Financial Information for the Company and Its Subsidiaries | 16. Financial Information for the Company and Its Subsidiaries The Company conducts substantially all of its business through its subsidiaries. The 12.875% Senior Notes, 6.125% Senior Notes, 5.125% Senior Notes and 5.625% Senior Notes are jointly and severally guaranteed on an unsecured senior basis by all of the Company’s subsidiaries that guarantee the Company’s obligations under the Amended and Restated Senior Credit Facility. Presented below is condensed consolidating financial information for the Company and its subsidiaries as of June 30, 2015 and December 31, 2014, and for the three and six months ended June 30, 2015 and 2014. The information segregates the parent company (Acadia Healthcare Company, Inc.), the combined wholly-owned subsidiary guarantors, the combined non-guarantor subsidiaries and eliminations. Acadia Healthcare Company, Inc. Condensed Consolidating Balance Sheets June 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 17,179 $ 17,393 $ — $ 34,572 Accounts receivable, net — 160,179 22,136 — 182,315 Deferred tax assets — 36,502 2,191 — 38,693 Other current assets — 62,295 8,030 — 70,325 Total current assets — 276,155 49,750 — 325,905 Property and equipment, net — 656,262 799,128 — 1,455,390 Goodwill — 1,700,705 245,323 — 1,946,028 Intangible assets, net — 55,928 2,586 — 58,514 Deferred tax assets – noncurrent 5,361 16,239 12,366 — 33,966 Investment in subsidiaries 1,332,308 — — (1,332,308 ) — Other assets 389,676 65,957 2,322 (351,373 ) 106,582 Total assets $ 1,727,345 $ 2,771,246 $ 1,111,475 $ (1,683,681 ) $ 3,926,385 Current liabilities: Current portion of long-term debt $ 38,437 $ — $ 215 $ — $ 38,652 Accounts payable — 44,985 13,729 — 58,714 Accrued salaries and benefits — 65,040 12,505 — 77,545 Other accrued liabilities 22,604 27,543 18,050 — 68,197 Total current liabilities 61,041 137,568 44,499 — 243,108 Long-term debt — 1,890,716 375,212 (351,373 ) 1,914,555 Deferred tax liabilities – noncurrent — — 20,200 — 20,200 Other liabilities — 72,329 9,889 — 82,218 Total liabilities 61,041 2,100,613 449,800 (351,373 ) 2,260,081 Total equity 1,666,304 670,633 661,675 (1,332,308 ) 1,666,304 Total liabilities and equity $ 1,727,345 $ 2,771,246 $ 1,111,475 $ (1,683,681 ) $ 3,926,385 Acadia Healthcare Company, Inc. Condensed Consolidating Balance Sheets December 31, 2014 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 76,685 $ 17,355 $ — $ 94,040 Accounts receivable, net — 100,797 17,581 — 118,378 Deferred tax assets — 18,395 1,760 — 20,155 Other current assets — 36,049 5,521 — 41,570 Total current assets — 231,926 42,217 — 274,143 Property and equipment, net — 451,943 617,757 — 1,069,700 Goodwill — 596,611 206,375 — 802,986 Intangible assets, net — 19,057 2,579 — 21,636 Deferred tax assets – noncurrent 4,563 — 14,244 (5,666 ) 13,141 Investment in subsidiaries 1,759,337 — — (1,759,337 ) — Other assets 202,708 18,727 2,323 (181,774 ) 41,984 Total assets $ 1,966,608 $ 1,318,264 $ 885,495 $ (1,946,777 ) $ 2,223,590 Current liabilities: Current portion of long-term debt $ 26,750 $ — $ 215 $ — $ 26,965 Accounts payable — 39,486 9,210 — 48,696 Accrued salaries and benefits — 47,597 11,720 — 59,317 Other accrued liabilities 13,647 7,688 9,621 — 30,956 Total current liabilities 40,397 94,771 30,766 — 165,934 Long-term debt 1,045,246 — 205,833 (181,774 ) 1,069,305 Deferred tax liabilities – noncurrent — 21,027 48,519 (5,666 ) 63,880 Other liabilities — 33,321 10,185 — 43,506 Total liabilities 1,085,643 149,119 295,303 (187,440 ) 1,342,625 Total equity 880,965 1,169,145 590,192 (1,759,337 ) 880,965 Total liabilities and equity $ 1,966,608 $ 1,318,264 $ 885,495 $ (1,946,777 ) $ 2,223,590 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income Three Months Ended June 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 363,851 $ 97,947 $ — $ 461,798 Provision for doubtful accounts — (7,566 ) (572 ) — (8,138 ) Revenue — 356,285 97,375 — 453,660 Salaries, wages and benefits 5,355 183,490 54,457 — 243,302 Professional fees — 22,579 7,450 — 30,029 Supplies — 16,929 3,613 — 20,542 Rents and leases — 7,402 809 — 8,211 Other operating expenses — 43,145 7,983 — 51,128 Depreciation and amortization — 10,551 4,375 — 14,926 Interest expense, net 18,106 5,882 4,061 — 28,049 Loss on foreign currency derivatives 961 — — — 961 Transaction-related expenses — 2,946 4,211 — 7,157 Total expenses 24,422 292,924 86,959 — 404,305 (Loss) income from continuing operations before income taxes (24,422 ) 63,361 10,416 — 49,355 Equity in earnings of subsidiaries 50,281 — — (50,281 ) — (Benefit from) provision for income taxes (7,985 ) 20,734 2,763 — 15,512 Income (loss) from continuing operations 33,844 42,627 7,653 (50,281 ) 33,843 Income from discontinued operations, net of income taxes — 1 — — 1 Net income (loss) $ 33,844 $ 42,628 $ 7,653 $ (50,281 ) $ 33,844 Other comprehensive income: Foreign currency translation gain — — 46,173 — 46,173 Other comprehensive income — — 46,173 — 46,173 Comprehensive income (loss) $ 33,844 $ 42,628 $ 53,826 $ (50,281 ) $ 80,017 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income Three Months Ended June 30, 2014 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 207,143 $ 13,521 $ — $ 220,664 Provision for doubtful accounts — (5,954 ) (907 ) — (6,861 ) Revenue — 201,189 12,614 — 213,803 Salaries, wages and benefits 2,406 114,976 5,091 — 122,473 Professional fees — 9,691 1,200 — 10,891 Supplies — 9,967 629 — 10,596 Rents and leases — 2,613 276 — 2,889 Other operating expenses — 22,522 2,124 — 24,646 Depreciation and amortization — 5,581 354 — 5,935 Interest expense, net 9,202 — 528 — 9,730 Loss (gain) on foreign currency derivatives (13,735 ) — — — (13,735 ) Transaction-related expenses — 3,016 — — 3,016 Total expenses (2,127 ) 168,366 10,202 — 176,441 Income from continuing operations before income taxes 2,127 32,823 2,412 — 37,362 Equity in earnings of subsidiaries 20,972 — — (20,972 ) — Provision for income taxes 648 13,315 942 — 14,905 Income (loss) from continuing operations 22,451 19,508 1,470 (20,972 ) 22,457 Loss from discontinued operations, net of income taxes — (6 ) — — (6 ) Net income (loss) $ 22,451 $ 19,502 $ 1,470 $ (20,972 ) $ 22,451 Comprehensive income (loss) $ 22,451 $ 19,502 $ 1,470 $ (20,972 ) $ 22,451 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income Six Months Ended June 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 651,616 $ 184,340 $ — $ 835,956 Provision for doubtful accounts — (14,985 ) (1,528 ) — (16,513 ) Revenue — 636,631 182,812 — 819,443 Salaries, wages and benefits 9,249 339,189 100,735 — 449,173 Professional fees — 39,064 13,392 — 52,456 Supplies — 29,938 6,858 — 36,796 Rents and leases — 12,519 1,578 — 14,097 Other operating expenses — 75,392 16,263 — 91,655 Depreciation and amortization — 19,262 8,768 — 28,030 Interest expense, net 31,054 11,603 7,538 — 50,195 Loss on foreign currency derivatives 908 — — — 908 Transaction-related expenses — 21,362 4,211 — 25,573 Total expenses 41,211 548,329 159,343 — 748,883 (Loss) income from continuing operations before income taxes (41,211 ) 88,302 23,469 — 70,560 Equity in earnings of subsidiaries 76,268 — — (76,268 ) — (Benefit from) provision for income taxes (13,381 ) 29,251 6,255 — 22,125 Income (loss) from continuing operations 48,438 59,051 17,214 (76,268 ) 48,435 Income from discontinued operations, net of income taxes — 3 — — 3 Net income (loss) $ 48,438 $ 59,054 $ 17,214 $ (76,268 ) $ 48,438 Other comprehensive income: Foreign currency translation gain — — 16,784 — 16,784 Other comprehensive income — — 16,784 — 16,784 Comprehensive income (loss) $ 48,438 $ 59,054 $ 33,998 $ (76,268 ) $ 65,222 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income Six Months Ended June 30, 2014 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 400,425 $ 26,358 $ — $ 426,783 Provision for doubtful accounts — (10,464 ) (1,098 ) — (11,562 ) Revenue — 389,961 25,260 — 415,221 Salaries, wages and benefits 4,170 225,629 10,249 — 240,048 Professional fees — 18,944 2,329 — 21,273 Supplies — 19,353 1,307 — 20,660 Rents and leases — 5,108 550 — 5,658 Other operating expenses — 43,600 4,156 — 47,756 Depreciation and amortization — 10,666 705 — 11,371 Interest expense, net 18,313 — 1,124 — 19,437 Loss (gain) on foreign currency derivatives (13,735 ) — — — (13,735 ) Transaction-related expenses — 4,595 — — 4,595 Total expenses 8,748 327,895 20,420 — 357,063 (Loss) income from continuing operations before income taxes (8,748 ) 62,066 4,840 — 58,158 Equity in earnings of subsidiaries 40,839 — — (40,839 ) — (Benefit from) provision for income taxes (3,418 ) 24,249 1,849 — 22,680 Income (loss) from continuing operations 35,509 37,817 2,991 (40,839 ) 35,478 Income from discontinued operations, net of income taxes — 31 — — 31 Net income (loss) $ 35,509 $ 37,848 $ 2,991 $ (40,839 ) $ 35,509 Comprehensive income (loss) $ 35,509 $ 37,848 $ 2,991 $ (40,839 ) $ 35,509 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2015 (In thousands) Parent Combined Combined Consolidating Total Operating activities: Net income (loss) $ 48,438 $ 59,054 $ 17,214 $ (76,268 ) $ 48,438 Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities: Equity in earnings of subsidiaries (76,268 ) — — 76,268 — Depreciation and amortization — 19,262 8,768 — 28,030 Amortization of debt issuance costs — 3,438 (220 ) — 3,218 Equity-based compensation expense 9,249 — — — 9,249 Deferred income tax (benefit) expense (798 ) 22,964 2,516 — 24,682 Loss from discontinued operations, net of taxes — (3 ) — — (3 ) Loss (gain) on foreign currency derivatives 908 — — — 908 Other — 662 30 — 692 Change in operating assets and liabilities, net of effect of acquisitions: — Accounts receivable, net — (11,409 ) 967 — (10,442 ) Other current assets — (12,026 ) (1,022 ) — (13,048 ) Other assets (300 ) (1,220 ) 2 300 (1,218 ) Accounts payable and other accrued liabilities — 5,991 (10,304 ) — (4,313 ) Accrued salaries and benefits — 791 (1,016 ) — (225 ) Other liabilities — 5,442 (823 ) — 4,619 Net cash (used in) provided by continuing operating activities (18,771 ) 92,946 16,112 300 90,587 Net cash provided by discontinued operating activities — 554 — — 554 Net cash (used in) provided by operating activities (18,771 ) 93,500 16,112 300 91,141 Investing activities: — Cash paid for acquisitions, net of cash acquired — (89,041 ) (197,693 ) — (286,734 ) Cash paid for capital expenditures — (62,101 ) (59,934 ) — (122,035 ) Cash paid for real estate acquisitions — (3,428 ) — — (3,428 ) Settlement of foreign currency derivatives — (908 ) — — (908 ) Other — (481 ) — — (481 ) Net cash used in investing activities — (155,959 ) (257,627 ) — (413,586 ) Financing activities: — Borrowings on long-term debt 875,000 — — — 875,000 Borrowings on revolving credit facility 180,000 — — — 180,000 Principal payments on revolving credit facility (180,000 ) — — — (180,000 ) Repayment of assumed CRC debt (904,467 ) — — — (904,467 ) Principal payments on long-term debt (15,875 ) — (300 ) 300 (15,875 ) Payment of debt issuance costs — (22,775 ) — — (22,775 ) Issuance of Common Stock — 331,530 — — 331,530 Common stock withheld for minimum statutory taxes, net — (7,826 ) — — (7,826 ) Excess tax benefit from equity awards — 6,327 — — 6,327 Other — (150 ) — — (150 ) Cash provided by (used in) intercompany activity 64,113 (305,366 ) 241,853 (600 ) — Net cash provided by (used in) financing activities 18,771 1,740 241,553 (300 ) 261,764 Effect of exchange rate changes on cash — 1,213 — — 1,213 Net (decrease) increase in cash and cash equivalents — (59,506 ) 38 — (59,468 ) Cash and cash equivalents at beginning of the period — 76,685 17,355 — 94,040 Cash and cash equivalents at end of the period $ — $ 17,179 $ 17,393 $ — $ 34,572 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Cash Flows Six Months Ended June 30, 2014 (In thousands) Parent Combined Combined Consolidating Total Operating activities: Net income (loss) $ 35,509 $ 37,848 $ 2,991 $ (40,839 ) $ 35,509 Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities: Equity in earnings of subsidiaries (40,839 ) — — 40,839 — Depreciation and amortization — 10,666 705 — 11,371 Amortization of debt issuance costs 1,560 — (226 ) — 1,334 Equity-based compensation expense 4,170 — — — 4,170 Deferred income tax expense 5,585 3,105 407 — 9,097 Income from discontinued operations, net of taxes — (31 ) — — (31 ) Gain on foreign currency derivatives (13,735 ) — — — (13,735 ) Other — 25 — — 25 Change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net — (16,670 ) 1,367 — (15,303 ) Other current assets — (5,033 ) 241 — (4,792 ) Other assets 165 (578 ) — (165 ) (578 ) Accounts payable and other accrued liabilities — (1,584 ) 284 — (1,300 ) Accrued salaries and benefits — 1,701 81 — 1,782 Other liabilities — 1,701 — — 1,701 Net cash (used in) provided by continuing operating activities (7,585 ) 31,150 5,850 (165 ) 29,250 Net cash used in discontinued operating activities — (11 ) — — (11 ) Net cash (used in) provided by operating activities (7,585 ) 31,139 5,850 (165 ) 29,239 Investing activities: Cash paid for acquisitions, net of cash acquired — (10,000 ) — — (10,000 ) Cash paid for capital expenditures — (39,782 ) (3,541 ) — (43,323 ) Cash paid for real estate acquisitions — (18,326 ) — — (18,326 ) Other — (439 ) — — (439 ) Net cash used in investing activities — (68,547 ) (3,541 ) — (72,088 ) Financing activities: Borrowings on long-term debt 7,500 — — — 7,500 Borrowings on revolving credit facility 59,500 — — — 59,500 Principal payments on revolving credit facility (113,000 ) — — — (113,000 ) Principal payments on long-term debt (3,750 ) — (165 ) 165 (3,750 ) Payment of debt issuance costs (5,810 ) — — — (5,810 ) Issuance of common stock, net 374,336 — — — 374,336 Common stock withheld for minimum statutory taxes, net (2,981 ) — — — (2,981 ) Excess tax benefit from equity awards 3,479 — — — 3,479 Cash paid for contingent consideration — (3,250 ) — — (3,250 ) Cash (used in) provided by intercompany activity (311,689 ) 315,175 (5,411 ) 1,925 — Net cash provided by (used in) financing activities 7,585 311,925 (5,576 ) 2,090 316,024 Net increase (decrease) in cash and cash equivalents — 274,517 (3,267 ) 1,925 273,175 Cash and cash equivalents at beginning of the period — — 6,494 (1,925 ) 4,569 Cash and cash equivalents at end of the period $ — $ 274,517 $ 3,227 $ — $ 277,744 |