Supplemental Condensed Consolidating Financial Information and Other Collateral-Related Information | NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION HCA Inc. is a 100% owned direct subsidiary of HCA Holdings, Inc. On November 23, 2010, HCA Holdings, Inc. issued $1.525 billion aggregate principal amount of 7 3 / 4 % senior unsecured notes due 2021, which were redeemed in full during May 2015. On December 6, 2012, HCA Holdings, Inc. issued $1.000 billion aggregate principal amount of 6.25% senior unsecured notes due 2021. These notes are senior unsecured obligations and are not guaranteed by any of our subsidiaries. The senior secured credit facilities and senior secured notes described in Note 9 are jointly and severally, and fully and unconditionally guaranteed by substantially all existing and future, direct and indirect, 100% owned material domestic subsidiaries that are “Unrestricted Subsidiaries” under our Indenture dated December 16, 1993 (except for certain special purpose subsidiaries that only guarantee and pledge their assets under our ABL credit facility). NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) Our condensed consolidating balance sheets at December 31, 2015 and 2014 and condensed consolidating statements of comprehensive income and cash flows for each of the three years in the period ended December 31, 2015, segregating HCA Holdings, Inc. issuer, HCA Inc. issuer, the subsidiary guarantors, the subsidiary non-guarantors and eliminations, follow. HCA HOLDINGS, INC. CONDENSED CONSOLIDATING COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2015 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Revenues before provision for doubtful accounts $ — $ — $ 22,272 $ 21,319 $ — $ 43,591 Provision for doubtful accounts — — 2,099 1,814 — 3,913 Revenues — — 20,173 19,505 — 39,678 Salaries and benefits — — 9,131 8,984 — 18,115 Supplies — — 3,464 3,174 — 6,638 Other operating expenses (2 ) — 3,324 3,781 — 7,103 Electronic health record incentive income — — (31 ) (16 ) — (47 ) Equity in earnings of affiliates (2,352 ) — (6 ) (40 ) 2,352 (46 ) Depreciation and amortization — — 915 989 — 1,904 Interest expense 115 2,445 (766 ) (129 ) — 1,665 Losses (gains) on sales of facilities — — (2 ) 7 — 5 Losses on retirement of debt 122 13 — — — 135 Legal claim costs 120 129 — — — 249 Management fees — — (676 ) 676 — — (1,997 ) 2,587 15,353 17,426 2,352 35,721 Income (loss) before income taxes 1,997 (2,587 ) 4,820 2,079 (2,352 ) 3,957 Provision (benefit) for income taxes (132 ) (962 ) 1,758 597 — 1,261 Net income (loss) 2,129 (1,625 ) 3,062 1,482 (2,352 ) 2,696 Net income attributable to noncontrolling interests — — 92 475 — 567 Net income (loss) attributable to HCA Holdings, Inc. $ 2,129 $ (1,625 ) $ 2,970 $ 1,007 $ (2,352 ) $ 2,129 Comprehensive income (loss) attributable to HCA Holdings, Inc. $ 2,187 $ (1,568 ) $ 3,009 $ 969 $ (2,410 ) $ 2,187 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2014 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Revenues before provision for doubtful accounts $ — $ — $ 20,533 $ 19,554 $ — $ 40,087 Provision for doubtful accounts — — 1,777 1,392 — 3,169 Revenues — — 18,756 18,162 — 36,918 Salaries and benefits — — 8,574 8,067 — 16,641 Supplies — — 3,280 2,982 — 6,262 Other operating expenses 20 — 3,138 3,597 — 6,755 Electronic health record incentive income — — (85 ) (40 ) — (125 ) Equity in earnings of affiliates (2,003 ) — (7 ) (36 ) 2,003 (43 ) Depreciation and amortization — — 888 932 — 1,820 Interest expense 184 2,175 (559 ) (57 ) — 1,743 Gains on sales of facilities — — (25 ) (4 ) — (29 ) Losses on retirement of debt — 335 — — — 335 Legal claim costs — 78 — — — 78 Management fees — — (662 ) 662 — — (1,799 ) 2,588 14,542 16,103 2,003 33,437 Income (loss) before income taxes 1,799 (2,588 ) 4,214 2,059 (2,003 ) 3,481 Provision (benefit) for income taxes (76 ) (961 ) 1,533 612 — 1,108 Net income (loss) 1,875 (1,627 ) 2,681 1,447 (2,003 ) 2,373 Net income attributable to noncontrolling interests — — 87 411 — 498 Net income (loss) attributable to HCA Holdings, Inc. $ 1,875 $ (1,627 ) $ 2,594 $ 1,036 $ (2,003 ) $ 1,875 Comprehensive income (loss) attributable to HCA Holdings, Inc. $ 1,809 $ (1,566 ) $ 2,508 $ 995 $ (1,937 ) $ 1,809 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING COMPREHENSIVE INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2013 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Revenues before provision for doubtful accounts $ — $ — $ 20,042 $ 17,998 $ — $ 38,040 Provision for doubtful accounts — — 2,262 1,596 — 3,858 Revenues — — 17,780 16,402 — 34,182 Salaries and benefits — — 8,387 7,259 — 15,646 Supplies — — 3,158 2,812 — 5,970 Other operating expenses 8 (2 ) 2,998 3,233 — 6,237 Electronic health record incentive income — — (142 ) (74 ) — (216 ) Equity in earnings of affiliates (1,675 ) — (2 ) (27 ) 1,675 (29 ) Depreciation and amortization — — 855 898 — 1,753 Interest expense 184 2,253 (523 ) (66 ) — 1,848 Losses (gains) on sales of facilities — — 20 (10 ) — 10 Loss on retirement of debt — 17 — — — 17 Management fees — — (632 ) 632 — — (1,483 ) 2,268 14,119 14,657 1,675 31,236 Income (loss) before income taxes 1,483 (2,268 ) 3,661 1,745 (1,675 ) 2,946 Provision (benefit) for income taxes (73 ) (860 ) 1,362 521 — 950 Net income (loss) 1,556 (1,408 ) 2,299 1,224 (1,675 ) 1,996 Net income attributable to noncontrolling interests — — 69 371 — 440 Net income (loss) attributable to HCA Holdings, Inc. $ 1,556 $ (1,408 ) $ 2,230 $ 853 $ (1,675 ) $ 1,556 Comprehensive income (loss) attributable to HCA Holdings, Inc. $ 1,756 $ (1,324 ) $ 2,338 $ 861 $ (1,875 ) $ 1,756 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2015 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed ASSETS Current assets: Cash and cash equivalents $ — $ — $ 155 $ 586 $ — $ 741 Accounts receivable, net — — 2,982 2,907 — 5,889 Inventories — — 852 587 — 1,439 Other 223 — 403 537 — 1,163 223 — 4,392 4,617 — 9,232 Property and equipment, net — — 8,328 6,686 — 15,014 Investments of insurance subsidiaries — — — 432 — 432 Investments in and advances to affiliates 24,380 — 14 164 (24,380 ) 178 Goodwill and other intangible assets — — 1,703 5,028 — 6,731 Other 943 — 19 195 — 1,157 $ 25,546 $ — $ 14,456 $ 17,122 $ (24,380 ) $ 32,744 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) Current liabilities: Accounts payable $ 2 $ — $ 1,375 $ 793 $ — $ 2,170 Accrued salaries — — 712 521 — 1,233 Other accrued expenses 172 340 458 910 — 1,880 Long-term debt due within one year — 114 65 54 — 233 174 454 2,610 2,278 — 5,516 Long-term debt, net 984 28,756 226 289 — 30,255 Intercompany balances 31,432 (11,171 ) (23,435 ) 3,174 — — Professional liability risks — — — 1,115 — 1,115 Income taxes and other liabilities 555 548 417 384 — 1,904 33,145 18,587 (20,182 ) 7,240 — 38,790 Stockholders’ (deficit) equity attributable to HCA Holdings, Inc. (7,599 ) (18,587 ) 34,510 8,457 (24,380 ) (7,599 ) Noncontrolling interests — — 128 1,425 — 1,553 (7,599 ) (18,587 ) 34,638 9,882 (24,380 ) (6,046 ) $ 25,546 $ — $ 14,456 $ 17,122 $ (24,380 ) $ 32,744 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2014 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed ASSETS Current assets: Cash and cash equivalents $ — $ — $ 87 $ 479 $ — $ 566 Accounts receivable, net — — 2,812 2,882 — 5,694 Inventories — — 756 523 — 1,279 Deferred income taxes 366 — — — — 366 Other 118 — 376 531 — 1,025 484 — 4,031 4,415 — 8,930 Property and equipment, net — — 7,871 6,484 — 14,355 Investments of insurance subsidiaries — — — 494 — 494 Investments in and advances to affiliates 21,970 — 16 149 (21,970 ) 165 Goodwill and other intangible assets — — 1,705 4,711 — 6,416 Other 435 — 27 158 — 620 $ 22,889 $ — $ 13,650 $ 16,411 $ (21,970 ) $ 30,980 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) Current liabilities: Accounts payable $ 1 $ — $ 1,272 $ 762 $ — $ 2,035 Accrued salaries — — 783 587 — 1,370 Other accrued expenses 45 317 517 858 — 1,737 Long-term debt due within one year — 231 56 51 — 338 46 548 2,628 2,258 — 5,480 Long-term debt, net 2,499 26,124 185 280 — 29,088 Intercompany balances 27,685 (10,141 ) (21,405 ) 3,861 — — Professional liability risks — — — 1,078 — 1,078 Income taxes and other liabilities 553 487 605 187 — 1,832 30,783 17,018 (17,987 ) 7,664 — 37,478 Stockholders’ (deficit) equity attributable to HCA Holdings, Inc. (7,894 ) (17,018 ) 31,516 7,472 (21,970 ) (7,894 ) Noncontrolling interests — — 121 1,275 — 1,396 (7,894 ) (17,018 ) 31,637 8,747 (21,970 ) (6,498 ) $ 22,889 $ — $ 13,650 $ 16,411 $ (21,970 ) $ 30,980 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2015 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Cash flows from operating activities: Net income (loss) $ 2,129 $ (1,625 ) $ 3,062 $ 1,482 $ (2,352 ) $ 2,696 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Change in operating assets and liabilities (12 ) 44 (2,537 ) (1,731 ) — (4,236 ) Provision for doubtful accounts — — 2,099 1,814 — 3,913 Depreciation and amortization — — 915 989 — 1,904 Income taxes (160 ) — — — — (160 ) Losses (gains) on sales of facilities — — (2 ) 7 — 5 Losses on retirement of debt 122 13 — — — 135 Legal claim costs 20 129 — — — 149 Amortization of debt issuance costs 3 32 — — — 35 Share-based compensation 239 — — — — 239 Equity in earnings of affiliates (2,352 ) — — — 2,352 — Other 66 3 (4 ) (11 ) — 54 Net cash provided by (used in) operating activities 55 (1,404 ) 3,533 2,550 — 4,734 Cash flows from investing activities: Purchase of property and equipment — — (1,248 ) (1,127 ) — (2,375 ) Acquisition of hospitals and health care entities — — (51 ) (300 ) — (351 ) Disposal of hospitals and health care entities — — 48 25 — 73 Change in investments — — 9 54 — 63 Other — — (6 ) 13 — 7 Net cash used in investing activities — — (1,248 ) (1,335 ) — (2,583 ) Cash flows from financing activities: Issuance of long-term debt — 5,548 — — — 5,548 Net change in revolving bank credit facilities — 150 — — — 150 Repayment of long-term debt (1,632 ) (3,189 ) (59 ) (40 ) — (4,920 ) Distributions to noncontrolling interests — — (85 ) (410 ) — (495 ) Payment of debt issuance costs — (50 ) — — — (50 ) Repurchases of common stock (2,397 ) — — — — (2,397 ) Income tax benefits 235 — — — — 235 Changes in intercompany balances with affiliates, net 3,767 (1,055 ) (2,073 ) (639 ) — — Other (28 ) — — (19 ) — (47 ) Net cash (used in) provided by financing activities (55 ) 1,404 (2,217 ) (1,108 ) — (1,976 ) Change in cash and cash equivalents — — 68 107 — 175 Cash and cash equivalents at beginning of period — — 87 479 — 566 Cash and cash equivalents at end of period $ — $ — $ 155 $ 586 $ — $ 741 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2014 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Cash flows from operating activities: Net income (loss) $ 1,875 $ (1,627 ) $ 2,681 $ 1,447 $ (2,003 ) $ 2,373 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Change in operating assets and liabilities (11 ) (12 ) (1,972 ) (1,438 ) — (3,433 ) Provision for doubtful accounts — — 1,777 1,392 — 3,169 Depreciation and amortization — — 888 932 — 1,820 Income taxes (83 ) — — — — (83 ) Gains on sales of facilities — — (25 ) (4 ) — (29 ) Losses on retirement of debt — 335 — — — 335 Legal claim costs — 78 — — — 78 Amortization of debt issuance costs 3 39 — — — 42 Share-based compensation 163 — — — — 163 Equity in earnings of affiliates (2,003 ) — — — 2,003 — Other — 18 — (5 ) — 13 Net cash (used in) provided by operating activities (56 ) (1,169 ) 3,349 2,324 — 4,448 Cash flows from investing activities: Purchase of property and equipment — — (1,189 ) (987 ) — (2,176 ) Acquisition of hospitals and health care entities — — (34 ) (732 ) — (766 ) Disposal of hospitals and health care entities — — 41 10 — 51 Change in investments — — 32 (69 ) — (37 ) Other — — — 10 — 10 Net cash used in investing activities — — (1,150 ) (1,768 ) — (2,918 ) Cash flows from financing activities: Issuance of long-term debt — 5,500 — 2 — 5,502 Net change in revolving bank credit facilities — 440 — — — 440 Repayment of long-term debt — (5,086 ) (50 ) (28 ) — (5,164 ) Distributions to noncontrolling interests — — (65 ) (377 ) — (442 ) Payment of debt issuance costs — (73 ) — — — (73 ) Repurchases of common stock (1,750 ) — — — — (1,750 ) Income tax benefits 134 — — — — 134 Changes in intercompany balances with affiliates, net 1,678 388 (2,109 ) 43 — — Other (6 ) — — (19 ) — (25 ) Net cash provided by (used in) financing activities 56 1,169 (2,224 ) (379 ) — (1,378 ) Change in cash and cash equivalents — — (25 ) 177 — 152 Cash and cash equivalents at beginning of period — — 112 302 — 414 Cash and cash equivalents at end of period $ — $ — $ 87 $ 479 $ — $ 566 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) HCA HOLDINGS, INC. CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2013 (Dollars in millions) HCA HCA Inc. Subsidiary Subsidiary Eliminations Condensed Cash flows from operating activities: Net income (loss) $ 1,556 $ (1,408 ) $ 2,299 $ 1,224 $ (1,675 ) $ 1,996 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Change in operating assets and liabilities (11 ) 17 (2,320 ) (1,958 ) — (4,272 ) Provision for doubtful accounts — — 2,262 1,596 — 3,858 Depreciation and amortization — — 855 898 — 1,753 Income taxes 143 — — — — 143 Losses (gains) on sales of facilities — — 20 (10 ) — 10 Loss on retirement of debt — 17 — — — 17 Amortization of debt issuance costs 3 52 — — — 55 Share-based compensation 113 — — — — 113 Equity in earnings of affiliates (1,675 ) — — — 1,675 — Other — 9 2 (4 ) — 7 Net cash provided by (used in) operating activities 129 (1,313 ) 3,118 1,746 — 3,680 Cash flows from investing activities: Purchase of property and equipment — — (921 ) (1,022 ) — (1,943 ) Acquisition of hospitals and health care entities — — — (481 ) — (481 ) Disposal of hospitals and health care entities — — 17 16 — 33 Change in investments — — (16 ) 52 — 36 Other — — — 9 — 9 Net cash used in investing activities — — (920 ) (1,426 ) — (2,346 ) Cash flows from financing activities: Net change in revolving bank credit facilities — 970 — — — 970 Repayment of long-term debt — (1,254 ) (34 ) (374 ) — (1,662 ) Distributions to noncontrolling interests — — (71 ) (364 ) — (435 ) Payment of debt issuance costs — (5 ) — — — (5 ) Repurchases of common stock (500 ) — — — — (500 ) Income tax benefits 113 — — — — 113 Changes in intercompany balances with affiliates, net 342 1,602 (2,364 ) 420 — — Other (106 ) — — — — (106 ) Net cash (used in) provided by financing activities (151 ) 1,313 (2,469 ) (318 ) — (1,625 ) Change in cash and cash equivalents (22 ) — (271 ) 2 — (291 ) Cash and cash equivalents at beginning of period 22 — 383 300 — 705 Cash and cash equivalents at end of period $ — $ — $ 112 $ 302 $ — $ 414 NOTE 17 — SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION AND OTHER COLLATERAL-RELATED INFORMATION (continued) Healthtrust, Inc. — The Hospital Company (“Healthtrust”) is the first-tier subsidiary of HCA Inc. The common stock of Healthtrust has been pledged as collateral for the senior secured credit facilities and senior secured notes described in Note 9. Rule 3-16 of Regulation S-X under the Securities Act requires the filing of separate financial statements for any affiliate of the registrant whose securities constitute a substantial portion of the collateral for any class of securities registered or being registered. We believe the separate financial statements requirement applies to Healthtrust due to the pledge of its common stock as collateral for the senior secured notes. Due to the corporate structure relationship of HCA and Healthtrust, HCA’s operating subsidiaries are also the operating subsidiaries of Healthtrust. The corporate structure relationship, combined with the application of push-down accounting in Healthtrust’s consolidated financial statements related to HCA’s debt and financial instruments, results in the consolidated financial statements of Healthtrust being substantially identical to the consolidated financial statements of HCA. The consolidated financial statements of HCA and Healthtrust present the identical amounts for revenues, expenses, net income, assets, liabilities, total stockholders’ deficit, net cash provided by operating activities, net cash used in investing activities and net cash used in financing activities. Certain individual line items in the HCA consolidated statements of stockholders’ deficit are combined into one line item in the Healthtrust consolidated statements of stockholder’s deficit. Reconciliations of the HCA Holdings, Inc. Consolidated Statements of Stockholders’ Deficit presentation to the Healthtrust, Inc. — The Hospital Company Consolidated Statements of Stockholder’s Deficit presentation for the years ended December 31, 2015, 2014 and 2013 are as follows (dollars in millions): 2015 2014 2013 Presentation in HCA Holdings, Inc. Consolidated Statements of Stockholders’ Deficit: Share-based benefit plans $ 523 $ 321 $ 139 Other (18 ) (6 ) (6 ) Presentation in Healthtrust, Inc. — The Hospital Company Consolidated Statements of Stockholder’s Deficit: Distributions from HCA Holdings, Inc., net of contributions to HCA Holdings, Inc. $ 505 $ 315 $ 133 Due to the consolidated financial statements of Healthtrust being substantially identical to the consolidated financial statements of HCA, except for the items presented in the table above, the separate consolidated financial statements of Healthtrust are not presented. |