Reserve System,
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code, and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the United States Securities Exchange Act of 1934, as amended.
The Depositary holds securities, such as the Notes, deposited by its direct
participants. The Depositary also facilitates the settlement among direct
participants of securities transactions in
S-12
deposited securities, such as transfers and pledges, through electronic
computerized book-entry changes in the direct participants' accounts. This
eliminates the need for physical movement of securities certificates. Direct
participants include securities brokers and dealers (including the
Underwriters), banks, trust companies, clearing corporations and certain other
organizations. The Depositary is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc. Access to the Depositary's
book-entry system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly. These
entities are known as indirect participants. The rules applicable to the
Depositary and its direct and indirect participants are on file with the SEC.
Principal and interest payments on the Notes registered in the name of the
Depositary's nominee will be made in immediately available funds to the
Depositary's nominee as the registered owner of the global securities. Under the
terms of the Notes, we and the Trustee will treat the persons in whose names the
Notes are registered as the owners of the Notes for the purpose of receiving
payment of principal and interest on them and for all other purposes whatsoever.
Therefore, neither we, the Trustee nor any paying agent has any direct
responsibility or liability for the payment of principal or interest on the
global securities to owners of beneficial interests in the global securities.
The Depositary has advised us and the Trustee that its current practice is, upon
receipt of any payment of principal or interest, to credit direct participants'
accounts on the payment date in accordance with their respective holdings of
beneficial interests in the global securities as shown on the Depositary's
records, unless the Depositary has reason to believe that it will not receive
payment on the payment date. Payments by direct and indirect participants to
owners of beneficial interests in the global securities will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of such direct and indirect participants
and not of the Depositary, the Trustee, or HCA, subject to any statutory
requirements that may be in effect from time to time. Payment of principal and
interest to the Depositary is the responsibility of the Trustee or HCA.
Disbursement of such payments to the owners of beneficial interests in the
global securities shall be the responsibility of the Depositary and direct and
indirect participants.
Notes represented by a global security will be exchangeable for Notes in
definitive form of like tenor issuable in authorized denominations and
registered in such names as the Depositary shall direct, only if either (i) the
Depositary notifies us that it is unwilling or unable to continue as Depositary
for such global security or if at any time the Depositary ceases to be a
clearing agency registered under applicable law and we do not appoint a
successor depositary within 90 days or (ii) we, in our discretion at any time,
determine not to require all of the Notes of the series to be represented by a
global security and so notify the Trustee. The Notes will be in denominations of
$1,000 and in any greater amount that is an integral multiple. Subject to the
foregoing, a global security is not exchangeable, except for a global security
or global securities of the same aggregate denominations to be registered in the
name of the Depositary or its nominee.
The distribution of the Notes may in the future be cleared through
Clearstream, Luxembourg and Euroclear. Secondary market trading of book-entry
interests in the Notes may take place through Euroclear and Clearstream,
Luxembourg, and those participants will follow the settlement procedures that
are applicable to conventional Eurobonds in registered form. Owners of
book-entry interests in the Notes will receive payments relating to their Notes
in United States dollars. Clearstream, Luxembourg and Euroclear have established
electronic securities and payment transfer, processing, depositary and custodial
links among themselves and others, either directly or through custodians and
depositaries. These links allow securities to be issued, held and transferred
among the clearing systems without the physical transfer of certificates.
S-13
Special procedures to facilitate clearance and settlement have been established
among these clearing systems to trade securities across borders in the secondary
market.
The policies of Clearstream, Luxembourg and Euroclear will govern payments,
transfers, exchange and other matters relating to the investor's interest in
securities held by them. We have no responsibility for any aspect of the records
kept by Clearstream, Luxembourg or Euroclear or any of their direct or indirect
participants. We also do not supervise these systems in any way.
Clearstream, Luxembourg and Euroclear and their participants perform these
clearance and settlement functions under agreements they have made with one
another or with their customers. You should be aware that they are not obligated
to perform or continue to perform these procedures and may modify them or
discontinue them at any time.
The description of the clearing systems in this section reflects our
understanding of the rules and procedures of Clearstream, Luxembourg and
Euroclear as they are currently in effect. These systems could change their
rules and procedures at any time. We have obtained the information in this
section concerning Clearstream, Luxembourg and Euroclear and their book-entry
systems and procedures from sources that we believe to be reliable, but we take
no responsibility for the accuracy of this information.
CLEARSTREAM, LUXEMBOURG
Clearstream, Luxembourg is incorporated as a bank under Luxembourg law.
Clearstream, Luxembourg holds securities for its customers and facilitates the
clearance and settlement of securities transactions between Clearstream,
Luxembourg customers through electronic book-entry changes in customer accounts,
thus eliminating the need for physical movement of certificates. Clearstream,
Luxembourg provides to its customers, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Clearstream, Luxembourg
interfaces with domestic markets in a number of countries. Clearstream,
Luxembourg has established an electronic bridge with Euroclear to facilitate
settlement of trades between Clearstream, Luxembourg and Euroclear.
As a registered bank in Luxembourg, Clearstream, Luxembourg is subject to
regulation by the Luxembourg Commission for the Supervision of the Financial
Sector. Clearstream, Luxembourg customers are recognized financial institutions
around the world, including underwriters, securities brokers and dealers, banks,
trust companies and clearing corporations. In the United States, Clearstream,
Luxembourg customers are limited to securities brokers and dealers. Clearstream,
Luxembourg customers may include the Underwriters. Other institutions that
maintain a custodial relationship with a Clearstream, Luxembourg customer may
obtain indirect access to Clearstream, Luxembourg.
THE EUROCLEAR SYSTEM
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous electronic book-entry
delivery against payment, thus eliminating the need for physical movement of
certificates and the risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in many currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing, and interfaces with domestic markets in
several countries.
The Euroclear System is operated by the Brussels office of Morgan Guaranty
Trust Company of New York, which is known as the Euroclear Operator, under
contract with Euroclear Clearance System, S.C., a Belgian cooperative
corporation. The Euroclear Operator conducts all operations, and all Euroclear
securities clearance accounts and Euroclear cash
S-14
accounts are accounts with the Euroclear Operator, not the cooperative. The
cooperative establishes policy for the Euroclear System on behalf of Euroclear
participants. Euroclear participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. The Board of
Governors of the Federal Reserve System, the New York State Banking Department
and the Belgian Banking Commission regulate and examine the Euroclear Operator.
The "Terms and Conditions Governing Use of Euroclear" and the related
"Operating Procedures of the Euroclear System" and applicable Belgian law govern
securities clearance accounts and cash accounts with the Euroclear Operator.
Specifically, these terms and conditions govern:
- transfers of securities and cash within the Euroclear System;
- withdrawal of securities and cash from the Euroclear System; and
- receipts of payments with respect to securities in the Euroclear System.
All securities in the Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear participants and has no record of or relationship with persons holding
securities through Euroclear participants.
CLEARANCE AND SETTLEMENT PROCEDURES
We understand that investors that hold their debt securities through
Euroclear or Clearstream, Luxembourg accounts will follow the settlement
procedures that are applicable to conventional Eurobonds in registered form.
Debt securities will be credited to the securities custody accounts of Euroclear
and Clearstream, Luxembourg participants on the Business Day following the
settlement date, for value on the settlement date. They will be credited either
free of payment or against payment for value on the settlement date. "Business
Day" means any day that is not a Saturday or Sunday and that is not a day on
which banking institutions are generally authorized or obligated by law to close
in The City of New York or London and, for any other place of payment, in such
place of payment.
We understand that secondary market trading between Euroclear and/or
Clearstream, Luxembourg participants will occur in the ordinary way following
the applicable rules and operating procedures of Euroclear and Clearstream,
Luxembourg. Secondary market trading will be settled using procedures applicable
to conventional Eurobonds in registered form.
You should be aware that investors will only be able to make and receive
deliveries, payments and other communications involving the Notes through
Clearstream, Luxembourg and Euroclear on Business Days. Those systems may not be
open for business on days when banks, brokers and other institutions are open
for business in the United States.
In addition, because of time-zone differences, there may be problems with
completing transactions involving Clearstream, Luxembourg and Euroclear on the
same Business Day as in the United States. U.S. investors who wish to transfer
their interests in the Notes, or to make or receive a payment or delivery of the
Notes, on a particular day, may find that the transactions will not be performed
until the next Business Day in Luxembourg or Brussels, in the event that
Clearstream, Luxembourg or Euroclear is used.
S-15
Clearstream, Luxembourg or Euroclear will credit payments to the cash
accounts of Clearstream, Luxembourg customers or Euroclear participants in
accordance with the relevant systemic rules and procedures, to the extent
received by its depositary. Clearstream, Luxembourg or the Euroclear Operator,
as the case may be, will take any other action permitted to be taken by a holder
under the Indenture on behalf of a Clearstream, Luxembourg customer or Euroclear
participant only in accordance with its relevant rules and procedures.
Clearstream, Luxembourg and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of the Notes among participants of
Clearstream, Luxembourg and Euroclear. However, they are under no obligation to
perform or continue to perform those procedures, and they may discontinue those
procedures at any time.
OPTIONAL REDEMPTION
The Notes will be redeemable as a whole or in part, at our option, at any
time, at a redemption price equal to the greater of (i) 100% of the principal
amount of such Notes and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate (as defined below), plus 25 basis
points, plus, in each case, accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker and having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date, (1)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding the redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (2) if the release (or any successor release) is not
published or does not contain the prices on that business day, (a) the average
of the Reference Treasury Dealer Quotations for the redemption date, after
excluding the highest and lowest Reference Treasury Dealer Quotations, or (b) if
the Trustee obtains fewer than four Reference Treasury Dealer Quotations, the
average of all the quotations.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by the Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding the redemption date.
"Reference Treasury Dealer" means each of Deutsche Bank Securities Inc. and
J.P. Morgan Securities Inc. and their respective successors; provided however,
that if any of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), we shall
substitute another Primary Treasury Dealer.
S-16
We will mail notice of any redemption between 30 and 60 days preceding the
redemption date to each holder of the Notes to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Notes or portions called
for redemption.
SAME-DAY SETTLEMENT AND PAYMENT
The Underwriters will settle the Notes in immediately available funds. So
long as the Depositary continues to make its same-day funds settlement system
available to us, we will make all payments of principal and interest on the
Notes in immediately available funds.
S-17
UNDERWRITING
We and the Underwriters have entered into an Underwriting Agreement
relating to the offering and sale of the Notes. In the Underwriting Agreement,
we have agreed to sell to each Underwriter, and each Underwriter has severally
agreed to purchase from us, the principal amount of Notes that appears opposite
its name in the table below:
PRINCIPAL AMOUNT
UNDERWRITER OF NOTES
----------- ----------------
Deutsche Bank Securities Inc................................ $175,000,000
J.P. Morgan Securities Inc.................................. 175,000,000
Banc of America Securities LLC.............................. 25,000,000
Fleet Securities, Inc....................................... 25,000,000
Mizuho International plc.................................... 25,000,000
Scotia Capital (USA) Inc.................................... 25,000,000
SunTrust Capital Markets, Inc............................... 25,000,000
BNY Capital Markets, Inc.................................... 12,500,000
Wachovia Securities, Inc.................................... 12,500,000
------------
Total............................................. $500,000,000
============
The obligations of the Underwriters under the Underwriting Agreement,
including their agreement to purchase Notes from us, are several and not joint.
Those obligations are also subject to certain conditions in the Underwriting
Agreement being satisfied. The Underwriters have agreed to purchase all of the
Notes if any of them are purchased.
The Underwriters have advised us that they propose to offer the Notes to
the public at the public offering price that appears on the cover page of this
prospectus supplement. The Underwriters may offer the Notes to selected dealers
at the public offering price minus a selling concession of up to .400% of the
principal amount of the Notes. In addition, the Underwriters may allow, and
those selected dealers may reallow, a selling concession of up to .250% of the
principal amount of the Notes to certain other dealers. After the initial public
offering, the Underwriters may change the public offering price and any other
selling terms.
In the Underwriting Agreement, we have agreed that:
- we will pay our expenses related to this offering, which we estimate will
be $350,000; and
- we will indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Notes are a new issue of securities, and there is currently no
established trading market for the Notes. In addition, we do not intend to apply
for the Notes to be listed on any securities exchange or to arrange for the
Notes to be quoted on any quotation system. The Underwriters have advised us
that they intend to make a market in the Notes, but they are not obligated to do
so. The Underwriters may discontinue any market making in the Notes at any time
in their sole discretion. Accordingly, we cannot assure you that a liquid
trading market will develop for the Notes, that you will be able to sell your
Notes at a particular time or that the prices that you receive when you sell
will be favorable.
Short sales involve the sale by the Underwriters of a greater principal
amount of Notes than they are required to purchase in the offering. The
Underwriters may close out any short position by purchasing Notes in the open
market. A short position is more likely to be created if Underwriters are
concerned that there may be downward pressure on the price of the Notes in the
open market prior to the completion of the offering. Stabilizing transactions
consist of various bids for or purchases of the Notes made by the Underwriters
in the open market prior to the completion of the offering. The Underwriters may
impose a penalty bid. This occurs when a particular Underwriter repays to the
other Underwriters a portion of the underwriting discount received by it because
the representatives of the Underwriters have repurchased Notes
S-18
sold by or for the account of that Underwriter in stabilizing or short covering
transactions. Purchases to cover a short position and stabilizing transactions
may have the effect of preventing or slowing a decline in the market price of
the Notes. Additionally, these purchases, along with the imposition of the
penalty bid, may stabilize, maintain or otherwise affect the market price of the
Notes. As a result, the price of the Notes may be higher than the price that
might otherwise exist in the open market. These transactions may be effected in
the over-the-counter market or otherwise.
Some of the Underwriters and their affiliates engage in various general
financing and banking transactions with us and our affiliates. In particular,
affiliates of the Underwriters are lenders under our revolving credit facility
and will receive a portion of the amounts repaid under our revolving credit
facility with the net proceeds of the offering. Because more than 10% of the net
proceeds will be paid to affiliates of the Underwriters, the offering is being
conducted in compliance with Rule 2710(c)(8) of the Conduct Rules of the
National Association of Securities Dealers, Inc.
S-19
PROSPECTUS
----------
HCA - THE HEALTHCARE COMPANY
$1,500,000,000
DEBT SECURITIES
---------------------
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf " registration process.
Under this shelf process, we may, from time to time, sell the debt securities
described in this prospectus in one or more offerings up to a total dollar
amount of $1,500,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. A prospectus supplement may also add, update or change information
contained in this prospectus.
You should rely only on the information incorporated by reference or
provided in this prospectus and the prospectus supplement. Neither we nor any
underwriter has authorized anyone else to provide you with different
information. This prospectus is not an offer to sell and it is not soliciting an
offer to buy these debt securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or the
prospectus supplement is accurate as of any date other than the date on the
front of the document.
We will provide specific terms of these debt securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
---------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
December 19, 2000
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934 and file reports and other information with the SEC. You may read
and copy these reports at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling the SEC at (800) 732-0330.
You may also inspect these reports at the SEC's New York Regional Office, Seven
World Trade Center, New York, New York 10048, at its Chicago Regional Office,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005, on which our
common stock trades. In addition, the SEC maintains an Internet site that
contains reports and other information regarding us (http://www.sec.gov).
We have registered these securities with the SEC on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
set forth in the Registration Statement. You may obtain copies of the
Registration Statement, including exhibits, as discussed in the first paragraph.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supersede
this information. We incorporate by reference the following documents:
- our Annual Report on Form 10-K for the year ended December 31, 1999;
- our Quarterly Report on Form 10-Q for the quarters ended March 31, 2000,
June 30, 2000 and September 30, 2000;
- our Current Reports on Form 8-K dated February 14, 2000, May 18, 2000,
May 25, 2000, August 18, 2000, September 14, 2000 and October 25, 2000;
and
- any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until our offering is
completed.
You may obtain copies of the above information (including exhibits), upon
written or oral request, without charge. You should direct requests to John M.
Franck II, Corporate Secretary, HCA - The Healthcare Company, One Park Plaza,
Nashville, Tennessee 37203 or by telephone at (615) 344-9551. Our web site
address is www.hcahealthcare.com.
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THE COMPANY
HCA - The Healthcare Company is a holding company whose affiliates own and
operate hospitals and related health care entities. The term "affiliates"
includes our direct and indirect subsidiaries and partnerships and joint
ventures in which our subsidiaries are partners. As of September 30, 2000, these
affiliates owned and operated 189 hospitals and 76 freestanding surgery centers
and provided extensive outpatient and ancillary services. Our affiliates are
also partners in several 50/50 joint ventures that own and operate nine
hospitals and three freestanding surgery centers which are accounted for using
the equity method. Our facilities are located in 24 states, England and
Switzerland.
Our primary objective is to provide a comprehensive array of quality health
care services in the most cost-effective manner possible. Our hospitals provide
a full range of medical services including such medical specialties as internal
medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and
obstetrics, as well as diagnostic and emergency services. We also provide
outpatient and ancillary health care services at both our general, acute care
hospitals and at our freestanding facilities, including outpatient surgery and
diagnostic centers, rehabilitation facilities, home health care agencies and
other facilities. In addition, we operate psychiatric hospitals which generally
provide a full range of mental health care services in inpatient, partial
hospitalization and outpatient settings.
We were formed in January 1990 as a Nevada corporation and reincorporated
in Delaware in July 1993. Our principal executive offices are located at One
Park Plaza, Nashville, Tennessee 37203, and our telephone number at that address
is (615) 344-9551.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our consolidated earnings to
fixed charges for the periods presented.
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------- -------------------------------------
2000 1999 1999 1998 1997 1996 1995
----- ----- ----- ----- ----- ----- -----
1.97x 3.33x 3.11x 2.58x 1.81x 4.99x 3.94x
For the purpose of computing the ratio of earnings to fixed charges,
"earnings" consist of income from continuing operations before minority
interests, income taxes and fixed charges. "Fixed charges" consist of interest
expense, debt amortization costs and one-third of rent expense, which
approximates the interest portion of rent expense.
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement accompanying this
prospectus, we intend to use the net proceeds from the sale of the debt
securities for general corporate purposes. We intend to offer the debt
securities periodically when prevailing interest rates and other market
conditions are advantageous.
3
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
The description below of the general terms of the debt securities will be
supplemented by the more specific terms in the prospectus supplement.
We will issue the debt securities in one or more series under an indenture
dated as of December 16, 1993 between us and The First National Bank of Chicago.
Bank One Trust Company, N.A. succeeded The First National Bank of Chicago, which
fact is reflected in a supplement to the indenture dated as of May 25, 2000. We
will call Bank One Trust Company, N.A. the "Trustee." The indenture describes
the terms of the debt securities and does not limit the amount of debt
securities or other unsecured, senior debt that we may issue.
The debt securities will be unsecured and will rank equally with all of our
other unsecured and unsubordinated indebtedness. The indenture limits our
ability and that of our subsidiaries under certain circumstances to secure debt
by mortgages on our principal properties, by entering into sale and lease-back
transactions or by issuing subsidiary debt or preferred stock. In a liquidation
or reorganization of any of our subsidiaries, the right of holders of the debt
securities to participate in any distribution is subject to the prior claims of
creditors of that subsidiary, except to the extent that we are a creditor.
In addition to the following description of the debt securities, you should
refer to the detailed provisions of the indenture, a copy of which is filed as
an exhibit to the Registration Statement. The article and section numbers refer
to those in the indenture.
The prospectus supplement will specify the following terms of the issue of
debt securities:
- the title of the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the date or dates on which the debt securities may be issued and are or
will be payable;
- the rate or rates at which the debt securities will bear interest, if
any, or the method by which such rate or rates shall be determined, and
the date or dates from which such interest, if any, will accrue;
- the date or dates on which such interest, if any, will be payable, the
method of determining holders to whom any of the interest shall be
payable and the manner in which any interest payable on a global debt
security will be paid if other than book-entry;
- each office or agency where the principal, premium and interest on the
debt securities will be payable and where the debt securities may be
presented for registration of transfer or exchange;
- the period or periods within which, the price or prices at which, and the
terms and conditions upon which, the debt securities may be redeemed at
our option;
- our obligation, if any, to redeem, repay or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option of
a holder, and the period or periods within which, the price or prices at
which, and the terms and conditions upon which, the debt securities will
be redeemed, repaid or purchased pursuant to any such obligation;
- whether the debt securities are to be issued with original issue discount
within the meaning of Section 1273(a) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder;
- whether the debt securities are to be issued in whole or in part in the
form of one or more global notes and, if so, the identity of the
depositary, if any, for such global note or notes;
4
- if other than dollars, the foreign currency or currencies or foreign
currency units in which the principal, premium and interest on the debt
securities shall or may be paid and, if applicable, whether at our
election and/or that of the holder, and the conditions and manner of
determining the exchange rate or rates;
- any index used to determine the amount of payment of principal, premium
and interest on the debt securities;
- any addition to, or modification or deletion of, any events of default or
covenants provided for with respect to the debt securities;
- any other detailed terms and provisions of the debt securities that are
not inconsistent with the indenture (Section 301); and
- any special provisions for the payment of additional amounts with respect
to the debt securities.
The debt securities may be issued at a substantial discount below their
stated principal amount. The prospectus supplement will describe any federal
income tax consequences and other special considerations applicable to discount
securities. Discount securities may provide for the declaration or acceleration
of the maturity of an amount less than the principal amount if an event of
default occurs and continues.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless we state otherwise in a prospectus supplement, we will issue the
debt securities in registered form and in denominations of $1,000 or any
multiple thereof (Section 302). You will be able to exchange the debt securities
of any series (other than a global note) for an equal aggregate principal amount
of registered debt securities of the same series having the same maturity date,
interest rate and other terms, as long as the debt securities are issued in
authorized denominations. You may exchange the debt securities at the office of
the Security Registrar or co-Security Registrar that we designate in a
prospectus supplement. We will not impose any service charge for the exchange of
any debt security; however, we may ask you to pay any taxes and other
governmental charges as described in the indenture. The Security Registrar or
co-Security Registrar will effect the exchange when satisfied with your
documents of title and identity. We have appointed the Trustee as Security
Registrar (Section 305).
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in a prospectus supplement, we will make
principal, premium, and interest payments at the office of our Paying Agent. We
may determine to pay any interest, including any installment of interest, (i) by
check mailed to you at the address in the register or (ii) by wire transfer to
the holder's account (Section 307).
Unless otherwise indicated in a prospectus supplement, the Trustee will act
as our sole Paying Agent with respect to the debt securities, through its
principal office in the Borough of Manhattan, The City of New York. We will name
any additional Paying Agents in a prospectus supplement. We may at any time
rescind the designation of any Paying Agent or approve a change in the office
through which any Paying Agent acts, but we must maintain a Paying Agent in each
place of payment for a series of the debt securities.
If we have paid any moneys to the Trustee or a Paying Agent for the
principal, premium, and interest on any debt securities, and those moneys remain
unclaimed two years after due and payable, the moneys will be repaid to us and
the holder of the debt securities may thereafter look only to us for any payment
(Section 1103).
5
BOOK-ENTRY SYSTEM
We may issue the debt securities in whole or in part in book-entry only
form, which means that they will be represented by one or more permanent global
notes that will be deposited with a depositary located in the United States. We
will identify the depositary and describe the specific terms of the depositary
arrangement in the prospectus supplement relating to each series. We will refer
to this form here and in the prospectus supplement as "book-entry only." The
following discussion pertains to securities that are issued in book-entry only
form.
One or more global notes will be issued to and registered in the name of
the depositary or its nominee. The depositary will keep a computerized record of
its participants (for example, your broker) whose clients have purchased the
securities. The participant will then keep a record of its clients who purchased
the securities. Beneficial interests in global notes will be shown on, and
transfers of global notes will be made only through, records maintained by the
depositary and its participants.
So long as a depositary or its nominee is the registered owner of a global
note, it will be considered the sole owner of the debt securities under the
indenture. Except as provided below, you will not be entitled to have debt
securities registered in your name, will not receive or be entitled to receive
physical delivery of the debt securities in definitive form and will not be
considered the owner under the indenture. Certain jurisdictions that require
purchasers of securities to take physical delivery of securities in definitive
form may impair the ability to transfer beneficial interests in a global note.
Neither we, the Trustee, any Paying Agent nor the Security Registrar will have
any responsibility or liability for payments on account of, or for maintaining,
supervising or reviewing any records relating to, the beneficial ownership
interests.
We will make payments of principal, premium and interest on debt securities
to the depositary or its nominee, as the registered owner of the global note. We
expect that the depositary for debt securities of a series, upon receipt of any
payment of principal, premium or interest in respect of a global note, will
credit immediately participants' accounts with payments according to their
respective holdings of beneficial interests in the global note as shown on the
records of the depositary. We also expect that standing instructions and
customary practices will govern payments by participants to owners of beneficial
interests in the global note held through the participants, as is now the case
with securities held for the accounts of customers registered in "street name."
These payments will be the responsibility of the participants.
A global note may not be transferred, except that the depositary, its
nominees and their successors may transfer an entire global note to one another.
Debt securities represented by a global security would be exchangeable for
certificates in definitive registered form with the same terms in authorized
denominations only if:
- a depositary of a series is at any time unwilling or unable to continue
as depositary and we do not appoint a successor depositary within 90
days; or
- we determine at any time not to have any debt securities represented by
one or more global notes.
In either instance, an owner of beneficial interests in a global note will be
entitled to have debt securities equal in principal amount to the beneficial
interest registered in its name and to physical delivery in definitive form
(Section 304).
LIMITATIONS ON US AND OUR SUBSIDIARIES
Limitations on Mortgages
The indenture provides that neither we nor any of our subsidiaries will
issue, assume or guarantee any indebtedness or obligation secured by mortgages,
liens, pledges or other encumbrances upon any principal property (which means
each of our acute care hospitals that
6
provides general medical and surgical services), unless the debt securities
shall be secured equally and ratably with (or prior to) such debt (Section
1105). This restriction will not apply to:
- mortgages securing the purchase price or cost of construction of property
or additions, substantial repairs, alterations or improvements, if the
debt and the mortgages are incurred within 18 months of the acquisition
or completion of construction and full operation or additions, repairs,
alterations or improvements;
- mortgages existing on property at the time of its acquisition by us or
our subsidiary or on the property of a corporation at the time of the
acquisition of such corporation by us or our subsidiary;
- mortgages to secure debt on which the interest payments are exempt from
federal income tax under Section 103 of the Internal Revenue Code;
- mortgages in favor of us or a consolidated subsidiary;
- mortgages existing on the date of the indenture;
- certain mortgages to governmental entities;
- mortgages incurred in connection with the borrowing of funds used to
repay debt within 120 days in the same principal amount secured by other
mortgages on principal property with at least the same appraised fair
market value;
- mortgages incurred within 90 days (or any longer period, not in excess of
one year, as permitted by law) after acquisition of the related property
or equipment arising solely in connection with the transfer of tax
benefits in accordance with Section 168(f)(8) of the Internal Revenue
Code; and
- any extension, renewal or replacement of any mortgage referred to above,
provided the amount secured is not increased and it relates to the same
property.
Limitations on Sale and Lease-Back
The indenture provides that neither we nor any subsidiary will enter into
any sale and lease-back transaction with respect to any principal property with
another person unless either:
- we or our subsidiary could incur indebtedness secured by a mortgage on
the property to be leased; or
- within 120 days, we apply the greater of the net proceeds of the sale of
the leased property or the fair value of the leased property, net of all
debt securities delivered under the indenture, to the voluntary
retirement of our funded debt or the acquisition or construction of a
principal property (Section 1106).
Limitations on Subsidiary Debt and Preferred Stock
The indenture provides that none of our restricted subsidiaries may,
directly or indirectly, create, incur, issue, assume or otherwise become liable
with respect to, extend the maturity of, or become responsible for the payment
of, any debt or preferred stock except:
- debt outstanding on the date of the indenture;
- debt representing the assumption by one restricted subsidiary of debt of
another;
- debt or preferred stock of any corporation or partnership existing when
it becomes a subsidiary;
- debt of a restricted subsidiary arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations or
from guarantees, letters of credit,
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surety bonds or performance bonds securing any of our obligations or
those of our subsidiaries incurred or assumed in connection with the
disposition of any business, property or subsidiary, except for the
purpose of financing an acquisition, provided that the maximum aggregate
liability does not exceed the gross proceeds from the disposition;
- debt of a restricted subsidiary in respect of performance, surety and
other similar bonds, bankers acceptances and letters of credit provided
in the ordinary course of business;
- debt secured by a mortgage incurred to finance the purchase price or cost
of construction of property or additions, substantial repairs,
alterations or improvements, if the mortgage and debt are incurred within
18 months of the later of the acquisition or completion of construction
and full operation or additions, repairs, alterations or improvements and
the mortgage does not relate to any other property;
- permitted subsidiary refinancing debt (as defined in the indenture);
- debt of a restricted subsidiary to us or another subsidiary as long as we
hold it; or
- any obligation pursuant to a permitted sale and lease-back transaction
(Section 1107).
Exempted Transactions
Even if otherwise prohibited by these limitations, if the aggregate
outstanding principal amount of all our other debt and that of our subsidiaries
subject to these limitations does not exceed 15% of our consolidated net
tangible assets, then:
- we or any of our subsidiaries may issue, assume or guarantee debt secured
by mortgages;
- we or any of our subsidiaries may enter into any sale and lease-back
transaction; and
- any restricted subsidiary may issue, assume or become liable for any debt
or preferred stock (Section 1108).
EVENTS OF DEFAULT
Under the indenture, an event of default applicable to the debt securities
of any series means:
- failure to pay the principal or any premium on any debt security of that
series when due;
- failure to pay any interest on any debt security of that series when due,
continued for 30 days;
- failure to deposit any sinking fund payment in respect of any debt
security of that series when due;
- failure to perform, or the breach of, any of our other applicable
covenants or warranties in the indenture, continued for 60 days after
written notice;
- events in bankruptcy, insolvency or reorganization; and
- any other event of default provided with respect to debt securities of
that series (Section 501).
If any event of default with respect to debt securities of any series
occurs and is continuing, either the Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding debt securities of that series may
declare the principal amount, or in the case of discount securities, a portion
of the principal amount, of all the debt securities of that series to be due and
payable immediately. The holders may, under certain circumstances, rescind and
annul this acceleration prior to obtaining a judgment or decree (Section 502).
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Other than the duties of the Trustee during a default to act with the
required standard of care, the Trustee is not obligated to exercise any of its
rights or powers under the indenture at the request or direction of any of the
holders unless the holders shall have offered to the Trustee reasonable
indemnity (Section 603). Subject to these indemnification provisions, the
holders of a majority in aggregate principal amount of the outstanding debt
securities of any series may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, with respect to the debt securities of that
series (Section 512).
We will furnish the Trustee annually with a statement as to our performance
of certain obligations under the indenture and as to any default in our
performance (Section 1109).
MODIFICATION AND WAIVER
We and the Trustee may modify and amend the indenture with the consent of
the holders of a majority in aggregate principal amount of the outstanding debt
securities of each series affected. We must have the consent of the holder of
each outstanding debt security affected to:
- change the stated maturity of the principal of, or any installment of
interest on, any debt security;
- reduce the principal, premium or interest on any debt security;
- reduce the amount of principal of discount securities payable upon
acceleration of the maturity;
- change the currency of payment of principal, premium or interest on any
debt security;
- impair the right to institute suit for the enforcement of any payment on
or with respect to any debt security; or
- reduce the percentage of holders whose consent is required for
modification or amendment of the indenture or for waiver of compliance
with certain provisions of the indenture or certain defaults (Section
1002).
The holders of a majority in aggregate principal amount of the outstanding
debt securities of each series may, on behalf of all holders of that series,
waive any past default under the indenture with respect to debt securities of
that series. However, such holders may not waive a past default in the payment
of principal, premium or interest, or any sinking fund installment with respect
to the debt securities, or waive a covenant or provision that cannot be modified
or amended, without the consent of the holders of each outstanding debt security
affected (Section 513).
CONSOLIDATION, MERGER, SALE OR LEASE OF ASSETS
We may consolidate with or merge into, or transfer or lease our assets to,
any corporation without the consent of the holders of any of the outstanding
debt securities under the indenture if:
- the successor corporation assumes our obligations on the debt securities
and under the indenture;
- after giving effect to the transaction, no event of default, and no event
which, after notice or lapse of time or both, would become an event of
default, shall have occurred and be continuing; and
- other conditions are met (Section 901).
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DEFEASANCE
If so specified in a prospectus supplement, we may be discharged from all
obligations under the debt securities of any series, and we will not be subject
to the limitations in the indenture discussed in the above sections, if we
deposit with the Trustee trust money or U.S. government obligations that are
sufficient to pay all principal, premium and interest on the debt securities of
the series. We would deliver to the Trustee an opinion of counsel to the effect
that the deposit and related defeasance would not (1) cause the holders of the
debt securities of the series to recognize income, gain or loss for United
States income tax purposes or (2) result in the delisting of the debt securities
from any national securities exchange (if so listed) (Article Fourteen).
NOTICES
Notices to holders will be mailed to the addresses of the holders listed in
the security register (Sections 101, 105).
GOVERNING LAW
We will construe the indenture and the debt securities in accordance with
the laws of the State of New York (Section 111).
CONCERNING THE TRUSTEE
The Trustee has normal banking relationships with us.
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PLAN OF DISTRIBUTION
GENERAL
We may sell the debt securities directly to purchasers or through
underwriters, dealers or agents. We may distribute the debt securities in one or
more transactions, either at a fixed price or varying prices, at prevailing
market prices, at prices related to prevailing market prices or at negotiated
prices. The prospectus supplement will identify the terms of the offering, the
names of the underwriters or agents, the purchase price, any underwriting
discounts, the method of distribution and the time and place of delivery of the
debt securities.
In connection with the sale of debt securities, underwriters, dealers or
agents may receive discounts, concessions or commissions from us or from
purchasers for whom they act as agents. Underwriters, dealers and agents that
participate in the distribution of debt securities may qualify as underwriters
under the Securities Act of 1933. The prospectus supplement will identify any
such underwriter, dealer or agent and describe any compensation paid by us.
We may agree to indemnify underwriters, dealers and agents that participate
in the distribution of debt securities against liabilities, including
liabilities under the Securities Act of 1933.
Since each issuance of a series of these debt securities will have no
established trading market, broker-dealers may make a market in the debt
securities. We cannot assure the liquidity of the trading market for the debt
securities.
DELAYED DELIVERY ARRANGEMENT
If so indicated in a prospectus supplement, we will authorize dealers or
agents to solicit offers by certain institutions to purchase debt securities
from us pursuant to contracts providing for payment and delivery on a future
date, if so permitted by the purchaser's jurisdiction. We must approve all
institutions, which may include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others. The dealers and other agents will not be responsible
for the validity or performance of these contracts.
LEGAL OPINIONS
Bass, Berry & Sims PLC is passing upon the validity of the debt securities
for us. Jenkens & Gilchrist, a Professional Corporation, is passing upon legal
matters in connection with the offering of the debt securities for any
underwriters, dealers or agents. Jenkens & Gilchrist has rendered, and continues
to render, legal services to us.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
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HCA INC.