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NOTE 9 - SUPPLEMENTAL GUARANTOR INFORMATION

6 Months Ended

Jun. 30, 2012

SupplementalGuarantorInformation [TextBlock]

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 senior secured term loan due 2016 and the senior notes due 2018 ; (b) Radnet Management, Inc., the subsidiary issuer (the “Subsidiary Issuer”) of the senior secured term loan due 2016 and the senior notes due 2018; (c) on a combined basis, the guarantor subsidiaries (the “Guarantor Subsidiaries”) of the senior secured term loan due 2016 and the 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, which we consolidate as a VIE. 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.

				Subsidiary			Guarantor		Non-Guarantor
	Parent			Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–		$	–		$	234	$	–	$	–		$	234
Accounts receivable, net		–			–			73,377		58,066		–			131,443
Prepaid expenses and other current assets		–			12,375			8,042		754		–			21,171
Total current assets		–			12,375			81,653		58,820		–			152,848
PROPERTY AND EQUIPMENT, NET		–			47,854			170,432		758		–			219,044
OTHER ASSETS															–
Goodwill		–			48,265			117,050		845		–			166,160
Other intangible assets		–			205			51,153		125		–			51,483
Deferred financing costs, net		–			11,948			–		–		–			11,948
Investment in subsidiaries		(65,755	)		265,332			9,667		–		(209,244	)		–
Investment in joint ventures		–			–			23,119		–		–			23,119
Deposits and other		–			1,347			1,660		–		–			3,007
Total assets	$	(65,755	)	$	387,326		$	454,734	$	60,548	$	(209,244	)	$	627,609
LIABILITIES AND EQUITY DEFICIT
CURRENT LIABILITIES
Intercompany	$	–		$	(164,869	)	$	122,677	$	42,192	$	–		$	–
Accounts payable, accrued expenses and other		–			68,985			32,162		7,892		–			109,039
Due to affiliates		–			–			4,490		–		–			4,490
Deferred revenue		–			–			1,008		–		–			1,008
Current portion of notes payable		–			2,980			3,295		–		–			6,275
Current portion of deferred rent		–			517			506		–		–			1,023
Current portion of obligations under capital leases		–			1,745			2,862		–		–			4,607
Total current liabilities		–			(90,642	)		167,000		50,084		–			126,442
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–			9,106			5,859		–		–			14,965
Deferred taxes		–			–			277		–		–			277
Line of credit		–			59,500			–		–		–			59,500
Notes payable, net of current portion		–			473,264			8,003		–		–			481,267
Obligations under capital leases, net of current portion		–			1,853			429		–		–			2,282
Other non-current liabilities		–			–			7,834		–		–			7,834
Total liabilities		–			453,081			189,402		50,084		–			692,567

EQUITY DEFICIT
Total RadNet, Inc.'s equity deficit		(65,755	)		(65,755	)		265,332		9,667		(209,244	)		(65,755	)
Noncontrolling interests		–			–			–		797		–			797
Total equity deficit		(65,755	)		(65,755	)		265,332		10,464		(209,244	)		(64,958	)
Total liabilities and equity deficit	$	(65,755	)	$	387,326		$	454,734	$	60,548	$	(209,244	)	$	627,609

				Subsidiary			Guarantor		Non-Guarantor
	Parent			Issuer			Subsidiaries		Subsidiaries		Eliminations			Consolidated

ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	–		$	1,366		$	–	$	1,089	$	–		$	2,455
Accounts receivable, net		–			–			78,229		50,203		–			128,432
Asset held for sale		–			–			2,300		–		–			2,300
Prepaid expenses and other current assets		–			11,858			6,651		631		–			19,140
Total current assets		–			13,224			87,180		51,923		–			152,327
PROPERTY AND EQUIPMENT, NET		–			46,445			168,213		869		–			215,527
OTHER ASSETS															–
Goodwill		–			42,784			115,878		845		–			159,507
Other intangible assets		–			50			52,916		139		–			53,105
Deferred financing costs, net		–			13,490			–		–		–			13,490
Investment in subsidiaries		(70,756	)		249,763			9,974		–		(188,981	)		–
Investment in joint ventures		–			–			22,326		–		–			22,326
Deposits and other		–			1,279			1,627		–		–			2,906
Total assets	$	(70,756	)	$	367,035		$	458,114	$	53,776	$	(188,981	)	$	619,188
LIABILITIES AND EQUITY DEFICIT
CURRENT LIABILITIES
Intercompany	$	–		$	(160,017	)	$	124,679	$	35,338	$	–		$	–
Accounts payable, accrued expenses and other		–			50,262			45,324		7,515		–			103,101
Due to affiliates		–			–			3,762		–		–			3,762
Deferred revenue		–			–			1,076		–		–			1,076
Current portion of notes payable		–			2,981			3,627		–		–			6,608
Current portion of deferred rent		–			502			497		–		–			999
Current portion of obligations under capital leases		–			2,996			3,838		–		–			6,834
Total current liabilities		–			(103,276	)		182,803		42,853		–			122,380
LONG-TERM LIABILITIES
Deferred rent, net of current portion		–			7,734			4,673		–		–			12,407
Deferred taxes		–			–			277		–		–			277
Line of Credit		–			58,000			–		–		–			58,000
Notes payable, net of current portion		–			474,165			9,881		–		–			484,046
Obligations under capital leases, net of current portion		–			1,168			2,170		–		–			3,338
Other non-current liabilities		–			–			8,547		–		–			8,547
Total liabilities		–			437,791			208,351		42,853		–			688,995

EQUITY DEFICIT
Total RadNet, Inc.'s equity deficit		(70,756	)		(70,756	)		249,763		9,974		(188,981	)		(70,756	)
Noncontrolling interests		–			–			–		949		–			949
Total equity deficit		(70,756	)		(70,756	)		249,763		10,923		(188,981	)		(69,807	)
Total liabilities and equity deficit	$	(70,756	)	$	367,035		$	458,114	$	53,776	$	(188,981	)	$	619,188

			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
Operating expenses		–		32,633			89,674			14,247			–			136,554
Depreciation and amortization		–		3,214			11,617			62			–			14,893
Loss on sale 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
Other (income) expense		–		(1,437	)		93			–			–			(1,344	)
Total other expenses		–		6,497			5,634			–			–			12,131

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–		(5,611	)		6,851			94			–			1,334
Provision for income taxes		–		(19	)		(397	)		(5	)		–			(421	)
Equity in earnings of consolidated subsidiaries		2,946		8,576			136			–			(11,658	)		–
Equity in earnings of joint ventures		–		–			1,986			–			–			1,986
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

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	31,299		$	105,684		$	16,387		$	–		$	153,370
Provision for bad debts		–		(1,155	)		(3,827	)		(689	)		–			(5,671	)
Net service fee revenue		–		30,144			101,857			15,698			–			147,699

OPERATING EXPENSES
Operating expenses		–		27,166			76,877			15,070			–			119,113
Depreciation and amortization		–		3,513			10,672			111			–			14,296
(Gain) loss on sale and disposal of equipment		–		(1,650	)		294			–			–			(1,356	)
Severance costs		–		120			389			–			–			509
Total operating expenses		–		29,149			88,232			15,181			–			132,562


INCOME FROM OPERATIONS		–		995			13,625			517			–			15,137

OTHER EXPENSES
Interest expense		–		7,601			5,532			17			–			13,150
Other income		–		(689	)		–			–			–			(689	)
Total other expenses		–		6,912			5,532			17			–			12,461

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–		(5,917	)		8,093			500			–			2,676
Provision for income taxes		–		(18	)		(315	)		(4	)		–			(337	)
Equity in earnings of consolidated subsidiaries		3,521		9,456			411			–			(13,388	)		–
Equity in earnings of joint ventures		–		–			1,267			–			–			1,267
NET INCOME		3,521		3,521			9,456			496			(13,388	)		3,606
Net income attributable to noncontrolling interests		–		–			–			85			–			85
NET INCOME ATTRIBUTABLE TO RADNET, INC.COMMON STOCKHOLDERS	$	3,521	$	3,521		$	9,456		$	411		$	(13,388	)	$	3,521

			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
Operating expenses		–		63,019			181,179			27,756			–			271,954
Depreciation and amortization		–		6,361			23,300			124			–			29,785
Loss on sale 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
Other (income) expense		–		(2,650	)		159			–			–			(2,491	)
Total other expenses		–		13,262			11,289			–			–			24,551

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–		(12,802	)		12,714			253			–			165
Provision for income taxes		–		(21	)		(640	)		(5	)		–			(666	)
Equity in earnings of consolidated subsidiaries		2,835		15,658			336			–			(18,829	)		–
Equity in earnings of joint ventures		–		–			3,248			–			–			3,248
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

			Subsidiary			Guarantor			Non-Guarantor
	Parent		Issuer			Subsidiaries			Subsidiaries			Eliminations			Consolidated
NET SERVICE FEE REVENUE
Service fee revenue, net of contractual allowances and discounts	$	–	$	62,415		$	203,523		$	31,515		$	–		$	297,453
Provision for bad debts		–		(2,146	)		(7,315	)		(1,241	)		–			(10,702	)
Net service fee revenue		–		60,269			196,208			30,274			–			286,751

OPERATING EXPENSES
Operating expenses		–		53,894			151,989			29,058			–			234,941
Depreciation and amortization		–		7,009			20,987			221			–			28,217
(Gain) loss on sale and disposal of equipment		–		(2,063	)		466			–			–			(1,597	)
Severance costs		–		189			465			–			–			654
Total operating expenses		–		59,029			173,907			29,279			–			262,215


INCOME FROM OPERATIONS		–		1,240			22,301			995			–			24,536

OTHER EXPENSES
Interest expense		–		14,920			11,110			35			–			26,065
Other income		–		(2,060	)		–			–			–			(2,060	)
Total other expenses		–		12,860			11,110			35			–			24,005

(LOSS) INCOME BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF JOINT VENTURES		–		(11,620	)		11,191			960			–			531
Provision for income taxes		–		(31	)		(447	)		(6	)		–			(484	)
Equity in earnings of consolidated subsidiaries		2,645		14,296			801			–			(17,742	)		–
Equity in earnings of joint ventures		–		–			2,751			–			–			2,751
NET INCOME		2,645		2,645			14,296			954			(17,742	)		2,798
Net income attributable to noncontrolling interests		–		–			–			153			–			153
NET INCOME ATTRIBUTABLE TO RADNET, INC.COMMON STOCKHOLDERS	$	2,645	$	2,645		$	14,296		$	801		$	(17,742	)	$	2,645

				Subsidiary			Guarantor			Non-Guarantor
	Parent			Issuer			Subsidiaries			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
Amortization of deferred financing cost		–			1,542			–			–			–			1,542
Amortization of bond discount		–			132			–			–			–			132
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 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

	Parent			Subsidiary Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Consolidated

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	2,645		$	2,645		$	14,296		$	954		$	(17,742	)	$	2,798
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		—			7,009			20,987			221			—			28,217
Provision for bad debt		—			2,146			7,315			1,241			—			10,702
Equity in earnings of consolidated subsidiaries		(2,645	)		(14,296	)		(801	)		—			17,742			—
Distributions from consolidated subsidiaries		—			—			732			—			(732	)		—
Equity in earnings of joint ventures		—			—			(2,751	)		—			—			(2,751	)
Distributions from joint ventures		—			—			2,370			—			—			2,370
Deferred rent amortization		—			985			325			—			—			1,310
Amortization of deferred financing cost		—			1,467			—			—			—			1,467
Amortization of bond discount		—			119			—			—			—			119
Loss (gain) on sale and disposal of equipment		—			(2,063	)		466			—			—			(1,597	)
Amortization of cash flow hedge		—			612			—			—			—			612
Stock-based compensation		—			448			1,342			—			—			1,790
Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in purchase transactions:
Accounts receivable		—			—			(21,199	)		(9,315	)		—			(30,514	)
Other current assets		—			(114	)		(1,163	)		(86	)		—			(1,363	)
Other assets		—			(230	)		3			—			—			(227	)
Deferred revenue		—			—			(230	)		—			—			(230	)
Accounts payable, accrued expenses and other		—			(14,575	)		16,413			8,326			—			10,164
Net cash (used in) provided by operating activities		—			(15,847	)		38,105			1,341			(732	)		22,867
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of imaging facilities		—			—			(11,529	)		—			—			(11,529	)
Proceeds from insurance claims on damaged equipment		—			2,151			318						—			2,469
Purchase of property and equipment		—			(5,315	)		(18,989	)		(611	)		—			(24,915	)
Proceeds from sale of equipment		—			—			291			—			—			291
Purchase of equity interest in joint ventures		—			—			(1,500	)		—			—			(1,500	)
Net cash used in investing activities		—			(3,164	)		(31,409	)		(611	)		—			(35,184	)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on notes and leases payable		—			(3,700	)		(6,731	)		(171	)		—			(10,602	)
Deferred financing costs		—			(217	)		—			—			—			(217	)
Proceeds from, net of payments, on line of credit		—			25,700			—			—			—			25,700
Payments to counterparties of interest rate swaps, net of payments received		—			(3,219	)		—			—			—			(3,219	)
Distributions paid to noncontrolling interests		—			—			—			(803	)		732			(71	)
Proceeds from issuance of common stock		—			242			—			—			—			242
Net cash provided by (used in) financing activities		—			18,806			(6,731	)		(974	)		732			11,833
EFFECT OF EXCHANGE RATE CHANGES ON CASH		—			—			35			—			—			35
NET DECREASE IN CASH AND CASH EQUIVALENTS		—			(205	)		—			(244	)		—			(449	)
CASH AND CASH EQUIVALENTS, beginning of period		—			205			—			422			—			627
CASH AND CASH EQUIVALENTS, end of period	$	—		$	—		$	—		$	178		$	—		$	178