Financial Information for the Company and Its Subsidiaries | Financial Information for the Company and Its Subsidiaries The 2020 Senior Unsecured Notes and 2022 Senior Unsecured Notes are senior unsecured obligations of the Company and are guaranteed by its existing and subsequently acquired or organized 100% owned domestic subsidiaries. The 2020 Senior Unsecured Notes and 2022 Senior Unsecured Notes are guaranteed on a full and unconditional and joint and several basis, with limited exceptions considered customary for such guarantees, including the release of the guarantee when a subsidiary's assets are sold. The following condensed consolidating financial statements present the Company (as parent issuer), the subsidiary guarantors, the subsidiary non-guarantors and consolidating adjustments. These condensed consolidating financial statements have been prepared and presented in accordance with Rule 3-10 of Regulation S-X “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” The operating and investing activities of the separate legal entities are fully interdependent and integrated. Accordingly, the results of the separate legal entities are not representative of what the operating results would be on a stand-alone basis. Condensed Consolidating Balance Sheet - September 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Assets Current assets: Cash and cash equivalents $ 68,730 $ 56,647 $ 62,045 $ — $ 187,422 Restricted cash and marketable securities — — 11,789 — 11,789 Accounts receivable, net — 160,685 115,552 — 276,237 Supplies inventory — 255 20,632 — 20,887 Prepaid and other current assets 33,969 50,302 19,516 (12,136 ) 91,651 Total current assets 102,699 267,889 229,534 (12,136 ) 587,986 Property and equipment, net 12,819 9,468 168,112 — 190,399 Investments in and receivables from unconsolidated affiliates 4,115,444 1,729,729 — (5,732,296 ) 112,877 Goodwill — 1,559,463 — 2,029,854 3,589,317 Intangible assets, net 62,201 1,217,937 2,429 — 1,282,567 Other assets 3,408 1,040 21,624 (1,998 ) 24,074 Total assets $ 4,296,571 $ 4,785,526 $ 421,699 $ (3,716,576 ) $ 5,787,220 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 8,700 $ — $ 11,282 $ — $ 19,982 Accounts payable 1,696 4,686 28,067 (3,699 ) 30,750 Accrued salaries and benefits 28,070 141,388 17,465 — 186,923 Accrued interest 17,835 — 11 — 17,846 Other accrued liabilities 14,856 81,017 43,127 (8,437 ) 130,563 Total current liabilities 71,157 227,091 99,952 (12,136 ) 386,064 Long-term debt 2,200,425 — 57,759 (27,888 ) 2,230,296 Deferred income taxes 238,773 408,936 — (1,998 ) 645,711 Other long-term liabilities 4,473 66,862 19,336 — 90,671 Intercompany payable — 1,228,157 — (1,228,157 ) — Noncontrolling interests – redeemable — — 64,595 120,666 185,261 Equity: Total AmSurg Corp. equity 1,781,743 2,854,480 133,171 (2,987,651 ) 1,781,743 Noncontrolling interests – non-redeemable — — 46,886 420,588 467,474 Total equity 1,781,743 2,854,480 180,057 (2,567,063 ) 2,249,217 Total liabilities and equity $ 4,296,571 $ 4,785,526 $ 421,699 $ (3,716,576 ) $ 5,787,220 Condensed Consolidating Balance Sheet - December 31, 2014 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Assets Current assets: Cash and cash equivalents $ 134,351 $ 23,471 $ 50,257 $ — $ 208,079 Restricted cash and marketable securities — — 10,219 — 10,219 Accounts receivable, net — 123,772 109,281 — 233,053 Supplies inventory — 301 19,673 — 19,974 Prepaid and other current assets 47,997 58,388 13,795 (4,818 ) 115,362 Total current assets 182,348 205,932 203,225 (4,818 ) 586,687 Property and equipment, net 10,391 9,972 160,085 — 180,448 Investments in and receivables from unconsolidated affiliates 3,912,804 1,587,881 — (5,425,210 ) 75,475 Goodwill — 1,490,981 — 1,890,168 3,381,149 Intangible assets, net 67,678 1,203,218 2,983 — 1,273,879 Other assets 3,323 943 23,086 (1,466 ) 25,886 Total assets $ 4,176,544 $ 4,498,927 $ 389,379 $ (3,541,326 ) $ 5,523,524 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 8,700 $ — $ 10,126 $ — $ 18,826 Accounts payable 1,849 35 31,781 (4,080 ) 29,585 Accrued salaries and benefits 25,035 101,395 13,614 — 140,044 Accrued interest 29,621 — 23 — 29,644 Other accrued liabilities 8,051 44,305 16,368 (738 ) 67,986 Total current liabilities 73,256 145,735 71,912 (4,818 ) 286,085 Long-term debt 2,206,950 — 53,648 (28,412 ) 2,232,186 Deferred income taxes 209,400 425,546 — (1,466 ) 633,480 Other long-term liabilities 7,391 63,616 18,436 — 89,443 Intercompany payable — 1,219,979 8,010 (1,227,989 ) — Noncontrolling interests – redeemable — — 63,544 120,555 184,099 Equity: Total AmSurg Corp. equity 1,679,547 2,644,051 130,206 (2,774,257 ) 1,679,547 Noncontrolling interests – non-redeemable — — 43,623 375,061 418,684 Total equity 1,679,547 2,644,051 173,829 (2,399,196 ) 2,098,231 Total liabilities and equity $ 4,176,544 $ 4,498,927 $ 389,379 $ (3,541,326 ) $ 5,523,524 Condensed Consolidating Statement of Operations - For the Three Months Ended September 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 5,975 $ 339,484 $ 314,382 $ (9,614 ) $ 650,227 Operating expenses: Salaries and benefits 17,642 231,769 78,249 (128 ) 327,532 Supply cost — 476 45,182 (20 ) 45,638 Other operating expenses 7,054 34,742 66,522 (9,466 ) 98,852 Transaction costs 270 1,837 — — 2,107 Depreciation and amortization 1,017 14,906 8,183 — 24,106 Total operating expenses 25,983 283,730 198,136 (9,614 ) 498,235 Net gain on deconsolidations — 9,112 — — 9,112 Equity in earnings of unconsolidated affiliates 96,232 64,423 — (155,720 ) 4,935 Operating income 76,224 129,289 116,246 (155,720 ) 166,039 Interest expense, net 11,766 17,845 631 — 30,242 Earnings from operations before income taxes 64,458 111,444 115,615 (155,720 ) 135,797 Income tax expense 21,797 15,210 511 — 37,518 Net earnings 42,661 96,234 115,104 (155,720 ) 98,279 Less net earnings attributable to noncontrolling interests — — 55,618 — 55,618 Net earnings attributable to AmSurg Corp. shareholders 42,661 96,234 59,486 (155,720 ) 42,661 Preferred stock dividends (2,264 ) — — — (2,264 ) Net earnings attributable to AmSurg Corp. common shareholders $ 40,397 $ 96,234 $ 59,486 $ (155,720 ) $ 40,397 Condensed Consolidating Statement of Operations - For the Nine Months Ended September 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 20,145 $ 954,642 $ 915,791 $ (27,956 ) $ 1,862,622 Operating expenses: Salaries and benefits 50,796 671,988 227,703 (380 ) 950,107 Supply cost — 1,361 132,705 (54 ) 134,012 Other operating expenses 19,471 106,452 196,023 (27,522 ) 294,424 Transaction costs 862 4,698 — — 5,560 Depreciation and amortization 2,907 43,830 23,799 — 70,536 Total operating expenses 74,036 828,329 580,230 (27,956 ) 1,454,639 Net gain on deconsolidations — 5,889 (35 ) — 5,854 Equity in earnings of unconsolidated affiliates 233,362 183,519 — (405,306 ) 11,575 Operating income 179,471 315,721 335,526 (405,306 ) 425,412 Interest expense, net 35,630 53,223 1,818 — 90,671 Earnings from operations before income taxes 143,841 262,498 333,708 (405,306 ) 334,741 Income tax expense 46,467 29,134 1,359 — 76,960 Net earnings 97,374 233,364 332,349 (405,306 ) 257,781 Less net earnings attributable to noncontrolling interests — — 160,407 — 160,407 Net earnings attributable to AmSurg Corp. shareholders 97,374 233,364 171,942 (405,306 ) 97,374 Preferred stock dividends (6,792 ) — — — (6,792 ) Net earnings attributable to AmSurg Corp. common shareholders $ 90,582 $ 233,364 $ 171,942 $ (405,306 ) $ 90,582 Condensed Consolidating Statement of Operations - For the Three Months Ended September 30, 2014 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 5,551 $ 221,013 $ 280,589 $ (4,803 ) $ 502,350 Operating expenses: Salaries and benefits 14,961 153,653 71,846 (123 ) 240,337 Supply cost — 816 41,070 — 41,886 Other operating expenses 6,425 19,127 60,390 (4,680 ) 81,262 Transaction costs 23,111 1,991 — — 25,102 Depreciation and amortization 789 12,320 7,729 — 20,838 Total operating expenses 45,286 187,907 181,035 (4,803 ) 409,425 Equity in earnings of unconsolidated affiliates 58,649 48,225 — (104,716 ) 2,158 Operating income 18,914 81,331 99,554 (104,716 ) 95,083 Interest expense 23,865 14,630 559 — 39,054 Debt extinguishment costs 16,887 — — — 16,887 Earnings (loss) from continuing operations before income taxes (21,838 ) 66,701 98,995 (104,716 ) 39,142 Income tax expense (benefit) (8,566 ) 8,051 537 — 22 Net earnings (loss) from continuing operations (13,272 ) 58,650 98,458 (104,716 ) 39,120 Net earnings (loss) from discontinued operations 3,438 — (5,135 ) — (1,697 ) Net earnings (loss) (9,834 ) 58,650 93,323 (104,716 ) 37,423 Less net earnings attributable to noncontrolling interests — — 47,257 — 47,257 Net earnings (loss) attributable to AmSurg Corp. shareholders (9,834 ) 58,650 46,066 (104,716 ) (9,834 ) Preferred stock dividends (2,239 ) — — — (2,239 ) Net earnings (loss) attributable to AmSurg Corp. common shareholders $ (12,073 ) $ 58,650 $ 46,066 $ (104,716 ) $ (12,073 ) Amounts attributable to AmSurg Corp. common shareholders: Earnings (loss) from continuing operations, net of income tax $ (15,511 ) $ 58,650 $ 50,880 $ (104,716 ) $ (10,697 ) Discontinued operations, net of income tax 3,438 — (4,814 ) — (1,376 ) Net earnings (loss) attributable to AmSurg Corp. common shareholders $ (12,073 ) $ 58,650 $ 46,066 $ (104,716 ) $ (12,073 ) Condensed Consolidating Statement of Operations - For the Nine Months Ended September 30, 2014 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 18,042 $ 221,013 $ 815,272 $ (14,189 ) $ 1,040,138 Operating expenses: Salaries and benefits 44,728 153,653 208,527 (369 ) 406,539 Supply cost — 816 119,748 — 120,564 Other operating expenses 15,440 19,127 170,496 (13,820 ) 191,243 Transaction costs 26,690 1,991 — — 28,681 Depreciation and amortization 2,429 12,320 22,784 — 37,533 Total operating expenses 89,287 187,907 521,555 (14,189 ) 784,560 Gain on deconsolidation 3,411 3,411 — (3,411 ) 3,411 Equity in earnings of unconsolidated affiliates 161,340 150,916 — (308,795 ) 3,461 Operating income 93,506 187,433 293,717 (312,206 ) 262,450 Interest expense 36,658 14,630 1,618 — 52,906 Debt extinguishment costs 16,887 — — — 16,887 Earnings from continuing operations before income taxes 39,961 172,803 292,099 (312,206 ) 192,657 Income tax expense 16,687 8,051 1,064 — 25,802 Net earnings from continuing operations 23,274 164,752 291,035 (312,206 ) 166,855 Net earnings (loss) from discontinued operations 3,048 — (4,194 ) — (1,146 ) Net earnings 26,322 164,752 286,841 (312,206 ) 165,709 Less net earnings attributable to noncontrolling interests — — 139,387 — 139,387 Net earnings attributable to AmSurg Corp. shareholders 26,322 164,752 147,454 (312,206 ) 26,322 Preferred stock dividends (2,239 ) — — — (2,239 ) Net earnings attributable to AmSurg Corp. common shareholders $ 24,083 $ 164,752 $ 147,454 $ (312,206 ) $ 24,083 Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 21,035 $ 164,752 $ 151,885 $ (312,206 ) $ 25,466 Discontinued operations, net of income tax 3,048 — (4,431 ) — (1,383 ) Net earnings attributable to AmSurg Corp. common shareholders $ 24,083 $ 164,752 $ 147,454 $ (312,206 ) $ 24,083 Condensed Consolidating Statement of Cash Flows - For the Nine Months Ended September 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Cash flows from operating activities: Net cash flows provided by (used in) operating activities $ (20,702 ) $ 313,286 $ 368,391 $ (233,773 ) $ 427,202 Cash flows from investing activities: Acquisitions and related expenses (29,157 ) (236,107 ) — 31,774 (233,490 ) Acquisition of property and equipment (5,659 ) (15,418 ) (25,929 ) — (47,006 ) Purchases of marketable securities — — (1,743 ) — (1,743 ) Maturities of marketable securities — — 4,233 — 4,233 Other — (779 ) (3,195 ) — (3,974 ) Net cash flows used in investing activities (34,816 ) (252,304 ) (26,634 ) 31,774 (281,980 ) Cash flows from financing activities: Proceeds from long-term borrowings — — 10,197 — 10,197 Repayment on long-term borrowings (6,525 ) — (9,212 ) — (15,737 ) Distributions to owners, including noncontrolling interests — (59,616 ) (332,301 ) 233,773 (158,144 ) Capital contributions — 29,157 — (29,157 ) — Cash dividends for preferred shares (6,792 ) — — — (6,792 ) Financing cost incurred (294 ) — — — (294 ) Changes in intercompany balances with affiliates, net 524 — (524 ) — — Other, net 2,984 2,653 1,871 (2,617 ) 4,891 Net cash flows used in financing activities (10,103 ) (27,806 ) (329,969 ) 201,999 (165,879 ) Net increase (decrease) in cash and cash equivalents (65,621 ) 33,176 11,788 — (20,657 ) Cash and cash equivalents, beginning of period 134,351 23,471 50,257 — 208,079 Cash and cash equivalents, end of period $ 68,730 $ 56,647 $ 62,045 $ — $ 187,422 Condensed Consolidating Statement of Cash Flows - For the Nine Months Ended September 30, 2014 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Cash flows from operating activities: Net cash flows provided by operating activities $ 103,091 $ 225,098 $ 309,033 $ (361,171 ) $ 276,051 Cash flows from investing activities: Acquisitions and related expenses (2,147,585 ) (2,142,611 ) 1,574 2,149,974 (2,138,648 ) Acquisition of property and equipment (3,653 ) (2,337 ) (17,119 ) — (23,109 ) Proceeds from sale of interests in surgery centers — 4,969 — — 4,969 Purchases of marketable securities — — (3,486 ) — (3,486 ) Other (2,555 ) (648 ) 5,285 — 2,082 Net cash flows used in investing activities (2,153,793 ) (2,140,627 ) (13,746 ) 2,149,974 (2,158,192 ) Cash flows from financing activities: Proceeds from long-term borrowings 2,040,000 — 6,399 — 2,046,399 Repayment on long-term borrowings (394,318 ) — (8,725 ) — (403,043 ) Distributions to owners, including noncontrolling interests — (206,580 ) (294,034 ) 361,171 (139,443 ) Capital contributions — 2,147,585 — (2,147,585 ) — Proceeds from preferred stock offering 172,500 — — — 172,500 Cash dividends for preferred shares (2,239 ) — — — (2,239 ) Proceeds from common stock offering 439,875 — — — 439,875 Payments of equity issuance costs (24,366 ) — — — (24,366 ) Financing costs incurred (65,673 ) — — — (65,673 ) Changes in intercompany balances with affiliates, net 731 — (731 ) — — Other, net 1,311 (206 ) 2,656 (2,389 ) 1,372 Net cash flows provided by (used in) financing activities 2,167,821 1,940,799 (294,435 ) (1,788,803 ) 2,025,382 Net increase in cash and cash equivalents 117,119 25,270 852 — 143,241 Cash and cash equivalents, beginning of period 6,710 — 44,130 — 50,840 Cash and cash equivalents, end of period $ 123,829 $ 25,270 $ 44,982 $ — $ 194,081 |