Attached files
| file | filename |
|---|---|
| EX-31.1 - RadNet, Inc. | v179424_ex31-1.htm |
| EX-23.2 - RadNet, Inc. | v179424_ex23-2.htm |
| EX-32.2 - RadNet, Inc. | v179424_ex32-2.htm |
| EX-32.1 - RadNet, Inc. | v179424_ex32-1.htm |
| EX-31.2 - RadNet, Inc. | v179424_ex31-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington
DC 20549
FORM
10-K/A
AMENDMENT
NO. 1
x ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2009
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission
File Number 0-19019
RADNET,
INC.
(Exact
name of registrant as specified in charter)
|
Delaware
|
13-3326724
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
1510
Cotner Avenue
|
|
|
Los
Angeles, California
|
90025
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant’s
telephone number, including area code: (310) 478-7808
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of Each
Class
|
Name of each exchange
on which registered
|
|
Common
Stock, $.0001 par value
|
NASDAQ
Global Market
|
Securities
registered pursuant to Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) or the act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
Accelerated Filer o
Accelerated Filer x
Non-Accelerated
Filer o
(Do not check if a smaller reporting
company)
Smaller Reporting Company o
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange
Act Rule 12b-2) Yes o No x
-1-
The
aggregate market value of the registrant’s voting and nonvoting common equity
held by non-affiliates of the registrant was approximately $63,538,580 on June
30, 2009 (the last business day of the registrant’s most recently completed
second quarter) based on the closing price for the common stock on the NASDAQ
Global Market on June 30, 2009.
The
number of shares of the registrant’s common stock outstanding on March 10, 2010,
was 36,259,279 shares (excluding treasury shares).
DOCUMENTS
INCORPORATED BY REFERENCE
The
information required by Part III of the Form 10-K, to the extent not set forth
herein or in the Annual Report on Form 10-K filed on March 15, 2010, is
incorporated herein by reference from the registrant’s definitive proxy
statement for the Annual Meeting of Stockholders, to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A not later than 120
days after the close of the registrant’s fiscal year.
EXPLANATORY NOTE
We are
filing this Form 10-K/A (Amendment No. 1) to our Annual Report on Form 10-K for
the fiscal year ended December 31, 2009, originally filed with the U.S.
Securities and Exchange Commission on March 15, 2010 (the "Original Filing"),
solely for the purpose of complying with Rule 3-09 of Regulation S-X. Rule
3-09 requires that we file financial statements of certain unconsolidated joint
ventures in which we hold equity interests of 50% or less and account for them
under the equity method, to the extent the unconsolidated joint ventures are
individually significant. Under Rule 3-09 of Regulation S-X, we are
permitted to file combined financial statements for individually significant
unconsolidated joint ventures which are in the same line of
business.
We have
determined that as of and for the year ended December 31, 2009, three of our
unconsolidated joint venture interests including Franklin Imaging
Joint Venture, Carroll County Radiology, LLC and MRI at St. Joseph Medical
Center, LLC, (collectively, the “Group”), were significant equity method
investees under Rule 3-09. Accordingly, we are filing in this Amendment
No. 1 the combined financial statements of the Group under Item 8 – Financial
Statements and Supplementary Data, and we are amending Item 15 - Exhibits and
Financial Statement Schedules, to include a list of the financial statements and
exhibits being filed herewith.
A fourth
unconsolidated joint venture, MIB Partnership, LLP ("MIB"), meets the definition
of "Significant Subsidiary" under Rule 1-02(w)(3) of Regulation S-X (the "Income
Test"), but does not otherwise meet the definition of "Significant
Subsidiary". Notwithstanding this determination under the Income Test, MIB
should not be considered a significant joint venture interest for which audited
financial information is required to be filed. We have submitted
correspondence to the Securities and Exchange Commission to ask for their
concurrence with our determination. If audited financial information of
MIB is determined to be required under Rule 3-09, we intend to file an
additional amendment to our Annual Report on Form 10-K to include MIB in the
combined financial statements included herewith.
Except as
described above, no other changes have been made to the Original Filing, and
this Form 10-K/A does not amend, update or change any other items or disclosures
in the Original Filing. This Form 10-K/A does not reflect events occurring
after the Original Filing. Accordingly, this Amendment should be
read in conjunction with the Original Filing and our other filings with the
SEC.
-2-
|
PART
II.
|
||
|
Item
8.
|
Financial
Statements and Supplementary Data
|
|
-3-
Report
of Independent Registered Public Accounting Firm
To the
partners of:
Franklin Imaging Joint
Venture;
Carroll County Radiology, LLC;
MRI at St. Joseph Medical Center, LLC.
We have
audited the accompanying combined balance sheet of certain RadNet, Inc.
affiliates including Franklin
Imaging Joint Venture, Carroll County Radiology, LLC and MRI at St. Joseph
Medical Center, LLC,
(collectively, the “Group”), as of December 31, 2009, and the
related combined statements of income, partners’ equity, and cash flows for the
year ended December 31, 2009. These financial statements are the responsibility
of the Group’s management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. We were not engaged to
perform an audit of the Group’s internal control over financial
reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the combined financial position of the Group at
December 31, 2009, and the combined results of their operations and their
cash flows for the year ended December 31, 2009, in conformity with U.S.
generally accepted accounting principles.
/s/ Ernst & Young
LLP
March 31,
2010
Los
Angeles, California
-4-
|
CERTAIN
RADNET, INC. AFFILIATES
|
|
COMBINED
BALANCE SHEETS
|
|
(IN
THOUSANDS)
|
|
December
31,
|
December
31,
|
|||||||
|
2009
|
2008
|
|||||||
|
(unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,306 | $ | 519 | ||||
|
Accounts
receivable, net of allowance for bad debts of $1,832 and
$1,236 at December 31, 2009 and 2008, respectively
|
5,403 | 6,094 | ||||||
|
Due
from affiliates
|
5,988 | 4,999 | ||||||
|
Prepaid
expenses and other current assets
|
956 | 465 | ||||||
|
Total
current assets
|
13,653 | 12,077 | ||||||
|
PROPERTY
AND EQUIPMENT, NET
|
19,785 | 18,731 | ||||||
|
Total
assets
|
$ | 33,438 | $ | 30,808 | ||||
|
LIABILITIES
AND PARTNERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
payable and accrued expenses
|
$ | 2,717 | $ | 1,708 | ||||
|
Current
portion of deferred rent
|
196 | 61 | ||||||
|
Current
portion of equipment notes payable
|
1,368 | 1,366 | ||||||
|
Current
portion of obligations under capital leases
|
906 | 646 | ||||||
|
Total
current liabilities
|
5,187 | 3,781 | ||||||
|
LONG-TERM
LIABILITIES
|
||||||||
|
Deferred
rent, net of current portion
|
707 | 124 | ||||||
|
Equipment
notes payable, net of current portion
|
3,316 | 4,687 | ||||||
|
Obligations
under capital lease, net of current portion
|
2,331 | 2,142 | ||||||
|
Total
liabilities
|
11,541 | 10,734 | ||||||
|
COMMITMENTS
AND CONTINGENCIES
|
||||||||
|
PARTNERS'
EQUITY
|
||||||||
|
Radnet,
Inc.
|
9,836 | 9,064 | ||||||
|
Other
partners
|
12,061 | 11,010 | ||||||
|
Total
partners' equity
|
21,897 | 20,074 | ||||||
|
Total
liabilities and partners' equity
|
$ | 33,438 | $ | 30,808 | ||||
|
The
accompanying notes are an integral part of these financial
statements.
|
-5-
|
CERTAIN
RADNET, INC. AFFILIATES
|
|
COMBINED
STATEMENTS OF INCOME
|
|
(IN
THOUSANDS)
|
|
Years
Ended December 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||
|
NET
REVENUE
|
$ | 43,074 | $ | 43,784 | $ | 32,349 | ||||||
|
OPERATING
EXPENSES
|
||||||||||||
|
Operating
expenses
|
27,272 | 26,875 | 20,458 | |||||||||
|
Depreciation
and amortization
|
3,269 | 3,227 | 1,518 | |||||||||
|
Provision
for bad debts
|
2,482 | 2,416 | 1,510 | |||||||||
|
Loss
(gain) on sale of equipment
|
- | 68 | (8 | ) | ||||||||
|
Total
operating expenses
|
33,023 | 32,586 | 23,478 | |||||||||
|
INCOME
FROM OPERATIONS
|
10,051 | 11,198 | 8,871 | |||||||||
|
Net
interest expense
|
659 | 647 | 52 | |||||||||
|
NET
INCOME
|
$ | 9,392 | $ | 10,551 | $ | 8,819 | ||||||
|
The
accompanying notes are an integral part of these financial
statements.
|
-6-
|
CERTAIN
RADNET, INC. AFFILIATES
|
|
COMBINED
STATEMENTS OF PARTNERS' EQUITY
|
|
(IN
THOUSANDS)
|
|
Radnet,
Inc.
|
Other
Partners
|
Total
|
||||||||||
|
BALANCE
- January 1, 2007 (unaudited)
|
$ | 7,935 | $ | 10,434 | $ | 18,369 | ||||||
|
Contributions
|
714 | 744 | 1,458 | |||||||||
|
Net
Income
|
4,835 | 3,984 | 8,819 | |||||||||
|
Transfers
|
(392 | ) | 392 | - | ||||||||
|
Distributions
|
(5,418 | ) | (6,522 | ) | (11,940 | ) | ||||||
|
BALANCE
- December 31, 2007 (unaudited)
|
7,674 | 9,032 | 16,706 | |||||||||
|
Contributions
|
400 | 600 | 1,000 | |||||||||
|
Net
Income
|
4,725 | 5,826 | 10,551 | |||||||||
|
Distributions
|
(3,735 | ) | (4,448 | ) | (8,183 | ) | ||||||
|
BALANCE
- December 31, 2008 (unaudited)
|
9,064 | 11,010 | 20,074 | |||||||||
|
Contributions
|
- | - | - | |||||||||
|
Net
Income
|
4,171 | 5,221 | 9,392 | |||||||||
|
Distributions
|
(3,399 | ) | (4,170 | ) | (7,569 | ) | ||||||
|
BALANCE
- December 31, 2009
|
$ | 9,836 | $ | 12,061 | $ | 21,897 | ||||||
|
The
accompanying notes are an integral part of these financial
statements.
|
||||||
-7-
|
CERTAIN
RADNET, INC. AFFILIATES
|
||||||||||||
|
COMBINED
STATEMENTS OF CASH FLOWS
|
|
Years
Ended December 31,
|
||||||||||||
|
2009
|
2008
|
2007
|
||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
|
Net
income
|
$ | 9,392 | $ | 10,551 | $ | 8,819 | ||||||
|
Adjustments
to reconcile net income
|
||||||||||||
|
to
net cash provided by operating activities:
|
||||||||||||
|
Depreciation
and amortization
|
3,269 | 3,227 | 1,518 | |||||||||
|
Provision
for bad debts
|
2,482 | 2,416 | 1,510 | |||||||||
|
Deferred
rent amortization
|
718 | 29 | 158 | |||||||||
|
Net
loss (gain) on sale of assets
|
- | 68 | (8 | ) | ||||||||
|
Changes
in operating assets and liabilities
|
||||||||||||
|
Accounts
receivable
|
(1,791 | ) | (4,009 | ) | (919 | ) | ||||||
|
Other
current assets
|
(1,308 | ) | (3,011 | ) | (883 | ) | ||||||
|
Accounts
payable and accrued expenses
|
373 | (986 | ) | 675 | ||||||||
|
Net
cash provided by operating activities
|
13,603 | 9,118 | 10,870 | |||||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
|
Purchase
of property and equipment
|
(4,046 | ) | (5,555 | ) | (6,669 | ) | ||||||
|
Proceeds
from sale of equipment
|
911 | 18 | 38 | |||||||||
|
Net
cash used in investing activities
|
(3,135 | ) | (5,537 | ) | (6,631 | ) | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
|
Principal
payments on notes and leases payable
|
(2,112 | ) | (1,457 | ) | (169 | ) | ||||||
|
Proceeds
from borrowings on notes payable
|
- | 2,125 | 4,742 | |||||||||
|
Partner
contributions
|
- | 1,000 | 1,458 | |||||||||
|
Distributions
to partners
|
(7,101 | ) | (7,350 | ) | (11,940 | ) | ||||||
|
Net
cash used in financing activities
|
(9,681 | ) | (6,515 | ) | (5,909 | ) | ||||||
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
787 | (2,934 | ) | (1,670 | ) | |||||||
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
519 | 3,453 | 5,123 | |||||||||
|
CASH
AND CASH EQUIVALENTS, end of period
|
$ | 1,306 | $ | 519 | $ | 3,453 | ||||||
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||||||
|
Cash
paid during the period for interest
|
$ | 659 | $ | 647 | $ | 52 | ||||||
|
The
accompanying notes are an integral part of these financial
statements.
|
-8-
CERTAIN
RADNET, INC. AFFILIATES
COMBINED
STATEMENTS OF CASH FLOWS (CONTINUED)
Supplemental
Schedule of Non-Cash Investing and Financing Activities
The Group
entered into capital leases and equipment notes for approximately $1.2 million,
$2.7 million (unaudited) and $751,000 (unaudited), during the years ended
December 31, 2009, 2008 and 2007, respectively.
-9-
CERTAIN RADNET,
INC. AFFILIATES
NOTES
TO COMBINED FINANCIAL STATEMENTS
NOTE
1 – DESCRIPTION OF BUSINESS
The financial information for 2008 and
2007 included herein has been prepared by management of Radnet, Inc. without
audit. Management of Radnet, Inc. believes that such financial
information has been prepared in conformity with U.S. generally accepted
accounting principles, and includes all adjustments necessary for a fair
presentation of the financial position, results of operations and cash flows as
of and for the years ended December 31, 2008 and 2007.
Franklin Imaging Joint Venture, Carroll
County Radiology, LLC and MRI at St. Joseph Medical Center, LLC, (collectively, the “Group”),
are joint ventures between Radnet, Inc. and, as applicable, hospitals, health
systems or radiology practices and were formed for the purpose of owning and
operating diagnostic imaging centers. Professional services at the
joint venture diagnostic imaging centers are performed by contracted radiology
practices or a radiology practice that participates in the joint
venture. Each joint venture within the Group is an affiliate of
Radnet, Inc. as follows:
|
%
owned by Radnet, Inc.
|
||||
|
Franklin
Imaging Joint Venture
|
49%
|
|||
|
Carroll
County Radiology, LLC
|
40%
|
|||
|
MRI
at St. Joseph Medical Center
|
49%
*
|
|||
|
*
|
Prior
to December 2007, Radnet, Inc. owned 73% of MRI at St. Joseph Medical
Center
|
|||
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES
OF COMBINATION – Under Rule 3-09 of Regulation S-X, Radnet, Inc. is permitted to
file combined financial statements for individually significant unconsolidated
joint ventures which are in the same line of business. The combined
financial statements include the assets, liabilities, and operations of each
member of the Group. The operating activities of each of these joint ventures
are completely separate from one another and are in no way affiliated with one
another. Accordingly there are no intercompany transactions and balances to be
eliminated when combining each together.
USE OF
ESTIMATES - The preparation of these financial statements in conformity with
U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. These estimates and assumptions affect
various matters including the Group’s reported amounts of assets and liabilities
in the combined balance sheets at the dates of the financial statements;
disclosure of contingent assets and liabilities at the dates of the financial
statements; and reported amounts of revenues and expenses in the combined
statements of income during the reporting periods. These estimates involve
judgments with respect to numerous factors that are difficult to predict and are
beyond management’s control. As a result, actual amounts could materially differ
from these estimates.
REVENUE
RECOGNITION – Combined net revenue consists of net patient fee for service
revenue Net patient service revenue is recognized at the time
services are provided net of contractual adjustments based on an evaluation of
expected collections resulting from the analysis of current and past due
accounts, past collection experience in relation to amounts billed and other
relevant information. Contractual adjustments result from the
differences between the rates charged for services performed and reimbursements
by government-sponsored healthcare programs and insurance companies for such
services.
CONCENTRATION
OF CREDIT RISKS - Financial instruments that potentially subject the Group to
credit risk are primarily cash equivalents and accounts receivable. Each joint
venture places its cash and cash equivalents with one major financial
institution. At times, the cash in the financial institution is temporarily in
excess of the amount insured by the Federal Deposit Insurance Corporation, or
FDIC. Substantially all accounts receivable are due under
fee-for-service contracts from third party payors, such as insurance companies
and government-sponsored healthcare programs, or directly from
patients. Services are generally provided pursuant to one-year
contracts with healthcare providers. Receivables generally are
collected within industry norms for third-party payors. The Group
continuously monitors collections from its clients and maintains an allowance
for bad debts based upon any specific payor collection issues that are
identified and historical experience.
CASH AND
CASH EQUIVALENTS – The Group considers all highly liquid investments that mature
in three months or less when purchased to be cash equivalents. The carrying
amount of cash and cash equivalents approximates their fair market
value.
-10-
PROPERTY
AND EQUIPMENT - Property and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization of property and
equipment are provided using the straight-line method over the estimated useful
lives, which range from 3 to 15 years. Leasehold improvements are amortized at
the lesser of the related lease term or their estimated useful lives, whichever
is shorter, which range from 3 to 30 years. Only a few leasehold improvements
are deemed to have a life greater than 15 years. Maintenance and repairs are
charged to expenses as incurred.
INCOME
TAXES - Each member of the Group is treated as a partnership for federal and
state income tax purposes where all taxable income is allocated to the partners
in accordance with the respective partnership agreement. Accordingly,
no income tax provision is recorded by the joint ventures.
FAIR VALUE MEASUREMENTS –The
combined balance sheets include the following financial instruments: cash and
cash equivalents, receivables, trade accounts payable, capital leases, long-term
debt and other liabilities. The Group considers the carrying amounts
of cash and cash equivalents, receivables, other current assets and current
liabilities to approximate their fair value because of the relatively short
period of time between the origination of these instruments and their expected
realization or payment. Additionally, the Group considers the
carrying amount of its equipment notes payable and capital lease obligations to
approximate their fair value because the weighted average interest rate used to
formulate the carrying amounts approximates current market rates.
NOTE
3 – RECENT ACCOUNTING STANDARDS
In May
2009, the FASB issued Statement No. 165, “Subsequent Events,” codified
in FASB ASC Topic 855, which establishes general standards of accounting for,
and requires disclosure of, events that occur after the balance sheet date but
before financial statements are issued or are available to be issued. Each
unconsolidated joint venture subsidiary adopted the provisions of ASC
Topic 855 for the quarter ended September 30, 2009. The adoption of these
provisions did not have a material effect on the combined financial
statements.
Each
joint venture evaluated subsequent events through the time of filing this Form
10-K/A.
In
September 2009, the ASC became the authoritative source of accounting principles
accepted in the United States (“GAAP”) recognized by the FASB. All
existing FASB accounting standards and guidance were superseded by the
ASC. Instead of issuing new accounting standards in the form of
statements, FASB staff positions and Emerging Issues Task Force abstracts, the
FASB now issues Accounting Standards Updates that update the
ASC. Rules and interpretive releases of the Securities and Exchange
Commission (“SEC”) under authority of federal securities laws continue to be
additional sources of authoritative GAAP for SEC registrants.
NOTE
4 - PROPERTY AND EQUIPMENT
Property
and equipment and accumulated depreciation and amortization are as follows (in
thousands):
|
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
(unaudited)
|
||||||||
|
Medical
equipment
|
$ | 19,848 | $ | 19,446 | ||||
|
Office
equipment, furniture and fixtures
|
1,914 | 1,846 | ||||||
|
Leasehold
improvements
|
11,678 | 9,097 | ||||||
|
Equipment
under capital leases
|
4,661 | 3,469 | ||||||
| 38,101 | 33,858 | |||||||
|
Accumulated
depreciation and amortization
|
(18,316 | ) | (15,127 | ) | ||||
| $ | 19,785 | $ | 18,731 | |||||
Depreciation
and amortization expense on property and equipment, including amortization of
equipment under capital leases, for the years ended December 31, 2009, 2008
and 2007 totaled $3.3 million, $3.2 million (unaudited) and $1.4 million
(unaudited), respectively.
-11-
NOTE
5 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES (IN THOUSANDS)
|
December
31,
|
||||||||
|
2009
|
2008
|
|||||||
|
(unaudited)
|
||||||||
|
Accounts
payable
|
$ | 271 | $ | 70 | ||||
|
Accrued
expenses
|
1,859 | 1,085 | ||||||
|
Accrued
payroll and vacation
|
587 | 553 | ||||||
|
Total
|
$ | 2,717 | $ | 1,708 | ||||
NOTE
6 – EQUIPMENT NOTES PAYABLE AND CAPITAL LEASES
One member of the Group, MRI at St.
Joseph Medical Center, LLC, holds four promissory notes issued by a financing
company for the purpose of acquiring imaging equipment. These notes
have interest rates between 7.1% and 8.2%, mature on or before May 2013 and are
collateralized by the acquired equipment.
The
following is a listing of annual principal maturities of the equipment notes
discussed above for years ending December 31 (in thousands):
|
2010
|
$ | 1,368 | ||
|
2011
|
1,480 | |||
|
2012
|
1,601 | |||
|
2013
|
235 | |||
|
Total
minimum payments
|
$ | 4,684 |
The Group
leases equipment under capital lease arrangements. Future minimum
lease payments under capital leases for years ending December 31 (in
thousands) is as follows:
|
2010
|
$ | 1,134 | ||
|
2011
|
1,134 | |||
|
2012
|
978 | |||
|
2013
|
331 | |||
|
2014
|
147 | |||
|
Total
minimum payments
|
3,724 | |||
|
Amount
representing interest
|
(487 | ) | ||
|
Present
value of net minimum lease payments
|
3,237 | |||
|
Less
current portion
|
(906 | ) | ||
|
Long-term
portion
|
$ | 2,331 |
NOTE
7 – COMMITMENTS AND CONTINGENCIES
Leases – The Group leases
various operating facilities and certain medical equipment under operating
leases with renewal options expiring through 2022. Certain leases contain
renewal options from two to ten years and escalation clauses based either on the consumer price
index or fixed rent escalators. The schedule below includes lease
renewals that the joint
ventures are expected to make at reasonably assured level. Leases with fixed rent escalators are
recorded on a straight-line
basis. The Group records deferred rent for tenant leasehold
improvement allowances received from a lessor
and amortizes the deferred rent expense over the term
of the lease agreement. Minimum annual payments under operating leases for future
years, including all options to extend, ending December 31 follow (in thousands):
-12-
|
Facilities
|
Equipment
|
Total
|
||||||||||
|
2010
|
$ | 1,577 | $ | 801 | $ | 2,378 | ||||||
|
2011
|
1,324 | 548 | 1,872 | |||||||||
|
2012
|
1,335 | 91 | 1,426 | |||||||||
|
2013
|
1,372 | - | 1,372 | |||||||||
|
2014
|
1,410 | - | 1,410 | |||||||||
|
Thereafter
|
6,164 | - | 6,164 | |||||||||
| $ | 13,182 | $ | 1,440 | $ | 14,622 | |||||||
Total
rent expense, including equipment rentals, for the years ended December 31,
2009, 2008 and 2007 was $3.3 million, $3.2 million (unaudited) and $3.2 million
(unaudited), respectively.
NOTE
8 – RELATED PARTY TRANSACTIONS
Radnet,
Inc. contracts with each joint venture within the Group to provide certain
administrative services including assistance with accounting, payroll and
employee benefits processing, and billing and collection functions on behalf of
these joint ventures. Radnet Inc. remits to the joint ventures all
amounts collected through its administration of the billing and collection
functions.
Radnet,
Inc., as administrator over payroll and employee benefits, pays salary and
benefit obligations on behalf of these joint ventures and then bills each joint
venture for its respective portion.
Radnet,
Inc. contracts certain members of its contracted radiologist groups to perform
professional services for the joint ventures. Radnet, Inc., on behalf
of its contracted radiologist groups, bills each joint venture for its
respective share of the professional fees incurred through its utilization of
these contracted radiologists. Radnet, Inc. remits to its contracted
radiologist groups all amounts collected from the joint ventures for the billed
professional fees.
Amounts
receivable from and payable to Radnet Inc. for the activities listed above are
summarized in due from affiliates on the Group’s combined balance sheets and was
$6.0 million and $5.0 million (unaudited) at December 31, 2009 and 2008,
respectively. Due from affiliates of $6.0 million at December 31,
2009 consists of a receivable from Radnet, Inc. of $9.5 million for amounts
collected through its administration of the billing and collection functions not
yet remitted to the joint ventures at December 31, 2009. This
receivable is offset by amounts payable to Radnet, Inc. of $800,000 for the
unpaid portion of billed administrative services performed, $1.2 million for the
unpaid portion of professional fees which Radnet must in turn remit to its
contracted radiologists, and $1.5 million for unpaid payroll and employee
benefit costs.
Carroll
County General Hospital, Inc., a partner of Carroll County Radiology, LLC, is
also the lessor of one imaging center location within this joint
venture. Carroll County General Hospital, Inc., as the lessor,
requested the joint venture to relocate so that its facility could be utilized
for other purposes. As part of the relocation agreement, Carroll
County General Hospital, Inc. purchased from Carroll County Radiology, LLC
certain leasehold improvements for $911,000.
St.
Joseph Medical Center, Inc., a partner of St. Joseph Medical Center, LLC, is
managing, on behalf of this joint venture, the construction of a new breast care
center. As manager of this construction project, St. Joseph Medical
Center, Inc. pays upfront all construction costs incurred which it, in turn,
bills the joint venture. St. Joseph Medical Center, LLC had accrued
expenses of $164,000 at December 31, 2009 related to this activity.
-13-
PART
IV
(a) Financial
Statements – The following financial statements are filed herewith:
|
Item
15.
Exhibits
and Financial Statement Schedules
|
Page No.
|
|
|
(a)
Financial Statements – The following financial statements are filed
herewith:
|
||
|
Report
of Independent Registered Public Accounting Firm
|
4
|
|
|
Combined
Balance Sheets of Certain Radnet, Inc. Affiliates
|
5
|
|
|
Combined
Statements of Income of Certain Radnet, Inc.
Affiliates
|
6
|
|
|
Combined
Statements of Partners’ Equity of Certain Radnet, Inc.
Affiliates
|
7
|
|
|
Combined
Statements of Cash Flows of Certain Radnet, Inc.
Affiliates
|
8
to 9
|
|
|
Notes to Combined
Financial Statements
|
10
to 13
|
(c)
Exhibits – The following exhibits are filed herewith or incorporated by
reference herein:
|
Exhibit
No.
|
Description
of Exhibit
|
Incorporated by
Reference
to
|
||
|
2.1
|
Agreement
and Plan of Merger, dated as of July 6, 2006, by and among Primedex,
Radiologix, Radnet Management, Inc. and Merger Sub
|
(E)
|
||
|
2.2
|
Agreement
and Plan of Merger and Reorganization, dated as of September 3,
2008
|
(M)
|
||
|
3.1
|
Certificate
of Incorporation of RadNet, Inc., a Delaware corporation
|
(M)
|
||
|
3.2
|
Certificate
of Amendment to Certificate of Incorporation of RadNet, Inc., a Delaware
corporation, dated September 2, 2008
|
(M)
|
||
|
3.3
|
Bylaws
|
(M)
|
||
|
4.1
|
Form
of Common Stock Certificate
|
(G)
|
||
|
10.1
|
2000
Incentive Stock Option Plan (as amended)*
|
(C)
|
||
|
10.2
|
2006
Equity Incentive Plan*
|
(E)
|
||
|
10.3
|
First
Amendment to the 2006 Equity Incentive Plan*
|
(K)
|
||
|
10.4
|
Form
of Warrant recharacterized as under the 2006 Equity Incentive plan – Form
A
|
(K)
|
||
|
10.5
|
Form
of Warrant recharacterized as under the 2006 Equity Incentive plan – Form
B
|
(K)
|
||
|
10.6
|
Form
of Indemnification Agreement between the registrant and each of its
officers and directors*
|
(L)
|
||
|
10.7
|
Employment
Agreement dated as of June 12, 1992 between RadNet and Howard G. Berger,
M.D.
|
(A)
|
||
|
and
amendment to agreement.*
|
(D)
|
-14-
|
10.8
|
Employment
Agreement dated April 16, 2001, with Jeffrey L. Linden
|
(B)
|
||
|
and
amendment to agreement*
|
(D)
|
|||
|
10.9
|
Employment
Agreement with Norman R. Hames dated May 1, 2001
|
(B)
|
||
|
and
amendment to agreement*
|
(D)
|
|||
|
10.10
|
Employment
Agreement with Mark Stolper effective January 1,
2009*
|
(N)
|
||
|
10.11
|
Retention
Agreement with Stephen Forthuber dated November 15,
2006*
|
(H)
|
||
|
10.12
|
Amended
and Restated Management and Service Agreement between Radnet Management,
Inc. and Beverly Radiology Medical Group III dated January 1,
2004
|
(C)
|
||
|
10.14
|
Credit
Agreement, dated as November 15, 2006, among Radnet Management, Inc.,
the Credit Parties designated therein, General Electric Capital
Corporation, as Agent, the lenders described therein, and GE Capital
Markets, Inc.
|
(F)
|
||
|
10.15
|
Amendment
No. 1 of Existing Credit Agreement with General Electric Capital dated
April 2007.
|
(N)
|
||
|
10.16
|
Amendment
No. 2 of Existing Credit Agreement with General Electric Capital dated May
2007.
|
(N)
|
||
|
10.17
|
Amendment
No. 3 of Existing Credit Agreement with General Electric Capital
Corporation dated August 2007.
|
(I)
|
||
|
10.18
|
Amendment
No. 4 of Existing Credit Agreement with General Electric Capital
Corporation dated November 2007.
|
(N)
|
|
Amendment
No. 5 of Existing Credit Agreement with General Electric Capital
Corporation dated February 2008.
|
(J)
|
|||
|
10.20
|
Amendment
No. 6 of Existing Credit Agreement with General Electric Capital
Corporation dated April 2008.
|
(N)
|
||
|
10.21
|
Second
Lien Credit Agreement, dated as of November 15, 2006, among Radnet
Management, Inc., the Credit Parties designated therein, General Electric
Capital Corporation, as Agent, the Lenders described therein, and GE
Capital Markets, Inc.
|
(F)
|
||
|
10.22
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated May 2007.
|
(N)
|
||
|
10.23
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated August 2007.
|
(I)
|
||
|
10.24
|
Amendment
of Second Lien Credit Agreement with General Electric Capital Corporation
dated November 2007.
|
(N)
|
||
|
10.25
|
Guaranty,
dated as of November 15, 2006, by and among the Guarantors identified
therein and General Electric Capital Corporation.
|
(F)
|
||
|
10.26
|
Second
Lien Guaranty, dated as of November 15, 2006, by and among the
Guarantors identified therein and General Electric Capital
Corporation.
|
(F)
|
-15-
|
10.27
|
Pledge
Agreement, dated as of November 15, 2006, by and among the Pledgors
identified therein and General Electric Capital
Corporation.
|
(F)
|
||
|
10.28
|
Security
Agreement, dated as of November 15, 2006, by and among the Grantors
identified therein and General Electric Capital
Corporation.
|
(F)
|
||
|
10.29
|
Second
Lien Security Agreement, dated as of November 15, 2006, by and among
the Grantors identified therein and General Electric Capital
Corporation.
|
(F)
|
||
|
10.30
|
Commitment
and Term Loan Engagement Letter dated March 12, 2010.
|
(N)
|
||
|
14
|
Code
of Financial Ethics
|
(C)
|
||
|
21
|
List
of Subsidiaries
|
(N)
|
||
|
23.1
|
Consent
of Registered Independent Public Accounting Firm
|
(N)
|
||
|
23.2
|
Consent
of Registered Independent Public Accounting Firm
|
(O)
|
||
|
24
|
Power
of Attorney
|
(N)
|
||
|
31.1
|
CEO
Certification pursuant to Section 302
|
(O)
|
||
|
31.2
|
CFO
Certification pursuant to Section 302
|
(O)
|
||
|
32.1
|
CEO
Certification pursuant to Section 906
|
(O)
|
||
|
32.2
|
CFO
Certification pursuant to Section 906
|
(O)
|
*
Management contract with compensatory arrangement.
|
(A)
|
Incorporated
by reference to exhibit filed in an amendment to Form 8-K report for June
12, 1992.
|
|
(B)
|
Incorporated
by reference to exhibit filed with the Form 10-K for the year ended
October 31, 2001.
|
|
(C)
|
Incorporated
by reference to exhibit filed with the Form 10-K for the year ended
October 31, 2003.
|
|
(D)
|
Incorporated
by reference to exhibit filed with the Form 10-Q for the quarter ended
January 31, 2004.
|
|
(E)
|
Incorporated
by reference to exhibit filed with Registrant’s Registration Statement on
Form S-4 (File No. 333-136800).
|
|
(F)
|
Incorporated
by reference to exhibit filed with Form 8-K for November 21,
2006.
|
|
(G)
|
Incorporated
by reference to exhibit filed with Form 10-K for October 31,
2006.
|
|
(H)
|
Incorporated
by reference to exhibit filed with Form 10-K/T for December 31,
2006.
|
|
(I)
|
Incorporated
by reference to exhibit filed with Form 8-K for August 24,
2007.
|
|
(J)
|
Incorporated
by reference to exhibit filed in an amendment to Form 10-K for
December 31, 2007.
|
|
(K)
|
Incorporated
by reference to exhibit filed with Form 10-Q for the quarter ended June
30, 2008.
|
|
(L)
|
Incorporated
by reference to exhibit filed with Form 10-Q for the quarter ended March
31, 2008.
|
|
(M)
|
Incorporated
by reference to exhibit filed with Form 8-K for September 4,
2008.
|
-16-
|
(N)
|
Incorporated
by reference to the Form 10-K for December 31,
2009.
|
|
(O)
|
Filed
herewith.
|
-17-
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
RADNET,
INC.
|
|||
|
Date: March
31, 2010
|
/
s/ HOWARD G . BERGER, M.D.
|
||
|
Howard
G. Berger, M.D., President,
|
|||
|
Chief
Executive Officer and Director
|
|||
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of registrant in the capacities
and on the dates indicated.
|
By
|
/
s/ HOWARD G . BERGER, M.D.
|
Date: March
31, 2010
|
||
|
Howard
G. Berger, M.D., Director, Chief Executive Officer and
President
|
||||
|
By
|
/s/
MARVIN S. CADWELL *
|
Date: March
31, 2010
|
||
|
Marvin
S. Cadwell, Director
|
||||
|
By
|
/s/
JOHN V. CRUES, III, M.D. *
|
Date: March
31, 2010
|
||
|
John
V. Crues, III, M.D., Director
|
||||
|
By
|
/s/
NORMAN R. HAMES *
|
Date: March
31, 2010
|
||
|
Norman
R. Hames, Director
|
||||
|
By
|
/s/
DAVID L. SWARTZ *
|
Date: March
31, 2010
|
||
|
David
L. Swartz, Director
|
||||
|
By
|
/s/
LAWRENCE L. LEVITT *
|
Date: March
31, 2010
|
|
|
Lawrence
L. Levitt, Director
|
|||
|
By
|
/s/
MICHAEL L. SHERMAN, M.D. *
|
Date: March
31, 2010
|
|
|
Michael
L. Sherman, M.D., Director
|
|||
|
By
|
/s/
MARK D. STOLPER
|
Date: March
31, 2010
|
|
|
Mark D. Stolper, Chief Financial Officer
(Principal Accounting Officer)
|
|||
* By
Mark D. Stolper, as attorney- in- fact
-18-