(12) Supplemental Condensed Consolidating Financial Information

Certain of our senior notes are guaranteed by a group of subsidiaries (the “Guarantors”). The Guarantors, each of which is a 100% directly owned subsidiary of Universal Health Services, Inc., fully and unconditionally guarantee the senior notes on a joint and several basis, subject to certain customary release provisions.

The following financial statements present condensed consolidating financial data for (i) Universal Health Services, Inc. (on a parent company only basis), (ii) the combined Guarantors, (iii) the combined non guarantor subsidiaries (all other subsidiaries), (iv) an elimination column for adjustments to arrive at the information for the parent company, Guarantors, and non guarantors on a consolidated basis, and (v) the parent company and our subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for by the parent company and the Guarantors using the equity method for this presentation. Results of operations of subsidiaries are therefore classified in the parent company’s and Guarantors’ investment in subsidiaries accounts. The elimination entries set forth in the following condensed consolidating financial statements eliminate distributed and undistributed income of subsidiaries, investments in subsidiaries, and intercompany balances and transactions between the parent, Guarantors, and non guarantors.

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2013

(amounts in thousands)


													Total
							Non			Consolidating			Consolidated
	Parent			Guarantors			Guarantors			Adjustments			Amounts
Net revenues before provision for doubtful accounts	$	0		$	1,416,011		$	672,949		$	(7,298	)	$	2,081,662
Less: Provision for doubtful accounts		0			150,294			96,393			0			246,687

Net revenues		0			1,265,717			576,556			(7,298	)		1,834,975

Operating charges:
Salaries, wages and benefits		0			639,421			257,913			0			897,334
Other operating expenses		0			193,388			139,063			(6,889	)		325,562
Supplies expense		0			123,894			78,450			0			202,344
Depreciation and amortization		0			57,597			24,085			0			81,682
Lease and rental expense		0			15,536			8,955			(409	)		24,082
Electronic health records incentive income		0			(452	)		369			0			(83	)

		0			1,029,384			508,835			(7,298	)		1,530,921

Income from operations		0			236,333			67,721			0			304,054
Interest expense		36,772			846			618			0			38,236
Interest (income) expense, affiliate		0			24,391			(24,391	)		0			0
Equity in net income of consolidated affiliates		(174,539	)		(38,497	)		0			213,036			0

Income before income taxes		137,767			249,593			91,494			(213,036	)		265,818
Provision for income taxes		(14,074	)		93,570			18,519			0			98,015

Net income		151,841			156,023			72,975			(213,036	)		167,803
Less: Income attributable to noncontrolling interests		0			0			15,962			0			15,962

Net income attributable to UHS	$	151,841		$	156,023		$	57,013		$	(213,036	)	$	151,841

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2013

(amounts in thousands)


													Total
							Non			Consolidating			Consolidated
	Parent			Guarantors			Guarantors			Adjustments			Amounts
Net revenues before provision for doubtful accounts	$	0		$	2,837,863		$	1,336,155		$	(14,008	)	$	4,160,010
Less: Provision for doubtful accounts		0			300,062			193,341			0			493,403

Net revenues		0			2,537,801			1,142,814			(14,008	)		3,666,607

Operating charges:
Salaries, wages and benefits		0			1,285,015			514,615			0			1,799,630
Other operating expenses		0			437,807			282,266			(13,504	)		706,569
Supplies expense		0			252,604			154,382			0			406,986
Depreciation and amortization		0			113,376			48,118			0			161,494
Lease and rental expense		0			31,211			18,040			(504	)		48,747
Electronic health records incentive income		0			(3,568	)		(1,227	)		0			(4,795	)

		0			2,116,445			1,016,194			(14,008	)		3,118,631

Income from operations		0			421,356			126,620			0			547,976
Interest expense		74,718			1,700			1,756			0			78,174
Interest (income) expense, affiliate		0			48,782			(48,782	)		0			0
Equity in net income of consolidated affiliates		(317,745	)		(70,278	)		0			388,023			0

Income before income taxes		243,027			441,152			173,646			(388,023	)		469,802
Provision for income taxes		(28,598	)		158,893			41,769			0			172,064

Net income		271,625			282,259			131,877			(388,023	)		297,738
Less: Income attributable to noncontrolling interests		0			0			26,113			0			26,113

Net income attributable to UHS	$	271,625		$	282,259		$	105,764		$	(388,023	)	$	271,625

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2012

(amounts in thousands)


													Total
							Non			Consolidating			Consolidated
	Parent			Guarantors			Guarantors			Adjustments			Amounts
Net revenues before provision for doubtful accounts	$	0		$	1,293,848		$	620,494		$	(6,553	)	$	1,907,789
Less: Provision for doubtful accounts		0			105,390			79,316			0			184,706

Net revenues		0			1,188,458			541,178			(6,553	)		1,723,083

Operating charges:
Salaries, wages and benefits		0			608,937			245,926			0			854,863
Other operating expenses		0			223,553			127,967			(6,459	)		345,061
Supplies expense		0			122,524			75,292			0			197,816
Depreciation and amortization		0			50,997			21,986			0			72,983
Lease and rental expense		0			14,394			9,683			(94	)		23,983
Electronic health records incentive income		0			(1,955	)		0			0			(1,955	)

		0			1,018,450			480,854			(6,553	)		1,492,751

Income from operations		0			170,008			60,324			0			230,332
Interest expense		44,298			838			752			0			45,888
Interest (income) expense, affiliate		0			22,783			(22,783	)		0			0
Equity in net income of consolidated affiliates		(134,904	)		(28,548	)		0			163,452			0

Income before income taxes		90,606			174,935			82,355			(163,452	)		184,444
Provision for income taxes		(16,955	)		62,521			21,434			0			67,000

Net income		107,561			112,414			60,921			(163,452	)		117,444
Less: Income attributable to noncontrolling interests		0			0			9,883			0			9,883

Net income attributable to UHS	$	107,561		$	112,414		$	51,038		$	(163,452	)	$	107,561

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2012

(amounts in thousands)


													Total
							Non			Consolidating			Consolidated
	Parent			Guarantors			Guarantors			Adjustments			Amounts
Net revenues before provision for doubtful accounts	$	0		$	2,627,313		$	1,234,978		$	(12,879	)	$	3,849,412
Less: Provision for doubtful accounts		0			194,768			138,525			0			333,293

Net revenues		0			2,432,545			1,096,453			(12,879	)		3,516,119

Operating charges:
Salaries, wages and benefits		0			1,230,001			496,976			0			1,726,977
Other operating expenses		0			459,381			249,670			(12,690	)		696,361
Supplies expense		0			250,833			152,343			0			403,176
Depreciation and amortization		0			102,257			42,518			0			144,775
Lease and rental expense		0			29,238			18,376			(189	)		47,425
Electronic health records incentive income		0			(1,955	)		0			0			(1,955	)

		0			2,069,755			959,883			(12,879	)		3,016,759

Income from operations		0			362,790			136,570			0			499,360
Interest expense		89,452			1,625			1,521			0			92,598
Interest (income) expense, affiliate		0			45,565			(45,565	)		0			0
Equity in net income of consolidated affiliates		(291,382	)		(69,625	)		0			361,007			0

Income before income taxes		201,930			385,225			180,614			(361,007	)		406,762
Provision for income taxes		(34,238	)		136,629			44,357			0			146,748

Net income		236,168			248,596			136,257			(361,007	)		260,014
Less: Income attributable to noncontrolling interests		0			0			23,846			0			23,846

Net income attributable to UHS	$	236,168		$	248,596		$	112,411		$	(361,007	)	$	236,168

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2013

(amounts in thousands)


											Total
						Non		Consolidating			Consolidated
	Parent			Guarantors		Guarantors		Adjustments			Amounts
Net income	$	151,841		$	156,023	$	72,975	$	(213,036	)	$	167,803
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		5,282			0		0		0			5,282
Amortization of terminated hedge		(84	)		0		0		0			(84	)

Other comprehensive income before tax		5,198			0		0		0			5,198
Income tax expense related to items of other comprehensive income		1,960			0		0		0			1,960

Total other comprehensive income, net of tax		3,238			0		0		0			3,238

Comprehensive income		155,079			156,023		72,975		(213,036	)		171,041
Less: Comprehensive income attributable to noncontrolling interests		0			0		15,962		0			15,962

Comprehensive income attributable to UHS	$	155,079		$	156,023	$	57,013	$	(213,036	)	$	155,079


UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2013
(amounts in thousands)

											Total
						Non		Consolidating			Consolidated
	Parent			Guarantors		Guarantors		Adjustments			Amounts
Net income	$	271,625		$	282,259	$	131,877	$	(388,023	)	$	297,738
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		9,817			0		0		0			9,817
Amortization of terminated hedge		(168	)		0		0		0			(168	)

Other comprehensive income before tax		9,649			0		0		0			9,649
Income tax expense related to items of other comprehensive income		3,638			0		0		0			3,638

Total other comprehensive income, net of tax		6,011			0		0		0			6,011

Comprehensive income		277,636			282,259		131,877		(388,023	)		303,749
Less: Comprehensive income attributable to noncontrolling interests		0			0		26,113		0			26,113

Comprehensive income attributable to UHS	$	277,636		$	282,259	$	105,764	$	(388,023	)	$	277,636

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2012

(amounts in thousands)


											Total
						Non		Consolidating			Consolidated
	Parent			Guarantors		Guarantors		Adjustments			Amounts
Net income	$	107,561		$	112,414	$	60,921	$	(163,452	)	$	117,444
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		212			0		0		0			212
Amortization of terminated hedge		(84	)		0		0		0			(84	)

Other comprehensive income before tax		128			0		0		0			128
Income tax expense related to items of other comprehensive income		50			0		0		0			50

Total other comprehensive income, net of tax		78			0		0		0			78

Comprehensive income		107,639			112,414		60,921		(163,452	)		117,522
Less: Comprehensive income attributable to noncontrolling interests		0			0		9,883		0			9,883

Comprehensive income attributable to UHS	$	107,639		$	112,414	$	51,038	$	(163,452	)	$	107,639


UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2012
(amounts in thousands)

											Total
						Non		Consolidating			Consolidated
	Parent			Guarantors		Guarantors		Adjustments			Amounts
Net income	$	236,168		$	248,596	$	136,257	$	(361,007	)	$	260,014
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		1,827			0		0		0			1,827
Amortization of terminated hedge		(168	)		0		0		0			(168	)

Other comprehensive income before tax		1,659			0		0		0			1,659
Income tax expense related to items of other comprehensive income		632			0		0		0			632

Total other comprehensive income, net of tax		1,027			0		0		0			1,027

Comprehensive income		237,195			248,596		136,257		(361,007	)		261,041
Less: Comprehensive income attributable to noncontrolling interests		0			0		23,846		0			23,846

Comprehensive income attributable to UHS	$	237,195		$	248,596	$	112,411	$	(361,007	)	$	237,195

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF JUNE 30, 2013

(amounts in thousands)


												Total
						Non			Consolidating			Consolidated
	Parent		Guarantors			Guarantors			Adjustments			Amounts
Assets
Current assets:
Cash and cash equivalents	$	0	$	3,570		$	8,988		$	0		$	12,558
Accounts receivable, net		3,977		780,362			365,138			0			1,149,477
Supplies		0		62,380			37,944			0			100,324
Other current assets		2,477		74,488			9,768			0			86,733
Deferred income taxes		91,321		43,567			0			0			134,888

Total current assets		97,775		964,367			421,838			0			1,483,980

Investments in subsidiaries		6,099,224		1,394,110			0			(7,493,334	)		0
Intercompany receivable		453,498		0			462,047			(915,545	)		0
Intercompany note receivable		0		0			1,007,453			(1,007,453	)		0
Property and equipment		0		3,981,118			1,538,701			0			5,519,819
Less: accumulated depreciation		0		(1,384,909	)		(731,505	)		0			(2,116,414	)

		0		2,596,209			807,196			0			3,403,405

Other assets:
Goodwill		820		2,544,014			496,512			0			3,041,346
Deferred charges		58,717		5,702			2,491			0			66,910
Other		8,646		237,414			75,552			0			321,612

	$	6,718,680	$	7,741,816		$	3,273,089		$	(9,416,332	)	$	8,317,253

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	71,903	$	591		$	1,085		$	0		$	73,579
Accounts payable and accrued liabilities		42,144		740,872			175,936			0			958,952
Federal and state taxes		16,093		526			0			0			16,619

Total current liabilities		130,140		741,989			177,021			0			1,049,150

Intercompany payable		0		915,545			0			(915,545	)		0
Other noncurrent liabilities		18,456		186,685			105,807			0			310,948
Long-term debt		3,428,610		5,245			39,251			0			3,473,106
Intercompany note payable		0		1,007,453			0			(1,007,453	)		0
Deferred income taxes		150,017		56,801			0			0			206,818
Redeemable noncontrolling interests		0		0			233,417			0			233,417
UHS common stockholders’ equity		2,991,457		4,828,098			2,665,236			(7,493,334	)		2,991,457
Noncontrolling interest		0		0			52,357			0			52,357

Total equity		2,991,457		4,828,098			2,717,593			(7,493,334	)		3,043,814

	$	6,718,680	$	7,741,816		$	3,273,089		$	(9,416,332	)	$	8,317,253

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2012

(amounts in thousands)


												Total
						Non			Consolidating			Consolidated
	Parent		Guarantors			Guarantors			Adjustments			Amounts
Assets
Current assets:
Cash and cash equivalents	$	0	$	11,949		$	11,522		$	0		$	23,471
Accounts receivable, net		7,154		741,983			318,060			0			1,067,197
Supplies		0		61,100			37,900			0			99,000
Other current assets		2,188		75,117			10,631			0			87,936
Deferred income taxes		61,364		43,555			322			(780	)		104,461
Assets of facilities held for sale		0		0			25,431			0			25,431

Total current assets		70,706		933,704			403,866			(780	)		1,407,496

Investments in subsidiaries		5,781,479		1,323,832			0			(7,105,311	)		0
Intercompany receivable		644,105		0			360,538			(1,004,643	)		0
Intercompany note receivable		0		0			1,007,453			(1,007,453	)		0
Property and equipment		0		3,867,471			1,500,874			0			5,368,345
Less: accumulated depreciation		0		(1,288,975	)		(697,135	)		0			(1,986,110	)

		0		2,578,496			803,739			0			3,382,235

Other assets:
Goodwill		820		2,554,531			481,414			0			3,036,765
Deferred charges		67,831		5,839			2,218			0			75,888
Other		9,645		209,558			79,256			0			298,459

	$	6,574,586	$	7,605,960		$	3,138,484		$	(9,118,187	)	$	8,200,843

Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	0	$	990		$	1,599		$	0		$	2,589
Accounts payable and accrued liabilities		10,985		740,484			138,088			0			889,557
Liabilities of facilities held for sale		0		0			850			0			850
Federal and state taxes		0		900			620			(458	)		1,062

Total current liabilities		10,985		742,374			141,157			(458	)		894,058

Intercompany payable		0		1,004,643			0			(1,004,643	)		0
Other noncurrent liabilities		46,048		243,478			105,829			0			395,355
Long-term debt		3,676,940		5,372			45,119			0			3,727,431
Intercompany note payable		0		1,007,453			0			(1,007,453	)		0
Deferred income taxes		127,268		56,801			0			(322	)		183,747
Redeemable noncontrolling interests		0		0			234,303			0			234,303
UHS common stockholders’ equity		2,713,345		4,545,839			2,559,472			(7,105,311	)		2,713,345
Noncontrolling interest		0		0			52,604			0			52,604

Total equity		2,713,345		4,545,839			2,612,076			(7,105,311	)		2,765,949

	$	6,574,586	$	7,605,960		$	3,138,484		$	(9,118,187	)	$	8,200,843

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2013

(amounts in thousands)


												Total
							Non			Consolidating		Consolidated
	Parent			Guarantors			Guarantors			Adjustments		Amounts
Net cash provided by operating activities	$	16,014		$	242,016			147,972		$	0	$	406,002

Cash Flows from Investing Activities:
Property and equipment additions, net of disposals		0			(133,607	)		(42,337	)		0		(175,944	)
Proceeds received from sale of assets and businesses		0			7,552			26,456			0		34,008
Acquisition of property and businesses		0			(1,320	)		0			0		(1,320	)
Costs incurred for purchase and implementation of electronic health records application		0			(33,396	)		0			0		(33,396	)

Net cash used in investing activities		0			(160,771	)		(15,881	)		0		(176,652	)

Cash Flows from Financing Activities:
Reduction of long-term debt		(189,188	)		(526	)		(6,382	)		0		(196,096	)
Additional borrowings		11,000			0			0			0		11,000
Repurchase of common shares		(21,373	)		0			0			0		(21,373	)
Dividends paid		(9,795	)		0			0			0		(9,795	)
Issuance of common stock		2,735			0			0			0		2,735
Profit distributions to noncontrolling interests		0			0			(26,734	)		0		(26,734	)
Changes in intercompany balances with affiliates, net		190,607			(89,098	)		(101,509	)		0		0

Net cash used in financing activities		(16,014	)		(89,624	)		(134,625	)		0		(240,263	)

Decrease in cash and cash equivalents		0			(8,379	)		(2,534	)		0		(10,913	)
Cash and cash equivalents, beginning of period		0			11,949			11,522			0		23,471

Cash and cash equivalents, end of period	$	0		$	3,570		$	8,988		$	0	$	12,558

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2012

(amounts in thousands)


												Total
							Non			Consolidating		Consolidated
	Parent			Guarantors			Guarantors			Adjustments		Amounts
Net cash provided by operating activities	$	2,144		$	279,941			90,777		$	0	$	372,862

Cash Flows from Investing Activities:
Property and equipment additions, net of disposals		0			(153,894	)		(28,457	)		0		(182,351	)
Proceeds received from sale of assets and businesses		0			49,984			3,477			0		53,461
Acquisition of property and businesses		0			(11,476	)		0			0		(11,476	)
Costs incurred for purchase and implementation of electronic health records application		0			(28,008	)		0			0		(28,008	)
Return of deposit on terminated purchase agreement		6,500			0			0			0		6,500

Net cash provided by (used in) investing activities		6,500			(143,394	)		(24,980	)		0		(161,874	)

Cash Flows from Financing Activities:
Reduction of long-term debt		(191,898	)		(2,289	)		(1,499	)		0		(195,686	)
Repurchase of common shares		(2,927	)		0			0			0		(2,927	)
Dividends paid		(9,673	)		0			0			0		(9,673	)
Issuance of common stock		2,575			0			0			0		2,575
Profit distributions to noncontrolling interests		0			0			(13,565	)		0		(13,565	)
Changes in intercompany balances with affiliates, net		193,279			(144,331	)		(48,948	)		0		0

Net cash used in financing activities		(8,644	)		(146,620	)		(64,012	)		0		(219,276	)

(Decrease) increase in cash and cash equivalents		0			(10,073	)		1,785			0		(8,288	)
Cash and cash equivalents, beginning of period		0			33,221			8,008			0		41,229

Cash and cash equivalents, end of period	$	0		$	23,148		$	9,793		$	0	$	32,941