Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries under Select's 6.375% Senior Notes | 12 Months Ended |
Dec. 31, 2013 |
Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries under Select's 6.375% Senior Notes | ' |
Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries under Select's 6.375% Senior Notes | ' |
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18.   Financial Information for Subsidiary Guarantors and Non-Guarantor Subsidiaries under Select's 6.375% Senior Notes |
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        Select's 6.375% senior notes are fully and unconditionally guaranteed, except for customary limitations, on a senior basis by all of Select's wholly-owned subsidiaries (the "Subsidiary Guarantors") which is defined as a subsidiary where Select or a subsidiary of Select holds all of the outstanding ownership interests. Certain of Select's subsidiaries did not guarantee the 6.375% senior notes (the "Non-Guarantor Subsidiaries"). |
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        Select conducts a significant portion of its business through its subsidiaries. Presented below is consolidating financial information for Select, the Subsidiary Guarantors and the Non-Guarantor Subsidiaries at December 31, 2012 and 2013 and for the years ended December 31, 2011, 2012 and 2013. |
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        The equity method has been used by Select with respect to investments in subsidiaries. The equity method has been used by Subsidiary Guarantors with respect to investments in Non-Guarantor Subsidiaries. Separate financial statements for Subsidiary Guarantors are not presented. |
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        The consolidating balance sheets at December 2011 and the consolidating statement of cash flows for the year ended December 31, 2011 included in this footnote contain certain immaterial adjustments that were made to the December 31, 2011 consolidating balance sheet and the consolidating statement of cash flows for the year ended December 31, 2011 relating to the presentation of intercompany transactions. On the December 31, 2011 consolidating balance sheet, intercompany accounts that were previously reported as both asset and liability balances within the liability section of the balance sheet have been adjusted and presented separately as either an intercompany receivable within the current asset classification or as an intercompany payable within the current liability classification, based upon the account's attributes on each subsidiary's balance sheet. On the consolidating statement of cash flows for the year ended December 31, 2011, the changes in intercompany advances that were previously reported as a change in operating assets and liabilities in cash flow provided by operating activities has been adjusted as a financing activity. These adjustments had no impact on the total equity of the Guarantors, non-Guarantors or Parent Company. They did not alter the net increase or decrease in cash for the Guarantors, non-Guarantors or Parent Company. |
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| | Select Medical Corporation | |
Consolidating Balance Sheet |
December 31, 2013 |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Assets | | | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 71 | | $ | 3,098 | | $ | 1,150 | | $ | — | | $ | 4,319 | |
Accounts receivable, net | | | — | | | 337,517 | | | 54,452 | | | -650 | (a) | | 391,319 | |
Current deferred tax asset | | | 7,965 | | | 5,214 | | | 4,445 | | | — | | | 17,624 | |
Intercompany receivables | | | — | | | 1,079,736 | | | 105,028 | | | -1,184,764 | (b) | | — | |
Other current assets | | | 9,745 | | | 26,545 | | | 4,850 | | | — | | | 41,140 | |
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Total Current Assets | | | 17,781 | | | 1,452,110 | | | 169,925 | | | (1,185,414 | ) | | 454,402 | |
Property and equipment, net | | | 15,624 | | | 434,040 | | | 59,438 | | | — | | | 509,102 | |
Investment in affiliates | | | 3,059,581 | | | 83,012 | | | — | | | -3,142,593 | (c)(d) | | — | |
Goodwill | | | — | | | 1,642,633 | | | — | | | — | | | 1,642,633 | |
Non-current deferred tax asset | | | 7,662 | | | — | | | — | | | -7,662 | (e) | | — | |
Other identifiable intangibles | | | — | | | 71,907 | | | — | | | — | | | 71,907 | |
Other assets | | | 35,274 | | | 103,696 | | | 608 | | | — | | | 139,578 | |
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Total Assets | | $ | 3,135,922 | | $ | 3,787,398 | | $ | 229,971 | | $ | (4,335,669 | ) | $ | 2,817,622 | |
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Liabilities and Equity | | | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | | | |
Bank overdrafts | | $ | 12,506 | | $ | — | | $ | — | | $ | — | | $ | 12,506 | |
Current portion of long-term debt and notes payable | | | 9,107 | | | 7,317 | | | 1,141 | | | — | | | 17,565 | |
Accounts payable | | | 6,749 | | | 68,574 | | | 12,962 | | | — | | | 88,285 | |
Intercompany payables | | | 1,184,764 | | | — | | | — | | | -1,184,764 | (b) | | — | |
Accrued payroll | | | 1,167 | | | 88,599 | | | 245 | | | — | | | 90,011 | |
Accrued vacation | | | 4,619 | | | 47,682 | | | 7,429 | | | — | | | 59,730 | |
Accrued interest | | | 11,076 | | | 1,221 | | | — | | | — | | | 12,297 | |
Accrued other | | | 59,249 | | | 23,493 | | | 7,729 | | | — | | | 90,471 | |
Income taxes payable | | | 622 | | | — | | | — | | | — | | | 622 | |
Due to third party payors | | | — | | | 1 | | | 686 | | | -650 | (a) | | 37 | |
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Total Current Liabilities | | | 1,289,859 | | | 236,887 | | | 30,192 | | | (1,185,414 | ) | | 371,524 | |
Long-term debt, net of current portion | | | 1,006,201 | | | 364,060 | | | 57,449 | | | — | | | 1,427,710 | |
Non-current deferred tax liability | | | — | | | 96,111 | | | 7,838 | | | -7,662 | (e) | | 96,287 | |
Other non-current liabilities | | | 53,628 | | | 33,123 | | | 5,124 | | | — | | | 91,875 | |
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Total Liabilities | | | 2,349,688 | | | 730,181 | | | 100,603 | | | (1,193,076 | ) | | 1,987,396 | |
Redeemable non-controlling interests | | | — | | | — | | | 11,584 | | | — | | | 11,584 | |
Stockholder's Equity: | | | | | | | | | | | | | | | | |
Common stock | | | 0 | | | — | | | — | | | — | | | 0 | |
Capital in excess of par | | | 869,576 | | | — | | | — | | | — | | | 869,576 | |
Retained earnings | | | (83,342 | ) | | 920,694 | | | 21,186 | | | -941,880 | (d) | | (83,342 | ) |
Subsidiary investment | | | — | | | 2,136,523 | | | 64,190 | | | -2,200,713 | (c) | | — | |
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Total Select Medical Corporation Stockholder's Equity | | | 786,234 | | | 3,057,217 | | | 85,376 | | | (3,142,593 | ) | | 786,234 | |
Non-controlling interests | | | — | | | — | | | 32,408 | | | — | | | 32,408 | |
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Total Equity | | | 786,234 | | | 3,057,217 | | | 117,784 | | | (3,142,593 | ) | | 818,642 | |
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Total Liabilities and Equity | | $ | 3,135,922 | | $ | 3,787,398 | | $ | 229,971 | | $ | (4,335,669 | ) | $ | 2,817,622 | |
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(a) |
Reclass portion of due to third party payor to accounts receivable net in consolidation. |
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(b) |
Elimination of intercompany. |
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(c) |
Elimination of investments in consolidated subsidiaries. |
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(d) |
Elimination of investments in consolidated subsidiaries' earnings. |
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(e) |
Reclass of non-current deferred tax assset to report net non-current deferred tax liability in consolidation. |
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| | Select Medical Corporation | |
Consolidating Statement of Operations |
For the Year Ended December 31, 2013 |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Net operating revenues | | $ | 350 | | $ | 2,553,505 | | $ | 421,793 | | $ | — | | $ | 2,975,648 | |
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Costs and expenses: | | | | | | | | | | | | | | | | |
Cost of services | | | 1,757 | | | 2,135,754 | | | 357,965 | | | — | | | 2,495,476 | |
General and administrative | | | 76,709 | | | 212 | | | — | | | — | | | 76,921 | |
Bad debt expense | | | — | | | 31,003 | | | 6,420 | | | — | | | 37,423 | |
Depreciation and amortization | | | 3,746 | | | 50,982 | | | 9,664 | | | — | | | 64,392 | |
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Total costs and expenses | | | 82,212 | | | 2,217,951 | | | 374,049 | | | — | | | 2,674,212 | |
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Income (loss) from operations | | | (81,862 | ) | | 335,554 | | | 47,744 | | | — | | | 301,436 | |
Other income and expense: | | | | | | | | | | | | | | | | |
Intercompany interest and royalty fees | | | (1,326 | ) | | 1,339 | | | (13 | ) | | — | | | — | |
Intercompany management fees | | | 144,447 | | | (125,361 | ) | | (19,086 | ) | | — | | | — | |
Equity in earnings of unconsolidated subsidiaries | | | — | | | 2,384 | | | 92 | | | — | | | 2,476 | |
Loss on early retirement of debt | | | (17,788 | ) | | — | | | — | | | — | | | (17,788 | ) |
Interest expense | | | (58,100 | ) | | (22,760 | ) | | (4,094 | ) | | — | | | (84,954 | ) |
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Income (loss) from operations before income taxes | | | (14,629 | ) | | 191,156 | | | 24,643 | | | — | | | 201,170 | |
Income tax expense (benefit) | | | (1,238 | ) | | 76,870 | | | 339 | | | — | | | 75,971 | |
Equity in earnings of subsidiaries | | | 129,971 | | | 15,716 | | | — | | | -145,687 | (a) | | — | |
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Net income | | | 116,580 | | | 130,002 | | | 24,304 | | | (145,687 | ) | | 125,199 | |
Less: Net income attributable to non-controlling interests | | | — | | | — | | | 8,619 | | | — | | | 8,619 | |
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Net income attributable to Select Medical Corporation | | $ | 116,580 | | $ | 130,002 | | $ | 15,685 | | $ | (145,687 | ) | $ | 116,580 | |
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(a) |
Elimination of equity in earnings of subsidiaries. |
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Select Medical Corporation |
Consolidating Statement of Cash Flows |
For the Year Ended December 31, 2013 |
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| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Operating activities | | | | | | | | | | | | | | | | |
Net income | | $ | 116,580 | | $ | 130,002 | | $ | 24,304 | | $ | (145,687 | )(a) | $ | 125,199 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 3,746 | | | 50,982 | | | 9,664 | | | — | | | 64,392 | |
Provision for bad debts | | | — | | | 31,003 | | | 6,420 | | | — | | | 37,423 | |
Equity in earnings of unconsolidated subsidiaires | | | — | | | (2,384 | ) | | (92 | ) | | — | | | (2,476 | ) |
Loss on early retirement of debt | | | 17,788 | | | — | | | — | | | — | | | 17,788 | |
Gain from disposal or sale of assets | | | — | | | (463 | ) | | (118 | ) | | — | | | (581 | ) |
Non-cash stock compensation expense | | | 7,033 | | | — | | | — | | | — | | | 7,033 | |
Amortization of debt discount and issuance costs | | | 8,344 | | | — | | | — | | | — | | | 8,344 | |
Deferred income taxes | | | 7,032 | | | — | | | — | | | — | | | 7,032 | |
Changes in operating assets and liabilities, net of effects from acquisition of businesses: | | | | | | | | | | | | | | | | |
Equity in earnings of subsidiaries | | | (129,971 | ) | | (15,716 | ) | | — | | | 145,687 | (a) | | — | |
Accounts receivable | | | — | | | (59,804 | ) | | (7,341 | ) | | — | | | (67,145 | ) |
Other current assets | | | (4,145 | ) | | (5,735 | ) | | 1,713 | | | — | | | (8,167 | ) |
Other assets | | | (6,594 | ) | | 3,026 | | | 84 | | | — | | | (3,484 | ) |
Accounts payable | | | 2,075 | | | (3,660 | ) | | 302 | | | — | | | (1,283 | ) |
Due to third-party payors | | | — | | | 996 | | | (2,037 | ) | | — | | | (1,041 | ) |
Accrued expenses | | | (4,929 | ) | | 20,609 | | | (612 | ) | | — | | | 15,068 | |
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Net cash provided by operating activities | | | 16,959 | | | 148,856 | | | 32,287 | | | — | | | 198,102 | |
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Investing activities | | | | | | | | | | | | | | | | |
Purchases of property and equipment | | | (3,024 | ) | | (60,532 | ) | | (10,104 | ) | | — | | | (73,660 | ) |
Investment in businesses, net of distributions | | | — | | | (34,893 | ) | | — | | | — | | | (34,893 | ) |
Acquisition of businesses, net of cash acquired | | | — | | | (1,665 | ) | | — | | | — | | | (1,665 | ) |
Proceeds from sale of assets | | | — | | | 2,456 | | | 456 | | | — | | | 2,912 | |
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Net cash used in investing activities | | | (3,024 | ) | | (94,634 | ) | | (9,648 | ) | | — | | | (107,306 | ) |
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Financing activities | | | | | | | | | | | | | | | | |
Borrowings on revolving credit facility | | | 690,000 | | | — | | | — | | | — | | | 690,000 | |
Payments on revolving credit facility | | | (800,000 | ) | | — | | | — | | | — | | | (800,000 | ) |
Borrowings on credit facility term loans, net of discount | | | 298,500 | | | — | | | — | | | — | | | 298,500 | |
Payments on credit facility term loans | | | (596,720 | ) | | — | | | — | | | — | | | (596,720 | ) |
Issuance of 6.375% senior notes | | | 600,000 | | | — | | | — | | | — | | | 600,000 | |
Repurchase of 75/8% senior subordinated notes, net of premiums | | | (70,000 | ) | | — | | | — | | | — | | | (70,000 | ) |
Borrowings of other debt | | | 8,923 | | | 5,303 | | | 1,084 | | | — | | | 15,310 | |
Principal payments on other debt | | | (7,752 | ) | | (873 | ) | | (2,209 | ) | | — | | | (10,834 | ) |
Debt issuance costs | | | (18,914 | ) | | — | | | — | | | — | | | (18,914 | ) |
Repayments of bank overdrafts | | | (5,330 | ) | | — | | | — | | | — | | | (5,330 | ) |
Equity investment by Holdings | | | 1,525 | | | — | | | — | | | — | | | 1,525 | |
Dividends paid to Holdings | | | (226,621 | ) | | — | | | — | | | — | | | (226,621 | ) |
Intercompany | | | 77,455 | | | (59,288 | ) | | (18,167 | ) | | — | | | — | |
Distributions to non-controlling interests | | | — | | | — | | | (3,537 | ) | | — | | | (3,537 | ) |
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Net cash used in financing activities | | | (48,934 | ) | | (54,858 | ) | | (22,829 | ) | | — | | | (126,621 | ) |
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Net decrease in cash and cash equivalents | | | (34,999 | ) | | (636 | ) | | (190 | ) | | — | | | (35,825 | ) |
Cash and cash equivalents at beginning of period | | | 35,070 | | | 3,734 | | | 1,340 | | | — | | | 40,144 | |
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Cash and cash equivalents at end of period | | $ | 71 | | $ | 3,098 | | $ | 1,150 | | $ | — | | $ | 4,319 | |
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(a) |
Elimination of equity in earnings of consolidated subsidiaries. |
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Select Medical Corporation |
Consolidating Balance Sheet |
December 31, 2012 |
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| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Assets | | | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 35,070 | | $ | 3,734 | | $ | 1,340 | | $ | — | | $ | 40,144 | |
Accounts receivable, net | | | — | | | 308,043 | | | 53,531 | | | -1,645 | (a) | | 359,929 | |
Current deferred tax asset | | | 12,383 | | | 1,060 | | | 4,434 | | | — | | | 17,877 | |
Prepaid income taxes | | | 3,895 | | | — | | | — | | | — | | | 3,895 | |
Intercompany receivables | | | — | | | 1,021,479 | | | 102,694 | | | (1,124,173 | )(b) | | — | |
Other current assets | | | 5,600 | | | 19,655 | | | 6,563 | | | — | | | 31,818 | |
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Total Current Assets | | | 56,948 | | | 1,353,971 | | | 168,562 | | | (1,125,818 | ) | | 453,663 | |
Property and equipment, net | | | 16,344 | | | 425,677 | | | 59,531 | | | — | | | 501,552 | |
Investment in affiliates | | | 2,930,022 | | | 82,475 | | | — | | | (3,012,497 | )(c)(d) | | — | |
Goodwill | | | — | | | 1,640,534 | | | — | | | — | | | 1,640,534 | |
Other identifiable intangibles | | | — | | | 71,745 | | | — | | | — | | | 71,745 | |
Non-current deferred tax asset | | | 5,107 | | | — | | | — | | | -5,107 | (e) | | — | |
Other assets | | | 28,680 | | | 63,447 | | | 692 | | | — | | | 92,819 | |
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Total Assets | | $ | 3,037,101 | | $ | 3,637,849 | | $ | 228,785 | | $ | (4,143,422 | ) | $ | 2,760,313 | |
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Liabilities and Equity | | | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | | | |
Bank overdrafts | | $ | 17,836 | | $ | — | | $ | — | | $ | — | | $ | 17,836 | |
Current portion of long-term debt and notes payable | | | 8,916 | | | 1,059 | | | 1,671 | | | — | | | 11,646 | |
Accounts payable | | | 4,674 | | | 72,213 | | | 12,660 | | | — | | | 89,547 | |
Intercompany payables | | | 1,124,173 | | | — | | | — | | | -1,124,173 | (b) | | — | |
Accrued payroll | | | 186 | | | 88,096 | | | 304 | | | — | | | 88,586 | |
Accrued vacation | | | 4,249 | | | 44,508 | | | 6,957 | | | — | | | 55,714 | |
Accrued interest | | | 17,955 | | | 804 | | | — | | | — | | | 18,759 | |
Accrued other | | | 55,206 | | | 31,343 | | | 5,534 | | | — | | | 92,083 | |
Due to third party payors | | | — | | | — | | | 2,723 | | | -1,645 | (a) | | 1,078 | |
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Total Current Liabilities | | | 1,233,195 | | | 238,023 | | | 29,849 | | | (1,125,818 | ) | | 375,249 | |
Long-term debt, net of current portion | | | 872,671 | | | 358,104 | | | 60,522 | | | — | | | 1,291,297 | |
Non-current deferred tax liability | | | — | | | 85,287 | | | 9,330 | | | -5,107 | (e) | | 89,510 | |
Other non-current liabilities | | | 49,918 | | | 28,808 | | | 4,973 | | | — | | | 83,699 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total Liabilities | | | 2,155,784 | | | 710,222 | | | 104,674 | | | (1,130,925 | ) | | 1,839,755 | |
Redeemable non-controlling interests | | | — | | | — | | | 10,811 | | | — | | | 10,811 | |
Stockholder's Equity: | | | | | | | | | | | | | | | | |
Common stock | | | 0 | | | — | | | — | | | — | | | 0 | |
Capital in excess of par | | | 859,839 | | | — | | | — | | | — | | | 859,839 | |
Retained earnings | | | 21,478 | | | 790,692 | | | 21,197 | | | -811,889 | (d) | | 21,478 | |
Subsidiary investment | | | — | | | 2,136,935 | | | 63,673 | | | -2,200,608 | (c) | | — | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total Select Medical Corporation Stockholder's Equity | | | 881,317 | | | 2,927,627 | | | 84,870 | | | (3,012,497 | ) | | 881,317 | |
Non-controlling interests | | | — | | | — | | | 28,430 | | | — | | | 28,430 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total Equity | | | 881,317 | | | 2,927,627 | | | 113,300 | | | (3,012,497 | ) | | 909,747 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total Liabilities and Equity | | $ | 3,037,101 | | $ | 3,637,849 | | $ | 228,785 | | $ | (4,143,422 | ) | $ | 2,760,313 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
(a) |
Reclass portion of due to third party payor to accounts receivable net in consolidation. |
|
(b) |
Elimination of intercompany. |
|
(c) |
Elimination of investments in consolidated subsidiaries. |
|
(d) |
Elimination of investments in consolidated subsidiaries' earnings. |
|
(e) |
Reclass of non-current deferred tax asset to report net non-current deferred tax liability in consolidation. |
|
Select Medical Corporation |
Consolidating Statement of Operations |
For the Year Ended December 31, 2012 |
|
| | | | | | | | | | | | | | | | |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Net operating revenues | | $ | 123 | | $ | 2,549,896 | | $ | 398,950 | | $ | — | | $ | 2,948,969 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Costs and expenses: | | | | | | | | | | | | | | | | |
Cost of services | | | 2,139 | | | 2,099,734 | | | 341,677 | | | — | | | 2,443,550 | |
General and administrative | | | 67,402 | | | (1,208 | ) | | — | | | — | | | 66,194 | |
Bad debt expense | | | — | | | 33,595 | | | 5,460 | | | — | | | 39,055 | |
Depreciation and amortization | | | 3,267 | | | 50,734 | | | 9,310 | | | — | | | 63,311 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total costs and expenses | | | 72,808 | | | 2,182,855 | | | 356,447 | | | — | | | 2,612,110 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Income (loss) from operations | | | (72,685 | ) | | 367,041 | | | 42,503 | | | — | | | 336,859 | |
Other income and expense: | | | | | | | | | | | | | | | | |
Intercompany interest and royalty fees | | | (2,532 | ) | | 2,494 | | | 38 | | | — | | | — | |
Intercompany management fees | | | 120,276 | | | (102,096 | ) | | (18,180 | ) | | — | | | — | |
Loss on early retirement of debt | | | (6,064 | ) | | — | | | — | | | — | | | (6,064 | ) |
Equity in earnings of unconsolidated subsidiaries | | | — | | | 7,637 | | | 68 | | | — | | | 7,705 | |
Interest expense | | | (54,167 | ) | | (25,348 | ) | | (4,244 | ) | | — | | | (83,759 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Income (loss) from operations before income taxes | | | (15,172 | ) | | 249,728 | | | 20,185 | | | — | | | 254,741 | |
Income tax expense (benefit) | | | (8,206 | ) | | 101,795 | | | (15 | ) | | — | | | 93,574 | |
Equity in earnings of subsidiaries | | | 162,470 | | | 15,639 | | | — | | | (178,109 | )(a) | | — | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net income | | | 155,504 | | | 163,572 | | | 20,200 | | | (178,109 | ) | | 161,167 | |
Less: Net income attributable to non-controlling interests | | | — | | | — | | | 5,663 | | | — | | | 5,663 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net income attributable to Select Medical Corporation | | $ | 155,504 | | $ | 163,572 | | $ | 14,537 | | $ | (178,109 | ) | $ | 155,504 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
(a) |
Elimination of equity in earnings of subsidiaries. |
|
Select Medical Corporation |
Consolidating Statement of Cash Flows |
For the Year Ended December 31, 2012 |
|
| | | | | | | | | | | | | | | | |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Operating activities | | | | | | | | | | | | | | | | |
Net income | | $ | 155,504 | | $ | 163,572 | | $ | 20,200 | | $ | -178,109 | (a) | $ | 161,167 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 3,267 | | | 50,734 | | | 9,310 | | | — | | | 63,311 | |
Provision for bad debts | | | — | | | 33,595 | | | 5,460 | | | — | | | 39,055 | |
Equity in earnings of unconsolidated subsidiaires | | | — | | | (7,637 | ) | | (68 | ) | | — | | | (7,705 | ) |
Loss on early retirement of debt | | | 6,064 | | | — | | | — | | | — | | | 6,064 | |
Loss (gain) from disposal or sale of assets | | | — | | | (6,002 | ) | | 96 | | | — | | | (5,906 | ) |
Non-cash stock compensation expense | | | 5,677 | | | — | | | — | | | — | | | 5,677 | |
Amortization of debt discount and issuance costs | | | 7,190 | | | — | | | — | | | — | | | 7,190 | |
Deferred income taxes | | | 7,909 | | | — | | | — | | | — | | | 7,909 | |
Changes in operating assets and liabilities, net of effects from acquisition of businesses: | | | | | | | | | | | | | | | | |
Equity in earnings of subsidiaries | | | (162,470 | ) | | (15,639 | ) | | — | | | 178,109 | (a) | | — | |
Accounts receivable | | | — | | | 29,727 | | | (14,569 | ) | | — | | | 15,158 | |
Other current assets | | | 740 | | | 141 | | | (2,488 | ) | | — | | | (1,607 | ) |
Other assets | | | 2,448 | | | 3,268 | | | 161 | | | — | | | 5,877 | |
Accounts payable | | | (2,679 | ) | | (4,040 | ) | | 602 | | | — | | | (6,117 | ) |
Due to third-party payors | | | — | | | (15,278 | ) | | 10,830 | | | — | | | (4,448 | ) |
Accrued expenses | | | 25,350 | | | (3,835 | ) | | 2,231 | | | — | | | 23,746 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash provided by operating activities | | | 49,000 | | | 228,606 | | | 31,765 | | | — | | | 309,371 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Investing activities | | | | | | | | | | | | | | | | |
Purchases of property and equipment | | | (5,150 | ) | | (49,160 | ) | | (13,875 | ) | | — | | | (68,185 | ) |
Investment in businesses, net of distributions | | | — | | | (14,689 | ) | | — | | | — | | | (14,689 | ) |
Acquisition of businesses, net of cash acquired | | | — | | | (6,043 | ) | | — | | | — | | | (6,043 | ) |
Proceeds from sale of assets | | | — | | | 16,511 | | | — | | | — | | | 16,511 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash used in investing activities | | | (5,150 | ) | | (53,381 | ) | | (13,875 | ) | | — | | | (72,406 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Financing activities | | | | | | | | | | | | | | | | |
Borrowings on revolving credit facility | | | 495,000 | | | — | | | — | | | — | | | 495,000 | |
Payments on revolving credit facility | | | (405,000 | ) | | — | | | — | | | — | | | (405,000 | ) |
Borrowings on 2011 credit facility term loans, net of discount | | | 266,750 | | | — | | | — | | | — | | | 266,750 | |
Payments on 2011 credit facility term loans | | | (9,875 | ) | | — | | | — | | | — | | | (9,875 | ) |
Repurchase of 75/8% senior subordinated notes, net of premiums | | | (278,495 | ) | | — | | | — | | | — | | | (278,495 | ) |
Borrowings of other debt | | | 8,003 | | | — | | | 278 | | | — | | | 8,281 | |
Principal payments on other debt | | | (8,049 | ) | | (433 | ) | | (1,813 | ) | | — | | | (10,295 | ) |
Debt issuance costs | | | (6,527 | ) | | — | | | — | | | — | | | (6,527 | ) |
Proceeds from bank overdrafts | | | 1,227 | | | — | | | — | | | — | | | 1,227 | |
Equity investment by Holdings | | | 1,817 | | | — | | | — | | | — | | | 1,817 | |
Dividends paid to Holdings | | | (268,479 | ) | | — | | | — | | | — | | | (268,479 | ) |
Intercompany | | | 183,421 | | | (171,058 | ) | | (12,363 | ) | | — | | | — | |
Distributions to non-controlling interests | | | — | | | — | | | (3,268 | ) | | — | | | (3,268 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash used in financing activities | | | (20,207 | ) | | (171,491 | ) | | (17,166 | ) | | — | | | (208,864 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net increase in cash and cash equivalents | | | 23,643 | | | 3,734 | | | 724 | | | — | | | 28,101 | |
Cash and cash equivalents at beginning of period | | | 11,427 | | | — | | | 616 | | | — | | | 12,043 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Cash and cash equivalents at end of period | | $ | 35,070 | | $ | 3,734 | | $ | 1,340 | | $ | — | | $ | 40,144 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
(a) |
Elimination of equity in earnings of consolidated subsidiaries. |
|
Select Medical Corporation |
Consolidating Statement of Operations |
For the Year Ended December 31, 2011 |
|
| | | | | | | | | | | | | | | | |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Net operating revenues | | $ | 121 | | $ | 2,436,177 | | $ | 368,209 | | $ | — | | $ | 2,804,507 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Costs and expenses: | | | | | | | | | | | | | | | | |
Cost of services | | | 1,729 | | | 1,996,671 | | | 310,170 | | | — | | | 2,308,570 | |
General and administrative | | | 61,995 | | | 359 | | | — | | | — | | | 62,354 | |
Bad debt expense | | | — | | | 44,300 | | | 7,047 | | | — | | | 51,347 | |
Depreciation and amortization | | | 4,115 | | | 58,064 | | | 9,338 | | | — | | | 71,517 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Total costs and expenses | | | 67,839 | | | 2,099,394 | | | 326,555 | | | — | | | 2,493,788 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Income (loss) from operations | | | (67,718 | ) | | 336,783 | | | 41,654 | | | — | | | 310,719 | |
Other income and expense: | | | | | | | | | | | | | | | | |
Intercompany interest and royalty fees | | | (3,408 | ) | | 3,382 | | | 26 | | | — | | | — | |
Intercompany management fees | | | 120,013 | | | (102,970 | ) | | (17,043 | ) | | — | | | — | |
Loss on early retirement of debt | | | (20,385 | ) | | — | | | — | | | — | | | (20,385 | ) |
Equity in earnings of unconsolidated subsidiaries | | | — | | | 2,870 | | | 53 | | | — | | | 2,923 | |
Interest income | | | 132 | | | 122 | | | 68 | | | — | | | 322 | |
Interest expense | | | (41,817 | ) | | (34,612 | ) | | (4,803 | ) | | — | | | (81,232 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Income (loss) before income taxes | | | (13,183 | ) | | 205,575 | | | 19,955 | | | — | | | 212,347 | |
Income tax expense (benefit) | | | (12,821 | ) | | 92,561 | | | 1,244 | | | — | | | 80,984 | |
Equity in earnings of subsidiaries | | | 126,809 | | | 13,406 | | | — | | | -140,215 | (a) | | — | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net income | | | 126,447 | | | 126,420 | | | 18,711 | | | (140,215 | ) | | 131,363 | |
Less: Net income attributable to non-controlling interests | | | — | | | — | | | 4,916 | | | — | | | 4,916 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net income attributable to Select Medical Corporation | | $ | 126,447 | | $ | 126,420 | | $ | 13,795 | | $ | (140,215 | ) | $ | 126,447 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
|
(a) |
Elimination of equity in earnings of subsidiaries. |
|
Select Medical Corporation |
Consolidating Statement of Cash Flows |
For the Year Ended December 31, 2011 |
|
| | | | | | | | | | | | | | | | |
| | Select Medical | | Subsidiary | | Non-Guarantor | | Eliminations | | Consolidated | |
Corporation (Parent | Guarantors | Subsidiaries |
Company Only) | | |
| | (in thousands) | |
Operating activities | | | | | | | | | | | | | | | | |
Net income | | $ | 126,447 | | $ | 126,420 | | $ | 18,711 | | $ | -140,215 | (a) | $ | 131,363 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 4,115 | | | 58,064 | | | 9,338 | | | — | | | 71,517 | |
Provision for bad debts | | | — | | | 44,300 | | | 7,047 | | | — | | | 51,347 | |
Equity in earnings of unconsolidated subsidiaries | | | — | | | (2,870 | ) | | (53 | ) | | — | | | (2,923 | ) |
Loss on early retirement of debt | | | 20,385 | | | — | | | — | | | — | | | 20,385 | |
Loss (gain) from disposal or sale of assets | | | 13 | | | (5,024 | ) | | 45 | | | — | | | (4,966 | ) |
Non-cash stock compensation expense | | | 3,725 | | | — | | | — | | | — | | | 3,725 | |
Amortization of debt discount and issuance costs | | | 6,700 | | | — | | | — | | | — | | | 6,700 | |
Deferred income taxes | | | 35,305 | | | — | | | — | | | — | | | 35,305 | |
Changes in operating assets and liabilities, net of effects from acquisition of businesses: | | | | | | | | | | | | | | | | |
Equity in earnings of subsidiaries | | | (126,809 | ) | | (13,406 | ) | | — | | | 140,215 | (a) | | — | |
Accounts receivable | | | — | | | (98,966 | ) | | (12,160 | ) | | — | | | (111,126 | ) |
Other current assets | | | (1,780 | ) | | 1,165 | | | (586 | ) | | — | | | (1,201 | ) |
Other assets | | | (12,069 | ) | | 9,683 | | | 318 | | | — | | | (2,068 | ) |
Accounts payable | | | 1,326 | | | 16,247 | | | 3,056 | | | — | | | 20,629 | |
Due to third-party payors | | | — | | | 1,408 | | | (1,181 | ) | | — | | | 227 | |
Accrued expenses | | | 14,823 | | | 5,522 | | | 794 | | | — | | | 21,139 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash provided by operating activities | | | 72,181 | | | 142,543 | | | 25,329 | | | — | | | 240,053 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Investing activities | | | | | | | | | | | | | | | | |
Purchases of property and equipment | | | (3,413 | ) | | (37,759 | ) | | (4,844 | ) | | — | | | (46,016 | ) |
Investment in businesses, net of distributions | | | — | | | (15,699 | ) | | — | | | — | | | (15,699 | ) |
Acquisition of businesses, net of cash acquired | | | — | | | (899 | ) | | — | | | — | | | (899 | ) |
Proceeds from sale of assets | | | — | | | 7,879 | | | — | | | — | | | 7,879 | |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash used in investing activities | | | (3,413 | ) | | (46,478 | ) | | (4,844 | ) | | — | | | (54,735 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Financing activities | | | | | | | | | | | | | | | | |
Borrowings on revolving credit facility | | | 735,000 | | | — | | | — | | | — | | | 735,000 | |
Payments on revolving credit facility | | | (720,000 | ) | | — | | | — | | | — | | | (720,000 | ) |
Borrowings on 2011 credit facility term loans, net of discount | | | 841,500 | | | — | | | — | | | — | | | 841,500 | |
Payments on 2011 credit facility term loans | | | (4,250 | ) | | — | | | — | | | — | | | (4,250 | ) |
Payments on 2005 credit facility term loans, net of call premium | | | (484,633 | ) | | — | | | — | | | — | | | (484,633 | ) |
Repurchase of 75/8% senior subordinated notes, net of premiums | | | (273,941 | ) | | — | | | — | | | — | | | (273,941 | ) |
Borrowings of other debt | | | 6,100 | | | 955 | | | — | | | — | | | 7,055 | |
Principal payments on other debt | | | (5,662 | ) | | (755 | ) | | (1,082 | ) | | — | | | (7,499 | ) |
Debt issuance costs | | | (18,556 | ) | | — | | | — | | | — | | | (18,556 | ) |
Repayments of bank overdrafts | | | (2,183 | ) | | — | | | — | | | — | | | (2,183 | ) |
Equity investment by Holdings | | | 208 | | | — | | | — | | | — | | | 208 | |
Dividends paid to Holdings | | | (245,729 | ) | | — | | | — | | | — | | | (245,729 | ) |
Intercompany | | | 114,656 | | | (99,832 | ) | | (14,824 | ) | | — | | | — | |
Distributions to non-controlling interests | | | — | | | — | | | (4,612 | ) | | — | | | (4,612 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net cash used in financing activities | | | (57,490 | ) | | (99,632 | ) | | (20,518 | ) | | — | | | (177,640 | ) |
| | | | | | | | | | | |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
Net increase (decrease) in cash and cash equivalents | | | 11,278 | | | (3,567 | ) | | (33 | ) | | — | | | 7,678 | |
Cash and cash equivalents at beginning of period | | | 149 | | | 3,567 | | | 649 | | | — | | | 4,365 | |
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Cash and cash equivalents at end of period | | $ | 11,427 | | $ | — | | $ | 616 | | $ | — | | $ | 12,043 | |
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(a) |
Elimination of equity in earnings of consolidated subsidiaries. |
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