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 - December 31, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Assets Current assets: Cash and cash equivalents $ 20,437 $ 27,507 $ 58,716 $ — $ 106,660 Restricted cash and marketable securities — — 13,506 — 13,506 Accounts receivable, net — 223,434 113,896 — 337,330 Supplies inventory — — 21,406 — 21,406 Prepaid and other current assets 28,739 39,046 16,062 (8,076 ) 75,771 Total current assets 49,176 289,987 223,586 (8,076 ) 554,673 Property and equipment, net 12,515 14,601 162,052 — 189,168 Investments in and receivables from unconsolidated affiliates 4,901,026 1,775,272 — (6,507,128 ) 169,170 Goodwill — 1,956,741 — 2,013,469 3,970,210 Intangible assets, net 59,928 1,579,537 2,346 — 1,641,811 Other assets 4,653 1,717 17,078 (1,998 ) 21,450 Total assets $ 5,027,298 $ 5,617,855 $ 405,062 $ (4,503,733 ) $ 6,546,482 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 8,700 $ — $ 11,677 $ — $ 20,377 Accounts payable 2,816 3,760 29,837 (3,852 ) 32,561 Accrued salaries and benefits 31,510 158,705 12,322 — 202,537 Accrued interest 30,463 — 17 — 30,480 Other accrued liabilities 13,962 76,590 32,909 (4,224 ) 119,237 Total current liabilities 87,451 239,055 86,762 (8,076 ) 405,192 Long-term debt 2,373,251 — 55,275 (23,396 ) 2,405,130 Deferred income taxes 268,573 432,923 — (1,998 ) 699,498 Other long-term liabilities 4,560 71,509 20,114 — 96,183 Intercompany payable — 1,228,157 — (1,228,157 ) — Noncontrolling interests – redeemable — — 63,060 112,672 175,732 Equity: Total AmSurg Corp. equity 2,293,463 3,646,211 132,267 (3,778,478 ) 2,293,463 Noncontrolling interests – non-redeemable — — 47,584 423,700 471,284 Total equity 2,293,463 3,646,211 179,851 (3,354,778 ) 2,764,747 Total liabilities and equity $ 5,027,298 $ 5,617,855 $ 405,062 $ (4,503,733 ) $ 6,546,482 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 46,097 37,826 13,795 (4,818 ) 92,900 Total current assets 180,448 185,370 203,225 (4,818 ) 564,225 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 $ 4,174,644 $ 4,478,365 $ 389,379 $ (3,541,326 ) $ 5,501,062 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 207,500 404,984 — (1,466 ) 611,018 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 $ 4,174,644 $ 4,478,365 $ 389,379 $ (3,541,326 ) $ 5,501,062 Condensed Consolidating Statement of Earnings - Year Ended December 31, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 28,554 $ 1,331,042 $ 1,245,292 $ (38,004 ) $ 2,566,884 Operating expenses: Salaries and benefits 69,102 937,484 308,313 (507 ) 1,314,392 Supply cost — 2,436 181,866 (80 ) 184,222 Other operating expenses 24,682 145,369 265,160 (37,417 ) 397,794 Transaction costs 1,762 6,562 — — 8,324 Depreciation and amortization 3,912 61,658 31,923 — 97,493 Total operating expenses 99,458 1,153,509 787,262 (38,004 ) 2,002,225 Gain (loss) on deconsolidations — 37,350 (656 ) — 36,694 Equity in earnings of unconsolidated affiliates 349,139 251,093 — (584,080 ) 16,152 Operating income 278,235 465,976 457,374 (584,080 ) 617,505 Interest expense, net 41,140 77,947 2,499 — 121,586 Earnings from continuing operations before income taxes 237,095 388,029 454,875 (584,080 ) 495,919 Income tax expense 73,159 38,891 1,740 — 113,790 Net earnings from continuing operations 163,936 349,138 453,135 (584,080 ) 382,129 Net loss from discontinued operations (989 ) — (24 ) — (1,013 ) Net earnings 162,947 349,138 453,111 (584,080 ) 381,116 Net earnings attributable to noncontrolling interests — — 218,169 — 218,169 Net earnings attributable to AmSurg Corp. shareholders 162,947 349,138 234,942 (584,080 ) 162,947 Preferred stock dividends (9,056 ) — — — (9,056 ) Net earnings attributable to AmSurg Corp. common shareholders $ 153,891 $ 349,138 $ 234,942 $ (584,080 ) $ 153,891 Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 154,880 $ 349,138 $ 234,954 $ (584,080 ) $ 154,892 Loss from discontinued operations, net of income tax (989 ) — (12 ) — (1,001 ) Net earnings attributable to AmSurg Corp. common shareholders $ 153,891 $ 349,138 $ 234,942 $ (584,080 ) $ 153,891 Condensed Consolidating Statement of Earnings - Year Ended December 31, 2014 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 24,773 $ 508,572 $ 1,112,940 $ (24,336 ) $ 1,621,949 Operating expenses: Salaries and benefits 65,697 350,615 284,050 (5,786 ) 694,576 Supply cost — 1,292 163,004 — 164,296 Other operating expenses 18,667 53,413 231,398 (18,550 ) 284,928 Transaction costs 29,004 4,886 — — 33,890 Depreciation and amortization 4,044 25,610 30,690 — 60,344 Total operating expenses 117,412 435,816 709,142 (24,336 ) 1,238,034 Gain on deconsolidation — 3,411 — — 3,411 Equity in earnings of unconsolidated affiliates 237,657 211,889 — (442,508 ) 7,038 Operating income 145,018 288,056 403,798 (442,508 ) 394,364 Interest expense, net 47,997 33,026 2,262 — 83,285 Debt extinguishment costs 16,887 — — — 16,887 Earnings from continuing operations before income taxes 80,134 255,030 401,536 (442,508 ) 294,192 Income tax expense 29,166 17,373 1,564 — 48,103 Net earnings from continuing operations 50,968 237,657 399,972 (442,508 ) 246,089 Net earnings (loss) from discontinued operations 2,733 — (4,029 ) — (1,296 ) Net earnings 53,701 237,657 395,943 (442,508 ) 244,793 Net earnings attributable to noncontrolling interests — 21 191,071 — 191,092 Net earnings attributable to AmSurg Corp. shareholders 53,701 237,636 204,872 (442,508 ) 53,701 Preferred stock dividends (4,503 ) — — — (4,503 ) Net earnings attributable to AmSurg Corp. common shareholders $ 49,198 $ 237,636 $ 204,872 $ (442,508 ) $ 49,198 Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 46,465 $ 237,636 $ 209,184 $ (442,508 ) $ 50,777 Earnings (loss) from discontinued operations, net of income tax 2,733 — (4,312 ) — (1,579 ) Net earnings attributable to AmSurg Corp. common shareholders $ 49,198 $ 237,636 $ 204,872 $ (442,508 ) $ 49,198 Condensed Consolidating Statement of Earnings - Year Ended December 31, 2013 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 24,167 $ — $ 1,050,547 $ (17,518 ) $ 1,057,196 Operating expenses: Salaries and benefits 61,038 — 267,014 (467 ) 327,585 Supply cost — — 153,126 — 153,126 Other operating expenses 22,360 — 211,192 (17,051 ) 216,501 Transaction costs 300 — — — 300 Depreciation and amortization 3,186 — 29,214 — 32,400 Total operating expenses 86,884 — 660,546 (17,518 ) 729,912 Gain on deconsolidation — 2,237 — — 2,237 Equity in earnings of unconsolidated affiliates 207,199 204,962 — (409,010 ) 3,151 Operating income 144,482 207,199 390,001 (409,010 ) 332,672 Interest expense, net 27,282 — 2,243 — 29,525 Earnings from continuing operations before income taxes 117,200 207,199 387,758 (409,010 ) 303,147 Income tax expense 47,139 — 1,515 — 48,654 Net earnings from continuing operations 70,061 207,199 386,243 (409,010 ) 254,493 Net earnings from discontinued operations 2,642 — 4,409 — 7,051 Net earnings 72,703 207,199 390,652 (409,010 ) 261,544 Net earnings attributable to noncontrolling interests — — 188,841 — 188,841 Net earnings attributable to AmSurg Corp. common shareholders $ 72,703 $ 207,199 $ 201,811 $ (409,010 ) $ 72,703 Amounts attributable to AmSurg Corp. common shareholders: Earnings from continuing operations, net of income tax $ 70,061 $ 207,199 $ 202,759 $ (409,010 ) $ 71,009 Earnings (loss) from discontinued operations, net of income tax 2,642 — (948 ) — 1,694 Net earnings attributable to AmSurg Corp. common shareholders $ 72,703 $ 207,199 $ 201,811 $ (409,010 ) $ 72,703 Condensed Consolidating Statement of Cash Flows - Year Ended December 31, 2015 (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 $ 40,432 $ 353,932 $ 489,820 $ (346,225 ) $ 537,959 Cash flows from investing activities: Acquisitions and related transactions (757,775 ) (969,259 ) — 764,345 (962,689 ) Acquisition of property and equipment (5,876 ) (22,988 ) (31,441 ) — (60,305 ) Proceeds from sale of interests in surgery centers — 7,114 — — 7,114 Purchases of marketable securities — — (3,984 ) — (3,984 ) Maturities of marketable securities — — 4,233 — 4,233 Other — (2,927 ) 1,733 — (1,194 ) Net cash flows used in investing activities (763,651 ) (988,060 ) (29,459 ) 764,345 (1,016,825 ) Cash flows from financing activities: Proceeds from long-term borrowings 546,000 — 14,133 — 560,133 Repayment on long-term borrowings (379,700 ) — (12,886 ) — (392,586 ) Distributions to owners, including noncontrolling interests — (109,862 ) (451,262 ) 346,225 (214,899 ) Capital contributions — 757,775 — (757,775 ) — Proceeds from common stock offering 466,777 — — — 466,777 Payments of equity issuance costs (19,058 ) — — — (19,058 ) Financing cost incurred (1,101 ) — (10 ) — (1,111 ) Changes in intercompany balances with affiliates, net 5,016 — (5,016 ) — — Other financing activities, net (8,629 ) (9,749 ) 3,139 (6,570 ) (21,809 ) Net cash flows provided by (used in) financing activities 609,305 638,164 (451,902 ) (418,120 ) 377,447 Net increase (decrease) in cash and cash equivalents (113,914 ) 4,036 8,459 — (101,419 ) Cash and cash equivalents, beginning of period 134,351 23,471 50,257 — 208,079 Cash and cash equivalents, end of period $ 20,437 $ 27,507 $ 58,716 $ — $ 106,660 Condensed Consolidating Statement of Cash Flows - Year Ended December 31, 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 $ 96,681 $ 298,415 $ 430,880 $ (413,605 ) $ 412,371 Cash flows from investing activities: Acquisitions and related transactions (2,124,124 ) (2,188,191 ) 1,520 2,126,737 (2,184,058 ) Acquisition of property and equipment (7,877 ) (9,933 ) (22,407 ) — (40,217 ) Proceeds from sale of interests in surgery centers — 7,069 — — 7,069 Purchases of marketable securities — — (6,474 ) — (6,474 ) Maturities of marketable securities — — 3,486 — 3,486 Other (3,068 ) (6,594 ) 4,721 — (4,941 ) Net cash flows used in investing activities (2,135,069 ) (2,197,649 ) (19,154 ) 2,126,737 (2,225,135 ) Cash flows from financing activities: Proceeds from long-term borrowings 2,040,000 — 8,958 — 2,048,958 Repayment on long-term borrowings (396,493 ) — (11,982 ) — (408,475 ) Distributions to owners, including noncontrolling interests — (202,247 ) (401,455 ) 413,605 (190,097 ) Capital contributions — 2,124,124 — (2,124,124 ) — Proceeds from preferred stock offering 172,500 — — — 172,500 Proceeds from common stock offering 439,875 — — — 439,875 Payments of equity issuance costs (24,494 ) — — — (24,494 ) Financing cost incurred (65,811 ) — — — (65,811 ) Changes in intercompany balances with affiliates, net 2,965 — (2,965 ) — — Other financing activities, net (2,513 ) 828 1,845 (2,613 ) (2,453 ) Net cash flows provided by (used in) financing activities 2,166,029 1,922,705 (405,599 ) (1,713,132 ) 1,970,003 Net increase in cash and cash equivalents 127,641 23,471 6,127 — 157,239 Cash and cash equivalents, beginning of period 6,710 — 44,130 — 50,840 Cash and cash equivalents, end of period $ 134,351 $ 23,471 $ 50,257 $ — $ 208,079 Condensed Consolidating Statement of Cash Flows - Year Ended December 31, 2013 (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 $ 45,127 $ 208,773 $ 426,572 $ (347,648 ) $ 332,824 Cash flows from investing activities: Acquisitions and related transactions — (74,288 ) — 694 (73,594 ) Acquisition of property and equipment (3,693 ) — (25,163 ) — (28,856 ) Proceeds from sale of interests in surgery centers — 3,553 — — 3,553 Other — 159 — — 159 Net cash flows used in investing activities (3,693 ) (70,576 ) (25,163 ) 694 (98,738 ) Cash flows from financing activities: Proceeds from long-term borrowings 152,700 — 9,504 — 162,204 Repayment on long-term borrowings (188,081 ) — (14,002 ) — (202,083 ) Distributions to owners, including noncontrolling interests — (138,875 ) (392,922 ) 347,648 (184,149 ) Changes in intercompany balances with affiliates, net 88 — (88 ) — — Other financing activities, net (6,690 ) 678 1,090 (694 ) (5,616 ) Net cash flows used in financing activities (41,983 ) (138,197 ) (396,418 ) 346,954 (229,644 ) Net increase (decrease) in cash and cash equivalents (549 ) — 4,991 — 4,442 Cash and cash equivalents, beginning of period 7,259 — 39,139 — 46,398 Cash and cash equivalents, end of period $ 6,710 $ — $ 44,130 $ — $ 50,840 |