NOTE 16. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

During the first quarter of 2011, we issued the 2021 Notes, which are guaranteed by virtually all of our domestic subsidiaries, all of which are wholly owned. These guarantees are joint and several, full, complete and unconditional. There are no restrictions on the ability of subsidiary guarantors to transfer funds to the parent company.

As a result of these guarantee arrangements, we are required to present the following condensed consolidating financial information pursuant to SEC Regulation S-X Rule 3-10, “Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.” The information presented below for the year ended December 31, 2010 reflects our previous guarantee arrangements under the 2014 Notes of which an aggregate principal amount of $3.6 million remains outstanding as of September 30, 2011.

CONDENSED CONSOLIDATING BALANCE SHEETS


	September 30, 2011
	Parent Company		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Assets:
Current assets	$	57,341	$	398,288	$	111,002		$	0		$	566,631
Property and equipment, net		0		1,061,983		82,173			0			1,144,156
Goodwill		0		597,067		28,421			0			625,488
Deferred financing costs, net		15,018		0		0			0			15,018
Intercompany notes and accounts receivable and investment in subsidiaries		2,724,444		861,987		(10,498	)		(3,575,933	)		0
Other assets		104		65,571		52,014			0			117,689

TOTAL ASSETS	$	2,796,907	$	2,984,896	$	263,112		$	(3,575,933	)	$	2,468,982

Liabilities and equity:
Current liabilities	$	75,228	$	132,873	$	78,315		$	0		$	286,416
Long-term debt and capital leases, less current portion		743,573		736		0			0			744,309
Intercompany notes and accounts payable		669,454		2,227,640		46,165			(2,943,259	)		0
Deferred tax liabilities		131,931		69,822		8			0			201,761
Other long-term liabilities		1,315		59,794		(19	)		0			61,090
Equity		1,175,406		494,031		138,643			(632,674	)		1,175,406

TOTAL LIABILITIES AND EQUITY	$	2,796,907	$	2,984,896	$	263,112		$	(3,575,933	)	$	2,468,982


	December 31, 2010
	Parent Company		Subsidiaries Guarantor		Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
Assets:
Current assets	$	20,287	$	287,244	$	106,489		$	0		$	414,020
Property and equipment, net		0		861,041		75,703			0			936,744
Goodwill		0		418,047		29,562			0			447,609
Deferred financing costs, net		7,806		0		0			0			7,806
Intercompany notes and accounts receivable and investment in subsidiaries		2,110,185		757,657		(6,226	)		(2,861,616	)		0
Other assets		5,234		56,954		24,569			0			86,757

TOTAL ASSETS	$	2,143,512	$	2,380,943	$	230,097		$	(2,861,616	)	$	1,892,936

Liabilities and equity:
Current liabilities	$	77,144	$	142,962	$	61,529		$	0		$	281,635
Long-term debt and capital leases, less current portion		425,000		2,116		5			0			427,121
Intercompany notes and accounts payable		587,801		1,738,214		120,410			(2,446,425	)		0
Deferred tax liabilities		70,511		73,790		8			0			144,309
Other long-term liabilities		1,253		56,815		0			0			58,068
Equity		981,803		367,046		48,145			(415,191	)		981,803

TOTAL LIABILITIES AND EQUITY	$	2,143,512	$	2,380,943	$	230,097		$	(2,861,616	)	$	1,892,936

CONDENSED CONSOLIDATING UNAUDITED STATEMENTS OF OPERATIONS


	Three Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Revenues	$	1,392		$	449,610		$	61,534		$	(11,221	)	$	501,315
Direct operating expense		0			274,283			49,514			(9,140	)		314,657
Depreciation and amortization expense		0			40,157			2,184			0			42,341
General and administrative expense		255			55,827			8,975			(2,125	)		62,932

Operating income (loss)		1,137			79,343			861			44			81,385

Interest expense, net of amounts capitalized		10,898			(341	)		679			0			11,236
Other, net		(386	)		1			1,973			46			1,634

(Loss) income from continuing operations before taxes		(9,375	)		79,683			(1,791	)		(2	)		68,515
Income tax (expense) benefit		(21,458	)		(3,880	)		261			0			(25,077	)

(Loss) income from continuing operations		(30,833	)		75,803			(1,530	)		(2	)		43,438
Discontinued operations		0			0			0			0			0

Net (loss) income		(30,833	)		75,803			(1,530	)		(2	)		43,438

Loss attributable to noncontrolling interest		0			0			(730	)		0			(730	)

(LOSS) INCOME ATTRIBUTABLE TO KEY	$	(30,833	)	$	75,803		$	(800	)	$	(2	)	$	44,168


	Three Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Revenues	$	0		$	253,076		$	43,635		$	(12,972	)	$	283,739
Direct operating expense		0			162,640			45,546			(10,028	)		198,158
Depreciation and amortization expense		0			30,315			2,250			0			32,565
General and administrative expense		337			41,178			6,677			(1,359	)		46,833

Operating (loss) income		(337	)		18,943			(10,838	)		(1,585	)		6,183

Interest expense, net of amounts capitalized		11,361			(949	)		214			0			10,626
Other, net		18			(1,348	)		2,135			(1,585	)		(780	)

(Loss) income from continuing operations before taxes		(11,716	)		21,240			(13,187	)		0			(3,663	)
Income tax (expense) benefit		(12,031	)		5,759			7,655			0			1,383

(Loss) income from continuing operations		(23,747	)		26,999			(5,532	)		0			(2,280	)
Discontinued operations		0			8,283			0			0			8,283

Net (loss) income		(23,747	)		35,282			(5,532	)		0			6,003

Loss attributable to noncontrolling interest		0			0			(769	)		0			(769	)

(LOSS) INCOME ATTRIBUTABLE TO KEY	$	(23,747	)	$	35,282		$	(4,763	)	$	0		$	6,772


	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Revenues	$	1,392		$	1,201,445		$	163,761		$	(28,930	)	$	1,337,668
Direct operating expense		0			764,879			136,853			(24,655	)		877,077
Depreciation and amortization expense		0			115,936			6,181			(1	)		122,116
General and administrative expense		922			149,599			24,606			(4,413	)		170,714

Operating income (loss)		470			171,031			(3,879	)		139			167,761

Loss on early extinguishment of debt		46,451			0			0			0			46,451
Interest expense, net of amounts capitalized		31,382			(1,384	)		1,590			0			31,588
Other, net		(5,880	)		(3,578	)		1,089			299			(8,070	)

(Loss) income from continuing operations before taxes		(71,483	)		175,993			(6,558	)		(160	)		97,792
Income tax expense		(33,403	)		(3,000	)		(303	)		0			(36,706	)

(Loss) income from continuing operations		(104,886	)		172,993			(6,861	)		(160	)		61,086
Discontinued operations		0			0			0			0			0

Net (loss) income		(104,886	)		172,993			(6,861	)		(160	)		61,086

Loss attributable to noncontrolling interest		0			0			(1,027	)		0			(1,027	)

(LOSS) INCOME ATTRIBUTABLE TO KEY	$	(104,886	)	$	172,993		$	(5,834	)	$	(160	)	$	62,113


	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Revenues	$	0		$	702,221		$	144,187		$	(42,925	)	$	803,483
Direct operating expense		0			459,021			156,333			(31,823	)		583,531
Depreciation and amortization expense		0			91,410			6,957			0			98,367
General and administrative expense		1,630			114,383			17,981			(3,268	)		130,726

Operating (loss) income		(1,630	)		37,407			(37,084	)		(7,834	)		(9,141	)

Interest expense, net of amounts capitalized		34,034			(2,659	)		239			0			31,614
Other, net		(997	)		(730	)		8,005			(7,834	)		(1,556	)

(Loss) income from continuing operations before taxes		(34,667	)		40,796			(45,328	)		0			(39,199	)
Income tax (expense) benefit		(5,068	)		11,287			8,760			0			14,979

(Loss) income from continuing operations		(39,735	)		52,083			(36,568	)		0			(24,220	)
Discontinued operations		0			18,360			0			0			18,360

Net (loss) income		(39,735	)		70,443			(36,568	)		0			(5,860	)

Loss attributable to noncontrolling interest		0			0			(2,816	)		0			(2,816	)

(LOSS) INCOME ATTRIBUTABLE TO KEY	$	(39,735	)	$	70,443		$	(33,752	)	$	0		$	(3,044	)

CONDENSED CONSOLIDATING UNAUDITED STATEMENTS OF CASH FLOWS


	Nine Months Ended September 30, 2011
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands)
	(unaudited)
Net cash provided by (used in) operating activities	$	0		$	104,360		$	(1,358	)	$	0		$	103,002
Cash flows from investing activities:
Capital expenditures		0			(235,732	)		(10,178	)		0			(245,910	)
Acquisitions		0			(188,629	)		0			0			(188,629	)
Intercompany notes and accounts		0			260,492			0			(260,492	)		0
Other investing activities, net		0			20,797			0			0			20,797

Net cash used in investing activities		0			(143,072	)		(10,178	)		(260,492	)		(413,742	)

Cash flows from financing activities:
Repayments of long-term debt		(460,509	)		0			0			0			(460,509	)
Proceeds from long-term debt		475,000			0			0			0			475,000
Repayment of capital lease obligations		0			(3,093	)		0			0			(3,093	)
Proceeds from borrowings on revolving credit facility		363,000			0			0			0			363,000
Repayments on revolving credit facility		(98,000	)		0			0			0			(98,000	)
Payment of deferred financing costs		(16,015	)					0			0			(16,015	)
Repurchases of common stock		(5,473	)		0			0			0			(5,473	)
Intercompany notes and accounts		(260,492	)		0			0			260,492			0
Other financing activities, net		13,188			0			0			0			13,188

Net cash (used in) provided by financing activities		10,699			(3,093	)		0			260,492			268,098

Effect of changes in exchange rates on cash		0			0			5,332			0			5,332

Net decrease in cash and cash equivalents		10,699			(41,805	)		(6,204	)		0			(37,310	)

Cash and cash equivalents at beginning of period		0			42,973			13,655			0			56,628

Cash and cash equivalents at end of period	$	10,699		$	1,168		$	7,451		$	0		$	19,318


	Nine Months Ended September 30, 2010
	Parent Company			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in thousands) (unaudited)
Net cash provided by (used in) operating activities	$	0		$	98,362		$	(7,935	)	$	0		$	90,427
Cash flows from investing activities:
Capital expenditures		0			(100,620	)		(445	)		0			(101,065	)
Intercompany notes and accounts		(165	)		(5,034	)		0			5,199			0
Other investing activities, net		165			20,502			0			0			20,667

Net cash (used in) provided by investing activities		0			(85,152	)		(445	)		5,199			(80,398	)

Cash flows from financing activities:
Repayments of long-term debt		0			(6,970	)		0			0			(6,970	)
Repurchases of common stock		(2,357	)		0			0			0			(2,357	)
Intercompany notes and accounts		5,034			165			0			(5,199	)		0
Other financing activities, net		(2,677	)		0			0			0			(2,677	)

Net cash used in financing activities		0			(6,805	)		0			(5,199	)		(12,004	)

Effect of changes in exchange rates on cash		0			0			(1,366	)		0			(1,366	)

Net increase (decrease) in cash and cash equivalents		0			6,405			(9,746	)		0			(3,341	)

Cash and cash equivalents at beginning of period		0			19,391			18,003			0			37,394

Cash and cash equivalents at end of period	$	0		$	25,796		$	8,257		$	0		$	34,053