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 September 30, 2018 and December 31, 2017 follow. September 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Assets Cash and cash equivalents $ 29 $ 3 $ 330 $ 8 $ — $ 370 Accounts receivable 22 — 74,766 10,670 — 85,458 Other current assets 843 — 2,922 595 — 4,360 Due from affiliate — — 513,867 68,121 (581,988 ) — Total current assets 894 3 591,885 79,394 (581,988 ) 90,188 Property, plant and equipment, net 5,134 — 1,563,950 342,546 — 1,911,630 Intangible assets, net — — 255,317 25,890 — 281,207 Goodwill — — 16,211 — — 16,211 Investment in equity method investees — — — 660,254 — 660,254 Other noncurrent assets 3,320 9,184 6,062 — — 18,566 Investment in subsidiaries 2,082,686 3,432,198 — — (5,514,884 ) — Total assets $ 2,092,034 $ 3,441,385 $ 2,433,425 $ 1,108,084 $ (6,096,872 ) $ 2,978,056 Liabilities and Partners' Capital Trade accounts payable $ 219 $ — $ 18,523 $ 3,827 $ — $ 22,569 Accrued expenses 725 — 16,051 1,571 — 18,347 Due to affiliate 413,900 168,101 — — (581,988 ) 13 Deferred revenue — — 10,716 436 — 11,152 Ad valorem taxes payable 14 — 7,802 407 — 8,223 Accrued interest — 15,285 — — — 15,285 Accrued environmental remediation — — — 2,702 — 2,702 Other current liabilities 5,386 — 4,488 514 — 10,388 Total current liabilities 420,244 183,386 57,580 9,457 (581,988 ) 88,679 Long-term debt — 1,175,313 — — — 1,175,313 Deferred Purchase Price Obligation 416,718 — — — — 416,718 Noncurrent deferred revenue — — 37,802 1,822 — 39,624 Noncurrent accrued environmental remediation — — — 1,182 — 1,182 Other noncurrent liabilities 4,057 — 1,437 31 — 5,525 Total liabilities 841,019 1,358,699 96,819 12,492 (581,988 ) 1,727,041 Total partners' capital 1,251,015 2,082,686 2,336,606 1,095,592 (5,514,884 ) 1,251,015 Total liabilities and partners' capital $ 2,092,034 $ 3,441,385 $ 2,433,425 $ 1,108,084 $ (6,096,872 ) $ 2,978,056 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 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, 2018 and 2017 follow. Three months ended September 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 73,014 $ 13,413 $ — $ 86,427 Natural gas, NGLs and condensate sales — — 34,017 — — 34,017 Other revenues — — 6,806 229 — 7,035 Total revenues — — 113,837 13,642 — 127,479 Costs and expenses: Cost of natural gas and NGLs — — 26,879 — — 26,879 Operation and maintenance — — 21,721 2,661 — 24,382 General and administrative — — 10,535 1,205 — 11,740 Depreciation and amortization 429 — 22,863 3,451 — 26,743 Loss on asset sales, net — — 1 5 — 6 Long-lived asset impairment — — 275 1,265 — 1,540 Total costs and expenses 429 — 82,274 8,587 — 91,290 Other income 58 — — — — 58 Interest expense — (14,862 ) — — — (14,862 ) Deferred Purchase Price Obligation 37,204 — — — — 37,204 Income (loss) before income taxes and loss from equity method investees 36,833 (14,862 ) 31,563 5,055 — 58,589 Income tax benefit 35 — — — — 35 Loss from equity method investees — — — (1,169 ) — (1,169 ) Equity in earnings of consolidated subsidiaries 20,587 35,449 — — (56,036 ) — Net income $ 57,455 $ 20,587 $ 31,563 $ 3,886 $ (56,036 ) $ 57,455 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 $ — $ — $ 82,152 $ 13,918 $ — $ 96,070 Natural gas, NGLs and condensate sales — — 22,940 — — 22,940 Other revenues — — 5,877 58 — 5,935 Total revenues — — 110,969 13,976 — 124,945 Costs and expenses: Cost of natural gas and NGLs — — 18,177 — — 18,177 Operation and maintenance — — 20,217 2,086 — 22,303 General and administrative — — 11,919 1,370 — 13,289 Depreciation and amortization 352 — 25,247 3,328 — 28,927 Transaction costs — — — — — — (Gain) loss on asset sales, net — — (82 ) 542 — 460 Long-lived asset impairment — — 696 594 — 1,290 Total costs and expenses 352 — 76,174 7,920 — 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 ) 34,795 6,056 — 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 $ 34,795 $ 6,406 $ (64,788 ) $ 93,637 Nine months ended September 30, 2018 SMLP Co-Issuers Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating adjustments Total (In thousands) Revenues: Gathering services and related fees $ — $ — $ 216,371 $ 44,002 $ — $ 260,373 Natural gas, NGLs and condensate sales — — 92,025 — — 92,025 Other revenues — — 20,042 542 — 20,584 Total revenues — — 328,438 44,544 — 372,982 Costs and expenses: Cost of natural gas and NGLs — — 71,549 — — 71,549 Operation and maintenance — — 66,095 7,357 — 73,452 General and administrative — — 34,786 4,880 — 39,666 Depreciation and amortization 1,305 — 68,500 10,399 — 80,204 (Gain) loss on asset sales, net — — (74 ) 68 — (6 ) Long-lived asset impairment — — 862 1,265 — 2,127 Total costs and expenses 1,305 — 241,718 23,969 — 266,992 Other income 78 — — — — 78 Interest expense — (44,821 ) — — — (44,821 ) Deferred Purchase Price Obligation (53,759 ) — — — — (53,759 ) (Loss) income before income taxes and loss from equity method investees (54,986 ) (44,821 ) 86,720 20,575 — 7,488 Income tax expense (88 ) — — — — (88 ) Loss from equity method investees — — — (3,703 ) — (3,703 ) Equity in earnings of consolidated subsidiaries 58,771 103,592 — — (162,363 ) — Net income $ 3,697 $ 58,771 $ 86,720 $ 16,872 $ (162,363 ) $ 3,697 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 $ — $ — $ 252,344 $ 46,540 $ — $ 298,884 Natural gas, NGLs and condensate sales — — 44,655 — — 44,655 Other revenues — — 18,809 194 — 19,003 Total revenues — — 315,808 46,734 — 362,542 Costs and expenses: Cost of natural gas and NGLs — — 36,328 — — 36,328 Operation and maintenance — — 64,405 5,606 — 70,011 General and administrative — — 35,283 5,087 — 40,370 Depreciation and amortization 660 — 75,772 9,752 — 86,184 Transaction costs 119 — — — — 119 (Gain) loss on asset sales, net — — (11 ) 541 — 530 Long-lived asset impairment — — 698 879 — 1,577 Total costs and expenses 779 — 212,475 21,865 — 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 ) 103,333 24,869 — 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 $ 103,333 $ 21,178 $ (175,119 ) $ 104,300 Condensed Consolidating Statements of Cash Flows. Statements of cash flows for the nine months ended September 30, 2018 and 2017 follow. Nine months ended September 30, 2018 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 $ 3,687 $ (38,590 ) $ 148,237 $ 53,158 $ — $ 166,492 Cash flows from investing activities: Capital expenditures (2,101 ) — (127,362 ) (7,570 ) — (137,033 ) Proceeds from asset sales — — — 496 — 496 Other, net (209 ) — — — — (209 ) Advances to affiliates — (84,148 ) (20,802 ) (46,090 ) 151,040 — Net cash used in investing activities (2,310 ) (84,148 ) (148,164 ) (53,164 ) 151,040 (136,746 ) Cash flows from financing activities: Distributions to common unitholders (135,484 ) — — — — (135,484 ) Distributions to Series A Preferred unitholders (14,250 ) — — — — (14,250 ) Borrowings under Revolving Credit Facility — 202,000 — — — 202,000 Repayments under Revolving Credit Facility — (79,000 ) — — — (79,000 ) Debt issuance costs — (334 ) — — — (334 ) Other, net (2,780 ) — (881 ) (77 ) — (3,738 ) Advances from affiliates 151,040 — — — (151,040 ) — Net cash (used in) provided by financing activities (1,474 ) 122,666 (881 ) (77 ) (151,040 ) (30,806 ) Net change in cash and cash equivalents (97 ) (72 ) (808 ) (83 ) — (1,060 ) Cash and cash equivalents, beginning of period 126 75 1,138 91 — 1,430 Cash and cash equivalents, end of period $ 29 $ 3 $ 330 $ 8 $ — $ 370 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 ) $ 176,442 $ 60,202 $ — $ 196,497 Cash flows from investing activities: Capital expenditures (995 ) — (64,413 ) (20,798 ) — (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 11,768 21,658 (116,254 ) (8,441 ) 91,269 — Net cash provided by (used in) investing activities 10,194 21,658 (180,667 ) (48,520 ) 91,269 (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 103,037 — — (11,768 ) (91,269 ) — Net cash (used in) provided by financing activities (16,107 ) 24,196 — (11,768 ) (91,269 ) (94,948 ) Net change in cash and cash equivalents (206 ) — (4,225 ) (86 ) — (4,517 ) Cash and cash equivalents, beginning of period 698 51 5,768 911 — 7,428 Cash and cash equivalents, end of period $ 492 $ 51 $ 1,543 $ 825 $ — $ 2,911 |