18. SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The Senior Notes due 2019, 2020 and 2022, which are senior unsecured obligations of CHS, and the 5⅛% 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 condensed 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 revised to reflect the status of guarantors or non-guarantors as of March 31, 2014.



Condensed Consolidating Balance Sheet
March 31, 2014
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	451	$	162	$	-	$	613
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		1,039		2,090		-		3,129
Supplies		-		-		360		169		-		529
Prepaid income taxes		220		-		-		-		-		220
Deferred income taxes		294		-		-		-		-		294
Prepaid expenses and taxes		-		-		145		59		-		204
Other current assets		-		-		331		307		-		638
Total current assets		514		-		2,326		2,787		-		5,627
Intercompany receivable		1,237		16,499		3,263		7,906		(28,905)		-
Property and equipment, net		-		-		7,010		3,562		-		10,572
Goodwill		-		-		5,082		3,291		-		8,373
Other assets, net		-		330		1,625		1,030		(595)		2,390
Net investment in subsidiaries		3,092		17,678		6,704		-		(27,474)		-
Total assets	$	4,843	$	34,507	$	26,010	$	18,576	$	(56,974)	$	26,962

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	138	$	53	$	8	$	-	$	199
Accounts payable		-		-		775		241		-		1,016
Deferred income taxes		-		-		-		-		-		-
Accrued interest		-		163		1		1		-		165
Accrued liabilities		4		-		1,248		494		-		1,746
Total current liabilities		4		301		2,077		744		-		3,126
Long-term debt		-		15,944		123		732		-		16,799
Intercompany payable		-		14,370		19,500		15,143		(49,013)		-
Deferred income taxes		1,134		-		-		-		-		1,134
Other long-term liabilities		-		801		822		397		(595)		1,425
Total liabilities		1,138		31,416		22,522		17,016		(49,608)		22,484
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		692		-		692
Equity:
Community Health Systems, Inc. stockholders’
equity:
Preferred stock		-		-		-		-		-		-
Common stock		1		-		-		-		-		1
Additional paid-in capital		1,995		1,175		1,274		655		(3,104)		1,995
Treasury stock, at cost		(7)		-		-		-		-		(7)
Accumulated other comprehensive (loss)
income		(58)		(58)		(16)		-		74		(58)
Retained earnings		1,774		1,974		2,230		132		(4,336)		1,774
Total Community Health Systems, Inc.
stockholders’ equity		3,705		3,091		3,488		787		(7,366)		3,705
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		81		-		81
Total equity		3,705		3,091		3,488		868		(7,366)		3,786
Total liabilities and equity	$	4,843	$	34,507	$	26,010	$	18,576	$	(56,974)	$	26,962



Condensed Consolidating Balance Sheet
December 31, 2013
	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	-	$	-	$	238	$	135	$	-	$	373
Patient accounts receivable, net of allowance
for doubtful accounts		-		-		871		1,457		-		2,328
Supplies		-		-		258		115		-		373
Prepaid income taxes		107		-		-		-		-		107
Deferred income taxes		101		-		-		-		-		101
Prepaid expenses and taxes		-		-		98		29		-		127
Other current assets		-		-		256		83		-		339
Total current assets		208		-		1,721		1,819		-		3,748
Intercompany receivable		579		9,541		4,534		3,810		(18,464)		-
Property and equipment, net		-		-		4,674		2,394		-		7,068
Goodwill		-		-		2,536		1,894		-		4,430
Other assets, net		-		144		1,430		828		(531)		1,871
Net investment in subsidiaries		3,194		9,335		4,030		-		(16,559)		-
Total assets	$	3,981	$	19,020	$	18,925	$	10,745	$	(35,554)	$	17,117

LIABILITIES AND EQUITY
Current liabilities:
Current maturities of long-term debt	$	-	$	152	$	13	$	2	$	-	$	167
Accounts payable		-		-		736		215		-		951
Deferred income taxes		3		-		-		-		-		3
Accrued interest		-		111		-		1		-		112
Accrued liabilities		4		-		869		352		-		1,225
Total current liabilities		7		263		1,618		570		-		2,458
Long-term debt		-		8,718		51		517		-		9,286
Intercompany payable		-		6,226		13,060		8,266		(27,552)		-
Deferred income taxes		906		-		-		-		-		906
Other long-term liabilities		-		619		671		218		(531)		977
Total liabilities		913		15,826		15,400		9,571		(28,083)		13,627
Redeemable noncontrolling interests in
equity of consolidated subsidiaries		-		-		-		358		-		358
Equity:
Community Health Systems, Inc. stockholders’
equity:
Preferred stock		-		-		-		-		-		-
Common stock		1		-		-		-		-		1
Additional paid-in capital		1,256		1,175		1,274		595		(3,044)		1,256
Treasury stock, at cost		(7)		-		-		-		-		(7)
Accumulated other comprehensive (loss)
income		(67)		(67)		(11)		-		78		(67)
Retained earnings		1,885		2,086		2,262		157		(4,505)		1,885
Total Community Health Systems, Inc.
stockholders’ equity		3,068		3,194		3,525		752		(7,471)		3,068
Noncontrolling interests in equity of
consolidated subsidiaries		-		-		-		64		-		64
Total equity		3,068		3,194		3,525		816		(7,471)		3,132
Total liabilities and equity	$	3,981	$	19,020	$	18,925	$	10,745	$	(35,554)	$	17,117



Condensed Consolidating Statement of Loss
Three Months Ended March 31, 2014

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(4)	$	3,130	$	1,774	$	-	$	4,900
Provision for bad debts		-		-		480		225		-		705
Net operating revenues		-		(4)		2,650		1,549		-		4,195
Operating costs and expenses:
Salaries and benefits		-		-		1,154		850		-		2,004
Supplies		-		-		418		217		-		635
Other operating expenses		-		-		665		358		-		1,023
Electronic health records incentive reimbursement		-		-		(23)		(17)		-		(40)
Rent		-		-		54		45		-		99
Depreciation and amortization		-		-		189		68		-		257
Amortization of software to be abandoned		-		-		26		16		-		42
Total operating costs and expenses		-		-		2,483		1,537		-		4,020
Income from operations		-		(4)		167		12		-		175
Interest expense, net		-		40		171		13		-		224
Loss from early extinguishment of debt		-		73		-		-		-		73
Equity in earnings of unconsolidated affiliates		112		31		15		-		(169)		(11)
Impairment of long-lived assets		-		-		24		-		-		24
(Loss) income from continuing operations before income taxes		(112)		(148)		(43)		(1)		169		(135)
Provision for (benefit from) income taxes		-		(36)		(16)		(5)		-		(57)
(Loss) income from continuing operations		(112)		(112)		(27)		4		169		(78)
Discontinued operations, net of taxes:
Loss from operations of entities held for sale		-		-		(5)		3		-		(2)
Impairment of hospitals held for sale		-		-		-		(18)		-		(18)
Loss from discontinued operations, net of taxes		-		-		(5)		(15)		-		(20)
Net (loss) income		(112)		(112)		(32)		(11)		169		(98)
Less: Net income attributable to noncontrolling interests		-		-		-		14		-		14
Net (loss) income attributable to Community Health
Systems, Inc. stockholders	$	(112)	$	(112)	$	(32)	$	(25)	$	169	$	(112)



Condensed Consolidating Statement of Income
Three Months Ended March 31, 2013

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
	(In millions)
Operating revenues (net of contractual
allowances and discounts)	$	-	$	(3)	$	2,403	$	1,352	$	-	$	3,752
Provision for bad debts		-		-		332		146		-		478
Net operating revenues		-		(3)		2,071		1,206		-		3,274
Operating costs and expenses:
Salaries and benefits		-		-		907		648		-		1,555
Supplies		-		-		322		172		-		494
Other operating expenses		-		-		437		259		-		696
Electronic health records incentive reimbursement		-		-		(11)		(8)		-		(19)
Rent		-		-		40		30		-		70
Depreciation and amortization		-		-		128		62		-		190
Total operating costs and expenses		-		-		1,823		1,163		-		2,986
Income from operations		-		(3)		248		43		-		288
Interest expense, net		-		14		127		15		-		156
Loss from early extinguishment of debt		-		1		-		-		-		1
Equity in earnings of unconsolidated affiliates		(79)		(92)		(19)		-		174		(16)
Impairment of long-lived assets		-		-		-		-		-		-
Income from continuing operations before income taxes		79		74		140		28		(174)		147
Provision for (benefit from) income taxes		-		(5)		50		4		-		49
Income from continuing operations		79		79		90		24		(174)		98
Discontinued operations, net of taxes:
Loss from operations of entities held for sale		-		-		-		(2)		-		(2)
Impairment of hospitals held for sale		-		-		-		-		-		-
Loss from discontinued operations, net of taxes		-		-		-		(2)		-		(2)
Net income		79		79		90		22		(174)		96
Less: Net income attributable to noncontrolling interests		-		-		-		17		-		17
Net income attributable to Community Health
Systems, Inc. stockholders	$	79	$	79	$	90	$	5	$	(174)	$	79



Condensed Consolidating Statement of Comprehensive Loss
Three Months Ended March 31, 2014

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net (loss) income	$	(112)	$	(112)	$	(32)	$	(11)	$	169	$	(98)
Other comprehensive income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		9		9		-		-		(9)		9
Net change in fair value of available-for-sale securities, net
of tax		-		-		-		-		-		-
Amortization and recognition of unrecognized pension
cost components, net of tax		-		-		-		-		-		-
Other comprehensive income		9		9		-		-		(9)		9
Comprehensive (loss) income		(103)		(103)		(32)		(11)		160		(89)
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		14		-		14
Comprehensive (loss) income attributable to Community
Health Systems, Inc. stockholders	$	(103)	$	(103)	$	(32)	$	(25)	$	160	$	(103)



Condensed Consolidating Statement of Comprehensive Income
Three Months Ended March 31, 2013

	Parent Guarantor		Issuer		Other Guarantors		Non - Guarantors		Eliminations		Consolidated
		(In millions)
Net income	$	79	$	79	$	90	$	22	$	(174)	$	96
Other comprehensive income, net of income taxes:
Net change in fair value of interest rate swaps, net of tax		16		16		-		-		(16)		16
Net change in fair value of available-for-sale securities, net
of tax		2		2		2		-		(4)		2
Amortization and recognition of unrecognized pension
cost components, net of tax		1		1		1		-		(2)		1
Other comprehensive income		19		19		3		-		(22)		19
Comprehensive income		98		98		93		22		(196)		115
Less: Comprehensive income attributable to
noncontrolling interests		-		-		-		17		-		17
Comprehensive income attributable to Community
Health Systems, Inc. stockholders	$	98	$	98	$	93	$	5	$	(196)	$	98



Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2014

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	75	$	298	$	60	$	(368)	$	-	$	65

Cash flows from investing activities:
Acquisitions of facilities and other related
equipment		-		-		(2,760)		(14)		-		(2,774)
Purchases of property and equipment		-		-		(143)		(38)		-		(181)
Purchases of available-for-sale securities		-		-		-		(78)		-		(78)
Proceeds from sales of available-for-sale securities		-		-		-		76		-		76
Increase in other investments		-		-		(76)		(23)		-		(99)
Net cash used in investing activities		-		-		(2,979)		(77)		-		(3,056)

Cash flows from financing activities:
Proceeds from exercise of stock options		6		-		-		-		-		6
Repurchase of restricted stock shares for payroll
tax withholding requirements		(11)		-		-		-		-		(11)
Stock buy-back		-		-		-		-		-		-
Deferred financing costs and
other-debt related costs		-		(269)		-		-		-		(269)
Excess tax benefit relating to
stock-based compensation		3		-		-		-		-		3
Redemption of noncontrolling investments in joint
ventures		-		-		-		(5)		-		(5)
Distributions to noncontrolling investors in joint
ventures		-		-		-		(19)		-		(19)
Changes in intercompany balances with
affiliates, net		(73)		(3,417)		3,122		368		-		-
Borrowings under credit agreements		-		7,062		17		-		-		7,079
Issuance of long-term debt		-		4,000		-		-		-		4,000
Proceeds from receivables facility		-		-		-		133		-		133
Repayments of long-term indebtedness		-		(7,674)		(7)		(5)		-		(7,686)
Net cash provided by (used in) financing
activities		(75)		(298)		3,132		472		-		3,231
Net change in cash and cash equivalents		-		-		213		27		-		240
Cash and cash equivalents at beginning of period		-		-		238		135		-		373
Cash and cash equivalents at end of period	$	-	$	-	$	451	$	162	$	-	$	613



Condensed Consolidating Statement of Cash Flows
Three Months Ended March 31, 2013

	Parent				Other		Non -
	Guarantor		Issuer		Guarantors		Guarantors		Eliminations		Consolidated
	(In millions)
Net cash (used in) provided by operating
activities	$	(6)	$	(13)	$	173	$	(97)	$	-	$	57

Cash flows from investing activities:
Acquisitions of facilities and other related
equipment		-		-		(4)		(1)		-		(5)
Purchases of property and equipment		-		-		(95)		(18)		-		(113)
Proceeds from sale of property and equipment		-		-		-		1		-		1
Purchases of available-for-sale securities		-		-		-		-		-		-
Proceeds from sales of available-for-sale securities		-		-		-		-		-		-
Increase in other investments		-		-		(55)		(14)		-		(69)
Net cash used in investing activities		-		-		(154)		(32)		-		(186)

Cash flows from financing activities:
Proceeds from exercise of stock options		72		-		-		-		-		72
Repurchase of restricted stock shares for payroll
tax withholding requirements		(14)		-		-		-		-		(14)
Stock buy-back		(19)		-		-		-		-		(19)
Deferred financing costs and
other-debt related costs		-		-		-		(1)		-		(1)
Excess tax benefit relating to
stock-based compensation		5		-		-		-		-		5
Redemption of noncontrolling investments in joint
ventures		-		-		-		-		-		-
Distributions to noncontrolling investors in joint
ventures		-		-		-		(15)		-		(15)
Changes in intercompany balances with
affiliates, net		(38)		219		(132)		(49)		-		-
Borrowings under credit agreements		-		90		11		-		-		101
Issuance of long-term debt		-		-		-		-		-		-
Proceeds from receivables facility		-		-		-		300		-		300
Repayments of long-term indebtedness		-		(296)		(6)		(101)		-		(403)
Net cash provided by (used in) financing
activities		6		13		(127)		134		-		26
Net change in cash and cash equivalents		-		-		(108)		5		-		(103)
Cash and cash equivalents at beginning of period		-		-		272		116		-		388
Cash and cash equivalents at end of period	$	-	$	-	$	164	$	121	$	-	$	285