HCA Holdings 2012 Annual Report Download - page 127

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 3 — ACQUISITIONS AND DISPOSITIONS (continued)
HealthONE Acquisition (continued)
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 due
to the value of the expected cash flows and HealthONE’s assembled workforce.
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 as of December 31, 2011. 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. During 2012, we recorded final adjustments to the purchase price allocation which resulted
in a $30 million increase to noncontrolling interests, a $26 million reduction to property and equipment and a $56
million increase to goodwill. The amount of tax deductible goodwill is $981 million.
A summary of the final purchase price allocation, including assumed liabilities, follows (dollars in millions):
Current assets ....................................... $ 400
Property and equipment ............................... 1,014
Identifiable intangible asset (trade name) ................. 269
Goodwill ........................................... 2,317
Other assets ........................................ 7
Liabilities .......................................... 152
Noncontrolling interests ............................... 123
The acquired HealthONE operating results have been included in the consolidated income statements since
the acquisition date. The revenues and net income attributable to HCA Holdings, Inc. related to the acquired
HealthONE operations for the period from November 1, 2011 through December 31, 2011 were $347 million and
$15 million, respectively. The following unaudited pro forma combined summary of operations data gives effect
to including the acquired HealthONE operating results in our operating results as if the acquisition had occurred
as of January 1, 2010 (dollars in millions):
Years Ended December 31,
2011 2010
Pro forma revenues .................................... $ 31,383 $ 29,925
Pro forma net income attributable to HCA Holdings, Inc. ...... 2,507 1,257
Pro forma adjustments to net income attributable to HCA Holdings, Inc. include adjustments to record
HealthONE’s operating results on a consolidated basis and eliminate the equity method operating results, to
record depreciation expense based on the estimated fair value assigned to the long-lived assets acquired, to
record interest expense assuming the increase in long-term debt used to fund the acquisition had occurred as of
January 1, 2010 and to record the related tax effects. These pro forma results are not necessarily indicative of the
actual results of operations that would have occurred if the acquisition had occurred on January 1, 2010.
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