Note 14 - Condensed Consolidating Financial Information of Guarantor Subsidiaries

3 Months Ended

Mar. 31, 2012

Condensed Consolidating Financial Information Of Guarantor Subsidiaries

(14)         Condensed Consolidating Financial Information of Guarantor Subsidiaries

The Company has outstanding certain indebtedness that is guaranteed by all of its U.S. subsidiaries. However, the indebtedness is not guaranteed by the Company’s foreign subsidiaries. The guarantor subsidiaries are wholly owned and the guarantees are made on a joint and several basis, and are full and unconditional. Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes that such information would not be material to investors. However, condensed consolidating financial information as of December 31, 2011and March 31, 2012, and for the three months ended March 31, 2011 and 2012 is presented below. The Company (issuer of the Senior Unsecured Notes) was formed in June 2010 to implement a holding company organizational structure. As a result, all operating activities are conducted through the Company’s wholly-owned subsidiaries.

Condensed Consolidating Statement of Operations for the three months ended March 31, 2011

(In thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	56,858		$	9,730		$	—	$	66,588
Costs and expenses:
Costs of revenues		37,862			5,707			—		43,569
Selling, general and administrative expenses		12,094			2,234			—		14,328
Depreciation and amortization		7,156			1,453			—		8,609
Total costs and expenses		57,112			9,394			—		66,506
Income (loss) from operations		(254	)		336			—		82
Interest and other expenses, net		430			582			—		1,012
Loss before income taxes		(684	)		(246	)		—		(930	)
Benefit for income taxes		(318	)		(53	)		—		(371	)
Net loss	$	(366	)	$	(193	)	$	—	$	(559	)

Condensed Consolidating Statement of Operations for the three months ended March 31, 2012

(In thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	87,195		$	36,543		$	—	$	123,738
Costs and expenses:
Costs of revenues		60,415			20,758			—		81,173
Selling, general and administrative expenses		17,022			11,610			—		28,632
Depreciation and amortization		8,719			5,306			—		14,025
Total costs and expenses		86,156			37,674			—		123,830
Income (loss) from operations		1,039			(1,131	)		—		(92	)
Interest and other expenses, net		5,312			1,261			—		6,573
Loss before income taxes		(4,273	)		(2,392	)		—		(6,665	)
Provision (benefit) for income taxes		(2,485	)		143			—		(2,342	)
Net loss	$	(1,788	)	$	(2,535	)	$	—	$	(4,323	)

Condensed Consolidating Balance Sheet as of December 31, 2011

(In thousands)

Assets	Guarantor Subsidiaries		Non-Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries			Consolidated Totals
Current assets:
Cash and cash equivalents	$	6,044	$	2,372	$	—		$	—		$	8,416
Accounts receivable, net		44,690		99,351		—			—			144,041
Other receivables		26		14		—			—			40
Prepaid expenses		2,694		1,793		—			—			4,487
Deferred tax assets		1,373		267		—			—			1,640
Other current assets		14		1,159		—			—			1,173
Total current assets		54,841		104,956		—			—			159,797
Property, equipment and leasehold improvements, net		7,745		1,173		—			—			8,918
Goodwill		240,252		60,008		—			—			300,260
Intangible assets, net		84,833		61,335		—			—			146,168
Deferred tax assets, noncurrent		—		1,913		—			(1,913	)		—
Deferred financing costs, net		—		—		11,458			—			11,458
Other assets		438		—		—			—			438
Total assets	$	388,109	$	229,385	$	11,458		$	(1,913	)	$	627,039
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	16,728	$	25,914	$	—		$	—		$	42,642
Accrued expenses		4,272		24,138		—			—			28,410
Accrued interest expense		—		3,236		7,011			—			10,247
Deferred revenue		192		1,140		—			—			1,332
Current portion of subordinated unsecured notes payable		1,932		—		—			—			1,932
Current portion of contingent earnout obligation		91		—		—			—			91
Other current liabilities		2,925		2,534		—			—			5,459
Total current liabilities		26,140		56,962		7,011			—			90,113
Senior unsecured notes payable		—		—		250,000			—			250,000
Senior secured revolving credit facility and working capital facilities		—		39,063		5,000			—			44,063
Long-term subordinated unsecured notes payable, less current portion		717		—		—			—			717
Long-term contingent earnout obligation, less current portion		86		—		—			—			86
Deferred tax liability, noncurrent		4,072		—		—			(1,913	)		2,159
Other long-term liabilities		1,691		286		—			—			1,977
Total liabilities		32,706		96,311		262,011			(1,913	)		389,115
Commitments and contingencies
Stockholders’ equity (1)		355,403		133,074		(250,553	)		—			237,924
Total liabilities and stockholders' equity	$	388,109	$	229,385	$	11,458		$	(1,913	)	$	627,039

(1)  Includes intercompany investments in subsidiaries.

Condensed Consolidating Balance Sheet as of March 31, 2012

(In thousands)

Assets	Guarantor Subsidiaries		Non-Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries			Consolidated Totals
Current assets:
Cash and cash equivalents	$	5,690	$	2,776	$	—		$	—		$	8,466
Accounts receivable, net		43,586		106,174		—			—			149,760
Other receivables		65		—		—			—			65
Prepaid expenses		2,278		2,673		—			—			4,951
Deferred tax assets		1,509		—		—			—			1,509
Other current assets		13		1,199		—			—			1,212
Total current assets		53,141		112,822		—			—			165,963
Property, equipment and leasehold improvements, net		8,629		1,204		—			—			9,833
Goodwill		242,111		60,908		—			—			303,019
Intangible assets, net		77,174		58,042		—			—			135,216
Deferred tax assets, noncurrent		—		2,869		—			(1,881	)		988
Deferred financing costs, net		—		—		11,343			—			11,343
Other assets		432		—		—			—			432
Total assets	$	381,487	$	235,845	$	11,343		$	(1,881	)	$	626,794
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	15,117	$	27,998	$	—		$	—		$	43,115
Accrued expenses		9,300		27,993		—			—			37,293
Accrued interest expense		—		4,502		317			—			4,819
Deferred revenue		174		1,746		—			—			1,920
Current portion of subordinated unsecured notes payable		1,629		—		—			—			1,629
Current portion of contingent earnout obligation		91		—		—			—			91
Other current liabilities		2,378		2,704		—			—			5,082
Total current liabilities		28,689		64,943		317			—			93,949
Senior unsecured notes payable		—		—		250,000			—			250,000
Senior secured revolving credit facility and working capital facilities		—		36,557		5,000			—			41,557
Long-term subordinated unsecured notes payable, less current portion		513		—		—			—			513
Long-term contingent earnout obligation, less current portion		86		—		—			—			86
Deferred tax liability, noncurrent		1,881		—		—			(1,881	)		—
Other long-term liabilities		1,527		336		—			—			1,863
Total liabilities		32,696		101,836		255,317			(1,881	)		387,968
Commitments and contingencies
Stockholders’ equity (1)		348,791		134,009		(243,974	)		—			238,826
Total liabilities and stockholders' equity	$	381,487	$	235,845	$	11,343		$	(1,881	)	$	626,794

(1)  Includes intercompany investments in subsidiaries.

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2011

(In thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	4,953		$	1,313		$	—		$	6,266
Investing activities:
Cash paid for acquisitions, net		(185,000	)		(2,303	)		—			(187,303	)
Purchases of equipment and leasehold improvements, net		(1,872	)		(96	)		—			(1,968	)
Working capital and other settlements for acquisitions		49			(374	)		—			(325	)
Net cash used in investing activities		(186,823	)		(2,773	)		—			(189,596	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			165,000			165,000
Proceeds from the exercise of options and warrants		—			—			263			263
Excess tax benefit related to share-based compensation		438			—			—			438
Payment of deferred financing costs		—			—			(445	)		(445	)
Repayment of subordinated unsecured notes payable		(361	)		—			—			(361	)
Net borrowings under working capital facilities		—			130			—			130
Intercompany investments and other		164,800			—			(164,818	)		(18	)
Net cash provided by financing activities		164,877			130			—			165,007
Exchange rate impact on cash and cash equivalents		—			80			—			80
Net decrease in cash and cash equivalents		(16,993	)		(1,250	)		—			(18,243	)
Cash and cash equivalents, beginning of period		31,192			2,432			—			33,624
Cash and cash equivalents, end of period	$	14,199		$	1,182		$	—		$	15,381

Condensed Consolidating Statement of Cash Flows for the three months ended March 31, 2012

(In thousands)

	Guarantor Subsidiaries			Non-Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	1,398		$	3,401		$	—		$	4,799
Investing activities:
Purchases of equipment and leasehold improvements, net		(407	)		(145	)		—			(552	)
Working capital and other settlements for acquisitions		47			861			—			908
Net cash provided by (used in) investing activities		(360	)		716			—			356
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			11,000			11,000
Proceeds from the exercise of options and warrants		—			—			50			50
Purchases of stock for treasury		—			—			(387	)		(387	)
Payment of deferred financing costs		—			—			(414	)		(414	)
Repayment of subordinated unsecured notes payable		(546	)		—			—			(546	)
Net repayments of working capital facilities		—			(3,789	)		—			(3,789	)
Repayment under credit facilities		—			—			(11,000	)		(11,000	)
Intercompany investments and other		(846	)		—			751			(95	)
Net cash used in financing activities		(1,392	)		(3,789	)		—			(5,181	)
Exchange rate impact on cash and cash equivalents		—			76			—			76
Net increase (decrease) in cash and cash equivalents		(354	)		404			—			50
Cash and cash equivalents, beginning of period		6,044			2,372			—			8,416
Cash and cash equivalents, end of period	$	5,690		$	2,776		$	—		$	8,466