Depreciation and amortization expense decreased $168,000 in 2007 compared to 2006.
Minority interest in consolidated income for 2007 increased $2,291,000 (5%) compared to 2006, as a result of
increases in minority interest percentages at certain partnerships.
Provision for income taxes in 2007 increased $1,709,000 compared to 2006 due to lower taxable loss in 2007 than
2006.
Liquidity and Capital Resources
Cash Flows
Our cash and cash equivalents were $22,854,000 and $25,198,000 at December 31, 2008 and 2007, respectively.
While our subsidiaries generally distribute all of their available cash quarterly, after establishing reserves
for estimated capital expenditures and working capital, these distributions are made just after quarter end which
leads to an accumulated cash balance at the end of each quarter. For the years ended December 31, 2008 and 2007,
our subsidiaries distributed cash of approximately $53,757,000 and $42,736,000, respectively, to minority
interest holders. In 2009, we anticipate that our subsidiaries will begin making distributions on a monthly
basis rather than a quarterly basis.
Cash provided by our operations, after minority interest, was $70,845,000 for the year ended December 31, 2008
and $61,877,000 for the year ended December 31, 2007. From 2007 to 2008, fee and other revenue collected
increased by $23,044,000 due primarily to increased revenues from our acquisitions. Cash paid to employees,
suppliers of goods and others increased by $13,578,000 in 2008. This fluctuation is primarily attributable to
increased operating expenses from our acquisitions and significant pay down of certain accrued expenses related
to our AMPI acquisition.
Cash used by our investing activities for the year ended December 31, 2008, was $52,311,000. We utilized
$49,487,000 in 2008 to acquire assets or interests in certain entities. Approximately $35 million of that cash
was used to acquire the Ocean services contract, $10 million was used to acquire AMPI, and $6.3 million to
acquire Uropath. In addition we increased our interest in certain existing litho partnerships. We purchased
equipment and leasehold improvements totaling $11,779,000 in 2008. Cash used by our investing activities for the
year ended December 31, 2007, was $18,757,000. We used approximately $8 million in cash to acquire our interests
in the new Keystone partnership and we used $4 million to acquire increased ownership in two other partnerships.
We purchased equipment and leasehold improvements totaling $9,469,000 in 2007.
Cash used in our financing activities for the year ended December 31, 2008, was $20,878,000, primarily due to
distributions to minority interests of $53,757,000 and payments on notes payable of $14,508,000 partially offset
by borrowings on our revolving line of credit of $50 million and on notes payable of $1,747,000. Cash used in our
financing activities for the year ended December 31, 2007, was $45,581,000, primarily due to distributions to
minority interests of $42,736,000 and payments on notes payable of $5,760,000 partially offset by borrowings on
notes payable of $2,546,000.
Accounts receivable as of December 31, 2008 has increased $5,798,000 from December 31, 2007. This increase
relates primarily to our purchases of AMPI and Uropath, whose accounts receivable at acquisition totaled
$3,072,000 and $1,040,000, respectively, as well as increases related primarily to higher revenues and to the
timing of collections.
Inventory as of December 31, 2008 totaled $8,843,000 and decreased $1,378,000 from December 31, 2007.
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