Note 14 - Condensed Consolidating Financial Information of Guarantor Subsidiaries

3 Months Ended

Mar. 31, 2016

Condensed Consolidating Financial Information of Guarantor Subsidiaries [Text Block]

(14) Condensed Consolidating Financial Information of Guarantor Subsidiaries

The Company has outstanding certain indebtedness that is guaranteed by certain 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, 2015 and March 31, 2016, and for the three months ended March 31, 2015 and 2016 is presented below. The Company (issuer of the Senior Unsecured Notes, and subsequently the Notes in April of 2015) 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.

Condensed Consolidating Statement of Operations

for the three months ended

March 31

, 201

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)		Consolidation and Elimination Entries			Consolidated Totals

Revenues	$	121,718		$	74,598	$	—	$	—		$	196,316
Costs and expenses:
Costs of revenues		82,334			45,842		—		—			128,176
Selling, general and administrative expenses		23,014			19,138		—		—			42,152
Depreciation and amortization		9,411			5,437		—		—			14,848
Total costs and expenses		114,759			70,417		—		—			185,176
Income from operations		6,959			4,181		—		—			11,140
Interest and other expenses, net		6,409			1,595		—		—			8,004
Loss before income taxes		550			2,586		—		—			3,136
Provision (benefit) for income taxes		(594	)		1,706		—		—			1,112
Net loss before earnings of consolidated subsidiaries	$	1,144		$	880	$	—	$	—		$	2,024
Net income (loss) of consolidated subsidiaries		880			—		880		(1,760	)		—
Net income (loss)	$	2,024		$	880	$	880	$	(1,760	)	$	2,024

Condensed Consolidating Statement of Operations

for the three months ended March 31, 2016

(In thousands)

	Guarantor Subsidiaries		Non- Guarantor Subsidiaries		ExamWorks Group, Inc. (Parent Corporation)		Consolidation and Elimination Entries			Consolidated Totals

Revenues	$	149,439	$	77,064	$	—	$	—		$	226,503
Costs and expenses:
Costs of revenues		102,001		47,125		—		—			149,126
Selling, general and administrative expenses		27,807		19,532		—		—			47,339
Depreciation and amortization		10,753		5,883		—		—			16,636
Total costs and expenses		140,561		72,540		—		—			213,101
Income from operations		8,878		4,524		—		—			13,402
Interest and other expenses, net		7,074		1,325		—		—			8,399
Income before income taxes		1,804		3,199		—		—			5,003
Provision for income taxes		492		1,251		—		—			1,743
Net income before earnings of consolidated subsidiaries	$	1,312	$	1,948	$	—	$	—		$	3,260
Net income (loss) of consolidated subsidiaries		1,948		—		1,948		(3,896	)		—
Net income (loss)	$	3,260	$	1,948	$	1,948	$	(3,896	)	$	3,260

Condensed Consolidating Balance Sheet as of December 31, 201

(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	$	33,011	$	14,854	$	—	$	—		$	47,865
Accounts receivable, net		68,896		176,553		—		—			245,449
Intercompany receivable		57,394		—		6,245		(63,639	)		—
Prepaid expenses		10,398		6,411		—		—			16,809
Other current assets		848		1,110		—		—			1,958
Total current assets		170,547		198,928		6,245		(63,639	)		312,081
Property, equipment and leasehold improvements, net		12,695		7,450		—		—			20,145
Investment in subsidiaries		280,114		—		800,743		(1,080,857	)		—
Intercompany notes receivable		174,421		—		174,421		(348,842	)		—
Goodwill		398,045		110,252		—		—			508,297
Intangible assets, net		46,423		38,250		—		—			84,673
Long-term accounts receivable, less current portion		—		62,717		—		—			62,717
Deferred tax assets, noncurrent		47,363		3,042		—		—			50,405
Deferred financing costs, net		2,416		104		—		—			2,520
Other assets		725		3,244		—		—			3,969
Total assets	$	1,132,749	$	423,987	$	981,409	$	(1,493,338	)	$	1,044,807
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	24,072	$	36,527	$	—	$	—		$	60,599
Intercompany payable		6,245		57,394		—		(63,639	)		—
Accrued expenses		13,150		47,598		—		—			60,748
Accrued interest expense		—		—		6,245		—			6,245
Deferred revenue		138		3,546		—		—			3,684
Other current liabilities		3,383		5,673		—		—			9,056
Total current liabilities		46,988		150,738		6,245		(63,639	)		140,332
Senior unsecured notes payable		—		—		493,126		—			493,126
Senior secured revolving credit facility and working capital facilities, less current portion		—		35,243		—		—			35,243
Intercompany notes payable		174,421		174,421		—		(348,842	)		—
Deferred tax liability, noncurrent		—		3,333		—		—			3,333
Other long-term liabilities		2,950		9,788		—		—			12,738
Total liabilities		224,359		373,523		499,371		(412,481	)		684,772
Commitments and contingencies
Stockholders’ equity (deficit)		908,390		50,464		482,038		(1,080,857	)		360,035
Total liabilities and stockholders' equity (deficit)	$	1,132,749	$	423,987	$	981,409	$	(1,493,338	)	$	1,044,807

Condensed Consolidating Balance Sheet as of

March 31, 2016

(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	$	1,554	$	14,445	$	—	$	—		$	15,999
Accounts receivable, net		77,277		171,785		—		—			249,062
Intercompany receivable		61,586		—		13,414		(75,000	)		—
Prepaid expenses		8,083		11,831		—		—			19,914
Other current assets		—		1,078		—		—			1,078
Total current assets		148,500		199,139		13,414		(75,000	)		286,053
Property, equipment and leasehold improvements, net		13,877		8,387		—		—			22,264
Investment in subsidiaries		282,062		—		895,039		(1,177,101	)		—
Intercompany notes receivable		174,413		—		174,413		(348,826	)		—
Goodwill		469,161		112,218		—		—			581,379
Intangible assets, net		76,555		32,854		—		—			109,409
Long-term accounts receivable, less current portion		—		67,495		—		—			67,495
Deferred tax assets, noncurrent		37,467		3,129		—		—			40,596
Deferred financing costs, net		2,296		90		—		—			2,386
Other assets		885		3,293		—		—			4,178
Total assets	$	1,205,216	$	426,605	$	1,082,866	$	(1,600,927	)	$	1,113,760
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	29,192	$	36,756	$	—	$	—		$	65,948
Intercompany payable		13,414		61,586		—		(75,000	)		—
Accrued expenses		11,967		43,294		—		—			55,261
Accrued interest expense		—		—		13,414		—			13,414
Deferred revenue		222		3,276		—		—			3,498
Current portion of contingent earnout obligation		2,556		—		—		—			2,556
Other current liabilities		4,432		2,850		—		—			7,282
Total current liabilities		61,783		147,762		13,414		(75,000	)		147,959
Senior unsecured notes payable		—		—		493,359		—			493,359
Senior secured revolving credit facility and working capital facilities, less current portion		—		32,578		50,000		—			82,578
Intercompany notes payable		174,413		174,413		—		(348,826	)		—
Long-term contingent earnout obligation, less current portion		5,079		—		—		—			5,079
Deferred tax liability, noncurrent		—		3,250		—		—			3,250
Other long-term liabilities		3,232		10,993		—		—			14,225
Total liabilities		244,507		368,996		556,773		(423,826	)		746,450
Commitments and contingencies
Stockholders’ equity (deficit)		960,709		57,609		526,093		(1,177,101	)		367,310
Total liabilities and stockholders' equity (deficit)	$	1,205,216	$	426,605	$	1,082,866	$	(1,600,927	)	$	1,113,760

Condensed Consolidating Statement of Cash Flows for the

three

months ended

March 31

, 201

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries		Consolidated Totals

Net cash provided by operating activities	$	2,226		$	3,938		$	—		$	—	$	6,164
Investing activities:
Cash paid for acquisitions, net		(2,299	)		—			—			—		(2,299	)
Purchases of building, equipment and leasehold improvements, net		(1,670	)		(559	)		—			—		(2,229	)
Working capital and other settlements for acquisitions		(91	)		—			—			—		(91	)
Proceeds from foreign currency net investment hedges		4,812			—			—			—		4,812
Other		(1,250	)		—			—			—		(1,250	)
Net cash used in investing activities		(498	)		(559	)		—			—		(1,057	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			25,478			—		25,478
Proceeds from the exercise of options and warrants		—			—			8,855			—		8,855
Excess tax benefit related to share-based compensation		—			—			2,086			—		2,086
Net repayments under working capital facilities		—			(132	)		—			—		(132	)
Repayment of contingent earnout obligation		—			(1,023	)		—			—		(1,023	)
Repayment under senior secured revolving credit facility		—			—			(29,331	)		—		(29,331	)
Intercompany notes and investments and other		7,088			—			(7,088	)		—		—
Net cash provided by (used in) financing activities		7,088			(1,155	)		—			—		5,933
Exchange rate impact on cash and cash equivalents		—			(509	)		—			—		(509	)
Net increase in cash and cash equivalents		8,816			1,715			—			—		10,531
Cash and cash equivalents, beginning of period		388			9,363			—			—		9,751
Cash and cash equivalents, end of period	$	9,204		$	11,078		$	—		$	—	$	20,282

Condensed Consolidating Statement of Cash Flows for the

three

months ended

March 31

, 201

(In thousands)

	Guarantor Subsidiaries			Non- Guarantor Subsidiaries			ExamWorks Group, Inc. (Parent Corporation)			Consolidation and Elimination Entries		Consolidated Totals

Net cash provided by operating activities	$	13,500		$	2,266		$	—		$	—	$	15,766
Investing activities:
Cash paid for acquisitions, net		(92,348	)		—			—			—		(92,348	)
Purchases of building, equipment and leasehold improvements, net		(1,179	)		(1,558	)		—			—		(2,737	)
Working capital and other settlements for acquisitions		(271	)		—			—			—		(271	)
Proceeds from foreign currency net investment hedge		1,649			—			—			—		1,649
Other		(150	)		—			—			—		(150	)
Net cash used in investing activities		(92,299	)		(1,558	)		—			—		(93,857	)
Financing activities:
Borrowings under senior secured revolving credit facility		—			—			75,000			—		75,000
Excess tax benefit related to share-based compensation		—			—			4,766			—		4,766
Proceeds from the exercise of options and warrants		—			—			582			—		582
Net repayments under working capital facilities		—			(1,623	)		—			—		(1,623	)
Purchases of stock for treasury		—			—			(8,006	)		—		(8,006	)
Repayment under senior secured revolving credit facility		—			—			(25,000	)		—		(25,000	)
Intercompany notes and investments and other		47,342			—			(47,342	)		—		—
Net cash provided by (used in) financing activities		47,342			(1,623	)		—			—		45,719
Exchange rate impact on cash and cash equivalents		—			506			—			—		506
Net decrease in cash and cash equivalents		(31,457	)		(409	)		—			—		(31,866	)
Cash and cash equivalents, beginning of period		33,011			14,854			—			—		47,865
Cash and cash equivalents, end of period	$	1,554		$	14,445		$	—		$	—	$	15,999