Community Health Systems 2015 Annual Report Download - page 169

COMMUNITY HEALTH SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
20. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION
The Senior Notes due 2019, 2020 and 2022, which are senior unsecured obligations of CHS, and the 5
1
⁄ 8 %
Senior Secured Notes due 2018 and 2021 (collectively, “the Notes”) are guaranteed on a senior basis by the
Company and by certain of its existing and subsequently acquired or organized 100% owned domestic
subsidiaries. The Notes are fully and unconditionally guaranteed on a joint and several basis, with exceptions
considered customary for such guarantees, limited to the release of the guarantee when a subsidiary guarantor’s
capital stock is sold, or a sale of all of the subsidiary guarantor’s assets used in operations. The following
condensed consolidating financial statements present Community Health Systems, Inc. (as parent guarantor),
CHS (as the issuer), the subsidiary guarantors, the subsidiary non-guarantors and eliminations. These condensed
consolidating financial statements have been prepared and presented in accordance with SEC Regulation S-X
Rule 3-10 “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being
Registered.”
The accounting policies used in the preparation of this financial information are consistent with those
elsewhere in the consolidated financial statements of the Company, except as noted below:
• Intercompany receivables and payables are presented gross in the supplemental condensed consolidating
balance sheets.
• Cash flows from intercompany transactions are presented in cash flows from financing activities, as changes
in intercompany balances with affiliates, net.
• Income tax expense is allocated from the parent guarantor to the income producing operations (other
guarantors and non-guarantors) and the issuer through stockholders’ equity. As this approach represents an
allocation, the income tax expense allocation is considered non-cash for statement of cash flow purposes.
• Interest expense, net has been presented to reflect net interest expense and interest income from outstanding
long-term debt and intercompany balances.
The Company’s intercompany activity consists primarily of daily cash transfers for purposes of cash
management, the allocation of certain expenses and expenditures paid for by the Parent on behalf of its
subsidiaries, and the push down of investment in its subsidiaries. This activity also includes the intercompany
transactions between consolidated entities as part of the Receivables Facility that is further discussed in Note 7.
The Company’s subsidiaries generally do not purchase services from one another; thus, the intercompany
transactions do not represent revenue generating transactions. All intercompany transactions eliminate in
consolidation.
From time to time, subsidiaries of the Company sell and/or repurchase noncontrolling interests in consolidated
subsidiaries, which may change subsidiaries between guarantors and non-guarantors. Amounts for prior periods
are revised to reflect the status of guarantors or non-guarantors as of December 31, 2015.
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