Financial Information for the Company and Its Subsidiaries | 19. Financial Information for the Company and Its Subsidiaries The Company conducts substantially all of its business through its subsidiaries. The 6.125% Senior Notes, 5.125% Senior Notes, 5.625% Senior Notes and 6.500% 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, 2016 and December 31, 2015, and for the three and six months ended June 30, 2016 and 2015. 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, 2016 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 10,048 $ 20,668 $ — $ 30,716 Accounts receivable, net — 209,194 75,938 — 285,132 Other current assets — 59,452 20,862 (3,795 ) 76,519 Total current assets — 278,694 117,468 (3,795 ) 392,367 Property and equipment, net — 907,277 2,367,263 — 3,274,540 Goodwill — 1,939,361 892,840 — 2,832,201 Intangible assets, net — 56,574 28,422 — 84,996 Deferred tax assets – noncurrent 3,579 9,671 4,679 — 17,929 Derivative instruments 40,459 — — — 40,459 Investment in subsidiaries 5,210,634 — — (5,210,634 ) — Other assets 845,914 33,523 5,764 (843,194 ) 42,007 Total assets $ 6,100,586 $ 3,225,100 $ 3,416,436 $ (6,057,623 ) $ 6,684,499 Current liabilities: Current portion of long-term debt $ 73,175 $ — $ 235 $ — $ 73,410 Accounts payable — 68,294 39,917 — 108,211 Accrued salaries and benefits — 75,872 37,520 — 113,392 Other accrued liabilities 35,919 — 92,664 (3,795 ) 124,788 Total current liabilities 109,094 144,166 170,336 (3,795 ) 419,801 Long-term debt 3,555,212 — 866,365 (843,194 ) 3,578,383 Deferred tax liabilities – noncurrent — — 85,526 — 85,526 Other liabilities — 108,574 43,054 — 151,628 Total liabilities 3,664,306 252,740 1,165,281 (846,989 ) 4,235,338 Redeemable noncontrolling interests — — 12,881 — 12,881 Total equity 2,436,280 2,972,360 2,238,274 (5,210,634 ) 2,436,280 Total liabilities and equity $ 6,100,586 $ 3,225,100 $ 3,416,436 $ (6,057,623 ) $ 6,684,499 Acadia Healthcare Company, Inc. Condensed Consolidating Balance Sheets December 31, 2015 (In thousands) Parent Combined Combined Consolidating Total Current assets: Cash and cash equivalents $ — $ 1,987 $ 9,228 $ — $ 11,215 Accounts receivable, net — 187,546 29,080 — 216,626 Other current assets — 57,968 8,927 — 66,895 Total current assets — 247,501 47,235 — 294,736 Property and equipment, net — 805,439 903,614 — 1,709,053 Goodwill — 1,835,339 292,876 — 2,128,215 Intangible assets, net — 57,024 2,551 — 59,575 Deferred tax assets – noncurrent 3,946 40,587 4,581 — 49,114 Investment in subsidiaries 3,495,067 — — (3,495,067 ) — Other assets 427,270 32,947 2,322 (424,024 ) 38,515 Total assets $ 3,926,283 $ 3,018,837 $ 1,253,179 $ (3,919,091 ) $ 4,279,208 Current liabilities: Current portion of long-term debt $ 45,125 $ — $ 235 $ — $ 45,360 Accounts payable — 75,015 16,326 — 91,341 Accrued salaries and benefits — 66,249 14,447 — 80,696 Other accrued liabilities 26,132 10,886 35,788 — 72,806 Total current liabilities 71,257 152,150 66,796 — 290,203 Long-term debt 2,171,998 — 447,410 (424,024 ) 2,195,384 Deferred tax liabilities – noncurrent — — 23,936 — 23,936 Other liabilities — 75,159 3,443 — 78,602 Total liabilities 2,243,255 227,309 541,585 (424,024 ) 2,588,125 Redeemable noncontrolling interests — — 8,055 — 8,055 Total equity 1,683,028 2,791,528 703,539 (3,495,067 ) 1,683,028 Total liabilities and equity $ 3,926,283 $ 3,018,837 $ 1,253,179 $ (3,919,091 ) $ 4,279,208 Acadia Healthcare Company, Inc. Condensed Consolidating Statement of Comprehensive Income Three Months Ended June 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 422,232 $ 344,822 $ — $ 767,054 Provision for doubtful accounts — (9,593 ) (913 ) — (10,506 ) Revenue — 412,639 343,909 — 756,548 Salaries, wages and benefits 6,888 212,944 188,455 — 408,287 Professional fees — 23,150 27,142 — 50,292 Supplies — 19,527 11,682 — 31,209 Rents and leases — 8,521 11,946 — 20,467 Other operating expenses — 51,100 29,855 — 80,955 Depreciation and amortization — 14,216 22,536 — 36,752 Interest expense, net 10,631 22,043 16,084 — 48,758 Gain on foreign currency derivatives (98 ) — — — (98 ) Transaction-related expenses — 4,189 1,885 — 6,074 Total expenses 17,421 355,690 309,585 — 682,696 (Loss) income from continuing operations before income taxes (17,421 ) 56,949 34,324 — 73,852 Equity in earnings of subsidiaries 67,943 — — (67,943 ) — (Benefit from) provision for income taxes (5,069 ) 16,186 7,144 — 18,261 Income (loss) from continuing operations 55,591 40,763 27,180 (67,943 ) 55,591 Income from discontinued operations, net of income taxes — — — — — Net income (loss) 55,591 40,763 27,180 (67,943 ) 55,591 Net loss attributable to noncontrolling interests — — 854 — 854 Net income (loss) attributable to Acadia Healthcare Company, Inc. $ 55,591 $ 40,763 $ 28,034 $ (67,943 ) $ 56,445 Other comprehensive loss: Foreign currency translation loss — — (213,468 ) — (213,468 ) Gain on derivative instruments 23,919 — — — 23,919 Other comprehensive loss 23,919 — (213,468 ) — (189,549 ) Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc. $ 79,510 $ 40,763 $ (185,434 ) $ (67,943 ) $ (133,104 ) 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 Six Months Ended June 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Revenue before provision for doubtful accounts $ — $ 825,166 $ 569,071 $ — $ 1,394,237 Provision for doubtful accounts — (18,935 ) (1,941 ) — (20,876 ) Revenue — 806,231 567,130 — 1,373,361 Salaries, wages and benefits 13,844 423,977 311,494 — 749,315 Professional fees — 45,827 44,456 — 90,283 Supplies — 37,989 19,905 — 57,894 Rents and leases — 17,098 18,175 — 35,273 Other operating expenses — 99,949 51,253 — 151,202 Depreciation and amortization — 26,967 37,760 — 64,727 Interest expense, net 24,064 38,136 24,272 — 86,472 Gain on foreign currency derivatives (508 ) — — — (508 ) Transaction-related expenses — 25,624 6,748 — 32,372 Total expenses 37,400 715,567 514,063 — 1,267,030 (Loss) income from continuing operations before income taxes (37,400 ) 90,664 53,067 — 106,331 Equity in earnings of subsidiaries 108,812 — — (108,812 ) — (Benefit from) provision for income taxes (9,548 ) 23,593 11,326 — 25,371 Income (loss) from continuing operations 80,960 67,071 41,741 (108,812 ) 80,960 Income from discontinued operations, net of income taxes — — — — — Net income (loss) 80,960 67,071 41,741 (108,812 ) 80,960 Net loss attributable to noncontrolling interests — — 1,173 — 1,173 Net income (loss) attributable to Acadia Healthcare Company, Inc. $ 80,960 $ 67,071 $ 42,914 $ (108,812 ) $ 82,133 Other comprehensive loss: Foreign currency translation loss — — (261,883 ) — (261,883 ) Gain on derivative instruments 23,919 — — — 23,919 Other comprehensive loss 23,919 — (261,883 ) — (237,964 ) Comprehensive income (loss) attributable to Acadia Healthcare Company, Inc. $ 104,879 $ 67,071 $ (218,969 ) $ (108,812 ) $ (155,831 ) 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 Cash Flows Six Months Ended June 30, 2016 (In thousands) Parent Combined Combined Consolidating Total Operating activities: Net income (loss) $ 80,960 $ 67,071 $ 41,741 $ (108,812 ) $ 80,960 Adjustments to reconcile net income (loss) to net cash (used in) provided by continuing operating activities: Equity in earnings of subsidiaries (108,812 ) — — 108,812 — Depreciation and amortization — 26,967 37,760 — 64,727 Amortization of debt issuance costs 5,171 — (215 ) — 4,956 Equity-based compensation expense 13,844 — — — 13,844 Deferred income tax (benefit) expense — 18,420 (1,599 ) — 16,821 Loss from discontinued operations, net of taxes — — — — — Loss (gain) on foreign currency derivatives (508 ) — — — (508 ) Other — 720 (16 ) — 704 Change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable, net — (24,072 ) 5,090 — (18,982 ) Other current assets — (1,459 ) (5,797 ) — (7,256 ) Other assets (775 ) 1,327 255 755 1,582 Accounts payable and other accrued liabilities — 21,943 7,158 — 29,101 Accrued salaries and benefits — 9,230 (13,076 ) — (3,846 ) Other liabilities — 7,208 (3,480 ) — 3,728 Net cash (used in) provided by continuing operating activities (10,120 ) 127,355 67,821 775 185,831 Net cash used in discontinued operating activities — (2,973 ) — — (2,973 ) Net cash (used in) provided by operating activities (10,120 ) 124,382 67,821 775 182,858 Investing activities: Cash paid for acquisitions, net of cash acquired — (103,189 ) (580,096 ) — (683,285 ) Cash paid for capital expenditures — (99,157 ) (78,561 ) — (177,718 ) Cash paid for real estate acquisitions — (16,638 ) (11,801 ) — (28,439 ) Settlement of foreign currency derivatives — 508 — — 508 Other — (1,084 ) — — (1,084 ) Net cash used in investing activities — (219,560 ) (670,458 ) — (890,018 ) Financing activities: Borrowings on long-term debt 1,480,000 — — — 1,480,000 Borrowings on revolving credit facility 158,000 — — — 158,000 Principal payments on revolving credit facility (166,000 ) — — — (166,000 ) Principal payments on long-term debt (29,869 ) — (775 ) 775 (29,869 ) Repayment of assumed debt (1,348,389 ) — — — (1,348,389 ) Payment of debt issuance costs (35,511 ) — — — (35,511 ) Issuance of Common Stock 685,097 — — — 685,097 Common stock withheld for minimum statutory taxes, net (7,365 ) — — — (7,365 ) Excess tax benefit from equity awards — — — — — Other — (823 ) — — (823 ) Cash (used in) provided by intercompany activity (725,843 ) 104,062 623,331 (1,550 ) — Net cash provided by (used in) financing activities 10,120 103,239 622,556 (775 ) 735,140 Effect of exchange rate changes on cash — — (8,479 ) — (8,479 ) Net increase in cash and cash equivalents — 8,061 11,440 — 19,501 Cash and cash equivalents at beginning of the period — 1,987 9,228 — 11,215 Cash and cash equivalents at end of the period $ — $ 10,048 $ 20,668 $ — $ 30,716 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 |