Note 14 - Condensed Consolidating Financial Information of Guarantor Subsidiaries

9 Months Ended

Sep. 30, 2013

Condensed Consolidating Financial Information Of Guarantor Subsidiaries [Abstract]

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, 2012 and September 30, 2013, and for the three and nine months ended September 30, 2012 and 2013 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 Comprehensive Income (Loss) for the three months ended September 30, 2012

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	84,785		$	45,300		$	—	$	130,085
Costs and expenses:
Costs of revenues		60,025			26,055			—		86,080
Selling, general and administrative expenses		15,003			13,278			—		28,281
Depreciation and amortization		8,480			5,978			—		14,458
Total costs and expenses		83,508			45,311			—		128,819
Income (loss) from operations		1,277			(11	)		—		1,266
Interest and other expenses, net		5,937			1,609			—		7,546
Loss before income taxes		(4,660	)		(1,620	)		—		(6,280	)
Provision (benefit) for income taxes		(3,692	)		2,038			—		(1,654	)
Net loss	$	(968	)	$	(3,658	)	$	—	$	(4,626	)
Comprehensive Income (Loss):
Net loss	$	(968	)	$	(3,658	)	$	—	$	(4,626	)
Foreign currency translation adjustments, net of tax		(159	)		4,572			—		4,413
Total comprehensive income (loss)	$	(1,127	)	$	914		$	—	$	(213	)

Condensed Consolidating Statement of Comprehensive Loss for the nine months ended September 30, 2012

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	260,442		$	121,158		$	—	$	381,600
Costs and expenses:
Costs of revenues		182,747			68,729			—		251,476
Selling, general and administrative expenses		47,449			37,193			—		84,642
Depreciation and amortization		25,881			16,364			—		42,245
Total costs and expenses		256,077			122,286			—		378,363
Income (loss) from operations		4,365			(1,128	)		—		3,237
Interest and other expenses, net		16,391			3,902			—		20,293
Loss before income taxes		(12,026	)		(5,030	)		—		(17,056	)
Provision (benefit) for income taxes		(6,938	)		2,138			—		(4,800	)
Net loss	$	(5,088	)	$	(7,168	)	$	—	$	(12,256	)
Comprehensive Loss:
Net loss	$	(5,088	)	$	(7,168	)	$	—	$	(12,256	)
Foreign currency translation adjustments, net of tax		(159	)		5,286			—		5,127
Total comprehensive loss	$	(5,247	)	$	(1,882	)	$	—	$	(7,129	)

Condensed Consolidating Statement of Comprehensive Income (Loss) for the three months ended September 30, 2013

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	93,963		$	58,391		$	—	$	152,354
Costs and expenses:
Costs of revenues		66,733			34,098			—		100,831
Selling, general and administrative expenses		15,902			15,718			—		31,620
Depreciation and amortization		7,730			8,180			—		15,910
Total costs and expenses		90,365			57,996			—		148,361
Income from operations		3,598			395			—		3,993
Interest and other expenses, net		5,512			1,804			—		7,316
Loss before income taxes		(1,914	)		(1,409	)		—		(3,323	)
Provision (benefit) for income taxes		(3,451	)		2,379			—		(1,072	)
Net income (loss)	$	1,537		$	(3,788	)	$	—	$	(2,251	)
Comprehensive Income (Loss):
Net income (loss)	$	1,537		$	(3,788	)	$	—	$	(2,251	)
Foreign currency translation adjustments, net of tax		(2,166	)		5,212			—		3,046
Total comprehensive income (loss)	$	(629	)	$	1,424		$	—	$	795

Condensed Consolidating Statement of Comprehensive Loss for the nine months ended September 30, 2013

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)		Consolidated Totals
Revenues	$	280,634		$	176,571		$	—	$	457,205
Costs and expenses:
Costs of revenues		197,937			102,396			—		300,333
Selling, general and administrative expenses		51,306			47,647			—		98,953
Depreciation and amortization		24,609			23,449			—		48,058
Total costs and expenses		273,852			173,492			—		447,344
Income from operations		6,782			3,079			—		9,861
Interest and other expenses, net		16,859			5,687			—		22,546
Loss before income taxes		(10,077	)		(2,608	)		—		(12,685	)
Provision (benefit) for income taxes		(8,329	)		4,270			—		(4,059	)
Net loss	$	(1,748	)	$	(6,878	)	$	—	$	(8,626	)
Comprehensive Loss:
Net loss	$	(1,748	)	$	(6,878	)	$	—	$	(8,626	)
Foreign currency translation adjustments, net of tax		516			(7,452	)		—		(6,936	)
Total comprehensive loss	$	(1,232	)	$	(14,330	)	$	—	$	(15,562	)

Condensed Consolidating Balance Sheet as of December 31, 2012

(In thousands)

	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries			Consolidated Totals
Assets
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
Current portion of subordinated unsecured notes payable		275		—		—			—			275
Deferred tax liability		—		21		—			(21	)		—
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 Balance Sheet as of September 30, 2013

(In thousands)

	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries			Consolidated Totals
Assets
Current assets:
Cash and cash equivalents	$	1,193	$	10,852	$	—		$	—		$	12,045
Accounts receivable, net		45,633		113,682		—			—			159,315
Other receivables		29		—		—			—			29
Prepaid expenses		2,583		3,429		—			—			6,012
Deferred tax assets		7		—		—			(4	)		3
Other current assets		—		1,211		—			—			1,211
Total current assets		49,445		129,174		—			(4	)		178,615
Property, equipment and leasehold improvements, net		7,428		3,309		—			—			10,737
Goodwill		248,999		119,826		—			—			368,825
Intangible assets, net		41,874		62,632		—			—			104,506
Long-term accounts receivable, less current portion		—		35,809		—			—			35,809
Deferred tax assets, noncurrent		11,187		5,256		—			—			16,443
Deferred financing costs, net		—		106		8,638			—			8,744
Other assets		490		985		—			—			1,475
Total assets	$	359,423	$	357,097	$	8,638		$	(4	)	$	725,154
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	15,729	$	35,259	$	—		$	—		$	50,988
Accrued expenses		2,587		35,185		—			—			37,772
Accrued interest expense		—		—		4,836			—			4,836
Deferred revenue		100		5,748		—			—			5,848
Current portion of subordinated unsecured notes payable		314		—		—			—			314
Deferred tax liability		—		4		—			(4	)		—
Other current liabilities		2,001		4,080		—			—			6,081
Total current liabilities		20,731		80,276		4,836			(4	)		105,839
Senior unsecured notes payable		—		—		250,000			—			250,000
Senior secured revolving credit facility and working capital facilities		—		34,630		66,596			—			101,226
Other long-term liabilities		1,335		6,400		—			—			7,735
Total liabilities		22,066		121,306		321,432			(4	)		464,800
Commitments and contingencies
Stockholders’ equity (deficit) (1)		337,357		235,791		(312,794	)		—			260,354
Total liabilities and stockholders' equity (deficit)	$	359,423	$	357,097	$	8,638		$	(4	)	$	725,154

(1) Includes intercompany investments in subsidiaries.

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2012

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	10,938		$	4,149		$	—		$	15,087
Investing activities:
Cash proceeds from (paid for) acquisitions, net		(96,942	)		1,141			—			(95,801	)
Purchases of equipment and leasehold improvements, net		(4,379	)		(478	)		—			(4,857	)
Working capital and other settlements for acquisitions		(857	)		1,404			—			547
Net cash provided by (used in) investing activities		(102,178	)		2,067			—			(100,111	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			160,640			160,640
Proceeds from the exercise of options and warrants		—			—			1,254			1,254
Net repayments of working capital facilities		—			(5,517	)		—			(5,517	)
Purchases of stock for treasury		—			—			(387	)		(387	)
Payment of deferred financing costs		—			—			(1,034	)		(1,034	)
Repayment of subordinated unsecured notes payable		(975	)		—			—			(975	)
Repayments under senior secured revolving credit facility		—			—			(71,000	)		(71,000	)
Intercompany investments and other		89,378			—			(89,473	)		(95	)
Net cash provided by (used in) financing activities		88,403			(5,517	)		—			82,886
Exchange rate impact on cash and cash equivalents		—			128			—			128
Net increase (decrease) in cash and cash equivalents		(2,837	)		827			—			(2,010	)
Cash and cash equivalents, beginning of period		6,044			2,372			—			8,416
Cash and cash equivalents, end of period	$	3,207		$	3,199		$	—		$	6,406

Condensed Consolidating Statement of Cash Flows for the nine months ended September 30, 2013

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidated Totals
Net cash provided by operating activities	$	13,477		$	9,241		$	—		$	22,718
Investing activities:
Purchases of equipment and leasehold improvements, net		(2,170	)		(2,588	)		—			(4,758	)
Working capital and other settlements for acquisitions		(444	)		(125	)		—			(569	)
Proceeds from foreign currency net investment hedge		500			—			—			500
Other		(332	)		—			—			(332	)
Net cash used in investing activities		(2,446	)		(2,713	)		—			(5,159	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			103,597			103,597
Proceeds from the exercise of options and warrants		—			—			13,089			13,089
Excess tax benefit related to share-based compensation		—			—			5,974			5,974
Net borrowings under working capital facilities		—			215			—			215
Payment of deferred financing costs		—			(116	)		(52	)		(168	)
Repayment of subordinated unsecured notes payable		(270	)		—			—			(270	)
Repayment under senior secured revolving credit facility		—			—			(136,301	)		(136,301	)
Intercompany investments and other		(13,693	)		—			13,693			—
Net cash provided by (used in) financing activities		(13,963	)		99			—			(13,864	)
Exchange rate impact on cash and cash equivalents		—			(277	)		—			(277	)
Net increase (decrease) in cash and cash equivalents		(2,932	)		6,350			—			3,418
Cash and cash equivalents, beginning of period		4,125			4,502			—			8,627
Cash and cash equivalents, end of period	$	1,193		$	10,852		$	—		$	12,045