SEC Info - Apria Healthcare Group Inc - ‘10-Q’ for 9/30/13

NOTE 11 — FINANCIAL GUARANTEES

The Company conducts substantially all of its business through its subsidiaries. Substantially all of the Company’s 100%-owned subsidiaries, jointly and severally, unconditionally guarantee the Senior Secured Term Loan and the Series A-2 Notes on a senior secured basis. The Guarantors also guarantee the Company’s ABL Facility. See also Note 4—Long-Term Debt.

The following condensed consolidating financial statements quantify the financial position as of September 30, 2013 and December 31, 2012, the operations for the three and nine months ended September 30, 2013 and 2012, and the cash flows for the three months ended September 30, 2013 and 2012. These condensed consolidating financial statements present financial information for the parent issuer, the guarantor subsidiaries, the non-guarantor subsidiaries and consolidating adjustments, consisting of the entries that eliminate the investment in subsidiaries and intercompany balances and transactions.

For periods beginning after July 1, 2013, income taxes have been allocated to certain guarantor subsidiaries which are organized as limited liabilities companies (“LLCs”). For federal and state income tax filing purposes, these LLCs are disregarded as separate taxable entities from the parent issuer; however, these LLCs are reflected as guarantor subsidiaries within the Company’s condensed consolidating financial statements.

The financial information as presented below is based on estimates to bifurcate shared resources, costs and revenues between entities and such information may not be indicative of results, if separate financial statements were prepared for these subsidiaries.

CONDENSED CONSOLIDATING BALANCE SHEETS

September 30, 2013

(Unaudited)

C: C: C: C:


	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
	(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	17,218		$	927		$	398	$	—		$	18,543
Accounts receivable less allowance for doubtful accounts		—			331,747			1,748		—			333,495
Inventories, net		—			83,477			453		—			83,930
Deferred expenses		—			3,476			—		—			3,476
Intercompany		360,264			977,759			—		(1,338,023	)		—
Prepaid expenses and other current assets		1,444			21,477			12		—			22,933
Deferred income taxes current		—			5,298			—		(5,298	)		—
Intercompany loan		710,000			—			—		(710,000	)		—

TOTAL CURRENT ASSETS		1,088,926			1,424,161			2,611		(2,053,321	)		462,377
PATIENT SERVICE EQUIPMENT, less accumulated depreciation		—			198,311			3		—			198,314
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET		32,530			38,761			142		—			71,433
GOODWILL		—			258,725			—		—			258,725
INTANGIBLE ASSETS, NET		50,000			83,223			—		—			133,223
DEFERRED DEBT ISSUANCE COSTS, NET		13,918			—			—		—			13,918
INVESTMENT IN SUBSIDIARIES		—			1,012			—		(1,012	)		—
OTHER ASSETS		6,008			30,024			—		—			36,032

TOTAL ASSETS	$	1,191,382		$	2,034,217		$	2,756	$	(2,054,333	)	$	1,174,022

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable	$	—		$	168,425		$	270	$	—		$	168,695
Accrued payroll and related taxes and benefits		9,177			69,116			200		—			78,493
Deferred income taxes current		5,602			—			—		(5,298	)		304
Other accrued liabilities		23,690			51,339			281		—			75,310
Deferred revenue		—			24,626			—		—			24,626
Intercompany		136,742			1,201,280			—		(1,338,022	)		—
Current portion of long-term debt		31,000			710,031			—		(710,000	)		31,031

TOTAL CURRENT LIABILITIES		206,211			2,224,817			751		(2,053,320	)		378,459
LONG-TERM DEBT, net of current portion		1,037,759			—			—		—			1,037,759
DEFERRED INCOME TAXES		14,049			57,509			—		—			71,558
INVESTMENT IN SUBSIDIARIES		306,926			—			—		(306,926	)		—
INCOME TAXES PAYABLE & OTHER NON-CURRENT LIABILITIES		7,433			58,817			993		—			67,243

TOTAL LIABILITIES		1,572,378			2,341,143			1,744		(2,360,246	)		1,555,019
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ (DEFICIT) EQUITY
Additional paid-in capital		699,413			(184,453	)		—		184,454			699,414
(Accumulated deficit) retained earnings		(1,080,409	)		(122,473	)		1,012		121,459			(1,080,411	)

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY		(380,996	)		(306,926	)		1,012		305,913			(380,997	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	1,191,382		$	2,034,217		$	2,756	$	(2,054,333	)	$	1,174,022

CONDENSED CONSOLIDATING BALANCE SHEETS

December 31, 2012

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
	(in thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	23,457		$	3,354		$	269	$	—		$	27,080
Accounts receivable less allowance for doubtful accounts		—			343,100			1,321		—			344,421
Inventories		—			67,857			218		—			68,075
Deferred expenses		—			3,798			—		—			3,798
Intercompany		667,745			475,973			—		(1,143,718	)		—
Prepaid expenses and other current assets		835			16,043			12		—			16,890
Intercompany loan		710,000			—			—		(710,000	)		—

TOTAL CURRENT ASSETS		1,402,037			910,125			1,820		(1,853,718	)		460,264
PATIENT SERVICE EQUIPMENT, less accumulated depreciation		—			186,457			3		—			186,460
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET		37,210			39,430			183		—			76,823
GOODWILL		—			258,725			—		—			258,725
INTANGIBLE ASSETS, NET		50,000			83,781			—		—			133,781
DEFERRED DEBT ISSUANCE COSTS, NET		30,207			—			—		—			30,207
INVESTMENT IN SUBSIDIARIES		—			774			—		(774	)		—
OTHER ASSETS		5,390			21,058			—		—			26,448

TOTAL ASSETS	$	1,524,844		$	1,500,350		$	2,006	$	(1,854,492	)	$	1,172,708

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	4,751		$	152,593		$	186	$	—		$	157,530
Accrued payroll and related taxes and benefits		8,774			61,562			211		—			70,547
Deferred income taxes		3,578			(2,592	)		—		—			986
Other accrued liabilities		19,883			54,536			45		—			74,464
Deferred revenue		—			27,785			—		—			27,785
Intercompany		402,475			741,243			—		(1,143,718	)		—
Current portion of long-term debt		25,000			710,195			—		(710,000	)		25,195

TOTAL CURRENT LIABILITIES		464,461			1,745,322			442		(1,853,718	)		356,507
LONG-TERM DEBT, net of current portion		1,017,500			15			—		—			1,017,515
DEFERRED INCOME TAXES		15,222			53,685			—		—			68,907
INVESTMENT IN SUBSIDIARIES		351,927			—			—		(351,927	)		—
INCOME TAXES PAYABLE & OTHER NON-CURRENT LIABILITIES		7,158			53,255			790		—			61,203

TOTAL LIABILITIES		1,856,268			1,852,277			1,232		(2,205,645	)		1,504,132
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Common stock		—			—			—		—			—
Additional paid-in capital		695,211			(247,215	)		—		247,215			695,211
(Accumulated deficit) retained earnings		(1,026,635	)		(104,712	)		774		103,938			(1,026,635	)

TOTAL STOCKHOLDERS’ (DEFICIT) EQUITY		(331,424	)		(351,927	)		774		351,153			(331,424	)

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	1,524,844		$	1,500,350		$	2,006	$	(1,854,492	)	$	1,172,708

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2013

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	(in thousands)
Operating net revenue	$	—		$	607,479		$	2,992		$	(3,274	)	$	607,197
Income from subsidiaries		53,034			—			—			(53,034	)		—

TOTAL NET REVENUES		53,034			607,479			2,992			(56,308	)		607,197
TOTAL COST OF NET REVENUES		—			280,901			2,008			(3,274	)		279,635
Provision for doubtful accounts		—			24,083			(150	)		—			23,933
Selling, distribution and administrative		37,826			309,795			844			(53,034	)		295,431
Amortization of intangible assets		—			186			—			—			186

TOTAL COSTS AND EXPENSES		37,826			614,965			2,702			(56,308	)		599,185
OPERATING INCOME (LOSS)		15,208			(7,486	)		290			—			8,012
Interest expense		23,150			7			—			—			23,157
Loss on early retirement of debt		—			—			—			—			—
Interest income and other		(11,669	)		11,339			142			—			(188	)

INCOME (LOSS) BEFORE TAXES		3,727			(18,832	)		148			—			(14,957	)
Income tax expense (benefit)		5,496			(4,668	)		—			—			828

NET (LOSS) INCOME		(1,769	)		(14,164	)		148			—			(15,785	)
Equity in income of subsidiaries, net of tax		(14,016	)		148			—			13,868			—

NET (LOSS) INCOME	$	(15,785	)	$	(14,016	)	$	148		$	13,868		$	(15,785	)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

Nine Months Ended September 30, 2013

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	(in thousands)
Operating net revenue	$	—		$	1,838,843		$	8,028		$	(4,296	)	$	1,842,575
Income from subsidiaries		152,479			—			—			(152,479	)		—

TOTAL NET REVENUES		152,479			1,838,843			8,028			(156,775	)		1,842,575
TOTAL COST OF NET REVENUES		—			812,548			4,925			(4,296	)		813,177
Provision for doubtful accounts		—			60,280			(120	)		—			60,160
Selling, distribution and administrative		116,739			921,519			2,256			(152,479	)		888,035
Amortization of intangible assets		—			558			—			—			558

TOTAL COSTS AND EXPENSES		116,739			1,794,905			7,061			(156,775	)		1,761,930
OPERATING INCOME		35,740			43,938			967			—			80,645
Interest expense		89,520			26			—			—			89,546
Loss on early retirement of debt		44,221			—			—			—			44,221
Interest income and other		(39,036	)		37,221			474			—			(1,341	)

(LOSS) INCOME BEFORE TAXES		(58,965	)		6,691			493			—			(51,781	)
Income tax expense (benefit)		2,689			(694	)		—			—			1,995

NET (LOSS) INCOME		(61,654	)		7,385			493			—			(53,776	)
Equity in income of subsidiaries, net of tax		7,878			493			—			(8,371	)		—

NET (LOSS) INCOME	$	(53,776	)	$	7,878		$	493		$	(8,371	)	$	(53,776	)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2012

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
	(in thousands)
Operating net revenue	$	—		$	606,729		$	2,262	$	(518	)	$	608,473
Income from subsidiaries		46,342			—			—		(46,342	)		—

TOTAL NET REVENUES		46,342			606,729			2,262		(46,860	)		608,473
TOTAL COST OF NET REVENUES		—			256,563			1,209		(518	)		257,254
Provision for doubtful accounts		—			13,440			55		—			13,495
Selling, distribution and administrative		40,048			312,726			699		(46,342	)		307,131
Amortization of intangible assets		—			344			—		—			344
Non-cash impairment of intangible assets		280,000			—			—		—			280,000

TOTAL COSTS AND EXPENSES		320,048			583,073			1,963		(46,860	)		858,224
OPERATING (LOSS) INCOME		(273,706	)		23,656			299		—			(249,751	)
Interest expense		33,562			232			—		—			33,794
Interest income and other		(15,290	)		14,832			147		—			(311	)

(LOSS) INCOME BEFORE TAXES		(291,978	)		8,592			152		—			(283,234	)
Income tax benefit		(106,370	)		(1,153	)		—		—			(107,523	)

NET (LOSS) INCOME		(185,608	)		9,745			152		—			(175,711	)
Equity in income of subsidiaries, net of tax		9,897			152			—		(10,049	)		—

NET (LOSS) INCOME	$	(175,711	)	$	9,897		$	152	$	(10,049	)	$	(175,711	)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Nine Months Ended September 30, 2012

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated
	(in thousands)
Operating net revenue	$	—		$	1,805,692		$	7,389	$	(1,223	)	$	1,811,858
Income from subsidiaries		148,694			—			—		(148,694	)		—

TOTAL NET REVENUES		148,694			1,805,692			7,389		(149,917	)		1,811,858
TOTAL COST OF NET REVENUES		—			762,506			3,834		(1,223	)		765,117
Provision for doubtful accounts		—			45,978			165		—			46,143
Selling, distribution and administrative		127,996			951,876			2,212		(148,694	)		933,390
Amortization of intangible assets		306			1,182			—		—			1,488
Non-cash impairment of intangible assets		280,000			—			—		—			280,000

TOTAL COSTS AND EXPENSES		408,302			1,761,542			6,211		(149,917	)		2,026,138
OPERATING (LOSS) INCOME		(259,608	)		44,150			1,178		—			(214,280	)
Interest expense		100,616			573			—		—			101,189
Interest income and other		(46,747	)		45,088			577		—			(1,082	)

(LOSS) INCOME BEFORE TAXES		(313,477	)		(1,511	)		601		—			(314,387	)
Income tax benefit		(105,803	)		(530	)		—		—			(106,333	)

NET (LOSS) INCOME		(207,674	)		(981	)		601		—			(208,054	)
Equity in income of subsidiaries, net of tax		(380	)		601			—		(221	)		—

NET (LOSS) INCOME	$	(208,054	)	$	(380	)	$	601	$	(221	)	$	(208,054	)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2013

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments		Consolidated
	(in thousands)
OPERATING ACTIVITIES
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	15,759		$	62,081		$	139		$	—	$	77,979

INVESTING ACTIVITIES
Purchases of patient service equipment and property, equipment and improvements		(12,543	)		(94,055	)		(10	)		—		(106,608	)
Proceeds from sale of patient service equipment and other		64			29,727			—			—		29,791

NET CASH USED IN INVESTING ACTIVITIES		(12,479	)		(64,328	)		(10	)		—		(76,817	)

FINANCING ACTIVITIES
Proceeds from ABL Facility		502,000			—			—			—		502,000
Payments on ABL Facility		(505,000	)		—			—			—		(505,000	)
Payments on Series A-1 Notes		(700,000	)		—			—			—		(700,000	)
Payments on Series A-2 Notes		(160,000	)		—			—			—		(160,000	)
Proceeds from Senior Secured Term Loan		900,000			—			—			—		900,000
Payments on Senior Secured Loan		(2,250	)		—			—			—		(2,250	)
Debt issuance costs on Senior Secured Term Loan		(10,628	)		—			—			—		(10,628	)
Payment of original issue discount associated with Senior Secured Term Loan		(9,000	)		—			—			—		(9,000	)
Payments on other long-term debt		—			(180	)		—			—		(180	)
Premium paid on early retirement of Series A-1 and A-2 Notes		(24,641	)		—			—			—		(24,641	)

NET CASH USED IN FINANCING ACTIVITIES		(9,519	)		(180	)		—			—		(9,699	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(6,239	)		(2,427	)		129			—		(8,537	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		23,457			3,354			269			—		27,080

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	17,218		$	927		$	398		$	—	$	18,543

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2012

(Unaudited)


	Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated
	(in thousands)
OPERATING ACTIVITIES
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES	$	(13,717	)	$	79,970		$	307		$	10,815		$	77,375

INVESTING ACTIVITIES
Purchases of patient service equipment and property, equipment and improvements		(6,881	)		(114,123	)		(4	)		—			(121,008	)
Proceeds from disposition of assets		15			34,529			—			—			34,544
Cash paid for acquisitions		—			(121	)		—			—			(121	)

NET CASH USED IN INVESTING ACTIVITIES		(6,866	)		(79,715	)		(4	)		—			(86,585	)

FINANCING ACTIVITIES
Proceeds from ABL Facility		317,000			—			—			—			317,000
Payments on ABL Facility		(321,000	)		—			—			—			(321,000	)
Payments on other long-term debt		—			(256	)		—			—			(256	)
Cash paid on profit interest		(102	)		—			—			—			(102	)

NET CASH USED IN FINANCING ACTIVITIES		(4,102	)		(256	)		—			—			(4,358	)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(24,685	)		(1	)		303			10,815			(13,568	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		43,552			1			475			(14,932	)		29,096

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	18,867		$	—		$	778		$	(4,117	)	$	15,528

This ‘10-Q’ Filing	Date	Other Filings

Filed on:	11/13/13	8-K, IRANNOTICE
For Period end:	9/30/13
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Apria Healthcare Group Inc – ‘10-Q’ for 9/30/13 – ‘R16’

On: Wednesday, 11/13/13, at 11:01am ET · For: 9/30/13 · Accession #: 1193125-13-439649 · File #: 333-168159

Previous ‘10-Q’: ‘10-Q’ on 8/9/13 for 6/30/13 · Latest ‘10-Q’: This Filing

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents

‘R16’ — Financial Guarantees

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Apria Healthcare Group Inc – ‘10-Q’ for 9/30/13 – ‘R16’

On: Wednesday, 11/13/13, at 11:01am ET · For: 9/30/13 · Accession #: 1193125-13-439649 · File #: 333-168159

Previous ‘10-Q’: ‘10-Q’ on 8/9/13 for 6/30/13 · Latest ‘10-Q’: This Filing

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34Filing Table of Contents

‘R16’ — Financial Guarantees

This is an IDEA Financial Report. [ Alternative Formats ]

Dates Referenced Herein and Documents Incorporated by Reference

Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34
Filing Table of Contents