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 - June 30, 2016 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Assets Current assets: Cash and cash equivalents $ 4,591 $ 16,215 $ 53,299 $ — $ 74,105 Restricted cash and marketable securities — — 12,794 — 12,794 Accounts receivable, net — 258,863 116,489 — 375,352 Supplies inventory — — 21,980 — 21,980 Prepaid and other current assets 45,542 24,074 26,261 (21,312 ) 74,565 Total current assets 50,133 299,152 230,823 (21,312 ) 558,796 Property and equipment, net 11,877 27,822 165,223 — 204,922 Investments in and receivables from unconsolidated affiliates 5,219,975 1,807,424 — (6,848,343 ) 179,056 Goodwill — 2,123,067 — 2,051,941 4,175,008 Intangible assets, net 13,037 1,664,313 1,925 — 1,679,275 Other assets 7,186 20,825 20,251 (1,999 ) 46,263 Total assets $ 5,302,208 $ 5,942,603 $ 418,222 $ (4,819,713 ) $ 6,843,320 Liabilities and Equity Current liabilities: Current portion of long-term debt $ 8,700 $ 20 $ 12,052 $ — $ 20,772 Accounts payable 3,073 1,640 29,569 (3,561 ) 30,721 Accrued salaries and benefits 29,533 140,149 17,226 — 186,908 Accrued interest 30,386 — 14 — 30,400 Other accrued liabilities 5,171 69,166 35,985 (17,751 ) 92,571 Total current liabilities 76,863 210,975 94,846 (21,312 ) 361,372 Long-term debt 2,550,996 36 56,065 (26,054 ) 2,581,043 Deferred income taxes 288,503 456,942 — (1,998 ) 743,447 Other long-term liabilities 8,568 76,144 34,766 — 119,478 Intercompany payable — 1,228,157 — (1,228,157 ) — Noncontrolling interests – redeemable — — 60,886 116,959 177,845 Equity: Total AmSurg Corp. equity 2,377,278 3,967,431 125,450 (4,092,881 ) 2,377,278 Noncontrolling interests – non-redeemable — 2,918 46,209 433,730 482,857 Total equity 2,377,278 3,970,349 171,659 (3,659,151 ) 2,860,135 Total liabilities and equity $ 5,302,208 $ 5,942,603 $ 418,222 $ (4,819,713 ) $ 6,843,320 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 12,780 1,579,537 2,320 — 1,594,637 Other assets 4,653 1,717 17,078 (1,998 ) 21,450 Total assets $ 4,980,150 $ 5,617,855 $ 405,036 $ (4,503,733 ) $ 6,499,308 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 2,326,103 — 55,249 (23,396 ) 2,357,956 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 $ 4,980,150 $ 5,617,855 $ 405,036 $ (4,503,733 ) $ 6,499,308 Condensed Consolidating Statement of Operations - For the Three Months Ended June 30, 2016 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 7,700 $ 437,042 $ 324,047 $ (10,290 ) $ 758,499 Operating expenses: Salaries and benefits 22,246 305,173 76,727 (135 ) 404,011 Supply cost — 1,145 48,578 (20 ) 49,703 Other operating expenses 6,034 44,213 71,033 (10,135 ) 111,145 Transaction costs 2,099 3,036 — — 5,135 Depreciation and amortization 1,103 21,192 7,759 — 30,054 Total operating expenses 31,482 374,759 204,097 (10,290 ) 600,048 Net gain (loss) on disposals and deconsolidations — 2,857 (262 ) — 2,595 Equity in earnings of unconsolidated affiliates 87,700 68,939 — (149,288 ) 7,351 Operating income 63,918 134,079 119,688 (149,288 ) 168,397 Interest expense (income), net (4,215 ) 35,528 600 — 31,913 Earnings before income taxes 68,133 98,551 119,088 (149,288 ) 136,484 Income tax expense 22,064 10,858 443 — 33,365 Net earnings 46,069 87,693 118,645 (149,288 ) 103,119 Less net earnings (loss) attributable to noncontrolling interests — (7 ) 57,057 — 57,050 Net earnings attributable to AmSurg Corp. shareholders 46,069 87,700 61,588 (149,288 ) 46,069 Preferred stock dividends (2,264 ) — — — (2,264 ) Net earnings attributable to AmSurg Corp. common shareholders $ 43,805 $ 87,700 $ 61,588 $ (149,288 ) $ 43,805 Condensed Consolidating Statement of Operations - For the Six Months Ended June 30, 2016 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 16,244 $ 852,872 $ 634,659 $ (20,598 ) $ 1,483,177 Operating expenses: Salaries and benefits 46,341 614,753 153,024 (268 ) 813,850 Supply cost — 2,152 94,547 (33 ) 96,666 Other operating expenses 13,652 87,552 137,920 (20,297 ) 218,827 Transaction costs 2,276 4,249 — — 6,525 Depreciation and amortization 2,175 41,528 15,423 — 59,126 Total operating expenses 64,444 750,234 400,914 (20,598 ) 1,194,994 Net gain (loss) on disposals and deconsolidations — 2,857 (262 ) — 2,595 Equity in earnings of unconsolidated affiliates 156,742 134,375 — (277,187 ) 13,930 Operating income 108,542 239,870 233,483 (277,187 ) 304,708 Interest expense (income), net (7,034 ) 68,504 1,253 — 62,723 Earnings before income taxes 115,576 171,366 232,230 (277,187 ) 241,985 Income tax expense 38,644 14,632 886 — 54,162 Net earnings 76,932 156,734 231,344 (277,187 ) 187,823 Less net earnings (loss) attributable to noncontrolling interests — (7 ) 110,898 — 110,891 Net earnings attributable to AmSurg Corp. shareholders 76,932 156,741 120,446 (277,187 ) 76,932 Preferred stock dividends (4,528 ) — — — (4,528 ) Net earnings attributable to AmSurg Corp. common shareholders $ 72,404 $ 156,741 $ 120,446 $ (277,187 ) $ 72,404 Condensed Consolidating Statement of Operations - For the Three Months Ended June 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 7,079 $ 329,579 $ 314,780 $ (9,488 ) $ 641,950 Operating expenses: Salaries and benefits 15,511 228,618 76,391 (124 ) 320,396 Supply cost — 489 45,335 (34 ) 45,790 Other operating expenses 5,783 42,099 66,450 (9,330 ) 105,002 Transaction costs 324 1,658 — — 1,982 Depreciation and amortization 1,056 14,617 7,939 — 23,612 Total operating expenses 22,674 287,481 196,115 (9,488 ) 496,782 Net gain (loss) on disposals and deconsolidations — (3,035 ) — — (3,035 ) Equity in earnings of unconsolidated affiliates 76,931 64,513 — (137,455 ) 3,989 Operating income 61,336 103,576 118,665 (137,455 ) 146,122 Interest expense, net 11,978 17,624 580 — 30,182 Earnings before income taxes 49,358 85,952 118,085 (137,455 ) 115,940 Income tax expense 15,683 9,021 489 — 25,193 Net earnings 33,675 76,931 117,596 (137,455 ) 90,747 Less net earnings attributable to noncontrolling interests — — 57,072 — 57,072 Net earnings attributable to AmSurg Corp. shareholders 33,675 76,931 60,524 (137,455 ) 33,675 Preferred stock dividends (2,264 ) — — — (2,264 ) Net earnings attributable to AmSurg Corp. common shareholders $ 31,411 $ 76,931 $ 60,524 $ (137,455 ) $ 31,411 Condensed Consolidating Statement of Operations - For the Six Months Ended June 30, 2015 (In thousands) Parent Issuer Guarantor Subsidiaries Non-Guarantor Subsidiaries Consolidating Adjustments Total Consolidated Net revenue $ 14,170 $ 615,158 $ 601,409 $ (18,342 ) $ 1,212,395 Operating expenses: Salaries and benefits 33,154 440,219 149,454 (252 ) 622,575 Supply cost — 885 87,523 (34 ) 88,374 Other operating expenses 12,417 71,710 129,501 (18,056 ) 195,572 Transaction costs 592 2,861 — — 3,453 Depreciation and amortization 1,890 28,924 15,616 — 46,430 Total operating expenses 48,053 544,599 382,094 (18,342 ) 956,404 Net gain (loss) on disposals and deconsolidations (188 ) (3,223 ) (35 ) 188 (3,258 ) Equity in earnings of unconsolidated affiliates 137,318 119,096 — (249,774 ) 6,640 Operating income 103,247 186,432 219,280 (249,586 ) 259,373 Interest expense, net 23,864 35,378 1,187 — 60,429 Earnings before income taxes 79,383 151,054 218,093 (249,586 ) 198,944 Income tax expense 24,670 13,924 848 — 39,442 Net earnings 54,713 137,130 217,245 (249,586 ) 159,502 Less net earnings attributable to noncontrolling interests — — 104,789 — 104,789 Net earnings attributable to AmSurg Corp. shareholders 54,713 137,130 112,456 (249,586 ) 54,713 Preferred stock dividends (4,528 ) — — — (4,528 ) Net earnings attributable to AmSurg Corp. common shareholders $ 50,185 $ 137,130 $ 112,456 $ (249,586 ) $ 50,185 Condensed Consolidating Statement of Cash Flows - For the Six Months Ended June 30, 2016 (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 $ 39,294 $ 131,227 $ 255,297 $ (230,713 ) $ 195,105 Cash flows from investing activities: Acquisitions and related expenses (265,258 ) (284,010 ) — 268,155 (281,113 ) Acquisition of property and equipment (1,676 ) (19,916 ) (16,026 ) — (37,618 ) Proceeds from sale of interests in surgery centers — 25 — — 25 Purchases of marketable securities — — (498 ) — (498 ) Maturities of marketable securities — — 2,738 — 2,738 Other — (4,057 ) (4,692 ) — (8,749 ) Net cash flows used in investing activities (266,934 ) (307,958 ) (18,478 ) 268,155 (325,215 ) Cash flows from financing activities: Proceeds from long-term borrowings 313,000 — 4,151 — 317,151 Repayment on long-term borrowings (92,350 ) (9 ) (6,404 ) — (98,763 ) Distributions to owners, including noncontrolling interests — (102,330 ) (243,972 ) 230,713 (115,589 ) Capital contributions — 265,258 — (265,258 ) — Changes in intercompany balances with affiliates, net (2,657 ) — 2,657 — — Other, net (6,199 ) 2,520 1,332 (2,897 ) (5,244 ) Net cash flows provided by (used in) financing activities 211,794 165,439 (242,236 ) (37,442 ) 97,555 Net decrease in cash and cash equivalents (15,846 ) (11,292 ) (5,417 ) — (32,555 ) Cash and cash equivalents, beginning of period 20,437 27,507 58,716 — 106,660 Cash and cash equivalents, end of period $ 4,591 $ 16,215 $ 53,299 $ — $ 74,105 Condensed Consolidating Statement of Cash Flows - For the Six Months Ended June 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 $ (27,553 ) $ 172,907 $ 232,423 $ (126,382 ) $ 251,395 Cash flows from investing activities: Acquisitions and related expenses (51,852 ) (197,718 ) — 53,538 (196,032 ) Acquisition of property and equipment (4,490 ) (9,424 ) (18,751 ) — (32,665 ) Purchases of marketable securities — — (1,245 ) — (1,245 ) Maturities of marketable securities — — 2,988 — 2,988 Other — (1,441 ) (546 ) — (1,987 ) Net cash flows used in investing activities (56,342 ) (208,583 ) (17,554 ) 53,538 (228,941 ) Cash flows from financing activities: Proceeds from long-term borrowings — — 7,795 — 7,795 Repayment on long-term borrowings (4,350 ) — (5,938 ) — (10,288 ) Distributions to owners, including noncontrolling interests — (15,108 ) (212,307 ) 126,382 (101,033 ) Capital contributions — 51,852 — (51,852 ) — Changes in intercompany balances with affiliates, net 444 — (444 ) — — Other financing activities, net (2,892 ) 2,573 1,287 (1,686 ) (718 ) Net cash flows provided by (used in) financing activities (6,798 ) 39,317 (209,607 ) 72,844 (104,244 ) Net increase (decrease) in cash and cash equivalents (90,693 ) 3,641 5,262 — (81,790 ) Cash and cash equivalents, beginning of period 134,351 23,471 50,257 — 208,079 Cash and cash equivalents, end of period $ 43,658 $ 27,112 $ 55,519 $ — $ 126,289 |