Note 14 - Condensed Consolidating Financial Information of Guarantor Subsidiaries

12 Months Ended

Dec. 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 100% 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, 2011 and 2012, and for the three years ended December 31, 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 100% owned  subsidiaries. On August 31, 2012, the Company acquired 100% of the outstanding common stock of MedHealth Holdings Pty Limited ("MedHealth"), an Australian entity. In connection with this acquisition, the Company formed a new Delaware holding company, ExamWorks AP, Inc. (“ExamWorks AP”). ExamWorks AP was added to the Indenture as a guarantor of the Senior Unsecured Notes and is a direct subsidiary of the Company.

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2010

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	147,917		$	15,594		$	—	$	163,511
Costs and expenses:
Costs of revenues		94,238			9,368			—		103,606
Selling, general and administrative expenses		34,789			2,900			—		37,689
Depreciation and amortization		17,044			2,461			—		19,505
Total costs and expenses		146,071			14,729			—		160,800
Income from operations		1,846			865			—		2,711
Interest and other expenses, net		10,034			1,199			—		11,233
Loss before income taxes		(8,188	)		(334	)		—		(8,522	)
Provision (benefit) for income taxes		(2,538	)		54			—		(2,484	)
Net loss	$	(5,650	)	$	(388	)	$	—	$	(6,038	)
Comprehensive Income (Loss):
Net loss	$	(5,650	)	$	(388	)	$	—	$	(6,038	)
Foreign currency translation adjustments, net of tax		—			1,216			—		1,216
Total comprehensive income (loss)	$	(5,650	)	$	828		$	—	$	(4,822	)

Condensed Consolidating Statement of Operations and Comprehensive Loss for the year ended December 31, 2011

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	298,056		$	99,804		$	—	$	397,860
Costs and expenses:
Costs of revenues		203,651			58,591			—		262,242
Selling, general and administrative expenses		55,139			28,994			—		84,133
Depreciation and amortization		34,081			13,358			—		47,439
Total costs and expenses		292,871			100,943			—		393,814
Income (loss) from operations		5,185			(1,139	)		—		4,046
Interest and other expenses, net		14,148			2,313			—		16,461
Loss before income taxes		(8,963	)		(3,452	)		—		(12,415	)
Provision (benefit) for income taxes		(5,331	)		1,249			—		(4,082	)
Net loss	$	(3,632	)	$	(4,701	)	$	—	$	(8,333	)
Comprehensive Loss:
Net loss	$	(3,632	)	$	(4,701	)	$	—	$	(8,333	)
Foreign currency translation adjustments, net of tax		—			(2,645	)		—		(2,645	)
Total comprehensive loss	$	(3,632	)	$	(7,346	)	$	—	$	(10,978	)

Condensed Consolidating Statement of Operations and Comprehensive Loss for the year ended December 31, 2012

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	340,200		$	181,037		$	—	$	521,237
Costs and expenses:
Costs of revenues		241,281			102,770			—		344,051
Selling, general and administrative expenses		60,255			53,255			—		113,510
Depreciation and amortization		34,339			24,212			—		58,551
Total costs and expenses		335,875			180,237			—		516,112
Income from operations		4,325			800			—		5,125
Interest and other expenses, net		24,411			3,640			—		28,051
Loss before income taxes		(20,086	)		(2,840	)		—		(22,926	)
Provision (benefit) for income taxes		(10,320	)		2,333			—		(7,987	)
Net loss	$	(9,766	)	$	(5,173	)	$	—	$	(14,939	)
Comprehensive Loss:
Net loss	$	(9,766	)	$	(5,173	)	$	—	$	(14,939	)
Foreign currency translation adjustments, net of tax		(249	)		4,861			—		4,612
Total comprehensive loss	$	(10,015	)	$	(312	)	$	—	$	(10,327	)

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 (Deficit)
Current liabilities:
Accounts payable	$	16,728	$	25,914	$	—		$	—		$	42,642
Accrued expenses		4,272		24,138		—			—			28,410
Accrued interest expense		—		—		10,247			—			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		53,726		10,247			—			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		93,075		265,247			(1,913	)		389,115
Commitments and contingencies
Stockholders’ equity (deficit) (1)		355,403		136,310		(253,789	)		—			237,924
Total liabilities and stockholders' equity (deficit)	$	388,109	$	229,385	$	11,458		$	(1,913	)	$	627,039

(1) Includes intercompany investments in subsidiaries.

Condensed Consolidating Balance Sheet as of December 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	$	4,125	$	4,502	$	—		$	—		$	8,627
Accounts receivable, net		43,939		100,737		—			—			144,676
Other receivables		17		4		—			—			21
Prepaid expenses		2,723		2,613		—			—			5,336
Deferred tax assets		37		—		—			(21	)		16
Other current assets		—		1,213		—			—			1,213
Total current assets		50,841		109,069		—			(21	)		159,889
Property, equipment and leasehold improvements, net		8,339		1,994		—			—			10,333
Goodwill		258,890		111,253		—			—			370,143
Intangible assets, net		62,420		90,476		—			—			152,896
Long-term accounts receivable, less current portion		—		31,708		—			—			31,708
Deferred tax assets, noncurrent		61		4,112		—			—			4,173
Deferred financing costs, net		—		—		10,258			—			10,258
Other assets		495		606		—			—			1,101
Total assets	$	381,046	$	349,218	$	10,258		$	(21	)	$	740,501
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	14,756	$	32,184	$	—		$	—		$	46,940
Accrued expenses		8,067		27,928		—			—			35,995
Accrued interest expense		—		—		10,918			—			10,918
Deferred revenue		103		3,848		—			—			3,951
Deferred tax liability		—		21		—			(21	)		—
Current portion of subordinated unsecured notes payable		275		—		—			—			275
Current portion of contingent earnout obligation		91		—		—			—			91
Current portion of working capital facilities		—		5,983		—			—			5,983
Other current liabilities		2,226		3,747		—			—			5,973
Total current liabilities		25,518		73,711		10,918			(21	)		110,126
Senior unsecured notes payable		—		—		250,000			—			250,000
Senior secured revolving credit facility and working capital facilities, less current portion		—		28,476		99,926			—			128,402
Long-term subordinated unsecured notes payable, less current portion		300		—		—			—			300
Other long-term liabilities		1,493		6,032		—			—			7,525
Total liabilities		27,311		108,219		360,844			(21	)		496,353
Commitments and contingencies
Stockholders’ equity (deficit) (1)		353,735		240,999		(350,586	)		—			244,148
Total liabilities and stockholders' equity (deficit)	$	381,046	$	349,218	$	10,258		$	(21	)	$	740,501

(1) Includes intercompany investments in subsidiaries.

Condensed Consolidating Statement of Cash Flows for the year ended December 31, 2010

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	14,565		$	3,738		$	—		$	18,303
Investing activities:
Cash paid for acquisitions, net		(115,331	)		106			—			(115,225	)
Purchases of equipment and leasehold improvements, net		(1,728	)		(2	)		—			(1,730	)
Working capital and other settlements for acquisitions		418			—			—			418
Net cash provided by (used in) investing activities		(116,641	)		104			—			(116,537	)
Financing activities:
Borrowings under credit facilities		—			—			67,315			67,315
Excess tax benefit related to share-based compensation		—			—			974			974
Proceeds from the exercise of options and warrants		—			—			703			703
Issuance of preferred stock, net		—			—			32,421			32,421
Issuance of common stock, net		—			—			136,660			136,660
Repayment of related party notes		(3,500	)		—			—			(3,500	)
Payment of deferred financing costs		—			—			(6,534	)		(6,534	)
Repayment of subordinated unsecured notes payable		(2,167	)		—			—			(2,167	)
Net borrowings (repayments) under working capital facilities		6,447			(1,450	)		—			4,997
Repayment under credit facilities		—			—			(100,550	)		(100,550	)
Intercompany investments and other		130,989			—			(130,989	)		—
Net cash provided by (used in) financing activities		131,769			(1,450	)		—			130,319
Exchange rate impact on cash and cash equivalents		—			40			—			40
Net increase in cash and cash equivalents		29,693			2,432			—			32,125
Cash and cash equivalents, beginning of year		1,499			—			—			1,499
Cash and cash equivalents, end of year	$	31,192		$	2,432		$	—		$	33,624

Condensed Consolidating Statement of Cash Flows for the year ended December 31, 2011

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	33,994		$	5,549		$	—		$	39,543
Investing activities:
Cash paid for acquisitions, net		(320,496	)		(1,752	)		—			(322,248	)
Purchases of equipment and leasehold improvements, net		(6,048	)		(808	)		—			(6,856	)
Working capital and other settlements for acquisitions		(5,007	)		(1,703	)		—			(6,710	)
Net cash used in investing activities		(331,551	)		(4,263	)		—			(335,814	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			278,000			278,000
Proceeds from the exercise of options and warrants		—			—			2,292			2,292
Borrowings under senior unsecured notes payable		—			—			250,000			250,000
Purchases of stock for treasury		—			—			(9,421	)		(9,421	)
Payment of deferred financing costs		—			—			(9,746	)		(9,746	)
Repayment of subordinated unsecured notes payable		(2,421	)		—			—			(2,421	)
Net borrowings under working capital facilities		37,145			(1,524	)		—			35,621
Repayment under senior secured revolving credit facility		—			—			(273,000	)		(273,000	)
Intercompany investments and other		237,685			—			(238,125	)		(440	)
Net cash provided by (used in) financing activities		272,409			(1,524	)		—			270,885
Exchange rate impact on cash and cash equivalents		—			178			—			178
Net decrease in cash and cash equivalents		(25,148	)		(60	)		—			(25,208	)
Cash and cash equivalents, beginning of year		31,192			2,432			—			33,624
Cash and cash equivalents, end of year	$	6,044		$	2,372		$	—		$	8,416

Condensed Consolidating Statement of Cash Flows for the year ended December 31, 2012

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	18,131		$	6,646		$	—		$	24,777
Investing activities:
Cash paid for acquisitions, net		(110,111	)		1,141			—			(108,970	)
Purchases of equipment and leasehold improvements, net		(5,071	)		(770	)		—			(5,841	)
Working capital and other settlements for acquisitions		(857	)		1,284			—			427
Net cash provided by (used in) investing activities		(116,039	)		1,655			—			(114,384	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			170,640			170,640
Excess tax benefit related to share-based compensation		—			—			2,853			2,853
Proceeds from the exercise of options and warrants		—			—			2,258			2,258
Purchases of stock for treasury		—			—			(387	)		(387	)
Payment of deferred financing costs		—			—			(1,074	)		(1,074	)
Repayment of subordinated unsecured notes payable		(2,193	)		—			—			(2,193	)
Net repayments of working capital facilities		—			(6,279	)		—			(6,279	)
Repayment under senior secured revolving credit facility		—			—			(76,000	)		(76,000	)
Intercompany investments and other		98,182			14			(98,290	)		(94	)
Net cash provided by (used in) financing activities		95,989			(6,265	)		—			89,724
Exchange rate impact on cash and cash equivalents		—			94			—			94
Net increase (decrease) in cash and cash equivalents		(1,919	)		2,130			—			211
Cash and cash equivalents, beginning of year		6,044			2,372			—			8,416
Cash and cash equivalents, end of year	$	4,125		$	4,502		$	—		$	8,627