HCA Holdings 2011 Annual Report Download - page 124

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 2 — SHARE-BASED COMPENSATION (Continued)
Stock Option Activity (Continued)
During 2010, our Board of Directors declared three distributions to the Company’s stockholders and holders
of stock options. The distributions totaled $9.43 per share and vested stock option. Pursuant to the terms of our
stock option plans, the holders of nonvested stock options received $9.43 per share reductions (subject to certain
tax related limitations for certain stock options that resulted in deferred distributions for a portion of the declared
distribution, which will be paid upon the vesting of the applicable stock options) to the exercise price of the
share-based awards.
The weighted average fair values of stock options granted during 2011, 2010 and 2009 were $8.53, $7.13
and $3.54 per share, respectively. The total intrinsic value of stock options exercised in the year ended
December 31, 2011 was $121 million. As of December 31, 2011, the unrecognized compensation cost related to
nonvested awards was $23 million.
NOTE 3 — ACQUISITIONS AND DISPOSITIONS
HealthONE Acquisition
During October 2011, we completed the acquisition of the Colorado Health Foundation’s (“Foundation”)
approximate 40% remaining ownership interest in the HCA-HealthONE LLC (“HealthONE”) joint venture for
$1.450 billion. HealthONE’s assets include seven hospitals and 12 freestanding surgery centers in the Denver
area. We accounted for our investment in HealthONE using the equity method through October 2011 with our
share of their operations all recorded in the line item “Equity in earnings of affiliates” in our consolidated income
statements, and we began consolidating HealthONE’s operations in our consolidated income statements
beginning November 2011.
The total cost of the HealthONE acquisition has been allocated to the assets acquired and liabilities assumed
based upon their respective fair values in accordance with ASC No. 805, Business Combinations. The purchase
price represented a premium over the fair value of the net tangible and identifiable intangible assets acquired for
reasons such as expected cash flows and HealthONE’s assembled workforce.
Based on our purchase price allocation as of December 31, 2011, we identified and analyzed the acquired fixed
assets, contracts, contractual commitments and legal contingencies to record the fair value of all assets acquired and
liabilities assumed, resulting in goodwill of $2.261 billion being recorded. The amount of goodwill expected to be
tax deductible is approximately $894 million. We also recorded a gain of $1.522 billion related to this acquisition
due to the remeasurement of our previous equity investment in HealthONE, based upon our acquisition of the
Foundation’s ownership interest and the resulting consolidation of the entire enterprise at estimated fair value.
Adjustments to the December 31, 2011 purchase price allocation are not expected to be material.
A summary of the purchase price allocation, including assumed liabilities, follows (in millions):
Current assets ............................................... $ 400
Property and equipment ....................................... 1,040
Identifiable intangible asset (trade name) ......................... 269
Goodwill ................................................... 2,261
Other assets ................................................ 7
Liabilities .................................................. 152
Noncontrolling interests ....................................... 93
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