Depreciation and amortization expense increased $1,256,000 in 2008 compared to 2007, primarily due to the
addition of our new AMPI entities and the amortization on our Ocean services agreement.
Income attributable to noncontrolling interest for 2008 increased $8,691,000 (19%) compared to 2007, as a result
of increases in noncontrolling interest percentages at certain partnerships, combined with an increase in income
at our existing urology partnerships and noncontrolling interest expense at our new AMPI entities.
Provision for income taxes in 2008 decreased $8,662,000 compared to 2007 due to the decrease in our taxable net
income primarily as a result of the goodwill impairment recorded in the fourth quarter. Our effective tax rate
was also impacted by the addition of a full valuation allowance on our deferred tax assets. For the next several
years, we will only be an alternative minimum tax payer as we will utilize our existing net operating loss carry
forwards to offset any current taxes payable.
Liquidity and Capital Resources
Cash Flows
Our cash and cash equivalents were $8,412,000 and $22,854,000 at December 31, 2009 and 2008, respectively.
Beginning in 2009, our subsidiaries began distributing available cash on a monthly basis, after establishing
reserves for estimated capital expenditures and working capital. Prior to 2009, they generally distributed all
of their available cash quarterly, which lead to an accumulated cash balance at the end of each quarter. For the
years ended December 31, 2009 and 2008, our subsidiaries distributed cash of approximately $62,020,000 and
$53,757,000, respectively, to noncontrolling interest holders.
Cash provided by our operating activities, after noncontrolling interest, was $61,940,000 for the period ended
December 31, 2009 and $70,845,000 for the period ended December 31, 2008. From 2008 to 2009, fee and other
revenue collected increased by $19,963,000 due primarily to increased revenues from our acquisitions as well as
timing of the collections of accounts receivable. Cash paid to employees, suppliers of goods and others
increased by $16,679,000 in 2009. This fluctuation is primarily attributable to increased operating expenses from
our acquisitions and timing of payments. Cash paid for acquisition related costs totaled $10,458,000 in 2009,
primarily related to our Endocare acquisition. Per ASC No. 805,
Business Combinations
(ASC 805),
(formerly SFAS 141R,
Business Combinations
), these acquisition related costs are now included in operating
activities beginning January 1, 2009. In prior years, prior to the implementation of ASC 805, these costs were
included in purchase of entities which is an investing activity.
Cash used by our investing activities for the year ended December 31, 2009, was $14,136,000. We purchased
equipment and leasehold improvements totaling $11,702,000 in 2009. We used $3,528,000 to acquire Endocare (which
is net of cash acquired) and to complete certain smaller acquisitions. Cash used by our investing activities for
the year ended December 31, 2008, was $52,311,000. We used approximately $17 million to acquire our interest in
AMPI and Uropath, as well as increase other partnership interests in certain litho partnerships and we used
approximately $35 million to acquire the Ocean services contract. In addition, we purchased equipment and
leasehold improvements totaling $11,779,000 in 2008.
Cash used in our financing activities for the year ended December 31, 2009, was $62,246,000, primarily due to
distributions to noncontrolling interests of $62,020,000 and payments on notes payable of $10,986,000 partially
offset by borrowings on notes payable of $12,997,000. Cash used in our financing activities for the year ended
December 31, 2008, was $20,878,000, primarily due to distributions to noncontrolling interests of $53,757,000 and
payments on notes payable of $14,508,000 partially offset by borrowings on our revolving line of credit of $50
million and on notes payable of $1,747,000.
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