CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 17. CONDENSED CONSOLIDATING FINANCIAL INFORMATION 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 the Co-Issuers account for their subsidiary investments, if any, under the equity method of accounting; and • the balances and results of operations associated with the assets, liabilities and expenses that were carved out of Summit Investments and allocated to SMLP in connection with the 2016 Drop Down have been attributed to SMLP during the common control period. Condensed Consolidating Balance Sheets. Balance sheets as of September 30, 2017 and December 31, 2016 follow. September 30, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 492 $ 51 $ 1,528 $ 840 $ — $ 2,911 Accounts receivable 22 — 52,118 9,127 — 61,267 Other current assets 849 — 3,129 807 — 4,785 Due from affiliate — 16,354 488,170 3,392 (507,916 ) — Total current assets 1,363 16,405 544,945 14,166 (507,916 ) 68,963 Property, plant and equipment, net 4,424 — 1,459,053 421,092 — 1,884,569 Intangible assets, net — — 366,967 25,068 — 392,035 Goodwill — — 16,211 — — 16,211 Investment in equity method investees — — — 696,590 — 696,590 Other noncurrent assets 2,588 11,045 120 — — 13,753 Investment in subsidiaries 2,183,363 3,471,883 — — (5,655,246 ) — Total assets $ 2,191,738 $ 3,499,333 $ 2,387,296 $ 1,156,916 $ (6,163,162 ) $ 3,072,121 Liabilities and Partners' Capital Trade accounts payable $ 3,435 $ — $ 12,525 $ 6,716 $ — $ 22,676 Accrued expenses 1,385 — 11,302 1,428 — 14,115 Due to affiliate 508,430 — — — (507,916 ) 514 Deferred revenue — — 2,373 — — 2,373 Ad valorem taxes payable — — 7,687 431 — 8,118 Accrued interest — 20,183 — — — 20,183 Accrued environmental remediation — — — 5,089 — 5,089 Other current liabilities 4,779 — 3,582 602 — 8,963 Total current liabilities 518,029 20,183 37,469 14,266 (507,916 ) 82,031 Long-term debt — 1,295,787 — — — 1,295,787 Deferred Purchase Price Obligation 508,607 — — — — 508,607 Deferred revenue — — 15,421 — — 15,421 Noncurrent accrued environmental remediation — — — 1,429 — 1,429 Other noncurrent liabilities 3,794 — 3,561 183 — 7,538 Total liabilities 1,030,430 1,315,970 56,451 15,878 (507,916 ) 1,910,813 Total partners' capital 1,161,308 2,183,363 2,330,845 1,141,038 (5,655,246 ) 1,161,308 Total liabilities and partners' capital $ 2,191,738 $ 3,499,333 $ 2,387,296 $ 1,156,916 $ (6,163,162 ) $ 3,072,121 December 31, 2016 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 698 $ 51 $ 5,647 $ 1,032 $ — $ 7,428 Accounts receivable 53 — 89,584 7,727 — 97,364 Other current assets 1,526 — 2,328 455 — 4,309 Due from affiliate 14,896 38,013 369,995 — (422,904 ) — Total current assets 17,173 38,064 467,554 9,214 (422,904 ) 109,101 Property, plant and equipment, net 2,266 — 1,440,180 411,225 — 1,853,671 Intangible assets, net — — 396,930 24,522 — 421,452 Goodwill — — 16,211 — — 16,211 Investment in equity method investees — — — 707,415 — 707,415 Other noncurrent assets 1,993 5,198 138 — — 7,329 Investment in subsidiaries 2,132,757 3,347,393 — — (5,480,150 ) — Total assets $ 2,154,189 $ 3,390,655 $ 2,321,013 $ 1,152,376 $ (5,903,054 ) $ 3,115,179 Liabilities and Partners' Capital Trade accounts payable $ 978 $ — $ 9,901 $ 5,372 $ — $ 16,251 Accrued expenses 2,399 114 6,069 2,807 — 11,389 Due to affiliate 408,266 — — 14,896 (422,904 ) 258 Ad valorem taxes payable 16 — 9,717 855 — 10,588 Accrued interest — 17,483 — — — 17,483 Accrued environmental remediation — — — 4,301 — 4,301 Other current liabilities 6,718 — 3,798 955 — 11,471 Total current liabilities 418,377 17,597 29,485 29,186 (422,904 ) 71,741 Long-term debt — 1,240,301 — — — 1,240,301 Deferred Purchase Price Obligation 563,281 — — — — 563,281 Deferred revenue — — 57,465 — — 57,465 Noncurrent accrued environmental remediation — — — 5,152 — 5,152 Other noncurrent liabilities 2,858 — 4,602 106 — 7,566 Total liabilities 984,516 1,257,898 91,552 34,444 (422,904 ) 1,945,506 Total partners' capital 1,169,673 2,132,757 2,229,461 1,117,932 (5,480,150 ) 1,169,673 Total liabilities and partners' capital $ 2,154,189 $ 3,390,655 $ 2,321,013 $ 1,152,376 $ (5,903,054 ) $ 3,115,179 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 Non-Guarantor 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 nine months ended September 30, 2017 and 2016 follow. Three months ended September 30, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 79,546 $ 16,524 $ — $ 96,070 Natural gas, NGLs and condensate sales — — 22,828 112 — 22,940 Other revenues — — 5,202 733 — 5,935 Total revenues — — 107,576 17,369 — 124,945 Costs and expenses: Cost of natural gas and NGLs — — 18,115 62 — 18,177 Operation and maintenance — — 19,044 3,259 — 22,303 General and administrative — — 11,555 1,734 — 13,289 Depreciation and amortization 352 — 24,596 3,979 — 28,927 (Gain) loss on asset sales, net — — (82 ) 542 — 460 Long-lived asset impairment — — 696 594 — 1,290 Total costs and expenses 352 — 73,924 10,170 — 84,446 Other income 79 — — — — 79 Interest expense — (17,614 ) — — — (17,614 ) Deferred Purchase Price Obligation 70,499 — — — — 70,499 Income (loss) before income taxes and income from equity method investees 70,226 (17,614 ) 33,652 7,199 — 93,463 Income tax expense (176 ) — — — — (176 ) Income from equity method investees — — — 350 — 350 Equity in earnings of consolidated subsidiaries 23,587 41,201 — — (64,788 ) — Net income $ 93,637 $ 23,587 $ 33,652 $ 7,549 $ (64,788 ) $ 93,637 Three months ended September 30, 2016 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 64,065 $ 16,231 $ — $ 80,296 Natural gas, NGLs and condensate sales — — 9,578 — — 9,578 Other revenues — — 4,612 587 — 5,199 Total revenues — — 78,255 16,818 — 95,073 Costs and expenses: Cost of natural gas and NGLs — — 6,986 — — 6,986 Operation and maintenance — — 20,800 2,259 — 23,059 General and administrative — — 10,183 2,185 — 12,368 Depreciation and amortization 154 — 24,765 3,060 — 27,979 Loss on asset sales, net — — 13 — — 13 Long-lived asset impairment — — 1,172 — — 1,172 Total costs and expenses 154 — 63,919 7,504 — 71,577 Other income 51 — — — — 51 Interest expense — (15,733 ) — — — (15,733 ) Deferred Purchase Price Obligation (6,188 ) — — — — (6,188 ) (Loss) income before income taxes and income from equity method investees (6,291 ) (15,733 ) 14,336 9,314 — 1,626 Income tax benefit 142 — — — — 142 Income from equity method investees — — — 270 — 270 Equity in earnings of consolidated subsidiaries 8,187 23,920 — — (32,107 ) — Net income $ 2,038 $ 8,187 $ 14,336 $ 9,584 $ (32,107 ) $ 2,038 Nine months ended September 30, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 245,882 $ 53,002 $ — $ 298,884 Natural gas, NGLs and condensate sales — — 44,355 300 — 44,655 Other revenues — — 17,043 1,960 — 19,003 Total revenues — — 307,280 55,262 — 362,542 Costs and expenses: Cost of natural gas and NGLs — — 36,243 85 — 36,328 Operation and maintenance — — 60,812 9,199 — 70,011 General and administrative — — 34,317 6,053 — 40,370 Depreciation and amortization 660 — 73,817 11,707 — 86,184 Transaction costs 119 — — — — 119 Gain (loss) on asset sales, net — — (14 ) 544 — 530 Long-lived asset impairment — — 698 879 — 1,577 Total costs and expenses 779 — 205,873 28,467 — 235,119 Other income 214 — — — — 214 Interest expense — (51,883 ) — — — (51,883 ) Early extinguishment of debt — (22,020 ) — — — (22,020 ) Deferred Purchase Price Obligation 54,674 — — — — 54,674 Income (loss) before income taxes and loss from equity method investees 54,109 (73,903 ) 101,407 26,795 — 108,408 Income tax expense (417 ) — — — — (417 ) Loss from equity method investees — — — (3,691 ) — (3,691 ) Equity in earnings of consolidated subsidiaries 50,608 124,511 — — (175,119 ) — Net income $ 104,300 $ 50,608 $ 101,407 $ 23,104 $ (175,119 ) $ 104,300 Nine months ended September 30, 2016 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 191,510 $ 43,073 $ — $ 234,583 Natural gas, NGLs and condensate sales — — 25,747 — — 25,747 Other revenues — — 13,286 1,663 — 14,949 Total revenues — — 230,543 44,736 — 275,279 Costs and expenses: Cost of natural gas and NGLs — — 20,140 — — 20,140 Operation and maintenance — — 64,413 7,898 — 72,311 General and administrative — — 31,072 7,051 — 38,123 Depreciation and amortization 424 — 74,194 9,052 — 83,670 Transaction costs 1,296 — — — — 1,296 Loss on asset sales, net — — 24 — — 24 Long-lived asset impairment — — 1,212 529 — 1,741 Total costs and expenses 1,720 — 191,055 24,530 — 217,305 Other income 92 — — — — 92 Interest expense (1,441 ) (46,209 ) — — — (47,650 ) Deferred Purchase Price Obligation (31,116 ) — — — — (31,116 ) (Loss) income before income taxes and loss from equity method investees (34,185 ) (46,209 ) 39,488 20,206 — (20,700 ) Income tax expense (141 ) — — — — (141 ) Loss from equity method investees — — — (31,341 ) — (31,341 ) Equity in (loss) earnings of consolidated subsidiaries (17,856 ) 28,353 — — (10,497 ) — Net (loss) income $ (52,182 ) $ (17,856 ) $ 39,488 $ (11,135 ) $ (10,497 ) $ (52,182 ) Condensed Consolidating Statements of Cash Flows. Statements of cash flows for the nine months ended September 30, 2017 and 2016 follow. Nine months ended September 30, 2017 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 $ 5,707 $ (45,854 ) $ 174,335 $ 62,309 $ — $ 196,497 Cash flows from investing activities: Capital expenditures (995 ) — (60,279 ) (24,932 ) — (86,206 ) Proceeds from asset sales — — — 2,300 — 2,300 Contributions to equity method investees — — — (21,581 ) — (21,581 ) Other, net (579 ) — — — — (579 ) Advances to affiliates 14,896 21,658 (118,175 ) (3,392 ) 85,013 — Net cash provided by (used in) investing activities 13,322 21,658 (178,454 ) (47,605 ) 85,013 (106,066 ) Cash flows from financing activities: Distributions to unitholders (134,066 ) — — — — (134,066 ) Borrowings under Revolving Credit Facility — 177,500 — — — 177,500 Repayments under Revolving Credit Facility — (319,500 ) — — — (319,500 ) Debt issuance costs — (15,891 ) — — — (15,891 ) Payment of redemption and call premiums on senior notes — (17,913 ) — — — (17,913 ) Proceeds from ATM Program issuances, net of costs 17,251 — — — — 17,251 Contribution from General Partner 465 — — — — 465 Issuance of senior notes — 500,000 — — — 500,000 Tender and redemption of senior notes — (300,000 ) — — — (300,000 ) Other, net (2,794 ) — — — — (2,794 ) Advances from affiliates 99,909 — — (14,896 ) (85,013 ) — Net cash (used in) provided by financing activities (19,235 ) 24,196 — (14,896 ) (85,013 ) (94,948 ) Net change in cash and cash equivalents (206 ) — (4,119 ) (192 ) — (4,517 ) Cash and cash equivalents, beginning of period 698 51 5,647 1,032 — 7,428 Cash and cash equivalents, end of period $ 492 $ 51 $ 1,528 $ 840 $ — $ 2,911 Nine months ended September 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 $ 3,740 $ (52,916 ) $ 159,650 $ 58,231 $ — $ 168,705 Cash flows from investing activities: Capital expenditures (904 ) — (39,630 ) (82,201 ) — (122,735 ) Contributions to equity method investees — — — (20,157 ) — (20,157 ) Acquisitions of gathering systems from affiliate (359,431 ) — — — — (359,431 ) Other, net (373 ) — — — — (373 ) Advances to affiliates (16,822 ) (245,093 ) (124,843 ) — 386,758 — Net cash used in investing activities (377,530 ) (245,093 ) (164,473 ) (102,358 ) 386,758 (502,696 ) Cash flows from financing activities: Distributions to unitholders (123,064 ) — — — — (123,064 ) Borrowings under Revolving Credit Facility 12,000 478,300 — — — 490,300 Repayments under Revolving Credit Facility — (189,300 ) — — — (189,300 ) Debt issuance costs — (3,013 ) — — — (3,013 ) Proceeds from issuance of common units, net 126,115 — — — — 126,115 Contribution from General Partner 2,702 — — — — 2,702 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 (980 ) — — — — (980 ) Advances from affiliates 369,936 — — 16,822 (386,758 ) — Net cash provided by financing activities 377,739 285,987 — 42,827 (386,758 ) 319,795 Net change in cash and cash equivalents 3,949 (12,022 ) (4,823 ) (1,300 ) — (14,196 ) Cash and cash equivalents, beginning of period 73 12,407 6,930 2,383 — 21,793 Cash and cash equivalents, end of period $ 4,022 $ 385 $ 2,107 $ 1,083 $ — $ 7,597 |