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Registration No. 333-
As Filed with the Securities and Exchange Commission on September 19, 2000
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
_________________
UNIVERSAL HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2077891
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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)
_______________
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ALAN B. MILLER Copies of Correspondence to:
President
Universal Health Services, Inc. WARREN J. NIMETZ, ESQ.
Universal Corporate Center Fulbright & Jaworski L.L.P.
367 South Gulph Road 666 Fifth Avenue
King of Prussia, Pennsylvania 19406 New York, New York 10103
(610) 768-3300 (212) 318-3000
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(Name, address, including zip code and telephone number,
including area code, of agent for service)
_______________
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
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. [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. [_]
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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
Class B common stock, par value
$0.01 per share................... 3,288,564(4) -- -- --(5)
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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) 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.
(5) 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).
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 securityholder may 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 is not +
+ soliciting an offer to buy these securities in any state where the offer or +
+ sale is not permitted. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated September 19, 2000
PROSPECTUS
$586,992,000
UNIVERSAL HEALTH SERVICES, INC.
CONVERTIBLE DEBENTURES DUE 2020
AND
CLASS B COMMON STOCK ISSUABLE
UPON CONVERSION OF THE DEBENTURES
We issued the debentures 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 on or before the maturity
date into 5.6024 shares of our class B common stock per debenture. The
conversion rate 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 or class B common stock or a
combination of cash 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 or before June 23, 2006. We may redeem all or a
portion of the debentures at any time on or after June 23, 2006.
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 $76 3/16 per share on September 18,
2000.
_________________
The securities offered hereby involve a high degree of risk. See "Risk
Factors" beginning on page 10.
_________________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated _________, 2000.
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TABLE OF CONTENTS
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Page
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Forward-Looking Statements........................................ 3
Where You Can Find More Information............................... 4
Summary........................................................... 5
Risk Factors...................................................... 10
Use of Proceeds................................................... 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.............................................. 34
Legal Matters..................................................... 36
Experts........................................................... 36
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You should rely only on the information contained or incorporated by
reference in this prospectus. 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 are not making an offer
to sell these securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in this prospectus
is accurate only as of the date on the front cover of 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.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. 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 this prospectus.
We incorporate by reference the documents 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;
. our quarterly report on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000; and
. our current reports on Form 8-K dated June 13, 2000 and June 20, 2000.
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 Services
Our principal business is owning and operating acute care hospitals,
behavioral health centers, ambulatory surgery centers, radiation oncology
centers and women's centers. Presently, we operate 60 hospitals, consisting of
23 acute care hospitals, 35 behavioral health centers, and two women's centers.
As part of our Ambulatory Treatment Centers Division, we own, either outright or
in partnership with physicians, and operate or manage 23 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% of our consolidated net revenues and our behavioral health
centers contributed approximately 14% 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 positions in small and
medium-sized markets experiencing above-average population growth.
Eighty percent of our acute care 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. In connection
with this transaction, we also purchased additional land in Laredo,
Texas on which we are currently constructing a 180 licensed bed
replacement hospital scheduled to be completed in the second quarter
of 2001. We estimate that 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 hospital 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.
. 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.
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. 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 Offices
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
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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.
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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."
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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
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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 recently renewed its
program, but the extent of our eligibility for reimbursement has yet to be
determined. South Carolina has neither terminated nor renewed its program, which
was scheduled to terminate in the third quarter of 2000. 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
<PAGE>
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
<PAGE>
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 $361/8 per
share and $701/4 per share during the first half 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
<PAGE>
. 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 ratios 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 months ended June 30, 1999 and 2000:
<TABLE>
<CAPTION>
Year ended December 31, Six months ended June 30,
------------------------------------------------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 1996 1997 1998 1999 1999 2000
---- ---- ---- ---- ---- ---- ----
3.2 3.3 4.0 3.9 3.8 5.1 4.6
</TABLE>
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 stock in the
foreseeable future.
14
<PAGE>
DESCRIPTION OF DEBENTURES
We issued 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 maturity 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
<PAGE>
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.
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
16
<PAGE>
and 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
<PAGE>
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, we may
redeem the debentures for cash as a whole at any time, or from time to time in
part, at 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
<PAGE>
<TABLE>
<CAPTION>
(3)
(1) (2) Redemption
Debenture Accrued Original Price
Redemption Date Issue Price Issue Discount (1)+(2)
--------------- ----------- ---------------- ----------
<S> <C> <C> <C>
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
</TABLE>
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
<PAGE>
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
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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:
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. 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 elections of directors, with
certain exceptions, or any permitted holder files such a schedule,
form or report in connection with a transaction or event, as a result
of which the 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 of 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
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. 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
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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
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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
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. 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.
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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's 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's class B common stock currently trades on the New York Stock Exchange
under the symbol "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's 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 CONSIDERATIONS
The following is a summary of United States federal income tax
considerations relating to the purchase, ownership, disposition, and conversion
of debentures. Unless otherwise stated, this summary deals only with debentures
held as capital assets (generally, assets held for investment under 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
<PAGE>
. a citizen or resident of the United States;
. a corporation created or organized in or under the laws of the United
States 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; 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 debentures may vary depending on his
particular situation. This summary does 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 who 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 issued at a substantial discount from their
stated principal amount at maturity. For United States federal income tax
purposes, the excess of the stated principal amount at maturity of each
debenture over the issue price (the initial offering price at which the
debentures were sold to the initial purchasers of the debentures) constitutes
original issue discount. In addition to stated cash interest on a debenture,
which will be taxable to a holder as ordinary interest income at the time it
accrues or is paid depending on the holder's method of accounting for United
States federal income tax purposes, holders of debentures will be required to
include original issue discount 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
<PAGE>
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 and will
be long-term capital gain or loss if the debenture is held for more than one
year.
A holder that receives class B common stock in exchange for a debenture
(whether upon conversion of a debenture or at 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 same as the holder's adjusted
income tax basis 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.
31
<PAGE>
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 donees
and pledgees selling securities received from a 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.
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
September 18, 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 information
will be set forth in supplements to this prospectus to the extent required. In
addition, the conversion ratio, and therefore the number of shares of our class
B common stock issuable upon conversion of the debentures, is subject to
adjustment. Accordingly, the number of shares of class B common stock issuable
upon conversion of the debentures 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 the class B common stock issuable upon
the conversion of the debentures, we cannot estimate the amount of the
debentures or how many shares of our class B common stock that each selling
securityholder will beneficially own after this offering.
<TABLE>
<CAPTION>
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
---- ------------------ ------------ --------------------
<S> <C> <C> <C> <C>
Allstate Life Insurance Company.................. $4,000,000 * 22,409
Baltimore Life Insurance Company................. 400,000 * 2,240
Bankers Life and Casualty Insurance Company
Convertible..................................... 2,000,000 * 11,204
Bankers Life Insurance Co. CA & Co. Single
Premium......................................... 60,000 * 336
Bankers Life Insurance Co. of N.Y................ 80,000 * 448
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
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
---- ---------------- ----------- ----------------
<S> <C> <C> <C>
Bear, Stearns & Co. Inc............................... $ 3,750,000 * 21,009
Conseco Annuity Assurance Company Convertible......... 2,500,000 * 14,006
Conseco Annuity Assurance - Multi Bucket Annuity
Convertible Bond Fund................................. 12,000,000 2.04% 67,228
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
Elf Aquitaine......................................... 800,000 * 4,481
Employee Benefit Convertible Securities Fund.......... 620,000 * 3,473
Kanawha Insurance Company............................. 430,000 * 2,409
Liberty View Funds L.P................................ 2,250,000 * 12,605
Lydian Overseas Partners Master Fund.................. 41,000,000 6.98% 229,698
McMahan Securities Co. L.P............................ 950,000 * 5,322
Michigan Mutual Insurance Company..................... 1,400,000 * 7,843
Morgan Stanley & Co................................... 10,000,000 1.7% 56,024
Nations Convertible Securities Fund................... 8,800,000 1.5% 49,301
Oxford, Lord Abbett & Co.............................. 5,200,000 * 29,132
Radian Group Inc...................................... 4,570,000 * 25,602
RGA-Reinsurance Trust................................. 11,000,000 1.87% 61,626
San Diego County Employees Retirement Association..... 1,500,000 * 8,403
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
University of South Florida........................... 1,500,000 * 8,403
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
</TABLE>
_____________
* Less than 1%.
33
<PAGE>
PLAN OF DISTRIBUTION
The selling securityholders will be offering and selling all 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 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
securityholders and any brokers, dealers or agents who participate in the
distribution of the 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 commissions under the Securities Act. To the extent
the selling securityholders may be deemed to be underwriters, the selling
securityholders 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, concessions or other items constituting
compensation from the selling securityholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers;
and
. that the participating broker-dealers did not conduct any
investigation 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.
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<PAGE>
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 the class B common stock)
or in the over-the-counter market. The 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 offering 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 common stock. If the debentures or the class B
35
<PAGE>
common stock into which the debentures 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 liabilities in connection with the offering of the
securities, including liabilities arising under the Securities Act. The selling
securityholders may also agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the 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 fact
required to be stated in the prospectus or necessary to make the statements in
the prospectus not misleading in the light 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.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the
securities offered by this prospectus will be passed upon for UHS by Fulbright &
Jaworski L.L.P., New York, New York. Anthony Pantaleoni, a director of ours who
owns less than one percent of our outstanding capital stock, is a partner in
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
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
36
<PAGE>
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. All amounts are estimates except the SEC
registration fee:
<TABLE>
<S> <C>
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
========
</TABLE>
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.
Section 7 of the registrant's bylaws provides for 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.
Item 16. Exhibits.
See Index to Exhibits.
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-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-
effective amendment thereof) which, individually or in the aggregate,
II-1
<PAGE>
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 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 or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
registration statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed 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, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant, 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 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-2
<PAGE>
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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in King of Prussia, Commonwealth of Pennsylvania, on September 14,
2000.
UNIVERSAL HEALTH SERVICES, INC.
By: /s/ ALAN B. MILLER
-------------------------
Alan B. Miller
Chairman of the Board, President &
Chief Executive Officer
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Alan B. Miller and Kirk E. Gorman, jointly and
severally, his true and lawful attorneys-in-fact and agents, each with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each of said attorneys-in-fact and agents, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman of the Board, President, Chief
/s/ ALAN B. MILLER Executive Officer and Director September 14, 2000
----------------------------------------------- (Principal Executive Officer)
Alan B. Miller
/s/ LEATRICE DUCAT Director September 15, 2000
-----------------------------------------------
Leatrice Ducat
/s/ JOHN H. HERRELL Director September 14, 2000
-----------------------------------------------
John H. Herrell
/s/ ROBERT H. HOTZ Director September 14, 2000
-----------------------------------------------
Robert H. Hotz
/s/ SIDNEY MILLER Director September 15, 2000
-----------------------------------------------
Sidney Miller
/s/ ANTHONY PANTALEONI Director September 15, 2000
-----------------------------------------------
Anthony Pantaleoni
/s/ JOSEPH T. SEBASTIANELLI Director September 14, 2000
-----------------------------------------------
Joseph T. Sebastianelli
/s/ JOHN F. WILLIAMS, JR. Director September 14, 2000
-----------------------------------------------
John F. Williams, Jr.
/s/ KIRK E. GORMAN Senior Vice President, Treasurer and September 15, 2000
----------------------------------------------- Chief Financial Officer (Principal
Kirk E. Gorman Financial Officer)
/s/ STEVE G. FILTON Vice President, Controller and Secretary September 14, 2000
----------------------------------------------- (Principal Accounting Officer)
Steve G. Filton
</TABLE>
II-4
<PAGE>
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.
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)./1/
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.
5.1 Opinion of Fulbright & Jaworski L.L.P.
8.1 Opinion of Fulbright & Jaworski L.L.P., as to certain tax matters.
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 Trustee on Form T-1.
__________________________
/1/ 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.
II-5
