(11) Supplemental Condensed Consolidating Financial Information

Certain of our senior notes are guaranteed by a group of subsidiaries (the “Guarantors”). The Guarantors, each of which is a 100% directly owned subsidiary of Universal Health Services, Inc., fully and unconditionally guarantee the senior notes on a joint and several basis, subject to certain customary release provisions.

The following financial statements present condensed consolidating financial data for (i) Universal Health Services, Inc. (on a parent company only basis), (ii) the combined Guarantors, (iii) the combined non guarantor subsidiaries (all other subsidiaries), (iv) an elimination column for adjustments to arrive at the information for the parent company, Guarantors, and non guarantors on a consolidated basis, and (v) the parent company and our subsidiaries on a consolidated basis.

Investments in subsidiaries are accounted for by the parent company and the Guarantors using the equity method for this presentation. Results of operations of subsidiaries are therefore classified in the parent company’s and Guarantors’ investment in subsidiaries accounts. The elimination entries set forth in the following condensed consolidating financial statements eliminate distributed and undistributed income of subsidiaries, investments in subsidiaries, and intercompany balances and transactions between the parent, Guarantors, and non guarantors.

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts

Net revenues before provision for doubtful accounts	$	0		$	1,530,301		$	652,376		$	(7,123	)	$	2,175,554
Less: Provision for doubtful accounts		0			109,858			47,938			0			157,796

Net revenues		0			1,420,443			604,438			(7,123	)		2,017,758


Operating charges:
Salaries, wages and benefits		0			680,877			272,706			0			953,583
Other operating expenses		0			366,675			152,813			(6,694	)		512,794
Supplies expense		0			134,966			87,742			0			222,708
Depreciation and amortization		0			67,204			26,252			0			93,456
Lease and rental expense		0			15,034			9,255			(429	)		23,860
Electronic health records incentive income		0			(531	)		(894	)		0			(1,425	)
Costs related to extinguishment of debt		36,171			0			0			0			36,171

		36,171			1,264,225			547,874			(7,123	)		1,841,147


Income from operations		(36,171	)		156,218			56,564			0			176,611
Interest expense		30,503			1,277			353			0			32,133
Interest (income) expense, affiliate		0			22,113			(22,113	)		0			0
Equity in net income of consolidated affiliates		(123,951	)		(32,595	)		0			156,546			0

Income before income taxes		57,277			165,423			78,324			(156,546	)		144,478
Provision for income taxes		(25,520	)		54,139			19,821			0			48,440

Net income		82,797			111,284			58,503			(156,546	)		96,038
Less: Income attributable to noncontrolling interests		0			0			13,241			0			13,241

Net income attributable to UHS	$	82,797		$	111,284		$	45,262		$	(156,546	)	$	82,797

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts

Net revenues before provision for doubtful accounts	$	0		$	4,514,444		$	2,007,037		$	(21,801	)	$	6,499,680
Less: Provision for doubtful accounts		0			367,375			174,560			0			541,935

Net revenues		0			4,147,069			1,832,477			(21,801	)		5,957,745


Operating charges:
Salaries, wages and benefits		0			2,038,171			812,697			0			2,850,868
Other operating expenses		0			890,720			453,265			(20,711	)		1,323,274
Supplies expense		0			403,195			259,085			0			662,280
Depreciation and amortization		0			199,540			77,966			0			277,506
Lease and rental expense		0			43,827			27,919			(1,090	)		70,656
Electronic health records incentive income		0			(2,665	)		(1,364	)		0			(4,029	)
Costs related to extinguishment of debt		36,171			0			0			0			36,171

		36,171			3,572,788			1,629,568			(21,801	)		5,216,726


Income from operations		(36,171	)		574,281			202,909			0			741,019
Interest expense		97,665			3,248			1,500			0			102,413
Interest (income) expense, affiliate		0			66,337			(66,337	)		0			0
Equity in net income of consolidated affiliates		(455,156	)		(125,458	)		0			580,614			0

Income before income taxes		321,320			630,154			267,746			(580,614	)		638,606
Provision for income taxes		(51,226	)		217,340			57,988			0			224,102

Net income		372,546			412,814			209,758			(580,614	)		414,504
Less: Income attributable to noncontrolling interests		0			0			41,958			0			41,958

Net income attributable to UHS	$	372,546		$	412,814		$	167,800		$	(580,614	)	$	372,546

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts

Net revenues before provision for doubtful accounts	$	0		$	1,451,793		$	690,311		$	(7,364	)	$	2,134,740
Less: Provision for doubtful accounts		0			188,151			130,220			0			318,371

Net revenues		0			1,263,642			560,091			(7,364	)		1,816,369


Operating charges:
Salaries, wages and benefits		0			646,595			256,617			0			903,212
Other operating expenses		0			255,295			145,222			(6,968	)		393,549
Supplies expense		0			128,284			78,711			0			206,995
Depreciation and amortization		0			60,615			26,356			0			86,971
Lease and rental expense		0			15,518			8,782			(396	)		23,904
Electronic health records incentive income		0			(16,089	)		(7,059	)		0			(23,148	)

		0			1,090,218			508,629			(7,364	)		1,591,483


Income from operations		0			173,424			51,462			0			224,886
Interest expense		30,853			840			621			0			32,314
Interest (income) expense, affiliate		0			24,391			(24,391	)		0			0
Equity in net income of consolidated affiliates		(133,630	)		(28,048	)		0			161,678			0

Income before income taxes		102,777			176,241			75,232			(161,678	)		192,572
Provision for income taxes		(11,810	)		62,429			18,854			0			69,473

Net income		114,587			113,812			56,378			(161,678	)		123,099
Less: Income attributable to noncontrolling interests		0			0			8,512			0			8,512

Net income attributable to UHS	$	114,587		$	113,812		$	47,866		$	(161,678	)	$	114,587

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts

Net revenues before provision for doubtful accounts	$	0		$	4,289,656		$	2,026,466		$	(21,372	)	$	6,294,750
Less: Provision for doubtful accounts		0			488,213			323,561			0			811,774

Net revenues		0			3,801,443			1,702,905			(21,372	)		5,482,976


Operating charges:
Salaries, wages and benefits		0			1,931,610			771,232			0			2,702,842
Other operating expenses		0			693,102			427,488			(20,472	)		1,100,118
Supplies expense		0			380,888			233,093			0			613,981
Depreciation and amortization		0			173,991			74,474			0			248,465
Lease and rental expense		0			46,729			26,822			(900	)		72,651
Electronic health records incentive income		0			(19,657	)		(8,286	)		0			(27,943	)

		0			3,206,663			1,524,823			(21,372	)		4,710,114


Income from operations		0			594,780			178,082			0			772,862
Interest expense		105,571			2,540			2,377			0			110,488
Interest (income) expense, affiliate		0			73,173			(73,173	)		0			0
Equity in net income of consolidated affiliates		(451,375	)		(98,326	)		0			549,701			0

Income before income taxes		345,804			617,393			248,878			(549,701	)		662,374
Provision for income taxes		(40,408	)		221,322			60,623			0			241,537

Net income		386,212			396,071			188,255			(549,701	)		420,837
Less: Income attributable to noncontrolling interests		0			0			34,625			0			34,625

Net income attributable to UHS	$	386,212		$	396,071		$	153,630		$	(549,701	)	$	386,212

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014

(amounts in thousands)


	Parent			Guarantors		Non Guarantors		Consolidating Adjustments			Total Consolidated Amounts

Net income	$	82,797		$	111,284	$	58,503	$	(156,546	)	$	96,038
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		4,712			0		0		0			4,712
Amortization of terminated hedge		(84	)		0		0		0			(84	)
Currency translation adjustment		(2,506	)		0		0		0			(2,506	)

Other comprehensive income before tax		2,122			0		0		0			2,122
Income tax expense related to items of other comprehensive income		1,620			0		0		0			1,620

Total other comprehensive income, net of tax		502			0		0		0			502


Comprehensive income		83,299			111,284		58,503		(156,546	)		96,540
Less: Comprehensive income attributable to noncontrolling interests		0			0		13,241		0			13,241

Comprehensive income attributable to UHS	$	83,299		$	111,284	$	45,262	$	(156,546	)	$	83,299

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(amounts in thousands)


	Parent			Guarantors		Non Guarantors		Consolidating Adjustments			Total Consolidated Amounts

Net income	$	372,546		$	412,814	$	209,758	$	(580,614	)	$	414,504
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		12,922			0		0		0			12,922
Amortization of terminated hedge		(252	)		0		0		0			(252	)
Currency translation adjustment		(2,506	)		0		0		0			(2,506	)

Other comprehensive income before tax		10,164			0		0		0			10,164
Income tax expense related to items of other comprehensive income		4,685			0		0		0			4,685

Total other comprehensive income, net of tax		5,479			0		0		0			5,479


Comprehensive income		378,025			412,814		209,758		(580,614	)		419,983
Less: Comprehensive income attributable to noncontrolling interests		0			0		41,958		0			41,958

Comprehensive income attributable to UHS	$	378,025		$	412,814	$	167,800	$	(580,614	)	$	378,025

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013

(amounts in thousands)


	Parent			Guarantors		Non Guarantors		Consolidating Adjustments			Total Consolidated Amounts

Net income	$	114,587		$	113,812	$	56,378	$	(161,678	)	$	123,099
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		3,054			0		0		0			3,054
Amortization of terminated hedge		(84	)		0		0		0			(84	)

Other comprehensive income before tax		2,970			0		0		0			2,970
Income tax expense related to items of other comprehensive income		1,120			0		0		0			1,120

Total other comprehensive income, net of tax		1,850			0		0		0			1,850


Comprehensive income		116,437			113,812		56,378		(161,678	)		124,949
Less: Comprehensive income attributable to noncontrolling interests		0			0		8,512		0			8,512

Comprehensive income attributable to UHS	$	116,437		$	113,812	$	47,866	$	(161,678	)	$	116,437

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

(amounts in thousands)


	Parent			Guarantors		Non Guarantors		Consolidating Adjustments			Total Consolidated Amounts

Net income	$	386,212		$	396,071	$	188,255	$	(549,701	)	$	420,837
Other comprehensive income (loss):
Unrealized derivative gains on cash flow hedges		12,871			0		0		0			12,871
Amortization of terminated hedge		(252	)		0		0		0			(252	)

Other comprehensive income before tax		12,619			0		0		0			12,619
Income tax expense related to items of other comprehensive income		4,758			0		0		0			4,758

Total other comprehensive income, net of tax		7,861			0		0		0			7,861


Comprehensive income		394,073			396,071		188,255		(549,701	)		428,698
Less: Comprehensive income attributable to noncontrolling interests		0			0		34,625		0			34,625

Comprehensive income attributable to UHS	$	394,073		$	396,071	$	153,630	$	(549,701	)	$	394,073

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF SEPTEMBER 30, 2014

(amounts in thousands)


	Parent		Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Assets
Current assets:
Cash and cash equivalents	$	0	$	29,203		$	10,508		$	0		$	39,711
Accounts receivable, net		0		885,715			353,763			0			1,239,478
Supplies		0		65,120			39,270			0			104,390
Deferred income taxes		51,505		43,699			0			0			95,204
Other current assets		0		129,965			13,346			0			143,311

Total current assets		51,505		1,153,702			416,887			0			1,622,094


Investments in subsidiaries		6,833,655		1,602,369			0			(8,436,024	)		0
Intercompany receivable		312,807		0			512,904			(825,711	)		0
Intercompany note receivable		0		0			1,104,881			(1,104,881	)		0

Property and equipment		0		4,415,264			1,689,826			0			6,105,090
Less: accumulated depreciation		0		(1,629,256	)		(826,860	)		0			(2,456,116	)

		0		2,786,008			862,966			0			3,648,974


Other assets:
Goodwill		0		2,796,307			500,051			0			3,296,358
Deferred charges		33,981		5,434			2,495			0			41,910
Other		6,891		285,684			59,681			0			352,256

	$	7,238,839	$	8,629,504		$	3,459,865		$	(10,366,616	)	$	8,961,592


Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	79,374	$	1,256		$	847		$	0		$	81,477
Accounts payable and accrued liabilities		27,145		970,673			86,169			0			1,083,987
Federal and state taxes		0		0			0			0			0

Total current liabilities		106,519		971,929			87,016			0			1,165,464


Intercompany payable		0		825,711			0			(825,711	)		0
Other noncurrent liabilities		2,187		200,806			77,804			0			280,797
Long-term debt		3,328,369		20,474			24,498			0			3,373,341
Intercompany note payable		0		1,104,881			0			(1,104,881	)		0
Deferred income taxes		198,560		54,631			0			0			253,191

Redeemable noncontrolling interests		0		0			231,473			0			231,473

UHS common stockholders’ equity		3,603,204		5,451,072			2,984,952			(8,436,024	)		3,603,204
Noncontrolling interest		0		0			54,122			0			54,122

Total equity		3,603,204		5,451,072			3,039,074			(8,436,024	)		3,657,326

	$	7,238,839	$	8,629,504		$	3,459,865		$	(10,366,616	)	$	8,961,592

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

AS OF DECEMBER 31, 2013

(amounts in thousands)


	Parent		Guarantors			Non Guarantors			Consolidating Adjustments			Total Consolidated Amounts
Assets
Current assets:
Cash and cash equivalents	$	0	$	7,990		$	9,248		$	0		$	17,238
Accounts receivable, net		0		799,898			317,063			0			1,116,961
Supplies		0		63,562			38,219			0			101,781
Deferred income taxes		76,719		43,184			0			0			119,903
Other current assets		0		63,786			12,660			0			76,446

Total current assets		76,719		978,420			377,190			0			1,432,329


Investments in subsidiaries		6,378,499		1,476,911			0			(7,855,410	)		0
Intercompany receivable		226,592		0			531,411			(758,003	)		0
Intercompany note receivable		0		0			982,568			(982,568	)		0

Property and equipment		0		4,093,914			1,597,988			0			5,691,902
Less: accumulated depreciation		0		(1,478,758	)		(770,975	)		0			(2,249,733	)

		0		2,615,156			827,013			0			3,442,169


Other assets:
Goodwill		0		2,552,190			496,826			0			3,049,016
Deferred charges		49,866		5,577			2,438			0			57,881
Other		8,411		251,365			70,552			0			330,328

	$	6,740,087	$	7,879,619		$	3,287,998		$	(9,595,981	)	$	8,311,723


Liabilities and Stockholders’ Equity
Current liabilities:
Current maturities of long-term debt	$	97,403		916			993			0		$	99,312
Accounts payable and accrued liabilities		28,099		837,354			87,996			0			953,449
Federal and state taxes		4,963		2,164			0			0			7,127

Total current liabilities		130,465		840,434			88,989			0			1,059,888


Intercompany payable		0		758,003			0			(758,003	)		0
Other noncurrent liabilities		7,591		199,104			77,894			0			284,589
Long-term debt		3,168,819		5,337			35,606			0			3,209,762
Intercompany note payable		0		982,568			0			(982,568	)		0
Deferred income taxes		183,233		55,915			0			0			239,148

Redeemable noncontrolling interests		0		0			218,107			0			218,107

UHS common stockholders’ equity		3,249,979		5,038,258			2,817,152			(7,855,410	)		3,249,979
Noncontrolling interest		0		0			50,250			0			50,250

Total equity		3,249,979		5,038,258			2,867,402			(7,855,410	)		3,300,229

	$	6,740,087	$	7,879,619		$	3,287,998		$	(9,595,981	)	$	8,311,723

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments		Total Consolidated Amounts


Net cash provided by operating activities	$	8,445			431,986			249,123		$	0	$	689,554


Cash Flows from Investing Activities:
Property and equipment additions, net of disposals		0			(205,455	)		(103,906	)		0		(309,361	)
Proceeds received from sale of assets and businesses		0			11,450			3,728			0		15,178
Cash paid/reserved related to acquisition of property and businesses		0			(394,854	)		(7,551	)		0		(402,405	)
Costs incurred for purchase and implementation of electronic health records application		0			(11,204	)		0			0		(11,204	)

Net cash used in investing activities		0			(600,063	)		(107,729	)		0		(707,792	)


Cash Flows from Financing Activities:
Reduction of long-term debt		(830,680	)		(609	)		(11,254	)		0		(842,543	)
Additional borrowings		969,800			0			0			0		969,800
Financing costs		(13,413	)		0			0			0		(13,413	)
Repurchase of common shares		(63,292	)		0			0			0		(63,292	)
Dividends paid		(19,794	)		0			0			0		(19,794	)
Issuance of common stock		4,907			0			0			0		4,907

Excess income tax benefits related to stock-based compensation		30,242			0			0			0		30,242
Profit distributions to noncontrolling interests		0			0			(25,074	)		0		(25,074	)
Changes in intercompany balances with affiliates, net		(86,215	)		190,021			(103,806	)		0		0

Net cash (used in) provided by financing activities		(8,445	)		189,412			(140,134	)		0		40,833


Effect of exchange rate changes on cash and cash equivalents		0			(122	)		0			0		(122	)
Increase in cash and cash equivalents		0			21,213			1,260			0		22,473
Cash and cash equivalents, beginning of period		0			7,990			9,248			0		17,238

Cash and cash equivalents, end of period	$	0		$	29,203		$	10,508		$	0	$	39,711

UNIVERSAL HEALTH SERVICES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2013

(amounts in thousands)


	Parent			Guarantors			Non Guarantors			Consolidating Adjustments		Total Consolidated Amounts


Net cash (used in) provided by operating activities	$	(6,371	)	$	341,031			241,263		$	0	$	575,923


Cash Flows from Investing Activities:
Property and equipment additions, net of disposals		0			(202,758	)		(76,993	)		0		(279,751	)
Proceeds received from sale of assets and businesses		0			7,552			29,566			0		37,118
Cash paid/reserved related to acquisition of property and businesses		0			(1,320	)		0			0		(1,320	)
Costs incurred for purchase and implementation of electronic health records application		0			(42,353	)		0			0		(42,353	)

Net cash used in investing activities		0			(238,879	)		(47,427	)		0		(286,306	)


Cash Flows from Financing Activities:
Reduction of long-term debt		(226,761	)		(807	)		(6,663	)		0		(234,231	)
Additional borrowings		1,500			0			0			0		1,500
Repurchase of common shares		(22,186	)		0			0			0		(22,186	)
Dividends paid		(14,706	)		0			0			0		(14,706	)
Issuance of common stock		4,096			0			0			0		4,096
Excess income tax benefits related to stock-based compensation		15,809			0			0			0		15,809
Profit distributions to noncontrolling interests		0			0			(51,248	)		0		(51,248	)
Changes in intercompany balances with affiliates, net		248,619			(108,930	)		(139,689	)		0		0


Net provided by (cash used) in financing activities		6,371			(109,737	)		(197,600	)		0		(300,966	)


Decrease in cash and cash equivalents		0			(7,585	)		(3,764	)		0		(11,349	)
Cash and cash equivalents, beginning of period		0			11,949			11,522			0		23,471

Cash and cash equivalents, end of period	$	0		$	4,364		$	7,758		$	0	$	12,122