HCA Holdings 2012 Annual Report Download - page 82

HCA HOLDINGS, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Years Ended December 31, 2012 and 2011 (continued)
During October 2011, we completed our acquisition of the Colorado Health Foundation’s (“Foundation”)
approximate 40% remaining ownership interest in the HealthONE joint venture for $1.450 billion. We recorded a
gain on the acquisition of a controlling interest in an equity investment of $1.522 billion related 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 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 2012.
Our Investors 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 35.6% and 22.6% for 2012 and 2011, respectively. The effective tax rate
computations exclude net income attributable to noncontrolling interests as it relates to consolidated partnerships.
Our provision for income taxes for 2012 was reduced by $33 million related to a reduction in interest expense
related to taxing authority examinations. 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.
Excluding the effect of these adjustments, the effective tax rate for 2012 and 2011 would have been 36.9% and
37.3%, respectively.
Net income attributable to noncontrolling interests increased from $377 million for 2011 to $401 million for
2012. 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, 2011 and 2010
Net income attributable to HCA Holdings, Inc. totaled $2.465 billion, or $4.97 per diluted share, for the year
ended December 31, 2011 compared to $1.207 billion, or $2.76 per diluted share, for the year ended
December 31, 2010. Financial results for 2011 include net gains on sales of facilities of $142 million (pretax), or
$0.16 per diluted share, a gain on the acquisition of controlling interest in an equity investment of $1.522 billion
(pretax), or $2.87 per diluted share, losses on retirement of debt of $481 million (pretax), or $0.61 per diluted
share, and termination of management agreement fees of $181 million (pretax), or $0.30 per diluted share.
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. All “per diluted share”
disclosures are based upon amounts net of the applicable income taxes. Shares used for diluted earnings per share
78