Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2011

Condensed Consolidating Financial Information [Abstract]

Condensed Consolidating Financial Information

12. Condensed Consolidating Financial Information

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X, Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” Each of the subsidiary guarantors is 100% owned by HealthSouth, and all guarantees are full and unconditional and joint and several, subject to certain customary conditions for release. HealthSouth’s investments in its consolidated subsidiaries, as well as guarantor subsidiaries’ investments in non-guarantor subsidiaries and non-guarantor subsidiaries’ investments in guarantor subsidiaries, are presented under the equity method of accounting.

As described in Note 8, Long-term Debt, to the consolidated financial statements accompanying the 2010 Form 10-K, the terms of our credit agreement restrict us from declaring or paying cash dividends on our common stock unless: (1) we are not in default under our credit agreement and (2) the amount of the dividend, when added to the aggregate amount of certain other defined payments made during the same fiscal year, does not exceed certain maximum thresholds. However, as described in Note 11, Convertible Perpetual Preferred Stock, to the consolidated financial statements accompanying the 2010 Form 10-K, our preferred stock generally provides for the payment of cash dividends, subject to certain limitations.

Condensed Consolidating Statement of Operations

	Three Months Ended September 30, 2011
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	5.6		$	352.3		$	151.1		$	(11.3	)	$	497.7
Operating expenses:
Salaries and benefits		7.4			169.3			71.7			(3.4	)		245.0
Other operating expenses		3.4			49.5			22.8			(5.4	)		70.3
General and administrative expenses		26.4			—			—			—			26.4
Supplies		0.2			17.4			7.1			—			24.7
Depreciation and amortization		2.3			13.0			4.2			—			19.5
Occupancy costs		1.4			9.2			4.4			(2.5	)		12.5
Provision for doubtful accounts		0.1			3.5			1.5			—			5.1
Loss on disposal of assets		—			2.8			—			—			2.8
Professional fees—accounting, tax, and legal		4.0			—			—			—			4.0
Total operating expenses		45.2			264.7			111.7			(11.3	)		410.3
Loss on early extinguishment of debt		12.7			—			—			—			12.7
Interest expense and amortization of debt discounts and fees		23.8			2.1			0.7			(0.3	)		26.3
Other expense (income)		0.2			—			(0.7	)		0.3			(0.2	)
Equity in net income of nonconsolidated affiliates		(0.7	)		(2.3	)		(0.1	)		—			(3.1	)
Equity in net income of consolidated affiliates		(80.1	)		(3.4	)		—			83.5			—
Management fees		(22.8	)		17.4			5.4			—			—
Income from continuing operations before income tax (benefit) expense		27.3			73.8			34.1			(83.5	)		51.7
Provision for income tax (benefit) expense		(26.6	)		36.0			8.7			—			18.1
Income from continuing operations		53.9			37.8			25.4			(83.5	)		33.6
Income (loss) from discontinued operations, net of tax		3.1			33.7			(2.1	)		—			34.7
Net Income		57.0			71.5			23.3			(83.5	)		68.3
Less: Net income attributable to noncontrolling interests		—			—			(11.3	)		—			(11.3	)
Net income attributable to HealthSouth	$	57.0		$	71.5		$	12.0		$	(83.5	)	$	57.0

Condensed Consolidating Statement of Operations

	Three Months Ended September 30, 2010
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	5.2		$	326.3		$	139.0		$	(9.7	)	$	460.8
Operating expenses:
Salaries and benefits		6.1			160.9			67.8			(3.1	)		231.7
Other operating expenses		4.6			45.0			20.3			(4.5	)		65.4
General and administrative expenses		24.9			—			—			—			24.9
Supplies		0.2			17.0			6.9			—			24.1
Depreciation and amortization		2.5			12.1			3.8			—			18.4
Occupancy costs		0.8			8.5			4.2			(2.1	)		11.4
Provision for doubtful accounts		0.1			3.0			0.6			—			3.7
Loss on disposal of assets		—			—			0.1			—			0.1
Government, class action, and related settlements		0.8			—			—			—			0.8
Professional fees—accounting, tax, and legal		5.2			—			—			—			5.2
Total operating expenses		45.2			246.5			103.7			(9.7	)		385.7
Interest expense and amortization of debt discounts and fees		28.5			2.1			0.7			(0.5	)		30.8
Other income		(0.3	)		(0.1	)		(0.8	)		0.5			(0.7	)
Loss on interest rate swaps		9.0			—			—			—			9.0
Equity in net income of nonconsolidated affiliates		(0.4	)		(1.8	)		(0.1	)		—			(2.3	)
Equity in net income of consolidated affiliates		(43.2	)		(10.0	)		—			53.2			—
Management fees		(22.3	)		17.2			5.1			—			—
(Loss) income from continuing operations before income tax (benefit) expense		(11.3	)		72.4			30.4			(53.2	)		38.3
Provision for income tax (benefit) expense		(41.3	)		33.0			7.9			—			(0.4	)
Income from continuing operations		30.0			39.4			22.5			(53.2	)		38.7
Income (loss) from discontinued operations, net of tax		1.8			1.7			(0.3	)		—			3.2
Net Income		31.8			41.1			22.2			(53.2	)		41.9
Less: Net income attributable to noncontrolling interests		—			—			(10.1	)		—			(10.1	)
Net income attributable to HealthSouth	$	31.8		$	41.1		$	12.1		$	(53.2	)	$	31.8

Condensed Consolidating Statement of Operations

	Nine Months Ended September 30, 2011
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	16.0		$	1,079.6		$	446.7		$	(33.5	)	$	1,508.8
Operating expenses:
Salaries and benefits		17.9			510.7			212.1			(10.1	)		730.6
Other operating expenses		17.5			149.0			66.1			(16.0	)		216.6
General and administrative expenses		80.7			—			—			—			80.7
Supplies		0.5			54.7			21.5			—			76.7
Depreciation and amortization		7.3			38.8			12.5			—			58.6
Occupancy costs		3.5			27.0			13.1			(7.4	)		36.2
Provision for doubtful accounts		0.3			10.5			4.1			—			14.9
Loss on disposal of assets		—			2.9			1.0			—			3.9
Government, class action, and related settlements		(10.6	)		—			—			—			(10.6	)
Professional fees—accounting, tax, and legal		16.2			—			—			—			16.2
Total operating expenses		133.3			793.6			330.4			(33.5	)		1,223.8
Loss on early extinguishment of debt		38.8			—			—			—			38.8
Interest expense and amortization of debt discounts and fees		88.8			6.4			2.0			(0.9	)		96.3
Other income		(0.1	)		(0.1	)		(2.2	)		0.9			(1.5	)
Equity in net income of nonconsolidated affiliates		(2.3	)		(6.3	)		(0.2	)		—			(8.8	)
Equity in net income of consolidated affiliates		(195.1	)		(9.3	)		—			204.4			—
Management fees		(70.9	)		55.0			15.9			—			—
Income from continuing operations before income tax (benefit) expense		23.5			240.3			100.8			(204.4	)		160.2
Provision for income tax (benefit) expense		(114.6	)		110.8			25.7			—			21.9
Income from continuing operations		138.1			129.5			75.1			(204.4	)		138.3
Income (loss) from discontinued operations, net of tax		20.6			36.2			(3.0	)		—			53.8
Net Income		158.7			165.7			72.1			(204.4	)		192.1
Less: Net income attributable to noncontrolling interests		—			—			(33.4	)		—			(33.4	)
Net income attributable to HealthSouth	$	158.7		$	165.7		$	38.7		$	(204.4	)	$	158.7

Condensed Consolidating Statement of Operations

	Nine Months Ended September 30, 2010
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net operating revenues	$	15.3		$	991.9		$	408.4		$	(28.9	)	$	1,386.7
Operating expenses:
Salaries and benefits		17.1			478.1			198.3			(9.3	)		684.2
Other operating expenses		9.1			135.9			65.7			(13.3	)		197.4
General and administrative expenses		77.9			—			—			—			77.9
Supplies		0.4			52.2			20.7			—			73.3
Depreciation and amortization		7.1			35.5			11.1			—			53.7
Occupancy costs		2.3			24.4			12.5			(6.2	)		33.0
Provision for doubtful accounts		0.4			11.1			3.3			—			14.8
Loss on disposal of assets		—			0.5			—			—			0.5
Government, class action, and related settlements		0.8			—			—			—			0.8
Professional fees—accounting, tax, and legal		13.8			—			—			—			13.8
Total operating expenses		128.9			737.7			311.6			(28.8	)		1,149.4
Loss on early extinguishment of debt		0.4			—			—			—			0.4
Interest expense and amortization of debt discounts and fees		84.3			6.5			2.3			(1.7	)		91.4
Other income		(0.8	)		(0.1	)		(3.6	)		1.7			(2.8	)
Loss on interest rate swaps		13.0			—			—			—			13.0
Equity in net income of nonconsolidated affiliates		(1.6	)		(5.8	)		(0.1	)		—			(7.5	)
Equity in net income of consolidated affiliates		(139.9	)		(9.5	)		—			149.4			—
Management fees		(67.1	)		52.1			15.0			—			—
(Loss) income from continuing operations before income tax (benefit) expense		(1.9	)		211.0			83.2			(149.5	)		142.8
Provision for income tax (benefit) expense		(117.2	)		96.6			21.3			—			0.7
Income from continuing operations		115.3			114.4			61.9			(149.5	)		142.1
Income (loss) from discontinued operations, net of tax		4.5			3.8			(0.6	)		0.1			7.8
Net Income		119.8			118.2			61.3			(149.4	)		149.9
Less: Net income attributable to noncontrolling interests		—			—			(30.1	)		—			(30.1	)
Net income attributable to HealthSouth	$	119.8		$	118.2		$	31.2		$	(149.4	)	$	119.8

Condensed Consolidating Balance Sheet

	As of September 30, 2011
	HealthSouth Corporation		Guarantor Subsidiaries		Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	44.9	$	0.5	$	2.3		$	—		$	47.7
Accounts receivable, net		3.2		152.5		63.5			—			219.2
Other current assets		64.5		23.1		75.3			(19.4	)		143.5
Total current assets		112.6		176.1		141.1			(19.4	)		410.4
Property and equipment, net		22.4		474.4		152.0			—			648.8
Goodwill		—		264.7		155.6			—			420.3
Intangible assets, net		0.4		33.5		8.9			—			42.8
Deferred income tax assets		558.1		—		64.5			(0.1	)		622.5
Other long-term assets		64.7		31.0		37.7			(7.2	)		126.2
Intercompany receivable		1,093.6		651.8		—			(1,745.4	)		—
Total assets	$	1,851.8	$	1,631.5	$	559.8		$	(1,772.1	)	$	2,271.0
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	9.9	$	25.8	$	9.7		$	—		$	45.4
Accrued expenses and other current liabilities		126.3		60.3		75.5			(19.4	)		242.7
Total current liabilities		136.2		86.1		85.2			(19.4	)		288.1
Long-term debt, net of current portion		1,214.9		76.1		24.9			(7.2	)		1,308.7
Other long-term liabilities		45.4		10.8		78.8			—			135.0
Intercompany payable		—		—		1,391.9			(1,391.9	)		—
		1,396.5		173.0		1,580.8			(1,418.5	)		1,731.8
Commitments and contingencies
Convertible perpetual preferred stock		387.4		—		—			—			387.4
Shareholders’ equity (deficit):
HealthSouth shareholders’ equity (deficit)		67.9		1,458.5		(1,104.9	)		(353.6	)		67.9
Noncontrolling interests		—		—		83.9			—			83.9
Total shareholders’ equity (deficit)		67.9		1,458.5		(1,021.0	)		(353.6	)		151.8
Total liabilities and shareholders’ equity (deficit)	$	1,851.8	$	1,631.5	$	559.8		$	(1,772.1	)	$	2,271.0

Condensed Consolidating Balance Sheet

	As of December 31, 2010
	HealthSouth Corporation			Guarantor Subsidiaries		Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Assets
Current assets:
Cash and cash equivalents	$	45.8		$	0.1	$	2.4		$	—		$	48.3
Accounts receivable, net		0.9			148.2		57.6			—			206.7
Other current assets		48.6			33.2		73.4			(4.0	)		151.2
Total current assets		95.3			181.5		133.4			(4.0	)		406.2
Property and equipment, net		23.2			465.2		154.2			—			642.6
Goodwill		—			264.7		155.6			—			420.3
Intangible assets, net		0.4			37.3		11.1			—			48.8
Deferred income tax assets		604.2			9.1		66.0			—			679.3
Other long-term assets		70.5			79.2		35.4			(10.2	)		174.9
Intercompany receivable		1,142.9			490.1		—			(1,633.0	)		—
Total assets	$	1,936.5		$	1,527.1	$	555.7		$	(1,647.2	)	$	2,372.1
Liabilities and Shareholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	6.8		$	24.9	$	12.9		$	—		$	44.6
Accrued expenses and other current liabilities		186.6			68.9		63.2			(4.0	)		314.7
Total current liabilities		193.4			93.8		76.1			(4.0	)		359.3
Long-term debt, net of current portion		1,397.0			83.3		26.7			(10.2	)		1,496.8
Other long-term liabilities		43.9			11.3		75.6			—			130.8
Intercompany payable		—			—		1,400.8			(1,400.8	)		—
		1,634.3			188.4		1,579.2			(1,415.0	)		1,986.9
Commitments and contingencies
Convertible perpetual preferred stock		387.4			—		—			—			387.4
Shareholders’ (deficit) equity:
HealthSouth shareholders’ (deficit) equity		(85.2	)		1,338.7		(1,106.5	)		(232.2	)		(85.2	)
Noncontrolling interests		—			—		83.0			—			83.0
Total shareholders’ (deficit) equity		(85.2	)		1,338.7		(1,023.5	)		(232.2	)		(2.2	)
Total liabilities and shareholders’ (deficit) equity	$	1,936.5		$	1,527.1	$	555.7		$	(1,647.2	)	$	2,372.1

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2011
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	65.0		$	263.9		$	89.2		$	(207.3	)	$	210.8
Cash flows from investing activities:
Capital expenditures		(6.6	)		(46.2	)		(9.1	)		—			(61.9	)
Purchase of restricted investments		—			—			(8.0	)		—			(8.0	)
Proceeds from sale of restricted investments		—			—			0.7			—			0.7
Net change in restricted cash		(0.1	)		—			6.4			—			6.3
Net settlements on interest rate swaps		(10.9	)		—			—			—			(10.9	)
Other		—			(0.7	)		—			—			(0.7	)
Net cash provided by (used in) investing activities of discontinued operations— Proceeds from sale of LTCHs		107.9			—			—			—			107.9
Other investing activities of discontinued operations		—			(0.3	)		(0.4	)		—			(0.7	)
Net cash provided by (used in) investing activities		90.3			(47.2	)		(10.4	)		—			32.7
Cash flows from financing activities:
Principal borrowings on term loan		100.0			—			—			—			100.0
Proceeds from bond issuance		120.0			—			—			—			120.0
Principal payments on debt, including pre-payments		(505.2	)		(0.8	)		—			3.0			(503.0	)
Borrowings on revolving credit facility		338.0			—			—			—			338.0
Payments on revolving credit facility		(238.0	)		—			—			—			(238.0	)
Principal payments under capital lease obligations		(0.7	)		(7.7	)		(1.7	)		—			(10.1	)
Debt issue costs		(4.3	)		—			—			—			(4.3	)
Dividends paid on convertible perpetual preferred stock		(19.5	)		—			—			—			(19.5	)
Distributions paid to noncontrolling interests of consolidated affiliates		—			—			(31.6	)		—			(31.6	)
Other		4.3			—			—			—			4.3
Change in intercompany advances		49.1			(207.8	)		(45.6	)		204.3			—
Net cash used in financing activities		(156.3	)		(216.3	)		(78.9	)		207.3			(244.2	)
(Decrease) increase in cash and cash equivalents		(1.0	)		0.4			(0.1	)		—			(0.7	)
Cash and cash equivalents at beginning of period		45.8			0.1			2.4			—			48.3
Cash and cash equivalents of facilities in discontinued operations at beginning of period		0.1			—			—			—			0.1
Less: Cash and cash equivalents of facilities in discontinued operations at end of period		—			—			—			—			—
Cash and cash equivalents at end of period	$	44.9		$	0.5		$	2.3		$	—		$	47.7

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2010
	HealthSouth Corporation			Guarantor Subsidiaries			Non Guarantor Subsidiaries			Eliminating Entries			HealthSouth Consolidated
	(In Millions)
Net cash provided by operating activities	$	166.3		$	164.9		$	84.8		$	(152.1	)	$	263.9
Cash flows from investing activities:
Capital expenditures		(5.2	)		(28.2	)		(15.4	)		—			(48.8	)
Acquisition of businesses, net of cash required		—			(34.1	)		—			—			(34.1	)
Purchase of restricted investments		—			—			(25.5	)		—			(25.5	)
Proceeds from sale of restricted investments		—			—			10.4			—			10.4
Net change in restricted cash		1.7			—			32.4			—			34.1
Net settlements on interest rate swaps		(33.7	)		—			—			—			(33.7	)
Other		—			(0.3	)		—			—			(0.3	)
Net cash provided by (used in) investing activities of discontinued operations		0.3			(0.7	)		7.5			—			7.1
Net cash (used in) provided by investing activities		(36.9	)		(63.3	)		9.4			—			(90.8	)
Cash flows from financing activities:
Principal payments on debt, including pre-payments		(11.2	)		—			—			3.0			(8.2	)
Principal payments under capital lease obligations		(1.6	)		(7.5	)		(1.5	)		—			(10.6	)
Dividends paid on convertible perpetual preferred stock		(19.5	)		—			—			—			(19.5	)
Distributions paid to noncontrolling interests of consolidated affiliates		—			—			(26.3	)		—			(26.3	)
Other		0.3			—			0.8			—			1.1
Change in intercompany advances		13.6			(95.3	)		(67.4	)		149.1			—
Net cash used in financing activities of discontinued operations		—			—			(0.1	)		—			(0.1	)
Net cash used in financing activities		(18.4	)		(102.8	)		(94.5	)		152.1			(63.6	)
Increase (decrease) in cash and cash equivalents		111.0			(1.2	)		(0.3	)		—			109.5
Cash and cash equivalents at beginning of period		76.2			1.7			2.8			—			80.7
Cash and cash equivalents of facilities in discontinued operations at beginning of period		0.1			—			0.1			—			0.2
Less: Cash and cash equivalents of facilities in discontinued operations at end of period		—			—			—			—			—
Cash and cash equivalents at end of period	$	187.3		$	0.5		$	2.6		$	—		$	190.4