CONDENSED CONSOLIDATING FINANCIAL INFORMATION | CONDENSED CONSOLIDATING FINANCIAL INFORMATION In July 2014 and June 2013, the Co-Issuers issued the Senior Notes. The Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by SMLP and the Guarantor Subsidiaries (see Note 9). The following supplemental condensed consolidating financial information reflects SMLP's separate accounts, the combined accounts of the Co-Issuers, the combined accounts of the Guarantor Subsidiaries, the combined accounts of the Non-Guarantor Subsidiaries and the consolidating adjustments for the dates and periods indicated. For purposes of the following consolidating information, each of SMLP and Co-Issuers account for their subsidiary investments, if any, under the equity method of accounting. Condensed Consolidating Balance Sheets. Balance sheets as of June 30, 2016 and December 31, 2015 follow. June 30, 2016 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 2,320 $ 638 $ 2,351 $ 1,434 $ — $ 6,743 Accounts receivable 55 — 40,698 7,552 — 48,305 Due from affiliate 11,660 140,443 300,806 — (452,909 ) — Other current assets 838 — 1,162 138 — 2,138 Total current assets 14,873 141,081 345,017 9,124 (452,909 ) 57,186 Property, plant and equipment, net 1,419 — 1,453,815 390,913 — 1,846,147 Intangible assets, net — — 417,381 24,580 — 441,961 Investment in equity method investees — — — 711,021 — 711,021 Goodwill — — 16,211 — — 16,211 Other noncurrent assets 2,402 6,186 160 — — 8,748 Investment in subsidiaries 2,070,570 3,253,326 — — (5,323,896 ) — Total assets $ 2,089,264 $ 3,400,593 $ 2,232,584 $ 1,135,638 $ (5,776,805 ) $ 3,081,274 Liabilities and Partners' Capital Trade accounts payable $ 334 $ — $ 8,530 $ 12,733 $ — $ 21,597 Due to affiliate 441,432 — — 11,660 (452,909 ) 183 Ad valorem taxes payable 20 — 6,965 673 — 7,658 Accrued interest — 17,483 — — — 17,483 Accrued environmental remediation — — — 8,026 — 8,026 Other current liabilities 4,573 — 7,836 1,372 — 13,781 Total current liabilities 446,359 17,483 23,331 34,464 (452,909 ) 68,728 Long-term debt — 1,312,539 — — — 1,312,539 Deferred purchase price obligation 532,355 — — — — 532,355 Deferred revenue — — 48,196 — — 48,196 Noncurrent accrued environmental remediation — — — 3,886 — 3,886 Other noncurrent liabilities 3,011 — 5,000 20 — 8,031 Total liabilities 981,725 1,330,022 76,527 38,370 (452,909 ) 1,973,735 Total partners' capital 1,107,539 2,070,571 2,156,057 1,097,268 (5,323,896 ) 1,107,539 Total liabilities and partners' capital $ 2,089,264 $ 3,400,593 $ 2,232,584 $ 1,135,638 $ (5,776,805 ) $ 3,081,274 December 31, 2015 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 73 $ 12,407 $ 6,930 $ 2,383 $ — $ 21,793 Accounts receivable — — 84,021 5,560 — 89,581 Due from affiliate 3,168 151,443 207,651 — (362,262 ) — Other current assets 540 — 2,672 361 — 3,573 Total current assets 3,781 163,850 301,274 8,304 (362,262 ) 114,947 Property, plant and equipment, net 1,178 — 1,462,623 348,982 — 1,812,783 Intangible assets, net — — 438,093 23,217 — 461,310 Investment in equity method investees — — — 751,168 — 751,168 Goodwill — — 16,211 — — 16,211 Other noncurrent assets 3,480 4,611 162 — — 8,253 Investment in subsidiaries 2,438,395 3,222,187 — — (5,660,582 ) — Total assets $ 2,446,834 $ 3,390,648 $ 2,218,363 $ 1,131,671 $ (6,022,844 ) $ 3,164,672 Liabilities and Partners' Capital Trade accounts payable $ 482 $ — $ 18,489 $ 21,837 $ — $ 40,808 Due to affiliate 360,243 — — 3,168 (362,262 ) 1,149 Deferred revenue — — 677 — — 677 Ad valorem taxes payable 9 — 9,881 381 — 10,271 Accrued interest — 17,483 — — — 17,483 Accrued environmental remediation — — — 7,900 — 7,900 Other current liabilities 4,558 — 7,405 1,334 — 13,297 Total current liabilities 365,292 17,483 36,452 34,620 (362,262 ) 91,585 Long-term debt 332,500 934,770 — — — 1,267,270 Deferred revenue — — 45,486 — — 45,486 Noncurrent accrued environmental remediation — — — 5,764 — 5,764 Other noncurrent liabilities 1,743 — 5,503 22 — 7,268 Total liabilities 699,535 952,253 87,441 40,406 (362,262 ) 1,417,373 Total partners' capital 1,747,299 2,438,395 2,130,922 1,091,265 (5,660,582 ) 1,747,299 Total liabilities and partners' capital $ 2,446,834 $ 3,390,648 $ 2,218,363 $ 1,131,671 $ (6,022,844 ) $ 3,164,672 Condensed Consolidating Statements of Operations. For the purposes of the following condensed consolidating statements of operations, we allocate general and administrative expenses recognized at the SMLP parent to the Guarantor Subsidiaries and Other Subsidiaries to reflect what those entities results would have been had they operated on a stand-alone basis. Statements of operations for the three and six months ended June 30, 2016 and 2015 follow. Three months ended June 30, 2016 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 62,677 $ 13,510 $ — $ 76,187 Natural gas, NGLs and condensate sales — — 8,581 — — 8,581 Other revenues — — 4,306 561 — 4,867 Total revenues — — 75,564 14,071 — 89,635 Costs and expenses: Cost of natural gas and NGLs — — 6,864 — — 6,864 Operation and maintenance — — 21,042 2,368 — 23,410 General and administrative — — 10,761 2,115 — 12,876 Transaction costs 122 — — — — 122 Depreciation and amortization 154 — 24,757 3,052 — 27,963 Loss on asset sales, net — — 74 — — 74 Long-lived asset impairment — — 40 529 — 569 Total costs and expenses 276 — 63,538 8,064 — 71,878 Other income 19 — — — — 19 Interest expense — (16,035 ) — — — (16,035 ) Deferred purchase price obligation expense (17,465 ) — — — — (17,465 ) (Loss) income before income taxes (17,722 ) (16,035 ) 12,026 6,007 — (15,724 ) Income tax expense (360 ) — — — — (360 ) Loss from equity method investees — — — (34,471 ) — (34,471 ) Equity in loss of consolidated subsidiaries (32,473 ) (16,438 ) — — 48,911 — Net (loss) income $ (50,555 ) $ (32,473 ) $ 12,026 $ (28,464 ) $ 48,911 $ (50,555 ) Three months ended June 30, 2015 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 64,420 $ 5,334 $ — $ 69,754 Natural gas, NGLs and condensate sales — — 11,967 — — 11,967 Other revenues — — 4,556 577 — 5,133 Total revenues — — 80,943 5,911 — 86,854 Costs and expenses: Cost of natural gas and NGLs — — 8,574 — — 8,574 Operation and maintenance — — 21,618 1,977 — 23,595 General and administrative — 9,739 1,893 — 11,632 Transaction costs 822 — — — — 822 Depreciation and amortization 184 — 23,795 2,040 — 26,019 Gain on asset sales, net — — (214 ) — — (214 ) Total costs and expenses 1,006 — 63,512 5,910 — 70,428 Other income — — — — — — Interest expense (3,516 ) (12,083 ) — — — (15,599 ) (Loss) income before income taxes (4,522 ) (12,083 ) 17,431 1 — 827 Income tax benefit 263 — — — — 263 Loss from equity method investees — — — (3,486 ) — (3,486 ) Equity in earnings of consolidated subsidiaries 1,863 13,946 — — (15,809 ) — Net (loss) income $ (2,396 ) $ 1,863 $ 17,431 $ (3,485 ) $ (15,809 ) $ (2,396 ) Six months ended June 30, 2016 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 127,445 $ 26,842 $ — $ 154,287 Natural gas, NGLs and condensate sales — — 16,169 — — 16,169 Other revenues — — 8,674 1,076 — 9,750 Total revenues — — 152,288 27,918 — 180,206 Costs and expenses: Cost of natural gas and NGLs — — 13,154 — — 13,154 Operation and maintenance — — 43,614 5,638 — 49,252 General and administrative — — 20,891 4,864 — 25,755 Transaction costs 1,296 — — — — 1,296 Depreciation and amortization 270 — 49,429 5,992 — 55,691 Loss on asset sales, net — — 11 — — 11 Long-lived asset impairment — — 41 528 — 569 Total costs and expenses 1,566 — 127,140 17,022 — 145,728 Other income 41 — — — — 41 Interest expense (1,441 ) (30,476 ) — — — (31,917 ) Deferred purchase price obligation expense (24,928 ) — — — — (24,928 ) (Loss) income before income taxes (27,894 ) (30,476 ) 25,148 10,896 — (22,326 ) Income tax expense (283 ) — — — — (283 ) Loss from equity method investees — — — (31,611 ) — (31,611 ) Equity in (loss) earnings of consolidated subsidiaries (26,043 ) 4,433 — — 21,610 — Net (loss) income $ (54,220 ) $ (26,043 ) $ 25,148 $ (20,715 ) $ 21,610 $ (54,220 ) Six months ended June 30, 2015 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 128,605 $ 9,589 $ — $ 138,194 Natural gas, NGLs and condensate sales — — 24,580 — — 24,580 Other revenues — — 8,975 1,192 — 10,167 Total revenues — — 162,160 10,781 — 172,941 Costs and expenses: Cost of natural gas and NGLs — — 18,015 — — 18,015 Operation and maintenance — — 42,673 3,712 — 46,385 General and administrative — — 19,765 3,466 — 23,231 Transaction costs 932 — — — — 932 Depreciation and amortization 350 — 47,384 3,815 — 51,549 Gain on asset sales, net — — (214 ) — — (214 ) Total costs and expenses 1,282 — 127,623 10,993 — 139,898 Other income — — 1 — — 1 Interest expense (6,302 ) (24,201 ) — — — (30,503 ) (Loss) income before income taxes (7,584 ) (24,201 ) 34,538 (212 ) — 2,541 Income tax expense (167 ) — — — — (167 ) Loss from equity method investees — — — (7,254 ) — (7,254 ) Equity in earnings of consolidated subsidiaries 2,871 27,072 — — (29,943 ) — Net (loss) income $ (4,880 ) $ 2,871 $ 34,538 $ (7,466 ) $ (29,943 ) $ (4,880 ) Condensed Consolidating Statements of Cash Flows. Statements of cash flows for the six months ended June 30, 2016 and 2015 follow. Six months ended June 30, 2016 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 750 $ (28,517 ) $ 119,435 $ 39,832 $ — $ 131,500 Cash flows from investing activities: Capital expenditures (512 ) — (30,745 ) (60,115 ) — (91,372 ) Contributions to equity method investees — — — (15,645 ) — (15,645 ) Acquisitions of gathering systems from affiliate, net of acquired cash (359,431 ) — — — — (359,431 ) Advances to affiliates (8,978 ) (357,486 ) (93,269 ) — 459,733 — Other, net (435 ) — — — — (435 ) Net cash used in investing activities (369,356 ) (357,486 ) (124,014 ) (75,760 ) 459,733 (466,883 ) Cash flows from financing activities: Distributions to unitholders (82,020 ) — — — — (82,020 ) Borrowings under revolving credit facility 12,000 427,300 — — — 439,300 Repayments under revolving credit facility — (50,300 ) — — — (50,300 ) Deferred loan costs — (2,766 ) — — — (2,766 ) Cash advance from Summit Investments to contributed subsidiaries, net (12,000 ) — — 24,214 — 12,214 Expenses paid by Summit Investments on behalf of contributed subsidiaries 3,030 — — 1,791 — 4,821 Other, net (912 ) — — (4 ) — (916 ) Advances from affiliates 450,755 — — 8,978 (459,733 ) — Net cash provided by financing activities 370,853 374,234 — 34,979 (459,733 ) 320,333 Net change in cash and cash equivalents 2,247 (11,769 ) (4,579 ) (949 ) — (15,050 ) Cash and cash equivalents, beginning of period 73 12,407 6,930 2,383 — 21,793 Cash and cash equivalents, end of period $ 2,320 $ 638 $ 2,351 $ 1,434 $ — $ 6,743 Six months ended June 30, 2015 SMLP Co-Issuers Guarantor subsidiaries Non-guarantor subsidiaries Consolidating adjustments Total (In thousands) Cash flows from operating activities: Net cash provided by (used in) operating activities $ 4,476 $ (23,986 ) $ 115,962 $ 8,544 $ — $ 104,996 Cash flows from investing activities: Capital expenditures (393 ) — (60,562 ) (70,562 ) — (131,517 ) Contributions to equity method investees — — — (64,396 ) — (64,396 ) Acquisitions of gathering systems from affiliate, net of acquired cash (292,941 ) — — — — (292,941 ) Advances to affiliates (1,012 ) (58,425 ) (78,159 ) — 137,596 — Other, net — — 238 — — 238 Net cash used in investing activities (294,346 ) (58,425 ) (138,483 ) (134,958 ) 137,596 (488,616 ) Cash flows from financing activities: Distributions to unitholders (70,619 ) — — — — (70,619 ) Borrowings under revolving credit facility 135,000 122,000 — — — 257,000 Repayments under revolving credit facility (100,000 ) (51,000 ) — — — (151,000 ) Repayments under term loan (177,500 ) — — — — (177,500 ) Deferred loan costs (50 ) (86 ) — — — (136 ) Proceeds from issuance of common units, net 222,119 — — — — 222,119 Contribution from general partner 4,737 — — — — 4,737 Cash advance from Summit Investments to contributed subsidiaries, net 142,500 — 21,719 122,580 — 286,799 Expenses paid by Summit Investments on behalf of contributed subsidiaries 7,354 — 3,447 2,551 — 13,352 Other, net (936 ) — — — — (936 ) Advances from affiliates 136,584 — — 1,012 (137,596 ) — Net cash provided by financing activities 299,189 70,914 25,166 126,143 (137,596 ) 383,816 Net change in cash and cash equivalents 9,319 (11,497 ) 2,645 (271 ) — 196 Cash and cash equivalents, beginning of period 7,531 11,621 7,353 1,306 — 27,811 Cash and cash equivalents, end of period $ 16,850 $ 124 $ 9,998 $ 1,035 $ — $ 28,007 |