Guarantor Financial Information | 15. Guarantor Financial Information Borrowings under each of our Senior Secured Credit Facilities, ABL Facility, Senior Secured Notes, Junior Lien Secured Notes and Senior Notes are guaranteed by certain of the Company’s domestic wholly-owned subsidiaries. The guarantees are full and unconditional and joint and several. The Company’s Senior Secured Credit Facility, ABL Facility, Senior Secured Notes, Junior Lien Secured Notes and Senior Notes are not guaranteed by certain of the Company’s subsidiaries, including all of its non-U.S. subsidiaries or non-wholly owned subsidiaries. The following supplemental financial information sets forth, on a condensed consolidating basis, balance sheet information, results of operations, comprehensive loss and cash flow information for inVentiv Health, Inc., the Guarantor Subsidiaries and other subsidiaries (the “Non-Guarantor Subsidiaries”). The supplemental financial information reflects the investments of inVentiv Health, Inc.’s investment in the Guarantor Subsidiaries and Non-Guarantor Subsidiaries using the equity method of accounting. CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION At June 30, 2015 (in thousands, except share and per share amounts) inVentiv Guarantor Non- Guarantor Subsidiaries Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 34,983 $ — $ 109,020 $ (92,408 ) $ 51,595 Restricted cash 825 — 1,157 — 1,982 Accounts receivable, net of allowances for doubtful accounts — 252,296 61,759 — 314,055 Unbilled services — 162,091 44,436 — 206,527 Intercompany receivables 462,405 687,314 77,702 (1,227,421 ) — Prepaid expenses and other current assets 6,543 11,476 21,021 — 39,040 Income tax receivable — 587 1,002 — 1,589 Current deferred tax assets 259 12,198 1,264 (6,261 ) 7,460 Total current assets 505,015 1,125,962 317,361 (1,326,090 ) 622,248 Property and equipment, net 23,392 86,792 16,486 — 126,670 Goodwill — 889,281 41,293 — 930,574 Intangible assets, net — 384,350 6,859 — 391,209 Non-current deferred tax assets — — 3,952 — 3,952 Deferred financing costs and other assets 65,807 4,272 13,473 — 83,552 Non-current intercompany receivables 967,896 35,073 135 (1,003,104 ) — Investment in consolidated subsidiaries 697,821 85,988 — (783,809 ) — Total assets $ 2,259,931 $ 2,611,718 $ 399,559 $ (3,113,003 ) $ 2,158,205 LIABILITIES AND STOCKHOLDER’S DEFICIT Current liabilities: Short-term borrowings, current portion of capital lease obligations and other financing arrangements $ 209 $ 16,619 $ 87,648 $ (87,482 ) $ 16,994 Accrued payroll, accounts payable and accrued expenses 72,845 162,661 59,186 (4,926 ) 289,766 Intercompany payables 732,286 474,363 20,772 (1,227,421 ) — Income taxes payable — 16 1,297 — 1,313 Deferred revenue and client advances — 174,914 52,570 — 227,484 Total current liabilities 805,340 828,573 221,473 (1,319,829 ) 535,557 Capital lease obligations, net of current portion — 31,423 54 — 31,477 Long-term debt, net of current portion 2,103,373 — — — 2,103,373 Non-current income tax liability — 5,543 1,383 — 6,926 Deferred tax liability 333 85,315 3,119 (6,261 ) 82,506 Other non-current liabilities 37,360 32,108 18,855 — 88,323 Non-current intercompany liabilities 4,734 968,031 30,339 (1,003,104 ) — Total liabilities 2,951,140 1,950,993 275,223 (2,329,194 ) 2,848,162 Total inVentiv Health, Inc. stockholder’s deficit (691,209 ) 660,725 123,084 (783,809 ) (691,209 ) Noncontrolling interest — — 1,252 — 1,252 Total stockholder’s deficit (691,209 ) 660,725 124,336 (783,809 ) (689,957 ) Total liabilities and stockholder’s deficit $ 2,259,931 $ 2,611,718 $ 399,559 $ (3,113,003 ) $ 2,158,205 CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION At December 31, 2014 (in thousands, except share and per share amounts) inVentiv Guarantor Non- Guarantor Eliminations Total ASSETS Current assets: Cash and cash equivalents $ 19,643 $ 3,439 $ 86,014 $ (52,037 ) $ 57,059 Restricted cash 569 — 1,148 — 1,717 Accounts receivable, net of allowances for doubtful accounts — 236,884 65,963 — 302,847 Unbilled services — 138,100 40,936 — 179,036 Intercompany receivables 389,532 557,758 64,778 (1,012,068 ) — Prepaid expenses and other current assets 5,301 12,181 20,743 — 38,225 Income tax receivable — 310 1,053 — 1,363 Current deferred tax assets 259 12,198 1,316 (6,261 ) 7,512 Total current assets 415,304 960,870 281,951 (1,070,366 ) 587,759 Property and equipment, net 21,665 82,857 17,337 — 121,859 Goodwill — 889,281 42,506 — 931,787 Intangible assets, net — 410,059 7,765 — 417,824 Non-current deferred tax assets — — 3,944 — 3,944 Deferred financing costs and other assets 75,296 3,519 12,447 — 91,262 Non-current intercompany receivables 944,664 44,585 132 (989,381 ) — Investment in consolidated subsidiaries 689,216 86,242 — (775,458 ) — Total assets $ 2,146,145 $ 2,477,413 $ 366,082 $ (2,835,205 ) $ 2,154,435 LIABILITIES AND STOCKHOLDER’S DEFICIT Current liabilities: Short-term borrowings, current portion of capital lease obligations and other financing arrangements $ 4,006 $ 14,025 $ 50,271 $ (52,037 ) $ 16,265 Accrued payroll, accounts payable and accrued expenses 70,593 154,523 61,497 — 286,613 Intercompany payables 562,297 418,920 30,851 (1,012,068 ) — Income taxes payable 222 — 987 — 1,209 Deferred revenue and client advances — 150,709 48,421 — 199,130 Total current liabilities 637,118 738,177 192,027 (1,064,105 ) 503,217 Capital lease obligations, net of current portion — 29,126 198 — 29,324 Long-term debt, net of current portion 2,071,232 — — — 2,071,232 Non-current income tax liability — 5,360 1,101 — 6,461 Deferred tax liability 333 80,860 2,300 (6,261 ) 77,232 Other non-current liabilities 37,441 25,175 18,140 — 80,756 Non-current intercompany liabilities 15,202 944,796 29,383 (989,381 ) — Total liabilities 2,761,326 1,823,494 243,149 (2,059,747 ) 2,768,222 Total inVentiv Health, Inc. stockholder’s deficit (615,181 ) 653,919 121,539 (775,458 ) (615,181 ) Noncontrolling interest — — 1,394 — 1,394 Total stockholder’s deficit (615,181 ) 653,919 122,933 (775,458 ) (613,787 ) Total liabilities and stockholder’s deficit $ 2,146,145 $ 2,477,413 $ 366,082 $ (2,835,205 ) $ 2,154,435 CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended June 30, 2015 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net revenues $ — $ 382,908 $ 112,927 $ (6,418 ) $ 489,417 Reimbursed out-of-pocket expenses — 68,450 14,689 (62 ) 83,077 Total revenues — 451,358 127,616 (6,480 ) 572,494 Operating expenses: Cost of revenues — 249,948 74,327 (5,885 ) 318,390 Reimbursable out-of-pocket expenses — 68,450 14,689 (62 ) 83,077 Selling, general and administrative expenses 20,491 85,823 35,614 (533 ) 141,395 Allocation of intercompany costs (9,900 ) 7,935 1,965 — — Total operating expenses 10,591 412,156 126,595 (6,480 ) 542,862 Operating income (loss) (10,591 ) 39,202 1,021 — 29,632 Interest income (expense), net (57,088 ) (197 ) 165 — (57,120 ) Intercompany interest income (expense) 23,579 (23,332 ) (247 ) — — Income (loss) before income tax (provision) benefit and income (loss) from equity investments (44,100 ) 15,673 939 — (27,488 ) Income tax (provision) benefit — (1,650 ) (1,088 ) — (2,738 ) Income (loss) before income (loss) from equity investments (44,100 ) 14,023 (149 ) — (30,226 ) Income (loss) from equity investments 13,869 (976 ) — (12,655 ) 238 Net income (loss) (30,231 ) 13,047 (149 ) (12,655 ) (29,988 ) Less: Net (income) loss attributable to the noncontrolling interest — — (243 ) — (243 ) Net income (loss) attributable to inVentiv Health, Inc. $ (30,231 ) $ 13,047 $ (392 ) $ (12,655 ) $ (30,231 ) CONSOLIDATED STATEMENT OF OPERATIONS Three Months Ended June 30, 2014 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net revenues $ — $ 332,133 $ 129,394 $ (11,958 ) $ 449,569 Reimbursed out-of-pocket expenses — 51,271 12,802 (31 ) 64,042 Total revenues — 383,404 142,196 (11,989 ) 513,611 Operating expenses: Cost of revenues — 219,961 84,145 (11,394 ) 292,712 Reimbursable out-of-pocket expenses — 51,271 12,802 (31 ) 64,042 Selling, general and administrative expenses 9,262 97,707 38,810 (564 ) 145,215 Allocation of intercompany costs (11,715 ) 8,897 2,818 — — Total operating expenses (2,453 ) 377,836 138,575 (11,989 ) 501,969 Operating income (loss) 2,453 5,568 3,621 — 11,642 Interest income (expense), net (53,287 ) (114 ) 169 — (53,232 ) Intercompany interest income (expense) 21,885 (21,230 ) (655 ) — — Income (loss) before income tax (provision) benefit and income (loss) from equity investments (28,949 ) (15,776 ) 3,135 — (41,590 ) Income tax (provision) benefit — (3,578 ) (2,175 ) — (5,753 ) Income (loss) before income (loss) from equity investments (28,949 ) (19,354 ) 960 — (47,343 ) Income (loss) from equity investments (24,039 ) (1,535 ) — 25,376 (198 ) Income (loss) from continuing operations (52,988 ) (20,889 ) 960 25,376 (47,541 ) Net income (loss) from discontinued operations, net of tax — (5,453 ) — — (5,453 ) Net income (loss) (52,988 ) (26,342 ) 960 25,376 (52,994 ) Less: Net (income) loss attributable to the noncontrolling interest — — 6 — 6 Net income (loss) attributable to inVentiv Health, Inc. $ (52,988 ) $ (26,342 ) $ 966 $ 25,376 $ (52,988 ) CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended June 30, 2015 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net revenues $ — $ 729,889 $ 222,678 $ (12,173 ) $ 940,394 Reimbursed out-of-pocket expenses — 128,066 22,472 (138 ) 150,400 Total revenues — 857,955 245,150 (12,311 ) 1,090,794 Operating expenses: Cost of revenues — 479,030 141,684 (11,147 ) 609,567 Reimbursable out-of-pocket expenses — 128,066 22,472 (138 ) 150,400 Selling, general and administrative expenses 36,578 177,743 70,342 (1,026 ) 283,637 Allocation of intercompany costs (19,800 ) 15,879 3,921 — — Total operating expenses 16,778 800,718 238,419 (12,311 ) 1,043,604 Operating income (loss) (16,778 ) 57,237 6,731 — 47,190 Interest income (expense), net (113,444 ) (408 ) 269 — (113,583 ) Intercompany interest income (expense) 46,384 (45,987 ) (397 ) — — Income (loss) before income tax (provision) benefit and income (loss) from equity investments (83,838 ) 10,842 6,603 — (66,393 ) Income tax (provision) benefit — (4,625 ) (2,641 ) — (7,266 ) Income (loss) before income (loss) from equity investments (83,838 ) 6,217 3,962 — (73,659 ) Income (loss) from equity investments 8,522 654 — (10,467 ) (1,291 ) Net income (loss) (75,316 ) 6,871 3,962 (10,467 ) (74,950 ) Less: Net (income) loss attributable to the noncontrolling interest — — (366 ) — (366 ) Net income (loss) attributable to inVentiv Health, Inc. $ (75,316 ) $ 6,871 $ 3,596 $ (10,467 ) $ (75,316 ) CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended June 30, 2014 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net revenues $ — $ 642,855 $ 253,881 $ (25,362 ) $ 871,374 Reimbursed out-of-pocket expenses — 94,064 26,532 (241 ) 120,355 Total revenues — 736,919 280,413 (25,603 ) 991,729 Operating expenses: Cost of revenues — 428,244 162,824 (24,098 ) 566,970 Reimbursable out-of-pocket expenses — 94,064 26,532 (241 ) 120,355 Selling, general and administrative expenses 17,801 192,601 75,198 (1,264 ) 284,336 Allocation of intercompany costs (23,486 ) 17,893 5,593 — — Total operating expenses (5,685 ) 732,802 270,147 (25,603 ) 971,661 Operating income (loss) 5,685 4,117 10,266 — 20,068 Interest income (expense), net (105,719 ) (208 ) 243 — (105,684 ) Intercompany interest income (expense) 43,067 (41,736 ) (1,331 ) — — Income (loss) before income tax (provision) benefit and income (loss) from equity investments (56,967 ) (37,827 ) 9,178 — (85,616 ) Income tax (provision) benefit (127 ) (5,691 ) (1,880 ) — (7,698 ) Income (loss) before income (loss) from equity investments (57,094 ) (43,518 ) 7,298 — (93,314 ) Income (loss) from equity investments (45,139 ) 3,903 — 41,000 (236 ) Income (loss) from continuing operations (102,233 ) (39,615 ) 7,298 41,000 (93,550 ) Net income (loss) from discontinued operations, net of tax — (8,163 ) — — (8,163 ) Net income (loss) (102,233 ) (47,778 ) 7,298 41,000 (101,713 ) Less: Net (income) loss attributable to the noncontrolling interest — — (520 ) — (520 ) Net income (loss) attributable to inVentiv Health, Inc. $ (102,233 ) $ (47,778 ) $ 6,778 $ 41,000 $ (102,233 ) CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS For the Three Months Ended June 30, 2015 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net income (loss) $ (30,231 ) $ 13,047 $ (149 ) $ (12,655 ) $ (29,988 ) Other comprehensive income (loss): Foreign currency translation adjustment 4,218 5,113 2,596 (7,709 ) 4,218 Total other comprehensive income (loss) 4,218 5,113 2,596 (7,709 ) 4,218 Total comprehensive income (loss) (26,013 ) 18,160 2,447 (20,364 ) (25,770 ) Less: Net (income) loss attributable to the noncontrolling interest — — (243 ) — (243 ) Total comprehensive income (loss) attributable to inVentiv Health, Inc. $ (26,013 ) $ 18,160 $ 2,204 $ (20,364 ) $ (26,013 ) CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS For the Three Months Ended June 30, 2014 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net income (loss) $ (52,988 ) $ (26,342 ) $ 960 $ 25,376 $ (52,994 ) Other comprehensive income (loss): Foreign currency translation adjustment 2,552 2,039 1,318 (3,357 ) 2,552 Total other comprehensive income (loss) 2,552 2,039 1,318 (3,357 ) 2,552 Total comprehensive income (loss) (50,436 ) (24,303 ) 2,278 22,019 (50,442 ) Less: Net (income) loss attributable to the noncontrolling interest — — 6 — 6 Total comprehensive income (loss) attributable to inVentiv Health, Inc. $ (50,436 ) $ (24,303 ) $ 2,284 $ 22,019 $ (50,436 ) CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS For the Six Months Ended June 30, 2015 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net income (loss) $ (75,316 ) $ 6,871 $ 3,962 $ (10,467 ) $ (74,950 ) Other comprehensive income (loss): Foreign currency translation adjustment (1,227 ) (322 ) (1,415 ) 1,737 (1,227 ) Total other comprehensive income (loss) (1,227 ) (322 ) (1,415 ) 1,737 (1,227 ) Total comprehensive income (loss) (76,543 ) 6,549 2,547 (8,730 ) (76,177 ) Less: Net (income) loss attributable to the noncontrolling interest — — (366 ) — (366 ) Total comprehensive income (loss) attributable to inVentiv Health, Inc. $ (76,543 ) $ 6,549 $ 2,181 $ (8,730 ) $ (76,543 ) CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS For the Six Months Ended June 30, 2014 (in thousands) inVentiv Guarantor Non- Guarantor Eliminations Total Net income (loss) $ (102,233 ) $ (47,778 ) $ 7,298 $ 41,000 $ (101,713 ) Other comprehensive income (loss): Foreign currency translation adjustment 2,690 1,342 1,152 (2,494 ) 2,690 Total other comprehensive income (loss) 2,690 1,342 1,152 (2,494 ) 2,690 Total comprehensive income (loss) (99,543 ) (46,436 ) 8,450 38,506 (99,023 ) Less: Net (income) loss attributable to the noncontrolling interest — — (520 ) — (520 ) Total comprehensive income (loss) attributable to inVentiv Health, Inc. $ (99,543 ) $ (46,436 ) $ 7,930 $ 38,506 $ (99,543 ) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2015 (in thousands) inVentiv Guarantor Non- Guarantor– Subsidiaries Eliminations Total Cash flows from operating activities: Net cash provided by (used in) operating activities $ 33,094 $ (19,802 ) $ 16,440 $ (4,925 ) $ 24,807 Cash flows from investing activities: Purchases of property and equipment (6,599 ) (10,285 ) (2,924 ) — (19,808 ) Proceeds from vehicle sales — 3,899 — — 3,899 Return of (disbursements for) investments 224 — — — 224 Other, net (256 ) 2,927 — — 2,671 Net cash provided by (used in) investing activities (6,631 ) (3,459 ) (2,924 ) — (13,014 ) Cash flows from financing activities: Repayments on capital leases — (12,375 ) (250 ) — (12,625 ) Advances from cash pool (2,065 ) — 37,511 (35,446 ) — Borrowings under line of credit 153,000 — — — 153,000 Repayments on line of credit (153,000 ) — — — (153,000 ) Payment on installment note related to acquisition (1,750 ) — — — (1,750 ) Payment of debt issuance costs (197 ) — — — (197 ) Repayment of other financing arrangements (1,966 ) (352 ) — — (2,318 ) Advances (repayment) of intercompany debt, net (5,048 ) 32,549 (27,501 ) — — Other, net (97 ) — (508 ) — (605 ) Net cash provided by (used in) financing activities (11,123 ) 19,822 9,252 (35,446 ) (17,495 ) Effects of foreign currency exchange rate changes on cash — — 238 — 238 Net increase (decrease) in cash and cash equivalents 15,340 (3,439 ) 23,006 (40,371 ) (5,464 ) Cash and cash equivalents, beginning of period 19,643 3,439 86,014 (52,037 ) 57,059 Cash and cash equivalents, end of period $ 34,983 $ — $ 109,020 $ (92,408 ) $ 51,595 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the Six Months Ended June 30, 2014 (in thousands) inVentiv Guarantor Non- Guarantor– Subsidiaries Eliminations Total Cash flows from operating activities: Net cash provided by (used in) continuing operations $ (47,017 ) $ (14,384 ) $ (993 ) $ — $ (62,394 ) Net cash provided by (used in) discontinued operations — (5,858 ) — — (5,858 ) Net cash provided by (used in) operating activities (47,017 ) (20,242 ) (993 ) — (68,252 ) Cash flows from investing activities: Purchases of property and equipment (8,736 ) (5,027 ) (3,131 ) — (16,894 ) Proceeds from vehicle sales — 1,032 — — 1,032 Return of (disbursements for) investments (750 ) — — — (750 ) Other, net (225 ) 3,244 — — 3,019 Net cash provided by (used in) investing activities (9,711 ) (751 ) (3,131 ) — (13,593 ) Cash flows from financing activities: Repayments on capital leases — (5,989 ) (280 ) — (6,269 ) Advances from cash pool — — 41,821 (41,821 ) — Borrowings under line of credit 134,000 — — — 134,000 Repayments on line of credit (126,000 ) — — — (126,000 ) Payment on installment note related to acquisition (1,500 ) — — — (1,500 ) Payments of debt issuance costs (52 ) (52 ) Repayment of other financing arrangements (1,749 ) (352 ) — — (2,101 ) Advances (repayment) of intercompany debt, net 25,156 12,637 (37,793 ) — — Other, net 154 — (477 ) — (323 ) Net cash provided by (used in) financing activities 30,009 6,296 3,271 (41,821 ) (2,245 ) Effects of foreign currency exchange rate changes on cash — — 302 — 302 Net increase (decrease) in cash and cash equivalents (26,719 ) (14,697 ) (551 ) (41,821 ) (83,788 ) Cash and cash equivalents, beginning of period 33,176 19,838 98,457 (35,244 ) 116,227 Cash and cash equivalents, end of period $ 6,457 $ 5,141 $ 97,906 $ (77,065 ) $ 32,439 |