Registration No.333-46098
As Filed with the Securities and Exchange Commission on October 31, 2000May 10, 2001
Registration No. 333-59916
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________--------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UnderUNDER
THE SECURITIES ACT OF 1933
_________________--------------
UNIVERSAL HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2077891
(State orof other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)Number)
Universal Corporate Center
367 South Gulph Road
King of Prussia, Pennsylvania 19406
(610) 768-3300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
_______________
ALAN B. MILLER Copies of Correspondence
Alan B. Miller, President Copies of all communications, including all communications sent to
Universal Health Services, Inc. the agent for service, should be sent to:
President
Universal Health Services, Inc. WARREN J. NIMETZ, ESQ.
Universal Corporate Center Warren J. Nimetz, Esq.
367 South Gulph Road Fulbright & Jaworski L.L.P.
367 South Gulph Road 666 Fifth Avenue
King of Prussia, Pennsylvania 19406 666 Fifth Avenue
(610) 768-3300 New York, New York 10103
(610) 768-3300 (212) 318-3000
(Name, address, including zip code, and telephone (212) 318-3000
number, including area code, of agent for service)
_______________
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Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this registration statement becomes effective.Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.box: [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_][ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_] _____________[ ] __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Title of each class of Amount to Proposed maximum Proposed maximum Amount of
Securities to be registered be registered offering price per unit aggregate offering price (1) registration fee
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Convertible debentures due 2020..... $586,992,000 (1) $471.25 (2) (3) $276,619,980 (2) (3) $73,028(4)
Class B common stock, par value
$0.01 per share................... 3,288,563 (5) -- -- -- (6)
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(1) Represents the aggregate principal amount at maturity of debentures that
were originally issued by the registrant on June 23, 2000.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the bid and asked prices
of debentures on The PORTAL Market on September 12, 2000.
(3) Excludes accrued interest and distributions, if any.
(4) Previously paid.
(5) Represents the number of shares of class B common stock that are currently
issuable upon conversion of the debentures. The number of shares of class B
common stock that may be issued upon conversion of the debentures in the
future is indeterminate, and the registrant is also registering this
indeterminate amount pursuant to Rule 416 under the Securities Act.
(6) No separate consideration will be received for class B common stock issuable
upon conversion of the debentures; therefore, no registration fee is
required pursuant to Rule 457(i).[ ]
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 as amended, or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may
determine.
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The information in this prospectus is not complete and may be changed. No
selling securityholderWe may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, dated October 31, 2000May 10, 2001
PROSPECTUS
$586,992,000$500,000,000
UNIVERSAL HEALTH SERVICES, INC.
CONVERTIBLE DEBENTURES DUE 2020
AND
CLASSClass B COMMON STOCK ISSUABLE
UPON CONVERSION OF THE DEBENTURESCommon Stock
Debt Securities
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We issuedmay offer to the debenturespublic, from time to time, in a private placement in June, 2000 at an issue
price of $425.90 per debenture. This prospectus will be used by selling
securityholders to resell their debentures and the class B common stock issuable
upon conversion of their debentures.
We will pay interest on the debentures semiannually in arrears on June 23
and December 23 of each year, beginning December 23, 2000, at the rate of .426%
per year on the principal amount at maturity. The rate of cash interest and
accrual of original issue discount represent a yield to maturity of 5% per year.
Holders may convert the debentures at any time onone or before the maturity
date into 5.6024more series or
issuances:
. shares of our class B common stock; and
. our debt securities, consisting of debentures, notes or other
unsecured evidences of our indebtedness.
This prospectus provides you with a general description of the class B
common stock per debenture. The
conversion rateand debt securities that we may be adjusted for various reasons, but will not be adjusted
for accrued original issue discount or accrued cash interest.
Holders may require us to purchase all or a portion of their debentures at
a price of $543.41 on June 23, 2006, $643.48 on June 23, 2010 and $799.84 on
June 23, 2015, plus accrued and unpaid cash interest to each purchase date. We
may choose to pay the purchase price in cash oroffer. Each time we offer class B
common stock or debt securities, we will provide a combinationprospectus supplement that
will contain specific information about the terms of cashthat offering. You should
read this prospectus and class B common stock. In addition, each holder may
require us to repurchase all or a portion of such holder's debentures upon a
change in control occurring on orprospectus supplement carefully before June 23, 2006. We may redeem all or a
portion of the debentures at any time on or after June 23, 2006.you invest.
Our class B common stock currently trades on the New York Stock Exchange
under the symbol "UHS."
The last reported sales price of our class B common
stock on the New York Stock Exchange was $82 7/8 per share on October 30, 2000.
_________________
The securities offered hereby involve a high degree of risk. See "Risk
Factors" beginning on page 10.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined ifthat
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated _________, 2000., 2001.
TABLE OF CONTENTS
Page
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Forward-Looking Statements........................................ 3
Where You Can Find More Information............................... 4
Summary........................................................... 5
Risk Factors...................................................... 10
Use of Proceeds...................................................Page
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Where You Can Find Additional Information............................ 3
Universal Health Services, Inc....................................... 4
Ratio of Earnings to Fixed Charges................................... 4
Use of Proceeds...................................................... 5
Description of Our Capital Stock..................................... 5
Description of Our Debt Securities................................... 6
Plan of Distribution................................................. 13
Legal Matters........................................................ 14
Experts.............................................................. 14
Ratio of Earnings to Fixed Charges................................ 14
Dividend Policy................................................... 14
Description of Debentures......................................... 15
Description of Capital Stock...................................... 29
Federal Income Tax Considerations................................. 29
Selling Securityholders........................................... 32
Plan of Distribution.............................................. 35
Legal Matters..................................................... 37
Experts........................................................... 37
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You should rely only on the information contained or incorporated by
reference in this prospectus.prospectus or in the prospectus supplement which is delivered
with this prospectus, or which is referred to under "Where You Can Find
Additional Information." We 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 areThis prospectus is not making an
offer to sell theseor a solicitation of an offer to buy any securities other than our
class B common stock or debt securities which are referred to in the prospectus
supplement. This prospectus is not an offer to sell or a solicitation of an
offer to buy any securities other than our class B common stock or debt
securities in any jurisdiction where thecircumstances in which an offer or salesolicitation is not permitted.unlawful.
You should assumenot interpret the delivery of this prospectus, or any sale of our
class B common stock or debt securities, as an indication that there has been no
change in our affairs since the date of this prospectus. You should be aware
that information appearing in this prospectus is accurate only as of the date on the front cover ofmay change after this prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or achievements
or industry results to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the following:
. possible changes in the levels and terms of reimbursement for our charges by
government programs, including Medicare or Medicaid or other third-party
payors;
. existing laws and government regulations and changes in or failure to comply
with laws and governmental regulations;
. the ability to enter into managed care provider agreements on acceptable
terms;
. our ability to successfully integrate recent and future acquisitions;
. that a significant portion of our revenues is produced by facilities in a
small number of our markets;
. competition;
. demographic changes;
. technological and pharmaceutical improvements that increase the cost of
providing, or reduce the demand for, our services;
. the ability to attract and retain qualified personnel, including physicians;
. liability and other claims asserted against us; and
. our ability to finance growth on favorable terms.
Given these uncertainties, you are cautioned not to place undue reliance on
our forward-looking statements. Except as required by law, we disclaim any
obligation to update any such factors or to publicly announce the results of any
revisions to any of the forward-looking statements contained in this prospectus
to reflect future events or developments.
3
WHERE YOU CAN FIND MOREADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our file number is 1-10765. Our SEC filings are
available to the public over the internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room located at 450 Fifth Street, N.W., Washington, D.C. 20549,
as well as at the regional offices of the SEC located at 7 World Trade Center,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information on
the public reference rooms and their copy charges.
Our class B common stock is listed on the New York Stock Exchange. You may
also inspect the information we file with the SEC at the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
We are "incorporating by reference" specified documents that we file with
the SEC, which means:
. incorporated documents are considered part of this prospectus;
. we are disclosing important information to you by referring you to
those documents; and
. information that we file in the future with the SEC will automatically
update and supersede the information in this prospectus.
We incorporate by reference the documentsdocumentS listed below, and any documents
that we file with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 as amended, after the date of this prospectus:
. our annual report on Form 10-K for the year ended December 31, 1999;2000.
. our quarterly report on Form 10-Q for the quartersquarter ended March 31,
2000 and
June 30, 2000; and
. our current reports on Form 8-K dated June 13, 2000 and June 20, 2000.2001.
You may also request a copy of these filings, (excluding exhibits), at no cost, by writing or
telephoning our chief financial officer at the following address:
Universal Health Services, Inc.
Universal Corporate Center
P.O. Box 61558
367 South Gulph Road
King of Prussia, Pennsylvania 19406-0958
Attention: Chief Financial Officer
Telephone: (610) 768-3300
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SUMMARY
This summary highlights selected information appearing elsewhere in this
prospectus and may not contain all of the information that is important to you.
You should read this entire prospectus, including the information incorporated
by reference, before making an investment decision. When used in this
prospectus, the terms "we," "our," and "us" refer to Universal Health Services
and not to the selling securityholders.
Universal Health ServicesUNIVERSAL HEALTH SERVICES, INC.
Our principal business is owning and operating acute care hospitals,
behavioral health centers, ambulatory surgery centers, radiation oncology
centers and women's centers. Presently,At December 31, 2000, we operate 60operated 59 hospitals,
consisting of 23 acute care hospitals, 35 behavioral health centers, and twoone
women's centers.center. As part of our Ambulatory Treatment Centers Division, at
December 31, 2000 we own,owned, either outright or in partnership with physicians,
and operateoperated or manage 24managed 25 surgery and radiation oncology centers located in 12
states and the District of Columbia. Our facilities are located in Arkansas,
California, Colorado, Delaware, the District of Columbia, Florida, Georgia, Illinois,
Indiana, Kentucky, Louisiana, Massachusetts, Michigan, Mississippi, Missouri, Nevada, New
Jersey, Oklahoma, Pennsylvania, Puerto Rico, South Carolina, Tennessee, Texas,
Utah and Washington.
In the second quarter of 2000, our acute care hospitals, ambulatory surgery centers, radiation
oncology centers and women's centers contributed approximately 85%84% of our
consolidated net revenues and our behavioral health centers contributed
approximately 14%16% of our consolidated net revenues.
Services provided by our hospitals include general surgery, internal
medicine, obstetrics, emergency room care, radiology, oncology, diagnostic care,
coronary care, pediatric services and behavioral health services. Our facilities
benefit from shared centralized services, such as central purchasing,
information services, finance and control systems, facilities planning,
physician recruitment services, administrative personnel management, marketing
and public relations.
Strategy
Our strategy to enhance our profitability and to continue to provide high-
quality, cost-effective healthcare services includes the following key elements:
. Establish and maintain market leadership positionsIn March 2001, we purchased a 93 percent ownership interest in small and medium-sized
markets experiencing above-average population growth. Eighty percent of our
acute carean operating
company that owns eight hospitals are the largest or second-largest healthcare providers
in their respective markets, based upon the number of patients discharged.
Our facilities are primarily located in markets with populations between
75,000 and 400,000 that are projected to grow above the national average
rate. For example, we own eight facilities located in three of the five
fastest-growing metropolitan areas in the United States.
. Provide a differentiated quality of healthcare. In 1999, our hospitals that
were surveyed by the Joint Commission on Accreditation of Healthcare
Organizations averaged a score of 95.4, which was above the industry average.
UHS continually seeks to improve the quality of the service that it delivers
through its company-wide Service Excellence Program as well as by conducting
extensive surveys of patients, physicians and employees.
. Expand by selectively acquiring, constructing or leasing additional hospital
facilities. We continually evaluate expansion opportunities, including
acquisitions, which may provide us with access to new markets and new health
care delivery capabilities. We describe some of our recent acquisitions and
construction projects below.
. Improve financial performance of existing facilities. We seek to increase the
operating revenues and profitability of our hospitals by introducing new
services, improving existing services, recruiting physicians and applying
financial and operational controls.
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. Develop and maintain strong relationships with physicians. We support the
growth of independent physician practices through marketing, partner
recruiting, practice management, information systems, and creation and
management of preferred provider networks.
. Maintain a low cost structure. We implement programs designed to improve
financial performance and efficiency while continuing to provide quality
care, including using professional staff more efficiently, monitoring and
adjusting staffing levels and equipment usage, improving patient management
and reporting procedures and implementing more efficient billing and
collection procedures.
Recent Acquisitions and Construction Projects
We proactively identify acquisition targets in addition to responding to
requests for proposals from entities that are seeking to sell or lease hospital
facilities. As a result, we may enter into agreements to acquire hospital
facilities from time to time and at any time, and we are currently actively
involved in negotiations concerning possible acquisitions. In addition, we are
actively involved in constructing replacement facilities and expanding our
existing facilities. Our recent acquisitions and construction projects include
the following:
. In June 1999, we acquired the assets and operations of Doctors' Hospital of
Laredo in exchange for the assets and operations of our Victoria Regional
Medical Center in Victoria, Texas.France. In connection with this
transaction,purchase, we also purchased additional land in Laredo, Texas on which we are currently
constructingplan to sell up to a 180 licensed bed replacement hospital scheduled to be
completed20 percent minority ownership interest in the
second quarter of 2001. We estimate thatoperating company to the costs of
construction and new equipment for the replacement hospital will total
approximately $45 million.
. On July 31, 2000, we completed the purchase of St. Mary's Mercy Hospital, a
full service, 277 licensed bed hospitalmanagement group located in Enid, Oklahoma. St. Mary's
Mercy Hospital is the leading hospital in Enid and provides comprehensive
medical and surgical services including a trauma center and comprehensive
neuroscience services. For the fiscal year ended June 30, 1999, St. Mary's
generated approximately $52 million in net revenues and $6.4 million in
earnings before interest, taxes, depreciation and amortization (EBITDA). We
estimate that the total purchase price, including expected working capital
contributions, will be approximately $43 million.
. On August 18, 2000, we completed the purchase of 11 behavioral health
facilities with over 1,400 licensed beds from Charter Behavioral Health
Systems, LLC and acquired the real estate assets associated with these
businesses plus one additional behavioral health property from Crescent Real
Estate Funding VII LP. In 1999, the acquired facilities produced
approximately $150 million in net revenues and $27 million in EBITDA. We
estimate that the total purchase price, including expected working capital
contributions, will be approximately $105 million.
. In September, 2000, we purchased Fort Duncan Medical Center, a 77 licensed
bed acute care facility located in Eagle Pass, Texas. Subject to the terms of
the purchase agreement, we are committed to building a replacement hospital
with a least 100 licensed beds within six years. For the fiscal year ended
June 30, 1999, Fort Duncan Medical Center generated approximately $29 million
in net revenues and $3.4 million in EBITDA. The purchase price of the
facility was $10 million and we estimate that the cost of construction and
new equipment for the replacement hospital will total approximately $25
million.
.France.
We are building a 371 licensed bed replacement hospital for The George
Washington University Hospital in Washington, D.C. We expect to complete the
construction in the second quarter of 2002 and estimate that our share of the
costs of construction and new equipment will total approximately $80 million
to $83 million, $40 million of which we funded at acquisition in 1997 with a
restricted cash investment account.
6
. We are expanding our Desert Springs Hospital in Las Vegas, Nevada to increase
its licensed capacity from 233 to 353 beds. We expect to complete the
expansion in the first quarter of 2001 and estimate that the costs of
construction and new equipment will total approximately $15 million.
. We expect to commence a renovation and expansion of Auburn Regional Medical
Center in Auburn, Washington in December of 2000. The renovated and expanded
facility will include a new operating room, emergency room, obstetrics
department and approximately 40 additional licensed beds. We expect to
complete this project in the fourth quarter of 2001, and estimate that the
costs of construction and new equipment will total approximately $15 million
to $18 million.
Principal Executive OfficesDelaware corporation. Our principal executive offices are located
at Universal Corporate Center, 367 South Gulph Road, P.O. Box 61558, King of
Prussia, Pennsylvania 19406-0958. Our telephone number is (610) 768-3300.
7
The Offering
Debentures....................... $586,992,000 aggregate principal amount at
maturity of Convertible Debentures due 2020.
Each debenture was originally issued at a
price of $425.90 per debenture and a
principal amount at maturity of $1,000.
Maturity......................... June 23, 2020.
Cash interest.................... 0.426% per year on the principal amount at
maturity, payable semiannually in arrears in
cash on June 23 and December 23 of each year,
beginning December 23, 2000.
Yield to maturity of debentures.. 5.00% per year (computed on a semiannual bond
equivalent basis) calculated from June 23,
2000.
Conversion rights................ Holders may convert the debentures at any
time. For each debenture converted, we will
deliver 5.6024 shares of our class B common
stock or, at our option, cash in an amount
equal to the value of those shares. The
conversion rate may be adjusted for various
reasons, but will not be adjusted for accrued
original issue discount, cash interest or
interest payable upon the occurrence of a tax
event. Upon conversion, the holder will not
receive any cash payment representing accrued
original issue discount or any accrued
interest; such accrued original issue
discount and accrued cash interest will be
deemed paid by the shares of class B common
stock or cash received by the holder on
conversion.
Ranking.......................... The debentures are unsecured and
unsubordinated obligations and rank equally
in right of payment with all of our existing
and future unsecured and unsubordinated
indebtedness.
Original issue discount.......... We offered each debenture at an original
issue discount for U.S. federal income tax
purposes equal to the principal amount at
maturity of the debenture, $1,000, less the
issue price, $425.90. You should be aware
that as original issue discount accrues, it
must be included in your gross income for
U.S. federal income tax purposes.
Sinking fund..................... None.
Optional redemption............. We may redeem all or a portion of the
debentures for cash at any time, on or after
June 23, 2006, at redemption prices equal to
the issue price of the debentures plus
accrued original issue discount and accrued
cash interest to the date of redemption.
Purchase by UHS at the option of
the holder...................... Holders may require us to purchase
their debentures on any of the following
dates at the following prices, plus accrued
cash interest to the purchase date.
. on June 23, 2006 at a price of $543.41
per debenture;
. on June 23, 2010 at a price of $643.48
per debenture; and
. on June 23, 2015 at a price of $799.84
per debenture.
We may choose to pay the purchase price in
cash or shares of class B common stock or a
combination of cash and shares of class B
common stock.
8
Change in control................ Upon a change in control of UHS occurring on
or before June 23, 2006 each holder may
require us to repurchase all or a portion of
such holder's debentures at a price equal to
the issue price of such debentures plus
accrued original issue discount and accrued
cash interest to the date of repurchase. If a
change in control occurs, we cannot assure
you that we will have sufficient funds to pay
the change in control purchase price if you
exercise your right to require us to purchase
your debentures. The term "change in control"
is defined in the "Description of
Debentures--Change In Control Permits
Purchase of Debentures at the Option of the
Holder" section of this prospectus.
Optional conversion to semiannual
coupon debenture upon tax event. From and after the occurrence of a tax event,
at the option of UHS, interest in lieu of
future original issue discount and regular
cash interest will accrue on each debenture
from the option exercise date at 5.00% per
year on the restated principal amount and
will be payable semiannually on each interest
payment date. Any such interest in lieu of
original issue discount and any regular cash
interest will be computed in the same manner
and payable at the same time as the regular
cash interest and will accrue from the most
recent date to which interest has been paid
or, if no interest has been paid, the option
exercise date. In such event, the redemption
price, purchase price and change in control
purchase price will be adjusted as described
in this prospectus. However, there will be no
changes in the holders' conversion rights.
Use of proceeds.................. The selling securityholders will receive all
of the proceeds from the sale of the
debentures and class B common stock under
this prospectus. We will not receive any of
the proceeds from their sales of debentures
or class B common stock.
Trading.......................... The debentures and class B common stock sold
using this prospectus will no longer be
eligible for trading in The PORTAL Market.
Our class B common stock is traded on the New
York Stock Exchange under the symbol "UHS."
Class B common stock............. As of June 30, 2000, there were 27,865,334
shares of class B common stock issued and
outstanding (excluding shares available for
issuance under our stock incentive plans,
shares subject to outstanding options, shares
reserved for issuance upon conversion of the
debentures and shares reserved for issuance
upon conversion of the class A, C and D
common stock), which represented
approximately 11% of our general voting
power. The holders of our class B common
stock have identical rights as the holders of
our other classes of common stock, except
with respect to voting and conversion. See
"Description of Capital Stock."
9
RISK FACTORS
This prospectus contains forward-looking statements that involve a number
of risks and uncertainties inherent in the purchase of the debentures or shares
of our class B common stock. You should be aware that such statements are
projections or estimates as to future events, which may or may not occur.
In addition to the other information in this prospectus, you should
carefully consider the following risk factors before deciding whether an
investment in the debentures is suitable for you. If any of the adverse events
contemplated by these risk factors actually occur, our business, financial
condition and results of operations could be materially adversely affected. The
risks and uncertainties described below are not the only ones facing our
company, and additional risks and uncertainties may also impair our business
operations.
If government programs or managed care companies reduce the payments we receive
as reimbursement for our services, our revenues may decline.
We derive a substantial portion of our net revenues from third-party
payors, including the Medicare and Medicaid programs. Changes in government
reimbursement programs have resulted in limitations on the growth rates of the
reimbursement programs and, in some cases, in reduced levels of reimbursement
for healthcare services, and additional changes are anticipated. The Balanced
Budget Act of 1997, which established a plan to balance the federal budget by
fiscal year 2002, includes significant reductions in spending levels for the
Medicare and Medicaid programs, including:
. payment reductions for inpatient and outpatient hospital services;
. establishment of a prospective payment system for outpatient hospital
services that commenced on August 1, 2000; and
. repeal of the federal payment standard often referred to as the "Boren
Amendment" for hospitals and nursing facilities, which could result in lower
Medicaid reimbursement rates.
The Balanced Budget Refinement Act of 1999 is expected to reduce the
adverse effects of the Balanced Budget Act of 1997 through a corridor
reimbursement approach, where a percentage of losses under the Medicare
outpatient prospective payment system will be reimbursed through December 31,
2003. Substantially all of our hospitals qualify for relief under this
provision. Inpatient reimbursement for behavioral health facilities converts to
a prospective payment system effective January 1, 2004.
In addition to changes in government reimbursement programs, private
payors, including managed care payors, increasingly are demanding discounted fee
structures or the assumption by healthcare providers of all or a portion of the
financial risk through prepaid capitation arrangements. Inpatient utilization,
average lengths of stay and occupancy rates continue to be negatively affected
by payor-required pre-admission authorization and utilization review and by
payor pressure to maximize outpatient and alternative healthcare delivery
services for less acutely ill patients.
We expect efforts to impose reduced allowances, greater discounts and more
stringent cost controls by government and other payors to continue. We believe
that additional reductions in the payments we receive for our services could
reduce our overall revenues.
If we fail to comply with extensive laws and government regulations, we could
suffer penalties or be required to make significant changes to our operations.
The healthcare industry is required to comply with many laws and
regulations at the federal, state and local government levels. These laws and
regulations require that hospitals meet various requirements, including those
relating to the adequacy of medical care, equipment, personnel, operating
policies and procedures, maintenance of adequate records, compliance with
building codes, and environmental protection. If we fail to comply with
10
applicable laws and regulations, we could suffer civil and criminal penalties,
including the loss of our licenses to operate and our ability to participate in
Medicare, Medicaid, and other federal and state healthcare programs.
In addition, there are heightened coordinated civil and criminal
enforcement efforts by both federal and state government agencies relating to
the healthcare industry, including the hospital segment. The ongoing
investigations relate to various referral, cost reporting, and billing
practices, laboratory and home healthcare services, and physician ownership and
joint ventures involving hospitals.
In the future, different interpretations or enforcement of these laws and
regulations could subject our current practices to allegations of impropriety or
illegality or could require us to make changes in our facilities, equipment,
personnel, services, capital expenditure programs, and operating expenses.
We are subject to uncertainties regarding healthcare reform.
In recent years, an increasing number of legislative initiatives have been
introduced or proposed in Congress and in state legislatures that would effect
major changes in the healthcare system, either nationally or at the state level.
Among the proposals that have been introduced are price controls on hospitals,
insurance market reforms to increase the availability of group health insurance
to small businesses, requirements that all businesses offer health insurance
coverage to their employees and the creation of a government health insurance
plan or plans that would cover all citizens and increase payments by
beneficiaries. We cannot predict whether any of the above proposals or any
other proposals will be adopted, and if adopted, no assurance can be given that
the implementation of such reforms will not have a material adverse effect on
our business.
Since 1995, the State of Texas has rolled out Medicaid managed care pilot
programs in several geographic areas of the state. Effective fall 1999,
however, the Texas legislature imposed a moratorium on the implementation of
additional pilot programs pending receipt of a study of the effectiveness of
Medicaid managed care. We are unable to predict the effect on our business of
changes to any current or any future pilot programs.
Upon meeting certain conditions, and serving a disproportionately high
share of Texas' and South Carolina's low income patients, four of our facilities
located in Texas and one facility located in South Carolina became eligible and
received additional reimbursement from each state's disproportionate share
hospital fund. Included in our financial results were aggregate revenues of
$33.4 million in 1997, $36.5 million in 1998, and $37.0 million in 1999,
received pursuant to the terms of these programs. Texas and South Carolina
recently renewed their respective programs, but the extent of our eligibility
for reimbursement under each program will likely be reduced. The
discontinuation of these programs, or further reduction of reimbursement, could
have a material adverse effect on our future results of operations.
Our growth strategy includes acquisitions, and we may not be able to acquire
hospitals that meet our target criteria. We may also face regulatory hurdles in
acquiring hospitals from not-for-profit entities.
One element of our growth strategy is expansion through the acquisition of
hospitals in markets that are attractive to us. We face competition for
acquisitions primarily from other for-profit health care companies as well as
not-for-profit entities. Some of our competitors have greater financial and
other resources than we do. As a result, we may not be able to effectively
accomplish this element of our growth strategy.
Hospital acquisitions generally require a longer period to complete than
acquisitions in many other businesses and are subject to additional regulatory
uncertainty. In recent years, the legislatures and attorneys general of some
states have shown a heightened level of interest in transactions involving the
sale of hospitals by not-for-profit entities. Although the level of interest
varies from state to state, the trend is to provide for increased governmental
review, and in some cases approval, of transactions in which not-for-profit
entities sell a healthcare facility. Although we have not been adversely
affected as a result of these trends, such increased scrutiny may increase the
difficulty or prevent the completion of transactions with not-for-profit
organizations in certain states in the future.
11
Our revenue and EBITDA are heavily concentrated in our facilities in the South
Texas and Las Vegas, Nevada markets.
McAllen Medical Center, located in McAllen, Texas, and Edinburg Regional
Medical Center, located in Edinburg, Texas, operate in the same market. On a
combined basis, these two facilities contributed 16% in 1997 and 13% in both
1998 and 1999 of our consolidated net revenues and 25% in 1997, 23% in 1998 and
25% in 1999 of our consolidated earnings before interest, income taxes,
depreciation, amortization, and nonrecurring charges (after deducting an
allocation of corporate overhead) (EBITDA).
Valley Hospital Medical Center, Summerlin Hospital Medical Center and
Desert Springs Hospital all operate within the Las Vegas, Nevada market. Valley
Hospital Medical Center and Summerlin Hospital Medical Center (which opened
during the fourth quarter of 1997) contributed 13% of our 1997 consolidated net
revenues and 18% of our 1997 consolidated EBITDA. On a combined basis, Valley
Hospital Medical Center, Summerlin Hospital Medical Center and Desert Springs
Hospital contributed 18% of our consolidated net revenues in both 1998 and 1999
and 15% in 1998 and 10% in 1999 of our consolidated EBITDA.
Any adverse change in the economic, competitive or regulatory conditions in
the South Texas or Las Vegas, Nevada markets in which these hospitals operate
could significantly reduce our revenues and EBITDA.
Other hospitals provide comparable services, which may raise the level of
competition faced by our hospitals.
In all geographical areas in which we operate, there are other hospitals
which provide services comparable to those offered by our hospitals, some of
which are owned by governmental agencies and supported by tax revenues, and
others of which are owned by not-for-profit corporations and may be supported to
a large extent by endowments and charitable contributions. Such support is not
available to our hospitals. Certain of our competitors have greater financial
resources than we do, are better equipped than we are and offer a broader range
of services than we do. Outpatient treatment and diagnostic facilities,
outpatient surgical centers and freestanding ambulatory surgical centers also
affect the healthcare marketplace. In recent years, competition among
healthcare providers for patients has intensified as hospital occupancy rates in
the United States have declined due to, among other things, regulatory and
technological changes, increasing use of managed care payment systems, cost
containment pressures, a shift toward outpatient treatment and an increasing
supply of physicians. There can be no assurance that our hospitals will
continue to be able to compete effectively in attracting patients under these
changing circumstances.
Our success depends upon our ability to recruit and retain physicians at our
hospitals.
With a few exceptions, physicians are not employees of our hospitals and
members of the medical staffs of our hospitals also serve on medical staffs of
hospitals not owned by us and may terminate their affiliation with our hospitals
at any time. Our future success will depend, in part, on the ability of our
hospitals to continue to attract and retain quality physicians and to organize
and structure integrated healthcare delivery systems with other healthcare
providers and physician practice groups. There can be no assurance that our
hospitals will continue to be able, on terms favorable to us, to attract
physicians to their staffs, or to organize and structure integrated healthcare
delivery systems, for which other healthcare companies with greater financial
resources or a wider range of services may be competing.
Our controlling stockholder can determine the outcome of virtually all matters
requiring stockholder approval.
Alan B. Miller, UHS's Chairman of the Board, President and Chief Executive
Officer, controls approximately 82.4% of the general voting power of UHS. Mr.
Miller also controls an aggregate of 94.1% of the class A common stock, 9.7% of
the class B common stock and 93.5% of class C common stock. As such, Mr. Miller
can elect 80% of UHS's Board of Directors and accomplish a merger, sale,
transfer of assets or other significant transaction without the approval of our
other stockholders. The existence of a controlling stockholder may limit your
ability, as a holder of class B common stock upon conversion of the debentures,
to influence the outcome of matters requiring stockholder approval.
12
Our liability insurance coverage is limited.
Effective January 1, 1998, our subsidiaries are covered under commercial
insurance policies which provide for a self-insured retention limit for
professional and general liability claims for most of our subsidiaries up to $1
million per occurrence, with an average annual aggregate for covered
subsidiaries of $6 million through 2001. These subsidiaries maintain excess
coverage up to $100 million with major insurance carriers. Our remaining
facilities are fully insured under commercial policies with excess coverage up
to $100 million maintained with major insurance carriers. Since 1993, certain
of our subsidiaries, including one of our larger acute care facilities, have
purchased general and professional liability occurrence policies with commercial
insurers. These policies include coverage up to $25 million per occurrence for
general and professional liability risks. If our liabilities exceed our
insurance coverage, our financial condition and results of operations could be
adversely affected.
We may need to obtain additional financing to fund acquisitions and capital
expenditures, and we cannot be sure that additional financing will be available
when needed.
We require substantial capital resources to fund our acquisitions. The
operations of our existing hospitals require ongoing capital expenditures for
renovation, expansion and the addition of medical equipment and technology
utilized in the hospitals. For example, we expect to construct a replacement
hospital scheduled to be completed in the second quarter of 2001 for the
Doctors' Hospital of Laredo, are building a replacement hospital for The George
Washington University Hospital expected to be completed in the second quarter of
2002, are expanding Desert Springs Hospital and expect to complete this
expansion in the first quarter of 2001, and expect to commence a renovation and
expansion of our Auburn Regional Medical Center in December of 2000 and to
complete the project in the fourth quarter of 2001. In addition, we recently
acquired St. Mary's Hospital in Enid, Oklahoma, 11 behavioral health facilities
from Charter Behavioral Health Systems, LLC and the real estate assets
associated with these businesses plus one additional behavioral health property
from Crescent Real Estate Funding VII LP, and Fort Duncan Medical Center in
Eagle Pass, Texas for which we are committed, subject to the terms of the
purchase agreement, to building a replacement hospital within six years.
We may need to incur additional indebtedness and may issue, from time to
time, debt or equity securities to fund acquisitions or capital expenditures.
We cannot assure you that sufficient financing will be available to us on
satisfactory terms or that our level of indebtedness may not restrict our
ability to borrow additional funds.
We may not be able to repurchase or redeem debentures.
On June 23, 2006, June 23, 2010 and June 23, 2015, the holders may require
us to purchase their debentures. If the holders require us to purchase their
debentures on one of these dates, we could have insufficient funds to complete
the purchase. In addition, upon a change in control of UHS occurring on or
before June 23, 2006, each holder may require us to repurchase all or a portion
of such holder's debentures. If a change in control occurs, we cannot assure
you that we will have sufficient funds to pay the change in control purchase
price if you exercise your right to require us to purchase your debentures.
Fluctuations in the market price of our class B common stock may affect the
price of the debentures.
Because the debentures are convertible into shares of our class B common
stock, fluctuations in the market price of class B common stock may affect the
price of the debentures. The market prices for our class B common stock and for
securities of other companies engaged primarily in healthcare services are
subject to wide fluctuations. For example, the sale prices of our class B
common stock, as reported by the New York Stock Exchange, fluctuated between
$36 1/8 per share and $89 1/2 per share during the first nine months of 2000.
The market price of our class B common stock may continue to fluctuate due to a
variety of factors, including:
. future issuances of class B common stock;
. material public announcements;
. regulatory approvals or regulatory issues;
13
. political developments or proposed legislation in the healthcare industry;
. period to period fluctuations in our financial results; and
. market trends relating to our industry.
Absence of existing active public market.
Upon their original issuance, the debentures became eligible for trading on
The PORTAL Market. The debentures sold pursuant to this prospectus, however,
will no longer be eligible for trading on The PORTAL Market and we do not intend
to apply for listing of the debentures on any securities exchange or quotation
system. We can not assure you that an active trading market for the debentures
will develop or as to the liquidity or sustainability of any such market, the
ability of the holders to sell their debentures or the price at which holders of
the debentures will be able to sell their debentures. Future trading prices of
the debentures will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the price of our class B
common stock and the market for similar securities.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the sale
of the debentures and class B common stock under this prospectus. We will not
receive any of the proceeds from their sales of debentures or class B common
stock.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratiosratio of earnings to fixed
charges for each of the years ended December 31, 1995, 1996, 1997, 1998, and 1999 and
for each of the six months2000.
Year ended June 30,December 31,
-----------------------
1996 1997 1998 1999 and 2000:
Year ended December 31, Six months ended June 30,
- ------------------------------------------------------------------------------ ------------------------------------
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
3.2 3.3 4.0 3.9 3.8 5.1 4.6
2000
---- ---- ---- ---- ----
3.3 4.0 3.9 3.8 4.2
The ratio of earnings to fixed charges is computed by dividing fixed
charges into earnings from continuing operations before income tax and
extraordinary items plus fixed charges. Fixed charges include interest expense,
interest element of lease rental expense, and amortization of debt issuance
costs.
DIVIDEND POLICY
We have historically not paid cash dividends on our capital stock and we do
not anticipate paying cash dividends on our class B common stock4
USE OF PROCEEDS
Unless otherwise provided in the foreseeable future.
14
DESCRIPTION OF DEBENTURES
We issuedprospectus supplement that accompanies
this prospectus, we intend to add the debentures under an indenture dated as of June 23, 2000
between UHS and Bank One Trust Company, N.A., as trustee. The form of indenture
(including the form of debenture which is part of the indenture) was previously
filed with the SEC and has been incorporated by reference as an exhibit to this
registration statement. The following summaries of certain provisions of the
debentures and the indenture do not purport to be complete and are subject to,
and are qualified in their entirety by reference to, all of the provisions of
the debentures and the indenture. Wherever particular provisions of the
indenture (or of the form of debenture which is a part of the indenture) are
referred to, such provisions are incorporated by reference in this prospectus.
As used in this description, references to "we," "us," "our" or "UHS" do not
include any current or future subsidiary of UHS.
General
The debentures are unsecured obligations of UHS limited to $586,992,000
aggregate principal amount at maturity. The debentures will mature on June 23,
2020. The principal amount at maturity of each debenture is $1,000 and will be
payable at the office of the paying agent, which initially is the trustee, or an
office or agency maintained by us for such purpose, in the Borough of Manhattan,
The City of New York.
The debentures were originally offered at a substantial discount from their
principal amount at maturity. See "Federal Income Tax Considerations--Original
Issue Discount." The debentures will accrue original issue discount while they
remain outstanding. Original issue discount is the difference between the issue
price and the principal amount at maturity of a debenture. The calculation of
the accrual of original issue discount will be on a semiannual bond equivalent
basis using a 360-day year composed of twelve 30-day months. Original issue
discount began to accrue on June 23, 2000, the issue date of the debentures.
The debentures also bear interest at the rate of 5.00% per year on the principal
amount at maturitynet proceeds from the issue date, or from the most recent date to which
interest has been paid or provided for, until the debentures are paid in full or
funds are made available for payment in full in accordance with the indenture.
Cash interest will be payable at maturity (or earlier date of purchase,
redemption or, in certain circumstances, conversion) and semiannually in arrears
on June 23 and December 23 of each year, commencing on December 23, 2000, to
holders of record at the close of business on the June 8 or December 8 (whether
or not a business day) immediately preceding such interest payment date. Each
payment of cash interest on the debentures will include interest accrued through
the day before the applicable interest payment date or the date of maturity (or
earlier purchase, redemption or, in certain circumstances, conversion), as the
case may be. Any payment required to be made on any day that is not a business
day will be made on the next succeeding business day. In the event of the
maturity, conversion, purchase by UHS at the option of a holder or redemption of
a debenture, original issue discount and cash interest will cease to accrue on
such debenture under the terms of and subject to the conditions in the
indenture. We may not reissue a debenture that has matured or been converted,
purchased by UHS at the option of a holder, redeemed or otherwise cancelled
(except for registration of transfer, exchange or replacement thereof).
Debentures may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. Each such agent is initially the trustee. We will not charge a
service charge for any registration of transfer or exchange of debentures.
Book-Entry Form
The debentures were issued in the form of global securities held in book-
entry form. DTC or its nominee is the sole registered holder of the debentures
for all purposes under the indenture. Owners of beneficial interests in the
debentures represented by the global security will hold such interests pursuant
to the procedures and practices of DTC. As a result, owners of beneficial
interests must exercise any rights in respect of their interests, including any
right to convert or require repurchase of their interests, in accordance with
the procedures and practices of DTC. Beneficial owners will not be holders and
will not be entitled to any rights under the global securities or the indenture
provided to the holders of the debentures. UHS and the trustee, and any of
their respective agents, may treat DTC as the sole holder and registered owner
of the global securities.
Certificated debentures may be issued in exchange for beneficial interests
in debentures represented by a global debenture only in the limited
circumstances set forth in the indenture.
15
Absence of Existing Active Public Market
Upon their original issuance, the debentures became eligible for trading on
The PORTAL Market. The debentures sold pursuant to this prospectus, however,
will no longer be eligible for trading on The PORTAL Market and we do not intend
to apply for listing of the debentures on any securities exchange or quotation
system. We can not assure you that an active trading market for the debentures
will develop or as to the liquidity or sustainability of any such market, the
ability of the holders to sell their debentures or the price at which holders of
the debentures will be able to sell their debentures. Future trading prices of
the debentures will depend on many factors, including, among other things,
prevailing interest rates, our operating results, the pricesale of our class B
common stock or debt securities to our general funds. We expect to use the
proceeds for general corporate purposes, including working capital, capital
expenditures and the marketrepayment of short-term borrowings. Before we use the
proceeds for similar securities.
Conversion Rights
A holder may convert a debenture, in integral multiples of $1,000 principal
amount at maturity, into shares of class B common stock at any time before the
close of business on June 23, 2020. However, a holder may convert a debenture
only until the close of business on the redemption date if we call the debenture
for redemption. A debenture for which a holder has delivered a purchase notice
or a change in control purchase notice requiring us to purchase that debenture
may be converted only if such notice is withdrawn in the manner and by the time
provided in the indenture.
The initial conversion rate for the debentures is 5.6024 shares of class B
common stock per $1,000 principal amount at maturity, subject to adjustment upon
the occurrence of various events described below. We will pay cash in lieu of
any fractional share in an amount equal to the value of such fractional share
based on the Sale Price (as defined below) on the trading day immediately
preceding the conversion date.
To convert a debenture, a holder must:
. complete and manually sign the conversion notice on the back of the debenture
(or complete and manually sign a facsimile of such notice) and deliver such
notice to the conversion agent (initially the trustee) at the office
maintained by the conversion agent for such purpose;
. surrender the debenture to the conversion agent;
. if required, furnish appropriate endorsements and transfer documents; and
. if required, pay all transfer or similar taxes.
Pursuant to the indenture, the date on which all of the foregoing
requirements have been satisfied is the conversion date.
Upon conversion of a debenture, a holder will not receive any cash payment
representing accrued original issue discount or, except as described below,
accrued cash interest. Our delivery to the holder of the fixed number of shares
of class B common stock into which the debenture is convertible, together with
any cash payment in lieu of any fractional shares, will be deemed to satisfy our
obligation to pay:
. the principal amount at maturity of the debenture; and
. the accrued original issue discount and accrued cash interest attributable to
the period from the issue date to the conversion date.
As a result, accrued original issue discount and accrued cash interest will
be deemed to be paid in full rather than canceled, extinguished or forfeited.
Notwithstanding the foregoing, accrued but unpaid cash interest will be payable
upon any conversion of debentures at the option of the holder made concurrently
with or after acceleration of the debentures following an event of default
described under "--Events of Default; Notice and
16
Waiver" below. Debentures surrendered for conversion during the period from the
close of business on any regular record date next preceding any interest payment
date to the opening of business of such interest payment date (except debentures
to be redeemed on a date within such period or on the next interest payment
date) must be accompanied by payment of an amount equal to the interest thereon
that the registered holder is to receive. Except where debentures surrendered
for conversion must be accompanied by payment as described above, no interest on
converted debentures will be payable by us on any interest payment date
subsequent to the date of conversion.
The conversion rate will not be adjusted at any time during the term of the
debentures for accrued original issue discount or accrued cash interest. A
certificate for the number of full shares of class B common stock into which any
debenture is converted, together with cash in lieu of any fractional shares,
will be delivered through the conversion agent as soon as practicable, but in
any event no later than the seventh business day following the conversion date.
For a discussion of the U.S. federal income tax treatment of a holder receiving
class B common stock upon conversion, see "Federal Income Tax Considerations--
Disposition or Conversion of Debentures."
If we exercise our option to have interest in lieu of original issue
discount accrue on a debenture following a tax event, the holder will be
entitled on conversion to receive the same number of shares of class B common
stock such holder would have received if we had not exercised our option. See
"--Optional Conversion to Semiannual Coupon Debenture upon Tax Event."
The conversion rate is subject to adjustment in certain events, including:
. the issuance of shares of class B common stock or other capital stock as a
dividend or a distribution with respect to class B common stock;
. subdivisions, combinations and reclassification of class B common stock;
. the issuance to all holders of class B common stock of rights or warrants
entitling them for a period not exceeding 45 days to subscribe for shares of
class B common stock at less than the then Market Price (as defined below) of
the class B common stock;
. the distribution to all holders of class B common stock of evidences of
indebtedness of UHS, securities or capital stock, cash or assets (including
securities, but excluding those rights, warrants, dividends and distributions
referred to above and dividends and distributions paid exclusively in cash);
. the payment of dividends and other distributions on class B common stock paid
exclusively in cash, excluding cash dividends if the annualized per share
amount thereof does not exceed 10% of the Market Price of class B common
stock on the trading day immediately preceding the date of declaration of
such dividend or other distribution; and
. payment to holders of class B common stock in respect of a tender or exchange
offer (other than an odd-lot offer) by UHS or any of our subsidiaries for
class B common stock at a price in excess of 110% of the then Market Price of
class B common stock on the trading day next succeeding the last date tenders
or exchanges may be made pursuant to such tender or exchange offer.
However, no adjustment need be made if holders may participate in the
transactions otherwise giving rise to an adjustment on a basis and with notice
that our board of directors determines to be fair and appropriate, or in certain
other cases. In cases where the fair market value of the portion of assets,
debt securities or rights, warrants or options to purchase securities of UHS
applicable to one share of class B common stock distributed to stockholders
equals or exceeds the average quoted price per share of class B common stock, or
such average quoted price exceeds such fair market value of such portion of
assets, debt securities or rights, warrants or options so distributed by less
than $1.00, rather than being entitled to an adjustment in the conversion rate,
the holder of a debenture will be entitled to receive upon conversion thereof,
in addition to the shares of class B common stock into which such debenture is
convertible, the kind and amounts of assets, debt securities or rights, options
or warrants comprising the distribution that such holder would have received if
such holder had converted such debenture
17
immediately prior to the record date for determining the stockholders entitled
to receive the distribution. The indenture permits us to increase the conversion
rate from time to time.
In the event that we are a party to any transaction, pursuant to which the
class B common stock is converted into the right to receive other securities,
cash or other property, including, without limitation, and with certain
exceptions:
. recapitalization or reclassification of the class B common stock,
. any consolidation of UHS with, or merger of UHS into, any other person, or
any merger of another person into UHS,
. any sale, transfer or lease of all or substantially all of the assets of UHS,
or
. any compulsory share exchange,
then the holders of debentures then outstanding shall have the right to convert
the debentures into the kind and amount of securities, cash or other property
receivable upon the consummation of such transaction by a holder of the number
of shares of class B common stock issuable upon conversion of such debentures
immediately prior to such transaction.
In the event that we are a party to such a transaction as described above,
each debenture would become convertible into the securities, cash or property
receivable by a holder of the number of shares of the class B common stock into
which such debenture was convertible immediately prior to such transaction.
This change could substantially lessen or eliminate the value of the conversion
privilege associated with the debentures in the future. For example, if we were
acquired in a cash merger, each debenture would become convertible solely into
cash and would not longer be convertible into securities whose value would vary
depending on our future prospects and other factors.
In the event of a taxable distribution to holders of class B common stock
which results in an adjustment of the conversion rate (or in which holders
otherwise participate) or in the event the conversion rate is increased at our
discretion, the holders of the debentures may, in certain circumstances, be
deemed to have received a distribution subject to United States federal income
tax as a dividend. See "Federal Income Tax Considerations--Adjustment of
Conversion Price."
Redemption of Debentures at the Option of UHS
No sinking fund is provided for the debentures. Prior to June 23, 2006,
the debentures will not be redeemable at our option. On and after that date,these purposes, we may redeeminvest the debentures for cash as a whole at anyproceeds in interest-bearing time
deposits or from time to time
in part, atshort-term marketable securities.
DESCRIPTION OF OUR CAPITAL STOCK
This section identifies the redemption prices set forth below plus accrued cash interest to
the redemption date. Any such redemption must be in integral multiples of
$1,000 principal amount at maturity. We will give not less than 30 days nor
more than 60 days notice of redemption by mail to holders of debentures.
The table below shows redemption prices of a debenture per $1,000 principal
amount at maturity on June 23, 2000, at each June 23 thereafter prior to
maturity, and at maturity on June 23, 2020. These prices reflect the accrued
original issue discount calculated to each such date. The redemption price of a
debenture redeemed between such dates would include an additional amount
reflecting the additional original issue discount accrued since the next
preceding date in the table to the redemption date.
18
(3)
(1) (2) Redemption
Debenture Accrued Original Price
Redemption Date Issue Price Issue Discount (1)+(2)
- -------------------- ---------------- -------------- ----------
June 23, 2006....... $425.90 $117.51 $ 543.41
June 23, 2007....... 425.90 140.70 566.60
June 23, 2008....... 425.90 165.07 590.97
June 23, 2009....... 425.90 190.68 616.58
June 23, 2010....... 425.90 217.58 643.48
June 23, 2011....... 425.90 245.84 671.74
June 23, 2012....... 425.90 275.53 701.43
June 23, 2013....... 425.90 306.73 732.63
June 23, 2014....... 425.90 339.51 765.41
June 23, 2015....... 425.90 373.94 799.84
June 23, 2016....... 425.90 410.12 836.02
June 23, 2017....... 425.90 448.13 874.03
June 23, 2018....... 425.90 488.06 913.96
June 23, 2019....... 425.90 530.02 955.92
At stated maturity.. 425.90 574.10 1,000.00
If converted to semiannual coupon debentures following the occurrence of a
tax event, the debentures will be redeemable at the restated principal amount
plus accrued and unpaid interest from the date of such conversion to the
redemption date. However, in no event may the debentures be redeemed prior to
June 23, 2006. See "--Optional Conversion to Semiannual Coupon Debenture upon
Tax Event."
If less than all of the outstanding debentures are to be redeemed, the
trustee shall select the debentures to be redeemed in principal amounts at
maturity of $1,000 or integral multiples of $1,000 by lot, pro rata or by
another method the trustee considers fair and appropriate. If a portion of a
holder's debentures is selected for partial redemption and such holder converts
a portion of such debentures prior to such redemption, such converted portion
will be deemed, solely for purposes of determining the aggregate principal
amount at maturity of the debentures to be redeemed by us, to be of the portion
selected for redemption.
Purchase of Debentures by UHS at the Option of the Holder
On June 23, 2006, June 23, 2010 and June 23, 2015, we will, at the option
of the holder, be required to purchase, at the purchase prices set forth below
plus accrued cash interest to the purchase date, any outstanding debenture for
which a written purchase notice has been properly delivered by the holder and
not withdrawn, subject to certain additional conditions. Holders may submit
their debentures for purchase to the paying agent at any time from the opening
of business on the date that is 20 business days before such purchase date until
the close of business on such purchase date.
The purchase price of a debenture will be:
. $543.41 per debenture on June 23, 2006;
. $643.48 per debenture on June 23, 2010; and
. $799.84 per debenture on June 23, 2015.
These purchase prices equal the issue price plus accrued original issue
discount to the applicable purchase date.
We may, at our option, elect to pay the purchase price in cash or shares of
class B common stock, or any combination thereof. For a summary of the U.S.
federal income tax treatment of a holder receiving cash, class B common stock or
any combination thereof, see "Federal Income Tax Considerations--Disposition or
Conversion."
19
If prior to a purchase date the debentures have been converted to
semiannual coupon debentures following the occurrence of a tax event, the
purchase price will be equal to the restated principal amount plus accrued and
unpaid cash interest from the date of the conversion to, but excluding, the
purchase date. See "--Optional Conversion to Semiannual Coupon Debenture upon
Tax Event."
We will give notice on a date not less than 20 business days prior to each
purchase date to all holders at their addresses shown in the register of the
registrar, and to beneficial owners as required by applicable law, stating among
other things:
. whether we will pay the purchase price of the debentures in cash or class B
common stock or any combination thereof, specifying the percentages of each;
. if we elect to pay in shares of class B common stock, in whole or in part,
the method of calculating the Market Price (as defined below) of the class B
common stock; and
. the procedures that holders must follow to require us to purchase their
debentures.
The purchase notice given by any holder requiring us to purchase debentures
will state:
. the certificate numbers of the debentures to be delivered by such holder for
purchase;
. the portion of the principal amount at maturity of debentures to be
purchased, which portion must be $1,000 or an integral multiple thereof;
. that the debentures are to be purchased by us pursuant to the applicable
provisions of the indenture and the debentures; and
. if we elect, pursuant to the notice we are required to give, to pay a
specified percentage of the purchase price in shares of class B common stock
but such specified percentage is ultimately to be paid to the holder in cash
because any of the conditions to payment of such specified percentage of the
purchase price in shares of class B common stock is not satisfied prior to
the close of business on the purchase date, as described below, whether the
holder elects (1) to withdraw the purchase notice as to some or all of the
debentures to which it relates (stating the principal amount at maturity and
certificate numbers of the debentures as to which such withdrawal relates) or
(2) to receive cash in respect to the purchase price of all debentures
subject to such purchase notice.
If the holder fails to indicate its choice with respect to the election
described in the final bullet point above, the holder will be deemed to have
elected to receive cash for the specific percentage of the purchase price that
was to have been payable in shares of class B common stock. See "Federal Income
Tax Considerations--Disposition or Conversion."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date. The notice of withdrawal must state the principal amount at
maturity and the certificate numbers of the debentures as to which the
withdrawal notice relates and any principal amount at maturity which remains
subject to the purchase notice.
If we elect to pay the purchase price, in whole or in part, in shares of
class B common stock, the number of shares of class B common stock to be
delivered by us shall be equal to the portion of the purchase price to be paid
in class B common stock divided by the Market Price of a share of class B common
stock. Instead of any fractional shares otherwise deliverable as part of the
purchase price, we will pay cash based on the Market Price for such fractional
shares of class B common stock. See "Federal Income Tax Considerations--
Disposition or Conversion."
The "Market Price" means the average of the Sale Prices of the class B
common stock for the five trading day period ending on (if the third business
day prior to the applicable purchase date is a trading day, or if not, then on
the last trading day prior to) the third business day prior to the applicable
purchase date, appropriately adjusted to
20
take into account the occurrence, during the period commencing on the first of
such trading days during such five trading day period and ending on such
purchase date (or other date in question, for purpose of adjusting the
conversion rate), of certain events that would result in an adjustment of the
conversion rate.
The "Sale Price" of the class B common stock on any date means the closing
per share sale price (or, if no closing sale price is reported, the average of
the bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such date as reported in the composite
transactions for the principal United States securities exchange on which the
class B common stock is traded or, if the class B common stock is not listed on
a United States national or regional securities exchange, as reported by the
Nasdaq Stock Market.
A "trading day" means each day on which the securities exchange or
quotation system which is used to determine the Sale Price is open for trading
or quotation. Because the Market Price of the class B common stock is determined
prior to the applicable purchase date, holders of debentures bear the market
risk with respect to the value of the class B common stock to be received from
the date such Market Price is determined to such purchase date. We may pay the
purchase price, or any portion of the purchase price, in class B common stock
only if the information necessary to calculate the Market Price is reported in
The Wall Street Journal or another daily newspaper of national circulation.
Upon determination of the actual number of shares of class B common stock
issuable in accordance with the foregoing provisions, we will publish such
information in The Wall Street Journal or another daily newspaper of national
circulation.
Our right to purchase debentures, in whole or in part, with shares of class
B common stock is subject to our satisfying various conditions, including:
. the registration of the class B common stock under the Securities Act and the
Exchange Act, if required; and
. any necessary qualification or registration under applicable state securities
law or the availability of an exemption from such qualification and
registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
debentures in cash. We may not change the form of consideration (or components
or percentages of components thereof) to be paid for debentures once we have
given the notice we are required to give to holders of debentures, except as
described in the preceding sentence.
In connection with any purchase offer, we will:
. comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
. file Schedule TO or any other required schedule under the Exchange Act.
Payment of the purchase price for a debenture for which a purchase notice
has been delivered and not validly withdrawn is conditioned upon delivery of the
debenture, together with necessary endorsements, to the paying agent, at any
time after delivery of such purchase notice. Payment of the purchase price for
the debenture will be made promptly following the later of the purchase date and
the time of delivery of the debenture.
If the paying agent holds money or securities sufficient to pay the
purchase price of the debenture on the business day following the purchase date
in accordance with the terms of the indenture, then, immediately after the
purchase date, such debenture will cease to be outstanding and cash interest and
original issue discount on such debenture will cease to accrue and will be
deemed paid, whether or not such debenture is delivered to the paying agent, and
all other rights of the holder shall terminate, other than the right to receive
the purchase price upon delivery of the debenture.
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No debentures may be purchased for cash at the option of the holders if
there has occurred and is continuing an event of default with respect to the
debentures other than a default in the payment of the purchase price with
respect to such debentures. If we become obligated to purchase any outstanding
debenture on a purchase date, there can be no assurance that we would have
sufficient funds to pay the purchase price on that purchase date (in which case,
we could be required to issue shares of class B common stock to pay the purchase
price at valuations based on then prevailing market prices) for all the
debentures tendered. Our then existing senior indebtedness or borrowing
agreements may provide that the maturing of any obligation to purchase the
debentures would constitute an event of default thereunder and may restrict or
prohibit the repurchase of the debentures.
Change In Control Permits Purchase of Debentures at the Option of the Holder
In the event of any change in control of UHS occurring on or prior to June
23, 2006, each holder will have the right, at the holder's option, subject to
the terms and conditions of the indenture, to require us to purchase all or any
portion of the holder's debentures. However, debentures submitted for purchase
by a holder must be in principal amounts at maturity of $1,000 or an integral
multiple of $1,000.
We will be required to purchase the debentures as of the date that is 35
business days after the occurrence of such change in control (a "change in
control purchase date") at a cash price equal to the issue price plus accrued
original issue discount and accrued cash interest to the change in control
purchase date.
If prior to a change in control purchase date the debentures have been
converted to semiannual coupon debentures following the occurrence of a tax
event, we will be required to purchase the debentures at a cash price equal to
the restated principal amount plus accrued and unpaid interest from the date of
the conversion to, but excluding, the change in control purchase date.
Within 15 business days after the occurrence of a change in control, we are
obligated to mail to the trustee and to all holders of debentures at their
addresses shown in the register of the registrar and to beneficial owners as
required by applicable law a notice regarding the change in control, which
notice shall state, among other things:
. the events causing a change in control;
. the date of such change in control;
. the last date on which the purchase right may be exercised;
. the change in control purchase price;
. the change in control purchase date;
. the name and address of the paying agent and the conversion agent;
. the conversion rate and any adjustments to the conversion rate;
. that the debentures with respect to which a change in control purchase notice
is given by the holder may be converted only if the change in control
purchase notice has been withdrawn in accordance with the terms of the
indenture; and
. the procedures that holders must follow to exercise these rights.
We will cause a copy of such notice to be published in The Wall Street
Journal or another daily newspaper of national circulation.
To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the change in control purchase
date. The required purchase notice upon a change in control shall state:
22
. the certificate number of the debentures to be delivered by the holder;
. the portion of the principal amount at maturity to be purchased, which
portion must be $1,000 or an integral multiple of $1,000; and
. that we are to purchase such debentures pursuant to the applicable provisions
of the indenture and the debentures.
Any change in control purchase notice may be withdrawn by the holder by a
written notice of withdrawal delivered to the paying agent prior to the close of
business on the change in control purchase date.
The notice of withdrawal shall state:
. the principal amount at maturity being withdrawn;
. the certificate numbers of the debentures being withdrawn; and
. the principal amount at maturity, if any, of the debentures that remain
subject to a change in control purchase notice.
Payment of the change in control purchase price for a debenture for which a
change in control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the debenture, together with necessary
endorsements, to the paying agent at any time after the delivery of such change
in control purchase notice. Payment of the change in control purchase price for
such debenture will be made promptly following the later of the change in
control purchase date or the time of delivery of such debenture.
If the paying agent holds money or securities sufficient to pay the change
in control purchase price of the debenture on the business day following the
change in control purchase date in accordance with the terms of indenture, then,
immediately after the change in control purchase date, such debenture will cease
to be outstanding and cash interest and original issue discount on such
debenture will cease to accrue and will be deemed paid, whether or not such
debenture is delivered to the paying agent, and all other rights of the holder
shall terminate, other than the right to receive the change in control purchase
price upon delivery of the debenture.
Under the indenture, a "change in control" of UHS is deemed to have
occurred at such time as:
. any person, including its affiliates and associates, other than permitted
holders, files a Schedule 13D or TO (or any successor schedule, form or
report under the Exchange Act) disclosing that such person has become the
beneficial owner of 50% or more of the total voting power in the aggregate of
all classes of our capital stock then outstanding normally entitled to vote
in electionsand some of directors,the
rights associated with certain exceptions, or any permitted holder
files such a schedule, form or report in connection with a transaction or
event, as a resulteach class of which theour capital stock. We may only offer class
B common stock ceases (or, upon
consummation of or immediately following such transaction or event, will
cease) to be listed on a United States national securities exchange or
approved for quotation on the Nasdaq National Market or any similar United
States system for automated dissemination of quotations of securities prices;
or
. there shall be consummated any consolidation or merger of UHS pursuant to
which the class B common stock would be converted into cash, securities or
other property, in each case other than a consolidation or merger of UHS in
which (1) the holders of all classes of common stock of UHS immediately prior
to the consolidation or merger have, directly or indirectly, at least a
majority of the total voting power in the aggregate of all classes of capital
stock of the continuing or surviving corporation normally entitled to vote in
elections of directors immediately after the consolidation or merger and (2)
the shares of class B common stock shall be converted into common stock which
is (or, upon consummation of or immediately following such consolidation or
merger, will be) listed on a United States national securities exchange or
approved for quotation on the Nasdaq
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National Market or any similar United States system for automated
dissemination of quotations of securities prices.
For purposes of the foregoing definition, permitted holders means (A) UHS,
any subsidiary of UHS or their employee benefit plans or Alan B. Miller, UHS's
Chairman of the Board, President and Chief Executive Officer, and his spouse,
immediate family members, estate, lineal descendants, executors or
administrators, or (B) any trust, corporation or other entity, the
beneficiaries, stockholders or other persons beneficially holding an 80% or more
controlling interest of which consist of persons or entities referred to in
clause (A).
In connection with any purchase offer in the event of a change in control,
we will:
. comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
. file Schedule TO or any other required schedule under the Exchange Act.
The change in control purchase feature of the debentures may in certain
circumstances make more difficult or discourage a takeover of UHS. The change
in control purchase feature, however, is not the result of our knowledge of any
specific effort to accumulate shares of our common stock or to obtain control of
UHS by means of a merger, tender offer, solicitation or otherwise, or part of a
plan by management to adopt a series of anti-takeover provisions.
Instead, the change in control purchase feature is a standard term
contained in offerings of securities comparable to the debentures that have been
marketed by Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, J.P. Morgan Securities Inc., UBS Warburg LLC and Banc of America
Securities LLC, the initial purchasers of the debentures. The terms of the
change in control purchase feature resulted from negotiations between the
initial purchasers and us.
We could, in the future, enter into certain transactions, including certain
recapitalizations, that would not constitute a change in control with respect to
the change in control purchase feature of the debentures but that would increase
the amount of our outstanding indebtedness.
No debentures may be purchased at the option of holders upon a change in
control if there has occurred and is continuing an event of default with respect
to the debentures, other than a default in the payment of the change in control
purchase price with respect to the debentures.
Optional Conversion to Semiannual Coupon Debenture upon Tax Event
From and after the date of the occurrence of a tax event, we will have the
option to elect to have interest in lieu of future original issue discount and
regular cash interest accrue at 5.00% per year on a principal amount per
debenture (the "restated principal amount") equal to the issue price plus
original issue discount accrued to the date of the tax event or the date on
which we exercise the option described herein, whichever is later (the "option
exercise date"). Such interest shall accrue from the option exercise date and
shall be payable semiannually on each interest payment date to holders of record
at the close of business on the regular record date immediately preceding such
interest payment date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months and will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the option
exercise date.
A "tax event" means that UHS shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date ofusing this prospectus, as a result of:
. any amendment to, or change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or
24
. any amendment to, or change in, an interpretation or application of such laws
or regulations by any legislative body, court, governmental agency or
regulatory authority,
in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this prospectus, there is more than an
insubstantial risk that interest (including original issue discount) payable on
the debentures either:
. would not be deductible on a current accrual basis, or
. would not be deductible under any other method, in either case in whole or in
part, by us (by reason of deferral, disallowance, or otherwise) for United
States federal income tax purposes.
The Clinton Administration has previously proposed to change the tax law to
defer the deduction of original issue discount on convertible debt instruments
until the issuer pays the interest. Congress has not yet enacted these proposed
changes in the law.
If a similar proposal were ever enacted and made applicable to the
debentures in a manner that would limit our ability to either:
. deduct the interest, including original issue discount, payable on the
debentures on a current accrual basis, or
. deduct the interest, including original issue discount, payable on the
debentures under any other method for United States federal income tax
purposes,
such enactment would result in a tax event and the terms of the debentures would
be subject to modification at our option as described above.
The modification of the terms of debentures by us upon a tax event as
described above could possibly alter the timing of income recognition by holders
of the debentures with respect to the semiannual payments of interest due on the
debentures after the option exercise date. See "Federal Income Tax
Considerations."
Merger and Sales of Assets by UHS
The indenture provides that UHS may not consolidate with or merge into any
other person or convey, transfer or lease its properties and assets
substantially as an entirety to another person, unless among other things, (i)
the resulting, surviving or transferee person (if other than UHS) is organized
and existing under the laws of the United States, any state thereof or the
District of Columbia and such person assumes all of our obligations under the
debentures and the indenture, and (ii) UHS or such successor person shall not
immediately thereafter be in default under the indenture. Upon the assumption
of our obligations by such a person in such circumstances, subject to certain
exceptions, we shall be discharged from all obligations under the debentures and
the indenture. Although such transactions are permitted under the indenture,
certain of the foregoing transactions occurring on or prior to June 23, 2006
could constitute a change in control of UHS permitting each holder to require us
to purchase its debentures as described above.
Events of Default; Notice and Waiver
The indenture provides that, if an event of default with respect to the
debentures shall have occurred and be continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount at maturity of the
debentures then outstanding may declare the issue price plus original issue
discount accrued, together with any accrued cash interest (or if the debentures
have been converted to semiannual coupon debentures following a tax event, the
restated principal amount, plus accrued interest) to the date of such
declaration (in the case of an event of default specified in the first six
bullet points of the following paragraph) or to the date of default (in the case
of an event of default specified in the last bullet point of the following
paragraph) on all the debentures to be immediately due and payable. In the case
of certain events of bankruptcy or insolvency, the issue price of the debentures
plus the
25
original issue discount accrued thereon, together with any accrued cash
interest (or if the debentures have been converted to semiannual coupon
debentures following a tax event, the restated principal amount, plus accrued
interest) to the occurrence of such event shall automatically become and be
immediately due and payable. Under certain circumstances, the holders of a
majority in aggregate principal amount at maturity of the outstanding debentures
may rescind any such acceleration with respect to the debentures and its
consequences. Interest shall accrue and be payable on demand upon a default in
the payment of the principal amount at maturity (or, if the debentures have been
converted to semiannual coupon debentures following a tax event, the restated
principal amount), accrued original issue discount, cash interest when due,
redemption price, purchase price, change in control purchase price or shares of
class B common stock (or cash in lieu of fractional shares) to be delivered on
conversion of debentures, in each case to the extent that the payment of such
interest shall be legally enforceable. The accrual of such interest on overdue
amounts shall be in lieu of, and not in addition to, the continued accrual of
original issue discount.
The following will be events of default with respect to the debentures:
. default in payment of the principal amount at maturity (or, if the debentures
have been converted to semiannual coupon debentures following a tax event,
the restated principal amount), accrued original issue discount, cash
interest when due (if such default in payment of interest shall continue for
30 days), redemption price, purchase price or change in control purchase
price with respect to any debenture, when the same becomes due and payable;
. our failure to deliver shares of class B common stock (together with cash in
lieu of fractional shares) when such class B common stock (or cash in lieu of
fractional shares) is required to be delivered following conversion of a
debenture and continuance of such default for 10 days;
. our failure to comply with any of our other agreements in the debentures or
the indenture upon the receipt by us of notice of such default from the
trustee or from holders of not less than 25% in aggregate principal amount at
maturity of the debentures then outstanding and our failure to cure such
default within 30 days after receipt by us of such notice;
. acceleration of Indebtedness (as defined in the indenture) of UHS or any
Significant Subsidiary (as defined in the indenture) under the terms of the
instruments evidencing such Indebtedness aggregating more than $5 million at
the time outstanding;
. a default in the payment of principal and interest in respect of any
Indebtedness of UHS or any Significant Subsidiary having an outstanding
principal amount of $5 million individually or in the aggregate;
. judgments for the payment of more than $5 million at the time outstanding
rendered against UHS or any Significant Subsidiary and not discharged within
60 days after such judgment becomes final and non-appealable; and
. certain events of bankruptcy, insolvency or reorganization with respect to
UHS or any Significant Subsidiary.
The trustee shall, within 90 days after the occurrence of any default, mail
to all holders of the debentures notice of all defaults of which the trustee
shall be aware, unless such defaults shall have been cured or waived before
giving of such notice; provided, that the trustee may withhold such notice as to
any default other than a payment default, if it determines in good faith that
withholding the notice is in the interests of the holders.
The holders of a majority in aggregate principal amount at maturity of the
outstanding debentures 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, provided that such direction shall not be in
conflict with any law or the indenture and subject to certain other limitations.
The trustee may refuse to perform any duty or exercise any right or power or
extend or risk its own funds or otherwise incur any financial liability unless
it receives indemnity
26
satisfactory to it against any loss, liability or expense. No holder of any
debenture will have any right to pursue any remedy with respect to the indenture
or the debentures, unless:
. such holder shall have previously given the trustee written notice of a
continuing event of default;
. the holders of at least 25% in aggregate principal amount at maturity of the
outstanding debentures shall have made a written request to the trustee to
pursue such remedy;
. such holder or holders shall have offered to the trustee reasonable security
or indemnity against any loss, liability or expense satisfactory to it;
. the trustee shall have failed to comply with the request within 60 days after
receipt of such notice, request and offer of security or indemnity; and
. the holders of a majority in aggregate principal amount at maturity of the
outstanding debentures shall not have given the trustee a direction
inconsistent with such request within 60 days after receipt of such request.
The right of any holder (1) to receive payment of the principal amount at
maturity (or, if the debentures have been converted to semiannual coupon
debentures following a tax event, the restated principal amount), issue price,
accrued original issue discount, redemption price, purchase price, change in
control purchase price or interest in respect of the debentures held by such
holder on or after the respective due dates expressed in the debentures, (2) to
convert such debentures, or (3) to bring suit for the enforcement of any such
payment on or after such respective dates or the right to convert, shall not be
impaired or adversely affected without such holder's consent.
The holders of a majority in aggregate principal amount at maturity of
debentures at the time outstanding may waive any existing default and its
consequences except (1) any default in any payment on the debentures, (2) any
default with respect to the conversion rights of the debentures, or (3) any
default in respect of certain covenants or provisions in the indenture which may
not be modified without the consent of the holder of each debenture as described
in "--Modification" below.
We will be required to furnish to the trustee annually a statement as to
any default by us in the performance and observance of our obligations under the
indenture. In addition, we must file with the trustee written notice of the
occurrence of any default or event of default within five business days of our
becoming aware of such default or event of default.
Modification
Modification and amendment of the indenture or the debentures may be
effected by UHS and the trustee with the written consent of the holders of not
less than a majority in aggregate principal amount at maturity of the debentures
then outstanding. However, without the consent of each holder affected thereby,
no amendment may, among other things:
. reduce the principal amount at maturity, restated principal amount, issue
price, purchase price, change in control purchase price or redemption price
with respect to any debenture, or extend the stated maturity of any debenture
or alter the manner or rate of accrual of original issue discount or cash
interest or make any debenture payable in money or securities other than that
stated in the debenture;
. make any reduction in the principal amount at maturity of debentures whose
holders must consent to an amendment or any waiver under the indenture or
modify the indenture provisions relating to such amendments or waivers;
. make any change that adversely affects the right to convert any debenture or
the right to require us to purchase a debenture; or
27
. impair the right to institute suit for the enforcement of any payment with
respect to, or conversion of, the debentures.
Without the consent of any holder of debentures, we and the trustee may
amend the indenture to:
. cure any ambiguity, omission, defect or inconsistency, provided, however,
that such amendment does not materially adversely affect the rights of any
holder;
. provide for the assumption by a successor to UHS of our obligations under the
indenture and debentures;
. provide for uncertificated debentures in addition to certificated debentures,
as long as such uncertificated debentures are in registered form for United
States federal income tax purposes;
. make any change that does not adversely affect the rights of any holder of
debentures;
. make any change to comply with the Trust Indenture Act of 1939, or to comply
with any requirement of the SEC in connection with the qualification of the
indenture under the Trust Indenture Act of 1939; or
. add to our covenants or obligations under the indenture for the protection of
holders of the debentures or surrender any right, power or option conferred
by the indenture on UHS.
Discharge of the Indenture
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding debentures or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the debentures have become due and payable, whether at stated
maturity or any redemption date, or any purchase date, or a change in control
purchase date, or upon conversion or otherwise, cash or shares of class B common
stock (as applicable under the terms of the indenture) sufficient to pay all of
the outstanding debentures and paying all other sums payable under the indenture
by us.
Limitations of Claims in Bankruptcy
If a bankruptcy proceeding is commenced in respect of UHS, the claim of the
holder of a debenture under Title 11 of the United States Code, is limited to
the issue price of the debenture plus that portion of the original issue
discount, together with any cash interest (or, if the debentures have been
converted to semiannual coupon debentures following a tax event, the restated
principal amount, plus interest), that is deemed to have accrued from the date
of issue to the commencement of the proceeding. In addition, the holders of the
debentures will be effectively subordinated to the indebtedness and other
obligations of our subsidiaries.
Governing Law
The indenture and the debentures will be governed by, and construed in
accordance with, the laws of the State of New York.
Information Concerning the Trustee
The trustee is Bank One Trust Company, N.A. The trustee is a lender to us
under our revolving credit agreement, provides cash management and depository
account services to us, and is the trustee under our indenture entered into with
our shelf registration for the issuance from time to time of debt securities of
up to $500 million. No such debt securities have been issued to date. From
time to time, we may enter into other banking relationships with the trustee.
28
Registration Rights
We entered into a registration rights agreement with the initial purchasers
of the debentures. If you sell debentures or class B common stock issued upon
conversion of the debentures under this registration statement, you generally
will be required to be named as a selling securityholder in this prospectus,
deliver this prospectus to purchasers and be bound by applicable provisions of
the registration rights agreement, including some indemnification provisions.
In the registration rights agreement, we agreed to file a registration
statement that includes this prospectus with the SEC by September 21, 2000. We
agreed to use reasonable efforts to cause this registration statement to become
effective as promptly as practicable, but by December 20, 2000. Under the
registration rights agreement, we are obligated to use reasonable efforts to
keep the registration statement effective until the earlier of: (1) two years
from the date on which this registration statement is declared effective by the
SEC, (2) the date on which all securities offered under this prospectus have
been sold pursuant to this prospectus, and (3) the date on which all outstanding
securities held by non-affiliates of UHS may be resold without registration
under the Securities Act pursuant to Rule 144(k) under the Securities Act. We
may suspend the use of this prospectus under limited circumstances, including
pending corporate developments or public filings with the SEC, for a period not
to exceed 45 days in any 3-month period and 90 days in any 12-month period. We
also agreed to pay liquidated damages to holders of debentures and shares of
class B common stock issued upon conversion of the debentures if the
registration statement is not timely filed or made effective or if the
prospectus is unavailable for periods in excess of those permitted above. You
should refer to the indenture for a description of these liquidated damages.
DESCRIPTION OF CAPITAL STOCK
UHS'sprospectus.
Our authorized capital stock consists of 12,000,000 shares of class A
common stock, $0.01 par value per share, 75,000,000 shares of class B common
stock, $0.01 par value per share, 1,200,000 shares of class C common stock,
$0.01 par value per share, and 5,000,000 shares of class D common stock, $0.01
par value per share. Shares of class A, C and D common stock may be converted
into class B common stock on a share-for-share basis.
UHS'sOur class B common stock currently trades on the New York Stock Exchange
under the symbol "UHS"."UHS."
Class A common stock, class B common stock, class C common stock and class
D common stock are substantially similar except that each class has different
voting rights. Each share of class A common stock has one vote per share; each
share of class B common stock has one-tenth vote per share; each share of class
C common stock has one hundred votes per share; and each share of class D common
stock has ten votes per share. Notwithstanding the foregoing, if a holder of
class C or class D common stock holds a number of shares of class A or class B
common stock, respectively, which is less than ten times the number of shares of
class C or class D common stock, respectively, that such holder holds, then such
holder will only be entitled to one vote per share of class C common stock and
one-tenth vote per share of class D common stock.
The holders of class B and class D common stock, voting together, with each
share of class B and class D common stock having one vote per share, are
entitled to elect the greater of 20% of UHS'sour Board of Directors or one director.
The holders of class B and class D common stock are also permitted to vote
together as a separate class with respect to certain other matters or as
required by applicable law. Holders of class A and class C common stock, voting
as a single class, elect the remaining directors and vote together with the
holders of class B and class D common stock on all other matters.
FEDERAL INCOME TAX CONSIDERATIONSWe have historically not paid cash dividends on our capital stock and do
not anticipate paying cash dividends on our capital stock in the forseeable
future.
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DESCRIPTION OF OUR DEBT SECURITIES
This section describes some of the general terms of our debt securities.
The followingprospectus supplement will describe the particular terms of the debt
securities we are offering. The prospectus supplement will also indicate the
extent, if any, to which these general terms may not apply to the debt
securities we are offering.
We will issue our debt securities under an indenture between us and Bank
One Trust Company, N.A., which is serving as trustee. The indenture is an
exhibit to the registration statement of which this prospectus is a summarypart. We are
summarizing certain important provisions of United States federal income tax
considerationsour debt securities and the
indenture. This is not a complete description of the important terms. You should
refer to the specific terms of the indenture for a complete statement of the
terms of the indenture and our debt securities.
General
Our debt securities will be unsecured obligations of ours.
The indenture does not limit the amount of debt securities that we may
issue under the indenture, nor does it limit other debt that we may issue. We
may issue our debt securities at various times in different series, each of
which may have different terms.
We expect that the prospectus supplement relating to the purchase, ownership, disposition, and conversionparticular series
of debentures. Unless otherwise stated, this summary deals only with debentures
held as capital assets (generally, assets held for investment underdebt securities we are offering will include the Internal
Revenue Code of 1986, as amended (the "Code")) by a holder who purchases
debentures upon original issuance and who is, for United States federal income
tax purposes:
29
following information
concerning those debt securities:
. a citizen or residentThe title of the United States;debt securities;
. Any limit on the amount of debt securities that we may offer;
. The price at which we are offering our debt securities. We will
usually express the price as a corporation created or organized in or under the lawspercentage of the United Statesprincipal amount;
. The maturity date of our debt securities;
. The interest rate per annum on our debt securities. We may specify a
fixed rate or any of its political subdivisions;
. an estate, the net income of which is subject to United States federal income
taxation regardless of its source;a variable rate, or . a trust, the administration of which is subject to the primary supervision of
a court within the United States and which has one or more United States
persons (as defined in the Code) with authority to control all substantial
decisions.
The tax treatment of a holder of debentureswe may vary depending on his
particular situation. This summary doesoffer debt securities that do
not address all of the tax consequences
that may be relevant to holders who may be subject to special tax rules such as,
for example, rules relating to persons whobear interest but are not citizens or residents of the
United States; banks and financial institutions; insurance companies; broker-
dealers; tax-exempt organizations; and persons who hold debentures as part of a
hedging, conversion or constructive sale transaction, straddle or other risk
reduction transaction. In addition, this summary does not address any aspects
of state, local or foreign tax laws.
Furthermore, this discussion does not address the tax consequences
applicable to holders that are treated as partnerships or as other pass through
entities for United States federal income tax purposes. This summary is based
on the United States federal income tax law in effect as of the date hereof,
which is subject to change, possibly on a retroactive basis. There can be no
assurance that the Internal Revenue Service will not challenge one or more of
the conclusions described herein, and we have not obtained, nor do we intend to
obtain, a ruling from the Internal Revenue Service with respect to the United
States federal income tax consequences of acquiring or holding debentures. An
investor considering the purchase of debentures should consult his tax advisor
as to the particular tax consequences of purchasing, owning, and disposing of
debentures, including the application and effect of United States federal,
state, local, and foreign tax laws.
Tax Opinion
We have received an opinion from our counsel, Fulbright & Jaworski L.L.P.,
that, subject to the qualifications and assumptions contained therein, the
debentures will be treated as indebtedness for United States federal income tax
purposes.
Cash Interest and Original Issue Discount
The debentures were initially issuedsold at a substantial discount from their
statedthe
amount payable at maturity;
. The date from which interest on our debt securities will accrue;
. The dates on which we will pay interest and the regular record dates
for determining who is entitled to receive the interest;
. If applicable, the dates on which or after which, and the prices at
which, we are required to redeem our debt securities or have the
option to redeem our debt securities;
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. If applicable, any limitations on our right to defease our obligations
under our debt securities by depositing cash or securities;
. The amount that we would be required to pay if the maturity of our
debt securities is accelerated, if that amount is other than the
principal amount;
. Any additional restrictive covenants or other material terms relating
to our debt securities;
. Any additional events of default that will apply to our debt
securities; and
. If we will make payments on our debt securities in any currency other
than United States dollars, the currency or composite currency in
which we will make those payments. If the currency will be determined
under an index, the details concerning such index.
Payments on Debt Securities
We will make payments on our debt securities at the office or agency we
will maintain for that purpose, which will be the Corporate Trust Office of the
trustee in New York, New York unless we indicate otherwise in the prospectus
supplement, or at such other places and at the respective times and in the
manner as we designate in the prospectus supplement. As explained under "--
Book-Entry Debt Securities" below, The Depository Trust Company or its nominee
will be the initial registered holder unless the prospectus supplement provides
otherwise.
Form, Denominations and Transfers
Unless otherwise indicated in the prospectus supplement:
. Our debt securities will be in fully registered form, without coupons,
in denominations of $1,000 or any multiple of $1,000; and
. We will not charge any fee to register any transfer or exchange of our
debt securities, except for taxes or other governmental charges, if
any.
Certain Covenants
Unless we otherwise specify in the prospectus supplement, there will not be
any covenants in the indenture or our debt securities that would protect you
against a highly leveraged or other transaction involving us that may adversely
affect you as a holder of our debt securities. If there are provisions that
offer such protection, they will be described in the prospectus supplement.
Limitations on Liens. Under the indenture, we and our restricted
subsidiaries (defined below) may not issue, assume or guarantee any debt for
money borrowed, which is secured by a lien on a principal property (defined
below) or shares of stock or indebtedness of any restricted subsidiary, unless
the lien similarly secures your debt securities. This restriction will not apply
to indebtedness that is secured by:
7
. liens existing on the date of the indenture;
. liens in favor of governmental bodies securing progress, advance or
other payments;
. liens existing on property, capital stock or indebtedness at the time
of acquisition, including acquisition through lease, merger or
consolidation;
. liens securing the payment of all or any part of the purchase price of
the acquired property or the purchase price of construction,
installation, renovation, improvement or development on or of the
acquired property or securing any indebtedness incurred prior to, at
the time of or within 360 days after the later of the acquisition,
completion of the construction, installation, renovation, improvement
or development or the commencement of full operation of the acquired
property, provided that the amount of such indebtedness does not
exceed the expense incurred to construct, install, renovate, improve
or develop the acquired property, or within 360 days after the
acquisition of the capital stock or indebtedness for the purpose of
financing all or any part of the purchase price;
. liens securing indebtedness in an aggregate amount which, at the time
of incurrence and together with all outstanding attributable debt
(defined below) in respect of sale and leaseback transactions where,
at the time of incurrence, we would be entitled under the indenture to
create or assume a lien on the principal property securing
indebtedness in an amount at maturity. Forleast equal to the attributable debt in
respect of that transaction, without equally and ratably securing our
debt securities described in this prospectus, does not exceed 10% of
our consolidated net tangible assets;
. liens securing indebtedness owed to us or to a restricted subsidiary;
and
. any extension, renewal or replacement, in whole or in part, of any of
the liens described above.
A direct or indirect subsidiary of ours is a "restricted subsidiary" if
substantially all of its property is located in the continental United States
federaland if it owns any principal property, except if the subsidiary is principally
engaged in leasing or in financing installment receivables or overseas
operations.
A "principal property" is any property, plant, equipment or facility of
ours or any of our restricted subsidiaries, except that any property, plant,
equipment or facility of ours or any of our restricted subsidiaries which does
not equal or exceed 3% of our consolidated net tangible assets shall not
constitute a principal property of ours unless our Board of Directors or our
management deems it to be material to us and our restricted subsidiaries, taken
as a whole. Accounts receivable or inventory of ours or any of our restricted
subsidiaries are not "principal property"; provided, however, that individual
items of property, plant, equipment or individual facilities of ours or any of
our restricted subsidiaries shall not be combined in determining whether that
property, plant, equipment or facility constitutes a principal property of ours,
whether or not they are the subject of the same transaction or series of
transactions.
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With respect to any sale and leaseback transaction as of any particular
time, "attributable debt" means the present value, discounted at the rate of
interest implicit in the terms of the lease, of the obligations of the lessee
under the lease for net rental payments during the remaining term of the lease,
including any period for which the lease has been extended or may, at our
option, be extended.
Limitation on Sale and Leaseback Transactions. We and our restricted
subsidiaries may not enter into sale and leaseback transactions involving any
principal property unless:
. we or our restricted subsidiary sell that principal property within
360 days from the date of acquisition or completion of the
construction or commencement of full operations of that principal
property, whichever is later; or
. we or our restricted subsidiary, within 120 days after the sale,
reduce funded debt, which is not subordinated in right of payment to
our debt securities described in this prospectus, by an amount not
less than the greater of the net proceeds of the sale and leaseback
transaction or the fair value of that principal property.
This restriction will not prevent a sale and leaseback transaction of any
principal property:
. if the lease is for a period, including renewals, of not more than 36
months; or
. if we or our restricted subsidiary would, at the time of incurrence,
be entitled under the indenture to create or assume a lien on that
principal property securing indebtedness in an amount at least equal
to the attributable debt in respect of the sale and leaseback
transaction, without equally and ratably securing our debt securities
described in this prospectus.
Restrictions on Consolidation, Merger or Sale. We may not consolidate or
merge or sell or convey all or substantially all of our assets unless the
surviving corporation, if it is not us, is a domestic corporation and assumes
our obligations under our debt securities and the indenture and unless, under
the indenture, there is no event of default as a result of the transaction.
Defeasance
The indenture includes provisions allowing defeasance that we may choose to
apply to our debt securities of any series. If we do so, we would deposit with
the trustee or another trustee money or U.S. government obligations sufficient
to make all payments on those debt securities. If we make such a deposit with
respect to your debt securities, we may elect either:
. to be discharged from all our obligations on your debt securities,
except for our obligations to register transfers and exchanges, to
replace temporary or mutilated, destroyed, lost or stolen debt
securities, to maintain an office or agency in respect of the debt
securities and to hold moneys for payment in trust; or
. to be released from our restrictions described above relating to liens
and sale and leaseback transactions.
9
To establish such a trust, we must deliver to the trustee an opinion of our
counsel that the holders of our debt securities will not recognize income, gain
or loss for Federal income tax purposes as a result of such defeasance and will
be subject to Federal income tax on the excesssame amounts, in the same manner and at
the same times as would have been the case if such defeasance had not occurred.
There may be additional provisions relating to defeasance which we will describe
in the prospectus supplement.
Events of Default, Notice and Waiver
If certain events of default by us specified in the indenture happen and
are continuing, either the trustee or the holders of 25% in principal amount of
the statedoutstanding debt securities of a series may declare the principal and
accrued interest, if any, of all securities of that series to be due and
payable. If other specified events of default happen and are continuing, either
the trustee or the holders of 25% in principal amount of the outstanding debt
securities of all series may declare the principal and accrued interest, if any,
of all the outstanding debt securities to be due and payable.
An event of default in respect of any series of our debt securities means:
. our failure to pay any interest on that series within 30 days of when
due;
. our failure to pay any principal, sinking fund installment or
analogous obligation on that series when due;
. our failure to perform any other agreement in our debt securities of
that series or the indenture, other than an agreement relating solely
to another series of our debt securities, for 90 days after notice;
. acceleration of our indebtedness aggregating more than $20,000,000;
. our failure to discharge any judgment of $20,000,000 or more within 60
days after the judgment becomes final and nonappealable; and
. certain events of our bankruptcy, insolvency and reorganization.
Within 90 days after a default in respect of any series of our debt
securities, the trustee must give to the holders of such series notice of all
uncured and unwaived defaults by us known to it. However, except in the case of
default in payment, the trustee may withhold such notice if it in good faith
determines that withholding is in the interest of such holders. The term
"default" means, for this purpose, the happening of any event of default,
disregarding any grace period or notice requirement.
Before the trustee is required to exercise rights under the indenture at
the request of holders, it is entitled to be indemnified by such holders,
subject to its duty, during an event of default, to act with the required
standard of care.
If any event of default has occurred, the holders of a majority in
principal amount of the outstanding debt securities of any series may direct the
time, method and place of conducting
10
proceedings for remedies available to the trustee, or exercising any trust or
power conferred on the trustee, in respect of that series.
We must file an annual certificate with the trustee that we are in
compliance with conditions and covenants under the indenture.
The holders of a majority in principal amount of the outstanding debt
securities of a series, on behalf of the holders of all debt securities of that
series, or the holders of a majority of all outstanding debt securities voting
as a single class, on behalf of the holders of all outstanding debt securities,
may waive some past defaults or events of default, or compliance with certain
provisions of the indenture, but may not waive among other things an uncured
default in payment.
Modification or Amendment of the Indenture
If we receive the consent of the holders of a majority in principal amount
of the outstanding debt securities affected, we may enter into supplemental
indentures with the trustee that would:
. add, change or eliminate provisions in the indenture; or
. change the rights of the holders of our debt securities.
However, unless we receive the consent of all of the affected holders, we
may not enter into supplemental indentures that would, with respect to the debt
securities of those holders:
. change the maturity;
. reduce the principal amount or any premium;
. reduce the interest rate or extend the time of payment of interest;
. reduce any amount payable on redemption or reduce the amount of the
principal of an original issue discount security that would be payable
on acceleration;
. impair or affect the right of any holder to institute suit for
payment;
. change any right of the holder to require repayment; or
. reduce the requirement for two-thirds approval of supplemental
indentures.
Regarding the Trustee
The trustee is Bank One Trust Company, N.A. The trustee is a lender to us
under our revolving credit agreement, provides cash management and depository
account services to us, and is the trustee under our indenture entered into in
connection with our issuance, in June 2000, of $586,992,000 aggregate principal
amount at maturity of convertible debentures due 2020. From time to time, we may
enter into other banking relationships with the trustee.
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Book-Entry Debt Securities
The prospectus supplement will indicate whether we are issuing the related
debt securities as book-entry securities. Book-entry securities of a series will
be issued in the form of one or more global notes that will be deposited with
The Depository Trust Company (DTC), New York, New York, and will evidence all of
our debt securities of that series. This means that we will not issue
certificates to each debenture overholder. We will issue one or more global securities to DTC,
which will keep a computerized record of its participants (for example, your
broker) whose clients have purchased our debt securities. The participant will
then keep a record of its clients who own our debt securities. Unless it is
exchanged in whole or in part for a security evidenced by individual
certificates, a global security may not be transferred, except that DTC, its
nominees and their successors may transfer a global security as a whole to one
another. Beneficial interests in global securities will be shown on, and
transfers of beneficial interests in global notes will be made only through,
records maintained by DTC and its participants. Each person owning a beneficial
interest in a global security must rely on the issue price (the initial offering price atprocedures of DTC and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest to exercise any rights of a holder of our debt
securities under the debentures were sold to the initialindenture.
The laws of some jurisdictions require that certain purchasers of
securities such as our debt securities take physical delivery of those
securities in definitive form. These limits and laws may impair your ability to
acquire or transfer beneficial interests in the debentures) constitutes
original issue discount. In additionglobal security.
We will make payments on each series of book-entry debt securities to stated cash interestDTC
or its nominee, as the sole registered owner and holder of the global security.
Neither we, the trustee nor any of our respective agents will be responsible or
liable for any aspect of DTC's records relating to or payments made on account
of beneficial ownership interests in a global security or for maintaining,
supervising or reviewing any of DTC's records relating to such beneficial
ownership interests.
DTC has advised us that, when it receives any payment on a debenture,
whichglobal security,
it will immediately, on its book-entry registration and transfer system, credit
the accounts of participants with payments in amounts proportionate to their
beneficial interests in the global security as shown on DTC's records. Payments
by participants to you, as an owner of a beneficial interest in the global
security, will be taxable to a holdergoverned by standing instructions and customary practices, as
ordinary interest income atis now the time it
accrues or is paid depending on the holder's method of accountingcase with securities held for United
States federal income tax purposes, holders of debentures will be required to
include original issue discountcustomer accounts registered in income periodically over the term of the
debentures before receipt of the cash or other payment attributable to such
income. For United States federal income tax purposes, each holder of a
debenture must generally include in gross income a portion of the original issue
discount in each taxable year during which the debenture is held in an amount
equal to the original issue discount that accrues on the debenture during such
period, determined by using a constant yield to maturity method. The original
issue discount included in income for each year will be calculated under a
compounding formula that will result in the allocation of less original issue
discount to the earlier years of the term of the debenture and more original
issue discount to later years. Any amount included in income as original issue
discount will increase the holder's tax basis in the debenture.
30
Disposition or Conversion of Debentures
Except as described below, upon the sale or other disposition of a
debenture, a holder will recognize gain or loss equal to the difference between
the amount realized and the holder's income tax basis in the debenture, which
will generally equal the holder's cost of the debenture increased by any accrued
original issue discount includible in such holder's gross income and reduced by
any payments other than payments of cash interest. Gain or loss upon a sale or
other disposition of a debenture will generally be capital gain or loss"street
name", and will be long-term capital gainthe sole responsibility of such participants.
A global security representing a series will be exchanged for certificated
debt securities of that series only if:
. DTC notifies us that it is unwilling or lossunable to continue as
depositary or if DTC ceases to be a clearing agency registered under
the debentureSecurities Exchange Act of 1934 and we do not appoint a successor
within 90 days;
. we decide that the global security shall be exchangeable; or
12
. there is heldan event of default under the indenture or an event which
with the giving of notice or lapse of time or both would become an
event of default with respect to our debt securities represented by
that global security.
If that occurs, we will issue our debt securities of that series in certificated
form in exchange for more than one
year.
A holder that receivesglobal security. An owner of a beneficial interest in
the global security then will be entitled to physical delivery of a certificate
for our debt securities of that series equal in principal amount to such
beneficial interest and to have those debt securities registered in its name. We
would issue the certificates for those debt securities in denominations of
$1,000 or any larger amount that is an integral multiple thereof, and we would
issue them in registered form only, without coupons.
DTC has advised us 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 Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered under the Securities Exchange Act of 1934. DTC was
created to hold the securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants
through electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations, some of whom, and/or
their representatives, own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly. The rules applicable to DTC and its participants are on
file with the SEC. No fees or costs of DTC will be charged to you.
PLAN OF DISTRIBUTION
We may sell our class B common stock in exchange for a debenture
(whether upon conversion of a debenture or atdebt securities to or through one
or more underwriters or dealers, and also may sell our option upon tender of a
debenture) will generally not recognize gain or loss (except with respect to
shares, if any, received in respect of accrued cash interest, which will be
treated as a payment of interest, and cash received in lieu of a fractional
share). A holder's income tax basis in the class B common stock received on
conversion or
tender of a debenture will be the samedebt securities directly to other purchasers or through agents. These firms may
also act as the holder's adjusted
income tax basisour agents in the debenture at the time of conversion or tender (exclusive
of any basis allocable to a fractional share), and the holding period for the
class B common stock received on conversion or tender will include the holding
period of the debenture converted. It is possible, however, the Internal
Revenue Service may argue that the holding period of the class B common stock
allocable to accrued original issue discount will commence on the date of the
conversion. The receipt of cash in lieu of a fractional share of class B common
stock will generally result in capital gain or loss, measured by the difference
between the cash received for the fractional share and the holder's adjusted tax
basis in the fractional share.
If a holder elects to exercise his option to cause us to purchase his
debentures on a purchase date and we issue class B common stock in satisfaction
of all the purchase price, such exchange will be treated the same as a
conversion. If a holder elects to exercise his option to cause us to purchase
his debentures on a purchase date and we deliver a combination of cash and class
B common stock in satisfaction of the purchase price, gain, but not loss,
realized by the holder will generally be recognized, but only to the extent of
all cash received. The character of any gain recognized may be capital or
ordinary depending on the circumstances, including the extent to which a holder
actually or constructively has any other equity interest in UHS. (The holder's
gain realized will be the sum of any cash received (other than cash attributable
to accrued but unpaid stated interest) and the fair market value of the class B
common stock received reduced by the holder's adjusted tax basis in the
debentures.) A holder's income tax basis in the class B common stock received
will generally be the same as the holder's income tax basis in the debenture,
reduced by the cash received and increased by any gain recognized (exclusive of
any income tax basis allocable to a fractional share). In the event a holder
surrenders a debenture for conversion at such a time that the debenture is
required to be accompanied by a payment in an amount equal to the interest due
thereon on the immediately next succeeding interest payment date, the holder,
particularly if an accrual method taxpayer, should consult with its tax advisor
regarding the extent to which such payment is deductible.
Adjustment of Conversion Price
If at any time we make a distribution of property to stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes (for example, distributions of evidences of indebtedness or
assets of UHS, but generally not stock dividends or rights to subscribe for
class B common stock) and, in accordance with the anti-dilution provisions of
the debentures, the conversion rate of the debentures is increased, the amount
of such increase may be deemed to be the payment of a taxable dividend to
holders of the debentures. If the conversion rate is increased at our
discretion or in other circumstances as described under the heading "Description
of Debentures," such increase may also be deemed to be the payment of a taxable
dividend to holders of debentures. Moreover, in certain other circumstances,
the absence of such an adjustment to the conversion rate may result in a taxable
dividend to holders of class B common stock.
Tax Event
The modification of the terms of the debentures by us upon a tax event as
described in "Description of Debentures--Optional Conversion to Semiannual
Coupon Debenture upon Tax Event," could possibly alter the timing of income
recognition by the holders of the debentures with respect to the semiannual
payments of interest due on the debentures after the option exercise date.
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Backup Withholding and Information Reporting
Information reporting will apply to payments of interest or dividends, if
any, made by us on, or the proceeds of the sale or other disposition of, the
debentures or shares of class B common stock with respect to certain
noncorporate holders, and backup withholding at a rate of 31% may apply unless
the recipient of such payment supplies a taxpayer identification number,
certified under penalties of perjury, as well as certain other information or
otherwise establishes an exemption from backup withholding. Any amount withheld
under the backup withholding rules will be allowable as a credit against the
holder's United States federal income tax, provided that the required
information is provided to the Internal Revenue Service.
SELLING SECURITYHOLDERS
The following table presents information with respect to the selling
securityholders and the principal amounts of debentures and shares of our class B common stock issuable upon the conversion of these debentures that they may
offer under this prospectus. The term "selling securityholders" includes
transferees, pledgees, donees and successors of holders selling securities
received from aor debt
securities. Only underwriters named selling securityholder after the date of this prospectus.
The debentures were originally issued by us and sold by the initial purchasers,
in transactions exempt from the registration requirements of the Securities Act,
to qualified institutional buyers or to institutional "accredited investors."
To our knowledge, none of the selling securityholders has, or within the past
three years has had, any position, office or other material relationship with us
or any of our predecessors or affiliates, except that Merrill Lynch, Pierce,
Fenner & Smith Incorporated, J.P. Morgan Securities Inc. and Banc of America
Securities LLC were initial purchasers of the debentures.
The principal amounts of debentures provided in the table below is based on
information provided to us by each of the selling securityholders on or prior to
October 30, 2000, and the percentages are based on $586,992,000 principal amount
at maturity of debentures outstanding. The number of shares of class B common
stock that may be sold is calculated based on the current conversion ratio of
5.6024 shares of class B common stock per $1,000 principal amount at maturity of
a debenture. If each selling securityholder named below converted all of its
debentures, each would own less than 1% of our outstanding class B common stock,
based on 27,865,334 shares of class B common stock issued and outstanding as of
June 30, 2000.
Since the date on which each provided this information, each selling
securityholder identified below may have sold, transferred or otherwise disposed
of all or a portion of its debentures in a transaction exempt from the
registration requirements of the Securities Act. Information concerning the
selling securityholders may change from time to time and any changed informationprospectus supplement will be
set forth in supplements to this prospectus to the extent required. In
addition, the conversion ratio, and therefore the number of sharesconsidered as underwriters of our class B common stock issuable upon conversion ofor debt securities
offered by the debentures, is subject to
adjustment. Accordingly, the number of shares ofprospectus supplement. We may distribute our class B common stock
issuable
upon conversion of the debenturesor debt securities at different times in one or more transactions. We may increase or decrease.
The selling securityholders may from time to time offer and sell
any or all
of the securities under this prospectus. Because the selling securityholders
are not obligated to sell the debentures or theour class B common stock issuable
uponor debt securities at fixed prices, which may change,
at market prices prevailing at the conversiontime of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the debentures, we cannot estimate the amount of the
debentures or how many sharessale of our class B common stock that each selling
securityholder will beneficially own after this offering.
Principal Amount at Percentage of Number of Shares of
Maturity of Debentures Debentures Class B Common Stock
Name That May Be Sold Outstanding That May Be Sold
---- ---------------- ----------- ----------------
Allstate Life Insurance Company.................... $ 4,000,000 * 22,409
American Fidelity Assurance Company................ 450,000 * 2,521
Amerisure Companies/Michigan Mutual
Insurance Company................................ 775,000 * 4,341
Aventis Pension Master Trust....................... 525,000 * 2,941
Baltimore Life Insurance Company................... 400,000 * 2,240
Banc of America Securities LLC..................... 7,500,000 1.28% 42,018
Bankers Life and Casualty Insurance
Company Convertible.............................. 2,000,000 * 11,204
32
Principal Amount at Percentage of Number of Shares of
Maturity of Debentures Debentures Class B Common Stock
Name That May Be Sold Outstanding That May Be Sold
---- ---------------- ----------- ----------------
Bankers Life Insurance Co. CA & Co.
Single Premium................................... $ 60,000 * 336
Bankers Life Insurance Co. of N.Y.................. 80,000 * 448
Bear, Stearns & Co. Inc............................ 3,750,000 * 21,009
Blue Cross Blue Shield of Florida.................. 3,250,000 * 18,207
Boilermaker-Blacksmith Pension Trust............... 3,155,000 * 17,675
CALAMOS Convertible Fund -
CALAMOS Investment Trust......................... 4,580,000 * 25,658
CALAMOS Convertible Growth and
Income Fund - CALAMOS Investment Trust........... 2,430,000 * 13,613
CALAMOS Convertible Portfolio -
CALAMOS Advisors Trust........................... 160,000 * 896
CALAMOS Global Convertible Fund -
CALAMOS Investment Trust......................... 320,000 * 1,792
Champion International Corporation
Master Retirement Trust.......................... 1,355,000 * 7,591
Chrysler Corporation Master Retirement Trust....... 9,720,000 1.66% 54,455
City of Albany Pension Plan........................ 300,000 * 1,680
City of Birmingham Retirement &
Relief System.................................... 3,250,000 * 18,207
City of Knoxville Pension System................... 765,000 * 4,285
Conseco Annuity Assurance - Multi
Bucket Annuity Convertible Bond Fund............. 12,000,000 2.04% 67,228
Conseco Annuity Assurance
Company Convertible.............................. 2,500,000 * 14,006
Conseco Direct Life Assurance
Company Convertible.............................. 2,000,000 * 11,204
Cumberland Mutual Fire Insurance Company........... 470,000 * 2,633
Deephaven Domestic Convertible Trading Ltd......... 18,000,000 3.07% 100,843
Delta Air Lines Master Trust....................... 9,295,000 1.58% 52,074
Dorinco Reinsurance Company........................ 2,250,000 * 12,605
Elf Aquitaine...................................... 800,000 * 4,481
Employee Benefit Convertible Securities Fund....... 620,000 * 3,473
Genesee County Employees' Retirement
System........................................... 700,000 * 3,921
Greek Catholic Union............................... 50,000 * 280
Greek Catholic Union II............................ 75,000 * 420
H.K. Porter Company, Inc........................... 80,000 * 448
HealthNow New York, Inc............................ 250,000 * 1,400
J.P. Morgan Securities Inc......................... 1,480,000 * 8,291
Jackson County Employees' Retirement System........ 725,000 * 4,061
Kanawha Insurance Company.......................... 430,000 * 2,409
Kettering Medical Center Funded
Depreciation Account............................. 190,000 * 1,064
Knoxville Utilities Board Retirement System........ 465,000 * 2,605
Liberty View Funds L.P............................. 2,250,000 * 12,605
Louisiana Workers' Compensation Corporation........ 815,000 * 4,565
Lydian Overseas Partners Master Fund............... 41,000,000 6.98% 229,698
Macomb County Employees' Retirement
System........................................... 475,000 * 2,661
McMahan Securities Co. L.P......................... 950,000 * 5,322
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................... 7,779,000 1.33% 43,581
Michigan Mutual Insurance Company.................. 1,400,000 * 7,843
Morgan Stanley & Co................................ 10,000,000 1.7% 56,024
Morgan Stanley Dean Witter Convertible
Securities Trust................................. 5,500,000 * 30,813
33
Principal Amount at Percentage of Number of Shares of
Maturity of Debentures Debentures Class B Common Stock
Name That May Be Sold Outstanding That May Be Sold
---- ---------------- ----------- ----------------
Motion Picture Industry Health Plan -
Active Member Fund............................... $ 1,130,000 * 6,330
Motion Picture Industry Health Plan -
Retiree Member Fund.............................. 570,000 * 3,193
Nashville Electric Service......................... 550,000 * 3,081
Nations Convertible Securities Fund................ 8,800,000 1.5% 49,301
NORCAL Mutual Insurance Company.................... 1,000,000 * 5,602
OCM Convertible Trust.............................. 4,105,000 * 22,997
Oxford, Lord Abbett & Co........................... 5,200,000 * 29,132
Partner Reinsurance Company Ltd.................... 1,910,000 * 10,700
Physicians' Reciprocal Insurers Account #7......... 2,500,000 * 14,006
Port Authority of Allegheny County
Retirement and Disability Allowance Plan
for the Employees Represented by Local 85
of the Amalgamated Transit Union................. 3,385,000 * 18,964
Radian Group Inc................................... 4,570,000 * 25,602
RGA-Reinsurance Trust.............................. 11,000,000 1.87% 61,626
Sage Capital....................................... 200,000 * 1,120
San Diego County Employees
Retirement Association........................... 1,500,000 * 8,403
Southern Farm Bureau Life Insurance Company........ 2,000,000 * 11,204
SPT................................................ 2,565,000 * 14,370
State Employees' Retirement Fund of the State
of Delaware...................................... 4,915,000 * 27,535
State of Connecticut Combined
Investment Funds................................. 10,890,000 1.86% 61,010
The Cockrell Foundation............................ 200,000 * 1,120
The Dow Chemical Company
Employees' Retirement Plan....................... 6,230,000 1.06% 34,902
The Fondren Foundation............................. 195,000 * 1,092
Transamerica Life Insurance and
Annuities Company................................ 5,000,000 * 28,012
UBS O'Connor, LLC f/b/o UBS Global
Equity Arbitrage Master Limited.................. 12,000,000 2.04% 67,228
Unifi, Inc. Profit Sharing Plan and Trust.......... 305,000 * 1,708
United Food and Commercial Workers
Local 1262 and Employers Pension Fund............ 1,515,000 * 8,487
University of South Florida........................ 1,500,000 * 8,403
Van Kampen Harbor Fund............................. 17,350,000 2.96% 97,201
Van Waters & Rogers, Inc. Retirement
Plan (f.k.a. Univar Corporation)................. 910,000 * 5,098
Vanguard Convertible Securities Fund, Inc.......... 11,855,000 2.02% 66,416
Westward Life Insurance Company.................... 300,000 * 1,680
White River Securities L.L.C....................... 3,750,000 * 21,009
Zurich HFR Master Hedge Fund Index Ltd............. 350,000 * 1,960
Any other holder of debentures or future
transferee, pledgee, donee or successor of any
holder........................................... 287,368,000 48.96% 1,609,950
Total........................................ $586,992,000 100.00% 3,288,526**
============ ====== =========
_____________
* Less than 1%.
** Total differsor debt securities,
underwriters may receive compensation from the amount registered due to the rounding downus or from purchasers of fractional shares ofour class B
common stock issuable to each selling
securityholder upon conversion of the debentures.
34
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling allor debt securities
offered and sold under this prospectus. We will not receive any of the proceeds
on these sales of these securities. In connection with the initial offering of
the debentures, we entered into a registration rights agreement dated June 23,
2000 with the initial purchasers of the debentures. Securities may only be
offered or sold under this prospectus pursuant to the terms of the registration
rights agreement. However, selling securityholders may resell all or a portion
of the securities in open market transactions in reliance upon Rule 144 or Rule
144A under the Securities Act, provided they meet the criteria and conform to
the requirements of one of these rules.
Who May Sell and Applicable Restrictions
The securities may be sold directly by the selling securityholders from
time to time. The selling securityholders may decide not to sell any of the
securities offered under this prospectus, and selling securityholders could
transfer, devise or gift these securities by other means.
Alternatively, the selling securityholders may from time to time offer the
securities through brokers, dealers or agents that may receive compensation in the form of discounts, concessions or
commissions. Underwriters, dealers and agents that participate in the
distribution of our class B common stock or debt securities may be deemed to be
underwriters. Discounts or commissions from the selling
securityholders and/or the purchasers of the securities for whom they may act as
agent. In effecting sales, broker-dealers that are engaged by the selling
securityholders may arrange for other broker-dealers to participate. The
selling securityholdersreceive and any brokers,profit on their
resale of our class B common stock or debt securities may be considered
underwriting discounts and commissions under the Securities Act of 1933. We will
identify any such underwriter or agent, and we will describe any such
compensation, in the prospectus supplement.
13
We may agree to indemnify underwriters, dealers orand agents who participate
in the distribution of theour class B common stock or debt securities may be deemed to be underwriters and any
profits on the sale of the securities by them and any discounts, commissions or
concessions received by any broker, dealer or agent might be deemed to be
underwriting discounts and commissionsagainst
certain liabilities, including liabilities under the Securities Act. ToAct of 1933. We
may also agree to contribute to payments which the extent
the selling securityholdersunderwriters, dealers or
agents may be deemedrequired to be underwriters, the selling
securityholdersmake in respect of such liabilities. We may be subject to statutory liabilities, including, but not
limited to, liability under Sections 11, 12 and 17 of the Securities Act and
Rule 10b-5 under the Exchange Act.
Prospectus Delivery
Because selling securityholders may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act, they will be subject to the
prospectus delivery requirements of the Securities Act. At any time a
particular offer of the securities is made, a revised prospectus or prospectus
supplement, if required, will be distributed which will disclose:
. the name of the selling securityholders and of any participating
underwriters, broker-dealers or agents;
. the aggregate amount and type of securities being offered;
. the price at which the securities were sold and other material terms of the
offering;
. any discounts, commissions, concessionsauthorize
dealers or other items constituting
compensation from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paidpersons who act as our agents to dealers; and
. that the participating broker-dealers did not conduct any investigationsolicit offers by certain
institutions to verify the information in this prospectus or incorporated in this
prospectus by reference.
The prospectus supplement or a post-effective amendment will be filed with the
SEC to reflect the disclosure of additional information with respect to the
distribution of the securities.
35
Manner of Sales
The selling securityholders will act independently of us in making
decisions with respect to the timing, manner and size of each sale. Sales may
be made over the New York Stock Exchange (in the case of thepurchase our class B common stock)stock or debt securities from us
under contracts which provide for payment and delivery on a future date. We may
enter into these contracts with commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and others. If we enter into these agreements concerning our class
B common stock or any series of our debt securities, we will indicate that in
the over-the-counter market. Theprospectus supplement.
In connection with an offering of our class B common stock or debt
securities, may be sold at then
prevailing market prices, at fixed prices or at negotiated prices.
The securities may be sold according to one or more of the following
methods:
. a block trade in which the broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by the broker or
dealer for its account as allowed under this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
. an exchange distribution under the rules of the exchange;
. face-to-face transactions between sellers and purchasers without a
broker-dealer; and
. by writing options.
Some persons participating in the offeringunderwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the securities including
the entry of stabilizing bids or syndicate covering transactions or the
imposition of penalty bids.
The selling securityholders and any other person participating in a
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder including Regulation M. This regulation
may limit the timing of purchases and sales of any of the securities by the
selling securityholders and any other person. The anti-manipulation rules under
the Exchange Act may apply to sales of securities in the market and to the
activities of the selling securityholders and their affiliates. Furthermore,
Regulation M of the Exchange Act may restrict the ability of any person engaged
in the distribution of the securities to engage in market-making activities with
respect to the particular securities being distributed for a period of up to
five business days before the distribution. All of the foregoing may affect the
marketability of the securities and the ability of any person or entity to
engage in market-making activities with respect to the securities.
Hedging and Other Transactions With Broker-Dealers
In connection with distributions of the securities, the selling
securityholders may enter into hedging transactions with broker-dealers. In
connection with these transactions, broker-dealers may engage in short sales of
the registered securities in the course of hedging the positions they assume
with selling securityholders. The selling securityholders may also sell
securities short and redeliver the securities to close short positions. The
selling securityholders may also enter into options or other transactions with
broker-dealers which require the delivery to the broker-dealer of the registered
securities. The broker-dealer may then resell or transfer these securities
under this prospectus. A selling securityholder may also loan or pledge the
registered securities to a broker-dealer and the broker-dealer may sell the
securities so loaned or, upon a default, the broker-dealer may effect sales of
the pledged securities under this prospectus.
Expenses Associated With Registration
We have agreed to pay substantially all of the expenses of registering the
securities under the Securities Act and of compliance with blue sky laws,
including registration and filing fees, printing and duplicating expenses, legal
fees of our counsel, fees for one legal counsel retained by the selling
securityholders and fees of the trustee under the indenture pursuant to which we
originally issued the securities and of the registrar and transfer agent of the
class B
36
common stock. If the debentures or the class B common stock into which the
debenturesor debt securities.
Specifically, underwriters may be converted are sold through underwriters or broker-dealers, the
selling securityholders will be responsible for underwriting discounts,
underwriting commissions and agent commissions.
Indemnification and Contribution
In the registration rights agreement, we and the selling securityholders
have agreed to indemnify or provide contribution to each other and specified
other persons against some liabilitiesover-allot in connection with the offering,
creating a syndicate short position in our class B common stock or debt
securities for their own account. In addition, underwriters may bid for, and
purchase, our class B common stock or debt securities in the open market to
cover short positions or to stabilize the price of our class B common stock or
debt securities.
Finally, underwriters may reclaim selling concessions allowed for
distributing our class B common stock or debt securities in the securities, including liabilities arising underoffering if the
Securities Act. The selling
securityholders may also agree to indemnify any broker-dealerunderwriters repurchase previously distributed shares of our class B common
stock or agent that
participatesour debt securities in transactions involving salesto cover short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of our class B common stock or debt securities
against some
liabilities, including liabilities that arise under the Securities Act.
Suspension of This Offering
We may suspend the use of this prospectus if we learn of any event that
causes this prospectus to include an untrue statement of a material factabove independent market levels. Underwriters are not required to be statedengage in any
of these activities and may end any of these activities at any time. Agents and
underwriters may engage in transactions with, or perform services for, us and
our affiliates in the prospectus or necessary to make the statements in
the prospectus not misleading in the lightordinary course of the circumstances then existing.
If this type of event occurs, a prospectus supplement or post-effective
amendment, if required, will be distributed to each selling securityholder. Each
selling securityholder has agreed not to trade securities from the time the
selling securityholder receives notice from us of this type of event until the
selling securityholder receives a prospectus supplement or amendment. This time
period will not exceed 45 days in any 3-month period and 90 days in any 12-month
period.
Termination of This Offering
Under the registration rights agreement, we are obligated to use reasonable
efforts to keep the registration statement effective until, and therefore this
offering will terminate on, the earlier of: (1) two years from the date on
which this registration statement is declared effective by the SEC, (2) the date
on which all securities offered under this prospectus have been sold pursuant to
this prospectus, and (3) the date on which all outstanding securities held by
non-affiliates of UHS may be resold without registration under the Securities
Act pursuant to Rule 144(k) under the Securities Act.business.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of theour class B common
stock and debt securities offered by this prospectus will be passed upon for UHSus by Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, New York, New York.York 10103. Anthony Pantaleoni, a
director of ours who owns less than one percent of our outstanding capital
stock, is a partner inof Fulbright & Jaworski L.L.P.
EXPERTS
The consolidated financial statements and schedule of Universal Health
Services, Inc. and subsidiaries as of December 31, 1998 and 1999 and for each of
the three years in the period ended December 31, 1999 incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reportreports with respect
thereto, and are incorporated by reference herein in reliancereference upon the
authority of said firm as experts in giving said report.
37reports.
14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
All expenses incurred in connection with the issuance and distribution of
the securities being registered will be paid by us. The following is an itemized statement of these expenses. Allall estimated amounts are estimates exceptof all
expenses payable by the registrant in connection with the registration of the
class B common stock and debt securities offered hereby, other than underwriting
discounts and commissions:
SEC registration fee:
SEC registration fee............................................ $ 73,028
Blue sky fees and expenses...................................... 15,000
Accountants' fees and expenses.................................. 25,000
Legal fees and expenses......................................... 100,000
Printing and engraving expenses................................. 25,000
Trustee's fees and expenses..................................... 8,000
Rating agency fees.............................................. 137,250
Miscellaneous expenses.......................................... 20,000
--------
Total.......................................................... $403,278
========
Registration Fee................................................ $139,000
Securities rating service fee....................................... 40,000
Blue Sky fees and expenses.......................................... 20,000
Accountants' fees and expenses...................................... 50,000
Legal fees and expenses............................................. 100,000
Printing and engraving expenses..................................... 50,000
Trustee fees........................................................ 6,000
Miscellaneous....................................................... 45,000
--------
Total............................................................ $450,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee or agent to the registrant. The
Delaware General Corporation Law provides that Section 145 is not exclusive of
other rights to which those seeking indemnification may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Article VII, Section 7 of the registrant's bylawsby-laws provides for the
indemnification by the registrant of its directors, officers and employees to
the fullest extent permitted by the Delaware General Corporation Law.
The registrant maintains standard policies of insurance under which
coverage is provided (a) to its directors and officers against loss rising from
claims made by reason of breach of duty or other wrongful act, and (b) to the
registrant with respect to payments which may be made by the registrant to such
officers and directors pursuant to the above indemnification provision or
otherwise as a matter of law.
II-1
Item 16. Exhibits.
See Index3.1 - Restated Certificate of Incorporation, and amendments thereto*
3.2 - By-laws**
4.1 - Form of Indenture under which our debt securities are to Exhibits.be issued.***
4.2 - Form of our debt security.***
5.1 - Opinion of Fulbright & Jaworski L.L.P.****
12.1 - Computation of Ratio of Earnings to Fixed Charges.****
23.1 - Consent of Arthur Andersen LLP.****
23.2 - Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1).****
24.1 - Power of Attorney (included on signature page).****
25.1 - Statement of Eligibility of the Trustee on Form T-1.****
- -------------
* Incorporated by reference to Exhibit 3.1 of our Form 10-Q for the quarter
ended June 30, 1997.
** Incorporated by reference to Exhibit 3.2 of our Form 10-K for the year
ended December 31, 1997.
*** Incorporated by reference to Exhibit 4.1 of our
Registration Statement on Form S-3 (File No. 333-85781), filed on
February 1, 2000.
**** Previously filed.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effectivepost- effective amendment of this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effectivepost- effective amendment thereof) which, individually or in the aggregate,
II-1
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
orof any material change to such information in the registration statement;
II-2
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form S-8F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes that, insofarInsofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of
such issue.
(d) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a
II-3
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in King of Prussia, Commonwealth of Pennsylvania, on
October 30, 2000.May 10, 2001.
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ Alan B. Miller
----------------------------------------------------------------------
Alan B. Miller
Chairman of the Board, President
& Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the registration statement has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Alan B. Miller - --------------------------------------------
Alan B. Miller Chairman of the Board, President, May 10, 2001
- -------------------------------- Chief October 30, 2000 Executive Officer and Director
Alan B. Miller (Principal Executive Officer)
/s/ Leatrice Ducat Director May 10, 2001
- ----------------------------------------------------------------------------
Leatrice Ducat
* Director October 30, 2000
/s/May 10, 2001
- --------------------------------
John H. Herrell
* Director May 10, 2001
- --------------------------------------------
John H. Herrell Director October 30, 2000
/s/--------------------------------
Robert H. Hotz
- --------------------------------------------
Robert H. Hotz Director October 30, 2000
/s/ Sidney Miller
- --------------------------------------------
Sidney Miller Director October 30, 2000
/s/ Anthony Pantaleoni
- ---------------------------------------------------------------------------- Director May 10, 2001
Anthony Pantaleoni Director October 31, 2000
/s/ Joseph T. Sebastianelli
- ---------------------------------------------------------------------------- Director May 10, 2001
Joseph T. Sebastianelli
Director October 30, 2000
*
- --------------------------------------------/s/ John F. Williams,
Jr.- -------------------------------- Director October 30, 2000May 10, 2001
John F. Williams, Jr., M.D.
/s/ Kirk E. Gorman
- -------------------------------------------- Kirk E. Gorman Senior Vice President, Treasurer and October 30, 2000
Chief May 10, 2001
- -------------------------------- Financial Officer
Kirk E. Gorman (Principal
/s/ Steve G. Filton Financial Officer)
- --------------------------------------------/s/ Steve G. Filton Vice President, Controller and Secretary October 31, 2000
(Principal Accounting Officer)
* By: /s/ Alan B. Miller
----------------------------------May 10, 2001
- -------------------------------- (Principal Accounting Officer)
Steve G. Filton
* By: /s/ Alan B. Miller
--------------------------
Alan B. Miller
as Attorney-in-Fact
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INDEX TO EXHIBITS
1.1 Purchase Agreement, dated as of June 19, 2000, between Universal Health
Services, Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, J.P. Morgan Securities Inc., UBS Warburg LLC and Banc
of America Securities LLC./(1)/
4.1 Indenture, dated as of June 23, 2000, between Universal Health Services,
Inc. and Bank One Trust Company, N.A. (includes form of Convertible
Debenture due 2020)./(2)/
4.2 Registration Rights Agreement, dated as of June 23, 2000, between Universal
Health Services, Inc. and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, J.P. Morgan Securities Inc., UBS Warburg LLC
and Banc of America Securities LLC./(1)/
5.1 Opinion of Fulbright & Jaworski L.L.P./(1)/
8.1 Opinion of Fulbright & Jaworski L.L.P., as to certain tax
matters./(1)/
12.1 Computation of Ratio of Earnings to Fixed Charges./(1)/
23.1 Consent of Arthur Andersen LLP./(1)/
23.2 Consent of Fulbright & Jaworski L.L.P. (included in Exhibit 5.1)./(1)/
24.1 Power of Attorney (included on signature page)./(1)/
25.1 Statement of Eligibility of Trustee on Form T-1./(1)/
_______________
/(1)/ Previously filed.
/(2)/ Incorporated by reference to Exhibit 10.1 filed with the registrant's
quarterly report on Form 10-Q for the quarter ended June 30, 2000.
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