Supplemental Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2012

Supplemental Financial Information [Abstract]

SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

18. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

In 2007, CHS issued the 8  ⁷/8% Senior Notes in the aggregate principal amount of approximately $3.0 billion. In 2011, CHS issued the 8% Senior Notes in the aggregate principal amount of $1.0 billion, the proceeds from which were used to purchase $1.0 billion of the 8  ⁷/8% Senior Notes. In addition, CHS issued an additional $1.0 billion of 8% Senior Notes in March 2012, which were used to purchase $850 million of 8 ⁷/8 % Senior Notes. These 8 ⁷/8 % Senior Notes and 8% Senior Notes are senior unsecured obligations of CHS and are guaranteed on a senior basis by the Company and by certain of its existing and subsequently acquired or organized 100% owned domestic subsidiaries.

Both the 8  ⁷/8% Senior Notes and the 8% Senior Notes are guaranteed on a joint and several basis, with limited exceptions considered customary for such guarantees, including the release of the guarantee when a subsidiary’s assets used in operations are sold. 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 11. 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, the Company sells and/or repurchases noncontrolling interests in consolidated subsidiaries, which may change subsidiaries between guarantors and non-guarantors. Amounts for prior periods are restated to reflect the status of guarantors or non-guarantors as of March 31, 2012.

Condensed Consolidating Balance Sheet

March 31, 2012

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	18,404		$	110,894	$	—		$	129,298
Patient accounts receivable, net of allowance for doubtful accounts		—			—			585,904			1,433,633		—			2,019,537
Supplies		—			—			228,702			125,372		—			354,074
Deferred income taxes		89,797			—			—			—		—			89,797
Prepaid expenses and taxes		49,769			67			96,916			32,171		—			178,923
Other current assets		—			—			247,017			81,830		—			328,847
Total current assets		139,566			67			1,176,943			1,783,900		—			3,100,476
Intercompany receivable		1,217,652			9,144,874			2,309,599			1,997,851		(14,669,976	)		—
Property and equipment, net		—			—			4,612,206			2,389,657		—			7,001,863
Goodwill		—			—			2,511,418			1,856,423		—			4,367,841
Other assets, net of accumulated amortization		—			133,393			606,887			635,956		—			1,376,236
Net investment in subsidiaries		1,848,287			7,131,830			3,469,179			—		(12,449,296	)		—
Total assets	$	3,205,505		$	16,410,164		$	14,686,232		$	8,663,787	$	(27,119,272	)	$	15,846,416
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	56,329		$	15,032		$	4,027	$	—		$	75,388
Accounts payable		—			1,982			569,299			250,966		—			822,247
Accrued interest		—			100,941			129			86		—			101,156
Accrued liabilities		7,580			—			673,039			316,999		—			997,618
Total current liabilities		7,580			159,252			1,257,499			572,078		—			1,996,409
Long-term debt		—			8,869,202			49,271			325,143		—			9,243,616
Intercompany payable		—			5,295,699			10,670,064			6,290,045		(22,255,808	)		—
Deferred income taxes		704,725			—			—			—		—			704,725
Other long-term liabilities		2,844			237,739			482,689			262,750		—			986,022
Total liabilities		715,149			14,561,892			12,459,523			7,450,016		(22,255,808	)		12,930,772
Redeemable noncontrolling interests in equity of consolidated subsidiaries		—			—			—			363,540		—			363,540
Equity:
Community Health Systems, Inc. stockholders’ equity:
Preferred stock		—			—			—			—		—			—
Common stock		919			—			1			2		(3	)		919
Additional paid-in capital		1,089,447			760,940			846,210			658,685		(2,265,835	)		1,089,447
Treasury stock, at cost		(6,678	)		—			—			—		—			(6,678	)
Accumulated other comprehensive (loss) income		(170,136	)		(170,136	)		(17,880	)		—		188,016			(170,136	)
Retained earnings		1,576,804			1,257,468			1,398,378			129,796		(2,785,642	)		1,576,804
Total Community Health Systems, Inc. stockholders’ equity		2,490,356			1,848,272			2,226,709			788,483		(4,863,464	)		2,490,356
Noncontrolling interests in equity of consolidated subsidiaries		—			—			—			61,748		—			61,748
Total equity		2,490,356			1,848,272			2,226,709			850,231		(4,863,464	)		2,552,104
Total liabilities and equity	$	3,205,505		$	16,410,164		$	14,686,232		$	8,663,787	$	(27,119,272	)	$	15,846,416

Condensed Consolidating Balance Sheet

December 31, 2011

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors		Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	—		$	—		$	14,536		$	115,329	$	—		$	129,865
Patient accounts receivable, net of allowance for doubtful accounts		—			—			1,088,121			746,046		—			1,834,167
Supplies		—			—			215,203			131,408		—			346,611
Deferred income taxes		89,797			—			—			—		—			89,797
Prepaid expenses and taxes		101,389			117			83,983			28,513		—			214,002
Other current assets		—			10,235			141,192			80,220		—			231,647
Total current assets		191,186			10,352			1,543,035			1,101,516		—			2,846,089
Intercompany receivable		1,160,785			9,294,295			1,741,928			1,672,003		(13,869,011	)		—
Property and equipment, net		—			—			4,395,498			2,460,478		—			6,855,976
Goodwill		—			—			2,412,517			1,852,328		—			4,264,845
Other assets, net of accumulated amortization		—			99,521			523,645			618,764		—			1,241,930
Net investment in subsidiaries		1,758,458			6,413,757			2,450,625			—		(10,622,840	)		—
Total assets	$	3,110,429		$	15,817,925		$	13,067,248		$	7,705,089	$	(24,491,851	)	$	15,208,840
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	—		$	49,954		$	9,625		$	4,127	$	—		$	63,706
Accounts payable		—			345			511,145			237,507		—			748,997
Accrued interest		—			109,984			131			6		—			110,121
Accrued liabilities		7,580			567			662,746			317,422		—			988,315
Total current liabilities		7,580			160,850			1,183,647			559,062		—			1,911,139
Long-term debt		—			8,707,805			49,184			25,809		—			8,782,798
Intercompany payable		—			4,936,587			9,290,461			6,229,469		(20,456,517	)		—
Deferred income taxes		704,725			—			—			—		—			704,725
Other long-term liabilities		1,028			254,228			433,119			261,615		—			949,990
Total liabilities		713,333			14,059,470			10,956,411			7,075,955		(20,456,517	)		12,348,652
Redeemable noncontrolling interests in equity of consolidated subsidiaries		—			—			—			395,743		—			395,743
Equity:
Community Health Systems, Inc. stockholders’ equity:
Preferred stock		—			—			—			—		—			—
Common stock		915			—			1			2		(3	)		915
Additional paid-in capital		1,086,008			701,399			769,841			59,941		(1,531,181	)		1,086,008
Treasury stock, at cost		(6,678	)		—			—			—		—			(6,678	)
Accumulated other comprehensive (loss) income		(184,479	)		(184,479	)		(21,687	)		—		206,166			(184,479	)
Retained earnings		1,501,330			1,241,535			1,362,682			106,099		(2,710,316	)		1,501,330
Total Community Health Systems, Inc. stockholders’ equity		2,397,096			1,758,455			2,110,837			166,042		(4,035,334	)		2,397,096
Noncontrolling interests in equity of consolidated subsidiaries		—			—			—			67,349		—			67,349
Total equity		2,397,096			1,758,455			2,110,837			233,391		(4,035,334	)		2,464,445
Total liabilities and equity	$	3,110,429		$	15,817,925		$	13,067,248		$	7,705,089	$	(24,491,851	)	$	15,208,840

Condensed Consolidating Statement of Income

Three Months Ended March 31, 2012

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
	(In thousands)
Operating revenues (net of contractual allowances and discounts)	$	—		$	(1,764	)	$	2,297,493		$	1,487,762		$	—		$	3,783,491
Provision for bad debts		—			—			323,543			162,913			—			486,456
Net operating revenues		—			(1,764	)		1,973,950			1,324,849			—			3,297,035
Operating costs and expenses:
Salaries and benefits		—			—			851,412			673,563			—			1,524,975
Supplies		—			—			301,328			197,251			—			498,579
Other operating expenses		—			315			445,871			262,757			—			708,943
Electronic health records incentive reimbursement		—			—			(18,079	)		(8,089	)		—			(26,168	)
Rent		—			—			34,805			32,419			—			67,224
Depreciation and amortization		—			—			111,133			63,221			—			174,354
Total operating costs and expenses		—			315			1,726,470			1,221,122			—			2,947,907
Income from operations		—			(2,079	)		247,480			103,727			—			349,128
Interest expense, net		—			15,737			123,418			13,020			—			152,175
Loss from early extinguishment of debt		—			63,429			—			—			—			63,429
Equity in earnings of unconsolidated affiliates		(75,474	)		(115,064	)		(51,314	)		—			229,839			(12,013	)
Income from continuing operations before income taxes		75,474			33,819			175,376			90,707			(229,839	)		145,537
Provision for (benefit from) income taxes		—			(41,655	)		63,311			24,163			—			45,819
Income from continuing operations		75,474			75,474			112,065			66,544			(229,839	)		99,718
Discontinued operations, net of taxes:
Loss from operations of entities sold		—			—			—			(466	)		—			(466	)
Impairment of hospital sold		—			—			—			—			—			—
Loss on sale, net		—			—			—			—			—			—
Loss from discontinued operations, net of taxes		—			—			—			(466	)		—			(466	)
Net income		75,474			75,474			112,065			66,078			(229,839	)		99,252
Less: Net income attributable to noncontrolling interests		—			—			—			23,778			—			23,778
Net income attributable to Community Health Systems, Inc.	$	75,474		$	75,474		$	112,065		$	42,300		$	(229,839	)	$	75,474

Condensed Consolidating Statement of Income

Three Months Ended March 31, 2011

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
	(In thousands)
Operating revenues (net of contractual allowances and discounts)	$	—		$	—		$	1,965,090		$	1,388,962		$	—		$	3,354,052
Provision for bad debts		—			—			245,533			154,436			—			399,969
Net operating revenues		—			—			1,719,557			1,234,526			—			2,954,083
Operating costs and expenses:
Salaries and benefits		—			—			753,989			625,378			—			1,379,367
Supplies		—			—			268,603			189,214			—			457,817
Other operating expenses		—			—			350,667			264,126			—			614,793
Electronic health records incentive reimbursement		—			—			—			—			—			—
Rent		—			—			31,489			31,681			—			63,170
Depreciation and amortization		—			—			95,556			62,599			—			158,155
Total operating costs and expenses		—			—			1,500,304			1,172,998			—			2,673,302
Income from operations		—			—			219,253			61,528			—			280,781
Interest expense, net		—			28,103			119,358			15,757			—			163,218
Loss from early extinguishment of debt		—			—			—			—			—			—
Equity in earnings of unconsolidated affiliates		(61,324	)		(79,436	)		(21,096	)		—			143,722			(18,134	)
Income from continuing operations before income taxes		61,324			51,333			120,991			45,771			(143,722	)		135,697
Provision for (benefit from) income taxes		—			(9,991	)		43,678			10,405			—			44,092
Income from continuing operations		61,324			61,324			77,313			35,366			(143,722	)		91,605
Discontinued operations, net of taxes:
Loss from operations of entities sold		—			—			—			(1,678	)		—			(1,678	)
Impairment of hospital sold		—			—			—			(8,368	)		—			(8,368	)
Loss on sale, net		—			—			—			(3,234	)		—			(3,234	)
Loss from discontinued operations, net of taxes		—			—			—			(13,280	)		—			(13,280	)
Net income		61,324			61,324			77,313			22,086			(143,722	)		78,325
Less: Net income attributable to noncontrolling interests		—			—			—			17,001			—			17,001
Net income attributable to Community Health Systems, Inc.	$	61,324		$	61,324		$	77,313		$	5,085		$	(143,722	)	$	61,324

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2012

	Parent Guarantor		Issuer		Other Guarantors		Non- Guarantors		Eliminations			Consolidated
	(In thousands)
Net income	$	75,474	$	75,474	$	112,065	$	66,078	$	(229,839	)	$	99,252
Other comprehensive income, net of taxes
Net change in fair value of interest rate swaps		10,536		10,536		—		—		(10,536	)		10,536
Net change in fair value of available-for-sale securities		2,667		2,667		2,667		—		(5,334	)		2,667
Amortization and recognition of unrecognized pension cost components		1,140		1,140		1,140		—		(2,280	)		1,140
Other comprehensive income		14,343		14,343		3,807		—		(18,150	)		14,343
Comprehensive income		89,817		89,817		115,872		66,078		(247,989	)		113,595
Less: Comprehensive income attributable to noncontrolling interests		—		—		—		23,778		—			23,778
Comprehensive income attributable to Community Health Systems, Inc.	$	89,817	$	89,817	$	115,872	$	42,300	$	(247,989	)	$	89,817

Condensed Consolidating Statement of Comprehensive Income

Three Months Ended March 31, 2011

	Parent Guarantor		Issuer		Other Guarantors		Non- Guarantors		Eliminations			Consolidated
	(In thousands)
Net income	$	61,324	$	61,324	$	77,313	$	22,086	$	(143,722	)	$	78,325
Other comprehensive income, net of taxes
Net change in fair value of interest rate swaps		36,446		36,446		—		—		(36,446	)		36,446
Net change in fair value of available-for-sale securities		1,069		1,069		1,069		—		(2,138	)		1,069
Amortization and recognition of unrecognized pension cost components		772		772		772		—		(1,544	)		772
Other comprehensive income		38,287		38,287		1,841		—		(40,128	)		38,287
Comprehensive income		99,611		99,611		79,154		22,086		(183,850	)		116,612
Less: Comprehensive income attributable to noncontrolling interests		—		—		—		17,001		—			17,001
Comprehensive income attributable to Community Health Systems, Inc.	$	99,611	$	99,611	$	79,154	$	5,085	$	(183,850	)	$	99,611

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2012

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
	(In thousands)
Net cash (used in) provided by operating activities	$	(1,230	)	$	(26,237	)	$	(64,108	)	$	278,885		$	—	$	187,310
Cash flows from investing activities:
Acquisitions of facilities and other related equipment		—			—			(242,977	)		(5,459	)		—		(248,436	)
Purchases of property and equipment		—			—			(127,796	)		(57,107	)		—		(184,903	)
Proceeds from disposition of ancillary operations		—			—			—			—			—		—
Proceeds from sale of property and equipment		—			—			688			60			—		748
Increase in other investments		—			10,000			(45,612	)		(32,096	)		—		(67,708	)
Net cash used in investing activities		—			10,000			(415,697	)		(94,602	)		—		(500,299	)
Cash flows from financing activities:
Proceeds from exercise of stock options		308			—			—			—			—		308
Repurchase of restricted stock shares for payroll tax withholding requirements		(9,032	)		—			—			—			—		(9,032	)
Deferred financing costs		—			(24,787	)		—			—			—		(24,787	)
Excess tax benefit (income tax payable increase) relating to stock-based compensation		1,004			—			—			—			—		1,004
Proceeds from noncontrolling investors in joint ventures		—			—			—			—			—		—
Redemption of noncontrolling investments in joint ventures		—			—			—			(31,096	)		—		(31,096	)
Distributions to noncontrolling investors in joint ventures		—			—			—			(27,038	)		—		(27,038	)
Changes in intercompany balances with affiliates, net		8,950			(58,772	)		479,643			(429,821	)		—		—
Borrowings under credit agreement		—			4,305,674			9,337			—			—		4,315,011
Issuance of long-term debt		—			1,025,000			—			—			—		1,025,000
Proceeds from receivables facility		—			—			—			300,000			—		300,000
Repayments of long-term indebtedness		—			(5,230,878	)		(5,307	)		(763	)		—		(5,236,948	)
Net cash provided by (used in) financing activities		1,230			16,237			483,673			(188,718	)		—		312,422
Net change in cash and cash equivalents		—			—			3,868			(4,435	)		—		(567	)
Cash and cash equivalents at beginning of period		—			—			14,536			115,329			—		129,865
Cash and cash equivalents at end of period	$	—		$	—		$	18,404		$	110,894		$	—	$	129,298

Condensed Consolidating Statement of Cash Flows

Three Months Ended March 31, 2011

	Parent Guarantor			Issuer			Other Guarantors			Non- Guarantors			Eliminations		Consolidated
	(In thousands)
Net cash (used in) provided by operating activities	$	(22,195	)	$	(83,202	)	$	331,077		$	(38,169	)	$	—	$	187,511
Cash flows from investing activities:
Acquisitions of facilities and other related equipment		—			—			(10,727	)		(34,695	)		—		(45,422	)
Purchases of property and equipment		—			—			(64,312	)		(89,563	)		—		(153,875	)
Proceeds from disposition of ancillary operations		—			—			—			14,583			—		14,583
Proceeds from sale of property and equipment		—			—			473			7,114			—		7,587
Increase in other investments		—			—			(36,201	)		3,924			—		(32,277	)
Net cash used in investing activities		—			—			(110,767	)		(98,637	)		—		(209,404	)
Cash flows from financing activities:
Proceeds from exercise of stock options		18,125			—			—			—			—		18,125
Repurchase of restricted stock shares for payroll tax withholding requirements		—			—			—			—			—		—
Deferred financing costs		—			—			—			—			—		—
Excess tax benefit (income tax payable increase) relating to stock-based compensation		4,675			—			—			—			—		4,675
Proceeds from noncontrolling investors in joint ventures		—			—			—			863			—		863
Redemption of noncontrolling investments in joint ventures		—			—			—			(225	)		—		(225	)
Distributions to noncontrolling investors in joint ventures		—			—			—			(15,333	)		—		(15,333	)
Changes in intercompany balances with affiliates, net		(605	)		95,750			(191,179	)		96,034			—		—
Borrowings under credit agreement		—			—			—			—			—		—
Proceeds from receivables facility		—			—			—			—			—		—
Issuance of long-term debt		—			—			—			—			—		—
Repayments of long-term indebtedness		—			(12,548	)		(1,472	)		(645	)		—		(14,665	)
Net cash provided by (used in) financing activities		22,195			83,202			(192,651	)		80,694			—		(6,560	)
Net change in cash and cash equivalents		—			—			27,659			(56,112	)		—		(28,453	)
Cash and cash equivalents at beginning of period		—			—			212,035			87,134			—		299,169
Cash and cash equivalents at end of period	$	—		$	—		$	239,694		$	31,022		$	—	$	270,716