Attached files
file | filename |
---|---|
EX-32.3 - EX-32.3 - SYMBION INC/TN | a10-18663_2ex32d3.htm |
EX-31.3 - EX-31.3 - SYMBION INC/TN | a10-18663_2ex31d3.htm |
EX-32.4 - EX-32.4 - SYMBION INC/TN | a10-18663_2ex32d4.htm |
EX-31.4 - EX-31.4 - SYMBION INC/TN | a10-18663_2ex31d4.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(Amendment No. 1)
(Mark One)
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
For the transition period from to
Commission file number: 000-50574
Symbion, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
|
62-1625480 |
(State or other
jurisdiction of |
|
(I.R.S. Employer |
40 Burton Hills Boulevard, Suite 500
Nashville, Tennessee 37215
(Address of principal executive offices and zip code)
(615) 234-5900
(Registrants telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: None
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) of the Exchange Act. Yes x No o
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 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 o No x
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 registrants 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 o |
|
|
|
Non-accelerated filer x |
|
Smaller reporting company o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
None of the registrants common stock is held by non-affiliates.
As of March 31, 2010, 1,000 shares of the registrants common stock were outstanding.
EXPLANATORY NOTE
Symbion, Inc. (the Company) is filing this Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission on March 31, 2010 (the Form 10-K), solely for the purpose of filing an amended report of the Companys independent auditor that includes a reference that the engagement was performed in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) in accordance with PCAOB Auditing Standard No. 1.
This amendment sets forth the complete text of Item 7 and Item 14 of the Form 10-K, as amended. The Company is including as exhibits currently dated certifications of the Companys Chief Executive Officer and Chief Financial Officer. This amendment should be read in conjunction with the Form 10-K, continues to speak as of the date of the Form 10-K, and does not modify or update disclosures in the Form 10-K except as noted above. Accordingly, this amendment does not reflect events occurring after the filing of the Form 10-K or modify or update any related disclosures.
PART II
Item 7. Financial Statements and Supplementary Data
Information with respect to this item is contained in our consolidated financial statements beginning with the Index on page F-1 of this report.
PART IV
Item 14. Exhibits and Financial Statement Schedules
(a) The following documents are filed as part of this report:
(1) Consolidated Financial Statements
The consolidated financial statements required to be included in Part II, Item 7. are indexed on Page F-1 and submitted as a separate section of this report.
(2) Consolidated Financial Statement Schedules
All schedules are omitted because they are not applicable or not required, or because the required information is included in the consolidated financial statements or notes in this report.
(3) Exhibits:
No. |
|
Description |
2 |
|
Agreement and Plan of Merger, dated as of April 24, 2007, by and among Symbol Acquisition, L.L.C., Symbol Merger Sub, Inc. and Symbion, Inc. (a) |
3.1 |
|
Amended Certificate of Incorporation of Symbion, Inc. (b) |
3.2 |
|
Amended and Restated Bylaws of Symbion, Inc. (b) |
4.1 |
|
Indenture, dated as of June 3, 2008, among Symbion, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (b) |
4.2 |
|
Form of Notes (included in Exhibit 4.1) |
4.3 |
|
Registration Rights Agreement, dated as of June 3, 2007, among Symbion, Inc., the subsidiaries of Symbion, Inc. party thereto as guarantors, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Greenwich Capital Markets, Inc. (b) |
4.4 |
|
First Supplemental Indenture, dated as of September 18, 2008 among Symbion, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (b) |
10.1 |
|
Employment Agreement, dated August 23, 2007, between Symbion, Inc. and Richard E. Francis, Jr.(b) (g) |
10.2 |
|
Employment Agreement, dated August 23, 2007, between Symbion, Inc. and Clifford G. Adlerz (b) (g) |
10.3 |
|
Credit Agreement, dated as of August 23, 2007, among Symbol Holdings Corporation, Symbol Merger Sub, Inc., the Lenders party thereto from time to time, Merrill Lynch Capital Corporation as Administrative Agent and Collateral Agent, Bank of America, N.A. as Syndication Agent, The Royal Bank of Scotland PLC and Fifth Third Bank as Co-Documentation Agents, and Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC as Joint Lead Arrangers and Joint Lead Bookrunners (c) |
10.4 |
|
Lease Agreement, dated June 26, 2001, between Burton Hills IV Partners and Symbion, Inc. (d) |
10.5 |
|
First Amendment to Lease Agreement, dated February 9, 2004, between Burton Hills IV Partners and Symbion, Inc. (e) |
10.6 |
|
Symbion Holdings Corporation 2007 Equity Incentive Plan (b) (g) |
10.7 |
|
Symbion, Inc. Executive Change in Control Severance Plan (b) (g) |
10.8 |
|
Symbion Holdings Corporation Compensatory Equity Participation Plan (b) (g) |
10.9 |
|
Shareholders Agreement, dated as of August 23, 2007, among Symbion Holdings Corporation and the stockholders of Symbion Holdings Corporation and other persons named therein (b) |
10.10 |
|
Advisory Services and Monitoring Agreement, dated as of August 23, 2007, among Symbion, Inc., Symbion Holdings Corporation and Crestview Advisors, L.L.C. (b) |
10.11 |
|
Form of Employee Contribution Agreement (b) |
10.12 |
|
Symbion, Inc. Supplemental Executive Retirement Plan (f) (g) |
10.13 |
|
Management Rights Purchase Agreement, dated as of July 27, 2005, by and among Parthenon Management Partners, LLC, Andrew A. Brooks, M.D., Randhir S. Tuli and SymbionARC Management Services, Inc. (h) |
10.14 |
|
Interest Rate Swap Agreement, dated October 31, 2007, between Symbion, Inc and Merrill Lynch Capital Services, Inc. (c) |
21 |
|
Subsidiaries of Registrant (i) |
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (i) |
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (i) |
31.3 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.4 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (i) |
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (i) |
32.3 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.4 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(a) |
Incorporated by reference to exhibits filed with the Registrants Current Report on Form 8-K filed April 24, 2007 (File No. 000-50574) |
(b) |
Incorporated by reference to exhibits filed with the Registrants Registration Statement on Form S-4 (Registration No. 333-153678) |
(c) |
Incorporated by reference to exhibits filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 2008, as amended (File No. 000-50574) |
(d) |
Incorporated by reference to exhibits filed with the Registrants Registration Statement on Form S-1 (Registration No. 333-89554) |
(e) |
Incorporated by reference to exhibits filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 000-50574) |
(f) |
Incorporated by reference to exhibits filed with the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 (File No. 000-50574) |
(g) |
Compensation plan or arrangement |
(h) |
Incorporated by reference to exhibit filed with the Registrants Current Report on Form 8-K filed August 2, 2005. |
(i) |
Previously filed as an exhibit to the Registrants Annual Report on Form 10-K for the year ended December 31, 2009 filed March 31, 2010 (File No. 000-50574) |
Index to Financials
|
F-2 |
|
|
F-3 |
|
|
F-4 |
|
|
F-5 |
|
|
F-6 |
|
|
F-7 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Symbion, Inc.
We have audited the accompanying consolidated balance sheets of Symbion, Inc. as of December 31, 2009 and 2008 and the related consolidated statements of operations, stockholders equity and cash flows for the years ended December 31, 2009 and 2008 and the period from August 24, 2007 to December 31, 2007, and the period from January 1, 2007 to August 23, 2007 (Predecessor). These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the 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 Companys internal control over financial reporting. Our audits 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 Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also 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, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Symbion, Inc. at December 31, 2009 and 2008, and the consolidated results of its operations and its cash flows for the years ended December 31, 2009 and 2008 and the period from August 24, 2007 to December 31, 2007, and the period from January 1, 2007 to August 23, 2007 (Predecessor), in conformity with U.S. generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, the Company changed its accounting and disclosure for noncontrolling interests with the adoption of the guidance originally issued in FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements (codified in FASB ASC Topic 810, Consolidation) effective January 1, 2009.
|
/s/ Ernst & Young LLP |
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|
Nashville, Tennessee |
|
March 31, 2010 |
|
SYMBION, INC.
(in thousands, except per share amounts)
|
|
December 31, |
|
December 31, |
|
||
ASSETS |
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
47,920 |
|
$ |
41,833 |
|
Accounts receivable, less allowance for doubtful accounts of $9,859 and $11,993, respectively |
|
36,636 |
|
34,707 |
|
||
Inventories |
|
9,730 |
|
9,050 |
|
||
Prepaid expenses and other current assets |
|
12,511 |
|
12,719 |
|
||
Deferred tax asset |
|
432 |
|
825 |
|
||
Current assets of discontinued operations |
|
530 |
|
1,104 |
|
||
Total current assets |
|
107,759 |
|
100,238 |
|
||
Land |
|
2,938 |
|
2,938 |
|
||
Buildings and improvements |
|
53,726 |
|
53,847 |
|
||
Furniture and equipment |
|
57,201 |
|
49,093 |
|
||
Computers and software |
|
4,022 |
|
2,864 |
|
||
|
|
117,887 |
|
108,742 |
|
||
Less accumulated depreciation |
|
(28,628 |
) |
(14,057 |
) |
||
Property and equipment, net |
|
89,259 |
|
94,685 |
|
||
Intangible assets |
|
19,480 |
|
19,570 |
|
||
Goodwill |
|
545,238 |
|
541,831 |
|
||
Investments in and advances to affiliates |
|
17,652 |
|
14,532 |
|
||
Other assets |
|
10,687 |
|
11,875 |
|
||
Long-term assets of discontinued operations |
|
651 |
|
833 |
|
||
Total assets |
|
$ |
790,726 |
|
$ |
783,564 |
|
|
|
|
|
|
|
||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
||
Accounts payable |
|
$ |
8,306 |
|
$ |
5,392 |
|
Accrued payroll and benefits |
|
5,922 |
|
7,500 |
|
||
Other accrued expenses |
|
31,352 |
|
22,240 |
|
||
Current maturities of long-term debt |
|
20,212 |
|
12,205 |
|
||
Current liabilities of discontinued operations |
|
1,186 |
|
629 |
|
||
Total current liabilities |
|
66,978 |
|
47,966 |
|
||
Long-term debt, less current maturities |
|
445,008 |
|
440,612 |
|
||
Deferred income tax payable |
|
40,776 |
|
33,008 |
|
||
Other liabilities |
|
6,279 |
|
12,526 |
|
||
Long-term liabilities of discontinued operations |
|
3,330 |
|
236 |
|
||
|
|
|
|
|
|
||
Noncontrolling interests redeemable |
|
31,546 |
|
32,645 |
|
||
|
|
|
|
|
|
||
Stockholders equity: |
|
|
|
|
|
||
Common stock, 1,000 shares, $0.01 par value, authorized, issued and outstanding at December 31, 2009 and December 31, 2008 |
|
|
|
|
|
||
Additional paid-in-capital |
|
242,623 |
|
240,815 |
|
||
Accumulated other comprehensive loss |
|
(2,731 |
) |
(5,584 |
) |
||
Retained deficit |
|
(46,479 |
) |
(24,025 |
) |
||
Total Symbion, Inc. stockholders equity |
|
193,413 |
|
211,206 |
|
||
Noncontrolling interests non-redeemable |
|
3,396 |
|
5,365 |
|
||
Total equity |
|
196,809 |
|
216,571 |
|
||
Total liabilities and stockholders equity |
|
$ |
790,726 |
|
$ |
783,564 |
|
See Notes to Consolidated Financial Statements.
SYMBION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
|
|
Year |
|
Year |
|
August 24, |
|
January 1, |
|
Year |
|
|||||
Revenues |
|
$ |
346,984 |
|
$ |
331,900 |
|
$ |
106,640 |
|
$ |
197,665 |
|
$ |
304,305 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and benefits |
|
96,844 |
|
90,510 |
|
29,763 |
|
54,048 |
|
83,811 |
|
|||||
Supplies |
|
74,905 |
|
67,562 |
|
21,932 |
|
39,103 |
|
61,035 |
|
|||||
Professional and medical fees |
|
23,162 |
|
19,021 |
|
6,468 |
|
12,120 |
|
18,588 |
|
|||||
Rent and lease expense |
|
25,603 |
|
22,307 |
|
7,038 |
|
12,297 |
|
19,335 |
|
|||||
Other operating expenses |
|
28,070 |
|
26,044 |
|
8,610 |
|
15,273 |
|
23,883 |
|
|||||
Cost of revenues |
|
248,584 |
|
225,444 |
|
73,811 |
|
132,841 |
|
206,652 |
|
|||||
General and administrative expense |
|
21,448 |
|
23,923 |
|
7,912 |
|
23,961 |
|
31,873 |
|
|||||
Depreciation and amortization |
|
17,314 |
|
15,175 |
|
4,732 |
|
7,920 |
|
12,652 |
|
|||||
Provision for doubtful accounts |
|
3,354 |
|
3,861 |
|
1,758 |
|
2,691 |
|
4,449 |
|
|||||
(Income) loss on equity investments |
|
(2,318 |
) |
(1,504 |
) |
(21 |
) |
5 |
|
(16 |
) |
|||||
Impairment and loss on disposal of long-lived assets |
|
3,505 |
|
1,899 |
|
53 |
|
319 |
|
372 |
|
|||||
Gain on sale of long-lived assets |
|
(250 |
) |
(975 |
) |
(319 |
) |
(596 |
) |
(915 |
) |
|||||
Proceeds from insurance settlements, net |
|
(430 |
) |
|
|
|
|
(161 |
) |
(161 |
) |
|||||
Litigation settlements, net |
|
|
|
893 |
|
|
|
|
|
|
|
|||||
Merger transaction expenses |
|
|
|
|
|
|
|
7,522 |
|
7,522 |
|
|||||
Total operating expenses |
|
291,207 |
|
268,716 |
|
87,926 |
|
174,502 |
|
262,428 |
|
|||||
Operating income |
|
55,777 |
|
63,184 |
|
18,714 |
|
23,163 |
|
41,877 |
|
|||||
Interest expense, net |
|
(44,981 |
) |
(43,426 |
) |
(14,763 |
) |
(5,228 |
) |
(19,991 |
) |
|||||
Income before income taxes and discontinued operations |
|
10,796 |
|
19,758 |
|
3,951 |
|
17,935 |
|
21,886 |
|
|||||
Provision (benefit) for income taxes |
|
7,766 |
|
13,256 |
|
(776 |
) |
4,016 |
|
3,240 |
|
|||||
Income from continuing operations |
|
3,030 |
|
6,502 |
|
4,727 |
|
13,919 |
|
18,646 |
|
|||||
Loss from discontinued operations, net of taxes |
|
(6,097 |
) |
(3,643 |
) |
(269 |
) |
(438 |
) |
(707 |
) |
|||||
Net (loss) income |
|
(3,067 |
) |
2,859 |
|
4,458 |
|
13,481 |
|
17,939 |
|
|||||
Less: Net income attributable to noncontrolling interests |
|
(19,387 |
) |
(23,657 |
) |
(7,685 |
) |
(15,656 |
) |
(23,341 |
) |
|||||
Net loss attributable to Symbion, Inc. |
|
$ |
(22,454 |
) |
$ |
(20,798 |
) |
$ |
(3,227 |
) |
$ |
(2,175 |
) |
$ |
(5,402 |
) |
See Notes to Consolidated Financial Statements.
SYMBION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(in thousands, except share amounts)
|
|
Symbion, Inc. |
|
Additional |
|
Accumulated |
|
Retained |
|
Noncontrolling |
|
Total |
|
||||||||
|
|
Shares |
|
Amount |
|
Paid-in Capital |
|
Income (Loss) |
|
(Deficit) |
|
redeemable |
|
Equity |
|
||||||
Balance at December 31, 2006 (Predecessor, as audited) |
|
21,643,291 |
|
$ |
216 |
|
$ |
212,452 |
|
$ |
485 |
|
$ |
72,126 |
|
$ |
5,244 |
|
$ |
290,523 |
|
Issuance of warrants and common stock, net of repurchases, and other |
|
89,367 |
|
1 |
|
959 |
|
|
|
|
|
|
|
960 |
|
||||||
Amortized compensation expense related to stock options and restricted stock |
|
|
|
|
|
10,337 |
|
|
|
|
|
|
|
10,337 |
|
||||||
Unrealized gain on interest rate swap, net of taxes |
|
|
|
|
|
|
|
(485 |
) |
|
|
|
|
(485 |
) |
||||||
Retirement of common stock in connection with Merger |
|
(21,590,992 |
) |
(216 |
) |
(223,747 |
) |
|
|
|
|
|
|
(223,963 |
) |
||||||
Common stock rolled over |
|
(141,666 |
) |
(1 |
) |
(1 |
) |
|
|
|
|
|
|
(2 |
) |
||||||
Net loss, January 1, 2007, through August 23, 2007 |
|
|
|
|
|
|
|
|
|
(2,175 |
) |
849 |
|
(1,326 |
) |
||||||
Distributions to noncontrolling interest holders |
|
|
|
|
|
|
|
|
|
|
|
(870 |
) |
(870 |
) |
||||||
Acquisitions and disposal of shares of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
712 |
|
712 |
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
(277 |
) |
(277 |
) |
||||||
Elimination of retained earnings as of merger date |
|
|
|
|
|
|
|
|
|
(69,951 |
) |
|
|
(69,951 |
) |
||||||
Balance at August 23, 2007 (Predecessor, as adjusted) |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
5,658 |
|
$ |
5,658 |
|
Issuance of common stock, net of issuance costs of $60 |
|
1,000 |
|
|
|
244,942 |
|
|
|
|
|
|
|
244,942 |
|
||||||
Payment of sponsor fee |
|
|
|
|
|
(6,650 |
) |
|
|
|
|
|
|
(6,650 |
) |
||||||
Amortized compensation expense related to stock options |
|
|
|
|
|
409 |
|
|
|
|
|
|
|
409 |
|
||||||
Unrealized loss on interest rate swap, net of taxes |
|
|
|
|
|
|
|
(2,188 |
) |
|
|
|
|
(2,188 |
) |
||||||
Distributions to noncontrolling interest holders |
|
|
|
|
|
|
|
|
|
|
|
(2,164 |
) |
(2,164 |
) |
||||||
Acquisitions and disposal of shares of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
715 |
|
715 |
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
279 |
|
279 |
|
||||||
Net loss, August 24, 2007 to December 31, 2007 (as adjusted) |
|
|
|
|
|
|
|
|
|
(3,227 |
) |
1,447 |
|
(1,780 |
) |
||||||
Balance at December 31, 2007 (as adjusted) |
|
1,000 |
|
$ |
|
|
$ |
238,701 |
|
$ |
(2,188 |
) |
$ |
(3,227 |
) |
$ |
5,935 |
|
$ |
239,221 |
|
Amortized compensation expense related to stock options |
|
|
|
|
|
2,114 |
|
|
|
|
|
|
|
2,114 |
|
||||||
Unrealized loss on interest rate swap, net of taxes |
|
|
|
|
|
|
|
(3,396 |
) |
|
|
|
|
(3,396 |
) |
||||||
Distributions to noncontrolling interest holders |
|
|
|
|
|
|
|
|
|
|
|
(3,555 |
) |
(3,555 |
) |
||||||
Acquisitions and disposal of shares of noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
(356 |
) |
(356 |
) |
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
160 |
|
160 |
|
||||||
Net loss |
|
|
|
|
|
|
|
|
|
(20,798 |
) |
3,181 |
|
(17,617 |
) |
||||||
Balance at December 31, 2008 (as adjusted) |
|
1,000 |
|
$ |
|
|
$ |
240,815 |
|
$ |
(5,584 |
) |
$ |
(24,025 |
) |
$ |
5,365 |
|
$ |
216,571 |
|
Amortized compensation expense related to stock options |
|
|
|
|
|
1,297 |
|
|
|
|
|
|
|
1,297 |
|
||||||
Unrealized loss on interest rate swap, net of taxes |
|
|
|
|
|
|
|
2,853 |
|
|
|
|
|
2,853 |
|
||||||
Distributions to noncontrolling interest holders |
|
|
|
|
|
|
|
|
|
|
|
(2,966 |
) |
(2,966 |
) |
||||||
Acquisitions and disposal of shares of noncontrolling interests |
|
|
|
|
|
511 |
|
|
|
|
|
220 |
|
731 |
|
||||||
Net loss |
|
|
|
|
|
|
|
|
|
(22,454 |
) |
777 |
|
(21,677 |
) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance at December 31, 2009 |
|
1,000 |
|
$ |
|
|
$ |
242,623 |
|
$ |
(2,731 |
) |
$ |
(46,479 |
) |
$ |
3,396 |
|
$ |
196,809 |
|
See Notes to Consolidated Financial Statements.
SYMBION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
Year |
|
Year |
|
August 24, |
|
January 1, |
|
Year |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(3,067 |
) |
$ |
2,859 |
|
$ |
4,458 |
|
$ |
13,481 |
|
$ |
17,939 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from discontinued operations |
|
6,097 |
|
3,643 |
|
269 |
|
438 |
|
707 |
|
|||||
Depreciation and amortization |
|
17,314 |
|
15,175 |
|
4,732 |
|
7,920 |
|
12,652 |
|
|||||
Amortization of deferred financing costs |
|
2,004 |
|
4,477 |
|
1,872 |
|
322 |
|
2,194 |
|
|||||
Non-cash payment-in-kind interest option |
|
23,263 |
|
17,616 |
|
|
|
|
|
|
|
|||||
Non-cash stock option compensation expense |
|
1,297 |
|
2,114 |
|
409 |
|
10,337 |
|
10,746 |
|
|||||
Noncash recognition of other comprehensive loss into earnings |
|
2,853 |
|
|
|
|
|
|
|
|
|
|||||
Noncash credit risk adjustment of financial instruments |
|
1,629 |
|
|
|
|
|
|
|
|
|
|||||
Noncash losses (gains) |
|
2,825 |
|
924 |
|
31 |
|
(305 |
) |
(274 |
) |
|||||
Deferred income taxes |
|
8,682 |
|
13,718 |
|
2,217 |
|
13,637 |
|
15,854 |
|
|||||
Equity in earnings of unconsolidated affiliates, net of distributions received |
|
(207 |
) |
333 |
|
(21 |
) |
5 |
|
(16 |
) |
|||||
Provision for doubtful accounts |
|
3,354 |
|
3,861 |
|
1,758 |
|
2,691 |
|
4,449 |
|
|||||
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts receivable |
|
(4,142 |
) |
(3,536 |
) |
(90 |
) |
(166 |
) |
(256 |
) |
|||||
Income taxes payable |
|
1,762 |
|
1,959 |
|
6,096 |
|
(10,402 |
) |
(11,899 |
) |
|||||
Other assets and liabilities |
|
(2,225 |
) |
(877 |
) |
(979 |
) |
(5,086 |
) |
1,528 |
|
|||||
Net cash provided by operating activities continuing operations |
|
61,439 |
|
62,266 |
|
20,752 |
|
32,872 |
|
53,624 |
|
|||||
Net cash (used in) provided by operating activities discontinued operations |
|
(1,021 |
) |
(43 |
) |
580 |
|
24 |
|
604 |
|
|||||
Net cash provided by operating activities |
|
60,418 |
|
62,223 |
|
21,332 |
|
32,896 |
|
54,228 |
|
|||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments for acquisitions, net of cash acquired |
|
(126 |
) |
(15,695 |
) |
(9,815 |
) |
(14,981 |
) |
(24,796 |
) |
|||||
Purchases of property and equipment, net |
|
(9,861 |
) |
(15,649 |
) |
(6,948 |
) |
(7,664 |
) |
(14,612 |
) |
|||||
Payments from unit activity of unconsolidated facilities |
|
(724 |
) |
|
|
|
|
|
|
|
|
|||||
Change in other assets |
|
(694 |
) |
(1,504 |
) |
(841 |
) |
1,401 |
|
560 |
|
|||||
Net cash used in investing activities continuing operations |
|
(11,405 |
) |
(32,848 |
) |
(17,604 |
) |
(21,244 |
) |
(38,848 |
) |
|||||
Net cash used in investing activities discontinued operations |
|
(40 |
) |
(358 |
) |
(24 |
) |
(36 |
) |
(60 |
) |
|||||
Net cash used in investing activities |
|
(11,445 |
) |
(33,206 |
) |
(17,628 |
) |
(21,280 |
) |
(38,908 |
) |
|||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments on long-term debt |
|
(13,741 |
) |
(18,675 |
) |
(1,492 |
) |
(161,555 |
) |
(163,047 |
) |
|||||
Repayment of bridge facility |
|
|
|
(179,937 |
) |
|
|
|
|
|
|
|||||
Proceeds from debt issuances |
|
678 |
|
13,491 |
|
50 |
|
458,597 |
|
458,647 |
|
|||||
Proceeds from issuance of Toggle Notes |
|
|
|
179,937 |
|
|
|
|
|
|
|
|||||
Payment of debt issuance costs |
|
(203 |
) |
(4,739 |
) |
|
|
(12,544 |
) |
(12,544 |
) |
|||||
Distributions to noncontrolling interests |
|
(24,971 |
) |
(23,423 |
) |
(7,301 |
) |
(17,185 |
) |
(24,486 |
) |
|||||
Proceeds from unit activity of consolidated facilities |
|
307 |
|
219 |
|
756 |
|
2,241 |
|
2,997 |
|
|||||
Payment of merger costs incurred by Symbion Holdings Corporation |
|
|
|
|
|
(445 |
) |
(6,528 |
) |
(6,973 |
) |
|||||
Cash paid to shareholders |
|
|
|
|
|
|
|
(490,510 |
) |
(490,510 |
) |
|||||
Proceeds from issuance of common stock, net of issuance costs |
|
|
|
|
|
|
|
239,085 |
|
239,085 |
|
|||||
Other financing activities |
|
(4,940 |
) |
1,437 |
|
(952 |
) |
250 |
|
(702 |
) |
|||||
Net cash (used in) provided by financing activities continuing operations |
|
(42,870 |
) |
(31,690 |
) |
(9,384 |
) |
11,851 |
|
2,467 |
|
|||||
Net cash used in financing activities discontinued operations |
|
(16 |
) |
(150 |
) |
(11 |
) |
(29 |
) |
(40 |
) |
|||||
Net cash (used in) provided by financing activities |
|
(42,886 |
) |
(31,840 |
) |
(9,395 |
) |
11,822 |
|
2,427 |
|
|||||
Net increase (decrease) in cash and cash equivalents |
|
6,087 |
|
(2,823 |
) |
(5,691 |
) |
23,438 |
|
17,747 |
|
|||||
Cash and cash equivalents at beginning of period |
|
41,833 |
|
44,656 |
|
50,347 |
|
26,909 |
|
26,909 |
|
|||||
Cash and cash equivalents at end of period |
|
$ |
47,920 |
|
$ |
41,833 |
|
$ |
44,656 |
|
$ |
50,347 |
|
$ |
44,656 |
|
See Notes to Consolidated Financial Statements.
SYMBION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
1. Organization
Symbion, Inc. (the Company), through its wholly owned subsidiaries, owns interests in partnerships and limited liability companies and operates a national network of short stay surgical facilities in joint ownership with physicians and physician groups, hospitals and hospital systems. As of December 31, 2009, the Company owned and operated 59 surgical facilities, including 55 ambulatory surgery centers and four surgical hospitals, and managed eight additional ambulatory surgery centers and two physician networks. The Company owns a majority ownership interest in 36 of the 59 surgical facilities and consolidates 52 of these surgical facilities for financial reporting purposes, of which 51 are included in continuing operations.
On August 23, 2007, the Company was acquired by an investment group led by an affiliate of Crestview Partners, L.P. (Crestview). As a result of this merger (the Merger), the Company no longer has publicly traded equity securities. The Company is a wholly owned subsidiary of Symbion Holdings Corporation (Holdings), which is owned by an investor group that includes affiliates of Crestview, members of the Companys management and other investors. The Companys financial position and the results of operations prior to the Merger are presented separately in the consolidated financial statements as Predecessor financial statements. Symbion, Inc. is referred to as the Predecessor for all periods and dates through August 23, 2007 and Symbion, Inc. is referred to as the Company for all periods and dates subsequent to August 23, 2007. References made herein to the Company, unless indicated otherwise or the context requires, include the Predecessor. As a result of the Merger, which substantially increased the Companys debt and interest expense, and the revaluation of assets and liabilities as a result of purchase accounting associated with the Merger, the combined 2007 financial statements are for comparison purposes only as they represent the combination of different bases of accounting.
2. Merger Transaction
In the Merger, the stockholders and option holders of the Predecessor (as defined above) received an aggregate of $490.5 million in cash. In order to consummate the Merger, Crestview formed Symbol Acquisition, L.L.C. (Parent) and Symbol Merger Sub, Inc., a wholly-owned subsidiary of Parent. Symbol Merger Sub, Inc. merged with and into the Company with the Company being the surviving corporation. Parent was converted into Holdings, which became the parent holding company of the Company by virtue of the Merger.
Holdings was capitalized with a $245.0 million cash contribution by Crestview and its affiliated funds and co-investors. In addition, certain members of Symbions management made a rollover equity contribution of Symbion shares and options to purchase common stock valued at the predecessor basis of $2,000. These rollover shares were exchanged for shares and options to purchase shares of common stock of Holdings. Following the Merger, Crestview and its affiliated funds and co-investors owned 96.7% of Holdings and members of management owned 3.3% of Holdings.
The Company accounted for the Merger as a purchase under the guidance set forth in Emerging Issues Task Force No. 88-16, Basis in Leveraged Buyout Transactions (EITF 88-16). Under EITF 88-16, the transaction was deemed to be a purchase by new controlling investors for which equity interests were valued using a partial change in accounting basis. In effect, the common stock owned by members of management was valued using the predecessor basis, while the common stock owned by Crestview, its affiliated funds and co-investors were recorded at fair value.
The following equity capitalization and financing transactions occurred in connection with the Merger:
· $145.0 million cash equity contribution by Crestview Symbion Holdings, L.L.C.;
· $40.0 million cash equity contribution by The Northwestern Mutual Life Insurance Company;
· $60.0 million cash equity contribution by other co-investors;
· $2,000 rollover equity contribution by certain members of management of the Company (representing a fair value of $8.4 million);
· Senior secured credit facility totaling $350.0 million, of which $250.0 million was drawn at the closing of the Merger; and
· $175.0 million bridge loan credit facility that was drawn at the closing of the Merger.
The proceeds from the equity capitalization and financing transactions were used to:
· Pay stockholders of the Company for shares of common stock not rolled over under the terms of the merger agreement;
· Pay option holders of the Company for outstanding options not rolled over, whether vested or unvested, the difference between $22.35 per share and the per share exercise price of the option;
· Pay holders of restricted stock of the Company for shares of restricted stock, whether vested or unvested, at $22.35 per share;
· Pay warrant holders of the Company for outstanding warrants, whether vested or unvested, the difference between $22.35 per share and the per share exercise price of the warrant;
· Repay all outstanding debt (totaling $129.0 million) under the former senior secured credit agreement for which the maturity date accelerated as a result of the Merger; and
· Pay the fees and expenses related to the Merger and the financing transactions.
As a result of the Merger, the vesting of stock options and restricted stock was accelerated, which resulted in $8.0 million in stock compensation expense, of which $710,000 is included in cost of revenues and $7.3 million is included in general and administrative expenses in 2007, following the Merger. The Company capitalized $12.1 million of fees and expenses related to the execution of the new credit facilities on the closing date of the Merger. As a result of the Merger, the Company recorded goodwill of $509.8 million.
The accompanying consolidated financial statements as of the dates and for all periods prior to August 24, 2007, reflect the financial position, results of operations and cash flows of the Predecessor. The consolidated financial statements as of the dates and for the periods on and after August 24, 2007, reflect the financial position, results of operations and cash flows of the Company.
The expenses incurred as a result of the Merger are classified as follows in the accompanying statements of operations (in thousands):
|
|
January 1, |
|
Year
Ended |
|
||
Cost of revenues |
|
$ |
710 |
|
$ |
710 |
|
General and administrative expense |
|
8,152 |
|
8,152 |
|
||
Merger transaction expenses |
|
7,522 |
|
7,522 |
|
||
Net income attributable to noncontrolling interests |
|
(329 |
) |
(329 |
) |
||
Total |
|
$ |
16,055 |
|
$ |
16,055 |
|
Additionally, the Company paid $7.0 million in costs incurred by Crestview in connection with the Merger which were recorded as additional purchase price.
3. Significant Accounting Policies and Practices
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and accompanying footnotes. Examples include, but are not limited to, estimates of accounts receivable allowances, professional and general liabilities and the estimate of deferred tax assets or liabilities. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All adjustments are of a normal, recurring nature. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, as well as interests in partnerships and limited liability companies controlled by the Company through ownership of a majority voting interest or other rights granted to the Company by contract to manage and control the affiliates business. The physician limited partners and physician minority members of the entities that the Company controls are responsible for the supervision and delivery of medical services. The governance rights of limited partners and minority members are restricted to those that protect their financial interests. Under certain partnership and operating agreements governing these partnerships and limited liability companies, the Company could be removed as the sole general partner or managing member for certain events such as material breach of the partnership or operating agreement, gross negligence or bankruptcy. These protective rights do not preclude consolidation of the respective partnerships and limited liability companies. The consolidated financial statements include the accounts of variable interest entities in which the Company is the primary beneficiary, under the provisions of ASC Topic 810, Consolidation. The variable interest entities are surgical facilities located in the states of Florida and New York. With regard to the New York facility, the Company is the primary beneficiary due to the level of variability within the management service agreement, as well as the obligation and likelihood of absorbing the majority of expected gains and losses. Regarding the Florida facility, the Company has fully guaranteed debt obligations. The debt obligations are subordinated to such a level that the Company absorbs the majority of the expected gains and losses. The accompanying consolidated balance sheets as of December 31, 2009 and December 31, 2008 include assets of $14.5 million and $17.6 million, respectively, and liabilities of $4.4 million and $8.3 million, respectively, related to the variable interest entities. All significant intercompany balances and transactions are eliminated in consolidation.
Fair Value of Financial Instruments
The fair value of a financial instrument is the amount at which the instrument could be exchanged in an orderly transaction between market participants to sell the asset or transfer the liability. The Company uses fair value measurements based on quoted prices in active markets for identical assets or liabilities (Level 1), or inputs other than quoted prices in active markets that are either directly or indirectly observable (Level 2), or unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions (Level 3), depending on the Nature of the item being valued.
The carrying amounts reported in the accompanying consolidated balance sheets for cash, accounts receivable and accounts payable approximate fair value because of their short-term nature.
The carrying amount and fair value of the Companys term loans under its senior secured credit facility and the Toggle Notes as of December 31, 2009 and 2008 were as follows:
|
|
Carrying Amount |
|
Fair Value |
|
||||||||
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
|
||||
Tranche A, term loan |
|
$ |
115,438 |
|
$ |
117,939 |
|
$ |
103,120 |
|
$ |
70,763 |
|
Tranche B, term loan |
|
116,687 |
|
117,938 |
|
104,237 |
|
70,763 |
|
||||
Senior PIK Toggle Notes |
|
206,967 |
|
184,635 |
|
156,260 |
|
73,854 |
|
||||
The fair value of the term loans and Toggle Notes were based on quoted prices at December 31, 2009 and 2008. The Companys long-term debt instruments are discussed further in Note 8.
The Company determines the fair value of its interest rate swap based on the amount at which it could be settled, which is considered to be the exit price. This price is based upon observable market assumptions and appropriate valuation adjustments for credit risk. The Company has categorized its interest rate swap as a Level 2 financial instrument. See Note 8 for further discussion regarding the interest rate swap.
Cash and Cash Equivalents
The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. The Company maintains its cash and cash equivalent balances at high credit quality financial institutions.
Accounts Receivable
Accounts receivable consist of receivables from federal and state agencies (under the Medicare and Medicaid programs), managed care health plans, commercial insurance companies, employers and patients. The Company recognizes that revenues and receivables from government agencies are significant to its operations, but it does not believe that there are significant credit risks associated with these government agencies. Concentration of credit risk with respect to other payors is limited because of the large number of such payors. Accounts receivable are recorded net of contractual adjustments and allowances for doubtful accounts to reflect accounts receivable at net realizable value. The Company does not require collateral for private pay patients. Accounts receivable at December 31, 2009 and December 31, 2008 were as follows (in thousands):
|
|
December 31, |
|
||||
|
|
2009 |
|
2008 |
|
||
Surgical facilities |
|
$ |
36,039 |
|
$ |
34,053 |
|
Physician networks |
|
597 |
|
654 |
|
||
Total |
|
$ |
36,636 |
|
$ |
34,707 |
|
The following table sets forth by type of payor the percentage of the Companys accounts receivable for consolidated surgical facilities as of December 31, 2009 and December 31, 2008:
|
|
December 31, |
|
||
|
|
2009 |
|
2008 |
|
Private insurance |
|
59 |
% |
59 |
% |
Government |
|
15 |
|
15 |
|
Self-pay |
|
13 |
|
15 |
|
Other |
|
13 |
|
11 |
|
Total |
|
100 |
% |
100 |
% |
Allowance for Doubtful Accounts
The Companys policy is to review the standard aging schedule, by surgical facility, to determine the appropriate allowance for doubtful accounts. Patient account balances are reviewed for delinquency based on contractual terms. This review is supported by an analysis of the actual net revenues, contractual adjustments and cash collections received. If the Companys internal collection efforts are unsuccessful, the Company manually reviews the patient accounts. An account is written off only after the Company has pursued collection with legal or collection agency assistance or otherwise deemed an account to be uncollectible.
Changes in the allowance for doubtful accounts and the amounts charged to revenues, costs and expenses were as follows (in thousands):
|
|
Allowance |
|
Charged
to |
|
Charged
to |
|
Other |
|
Allowance |
|
|||||
Year ended December 31: |
|
|
|
|
|
|
|
|
|
|
|
|||||
2007 |
|
$ |
24,576 |
|
$ |
4,449 |
|
$ |
938 |
|
$ |
(14,355 |
) |
$ |
15,608 |
|
2008 |
|
15,608 |
|
3,861 |
|
152 |
|
(7,628 |
) |
11,993 |
|
|||||
2009 |
|
11,993 |
|
3,354 |
|
|
|
(5,488 |
) |
9,859 |
|
|||||
(1) Relates to allowances for doubtful accounts recorded under the purchase method of accounting for acquired entities.
Inventories
Inventories, which consist primarily of medical and drug supplies, are stated at the lower of cost or market value. Cost is determined using the first-in, first-out method.
Prepaid and Other Current Assets
A summary of prepaid and other current assets is as follows (in thousands):
|
|
2009 |
|
2008 |
|
||
Prepaid expenses |
|
$ |
5,072 |
|
$ |
4,947 |
|
Other receivables |
|
7,439 |
|
7,772 |
|
||
|
|
$ |
12,511 |
|
$ |
12,719 |
|
Property and Equipment
Property and equipment are stated at cost, or if obtained through acquisition, at fair value determined on the date of acquisition and depreciated on a straight-line basis over the useful lives of the assets, generally three to five years for computers and software and five to seven years for furniture and equipment. Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term or the estimated useful life of the assets. Routine maintenance and repairs are charged to expenses as incurred, while expenditures that increase capacities or extend useful lives are capitalized.
Depreciation expense, including the amortization of assets under capital leases, was $17.3 million, $15.2 million and $12.7 million for the periods ended December 31, 2009, 2008 and 2007, respectively.
Impairment of Long-Lived Assets
When events or circumstances indicate that the carrying value of certain property and equipment might be impaired, the Company prepares an expected undiscounted cash flow projection. If the projection indicates that the recorded amounts of the property and equipment are not expected to be recovered, these amounts are reduced to estimated fair value. The cash flow estimates and discount rates incorporate managements best estimates, using appropriate and customary assumptions and projections at the date of evaluation. In 2009, the Company recorded an impairment of $2.4 million related to its equity method investment located in Arcadia, California. This impairment charge is included in the impairment and loss on disposal of long-lived assets. The Company recorded no impairment charges for 2008 and 2007.
Goodwill and Other Intangible Assets
Goodwill
Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets acquired. The Company tests for impairment annually as of December 31, or more frequently if certain indicators are encountered. See Note 6 for further discussion of our goodwill impairment valuation.
Other Intangible Assets
The Company recorded intangible assets of $19.5 million as a result of the purchase price allocation related to the certificates of need for certain of its facilities. These indefinite lived assets are not amortized, but will be assessed for possible impairment as part of the Companys annual impairment analysis.
Unfavorable leasehold rights arising from the Merger were $869,000. Amortization of $83,468 and $110,835 was recorded in 2009 and 2008, respectively. The unamortized balance at December 31, 2009 totaled $674,697. The unfavorable leasehold rights are amortized on a straight-line basis over the life of the applicable lease and reflected as a component of cost of revenues from continuing operations. Scheduled amortization expense for the five years ending December 31, 2010 to 2014 is $83,468 per year.
Noncontrolling Interests
The consolidated financial statements include all assets, liabilities, revenues and expenses of surgical facilities in which the Company has sufficient ownership and rights to allow the Company to consolidate the surgical facilities. The Company has recorded noncontrolling interests in the earnings (losses) of such surgical facilities.
Investments in and Advances to Affiliates
As of December 31, 2009 and 2008, the Company held interests in eight and nine surgical facilities, respectively, in which it exercised significant influence. However, the Company does not consolidate these facilities because of a lack of control. The Company accounts for such investments under the equity method. As of both December 31, 2009 and 2008, the Company owned less than 20% of three of these surgical facilities, but exerted significant influence through board of director representation, as well as an agreement to manage the surgical facilities.
Other Assets (Liabilities)
Other assets at December 31, 2009 and 2008 included approximately $9.5 million and $11.3 million, respectively, related to deferred financing costs. Deferred financing costs primarily relate to the Companys senior secured credit facility and the issuance of the Toggle Notes. Deferred financing costs consist of prepaid interest, loan fees and other costs of financing that are amortized over the term of the related financing agreements. The deferred financing costs are amortized as interest expense on the accompanying consolidated statements of operations.
Other liabilities at 2008 included approximately $7.0 million related to the fair value of the Companys interest rate swap. The Companys interest rate swap agreement was entered into to reduce the interest rate risk associated with the interest rate on the Companys senior secured credit facility. In 2009, the interest rate swap liability is considered a current liability, as it expires in October 2010. As such, the liability is included in other accrued expenses as of December 31, 2009.
Other Accrued Expenses
A summary of other accrued expenses is as follows (in thousands):
|
|
2009 |
|
2008 |
|
||
Interest payable |
|
$ |
9,945 |
|
$ |
9,787 |
|
Current taxes payable |
|
5,782 |
|
2,284 |
|
||
Self-insurance liabilities |
|
2,651 |
|
2,325 |
|
||
Interest rate swap liability |
|
5,045 |
|
|
|
||
Other accrued expenses |
|
7,929 |
|
7,844 |
|
||
|
|
$ |
31,352 |
|
$ |
22,240 |
|
Comprehensive Income
The Company reports other comprehensive income as a measure of changes in stockholders equity that result from recognized transactions. The Company entered into an interest rate swap agreement on October 31, 2007. The value of the interest rate swap was recorded as a current liability of $5.0 million at December 31, 2009. Prior to 2009, the change in the fair value of the interest rate swap was recorded to comprehensive income, net of taxes. Effective in 2009, the Company records the current market value of the interest rate swap as an adjustment to interest expense in the accompanying consolidated statement of operations.
Revenues
Revenues by service type consist of the following for the periods indicated (in thousands):
|
|
Year Ended December 31, |
|
|||||||
|
|
2009 |
|
2008 |
|
2007 |
|
|||
Patient service revenues |
|
$ |
332,708 |
|
$ |
315,869 |
|
$ |
289,271 |
|
Physician service revenues |
|
6,464 |
|
6,548 |
|
5,623 |
|
|||
Other service revenues |
|
7,812 |
|
9,483 |
|
9,411 |
|
|||
Total revenues |
|
$ |
346,984 |
|
$ |
331,900 |
|
$ |
304,305 |
|
Patient Service Revenues
Approximately 96% of the Companys revenues are patient service revenues. Patient service revenues are revenues from surgical or diagnostic procedures performed in each of the facilities that the Company consolidates for financial reporting purposes. The fee charged for a procedure varies depending on the procedure, but usually includes all charges for usage of an operating room, a recovery room, special equipment, supplies, nursing staff and medications. Also, in a very limited number of surgical facilities, the Company charges for anesthesia services. The fee does not normally include professional fees charged by the patients surgeon, anesthesiologist or other attending physician, which are billed directly by such physicians to the patient or third-party payor. Patient service revenues are recognized on the date of service, net of estimated contractual adjustments and discounts for third-party payors, including Medicare and Medicaid. Changes in estimated contractual adjustments and discounts are recorded in the period of change.
Physician Service Revenues
Physician service revenues are revenues from physician networks consisting of reimbursed expenses, plus participation in the excess of revenue over expenses of the physician networks, as provided for in the Companys service agreements with the Companys physician networks. Reimbursed expenses include the costs of personnel, supplies and other expenses incurred to provide the management services to the physician networks. The Company recognizes physician service revenues in the period in which reimbursable expenses are incurred and in the period in which the Company has the right to receive a percentage of the amount by which a physician networks revenues exceed its expenses. Physician service revenues are based on net billings with any changes in estimated contractual adjustments reflected in service revenues in the subsequent period.
Physician service revenues consist of the following for the periods indicated (in thousands):
|
|
Year Ended December 31, |
|
|||||||
|
|
2009 |
|
2008 |
|
2007 |
|
|||
Professional services revenues |
|
$ |
18,736 |
|
$ |
18,623 |
|
$ |
16,243 |
|
Contractual adjustments |
|
(9,414 |
) |
(9,294 |
) |
(7,685 |
) |
|||
Clinic revenue |
|
9,322 |
|
9,329 |
|
8,558 |
|
|||
Medical group retainage |
|
(2,858 |
) |
(2,781 |
) |
(2,935 |
) |
|||
Physician service revenues |
|
$ |
6,464 |
|
$ |
6,548 |
|
$ |
5,623 |
|
Other Service Revenues
Other service revenues consists of management and administrative service fees derived from the non-consolidated surgical facilities that the Company accounts for under the equity method, management of surgical facilities in which the Company does not own an interest and management services the Company provides to physician networks for which the Company is not required to provide capital or additional assets. The fees the Company derives from these management arrangements are based on a pre-determined percentage of the revenues of each surgical facility and physician network. The Company recognizes other service revenues in the period in which services are rendered.
The following table sets forth by type of payor the percentage of the Companys patient service revenues generated for the periods indicated (in thousands):
|
|
Year Ended December 31, |
|
||||
|
|
2009 |
|
2008 |
|
2007 |
|
Private Insurance |
|
71 |
% |
72 |
% |
73 |
% |
Government |
|
24 |
|
22 |
|
21 |
|
Self-pay |
|
4 |
|
4 |
|
4 |
|
Other |
|
1 |
|
2 |
|
2 |
|
Total |
|
100 |
% |
100 |
% |
100 |
% |
Supplemental Cash Flow Information
The Company made cash income tax payments of $288,000, $409,000 and $8.3 million for the years ended December 31, 2009, 2008 and 2007, respectively. The Company made interest payments of $18.2 million, $33.8 million and $17.0 million for the years ended December 31, 2009, 2008 and 2007 respectively. The Company entered into capital leases for $408,000, $1.9 million and $908,000 of equipment for the years ended December 31, 2009, 2008 and 2007, respectively.
Recently Adopted Accounting Guidelines
On September 30, 2009, we adopted changes issued by the Financial Accounting Standards Board (FASB) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards CodificationTM (Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the financial statements.
On January 1, 2009, we adopted changes issued by the FASB to noncontrolling interests in consolidated financial statements. These changes require, among other items, that a noncontrolling interest be included within equity separate from the parents equity; consolidated net income be reported at amounts inclusive of both the parents and noncontrolling interests shares; and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all be reported on the consolidated statement of operations. The implementation of these changes also results in the cash flow impact of certain transactions with noncontrolling interests being classified within financing activities. Those changes to the statement of cash flows include: a) distributions to noncontrolling interest partners were previously recorded as an operating activity and are now included in the financing activities section; and b) acquisitions or sales of equity interests in consolidated subsidiaries in which there were no changes of control were previously recorded in the investing section and are now presented as financing activities.
We could be obligated, under the terms of the partnership and operating agreements governing our joint ventures, upon the occurrence of various fundamental regulatory changes, to purchase some or all of the noncontrolling interests related to our consolidated subsidiaries. These repurchase requirements are limited to the portions of our facilities that are owned by physicians who perform surgery at our facilities and would be triggered by regulatory changes making the existing ownership structure illegal. While we are not aware of events that would make the occurrence of such a change probable, regulatory changes are outside of our control. Accordingly, the noncontrolling interests subject to these repurchase provisions, and the income attributable to those interests, have been classified outside of equity on our consolidated balance sheets.
Effective January 1, 2009, we adopted changes issued by the FASB to accounting for business combinations. These changes retain the purchase method of accounting for acquisitions, but require a number of changes, including changes in the way assets and liabilities are recognized in the purchase accounting as well as requiring the expensing of acquisition-related costs as incurred. Furthermore, these changes provide guidance for recognizing and measuring the goodwill acquired in the business combination and determining what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. We have applied these changes to the acquisitions completed during the year ended December 31, 2009.
Effective January 1, 2009, we adopted changes issued by the FASB to the method of determination of the useful life of intangible assets. This guidance amends the factors that should be considered in determining the useful life of a recognized intangible asset. The intent of this guidance is to improve consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The adoption of this guidance did not have a material impact on our consolidated results of operations or financial position.
Effective January 1, 2009, we adopted changes issued by the FASB to equity method investment accounting. These changes clarify the accounting for certain transactions and impairment considerations involving equity method investments. The adoption of this guidance did not have a material impact on our consolidated financial position, results of operations, or cash flows.
Effective January 1, 2009, we adopted changes issued by the FASB to disclosures about derivative instruments and hedging activities. This guidance requires enhanced disclosures about an entitys derivative and hedging activities and thereby improves the transparency of financial reporting. The objective of the guidance is to provide users of the financial statements with an enhanced understanding of how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for, and how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. We are adhering to the enhanced disclosure requirements regarding derivative instruments and hedging activities.
In April 2009, we adopted changes issued by the FASB to interim disclosures about fair value of financial instruments, which require an entity to provide interim disclosures about the fair value of all financial instruments within the scope of the guidance, and to include disclosures related to the methods and significant assumptions used in estimating those instruments. Other than the required disclosures, these changes had no impact on the financial statements.
On June 30, 2009, we adopted changes issued by the FASB to subsequent events. This guidance establishes general standards of accounting and disclosures of events that occur after the balance sheet date but before the financial statements are issued. We evaluated all subsequent events that occurred after the balance sheet date through the filing of this Annual Report on Form 10-K on March 31, 2010.
Reclassifications
Certain reclassifications have been made to the comparative periods financial statements to conform to the 2009 presentation. The reclassifications primarily related to the presentation of discontinued operations and noncontrolling interests and had no impact on the Companys financial position or results of operations.
4. Acquisitions and Equity Method Investments
Effective May 1, 2009, the Company acquired a 49.8% ownership interest in a surgical hospital in Austin, Texas for $350,000 plus the assumption of $2.6 million of debt. The acquisition included gross accounts receivable of $7.1 million. The Company recorded the receivables at $1.8 million, which was deemed to be fair value of the receivables at the date of the acquisition. This fair value estimate was assumed by the Company to be fully collectible as of the acquisition date. The acquisition was financed with cash from operations. The Company, as general partner, has the ability to direct the financial affairs of the facility, and as such, this facility is consolidated for financial reporting purposes.
Effective February 21, 2008, the Company acquired ownership in five surgical facilities specializing in spine, orthopedic and pain management procedures located in Boulder, Colorado; Honolulu, Hawaii; Bristol and Nashville, Tennessee; and Seattle, Washington for an aggregate of $5.8 million and the assumption of $4.7 million of debt. The Company acquired an ownership ranging from 20.0% to 50.0% in these surgical facilities. Four of these facilities are consolidated for financial reporting purposes.
These acquisitions were accounted for under the purchase method of accounting, and accordingly, the results of operations of the acquired consolidated businesses are included in the accompanying consolidated financial statements from their respective dates of acquisition. These acquisitions placed the Company in new markets or expanded the Companys presence in current markets.
The Company also engages in investing transactions that are not business combinations. These transactions primarily consist of acquisitions and sales of non-controlling equity interests in surgical facilities and the investment of additional cash in surgical facilities under development. During the first quarter of 2009, the Company acquired an incremental ownership of 18.0% in its surgical facility located in Westlake Village, California for $416,000. Prior to the acquisition, the Company owned 1.0% of this facility. The acquisition was financed with cash from operations.
Effective September 1, 2009, the Company acquired an ownership of 28.8% in a surgical facility located in Gresham, Oregon for $525,000. The acquisition was financed with cash from operations. The Company accounts for this investment under the equity method.
During 2008, the Company acquired an incremental ownership of 16.7% in its surgical facility located in Irvine, California for $3.1 million and an incremental ownership of 18.0% in its surgical facility located in Arcadia, California for $304,000. Prior to the acquisitions, the Company owned 15.3% of the Irvine, California surgical facility and 19.2% of the Arcadia, California surgical facility.
Additionally during 2008, the Company acquired an incremental ownership of 18.5% in its surgical facility located in Irvine, California for $5.1 million. Through this acquisition, the Company obtained a controlling interest in the facility. The acquisition was treated as a business combination and the Company began consolidating the facility for financial reporting purposes in 2008. The Company also acquired an incremental ownership in three other of its existing surgical facilities located in California. The Company acquired an incremental ownership of 10.7% in two surgical facilities located in Beverly Hills, California for an aggregate of $2.5 million and a 6.4% incremental ownership in a surgical facility located in Encino, California for $2.0 million. Prior to the acquisitions, the Company owned 55.1% and 57.0% of the two Beverly Hills, California surgical facilities and 55.5% of the Encino, California surgical facility.
5. Discontinued Operations
In February 2009, the Company completed its shutdown of the Englewood, Colorado facility. The Company recorded a loss on the disposal of $5.9 million, which includes an accrual of $4.6 million for future contractual obligations under a facility operating lease. As of December 31, 2009, this lease liability was $3.9 million. As of December 31, 2009, the Company owned one surgical facility that is classified as discontinued operations. The results of operations in these centers are presented net of income taxes in the accompanying consolidated financial statements as discontinued operations. The accompanying consolidated financial statements have been reclassified to conform to this presentation for all periods presented. These required reclassifications of prior period consolidated financial statements did not impact total assets, liabilities, stockholders equity, net loss or cash flows.
Revenues, the loss on operations before income taxes, income tax provision (benefit), loss (gain) on sale, net of tax and the loss from discontinued operations net of tax for the years ended December 31, 2009, 2008 and 2007 related to discontinued operations were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||||
|
|
2009 |
|
2008 |
|
2007 |
|
|||
Net revenues |
|
$ |
4,508 |
|
$ |
7,463 |
|
$ |
9,803 |
|
Loss on operations, before tax |
|
$ |
(240 |
) |
$ |
(792 |
) |
$ |
(1,522 |
) |
Income tax provision (benefit) |
|
$ |
17 |
|
$ |
(676 |
) |
$ |
(580 |
) |
(Loss) gain on sale, net of tax |
|
$ |
(5,840 |
) |
$ |
(3,527 |
) |
$ |
235 |
|
Loss from discontinued operations, net of taxes |
|
$ |
(6,097 |
) |
$ |
(3,643 |
) |
$ |
(707 |
) |
6. Goodwill and Intangible Assets
The Company tests its goodwill and intangible assets for impairment at least annually, or more frequently if certain indicators arise. The Company tests goodwill at the reporting unit level, which the Company concludes is the consolidated results of Symbion, Inc. The Company completed the required annual impairment testing as of December 31, 2009, 2008 and 2007.
During 2009, the Company performed its impairment test by developing a fair value estimate of the business enterprise as of December 31, 2009 using a discounted cash flow approach and corroborated this analysis using a market-based approach. As the Company does not have publicly traded equity from which to derive a market value, an assessment of peer company data was performed whereby the Company selected comparable peers based on growth and leverage ratios, as well as industry specific characteristics. Based on the comparable peer market trading data, the Company identified a reasonable estimate for the market trading price of the Company as of December 31, 2009. This market-based approach was then used to corroborate the results of the discounted cash flows approach. No impairment was indicated as of December 31, 2009.
Changes in the carrying amount of goodwill are as follows (in thousands):
Balance at December 31, 2008 |
|
$ |
541,831 |
|
Purchase price allocations |
|
3,583 |
|
|
Disposals |
|
(176 |
) |
|
Balance at December 31, 2009 |
|
$ |
545,238 |
|
As a result of the acquisition of a surgical hospital in Austin, Texas during the second quarter of 2009, the Company recorded goodwill of $4.2 million. The Company is in the process of performing a valuation of certain assets of the facility to determine the final purchase price allocation. Disposals of goodwill relate to ceasing operations at the Englewood, Colorado surgical facility in February 2009.
The Company has intangible assets related to the certificates of need for certain of its facilities of $19.5 million. These indefinite-lived assets are not amortized but are assessed for possible impairment as part of the Companys impairment analysis.
7. Operating Leases
The Company leases office space and equipment for its surgical facilities, including surgical facilities under development. The lease agreements generally require the lessee to pay all maintenance, property taxes, utilities and insurance costs. The Company accounts for operating lease obligations and sublease income on a straight-line basis. Contingent obligations of the Company are recognized when specific contractual measures have been met, which is typically the result of an increase in the Consumer Price Index. Lease obligations paid in advance are included in prepaid rent. The difference between actual lease payments and straight-line lease expense over the original lease term, excluding optional renewal periods, is included in deferred rent.
The future minimum lease payments under non-cancelable operating leases at December 31, 2009 are as follows (in thousands):
2010 |
|
$ |
23,498 |
|
2011 |
|
22,575 |
|
|
2012 |
|
21,755 |
|
|
2013 |
|
18,287 |
|
|
2014 |
|
13,097 |
|
|
Thereafter |
|
48,302 |
|
|
Total minimum lease payments |
|
$ |
147,514 |
|
Total rent and lease expense was $25.6 million, $22.3 million and $19.3 million for the periods ended December 31, 2009, 2008 and 2007, respectively. The Company incurred rental expense of $5.6 million, $4.6 million and $4.7 million under operating leases with physician investors and an entity that is an affiliate of one of the Companys former directors for the periods ended December 31, 2009, 2008 and 2007, respectively.
8. Long-Term Debt
The Companys long-term debt is summarized as follows (in thousands):
|
|
December 31, |
|
||||
|
|
2009 |
|
2008 |
|
||
Senior secured credit facility |
|
$ |
232,125 |
|
$ |
235,875 |
|
Senior PIK toggle notes |
|
206,967 |
|
184,635 |
|
||
Notes payable to banks |
|
14,433 |
|
17,636 |
|
||
Secured term loans |
|
2,628 |
|
3,213 |
|
||
Capital lease obligations |
|
9,067 |
|
11,458 |
|
||
|
|
465,220 |
|
452,817 |
|
||
Less current maturities |
|
(20,212 |
) |
(12,205 |
) |
||
|
|
$ |
445,008 |
|
$ |
440,612 |
|
Senior Secured Credit Facility
On August 23, 2007, the Company entered into a new $350.0 million senior secured credit facility with a syndicate of banks. The senior secured credit facility extends credit in the form of two term loans of $125.0 million each (the first, the Tranche A Term Loan and the second, the Tranche B Term Loan) and a $100.0 million revolving, swingline and letter of credit facility (the Revolving Facility). The swingline facility is limited to $10.0 million and the swingline loans are available on a same-day basis. The letter of credit facility is limited to $10.0
million. The Company is the borrower under the senior secured credit facility, and all of its wholly owned subsidiaries are guarantors. Under the terms of the senior secured credit facility, entities that become wholly owned subsidiaries must also guarantee the debt.
The Tranche A Term Loan matures on August 23, 2013, the Tranche B Term Loan matures on August 23, 2014 and the Revolving Facility matures on August 23, 2013. The Tranche A Term Loan requires quarterly principal payments $1.6 million through September 30, 2010, quarterly payments of $4.7 million from December 31, 2010 through September 30, 2011, quarterly payments of $6.3 million from December 31, 2011 through September 30, 2012, quarterly payments of $18.1 million from December 31, 2012 through June 30, 2013 and a balloon payment of $12.6 million on August 23, 2013. The Tranche B Term Loan requires quarterly principal payments of $312,500 through June 30, 2014 and a balloon payment of $111.1 million on August 23, 2014.
At the Companys option, the term loans bear interest at the lenders alternate base rate in effect on the applicable borrowing date plus an applicable alternate base rate margin, or Eurodollar rate in effect on the applicable borrowing date, plus an applicable Eurodollar rate margin. Both the applicable alternate base rate margin and applicable Eurodollar rate margin will vary depending upon the ratio of the Companys total indebtedness to consolidated EBITDA.
The senior secured credit facility permits the Company to declare and pay dividends only in additional shares of its stock except for the following exceptions. Restricted Subsidiaries, as defined in the credit agreement, may declare and pay dividends ratably with respect to their capital stock. The Company may declare and pay cash dividends or make other distributions to Holdings provided the proceeds are used by Holdings to (i) purchase or redeem equity interest of Holdings acquired by former or current employees, consultants or directors of Holdings, the Company or any Restricted Subsidiary or (ii) pay principal or interest on promissory notes that were issued in lieu of cash payments for the repurchase or redemption of such Equity Instruments, provided that the aggregate amount of such dividends or other distributions shall not exceed $3.0 million in any fiscal year. Any unused amounts that are permitted to be paid under this provision are available to be carried over to subsequent fiscal years provided that certain conditions are met. The Company may also make payments to Holdings to pay franchise taxes and other fees required to maintain its corporate existence provided such payments do not exceed $3.0 million in any calendar year and also make payments in the amount necessary to enable Holdings to pay income taxes directly attributable to the operations of the Company and to make $1.0 million in annual advisory and management agreement payments. The Company may also make additional payments to Holdings in the aggregate amount of $5.0 million throughout the term of the senior secured credit facility.
As of December 31, 2009, the amount outstanding under the senior secured credit facility was $232.1 million with an interest rate on the borrowings of 3.5%. The $100.0 million Revolving Facility includes a non-use fee of 0.5% of the portion of the facility not used. The Company pays this fee quarterly. As of December 31, 2009, the amount available under the Revolving Facility was $100.0 million.
Interest Rate Swap
In October 2007, the Company entered into an interest rate swap agreement to protect the Company against certain interest rate fluctuations of the LIBOR rate on $150.0 million of the Companys variable rate debt under the senior secured credit facility, with Merrill Lynch Capital Service, Inc., as counterparty. The effective date of the interest rate swap was October 31, 2007, and it is scheduled to expire on October 31, 2010. The interest rate swap effectively fixes the Companys LIBOR interest rate on the $150.0 million of variable debt at a rate of 4.7%.
The FASB established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The Company determines the fair value of its interest rate swap based on the amount at which it could be settled, which is referred to as the exit price. This price is based upon observable market assumptions and appropriate valuation adjustments for credit risk. The Company has categorized its interest rate swap as Level 2.
The interest rate swap agreement exposes both parties of the swap instrument to credit risk in the event of non-performance by the counter-party. As of December 31, 2009, the Company recorded a credit risk adjustment of $189,000 to reduce the carrying value of the swap liability, reflecting the liability at fair value.
The Company does not hold or issue derivative financial instruments for trading purposes. The fair value of the Companys interest rate swap at December 31, 2009 and December 31, 2008 reflected a liability of approximately $5.0 million and $7.0 million, respectively, and is included in other accrued expenses and other liabilities in the accompanying consolidated balance sheets as of December 31, 2009 and 2008, respectively. The interest rate swap reflects a liability balance as of December 31, 2009 and 2008 because of decreases in market interest rates since inception.
At inception, the Company designated the interest rate swap as a cash flow hedge instrument. The Company assesses the effectiveness of this cash flow hedge instrument on a quarterly basis. Due to the significant decline in benchmark interest rates, the Company elected, as of January 28, 2009, an interest term under the provisions of the hedged term debt agreement, different than the terms of the hedging instrument. The Company has determined that this benchmark interest rate swap would no longer result in effectiveness within an acceptable range under the authoritative guidance, on a prospective basis. As of December 31, 2008, the Company determined the hedge instrument to be ineffective and discontinued hedge accounting treatment. In January 2009, the Company began recognizing a ratable portion of the $7.0 million in accumulated other comprehensive income as additional interest expense, over the remaining life of the hedging instrument which expires October 31, 2010. Also in January 2009, the Company began recording into earnings the mark-to-market adjustment to reflect the fair value of the hedging instrument. During 2009, the Company recorded a mark-to-market adjustment of $3.6 million as a reduction of interest expense and additional interest expense of $3.8 million related to the amortization of the interest rate swap balance in accumulated other comprehensive income.
Senior PIK Toggle Notes
On June 3, 2008, the Company completed a private offering of $179.9 million aggregate principal amount of the 11.00%/11.75% Senior PIK Toggle Notes due 2015. Interest on the Toggle Notes is due February 23 and August 23 of each year. The Toggle Notes will mature on August 23, 2015. For any interest period through August 23, 2011, the Company may elect to pay interest on the Toggle Notes (i) in cash, (ii) in kind, by increasing the principal amount of the notes or issuing new notes (referred to as PIK interest) for the entire amount of the interest payment or (iii) by paying interest on 50% of the principal amount of the Toggle Notes in cash and 50% in PIK interest. Cash interest on the Toggle Notes will accrue at the rate of 11.0% per annum. PIK interest on the Toggle Notes will accrue at the rate of 11.75% per annum. The proceeds from the issuance of the Toggle Notes were used exclusively to repay the bridge facility.
Upon issuance of the Toggle Notes, the Company elected to exercise the PIK option by increasing the principal amount of the Toggle Notes in lieu of making scheduled interest payments of $4.7 million for the interest period through August 23, 2008. On August 23, 2008, the Company elected the PIK option of the Toggle Notes in lieu of making scheduled interest payments for the interest period from August 23, 2008 to February 23, 2009. This election increased the principal due on the Toggle Notes by $10.8 million in the first quarter of 2009. On February 23, 2009, the Company elected the PIK option of the Toggle Notes in lieu of making scheduled interest payments for the interest period from February 23, 2009 to August 23, 2009. This election increased the principal due on the Toggle Notes by $11.5 million in the third quarter of 2009. On August 23, 2009, the Company elected the PIK option of the Toggle Notes in lieu of making scheduled interest payments for the interest period from August 23, 2009 to February 23, 2010. The Company has accrued $8.6 million in interest in other accrued expenses as of December 31, 2009 and will reclassify the total accrued interest to the principal balance of the Toggle Notes on February 23, 2010.
The Toggle Notes are unsecured senior obligations and rank equally with other existing and future senior indebtedness, senior to all future subordinated indebtedness and effectively junior to all secured indebtedness to the extent of the value of the collateral securing such indebtedness. Certain existing subsidiaries have guaranteed the Toggle Notes on a senior basis, as required by the indenture. The indenture also requires that certain of the Companys future subsidiaries guarantee the Toggle Notes on a senior basis. Each guarantee is unsecured and ranks equally with senior indebtedness of the guarantor, senior to all of the guarantors subordinated indebtedness and effectively junior to its secured indebtedness to the extent of the value of the collateral securing such indebtedness.
The indenture governing the Toggle Notes contains various restrictive covenants, including financial covenants that limit the Companys ability and the ability of the subsidiaries to borrow money or guarantee other indebtedness, grant liens, make investments, sell assets, pay dividends or engage in transactions with affiliates.
At December 31, 2009, the Company was in compliance with all material covenants required by each of the senior secured credit facility and the Toggle Notes.
Notes Payable to Banks
Certain subsidiaries of the Company have outstanding bank indebtedness of $14.4 million which is collateralized by the real estate and equipment owned by the surgical facilities to which the loans were made. The various bank indebtedness agreements contain covenants to maintain certain financial ratios and also restrict encumbrance of assets, creation of indebtedness, investing activities and payment of distributions. The Company has guaranteed $9.4 million of this debt.
Capital Lease Obligations
The Company is liable to various vendors for several equipment leases. The outstanding balance related to these capital leases at December 31, 2009 and 2008 was $9.1 million and $11.5 million, respectively. The carrying value of the assets was $5.9 million and $4.5 million as of December 31, 2009 and 2008, respectively.
Other Long-Term Debt Information
Scheduled maturities of obligations as of December 31, 2009 are as follows (in thousands):
|
|
Long-term |
|
Capital
Lease |
|
Total |
|
|||
2010 |
|
$ |
16,036 |
|
$ |
4,176 |
|
$ |
20,212 |
|
2011 |
|
24,047 |
|
2,441 |
|
26,488 |
|
|||
2012 |
|
41,776 |
|
1,588 |
|
43,364 |
|
|||
2013 |
|
54,174 |
|
624 |
|
54,798 |
|
|||
2014 |
|
112,390 |
|
52 |
|
112,442 |
|
|||
Thereafter |
|
207,730 |
|
186 |
|
207,916 |
|
|||
|
|
$ |
456,153 |
|
$ |
9,067 |
|
$ |
465,220 |
|
9. Income Taxes
The Company and its subsidiaries file a consolidated federal income tax return. The partnerships and limited liability companies file separate income tax returns. The Companys allocable portion of each partnerships and limited liability companys income or loss is included in the taxable income of the Company. The remaining income or loss of each partnership and limited liability company is allocated to the other owners. The Company made income tax payments of $288,000 and $409,000 for the periods ended December 31, 2009 and 2008, respectively.
Income tax (benefit) expense from continuing operations is comprised of the following (in thousands):
|
|
Year
Ended |
|
Year
Ended December 31, |
|
August 24, |
|
January 1, |
|
January 1, |
|
|||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Federal |
|
$ |
(111 |
) |
$ |
(1,756 |
) |
$ |
(3,347 |
) |
$ |
1,199 |
|
$ |
(2,148 |
) |
State |
|
673 |
|
453 |
|
354 |
|
348 |
|
702 |
|
|||||
Deferred |
|
7,204 |
|
14,559 |
|
2,217 |
|
2,469 |
|
4,686 |
|
|||||
Income tax (benefit) expense |
|
$ |
7,766 |
|
$ |
13,256 |
|
$ |
(776 |
) |
$ |
4,016 |
|
$ |
3,240 |
|
A reconciliation of the provision for income taxes as reported and the amount computed by multiplying the income (loss) before taxes by the U.S. federal statutory rate of 35% was as follows (in thousands):
|
|
Year
Ended |
|
Year
Ended |
|
August 24, |
|
January 1, |
|
January 1, |
|
|||||
Tax at U.S. statutory rates |
|
$ |
3,810 |
|
$ |
6,915 |
|
$ |
1,383 |
|
$ |
6,277 |
|
$ |
7,660 |
|
State income taxes, net of federal tax benefit |
|
565 |
|
993 |
|
(171 |
) |
90 |
|
(81 |
) |
|||||
Change in valuation allowance |
|
10,192 |
|
14,137 |
|
402 |
|
193 |
|
595 |
|
|||||
Non-deductible transaction costs |
|
|
|
|
|
|
|
2,947 |
|
2,947 |
|
|||||
Net income attributable to noncontrolling interests |
|
(6,786 |
) |
(8,280 |
) |
(2,690 |
) |
(5,479 |
) |
(8,169 |
) |
|||||
Other |
|
(15 |
) |
(509 |
) |
300 |
|
(12 |
) |
288 |
|
|||||
|
|
$ |
7,766 |
|
$ |
13,256 |
|
$ |
(776 |
) |
$ |
4,016 |
|
$ |
3,240 |
|
The components of temporary differences and the approximate tax effects that give rise to the Companys net deferred tax liability are as follows at December 31 (in thousands):
|
|
2009 |
|
2008 |
|
||
Deferred tax assets: |
|
|
|
|
|
||
Depreciation |
|
$ |
|
|
$ |
|
|
Accrued vacation and bonus |
|
296 |
|
798 |
|
||
Net operating loss carryforwards |
|
26,116 |
|
14,801 |
|
||
Deferred project costs |
|
84 |
|
317 |
|
||
Deferred rent |
|
979 |
|
|
|
||
Interest rate swap |
|
1,964 |
|
2,518 |
|
||
Capital loss carryforward |
|
5,619 |
|
5,729 |
|
||
Stock option compensation |
|
3,139 |
|
2,771 |
|
||
Other deferred assets |
|
1,084 |
|
401 |
|
||
Total gross deferred tax assets |
|
39,281 |
|
27,335 |
|
||
Less: Valuation allowance |
|
(37,371 |
) |
(24,481 |
) |
||
Total deferred tax assets |
|
1,910 |
|
2,854 |
|
||
Deferred tax liabilities: |
|
|
|
|
|
||
Depreciation on property and equipment |
|
(193 |
) |
(723 |
) |
||
Amortization of intangible assets |
|
(2,241 |
) |
(2,364 |
) |
||
Basis differences of partnerships and joint ventures |
|
(39,150 |
) |
(31,350 |
) |
||
Other liabilities |
|
(670 |
) |
(600 |
) |
||
Total deferred tax liabilities |
|
(42,254 |
) |
(35,037 |
) |
||
Net deferred tax liability |
|
$ |
(40,344 |
) |
$ |
(32,183 |
) |
As of December 31, 2009, the Company has recorded current deferred tax assets and net non-current deferred tax liabilities of $432,000 and $40.8 million, respectively. The Company had federal net operating loss carryforwards of $56.0 million as of December 31, 2009, which expire between 2027 and 2029. The Company had state net operating loss carryforwards of $150.7 million as of December 31, 2009, which expire between 2009 and 2029. The Company had capital loss carryforwards of $16.1 million as of December 31, 2009, which expire between 2009 and 2013.
The Company recorded a valuation allowance against deferred tax assets at December 31, 2009 and December 31, 2008 totaling $37.4 and $24.5 million, respectively, which represents an increase of approximately $12.9 million. The valuation allowance has been provided for certain deferred tax assets, for which the Company believes it is more likely than not that the assets will not be realized. During 2008, goodwill was reduced by approximately $122,000 as a result of the utilization of state net operating losses that relate to the predecessor and for which a valuation allowance was previously recorded.
The benefit for income taxes for the period ended August 23, 2007 includes approximately $8.1 million of transactions costs incurred related to the Merger that may not be deductible for tax purposes. The treatment of these costs as non-deductible reduced the Companys tax benefit and increased the tax expense for the period ended August 23, 2007.
For the year ended December 31, 2009, the Company recorded income tax expense of $16,961 related to discontinued operations.
A reconciliation of the beginning and ending liability for gross unrecognized tax benefits at December 31, 2009 and 2008 is as follows (in thousands).
|
|
2009 |
|
2008 |
|
||
Unrecognized tax benefits balance at January 1 |
|
$ |
44 |
|
$ |
86 |
|
Additions based on tax provisions related to the current year |
|
3,094 |
|
|
|
||
Additions for tax positions of prior years |
|
190 |
|
6 |
|
||
Reductions for settlements with taxing authorities |
|
(13 |
) |
(48 |
) |
||
Unrecognized tax benefits balance at December 31 |
|
$ |
3,315 |
|
$ |
44 |
|
The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2009 and 2008, the Company had approximately $96,000 and $20,000 of accrued interest and penalties related to uncertain tax positions, respectively.
Total amount of accrued liabilities related to uncertain tax positions that would affect the Companys effective tax rate if recognized is $3.3 million as of December 31, 2009 and $44,000 as of December 31, 2008. The tax years 2006 through 2009 remain open to examination by major taxing jurisdictions to which the Company is subject.
10. Stock Options
Overview
The Company recognizes in the financial statements the cost of employee services received in exchange for awards of equity instruments based on the fair value of those awards.
The Predecessor used the modified prospective method of adoption, and the Company uses the Black-Scholes option pricing model to value any options awarded subsequent to adoption of ASC 718, Compensation, Stock Compensation. Under the modified prospective method, compensation cost is recognized for all share-based payments granted or modified after January 1, 2006 for all unvested awards granted prior to the effective date of ASC 718. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. All option pricing models require the input of highly subjective assumptions including the expected stock price volatility and the expected exercise patterns of the option holders.
The Company is a participant in the Symbion Holdings Corporation 2007 Equity Incentive Plan (the 2007 Plan). In connection with the Merger, certain members of Predecessors management rolled over 974,396 predecessor options into the 2007 Plan. The rollover options were exchanged for 611,799 options under the 2007 Plan. The conversion ratio was determined by the difference between $22.35, the share price paid to stockholders on the merger date, less the exercise price of each option, ignoring options with an exercise price greater than $22.35. The aggregate sum of the difference for each option was divided by $8.50 to determine the number of rollover options. The exercise price of each rollover option is $1.50 per share and the options expire on the expiration date of the original grants.
The Companys stock option compensation expense estimate can vary in the future depending on many factors, including levels of options and awards granted in the future, forfeitures and when option or award holders exercise these awards and depending on whether performance targets are met and a liquidity event occurs.
On August 31, 2007, Holdings granted 1,302,317 time-vested options and 1,606,535 performance vested options to certain employees of the Company. The maximum contractual term of the options is ten years, or earlier if the employee terminates employment before that time. The time-vested options vest over a five-year period with 20% of the options vesting each year. The Companys policy is to recognize compensation expense over the straight line method. The performance vested options shall vest and become exercisable upon a liquidity event and the obtainment of internal rate of return targets as defined in the 2007 Plan. No expense has been recorded in the statement of operations for the performance based shares as the conditions for vesting are not probable.
During 2009, 94,417 options to purchase shares of common stock included in the August 31, 2007 grant, which were reserved for issuance for positions to be filled after the initial grant, were issued to certain employees of the Company. During 2008, 87,386 options included in the August 31, 2007 grant were issued to certain employees of the Company. The Company began expensing these options during the requisite service period.
The Predecessors stock options vested over the related requisite service period, which was generally four years. The maximum contractual term of the Predecessors options was either seven or ten years depending on the grant, or earlier if the employee terminates employment before that time. The Predecessor historically granted stock options with an exercise price equal to the fair market value of the Predecessors common stock on the date of grant. As of August 23, 2007, all of the Predecessor options were either paid out as the result of the Merger or were rolled over and exchanged for new options of Holdings on August 23, 2007. Additionally, all of the shares of restricted stock were paid out as the result of the Merger.
Valuation Methodology
The fair values of the options were derived using the Black-Scholes option pricing model. In applying the Black-Scholes option pricing model, the Company used the following assumptions:
· Weighted average risk-free interest rate. The risk-free interest rate is used as a component of the fair value of stock options to take into account the time value of money. For the risk-free interest rate, the Company uses the implied yield on United States Treasury zero-coupon issues with a remaining term equal to the expected life, in years, of the options granted.
· Expected volatility. Volatility, for the purpose of stock-based compensation, is a measurement of the amount that a share price has fluctuated. Expected volatility involves reviewing historical volatility and determining what, if any, change the share price will have in the future. FASB recommended that companies such as Holdings, whose common stock is not publicly traded or had a limited public stock trading history, use average volatilities of similar entities. As a result, the Company has used the average volatilities of some of its competitors as an estimate in determining stock option fair values.
· Expected life, in years. A clear distinction is made between the expected life of the option and the contractual term of the option. The expected life of the option is considered the amount of time, in years, that the option is expected to be outstanding before it is exercised. Whereas, the contractual term of the stock option is the term the option is valid before it expires.
· Expected dividend yield. Since issuing dividends will affect the fair value of a stock option, GAAP requires companies to estimate future dividend yields or payments. The Company has not historically issued dividends and does not intend to issue dividends in the future.
· Expected forfeiture rate. The Company uses an estimated forfeiture rate based on historical experience for the respective position held by the option holder. The Company reviews the forfeiture estimate annually in comparison to the actual forfeiture rate experienced.
The following table summarizes the assumptions used by the Company in the valuation of the time-vested options for the various periods:
|
|
Weighted |
|
Weighted |
|
Expected |
|
Expected life, |
|
Expected |
|
Expected |
|
|
August 31, 2007 |
|
$ |
4.91 |
|
4.4 |
% |
42.0 |
% |
6.5 |
|
0.0 |
% |
4.0 |
% |
March 31, 2008 |
|
$ |
4.72 |
|
4.4 |
% |
42.0 |
% |
6.5 |
|
0.0 |
% |
4.0 |
% |
March 31, 2009 |
|
$ |
0.70 |
|
0.5 |
% |
42.0 |
% |
6.5 |
|
0.0 |
% |
4.0 |
% |
Pro Forma Net Income
The Company recorded non-cash compensation expense of $1.3 million for the year ended December 31, 2009 and $2.1 million for the year ended December 31, 2008. Non-cash compensation expense of $409,000 was recorded for the Successor period of 2007 from August 24, 2007 to December 31, 2007. After noncontrolling interests and the related tax benefit, the Company recorded a net impact of approximately $793,000 for 2009, $1.3 million for 2008 and $250,000 for the period August 24, 2007 to December 31, 2007.
Outstanding Option Information
The following is a summary of option transactions since the Merger on August 23, 2007:
Stock Options |
|
Number of |
|
Weighted |
|
Weighted |
|
Total Fair |
|
Aggregate |
|
Weighted |
|
||||
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
(in years) |
|
||||
Outstanding as of August 23, 2007 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
Rolled over |
|
611,799 |
|
1.50 |
|
8.81 |
|
5,390 |
|
7.31 |
|
6.1 |
|
||||
Granted |
|
2,908,852 |
|
10.00 |
|
4.91 |
|
14,282 |
|
|
|
9.6 |
|
||||
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of December 31, 2007 |
|
3,520,651 |
|
8.52 |
|
5.59 |
|
19,672 |
|
|
|
8.5 |
|
||||
Exercisable at December 31, 2007 |
|
872,262 |
|
4.04 |
|
7.65 |
|
6,669 |
|
3.61 |
|
7.1 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
2008 Activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
78,527 |
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
275,213 |
|
10.00 |
|
4.90 |
|
1,349 |
|
|
|
8.6 |
|
||||
Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of December 31, 2008 |
|
3,442,124 |
|
8.49 |
|
5.60 |
|
19,287 |
|
|
|
7.8 |
|
||||
Exercisable at December 31, 2008 |
|
1,147,475 |
|
$ |
5.47 |
|
$ |
6.99 |
|
$ |
8,017 |
|
$ |
1.52 |
|
6.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009 Activity |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Granted |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
Exercised |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited |
|
69,538 |
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
284,655 |
|
10.00 |
|
4.76 |
|
1,355 |
|
|
|
7.7 |
|
||||
Expired |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outstanding as of December 31, 2009 |
|
3,372,586 |
|
8.46 |
|
5.62 |
|
18,945 |
|
|
|
6.5 |
|
||||
Exercisable at December 31, 2009 |
|
1,432,129 |
|
$ |
6.37 |
|
$ |
6.54 |
|
$ |
9,372 |
|
$ |
0.18 |
|
6.1 |
|
As of December 31, 2009, the total compensation expense related to non-vested time-based awards not yet recognized was $2.7 million. This expense will be recognized over 3 years.
The following table summarizes information regarding the options outstanding at December 31, 2009:
Options Outstanding |
|
Options Exercisable |
|
|||||||||||
Exercise Prices |
|
Outstanding |
|
Weighted- |
|
Weighted- |
|
Exercisable |
|
Weighted- |
|
|||
$ |
1.50 |
|
611,799 |
|
4.07 |
|
$ |
1.50 |
|
611,799 |
|
$ |
1.50 |
|
10.00 |
|
2,760,787 |
|
7.77 |
|
10.00 |
|
820,330 |
|
10.00 |
|
|||
|
|
3,372,586 |
|
6.54 |
|
7.98 |
|
1,432,129 |
|
6.37 |
|
|||
Total unvested share awards as of December 31, 2009 are summarized as follows:
Stock Options |
|
Number of |
|
Weighted |
|
Weighted |
|
Total Fair |
|
Aggregate |
|
Weighted |
|
|||
|
|
|
|
|
|
|
|
(in thousands) |
|
|
|
(in years) |
|
|||
Unvested at January 1, 2009 |
|
2,294,649 |
|
$ |
10.00 |
|
$ |
4.73 |
|
$ |
10,858 |
|
|
|
8.7 |
|
Forfeited |
|
69,538 |
|
|
|
|
|
|
|
|
|
|
|
|||
Vested |
|
284,655 |
|
10.00 |
|
4.76 |
|
1,355 |
|
|
|
7.8 |
|
|||
Unvested at December 31, 2009 |
|
1,940,456 |
|
10.00 |
|
4.93 |
|
9,569 |
|
|
|
7.8 |
|
|||
11. Employee Benefit Plans
Symbion, Inc. 401(k) Plan
The Symbion, Inc. 401(k) Plan (the 401(k) Plan) is a defined contribution plan whereby employees who have completed six months of service in which they have worked a minimum of 1,000 hours and are age 21 or older are eligible to participate. Employees may enroll in the plan on either January 1 or July 1 of each year. The 401(k) Plan allows eligible employees to make contributions of varying percentages of their annual compensation, up to the maximum allowed amounts by the Internal Revenue Service. Eligible employees may or may not receive a match by the Company of their contributions. The match varies depending on location and is determined prior to the start of each plan year. Generally, employer contributions vest 20% after two years of service and continue vesting at 20% per year until fully vested. The Companys matching expense for the periods ended December 31, 2009, 2008 and 2007 was $326,000, $1.1 million and $892,000, respectively.
Supplemental Retirement Savings Plan
The Company adopted the supplemental retirement savings plan (the SERP) in May 2005. The SERP provides supplemental retirement alternatives to eligible officers and key employees of the Company by allowing participants to defer portions of their compensation. Under the SERP, eligible employees may enroll in the plan before December 31 to be entered in the plan the following year. Eligible employees may defer into the SERP up to 25% of their normal period payroll and up to 50% of their annual bonus. If the enrolled employee contributes a minimum of 2% of his or her base salary into the SERP, the Company will contribute 2% of the enrolled employees base salary to the plan and has the option of contributing additional amounts. Periodically, the enrolled employees deferred amounts are transferred to a plan administrator. The plan administrator maintains separate non-qualified accounts for each enrolled employee to track deferred amounts. On May 1 of each year, the Company is required to make its contribution to each enrolled employees account. Compensation expense recorded by the Company related to the Companys contribution to the SERP was $53,000, $54,000 and $46,000, for years ended December 31, 2009, 2008 and 2007, respectively.
12. Recently Issued Accounting Guidelines
In June 2009, the FASB issued Accounting Standards Update No. 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities (ASU 2009-17). ASU 2009-17 changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar) interests should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the other entitys purpose and design and the reporting entitys ability to direct the activities that most significantly impact the other entitys economic performance. ASU 2009-17 requires a number of additional disclosures about an entitys involvement with variable interest entities and any significant changes in risk exposure due to that involvement. ASU 2009-17 became applicable to the Company on January 1, 2010. The Company is in the process of evaluating the potential impact of these changes on the financial statements.
13. Commitments and Contingencies
Debt and Lease Guaranty on Non-consolidated Entities
The Company has guaranteed $1.4 million of operating lease payments of certain surgical facilities. These operating leases typically have 10 year terms, with optional renewal periods. As of December 31, 2009, the Company has also guaranteed $2.2 million of debt of six non-consolidating surgical facilities. In the event that the Company meets certain financial and debt service benchmarks, the guarantees at these surgical facilities will expire between 2010 and 2017.
Professional, General and Workers Compensation Liability Risks
The Company is subject to claims and legal actions in the ordinary course of business, including claims relating to patient treatment, employment practices and personal injuries. To cover these claims, the Company maintains general liability and professional liability insurance in excess of self-insured retentions through a third party commercial insurance carrier in amounts that management believes is sufficient for the Companys operations, although, potentially, some claims may exceed the scope of coverage in effect. This insurance coverage is on a claims-made basis. Plaintiffs in these matters may request punitive or other damages that may not be covered by insurance. The Company is not aware of any such proceedings that would have a material adverse effect on the Companys business, financial condition or results of operations. The Company expenses the costs under the self-insured retention exposure for general and professional liability claims which relate to (i) deductibles on claims made during the policy period, and (ii) an estimate of claims incurred but not yet reported that are expected to be reported after the policy period expires. Reserves and provisions for professional liability are based upon actuarially determined estimates. The reserves are estimated using individual case-basis valuations and actuarial analysis. Based on historical results and data currently available, management does not believe a change in one or more of these assumptions will have a material impact on the Companys consolidated financial position or results of operations.
Laws and Regulations
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations can be subject to future government review and interpretation as well as significant regulatory action including fines, penalties, and exclusion from the Medicare, Medicaid and other federal health care programs. From time to time, governmental regulatory agencies will conduct inquiries of the Companys practices. It is the Companys current practice and future intent to cooperate fully with such inquiries. The Company is not aware of any such inquiry that would have a material adverse effect on the Companys consolidated financial position or results of operations.
Acquired Facilities
The Company, through its wholly owned subsidiaries or controlled partnerships and limited liability companies, has acquired and will continue to acquire surgical facilities with prior operating histories. Such facilities may have unknown or contingent liabilities, including liabilities for failure to comply with health care laws and regulations, such as billing and reimbursement, fraud and abuse and similar anti-referral laws. Although the Company attempts to assure itself that no such liabilities exist and obtains indemnification from prospective sellers covering such matters and institutes policies designed to conform centers to its standards following completion of acquisitions, there can be no assurance that the Company will not become liable for past activities that may later be asserted to be improper by private plaintiffs or government agencies. There can be no assurance that any such matter will be covered by indemnification or, if covered, that the liability sustained will not exceed contractual limits or the financial capacity of the indemnifying party.
The Company cannot predict whether federal or state statutory or regulatory provisions will be enacted that would prohibit or otherwise regulate relationships which the Company has established or may establish with other health care providers or have materially adverse effects on its business or revenues arising from such future actions. The Company believes, however, that it will be able to adjust its operations so as to be in compliance with any regulatory or statutory provision as may be applicable.
Potential Physician Investor Liability
A majority of the physician investors in the partnerships and limited liability companies which operate the Companys surgical facilities carry general and professional liability insurance on a claims-made basis. Each investee may, however, be liable for damages to persons or property arising from occurrences at the surgical facilities. Although the various physician investors and other surgeons generally are required to obtain general and professional liability insurance with tail coverage, such individual may not be able to obtain coverage in amounts sufficient to cover all potential liability. Since most insurance policies contain exclusions, the physician investor will not be insured against all possible occurrences. In the event of an uninsured or underinsured loss, the value of an investment in the partnership interests or limited liability company membership units and the amount of distributions could be adversely affected.
14. Related Party Transactions
In addition to related party transactions discussed elsewhere in the notes to the accompanying consolidated financial statements, the consolidated financial statements include the following related party transactions. On August 23, 2007, the Company entered into a ten year advisory services and management agreement with Crestview Advisors, L.L.C. The annual management fee is $1.0 million and is payable on August 23 of each year. The Company has prepaid this annual management fee and, for the year ended December 31, 2009, has an asset of $643,845 that is included in prepaid expenses and other current assets.
As of December 31, 2009 and 2008, the Company has $545,000 and $560,000, respectively payable to physicians at one of our physician networks as a result of cash receipts in excess of expenditures for the related facilities. These amounts are included in other accrued expenses.
15. Selected Quarterly Financial Data (Unaudited)
The following is selected quarterly financial data for each of the four quarters in 2009 and 2008. Quarterly results are not necessarily representative of operations for a full year.
|
|
2009 |
|
||||||||||
|
|
First |
|
Second |
|
Third |
|
Fourth |
|
||||
|
|
(unaudited and in thousands) |
|
||||||||||
Revenues |
|
$ |
84,171 |
|
$ |
88,461 |
|
$ |
86,766 |
|
$ |
87,586 |
|
Cost of revenues |
|
57,416 |
|
62,756 |
|
64,150 |
|
64,262 |
|
||||
Income (loss) from continuing operations |
|
3,738 |
|
3,310 |
|
(3,207 |
) |
(811 |
) |
||||
Net (loss) income |
|
(2,494 |
) |
3,407 |
|
(3,030 |
) |
(950 |
) |
||||
|
|
|
|
|
|
|
|
|
|
||||
|
|
2008 |
|
||||||||||
|
|
First |
|
Second |
|
Third |
|
Fourth |
|
||||
|
|
(unaudited and in thousands) |
|
||||||||||
Revenues |
|
$ |
79,253 |
|
$ |
84,361 |
|
$ |
83,570 |
|
$ |
84,716 |
|
Cost of revenues |
|
54,380 |
|
56,011 |
|
57,539 |
|
57,514 |
|
||||
Income (loss) from continuing operations |
|
5,022 |
|
6,754 |
|
4,083 |
|
(9,357 |
) |
||||
Net income (loss) |
|
4,808 |
|
4,945 |
|
3,615 |
|
(10,509 |
) |
16. Financial Information for the Company and Its Subsidiaries
The Company conducts substantially all of its business through its subsidiaries. Presented below is condensed consolidating financial information for the Company and its subsidiaries as required by regulations of the Securities and Exchange Commission (SEC) in connection with the Companys Toggle Notes that have been registered with the SEC. The information segregates the parent company issuer, the combined wholly-owned subsidiary guarantors, the combined non-guarantors, and consolidating adjustments. The operating and investing activities of the separate legal entities are fully interdependent and integrated. Accordingly, the results of the separate legal entities are not representative of what the operating results would be on a stand-alone basis. All of the subsidiary guarantees are both full and unconditional and joint and several.
SYMBION, INC.
CONSOLIDATING BALANCE SHEET
December 31, 2009
|
|
Parent Issuer |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
11,272 |
|
$ |
14,992 |
|
$ |
21,656 |
|
$ |
|
|
$ |
47,920 |
|
Accounts receivable, net |
|
|
|
586 |
|
36,050 |
|
|
|
36,636 |
|
|||||
Inventories |
|
|
|
|
|
9,730 |
|
|
|
9,730 |
|
|||||
Prepaid expenses and other current assets |
|
4,234 |
|
416 |
|
7,861 |
|
|
|
12,511 |
|
|||||
Due from related parties |
|
106,061 |
|
|
|
|
|
(106,061 |
) |
|
|
|||||
Deferred Tax Asset - Current |
|
432 |
|
|
|
|
|
|
|
432 |
|
|||||
Current assets of discontinued operations |
|
|
|
|
|
530 |
|
|
|
530 |
|
|||||
Total current assets |
|
121,999 |
|
15,994 |
|
75,827 |
|
(106,061 |
) |
107,759 |
|
|||||
Property and equipment, net |
|
1,331 |
|
433 |
|
87,495 |
|
|
|
89,259 |
|
|||||
Goodwill and intangibles |
|
564,718 |
|
|
|
|
|
|
|
564,718 |
|
|||||
Investments in and advances to affiliates |
|
990 |
|
46,821 |
|
4,193 |
|
(34,352 |
) |
17,652 |
|
|||||
Other assets |
|
9,790 |
|
44 |
|
853 |
|
|
|
10,687 |
|
|||||
Long-term assets of discontinued operations |
|
|
|
|
|
651 |
|
|
|
651 |
|
|||||
Total assets |
|
$ |
698,828 |
|
$ |
63,292 |
|
$ |
169,019 |
|
$ |
(140,413 |
) |
$ |
790,726 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable |
|
$ |
15 |
|
$ |
136 |
|
$ |
8,155 |
|
$ |
|
|
$ |
8,306 |
|
Accrued payroll and benefits |
|
464 |
|
593 |
|
4,865 |
|
|
|
5,922 |
|
|||||
Due to related parties |
|
|
|
61,080 |
|
44,981 |
|
(106,061 |
) |
|
|
|||||
Other accrued expenses |
|
17,296 |
|
390 |
|
13,666 |
|
|
|
31,352 |
|
|||||
Current maturities of long-term debt |
|
10,865 |
|
|
|
9,347 |
|
|
|
20,212 |
|
|||||
Current liabilities of discontinued operations |
|
|
|
|
|
1,186 |
|
|
|
1,186 |
|
|||||
Total current liabilities |
|
28,640 |
|
62,199 |
|
82,200 |
|
(106,061 |
) |
66,978 |
|
|||||
Long-term debt, less current maturities |
|
428,655 |
|
|
|
16,353 |
|
|
|
445,008 |
|
|||||
Deferred income tax payable |
|
40,424 |
|
|
|
352 |
|
|
|
40,776 |
|
|||||
Other liabilities |
|
3,503 |
|
103 |
|
2,673 |
|
|
|
6,279 |
|
|||||
Long-term liabilities of discontinued operations |
|
|
|
|
|
3,330 |
|
|
|
3,330 |
|
|||||
Noncontrolling interest - redeemable |
|
|
|
|
|
31,546 |
|
|
|
31,546 |
|
|||||
Total Symbion, Inc. stockholders equity |
|
197,606 |
|
990 |
|
29,169 |
|
(34,352 |
) |
193,413 |
|
|||||
Noncontrolling interests - nonredeemable |
|
|
|
|
|
3,396 |
|
|
|
3,396 |
|
|||||
Total equity |
|
197,606 |
|
990 |
|
32,565 |
|
(34,352 |
) |
196,809 |
|
|||||
Total liabilities and stockholders equity |
|
$ |
698,828 |
|
$ |
63,292 |
|
$ |
169,019 |
|
$ |
(140,413 |
) |
$ |
790,726 |
|
SYMBION, INC.
CONSOLIDATING BALANCE SHEET
December 31, 2008
|
|
Parent Issuer |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
4,369 |
|
$ |
9,801 |
|
$ |
27,663 |
|
$ |
|
|
$ |
41,833 |
|
Accounts receivable, net |
|
|
|
654 |
|
34,053 |
|
|
|
34,707 |
|
|||||
Inventories |
|
|
|
|
|
9,050 |
|
|
|
9,050 |
|
|||||
Prepaid expenses and other current assets |
|
6,481 |
|
585 |
|
5,653 |
|
|
|
12,719 |
|
|||||
Due from related parties |
|
78,735 |
|
|
|
|
|
(78,735 |
) |
|
|
|||||
Deferred Tax Asset - Current |
|
825 |
|
|
|
|
|
|
|
825 |
|
|||||
Current assets of discontinued operations |
|
|
|
|
|
1,104 |
|
|
|
1,104 |
|
|||||
Total current assets |
|
90,410 |
|
11,040 |
|
77,523 |
|
(78,735 |
) |
100,238 |
|
|||||
Property and equipment, net |
|
3,900 |
|
878 |
|
89,907 |
|
|
|
94,685 |
|
|||||
Goodwill and intangibles |
|
561,401 |
|
|
|
|
|
|
|
561,401 |
|
|||||
Investments in and advances to affiliates |
|
6,033 |
|
22,006 |
|
1,019 |
|
(14,526 |
) |
14,532 |
|
|||||
Other assets |
|
11,345 |
|
85 |
|
445 |
|
|
|
11,875 |
|
|||||
Long-term assets of discontinued operations |
|
|
|
|
|
833 |
|
|
|
833 |
|
|||||
Total assets |
|
$ |
673,089 |
|
$ |
34,009 |
|
$ |
169,727 |
|
$ |
(93,261 |
) |
$ |
783,564 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable |
|
$ |
1 |
|
$ |
53 |
|
$ |
5,338 |
|
$ |
|
|
$ |
5,392 |
|
Accrued payroll and benefits |
|
1,822 |
|
678 |
|
5,000 |
|
|
|
7,500 |
|
|||||
Due to related parties |
|
|
|
27,030 |
|
51,705 |
|
(78,735 |
) |
|
|
|||||
Other accrued expenses |
|
15,373 |
|
77 |
|
6,790 |
|
|
|
22,240 |
|
|||||
Current maturities of long-term debt |
|
3,998 |
|
17 |
|
8,190 |
|
|
|
12,205 |
|
|||||
Current liabilities of discontinued operations |
|
|
|
|
|
629 |
|
|
|
629 |
|
|||||
Total current liabilities |
|
21,194 |
|
27,855 |
|
77,652 |
|
(78,735 |
) |
47,966 |
|
|||||
Long-term debt, less current maturities |
|
417,217 |
|
|
|
23,395 |
|
|
|
440,612 |
|
|||||
Other liabilities |
|
9,927 |
|
121 |
|
22,960 |
|
|
|
33,008 |
|
|||||
Deferred income tax payable |
|
12,526 |
|
|
|
|
|
|
|
12,526 |
|
|||||
Long-term liabilities of discontinued operations |
|
|
|
|
|
236 |
|
|
|
236 |
|
|||||
Noncontrolling interest - redeemable |
|
|
|
|
|
32,645 |
|
|
|
32,645 |
|
|||||
Total Symbion, Inc. stockholders equity |
|
212,225 |
|
6,033 |
|
7,474 |
|
(14,526 |
) |
211,206 |
|
|||||
Noncontrolling interests - nonredeemable |
|
|
|
|
|
5,365 |
|
|
|
5,365 |
|
|||||
Total equity |
|
212,225 |
|
6,033 |
|
12,839 |
|
(14,526 |
) |
216,571 |
|
|||||
Total liabilities and stockholders equity |
|
$ |
673,089 |
|
$ |
34,009 |
|
$ |
169,727 |
|
$ |
(93,261 |
) |
$ |
783,564 |
|
SYMBION, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2009
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Revenues |
|
$ |
35,064 |
|
$ |
9,299 |
|
$ |
317,997 |
|
$ |
(15,376 |
) |
$ |
346,984 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and benefits |
|
|
|
4,751 |
|
92,093 |
|
|
|
96,844 |
|
|||||
Supplies |
|
|
|
698 |
|
74,207 |
|
|
|
74,905 |
|
|||||
Professional and medical fees |
|
|
|
1,153 |
|
22,009 |
|
|
|
23,162 |
|
|||||
Rent and lease expense |
|
|
|
772 |
|
24,831 |
|
|
|
25,603 |
|
|||||
Other operating expenses |
|
|
|
507 |
|
27,563 |
|
|
|
28,070 |
|
|||||
Cost of revenues |
|
|
|
7,881 |
|
240,703 |
|
|
|
248,584 |
|
|||||
General and administrative expense |
|
21,448 |
|
|
|
|
|
|
|
21,448 |
|
|||||
Depreciation and amortization |
|
696 |
|
270 |
|
16,348 |
|
|
|
17,314 |
|
|||||
Provision for doubtful accounts |
|
|
|
198 |
|
3,156 |
|
|
|
3,354 |
|
|||||
Income on equity investments |
|
|
|
(2,318 |
) |
|
|
|
|
(2,318 |
) |
|||||
Impairment and (gain) loss on disposal of long-lived assets |
|
835 |
|
2,420 |
|
|
|
|
|
3,255 |
|
|||||
Proceeds from insurance settlements, net |
|
|
|
(430 |
) |
|
|
|
|
(430 |
) |
|||||
Management fees |
|
|
|
|
|
15,376 |
|
(15,376 |
) |
|
|
|||||
Equity in earnings of affiliates |
|
(23,814 |
) |
(22,542 |
) |
|
|
46,356 |
|
|
|
|||||
Total operating expenses |
|
(835 |
) |
(14,521 |
) |
275,583 |
|
30,980 |
|
291,207 |
|
|||||
Operating income (loss) |
|
35,899 |
|
23,820 |
|
42,414 |
|
(46,356 |
) |
55,777 |
|
|||||
Interest (expense) income, net |
|
(51,134 |
) |
(6 |
) |
6,159 |
|
|
|
(44,981 |
) |
|||||
(Loss) income before taxes and discontinued operations |
|
(15,235 |
) |
23,814 |
|
48,573 |
|
(46,356 |
) |
10,796 |
|
|||||
Provision for income taxes |
|
7,219 |
|
|
|
547 |
|
|
|
7,766 |
|
|||||
(Loss) income from continuing operations |
|
(22,454 |
) |
23,814 |
|
48,026 |
|
(46,356 |
) |
3,030 |
|
|||||
Loss from discontinued operations, net of taxes |
|
|
|
|
|
(6,097 |
) |
|
|
(6,097 |
) |
|||||
Net (loss) income |
|
(22,454 |
) |
23,814 |
|
41,929 |
|
(46,356 |
) |
(3,067 |
) |
|||||
Net (loss) income attributable to noncontrolling interests |
|
|
|
|
|
(19,387 |
) |
|
|
(19,387 |
) |
|||||
Net (loss) income attributable to Symbion, Inc. |
|
$ |
(22,454 |
) |
$ |
23,814 |
|
$ |
22,542 |
|
$ |
(46,356 |
) |
$ |
(22,454 |
) |
SYMBION, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2008
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Revenues |
|
$ |
35,122 |
|
$ |
10,685 |
|
$ |
301,767 |
|
$ |
(15,674 |
) |
$ |
331,900 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and benefits |
|
|
|
17,229 |
|
73,281 |
|
|
|
90,510 |
|
|||||
Supplies |
|
|
|
923 |
|
66,639 |
|
|
|
67,562 |
|
|||||
Professional and medical fees |
|
|
|
5,416 |
|
13,605 |
|
|
|
19,021 |
|
|||||
Rent and lease expense |
|
|
|
2,032 |
|
20,275 |
|
|
|
22,307 |
|
|||||
Other operating expenses |
|
|
|
3,658 |
|
22,386 |
|
|
|
26,044 |
|
|||||
Cost of revenues |
|
|
|
29,258 |
|
196,186 |
|
|
|
225,444 |
|
|||||
General and administrative expense |
|
23,923 |
|
|
|
|
|
|
|
23,923 |
|
|||||
Depreciation and amortization |
|
280 |
|
492 |
|
14,403 |
|
|
|
15,175 |
|
|||||
Provision for doubtful accounts |
|
|
|
262 |
|
3,599 |
|
|
|
3,861 |
|
|||||
Income on equity investments |
|
|
|
(1,504 |
) |
|
|
|
|
(1,504 |
) |
|||||
Impairment and (gain) loss on disposal of long-lived assets |
|
|
|
|
|
924 |
|
|
|
924 |
|
|||||
Litigation Settlements, net |
|
|
|
|
|
893 |
|
|
|
893 |
|
|||||
Management fees |
|
|
|
|
|
15,674 |
|
(15,674 |
) |
|
|
|||||
Equity in earnings of affiliates |
|
(22,312 |
) |
(39,841 |
) |
|
|
62,153 |
|
|
|
|||||
Total operating expenses |
|
1,891 |
|
(11,333 |
) |
231,679 |
|
46,479 |
|
268,716 |
|
|||||
Operating income (loss) |
|
33,231 |
|
22,018 |
|
70,088 |
|
(62,153 |
) |
63,184 |
|
|||||
Interest (expense) income, net |
|
(41,977 |
) |
294 |
|
(1,743 |
) |
|
|
(43,426 |
) |
|||||
(Loss) income before taxes and discontinued operations |
|
(8,746 |
) |
22,312 |
|
68,345 |
|
(62,153 |
) |
19,758 |
|
|||||
Provision for income taxes |
|
12,052 |
|
|
|
1,204 |
|
|
|
13,256 |
|
|||||
Income (loss) from continuing operations |
|
(20,798 |
) |
22,312 |
|
67,141 |
|
(62,153 |
) |
6,502 |
|
|||||
Loss from discontinued operations, net of taxes |
|
|
|
|
|
(3,643 |
) |
|
|
(3,643 |
) |
|||||
Net (loss) income |
|
(20,798 |
) |
22,312 |
|
63,498 |
|
(62,153 |
) |
2,859 |
|
|||||
Net loss attributable to noncontrolling interests |
|
|
|
|
|
(23,657 |
) |
|
|
(23,657 |
) |
|||||
Net (loss) income attributable to Symbion, Inc. |
|
$ |
(20,798 |
) |
$ |
22,312 |
|
$ |
39,841 |
|
$ |
(62,153 |
) |
$ |
(20,798 |
) |
SYMBION, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
For the period August 24, 2007 to December 31, 2007
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Revenues |
|
$ |
5,932 |
|
$ |
3,590 |
|
$ |
101,941 |
|
$ |
(4,823 |
) |
$ |
106,640 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and benefits |
|
|
|
1,560 |
|
28,203 |
|
|
|
29,763 |
|
|||||
Supplies |
|
|
|
299 |
|
21,633 |
|
|
|
21,932 |
|
|||||
Professional and medical fees |
|
|
|
304 |
|
6,164 |
|
|
|
6,468 |
|
|||||
Rent and lease expense |
|
|
|
215 |
|
6,823 |
|
|
|
7,038 |
|
|||||
Other operating expenses |
|
|
|
143 |
|
8,467 |
|
|
|
8,610 |
|
|||||
Cost of revenues |
|
|
|
2,521 |
|
71,290 |
|
|
|
73,811 |
|
|||||
General and administrative expense |
|
7,912 |
|
|
|
|
|
|
|
7,912 |
|
|||||
Depreciation and amortization |
|
184 |
|
360 |
|
4,188 |
|
|
|
4,732 |
|
|||||
Provision for doubtful accounts |
|
|
|
63 |
|
1,695 |
|
|
|
1,758 |
|
|||||
Income on equity investments |
|
|
|
(21 |
) |
|
|
|
|
(21 |
) |
|||||
Impairment and (gain) loss on disposal of long-lived assets |
|
2 |
|
(275 |
) |
7 |
|
|
|
(266 |
) |
|||||
Management fees |
|
|
|
|
|
4,823 |
|
(4,823 |
) |
|
|
|||||
Equity in earnings of affiliates |
|
(11,218 |
) |
(8,790 |
) |
|
|
20,008 |
|
|
|
|||||
Total operating expenses |
|
(3,120 |
) |
(6,142 |
) |
82,003 |
|
15,185 |
|
87,926 |
|
|||||
Operating income (loss) |
|
9,052 |
|
9,732 |
|
19,938 |
|
(20,008 |
) |
18,714 |
|
|||||
Interest (expense) income, net |
|
(14,006 |
) |
1,486 |
|
(2,243 |
) |
|
|
(14,763 |
) |
|||||
(Loss) income before taxes and discontinued operations |
|
(4,954 |
) |
11,218 |
|
17,695 |
|
(20,008 |
) |
3,951 |
|
|||||
Provision for income taxes |
|
(1,727 |
) |
|
|
951 |
|
|
|
(776 |
) |
|||||
Income (loss) from continuing operations |
|
(3,227 |
) |
11,218 |
|
16,744 |
|
(20,008 |
) |
4,727 |
|
|||||
Loss from discontinued operations, net of taxes |
|
|
|
|
|
(269 |
) |
|
|
(269 |
) |
|||||
Net income (loss) |
|
(3,227 |
) |
11,218 |
|
16,475 |
|
(20,008 |
) |
4,458 |
|
|||||
Net income attributable to noncontrolling interests |
|
|
|
|
|
(7,685 |
) |
|
|
(7,685 |
) |
|||||
Net income (loss) attributable to Symbion, Inc. |
|
$ |
(3,227 |
) |
$ |
11,218 |
|
$ |
8,790 |
|
$ |
(20,008 |
) |
$ |
(3,227 |
) |
SYMBION, INC.
CONSOLIDATING STATEMENT OF OPERATIONS
For the period January 1, 2007 to August 23, 2007
|
|
PREDECESSOR |
|
|||||||||||||
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Revenues |
|
$ |
10,984 |
|
$ |
6,673 |
|
$ |
188,874 |
|
$ |
(8,866 |
) |
$ |
197,665 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Salaries and benefits |
|
|
|
2,792 |
|
51,256 |
|
|
|
54,048 |
|
|||||
Supplies |
|
|
|
411 |
|
38,692 |
|
|
|
39,103 |
|
|||||
Professional and medical fees |
|
|
|
267 |
|
11,853 |
|
|
|
12,120 |
|
|||||
Rent and lease expense |
|
|
|
347 |
|
11,950 |
|
|
|
12,297 |
|
|||||
Other operating expenses |
|
|
|
245 |
|
15,028 |
|
|
|
15,273 |
|
|||||
Cost of revenues |
|
|
|
4,062 |
|
128,779 |
|
|
|
132,841 |
|
|||||
General and administrative expense |
|
23,961 |
|
|
|
|
|
|
|
23,961 |
|
|||||
Depreciation and amortization |
|
396 |
|
211 |
|
7,313 |
|
|
|
7,920 |
|
|||||
Provision for doubtful accounts |
|
|
|
98 |
|
2,593 |
|
|
|
2,691 |
|
|||||
Loss on equity investments |
|
|
|
5 |
|
|
|
|
|
5 |
|
|||||
Impairment and (gain) loss on disposal of long-lived assets |
|
(1,453 |
) |
(113 |
) |
1,289 |
|
|
|
(277 |
) |
|||||
Management fees |
|
|
|
|
|
8,866 |
|
(8,866 |
) |
|
|
|||||
Equity in earnings of affiliates |
|
(28,272 |
) |
(23,273 |
) |
|
|
51,545 |
|
|
|
|||||
Proceeds from insurance and litigation settlements, net |
|
|
|
|
|
(161 |
) |
|
|
(161 |
) |
|||||
Merger transaction expenses |
|
7,522 |
|
|
|
|
|
|
|
7,522 |
|
|||||
Total operating expenses |
|
2,154 |
|
(19,010 |
) |
148,679 |
|
42,679 |
|
174,502 |
|
|||||
Operating income (loss) |
|
8,830 |
|
25,683 |
|
40,195 |
|
(51,545 |
) |
23,163 |
|
|||||
Interest (expense) income, net |
|
(6,322 |
) |
2,589 |
|
(1,495 |
) |
|
|
(5,228 |
) |
|||||
(Loss) income before taxes and discontinued operations |
|
2,508 |
|
28,272 |
|
38,700 |
|
(51,545 |
) |
17,935 |
|
|||||
Provision (benefit) for income taxes |
|
4,683 |
|
|
|
(667 |
) |
|
|
4,016 |
|
|||||
Income (loss) from continuing operations |
|
(2,175 |
) |
28,272 |
|
39,367 |
|
(51,545 |
) |
13,919 |
|
|||||
Loss from discontinued operations, net of taxes |
|
|
|
|
|
(438 |
) |
|
|
(438 |
) |
|||||
Net (loss) income |
|
(2,175 |
) |
28,272 |
|
38,929 |
|
(51,545 |
) |
13,481 |
|
|||||
Net loss attributable to noncontrolling interests |
|
|
|
|
|
(15,656 |
) |
|
|
(15,656 |
) |
|||||
Net (loss) income attributable to Symbion, Inc. |
|
$ |
(2,175 |
) |
$ |
28,272 |
|
$ |
23,273 |
|
$ |
(51,545 |
) |
$ |
(2,175 |
) |
SYMBION, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
For the year ended December 31, 2009
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(22,454 |
) |
$ |
23,814 |
|
$ |
41,929 |
|
$ |
(46,356 |
) |
$ |
(3,067 |
) |
Adjustments to reconcile net (loss) income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from discontinued operations |
|
|
|
|
|
6,097 |
|
|
|
6,097 |
|
|||||
Depreciation and amortization |
|
696 |
|
270 |
|
16,348 |
|
|
|
17,314 |
|
|||||
Amortization of deferred financing costs |
|
2,004 |
|
|
|
|
|
|
|
2,004 |
|
|||||
Non-cash payment-in-kind interest option |
|
23,263 |
|
|
|
|
|
|
|
23,263 |
|
|||||
Non-cash stock option compensation expense |
|
1,297 |
|
|
|
|
|
|
|
1,297 |
|
|||||
Non-cash recognition of other comprehensive loss into earnings |
|
2,853 |
|
|
|
|
|
|
|
2,853 |
|
|||||
Non-cash credit risk adjustment of financial instruments |
|
1,629 |
|
|
|
|
|
|
|
1,629 |
|
|||||
Non-cash losses |
|
835 |
|
1,990 |
|
|
|
|
|
2,825 |
|
|||||
Deferred income taxes |
|
8,682 |
|
|
|
|
|
|
|
8,682 |
|
|||||
Equity in earnings of consolidated affiliates |
|
(23,814 |
) |
(22,542 |
) |
|
|
46,356 |
|
|
|
|||||
Equity in earnings of unconsolidated affiliates, net of distributions received |
|
|
|
(207 |
) |
|
|
|
|
(207 |
) |
|||||
Provision for doubtful accounts |
|
|
|
198 |
|
3,156 |
|
|
|
3,354 |
|
|||||
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts receivable |
|
|
|
|
|
(4,142 |
) |
|
|
(4,142 |
) |
|||||
Income taxes receivable |
|
1,762 |
|
|
|
|
|
|
|
1,762 |
|
|||||
Other assets and liabilities |
|
20,108 |
|
1,668 |
|
(24,001 |
) |
|
|
(2,225 |
) |
|||||
Net cash provided by operating activities continuing operations |
|
16,861 |
|
5,191 |
|
39,387 |
|
|
|
61,439 |
|
|||||
Net cash used in operating activities discontinued operations |
|
|
|
|
|
(1,021 |
) |
|
|
(1,021 |
) |
|||||
Net cash provided by operating activities |
|
16,861 |
|
5,191 |
|
38,366 |
|
|
|
60,418 |
|
|||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments for acquisitions, net of cash acquired |
|
(126 |
) |
|
|
|
|
|
|
(126 |
) |
|||||
Purchases of property and equipment, net |
|
(226 |
) |
|
|
(9,635 |
) |
|
|
(9,861 |
) |
|||||
Change in other assets |
|
(724 |
) |
|
|
(694 |
) |
|
|
(1,418 |
) |
|||||
Net cash used in investing activities continuing operations |
|
(1,076 |
) |
|
|
(10,329 |
) |
|
|
(11,405 |
) |
|||||
Net cash used in investing activities discontinued operations |
|
|
|
|
|
(40 |
) |
|
|
(40 |
) |
|||||
Net cash used in investing activities |
|
(1,076 |
) |
|
|
(10,369 |
) |
|
|
(11,445 |
) |
|||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments on long-term debt |
|
(4,046 |
) |
|
|
(9,695 |
) |
|
|
(13,741 |
) |
|||||
Proceeds from debt issuances |
|
|
|
|
|
678 |
|
|
|
678 |
|
|||||
Payment of debt issuance costs |
|
(203 |
) |
|
|
|
|
|
|
(203 |
) |
|||||
Distributions to noncontrolling interests |
|
|
|
|
|
(24,971 |
) |
|
|
(24,971 |
) |
|||||
Proceeds from unit activity of consolidated facilities |
|
307 |
|
|
|
|
|
|
|
307 |
|
|||||
Change in other long-term liabilities |
|
(4,940 |
) |
|
|
|
|
|
|
(4,940 |
) |
|||||
Net cash used in financing activities continuing operations |
|
(8,882 |
) |
|
|
(33,988 |
) |
|
|
(42,870 |
) |
|||||
Net cash used in financing activities discontinued operations |
|
|
|
|
|
(16 |
) |
|
|
(16 |
) |
|||||
Net cash used in financing activities |
|
(8,882 |
) |
|
|
(34,004 |
) |
|
|
(42,886 |
) |
|||||
Net (decrease) increase in cash and cash equivalents |
|
6,903 |
|
5,191 |
|
(6,007 |
) |
|
|
6,087 |
|
|||||
Cash and cash equivalents at beginning of period |
|
4,369 |
|
9,801 |
|
27,663 |
|
|
|
41,833 |
|
|||||
Cash and cash equivalents at end of period |
|
$ |
11,272 |
|
$ |
14,992 |
|
$ |
21,656 |
|
$ |
|
|
$ |
47,920 |
|
SYMBION, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
For the year ended December 31, 2008
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(20,798 |
) |
$ |
22,312 |
|
$ |
63,498 |
|
$ |
(62,153 |
) |
$ |
2,859 |
|
Adjustments to reconcile net (loss) income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from discontinued operations |
|
|
|
|
|
3,643 |
|
|
|
3,643 |
|
|||||
Depreciation and amortization |
|
280 |
|
492 |
|
14,403 |
|
|
|
15,175 |
|
|||||
Amortization of deferred financing costs |
|
4,477 |
|
|
|
|
|
|
|
4,477 |
|
|||||
Non-cash payment-in-kind interest option |
|
17,616 |
|
|
|
|
|
|
|
17,616 |
|
|||||
Non-cash stock option compensation expense |
|
2,114 |
|
|
|
|
|
|
|
2,114 |
|
|||||
Non-cash losses |
|
|
|
|
|
924 |
|
|
|
924 |
|
|||||
Deferred income taxes |
|
13,718 |
|
|
|
|
|
|
|
13,718 |
|
|||||
Equity in earnings of consolidated affiliates |
|
(22,312 |
) |
(39,841 |
) |
|
|
62,153 |
|
|
|
|||||
Equity in earnings of affiliates, net of distributions received |
|
|
|
333 |
|
|
|
|
|
333 |
|
|||||
Provision for doubtful accounts |
|
|
|
262 |
|
3,599 |
|
|
|
3,861 |
|
|||||
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts receivable |
|
|
|
|
|
(3,536 |
) |
|
|
(3,536 |
) |
|||||
Income taxes payable |
|
1,959 |
|
|
|
|
|
|
|
1,959 |
|
|||||
Other assets and liabilities |
|
24,203 |
|
19,180 |
|
(44,260 |
) |
|
|
(877 |
) |
|||||
Net cash provided by operating activities continuing operations |
|
21,257 |
|
2,738 |
|
38,271 |
|
|
|
62,266 |
|
|||||
Net cash used in operating activities discontinued operations |
|
|
|
|
|
(43 |
) |
|
|
(43 |
) |
|||||
Net cash provided by operating activities |
|
21,257 |
|
2,738 |
|
38,228 |
|
|
|
62,223 |
|
|||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments for acquisitions, net of cash acquired |
|
|
|
|
|
(15,695 |
) |
|
|
(15,695 |
) |
|||||
Purchases of property and equipment, net |
|
(580 |
) |
|
|
(15,069 |
) |
|
|
(15,649 |
) |
|||||
Change in other assets |
|
(1,504 |
) |
|
|
|
|
|
|
(1,504 |
) |
|||||
Net cash used in investing activities continuing operations |
|
(2,084 |
) |
|
|
(30,764 |
) |
|
|
(32,848 |
) |
|||||
Net cash used in investing activities discontinued operations |
|
|
|
|
|
(358 |
) |
|
|
(358 |
) |
|||||
Net cash used in investing activities |
|
(2,084 |
) |
|
|
(31,122 |
) |
|
|
(33,206 |
) |
|||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments on long-term debt |
|
(13,513 |
) |
|
|
(5,162 |
) |
|
|
(18,675 |
) |
|||||
Repayment of bridge facility |
|
(179,937 |
) |
|
|
|
|
|
|
(179,937 |
) |
|||||
Proceeds from debt issuances |
|
12,639 |
|
|
|
852 |
|
|
|
13,491 |
|
|||||
Proceeds from issuance of Toggle Notes |
|
179,937 |
|
|
|
|
|
|
|
179,937 |
|
|||||
Payment of debt issuance costs |
|
(4,739 |
) |
|
|
|
|
|
|
(4,739 |
) |
|||||
Distributions to noncontrolling interests |
|
|
|
|
|
(23,423 |
) |
|
|
(23,423 |
) |
|||||
Proceeds from unit activity of consolidated facilities |
|
219 |
|
|
|
|
|
|
|
219 |
|
|||||
Change in other long-term liabilities |
|
(22,429 |
) |
|
|
23,866 |
|
|
|
1,437 |
|
|||||
Net cash used in financing activities continuing operations |
|
(27,823 |
) |
|
|
(3,867 |
) |
|
|
(31,690 |
) |
|||||
Net cash used in financing activities discontinued operations |
|
|
|
|
|
(150 |
) |
|
|
(150 |
) |
|||||
Net cash used in financing activities |
|
(27,823 |
) |
|
|
(4,017 |
) |
|
|
(31,840 |
) |
|||||
Net (decrease) increase in cash and cash equivalents |
|
(8,650 |
) |
2,738 |
|
3,089 |
|
|
|
(2,823 |
) |
|||||
Cash and cash equivalents at beginning of period |
|
13,019 |
|
7,063 |
|
24,574 |
|
|
|
44,656 |
|
|||||
Cash and cash equivalents at end of period |
|
$ |
4,369 |
|
$ |
9,801 |
|
$ |
27,663 |
|
$ |
|
|
$ |
41,833 |
|
SYMBION, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
For the period from August 24, 2007 through December 31, 2007
|
|
Parent |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(3,227 |
) |
$ |
11,218 |
|
$ |
16,475 |
|
$ |
(20,008 |
) |
$ |
4,458 |
|
Adjustments to reconcile net (loss) income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from discontinued operations |
|
|
|
|
|
269 |
|
|
|
269 |
|
|||||
Depreciation and amortization |
|
184 |
|
360 |
|
4,188 |
|
|
|
4,732 |
|
|||||
Non-cash stock option compensation expense |
|
409 |
|
|
|
|
|
|
|
409 |
|
|||||
Amortization of deferred financing costs |
|
1,872 |
|
|
|
|
|
|
|
1,872 |
|
|||||
Non-cash gains and losses |
|
2 |
|
(275 |
) |
304 |
|
|
|
31 |
|
|||||
Deferred income taxes |
|
2,217 |
|
|
|
|
|
|
|
2,217 |
|
|||||
Equity in earnings of affiliates |
|
(11,218 |
) |
(8,790 |
) |
|
|
20,008 |
|
|
|
|||||
Equity in earnings of unconsolidated affiliates, net of distributions received |
|
|
|
(21 |
) |
|
|
|
|
(21 |
) |
|||||
Provision for doubtful accounts |
|
|
|
63 |
|
1,695 |
|
|
|
1,758 |
|
|||||
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts receivable |
|
|
|
|
|
(90 |
) |
|
|
(90 |
) |
|||||
Income tax receivable |
|
6,096 |
|
|
|
|
|
|
|
6,096 |
|
|||||
Other assets and liabilities |
|
(5,421 |
) |
1,808 |
|
2,634 |
|
|
|
(979 |
) |
|||||
Net cash (used in) provided by operating activities continuing operations |
|
(9,086 |
) |
4,363 |
|
25,475 |
|
|
|
20,752 |
|
|||||
Net cash provided by operating activities discontinued operations |
|
|
|
|
|
580 |
|
|
|
580 |
|
|||||
Net cash (used in) provided by operating activities |
|
(9,086 |
) |
4,363 |
|
26,055 |
|
|
|
21,332 |
|
|||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments for acquisitions, net of cash acquired |
|
|
|
|
|
(9,815 |
) |
|
|
(9,815 |
) |
|||||
Purchases of property and equipment, net |
|
(306 |
) |
|
|
(6,642 |
) |
|
|
(6,948 |
) |
|||||
Change in other assets |
|
|
|
(661 |
) |
(180 |
) |
|
|
(841 |
) |
|||||
Net cash used in investing activities continuing operations |
|
(306 |
) |
(661 |
) |
(16,637 |
) |
|
|
(17,604 |
) |
|||||
Net cash used in investing activities discontinued operations |
|
|
|
|
|
(24 |
) |
|
|
(24 |
) |
|||||
Net cash used in investing activities |
|
(306 |
) |
(661 |
) |
(16,661 |
) |
|
|
(17,628 |
) |
|||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments on long-term debt |
|
(625 |
) |
|
|
(867 |
) |
|
|
(1,492 |
) |
|||||
Proceeds from debt issuances |
|
|
|
|
|
50 |
|
|
|
50 |
|
|||||
Distributions to noncontrolling interests |
|
|
|
|
|
(7,301 |
) |
|
|
(7,301 |
) |
|||||
Proceeds from capital contributions by minority partners |
|
|
|
|
|
756 |
|
|
|
756 |
|
|||||
Payment of merger costs incurred by Symbion Holdings, LLC |
|
(445 |
) |
|
|
|
|
|
|
(445 |
) |
|||||
Change in other long-term liabilities |
|
409 |
|
|
|
(1,361 |
) |
|
|
(952 |
) |
|||||
Net cash used in financing activities continuing operations |
|
(661 |
) |
|
|
(8,723 |
) |
|
|
(9,384 |
) |
|||||
Net cash used in financing activities discontinued operations |
|
|
|
|
|
(11 |
) |
|
|
(11 |
) |
|||||
Net cash used in financing activities |
|
(661 |
) |
|
|
(8,734 |
) |
|
|
(9,395 |
) |
|||||
Net (decrease) increase in cash and cash equivalents |
|
(10,053 |
) |
3,702 |
|
660 |
|
|
|
(5,691 |
) |
|||||
Cash and cash equivalents at beginning of period |
|
23,072 |
|
3,361 |
|
23,914 |
|
|
|
50,347 |
|
|||||
Cash and cash equivalents at end of period |
|
$ |
13,019 |
|
$ |
7,063 |
|
$ |
24,574 |
|
$ |
|
|
$ |
44,656 |
|
SYMBION, INC.
CONSOLIDATING STATEMENT OF CASH FLOWS
For the period from January 1 to August 23, 2007
|
|
Predecessor |
|
|||||||||||||
|
|
Parent Issuer |
|
Guarantor |
|
Combined |
|
Eliminations |
|
Total |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Net (loss) income |
|
$ |
(2,175 |
) |
$ |
28,272 |
|
$ |
38,929 |
|
$ |
(51,545 |
) |
$ |
13,481 |
|
Adjustments to reconcile net (loss) income to net cash from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Loss from discontinued operations |
|
|
|
|
|
438 |
|
|
|
438 |
|
|||||
Depreciation and amortization |
|
396 |
|
211 |
|
7,313 |
|
|
|
7,920 |
|
|||||
Non-cash stock option compensation expense |
|
9,367 |
|
|
|
970 |
|
|
|
10,337 |
|
|||||
Amortization of deferred financing costs |
|
322 |
|
|
|
|
|
|
|
322 |
|
|||||
Non-cash gains and losses |
|
(1,453 |
) |
(6,008 |
) |
7,156 |
|
|
|
(305 |
) |
|||||
Deferred income taxes |
|
13,637 |
|
|
|
|
|
|
|
13,637 |
|
|||||
Equity in earnings of consolidated affiliates |
|
(28,272 |
) |
(23,273 |
) |
|
|
51,545 |
|
|
|
|||||
Equity in earnings of unconsolidated affiliates, net of distributions received |
|
|
|
5 |
|
|
|
|
|
5 |
|
|||||
Provision for doubtful accounts |
|
|
|
98 |
|
2,593 |
|
|
|
2,691 |
|
|||||
Changes in operating assets and liabilities, net of effect of acquisitions and dispositions: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts receivable |
|
|
|
|
|
(166 |
) |
|
|
(166 |
) |
|||||
Income tax receivable |
|
(10,402 |
) |
|
|
|
|
|
|
(10,402 |
) |
|||||
Other assets and liabilities |
|
(1,977 |
) |
|
|
(3,109 |
) |
|
|
(5,086 |
) |
|||||
Net cash (used in) provided by operating activities continuing operations |
|
(20,557 |
) |
(695 |
) |
54,124 |
|
|
|
32,872 |
|
|||||
Net cash provided by operating activities discontinued operations |
|
|
|
|
|
24 |
|
|
|
24 |
|
|||||
Net cash (used in) provided by operating activities |
|
(20,557 |
) |
(695 |
) |
54,148 |
|
|
|
32,896 |
|
|||||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Payments for acquisitions, net of cash acquired |
|
|
|
|
|
(14,981 |
) |
|
|
(14,981 |
) |
|||||
Purchases of property and equipment, net |
|
|
|
|
|
(7,664 |
) |
|
|
(7,664 |
) |
|||||
Change in other assets |
|
|
|
|
|
1,401 |
|
|
|
1,401 |
|
|||||
Net cash used in investing activities continuing operations |
|
|
|
|
|
(21,244 |
) |
|
|
(21,244 |
) |
|||||
Net cash used in investing activities discontinued operations |
|
|
|
|
|
(36 |
) |
|
|
(36 |
) |
|||||
Net cash used in investing activities |
|
|
|
|
|
(21,280 |
) |
|
|
(21,280 |
) |
|||||
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|||||
Principal payments on long-term debt |
|
(159,500 |
) |
|
|
(2,055 |
) |
|
|
(161,555 |
) |
|||||
Proceeds from debt issuances |
|
455,500 |
|
|
|
3,097 |
|
|
|
458,597 |
|
|||||
Payment of debt issuance costs |
|
(12,544 |
) |
|
|
|
|
|
|
(12,544 |
) |
|||||
Distributions to noncontrolling interests |
|
|
|
|
|
(17,185 |
) |
|
|
(17,185 |
) |
|||||
Proceeds from capital contributions by minority partners |
|
|
|
|
|
2,241 |
|
|
|
2,241 |
|
|||||
Payment of merger costs incurred by Symbion Holdings, LLC |
|
(6,528 |
) |
|
|
|
|
|
|
(6,528 |
) |
|||||
Cash paid to shareholders |
|
(490,510 |
) |
|
|
|
|
|
|
(490,510 |
) |
|||||
Net proceeds from issuance of common stock |
|
239,085 |
|
|
|
|
|
|
|
239,085 |
|
|||||
Change in other long-term liabilities |
|
17,786 |
|
2,592 |
|
(20,128 |
) |
|
|
250 |
|
|||||
Net cash provided by (used in) financing activities continuing operations |
|
43,289 |
|
2,592 |
|
(34,030 |
) |
|
|
11,851 |
|
|||||
Net cash used in financing activities discontinued operations |
|
|
|
|
|
(29 |
) |
|
|
(29 |
) |
|||||
Net cash provided by (used in) financing activities |
|
43,289 |
|
2,592 |
|
(34,059 |
) |
|
|
11,822 |
|
|||||
Net increase (decrease) in cash and cash equivalents |
|
22,732 |
|
1,897 |
|
(1,191 |
) |
|
|
23,438 |
|
|||||
Cash and cash equivalents at beginning of period |
|
340 |
|
1,464 |
|
25,105 |
|
|
|
26,909 |
|
|||||
Cash and cash equivalents at end of period |
|
$ |
23,072 |
|
$ |
3,361 |
|
$ |
23,914 |
|
$ |
|
|
$ |
50,347 |
|
17. Subsequent Events
The Company has evaluated subsequent events through the date that the Consolidated Financial Statements were issued, and concluded there are no material subsequent events.
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.
|
SYMBION, INC. |
|
|
|
|
|
By: |
/s/ Richard E. Francis, Jr. |
|
|
Richard E. Francis, Jr. |
|
|
Chairman of the Board and |
|
|
Chief Executive Officer |
Dated: October 5, 2010
Exhibit Index
No. |
|
Description |
2 |
|
Agreement and Plan of Merger, dated as of April 24, 2007, by and among Symbol Acquisition, L.L.C., Symbol Merger Sub, Inc. and Symbion, Inc. (a) |
3.1 |
|
Amended Certificate of Incorporation of Symbion, Inc. (b) |
3.2 |
|
Amended and Restated Bylaws of Symbion, Inc. (b) |
4.1 |
|
Indenture, dated as of June 3, 2008, among Symbion, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (b) |
4.2 |
|
Form of Notes (included in Exhibit 4.1) |
4.3 |
|
Registration Rights Agreement, dated as of June 3, 2007, among Symbion, Inc., the subsidiaries of Symbion, Inc. party thereto as guarantors, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities LLC and Greenwich Capital Markets, Inc. (b) |
4.4 |
|
First Supplemental Indenture, dated as of September 18, 2008 among Symbion, Inc., the Guarantors named therein and U.S. Bank National Association, as Trustee (b) |
10.1 |
|
Employment Agreement, dated August 23, 2007, between Symbion, Inc. and Richard E. Francis, Jr.(b) (g) |
10.2 |
|
Employment Agreement, dated August 23, 2007, between Symbion, Inc. and Clifford G. Adlerz (b) (g) |
10.3 |
|
Credit Agreement, dated as of August 23, 2007, among Symbol Holdings Corporation, Symbol Merger Sub, Inc., the Lenders party thereto from time to time, Merrill Lynch Capital Corporation as Administrative Agent and Collateral Agent, Bank of America, N.A. as Syndication Agent, The Royal Bank of Scotland PLC and Fifth Third Bank as Co-Documentation Agents, and Merrill Lynch & Co., Merrill, Lynch, Pierce, Fenner & Smith Incorporated and Banc of America Securities LLC as Joint Lead Arrangers and Joint Lead Bookrunners (c) |
10.4 |
|
Lease Agreement, dated June 26, 2001, between Burton Hills IV Partners and Symbion, Inc. (d) |
10.5 |
|
First Amendment to Lease Agreement, dated February 9, 2004, between Burton Hills IV Partners and Symbion, Inc. (e) |
10.6 |
|
Symbion Holdings Corporation 2007 Equity Incentive Plan (b) (g) |
10.7 |
|
Symbion, Inc. Executive Change in Control Severance Plan (b) (g) |
10.8 |
|
Symbion Holdings Corporation Compensatory Equity Participation Plan (b) (g) |
10.9 |
|
Shareholders Agreement, dated as of August 23, 2007, among Symbion Holdings Corporation and the stockholders of Symbion Holdings Corporation and other persons named therein (b) |
10.10 |
|
Advisory Services and Monitoring Agreement, dated as of August 23, 2007, among Symbion, Inc., Symbion Holdings Corporation and Crestview Advisors, L.L.C. (b) |
10.11 |
|
Form of Employee Contribution Agreement (b) |
10.12 |
|
Symbion, Inc. Supplemental Executive Retirement Plan (f) (g) |
10.13 |
|
Management Rights Purchase Agreement, dated as of July 27, 2005, by and among Parthenon Management Partners, LLC, Andrew A. Brooks, M.D., Randhir S. Tuli and SymbionARC Management Services, Inc. (c) |
10.14 |
|
Interest Rate Swap Agreement, dated October 31, 2007, between Symbion, Inc and Merrill Lynch Capital Services, Inc. (c) |
21 |
|
Subsidiaries of Registrant (i) |
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (i) |
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (i) |
31.3 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.4 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (i) |
32.2 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (i) |
32.3 |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.4 |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(a) |
Incorporated by reference to exhibits filed with the Registrants Current Report on Form 8-K filed April 24, 2007 (File No. 000-50574) |
(b) |
Incorporated by reference to exhibits filed with the Registrants Registration Statement on Form S-4 (Registration No. 333-153678) |
(c) |
Incorporated by reference to exhibits filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 2008, as amended (File No. 000-50574) |
(d) |
Incorporated by reference to exhibits filed with the Registrants Registration Statement on Form S-1 (Registration No. 333-89554) |
(e) |
Incorporated by reference to exhibits filed with the Registrants Annual Report on Form 10-K for the year ended December 31, 2003 (File No. 000-50574) |
(f) |
Incorporated by reference to exhibits filed with the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 (File No. 000-50574) |
(g) |
Compensation plan or arrangement |
(i) |
Previously filed as an exhibit to the Registrants Annual Report on Form 10-K for the year ended December 31, 2009 filed March 31, 2010 (File No. 000-50574) |