8. SUPPLEMENTAL GUARANTOR INFORMATION (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure Text Block Supplement [Abstract]

Supplemental guarantor information schedules

In accordance with SEC Regulation S-X, Rule 3-10, Paragraph (d), the following tables present unaudited interim condensed consolidating financial information for: (a) RadNet, Inc. (the “Parent”) on a stand-alone basis as a guarantor of the registered senior notes due 2018 ; (b) Radnet Management, Inc., the subsidiary borrower and issuer (the “Subsidiary Issuer”) of the registered senior notes due 2018; (c) on a combined basis, the guarantor subsidiaries (the “Guarantor Subsidiaries”) of the registered senior notes due 2018, which include all other 100% owned subsidiaries of the Subsidiary Issuer; (d) on a combined basis, the non-guarantor subsidiaries, which include joint venture partnerships of which the Subsidiary Issuer holds investments of 50% or greater, as well as BRMG and the Crues Entities, which we consolidate as VIEs. Separate financial statements of the Subsidiary Issuer or the Guarantor Subsidiaries are not presented because the guarantee by the Parent and each Guarantor Subsidiary is full and unconditional, joint and several.

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

June 30, 2013

(in thousands)

(unaudited)

			Subsidiary			Guarantor		Non-Guarantor
	Parent		Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–	$	–		$	251	$	–	$	–		$	251
Accounts receivable, net		–		–			68,473		70,900		–			139,373
Current deferred tax assets		–		–			5,888		–		–			5,888
Prepaid expenses and other current assets		–		11,490			4,443		825		–			16,758
Total current assets		–		11,490			79,055		71,725		–			162,270
PROPERTY AND EQUIPMENT, NET		–		51,654			162,097		5,928		–			219,679
OTHER ASSETS
Goodwill		–		49,139			142,211		4,740		–			196,090
Other intangible assets		–		150			51,217		95		–			51,462
Deferred financing costs, net		–		11,210			–		–		–			11,210
Investment in subsidiaries		2,844		359,976			15,386		–		(378,206	)		–
Investment in joint ventures		–		1,001			27,645		–		–			28,646
Deferred tax assets, net of current portion		–		–			53,817		–		–			53,817
Deposits and other		–		1,521			1,959		79		–			3,559
Total assets	$	2,844	$	486,141		$	533,387	$	82,567	$	(378,206	)	$	726,733
LIABILITIES AND EQUITY CURRENT LIABILITIES
Intercompany	$	–	$	(153,744	)	$	102,353	$	51,391	$	–		$	–
Accounts payable, accrued expenses and other		–		49,937			47,744		10,736		–			108,417
Due to affiliates		–		–			1,230		–		–			1,230
Deferred revenue		–		–			1,348		–		–			1,348
Current portion of deferred rent		–		658			653		49		–			1,360
Current portion of notes payable		–		3,900			1,479		165		–			5,544
Current portion of obligations under capital leases		–		720			917		903		–			2,540
Total current liabilities		–		(98,529	)		155,724		63,244		–			120,439
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–		10,423			6,851		224		–			17,498
Line of Credit		–		1,000			–		–		–			1,000
Notes payable, net of current portion		–		570,011			425		1,304		–			571,740
Obligations under capital leases, net of current portion		–		392			2,217		313		–			2,922
Other non-current liabilities		–		–			8,194		–		–			8,194
Total liabilities		–		483,297			173,411		65,085		–			721,793
EQUITY
Total Radnet, Inc.'s equity		2,844		2,844			359,976		15,386		(378,206	)		2,844
Noncontrolling interests		–		–			–		2,096		–			2,096
Total equity		2,844		2,844			359,976		17,482		(378,206	)		4,940
Total liabilities and equity	$	2,844	$	486,141		$	533,387	$	82,567	$	(378,206	)	$	726,733

RADNET, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

December 31, 2012

(in thousands)

				Subsidiary			Guarantor		Non-Guarantor
	Parent			Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–		$	362		$	–	$	–	$	–		$	362
Accounts receivable, net		–			–			76,838		52,356		–			129,194
Current portion of deferred tax assets		–			–			7,607		–		–			7,607
Prepaid expenses and other current assets		–			9,735			8,308		694		–			18,737
Total current assets		–			10,097			92,753		53,050		–			155,900
PROPERTY AND EQUIPMENT, NET		–			48,025			168,401		134		–			216,560
OTHER ASSETS
Goodwill		–			48,954			144,072		845		–			193,871
Other intangible assets		–			170			51,394		110		–			51,674
Deferred financing costs		–			11,977			–		–		–			11,977
Investment in subsidiaries		(2,635	)		342,796			9,217		–		(349,378	)		–
Investment in joint ventures		–			–			28,598		–		–			28,598
Deferred tax assets, net of current portion		–			–			52,790		–		–			52,790
Deposits and other		–			1,821			1,928		–		–			3,749
Total assets	$	(2,635	)	$	463,840		$	549,153	$	54,139	$	(349,378	)	$	715,119
LIABILITIES AND EQUITY (DEFICIT) CURRENT LIABILITIES
Intercompany	$	–		$	(176,217	)	$	138,223	$	37,994	$	–		$	–
Accounts payable, accrued expenses and other		–			57,939			41,696		6,294		–			105,929
Due to affiliates		–			–			1,602		–		–			1,602
Deferred revenue		–			–			1,273		–		–			1,273
Current portion of notes payable		–			3,500			1,203		–		–			4,703
Current portion of deferred rent		–			574			590		–		–			1,164
Current portion of obligations under capital leases		–			1,186			2,756		–		–			3,942
Total current liabilities		–			(113,018	)		187,343		44,288		–			118,613
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–			9,579			6,271		–		–			15,850
Line of Credit		–			33,000			–		–		–			33,000
Notes payable, net of current portion		–			536,248			761		–		–			537,009
Obligations under capital leases, net of current portion		–			666			3,087		–		–			3,753
Other non-current liabilities		–			–			8,895		–		–			8,895
Total liabilities		–			466,475			206,357		44,288		–			717,120
EQUITY (DEFICIT)
Total Radnet, Inc.'s equity (deficit)		(2,635	)		(2,635	)		342,796		9,217		(349,378	)		(2,635	)
Noncontrolling interests		–			–			–		634		–			634
Total equity (deficit)		(2,635	)		(2,635	)		342,796		9,851		(349,378	)		(2,001	)
Total liabilities and equity (deficit)	$	(2,635	)	$	463,840		$	549,153	$	54,139	$	(349,378	)	$	715,119

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Three Months Ended June 30, 2013

(in thousands)

(unaudited)

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	36,940		$	118,924		$	27,611		$	–		$	183,475
Provision for bad debts		–		(1,362	)		(3,909	)		(1,684	)		–			(6,955	)
Net service fee revenue		–		35,578			115,015			25,927			–			176,520
OPERATING EXPENSES
Cost of operations		–		28,731			95,386			24,581			–			148,698
Depreciation and amortization		–		3,152			10,984			392			–			14,528
(Gain) loss on sale and disposal of equipment		–		(199	)		391			–			–			192
Severance costs		–		20			97			–			–			117
Total operating expenses		–		31,704			106,858			24,973			–			163,535
INCOME FROM OPERATIONS		–		3,874			8,157			954			–			12,985
OTHER EXPENSES
Interest expense		–		(1,333	)		12,575			101			–			11,343
Equity in earnings of joint ventures		–		–			(1,658	)		–			–			(1,658	)
Gain on Sale of Imaging Centers		–		–			(2,108	)		–			–			(2,108	)
Other expenses		–		120			30			–			–			150
Total other expenses		–		(1,213	)		8,839			101			–			7,727
INCOME (LOSS) BEFORE INCOME TAXES		–		5,087			(682	)		853			–			5,258
Benefit from (provision for) income taxes		–		694			(3,191	)		–			–			(2,497	)
Equity in earnings of consolidated subsidiaries		2,686		(3,095	)		778			–			(369	)		–
NET INCOME (LOSS)		2,686		2,686			(3,095	)		853			(369	)		2,761
Net income attributable to noncontrolling interests		–		–			–			75			–			75
NET INCOME (LOSS) ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	2,686	$	2,686		$	(3,095	)	$	778		$	(369	)	$	2,686

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Three Months Ended  June 30, 2012

(in thousands)

(unaudited)

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	38,168		$	118,562		$	15,016		$	–		$	171,746
Provision for bad debts		–		(1,324	)		(4,458	)		(613	)		–			(6,395	)
Net service fee revenue		–		36,844			114,104			14,403			–			165,351
OPERATING EXPENSES
Cost of operations		–		32,633			89,674			14,247			–			136,554
Depreciation and amortization		–		3,214			11,617			62			–			14,893
Loss on sale and disposal of equipment		–		102			174			–			–			276
Severance costs		–		9			154			–			–			163
Total operating expenses		–		35,958			101,619			14,309			–			151,886
INCOME FROM OPERATIONS		–		886			12,485			94			–			13,465
OTHER EXPENSES
Interest expense		–		7,934			5,541			–			–			13,475
Equity in earnings of joint ventures		–		–			(1,986	)		–			–			(1,986	)
Other expenses (income)		–		(1,437	)		93			–			–			(1,344	)
Total other expenses		–		6,497			3,648			–			–			10,145
(LOSS) INCOME BEFORE INCOME TAXES		–		(5,611	)		8,837			94			–			3,320
Provision for income taxes		–		(19	)		(397	)		(5	)		–			(421	)
Equity in earnings of consolidated subsidiaries		2,946		8,576			136			–			(11,658	)		–
NET INCOME		2,946		2,946			8,576			89			(11,658	)		2,899
Net loss attributable to noncontrolling interests		–		–			–			(47	)		–			(47	)
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	2,946	$	2,946		$	8,576		$	136		$	(11,658	)	$	2,946

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Six Months Ended June 30, 2013

(in thousands)

(unaudited)

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	74,448		$	241,653		$	47,136		$	–		$	363,237
Provision for bad debts		–		(2,747	)		(8,499	)		(2,531	)		–			(13,777	)
Net service fee revenue		–		71,701			233,154			44,605			–			349,460
OPERATING EXPENSES
Cost of operations		–		61,967			193,910			42,383			–			298,260
Depreciation and amortization		–		6,280			22,307			701			–			29,288
(Gain) loss on sale and disposal of equipment		–		(114	)		476			–			–			362
Severance costs		–		31			207			2			–			240
Total operating expenses		–		68,164			216,900			43,086			–			328,150
INCOME FROM OPERATIONS		–		3,537			16,254			1,519			–			21,310
OTHER EXPENSES
Interest expense		–		5,340			17,966			184			–			23,490
Equity in earnings of joint ventures		–		–			(2,864	)		–			–			(2,864	)
Gain on Sale of Imaging Centers				–			(2,108	)		–			–			(2,108	)
Other expenses		–		120			28			–			–			148
Total other expenses		–		5,460			13,022			184			–			18,666
(LOSS) INCOME BEFORE INCOME TAXES		–		(1,923	)		3,232			1,335			–			2,644
Benefit from (provision for) income taxes		–		694			(1,937	)		(6	)					(1,249	)
Equity in earnings of consolidated subsidiaries		1,344		2,573			1,278						(5,195	)		–
NET INCOME		1,344		1,344			2,573			1,329			(5,195	)		1,395
Net income attributable to noncontrolling interests		–		–			–			51			–			51
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	1,344	$	1,344		$	2,573		$	1,278		$	(5,195	)	$	1,344

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For The Six Months Ended June 30, 2012

(in thousands)

(unaudited)

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	72,712		$	238,143		$	29,391		$	–		$	340,246
Provision for bad debts		–		(2,591	)		(9,056	)		(1,232	)		–			(12,879	)
Net service fee revenue		–		70,121			229,087			28,159			–			327,367
OPERATING EXPENSES
Cost of operations		–		63,019			181,179			27,756			–			271,954
Depreciation and amortization		–		6,361			23,300			124			–			29,785
Loss on sale and disposal of equipment		–		239			61			–			–			300
Severance costs		–		42			544			26			–			612
Total operating expenses		–		69,661			205,084			27,906			–			302,651
INCOME FROM OPERATIONS		–		460			24,003			253			–			24,716
OTHER EXPENSES
Interest expense		–		15,912			11,130			–			–			27,042
Equity in earnings of joint ventures		–		–			(3,248	)		–			–			(3,248	)
Other (income) expense		–		(2,650	)		159			–			–			(2,491	)
Total other expenses		–		13,262			8,041			–			–			21,303
(LOSS) INCOME BEFORE INCOME TAXES		–		(12,802	)		15,962			253			–			3,413
Provision for income taxes		–		(21	)		(640	)		(5	)		–			(666	)
Equity in earnings of consolidated subsidiaries		2,835		15,658			336			–			(18,829	)		–
NET INCOME		2,835		2,835			15,658			248			(18,829	)		2,747
Net loss attributable to noncontrolling interests		–		–			–			(88	)		–			(88	)
NET INCOME ATTRIBUTABLE TO RADNET, INC. COMMON STOCKHOLDERS	$	2,835	$	2,835		$	15,658		$	336		$	(18,829	)	$	2,835

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Six Months Ended June 30, 2013

(unaudited)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	1,344		$	1,344		$	2,573		$	1,329		$	(5,195	)	$	1,395
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		–			6,280			22,307			701			–			29,288
Provision for bad debt		–			2,747			8,499			2,531			–			13,777
Equity in earnings of consolidated subsidiaries		(1,344	)		(2,573	)		(1,278	)		–			5,195			–
Distributions from consolidated subsidiaries		–			–			138			–			(138	)		–
Equity in earnings of joint ventures		–			–			(2,864	)		–			–			(2,864	)
Distributions from joint ventures		–			–			3,971			–			–			3,971
Deferred rent amortization		–			928			858			58			–			1,844
Amortization of deferred financing cost		–			1,066			–			–			–			1,066
Amortization of term loan and bond discount		–			1,025			–			–			–			1,025
(Gain) loss on sale and disposal of equipment		–			(114	)		476			–			–			362
Gain on sale of imaging centers		–			–			(2,108	)		–			–			(2,108	)
Stock-based compensation		–			395			1,187			–			–			1,582
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		–			–			(6,292	)		(16,879	)		–			(23,171	)
Other current assets		–			(1,720	)		1,269			28			–			(423	)
Other assets		–			300			(110	)		–			–			190
Deferred taxes		–			–			692									692
Deferred revenue		–			–			75			–			–			75
Accounts payable, accrued expenses and other		–			(1,763	)		(10,161	)		14,000						2,076
Net cash provided by operating activities		–			7,915			19,232			1,768			(138	)		28,777
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities		–			(350	)		(3,275	)		–			–			(3,625	)
Purchase of property and equipment		–			(8,256	)		(20,025	)		(68	)		–			(28,349	)
Proceeds from sale of equipment		–			145			360			–			–			505
Proceeds from sale of imaging centers		–			–			3,920			–			–			3,920
Proceeds from sale of joint venture interests		–			–			2,640			–			–			2,640
Purchase of equity interest in joint ventures		–			–			(1,803	)		–			–			(1,803	)
Net cash used in investing activities		–			(8,461	)		(18,183	)		(68	)		–			(26,712	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		–			(2,858	)		(1,049	)		(1,304	)		–			(5,211	)
Deferred financing costs		–			(432	)		–			–			–			(432	)
Proceeds from, net of payments, on Term Loan		–			35,122			–			–			–			35,122
Proceeds from, net of payments, on line of credit		–			(32,000	)		–			–			–			(32,000	)
Distributions paid to noncontrolling interests		–			–			–			(145	)		138			(7	)
Proceeds from issuance of common stock		–			469			–			–			–			469
Net cash provided by (used in) financing activities		–			301			(1,049	)		(1,449	)		138			(2,059	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH					(117	)		–			–			–			(117	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		–			(362	)		–			251			–			(111	)
CASH AND CASH EQUIVALENTS, beginning of period		–			362			–			–			–			362
CASH AND CASH EQUIVALENTS, end of period	$	–		$	–		$	–		$	251		$	–		$	251

RADNET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Six Months Ended June 30, 2012

(in thousands)

(unaudited)

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,835		$	2,835		$	15,658		$	248		$	(18,829	)	$	2,747
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		–			6,361			23,300			124			–			29,785
Provision for bad debt		–			2,591			9,056			1,232			–			12,879
Equity in earnings of consolidated subsidiaries		(2,835	)		(15,658	)		(336	)		–			18,829			–
Distributions from consolidated subsidiaries		–			–			642			–			(642	)		–
Equity in earnings of joint ventures		–			–			(3,248	)		–			–			(3,248	)
Distributions from joint ventures		–			–			3,375			–			–			3,375
Deferred rent amortization		–			1,388			1,194			–			–			2,582
Deferred financing cost interest expense		–			1,205			–			–			–			1,205
Amortization of bond discount		–			469			–			–			–			469
Loss on sale and disposal of equipment		–			239			61			–			–			300
Amortization of cash flow hedge		–			276			275			–			–			551
Stock-based compensation		–			426			1,280			–			–			1,706
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		–			–			(1,133	)		(12,964	)		–			(14,097	)
Other current assets		–			(460	)		(1,269	)		(158	)		–			(1,887	)
Other assets		–			(68	)		39			–			–			(29	)
Deferred revenue		–			–			(68	)		–			–			(68	)
Accounts payable, accrued expenses and other		–			17,189			(23,777	)		11,135			–			4,547
Net cash provided by (used in) operating activities		–			16,793			25,049			(383	)		(642	)		40,817
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities		–			(8,144	)		(1,773	)		–			–			(9,917	)
Purchase of property and equipment		–			(5,544	)		(19,803	)		–			–			(25,347	)
Proceeds from sale of equipment		–			43			403			–			–			446
Proceeds from sale of imaging facilities		–			–			2,300			–			–			2,300
Purchase of equity interest in joint ventures		–			–			(920	)		–			–			(920	)
Net cash used in investing activities		–			(13,645	)		(19,793	)		–			–			(33,438	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		–			(2,968	)		(5,048	)		–			–			(8,016	)
Deferred financing costs		–			–			–			–			–			–
Proceeds from, net of payments, on line of credit		–			1,500			–			–			–			1,500
Payments to counterparties of interest rate swaps, net of amounts received		–			(3,046	)		–			–			–			(3,046	)
Distributions paid to noncontrolling interests		–			–			–			(706	)		642			(64	)
Proceeds from issuance of common stock		–			–			–			–			–			–
Net cash (used in) provided by financing activities		–			(4,514	)		(5,048	)		(706	)		642			(9,626	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH								26			–						26
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		–			(1,366	)		234			(1,089	)		–			(2,221	)
CASH AND CASH EQUIVALENTS, beginning of period		–			1,366			–			1,089			–			2,455
CASH AND CASH EQUIVALENTS, end of period	$	–		$	–		$	234		$	–		$	–		$	234