CONDENSED CONSOLIDATING FINANCIAL INFORMATION | 18. 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 10). 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. Condensed Consolidating Balance Sheets. Balance sheets as of June 30, 2018 and December 31, 2017 follow. June 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 2,616 $ 92 $ 4,998 $ 506 $ — $ 8,212 Accounts receivable 22 — 68,274 11,870 — 80,166 Other current assets 1,057 — 1,273 264 — 2,594 Due from affiliate — — 507,396 51,852 (559,248 ) — Total current assets 3,695 92 581,941 64,492 (559,248 ) 90,972 Property, plant and equipment, net 4,314 — 1,537,468 345,977 — 1,887,759 Intangible assets, net — — 263,416 23,249 — 286,665 Goodwill — — 16,211 — — 16,211 Investment in equity method investees — — — 670,827 — 670,827 Other noncurrent assets 3,288 9,762 94 — — 13,144 Investment in subsidiaries 2,062,096 3,396,771 — — (5,458,867 ) — Total assets $ 2,073,393 $ 3,406,625 $ 2,399,130 $ 1,104,545 $ (6,018,115 ) $ 2,965,578 Liabilities and Partners' Capital Trade accounts payable $ 141 $ — $ 18,280 $ 3,277 $ — $ 21,698 Accrued expenses 803 — 17,030 1,600 — 19,433 Due to affiliate 374,074 185,265 — — (559,248 ) 91 Deferred revenue — — 10,341 437 — 10,778 Ad valorem taxes payable 9 — 6,224 271 — 6,504 Accrued interest — 12,259 — — — 12,259 Accrued environmental remediation — — — 3,522 — 3,522 Other current liabilities 3,477 — 3,573 362 — 7,412 Total current liabilities 378,504 197,524 55,448 9,469 (559,248 ) 81,697 Long-term debt — 1,147,005 — — — 1,147,005 Deferred Purchase Price Obligation 453,922 — — — — 453,922 Noncurrent deferred revenue — — 36,416 1,703 — 38,119 Noncurrent accrued environmental remediation — — — 1,617 — 1,617 Other noncurrent liabilities 4,159 — 2,197 54 — 6,410 Total liabilities 836,585 1,344,529 94,061 12,843 (559,248 ) 1,728,770 Total partners' capital 1,236,808 2,062,096 2,305,069 1,091,702 (5,458,867 ) 1,236,808 Total liabilities and partners' capital $ 2,073,393 $ 3,406,625 $ 2,399,130 $ 1,104,545 $ (6,018,115 ) $ 2,965,578 December 31, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 126 $ 75 $ 1,138 $ 91 $ — $ 1,430 Accounts receivable 22 — 65,842 6,437 — 72,301 Other current assets 1,188 — 2,697 442 — 4,327 Due from affiliate — — 493,067 22,030 (515,097 ) — Total current assets 1,336 75 562,744 29,000 (515,097 ) 78,058 Property, plant and equipment, net 4,206 — 1,442,333 348,590 — 1,795,129 Intangible assets, net — — 278,958 22,387 — 301,345 Goodwill — — 16,211 — — 16,211 Investment in equity method investees — — — 690,485 — 690,485 Other noncurrent assets 2,547 10,913 105 — — 13,565 Investment in subsidiaries 2,019,700 3,324,464 — — (5,344,164 ) — Total assets $ 2,027,789 $ 3,335,452 $ 2,300,351 $ 1,090,462 $ (5,859,261 ) $ 2,894,793 Liabilities and Partners' Capital Trade accounts payable $ 209 $ — $ 11,283 $ 4,883 $ — $ 16,375 Accrued expenses 928 — 10,592 979 — 12,499 Due to affiliate 263,935 252,250 — — (515,097 ) 1,088 Deferred revenue — — 4,000 — — 4,000 Ad valorem taxes payable — — 7,809 520 — 8,329 Accrued interest — 12,310 — — — 12,310 Accrued environmental remediation — — — 3,130 — 3,130 Other current liabilities 6,395 — 4,385 478 — 11,258 Total current liabilities 271,467 264,560 38,069 9,990 (515,097 ) 68,989 Long-term debt — 1,051,192 — — — 1,051,192 Deferred Purchase Price Obligation 362,959 — — — — 362,959 Deferred revenue — — 12,707 — — 12,707 Noncurrent accrued environmental remediation — — — 2,214 — 2,214 Other noncurrent liabilities 3,694 — 3,293 76 — 7,063 Total liabilities 638,120 1,315,752 54,069 12,280 (515,097 ) 1,505,124 Total partners' capital 1,389,669 2,019,700 2,246,282 1,078,182 (5,344,164 ) 1,389,669 Total liabilities and partners' capital $ 2,027,789 $ 3,335,452 $ 2,300,351 $ 1,090,462 $ (5,859,261 ) $ 2,894,793 Condensed Consolidating St atements 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 refle ct 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, 2018 and 2017 follow. Three months ended June 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 73,891 $ 15,694 $ — $ 89,585 Natural gas, NGLs and condensate sales — — 31,891 — — 31,891 Other revenues — — 6,509 198 — 6,707 Total revenues — — 112,291 15,892 — 128,183 Costs and expenses: Cost of natural gas and NGLs — — 24,384 — — 24,384 Operation and maintenance — — 22,221 2,245 — 24,466 General and administrative — — 11,907 1,577 — 13,484 Depreciation and amortization 444 — 22,776 3,564 — 26,784 (Gain) loss on asset sales, net — — (1 ) 63 — 62 Long-lived asset impairment — — 587 — — 587 Total costs and expenses 444 — 81,874 7,449 — 89,767 Other income 27 — — — — 27 Interest expense — (14,837 ) — — — (14,837 ) Deferred Purchase Price Obligation (69,305 ) — — — — (69,305 ) (Loss) income before income taxes and loss from equity method investees (69,722 ) (14,837 ) 30,417 8,443 — (45,699 ) Income tax expense (294 ) — — — — (294 ) Loss from equity method investees — — — (3,920 ) — (3,920 ) Equity in earnings of consolidated subsidiaries 20,103 34,940 — — (55,043 ) — Net (loss) income $ (49,913 ) $ 20,103 $ 30,417 $ 4,523 $ (55,043 ) $ (49,913 ) Three months ended June 30, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 67,679 $ 17,122 $ — $ 84,801 Natural gas, NGLs and condensate sales — — 10,595 — — 10,595 Other revenues — — 6,332 64 — 6,396 Total revenues — — 84,606 17,186 — 101,792 Costs and expenses: Cost of natural gas and NGLs — — 9,099 — — 9,099 Operation and maintenance — — 22,169 1,847 — 24,016 General and administrative — — 10,886 2,063 — 12,949 Depreciation and amortization 154 — 25,282 3,252 — 28,688 Transaction costs 119 — — — — 119 Loss on asset sales, net — — 67 — — 67 Long-lived asset impairment — — 2 1 — 3 Total costs and expenses 273 — 67,505 7,163 — 74,941 Other income 64 — — — — 64 Interest expense — (17,553 ) — — — (17,553 ) Deferred Purchase Price Obligation 5,058 — — — — 5,058 Income (loss) before income taxes and loss from equity method investees 4,849 (17,553 ) 17,101 10,023 — 14,420 Income tax benefit 211 — — — — 211 Loss from equity method investees — — — (3,385 ) — (3,385 ) Equity in earnings of consolidated subsidiaries 6,186 23,739 — — (29,925 ) — Net income $ 11,246 $ 6,186 $ 17,101 $ 6,638 $ (29,925 ) $ 11,246 Six months ended June 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 143,357 $ 30,589 $ — $ 173,946 Natural gas, NGLs and condensate sales — — 58,008 — — 58,008 Other revenues — — 13,236 313 — 13,549 Total revenues — — 214,601 30,902 — 245,503 Costs and expenses: Cost of natural gas and NGLs — — 44,670 — — 44,670 Operation and maintenance — — 44,374 4,696 — 49,070 General and administrative — — 24,244 3,682 — 27,926 Depreciation and amortization 876 — 45,637 6,948 — 53,461 (Gain) loss on asset sales, net — — (75 ) 63 — (12 ) Long-lived asset impairment — — 587 — — 587 Total costs and expenses 876 — 159,437 15,389 — 175,702 Other income 20 — — — — 20 Interest expense — (29,959 ) — — — (29,959 ) Deferred Purchase Price Obligation (90,963 ) — — — — (90,963 ) (Loss) income before income taxes and loss from equity method investees (91,819 ) (29,959 ) 55,164 15,513 — (51,101 ) Income tax expense (123 ) — — — — (123 ) Loss from equity method investees — — — (2,534 ) — (2,534 ) Equity in earnings of consolidated subsidiaries 38,184 68,143 — — (106,327 ) — Net (loss) income $ (53,758 ) $ 38,184 $ 55,164 $ 12,979 $ (106,327 ) $ (53,758 ) Six months ended June 30, 2017 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 170,192 $ 32,622 $ — $ 202,814 Natural gas, NGLs and condensate sales — — 21,715 — — 21,715 Other revenues — — 12,932 136 — 13,068 Total revenues — — 204,839 32,758 — 237,597 Costs and expenses: Cost of natural gas and NGLs — — 18,151 — — 18,151 Operation and maintenance — — 44,189 3,519 — 47,708 General and administrative — — 23,371 3,710 — 27,081 Depreciation and amortization 308 — 50,524 6,425 — 57,257 Transaction costs 119 — — — — 119 Loss on asset sales, net — — 70 — — 70 Long-lived asset impairment — — 2 285 — 287 Total costs and expenses 427 — 136,307 13,939 — 150,673 Other income 135 — — — — 135 Interest expense — (34,269 ) — — — (34,269 ) Early extinguishment of debt — (22,020 ) — — — (22,020 ) Deferred Purchase Price Obligation (15,825 ) — — — — (15,825 ) (Loss) income before income taxes and loss from equity method investees (16,117 ) (56,289 ) 68,532 18,819 — 14,945 Income tax expense (241 ) — — — — (241 ) Loss from equity method investees — — — (4,041 ) — (4,041 ) Equity in earnings of consolidated subsidiaries 27,021 83,310 — — (110,331 ) — Net income $ 10,663 $ 27,021 $ 68,532 $ 14,778 $ (110,331 ) $ 10,663 Condensed Consolidating Statements of Cash Flows. Statements of cash flows for the six months ended June 30, 2018 and 2017 follow. Six months ended June 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Cash flows from operating activities: Net cash (used in) provided by operating activities $ (68 ) $ (27,877 ) $ 103,965 $ 34,029 $ — $ 110,049 Cash flows from investing activities: Capital expenditures (972 ) — (85,187 ) (4,235 ) — (90,394 ) Proceeds from asset sales — — — 496 — 496 Other, net (306 ) — — — — (306 ) Advances to affiliates — (66,985 ) (14,329 ) (29,820 ) 111,134 — Net cash used in investing activities (1,278 ) (66,985 ) (99,516 ) (33,559 ) 111,134 (90,204 ) Cash flows from financing activities: Distributions to common unitholders (90,269 ) — — — — (90,269 ) Distributions to Series A Preferred unitholders (14,250 ) — — — — (14,250 ) Borrowings under Revolving Credit Facility — 148,000 — — — 148,000 Repayments under Revolving Credit Facility — (53,000 ) — — — (53,000 ) Debt issuance costs — (121 ) — — — (121 ) Other, net (2,779 ) — (589 ) (55 ) — (3,423 ) Advances from affiliates 111,134 — — — (111,134 ) — Net cash provided by (used in) financing activities 3,836 94,879 (589 ) (55 ) (111,134 ) (13,063 ) Net change in cash and cash equivalents 2,490 17 3,860 415 — 6,782 Cash and cash equivalents, beginning of period 126 75 1,138 91 — 1,430 Cash and cash equivalents, end of period $ 2,616 $ 92 $ 4,998 $ 506 $ — $ 8,212 Six months ended June 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 $ 424 $ (32,466 ) $ 114,863 $ 38,520 $ — $ 121,341 Cash flows from investing activities: Capital expenditures (6,412 ) — (23,578 ) (15,922 ) — (45,912 ) Contributions to equity method investees — — — (15,649 ) — (15,649 ) Other, net (521 ) — — — — (521 ) Advances to affiliates 7,635 23,020 (95,361 ) — 64,706 — Net cash provided by (used in) investing activities 702 23,020 (118,939 ) (31,571 ) 64,706 (62,082 ) Cash flows from financing activities: Distributions to unitholders (89,029 ) — — — — (89,029 ) Borrowings under Revolving Credit Facility — 112,500 — — — 112,500 Repayments under Revolving Credit Facility — (269,500 ) — — — (269,500 ) Debt issuance costs — (15,613 ) — — — (15,613 ) Payment of redemption and call premiums on senior notes — (17,913 ) — — — (17,913 ) Proceeds from ATM Program issuances, net of costs 17,259 — — — — 17,259 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 (2,632 ) — 372 (8 ) — (2,268 ) Advances from affiliates 72,341 — — (7,635 ) (64,706 ) — Net cash (used in) provided by financing activities (1,596 ) 9,474 372 (7,643 ) (64,706 ) (64,099 ) Net change in cash and cash equivalents (470 ) 28 (3,704 ) (694 ) — (4,840 ) Cash and cash equivalents, beginning of period 698 51 5,768 911 — 7,428 Cash and cash equivalents, end of period $ 228 $ 79 $ 2,064 $ 217 $ — $ 2,588 |