HCA Holdings 2011 Annual Report Download - page 79

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS — (Continued)
Results of Operations (Continued)
Years Ended December 31, 2011 and 2010 (Continued)
Impairments of long-lived assets were $123 million for 2010 and included $74 million related to two
hospital facilities and $49 million related to other health care entity investments, which includes $35 million for
the writeoff of capitalized engineering and design costs related to certain building safety requirements (California
earthquake standards) that have been revised. There were no impairments of long-lived assets in 2011.
During 2011, we recorded losses on retirement of debt of $481 million related to the redemptions of all
$1.000 billion aggregate principal amount of our 9
1
⁄ 8 % Senior Secured Notes due 2014, at a redemption price of
104.563% of the principal amount; $108 million aggregate principal amount of our 9
7
⁄ 8 % Senior Secured Notes
due 2017, at a redemption price of 109.875% of the principal amount; all of our outstanding $1.578 billion
9
5
⁄ 8 %/10
3
⁄ 8 % second lien toggle notes due 2016, at a redemption price of 106.783% of the principal amount and
all of our outstanding $3.200 billion 9
1
⁄ 4 % second lien notes due 2016, at a redemption price of 106.513% of the
principal amount. There were no losses on retirement of debt during the 2010.
Our Investors have provided management and advisory services to the Company, pursuant to a management
agreement among HCA and the Investors executed in connection with the Investors’ acquisition of HCA in
November 2006. In March 2011, the management agreement was terminated pursuant to its terms upon
completion of the initial public offering of our common stock, and the Investors were paid a final fee of
$181 million.
The effective tax rate was 22.6% and 35.3% for 2011 and 2010, respectively. The effective tax rate
computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships.
Our income before income taxes for 2011 included $1.255 billion of nontaxable gain related to the reported gain
on the acquisition of a controlling interest in an equity investment. Our provision for income taxes for 2010 was
reduced by $44 million related to reductions in interest expense related to taxing authority examinations.
Excluding the effect of these adjustments, the effective tax rate for 2011 and 2010 would have been 37.3% and
37.6%, respectively.
Net income attributable to noncontrolling interests increased from $366 million for 2010 to $377 million for
2011. The increase in net income attributable to noncontrolling interests related primarily to growth in operating
results of certain surgery center joint ventures.
Years Ended December 31, 2010 and 2009
Net income attributable to HCA Holdings, Inc. totaled $1.207 billion, or $2.76 per diluted share, for the year
ended December 31, 2010 compared to $1.054 billion, or $2.44 per diluted share, for the year ended
December 31, 2009. Financial results for 2010 include net gains on sales of facilities of $4 million (pretax), or
$0.01 per diluted share, and asset impairment charges of $123 million (pretax), or $0.18 per diluted share.
Financial results for 2009 include net losses on sales of facilities of $15 million (pretax), or $0.02 per diluted
share, and asset impairment charges of $43 million (pretax), or $0.08 per diluted share. All “per diluted share”
disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share
were 437.347 million shares and 432.227 million shares for the years ended December 31, 2010 and 2009,
respectively.
During 2010, consolidated admissions declined 0.1% and same facility admissions increased 0.1% for 2010,
compared to 2009. Consolidated inpatient surgical volumes declined 1.5%, and same facility inpatient surgeries
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