Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Thousands, except Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Net operating revenues | $1,519,041 | $1,407,304 | $2,966,681 | $2,752,028 |
Operating expenses and charges: | ||||
Patient care costs | 1,051,879 | 973,286 | 2,057,765 | 1,903,495 |
General and administrative | 132,166 | 125,199 | 259,439 | 245,964 |
Depreciation and amortization | 58,185 | 52,892 | 115,308 | 105,703 |
Provision for uncollectible accounts | 41,233 | 37,497 | 77,969 | 72,128 |
Equity investment (income) loss | (376) | (4) | (358) | 523 |
Total operating expenses and charges | 1,283,087 | 1,188,870 | 2,510,123 | 2,327,813 |
Operating income | 235,954 | 218,434 | 456,558 | 424,215 |
Debt expense | (47,088) | (55,320) | (95,389) | (114,386) |
Other income | 1,273 | 2,987 | 2,027 | 7,850 |
Income before income taxes | 190,139 | 166,101 | 363,196 | 317,679 |
Income tax expense | 70,507 | 58,273 | 135,290 | 113,843 |
Net income | 119,632 | 107,828 | 227,906 | 203,836 |
Less: Net income attributable to noncontrolling interests | (13,813) | (12,877) | (25,876) | (21,951) |
Net income attributable to DaVita Inc. | $105,819 | $94,951 | $202,030 | $181,885 |
Earnings per share: | ||||
Basic earnings per share attributable to DaVita Inc. | 1.02 | 0.91 | 1.95 | 1.71 |
Diluted earnings per share attributable to DaVita Inc. | 1.02 | 0.9 | 1.94 | 1.7 |
Weighted average shares for earnings per share: | ||||
Basic | 103,705,683 | 104,814,817 | 103,791,579 | 106,082,024 |
Diluted | 103,925,843 | 105,617,173 | 104,166,964 | 106,927,556 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
ASSETS | ||
Cash and cash equivalents | $544,113 | $410,881 |
Short-term investments | 19,109 | 35,532 |
Accounts receivable, less allowance of $222,067 and $211,222 | 1,128,330 | 1,075,457 |
Inventories | 65,354 | 84,174 |
Other receivables | 226,931 | 239,165 |
Other current assets | 37,851 | 33,761 |
Income tax receivable | 0 | 32,130 |
Deferred income taxes | 211,709 | 217,196 |
Total current assets | 2,233,397 | 2,128,296 |
Property and equipment, net | 1,075,349 | 1,048,075 |
Amortizable intangibles, net | 148,923 | 160,521 |
Investments in third-party dialysis businesses | 24,144 | 19,274 |
Long-term investments | 6,827 | 5,656 |
Other long-term assets | 44,104 | 47,330 |
Goodwill | 3,908,290 | 3,876,931 |
Assets, Total | 7,441,034 | 7,286,083 |
LIABILITIES AND EQUITY | ||
Accounts payable | 230,576 | 282,883 |
Other liabilities | 453,048 | 495,239 |
Accrued compensation and benefits | 329,517 | 312,216 |
Current portion of long-term debt | 92,290 | 72,725 |
Income taxes payable | 3,409 | 0 |
Total current liabilities | 1,108,840 | 1,163,063 |
Long-term debt | 3,579,417 | 3,622,421 |
Other long-term liabilities | 100,209 | 101,442 |
Alliance and product supply agreement, net | 33,312 | 35,977 |
Deferred income taxes | 274,303 | 244,884 |
Total liabilities | 5,096,081 | 5,167,787 |
Commitments and contingencies | 0 | 0 |
Noncontrolling interests subject to put provisions | 288,458 | 291,397 |
Equity: | ||
Preferred stock ($0.001 par value, 5,000,000 shares authorized; none issued) | 0 | 0 |
Common stock ($0.001 par value, 450,000,000 shares authorized; 134,862,283 shares issued; 103,989,672 and 103,753,673 shares outstanding) | 135 | 135 |
Additional paid-in capital | 620,259 | 584,358 |
Retained earnings | 2,091,480 | 1,889,450 |
Treasury stock, at cost (30,872,611 and 31,108,610 shares) | (701,783) | (691,857) |
Accumulated other comprehensive loss | (10,033) | (14,339) |
Total DaVita Inc. shareholders' equity | 2,000,058 | 1,767,747 |
Noncontrolling interests not subject to put provisions | 56,437 | 59,152 |
Total equity | 2,056,495 | 1,826,899 |
Liabilities and Stockholders' Equity, Total | $7,441,034 | $7,286,083 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Thousands, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Accounts receivable, allowance | $222,067 | $211,222 |
Preferred stock, par value | 0.001 | 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 0 | 0 |
Common stock, par value | 0.001 | 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 134,862,283 | 134,862,283 |
Common stock, shares outstanding | 103,989,672 | 103,753,673 |
Treasury stock, shares | 30,872,611 | 31,108,610 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash flows from operating activities: | ||
Net income | $227,906 | $203,836 |
Adjustments to reconcile net income to cash provided by operating activities: | ||
Depreciation and amortization | 115,308 | 105,703 |
Stock-based compensation expense | 22,412 | 19,216 |
Tax benefits from stock award exercises | 9,974 | 5,264 |
Excess tax benefits from stock award exercises | (7,591) | (3,055) |
Deferred income taxes | 30,006 | 17,171 |
Equity investment (income) loss | (358) | 523 |
Loss on disposal of assets | 4,813 | 4,462 |
Non-cash debt and non-cash rent charges | 6,567 | 6,953 |
Changes in operating assets and liabilities, other than from acquisitions and divestitures: | ||
Accounts receivable | (54,073) | (119,996) |
Inventories | 19,044 | (301) |
Other receivables and other current assets | 4,026 | (12,493) |
Other long-term assets | 3,324 | (10,344) |
Accounts payable | (51,960) | (18,255) |
Accrued compensation and benefits | 37,077 | 4,091 |
Other current liabilities | (42,359) | 58,078 |
Income taxes | 35,535 | (10,074) |
Other long-term liabilities | (13,019) | 4,178 |
Net cash provided by operating activities | 346,632 | 254,957 |
Cash flows from investing activities: | ||
Additions of property and equipment, net | (138,205) | (145,007) |
Acquisitions | (43,314) | (46,763) |
Proceeds from asset sales | 5,784 | 125 |
Purchase of investments available for sale | (1,429) | (1,352) |
Purchase of investments held-to-maturity | (15,193) | (15,777) |
Proceeds from sale of investments available for sale | 16,537 | 5,321 |
Proceeds from maturities of investments held-to-maturity | 15,620 | 15,462 |
Distributions received on equity investments | 88 | 513 |
Purchase of intangible assets | (260) | (65) |
Net cash used in investing activities | (160,372) | (187,543) |
Cash flows from financing activities: | ||
Borrowings | 9,114,319 | 8,397,822 |
Payments on long-term debt | (9,136,951) | (8,397,476) |
Deferred financing costs | (42) | (130) |
Purchase of treasury stock | (32,016) | (169,673) |
Excess tax benefits from stock award exercises | 7,591 | 3,055 |
Stock award exercises and other share issuances, net | 16,691 | 12,770 |
Distributions to noncontrolling interests | (29,895) | (29,423) |
Contributions from noncontrolling interests | 6,504 | 10,048 |
Proceeds from sales of additional noncontrolling interests | 5,475 | 8,422 |
Purchases from noncontrolling interests | (4,704) | (22,889) |
Net cash used in financing activities | (53,028) | (187,474) |
Net increase (decrease) in cash and cash equivalents | 133,232 | (120,060) |
Cash and cash equivalents at beginning of period | 410,881 | 447,046 |
Cash and cash equivalents at end of period | $544,113 | $326,986 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||||||||
In Thousands | Non-controlling interests subject to put provisions
| Common stock Amount
| Additional paid-in capital
| Retained earnings
| Treasury stock Amount
| Accumulated Other Comprehensive Income [Member]
| Non-controlling interests not subject to put provisions
| Total
| ||
Beginning Balance at Dec. 31, 2007 | 134,862 | (27,732) | ||||||||
Beginning Balance at Dec. 31, 2007 | $330,467 | $135 | $479,115 | $1,515,290 | ($487,744) | ($2,511) | $48,178 | $1,504,285 | ||
Comprehensive income: | ||||||||||
Beginning Balance at Dec. 31, 2007 | 134,862 | (27,732) | ||||||||
Beginning Balance at Dec. 31, 2007 | 330,467 | 135 | 479,115 | 1,515,290 | (487,744) | (2,511) | 48,178 | 1,504,285 | ||
Comprehensive income: | ||||||||||
Ending Balance at Dec. 31, 2008 | 1,826,899 | |||||||||
Comprehensive income: | ||||||||||
Beginning Balance at Dec. 31, 2008 | 134,862 | |||||||||
Beginning Balance at Dec. 31, 2008 | 135 | 1,826,899 | ||||||||
Comprehensive income: | ||||||||||
Net income | 227,906 | |||||||||
Ending Balance at Jun. 30, 2009 | 2,056,495 | |||||||||
Beginning Balance at Mar. 31, 2009 | 134,862 | |||||||||
Beginning Balance at Mar. 31, 2009 | 135 | |||||||||
Comprehensive income: | ||||||||||
Ending Balance at Jun. 30, 2009 | $135 | |||||||||
Ending Balance at Jun. 30, 2009 | 134,862 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
1.Condensed consolidated interim financial statements | 1. Condensed consolidated interim financial statements The condensed consolidated interim financial statements included in this report are prepared by the Company without audit. In the opinion of management, all adjustments consisting only of normal recurring items necessary for a fair presentation of the results of operations are reflected in these consolidated interim financial statements. All significant intercompany accounts and transactions have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. The most significant estimates and assumptions underlying these financial statements and accompanying notes generally involve revenue recognition and provisions for uncollectible accounts, impairments and valuation adjustments, fair value estimates, accounting for income taxes, variable compensation accruals, purchase accounting valuation estimates and stock-based compensation. The results of operations for the six months ended June30, 2009 are not necessarily indicative of the operating results for the full year. The consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K for the year ended December31, 2008. Prior year balances and amounts have been classified to conform to the current year presentation. |
2.Significant new accounting policies | 2. Significant new accounting policies On June29, 2009, the Financial Accounting Standards Board (FASB) issued SFAS No.168 The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. SFAS No.168 establishes the FASB Accounting Standards Codification (Codification) as the single source of authoritative U.S. generally accepted accounting principles (GAAP) for all nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) are also sources of authoritative U.S. GAAP for SEC registrants. The Codification does not change U.S. GAAP but takes previously issued FASB standards and other U.S. GAAP authoritative pronouncements, changes the way the standards are referred to, and includes them in specific topic areas. SFAS No.168 and the Codification are effective for financial statements issued for interim and annual periods ending after September15, 2009. The adoption of this standard and the Codification will not have any impact on the Companys financial statements. On May28, 2009, the FASB issued SFAS No.165 Subsequent Events. This standard establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This standard sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. This standard does not apply to subsequent events or transactions that are within the scope of other applicable principles of GAAP that provide different guidance on the accounting treatment for subsequent events or transactions. This standard is effective for interim and annual periods ending after June15, 2009. In accordance with this standard, the Company has evaluated subsequent events through August6, 2009, which is the date these condensed financial statements were issued. On January1, 2009 the Company adopted SFAS No.160 Noncontrolling Interests in Consolidated Financial Statements, which amends Accounting Research Bulletin No.51 Consolidated Financial Statements. This standard requires noncontrolling interests to be treated as a separate component of equity, but apart from the parents equity, and not as a liability or other item outside of equity. This standard also specifies that consolidated net income attributable to the parent and to noncontrolling interests be clearly identified and presented on the face of the consolidated statement of income. Previously the Company had reported minority interests (noncontrolling interests) as a reduction to operating income. In addition, this standard specifies that changes in the parents ownership interest while it retains a controlling financial interest should be accounted for as e |
3.Earnings per share | 3. Earnings per share Basic net income per share is calculated by dividing net income attributable to DaVita Inc. by the weighted average number of common shares and vested stock units outstanding. Diluted net income per share includes the dilutive effect of outstanding stock options, stock-settled stock appreciation rights and unvested stock units (under the treasury stock method). The reconciliations of the numerators and denominators used to calculate basic and diluted earnings per share are as follows: Three months ended June30, Six months ended June30, 2009 2008 2009 2008 (shares in thousands) Basic: Net income attributable to DaVita Inc. $ 105,819 $ 94,951 $ 202,030 $ 181,885 Weighted average shares outstanding during the period 103,697 104,806 103,783 106,073 Vested stock units 9 9 9 9 Weighted average shares for basic earnings per share calculation 103,706 104,815 103,792 106,082 Basic net income per share attributable to DaVita Inc $ 1.02 $ 0.91 $ 1.95 $ 1.71 Diluted: Net income for diluted earnings per share calculation $ 105,819 $ 94,951 $ 202,030 $ 181,885 Weighted average shares outstanding during the period 103,697 104,806 103,783 106,073 Vested stock units 9 9 9 9 Assumed incremental shares from stock plans 220 802 375 846 Weighted average shares for diluted earnings per share calculation 103,926 105,617 104,167 106,928 Diluted net income per share attributable to DaVita Inc. $ 1.02 $ 0.90 $ 1.94 $ 1.70 Shares subject to anti-dilutive awards excluded from calculation (1) 14,296 10,593 13,585 10,691 (1) Shares associated with stock options and stock-settled stock appreciation rights that are excluded from the diluted denominator calculation because they are anti-dilutive under the treasury stock method. |
4.Stock-based compensation and other common stock transactions | 4. Stock-based compensation and other common stock transactions Under SFAS No.123(R), stock-based compensation recognized during a period is based on the estimated grant-date fair value of the portion of the stock-based awards vesting during that period, adjusted for expected forfeitures. Stock-based compensation recognized in these condensed consolidated financial statements for the three and six months ended June30, 2009 and 2008 includes compensation cost for stock-based awards granted prior to, but not fully vested as of, the adoption date of SFAS No.123(R) and subsequent stock-based awards granted through June30, 2009 and 2008, respectively. Shares issued upon exercise of stock awards are generally issued from shares in treasury. The Company has used the Black-Scholes-Merton valuation model for estimating the grant-date fair value of stock options and stock-settled stock appreciation rights granted in all periods. During the first six months of 2009, the Company granted 3,692 stock-settled stock appreciation rights with a grant-date fair value of $43,922 and a weighted-average expected life of approximately 3.5 years, and also granted 11 stock units with a grant-date fair value of $506 and a weighted-average expected life of approximately 0.7 years. For the six months ended June30, 2009 and 2008, the Company recognized $22,412 and $19,216, respectively, in stock-based compensation expense for stock options, stock-settled stock appreciation rights, stock units and discounted employee stock plan purchases, which are primarily included in general and administrative expenses. The estimated tax benefit recorded for stock-based compensation through June30, 2009 and 2008 was $8,504 and $7,260, respectively. As of June30, 2009, there was $96,129 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements under our equity compensation and stock purchase plans. The Company expects to recognize this cost over a weighted average remaining period of 1.5 years. During the six months ended June30, 2009 and 2008, the Company received $15,104 and $9,950, respectively, in cash proceeds from stock option exercises and $9,974 and $5,264, respectively, in actual tax benefits upon the exercise of stock awards. During the first three months of 2009, the Company repurchased a total of 744 shares of its common stock for $32,016 or an average price of $43.01 per share, pursuant to previously announced authorizations by the Board of Directors. The Company did not repurchase any additional shares of its common stock during the second quarter of 2009 and has not repurchased any additional shares of its common stock through August 6, 2009. As a result of these transactions, the total outstanding authorization for share repurchases is currently $121,500. This stock repurchase program has no expiration date. |
5.Long-term debt | 5. Long-term debt Long-term debt was comprised of the following: June30, 2009 December31, 2008 Senior secured credit facilities: Term loan A $ 188,125 $ 214,375 Term loan B 1,705,875 1,705,875 Senior and senior subordinated notes 1,750,000 1,750,000 Acquisition obligations and other notes payable 19,078 15,266 Capital lease obligations 5,511 5,873 Total debt principal outstanding 3,668,589 3,691,389 Premium on the 65/8% senior notes 3,118 3,757 3,671,707 3,695,146 Less current portion (92,290 ) (72,725 ) $ 3,579,417 $ 3,622,421 Scheduled maturities of long-term debt at June30, 2009 are as follows: 2009 (remainder of the year) $ 46,721 2010 90,621 2011 68,106 2012 1,707,833 2013 901,938 2014 934 Thereafter 852,436 During the first six months of 2009, the Company made mandatory principal payments totaling $26,250 on the term loan A. On January1, 2009 the Company adopted SFAS No.161 Disclosures about Derivative Instruments and Hedging Activities, which amends SFAS No.133 Accounting for Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about an entitys derivative and hedging activities. Entities are required to provide additional disclosures about (a)how and why an entity uses derivative instruments, (b)how derivative instruments and related hedged items are accounted for under SFAS No.133 and related interpretations, and (c)how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. This standard encourages, but does not require, comparative disclosures for earlier periods at the initial adoption. The adoption of this standard did not have a material impact on the Companys consolidated financial statements. The Company has elected to provide comparative disclosures for the prior period presented. The Company has entered into several interest rate swap agreements as a means of hedging its exposure to and volatility from variable-based interest rate changes as part of its overall risk management strategy. These agreements are not held for trading or speculative purposes, and have the economic effect of converting portions of our variable rate debt to a fixed rate. These agreements are designated as cash flow hedges, and as a result, hedge-effective gains or losses resulting from changes in the fair values of these swaps are reported in other comprehensive income until such time as each specific swap tranche is realized, at which time the amounts are reclassified into net income. Net amounts paid or received for each specific swap tranche that have settled have been reflected as adjustments to debt expense. These agreements do not contain credit-risk contingent features. As of June30, 2009, the Company maintained a total of eight interest rate swap agreements with amortizing notional amounts totaling $576,300. |
6.Contingencies | 6. Contingencies The majority of the Companys revenues are from government programs and may be subject to adjustment as a result of: (1)examination by government agencies or contractors for which the resolution of any matters raised may take extended periods of time to finalize; (2)differing interpretations of government regulations by different fiscal intermediaries or regulatory authorities; (3)differing opinions regarding a patients medical diagnosis or the medical necessity of services provided; and (4)retroactive applications or interpretations of governmental requirements. In addition, the Companys revenues from commercial payors may be subject to adjustment as a result of potential claims for refunds, as a result of government actions or as a result of other claims by commercial payors. Inquiries by the Federal Government In December 2008, the Company received a subpoena for documents from the Office of Inspector General, U.S. Department of Health and Human Services, or OIG, relating to the pharmaceutical products Zemplar, Hectorol, Venofer, Ferrlecit and Epogen, or EPO, as well as other related matters. The subpoena covers the period from January 2003 to the present. The Company has been in contact with the United States Attorneys Office, or U.S. Attorneys Office, for the Northern District of Georgia and the U.S. Department of Justice in Washington, DC, since November 2008 relating to this matter, and has been advised that this is a civil inquiry. On June17, 2009, the Company learned that the allegations were made as part of a civil qui tam complaint filed by individuals and brought pursuant to the federal False Claims Act. The case remains under seal in the United States District Court for the Northern District of Georgia. The Company is cooperating with the inquiry and is producing the requested records. To the Companys knowledge, no proceedings have been initiated by the federal government against the Company at this time. Although the Company cannot predict whether or when proceedings might be initiated, or when these matters may be resolved, it is not unusual for investigations such as these to continue for a considerable period of time. Responding to the subpoena will continue to require managements attention and significant legal expense. Any negative findings could result in substantial financial penalties against us and exclusion from future participation in the Medicare and Medicaid programs. In February 2007, the Company received a request for information from the OIG for records relating to EPO claims submitted to Medicare. In August 2007, the Company received a subpoena from the OIG seeking similar documents. The requested documents relate to services provided from 2001 to 2004 by a number of the Companys centers. The request and subpoena were sent from the OIGs offices in Houston and Dallas, Texas. The Company is cooperating with the inquiry and is producing the requested records. The Company has been in contact with the U.S. Attorneys Office for the Eastern District of Texas, which has stated that this is a civil inquiry related to EPO claims. On July6, 2009, the United States District Court for the |
7.Investments | 7. Investments In accordance with SFAS No.115 and based on the Companys intentions and strategy involving investments, the Company classifies certain debt securities as held-to-maturity and records them at amortized cost. Equity securities that have readily determinable fair values and certain other debt securities classified as available for sale are recorded at fair value. The Companys investments consist of the following: June30, 2009 December31, 2008 Held to maturity Available for sale Total Held to maturity Available for sale Total Certificates of deposit and U.S. treasury notes due within one year $ 18,779 $ $ 18,779 $ 19,355 $ $ 19,355 Investments in mutual funds 7,157 7,157 21,833 21,833 $ 18,779 $ 7,157 $ 25,936 $ 19,355 $ 21,833 $ 41,188 Short-term investments $ 18,779 $ 330 $ 19,109 $ 19,355 $ 16,177 $ 35,532 Long-term investments 6,827 6,827 5,656 5,656 $ 18,779 $ 7,157 $ 25,936 $ 19,355 $ 21,833 $ 41,188 The cost of the certificates of deposit and U.S. treasury notes at June30, 2009 and December31, 2008 approximates their fair value. As of June30, 2009 and December31, 2008, the available for sale investments included $1,380 and $1,558, respectively, of gross pre-tax unrealized losses. During the six months ended June30, 2009, the Company recorded gross pre-tax unrealized gains of $432, or $264 after tax, in other comprehensive income associated with changes in the fair value of these investments. During the six months ended June30, 2009, the Company sold investments in mutual funds for net proceeds of $16,537, and recognized a pre-tax gain of $255, or $156 after tax, that was previously recorded in other comprehensive income. The pre-tax gain is included in other income. The certificates of deposit and U.S. treasury notes classified as held to maturity are investments used to maintain certain capital requirements of the special need plans of VillageHealth, which is a wholly-owned subsidiary of the Company. The investments in mutual funds classified as available for sale are held in trust to fund existing obligations associated with several of the Companys non-qualified deferred compensation plans. |
8.Fair value of financial instruments | 8. Fair value of financial instruments The Company measures the fair value of certain assets, liabilities and noncontrolling interests subject to put provisions in accordance with SFAS No.157 Fair Value Measurements based upon certain valuation techniques that include observable or unobservable inputs and assumptions that market participants would use in pricing these assets, liabilities and commitments. The Company also has classified certain assets, liabilities and noncontrolling interests subject to put provisions that are measured at fair value into the appropriate fair value hierarchy levels as defined in SFAS No.157. See below. On January1, 2009 we adopted certain provisions of SFAS No.157 relating to nonfinancial assets and liabilities that are not recognized or disclosed at fair value in the financial statements on a recurring basis, at least annually. The adoption of these specific provisions of SFAS No.157 relating to nonfinancial assets and liabilities did not have material impact on the Companys consolidated financial statements. The following table summarizes the Companys assets and liabilities measured at fair value on a recurring basis as of June30, 2009: Total Quotedpricesin activemarketsfor identical assets (Level 1) Significantother observableinputs (Level 2) Significant unobservable inputs (Level 3) Assets Available for sale securities $ 7,157 $ 7,157 $ $ Liabilities Interest rate swap agreements $ 17,746 $ $ 17,746 $ Temporary equity Noncontrolling interests subject to put provisions $ 288,458 $ $ $ 288,458 The available for sale securities represent investments in various open or closed-ended registered investment companies, or mutual funds, and are recorded at fair value based upon the quoted market prices as reported by each mutual fund. See Note 7 to the condensed consolidated financial statements for further discussion. The interest rate swap agreements are recorded at fair value based upon valuation models and a variety of techniques as reported by various broker dealers that are based upon relevant observable market inputs such as current interest rates, forward yield curves, and other credit and liquidity market conditions. The Company does not believe the ultimate amount that could be realized upon settlement of these interest rate swap agreements would be materially different than the fair values as currently reported. See Note 5 to the condensed consolidated financial statements for further discussion. See Note 9 to the condensed consolidated financial statements for a discussion of the Companys methodology for estimating the fair value of noncontrolling interests subject to put obligations. On April9, 2009, the FASB issued FASB Staff Position No.FAS107-1 and APB28-1 Interim Disclosures about Fair Value of Financial Instruments (FSP), which amends FASB No.107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial |
9.Noncontrolling interests subject to put provisions and other commitments | 9. Noncontrolling interests subject to put provisions and other commitments The Company has potential obligations to purchase the noncontrolling interests held by third parties in several of its joint ventures and non-wholly-owned subsidiaries. These obligations are in the form of put provisions and are exercisable at the third-party owners discretion within specified periods as outlined in each specific put provision. If these put provisions were exercised, the Company would be required to purchase the third-party owners noncontrolling interests at either the appraised fair market value or a predetermined multiple of earnings or cash flow attributable to the noncontrolling interest put to the Company, which is intended to approximate fair value. The methodology the Company used to estimate the fair value of the noncontrolling interests subject to these put provisions assumes either the higher of a liquidation value or an average multiple of earnings, historical earnings, patient mix and other performance indicators, as well as other factors. The estimated fair values of the noncontrolling interests subject to these put provisions can also fluctuate and the implicit multiple of earnings at which these noncontrolling interest obligations may ultimately be settled could vary significantly from our current estimates depending upon market conditions including potential purchasers access to the credit and capital markets, which can impact the level of competition for dialysis and non-dialysis related businesses, the economic performance of these businesses and the restricted marketability of the third-party owners noncontrolling interests. The amount of noncontrolling interests subject to put provisions using a predetermined multiple of earnings and therefore not at fair value are immaterial. Additionally, the Company has certain other potential commitments to provide operating capital to several dialysis centers that are wholly-owned by third parties or centers in which the Company owns a noncontrolling interest as well as to physician-owned vascular access clinics that the Company operates under management and administrative service agreements of approximately $13,200. Certain consolidated joint ventures are contractually scheduled to dissolve after terms ranging from ten to fifty years. Accordingly, the noncontrolling interests in these joint ventures are considered mandatorily redeemable instruments for which the classification and measurement requirements of SFAS No.150 have been indefinitely deferred. Future distributions upon dissolution of these entities would be valued below the related noncontrolling interest carrying balances in the consolidated balance sheet. |
10.Income taxes | 10. Income taxes As of June30, 2009, the Companys total liability for unrecognized tax benefits relating to tax positions that do not meet the more-likely-than-not threshold was $11,662, all of which would impact the Companys effective tax rate if recognized. This balance represents an increase of $775 from the December31, 2008 balance of $10,887 due to the addition of 2009 liabilities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its income tax expense. At June30, 2009, the Company had approximately $2,186 accrued for interest and penalties related to unrecognized tax benefits, net of federal tax benefits. |
11.Segment reporting | 11. Segment reporting The Company operates principally as a dialysis and related lab services business but also operates other ancillary services and strategic initiatives. These ancillary services and strategic initiatives consist of infusion therapy services, pharmacy services, vascular access services, physician services, disease management services and full-service special need plans, as well as clinical research programs. For internal management reporting, the dialysis and related lab services business and each of the ancillary services and strategic initiatives have been defined as separate operating segments by management in accordance with SFAS No.131 Disclosures about Segments of an Enterprise and Related Information, as separate financial information is regularly produced and reviewed by the Companys chief operating decision maker in making decisions about allocating resources and assessing financial results. The Companys chief operating decision maker is its Chief Executive Officer. The dialysis and related lab services business qualifies as a separately reportable segment under SFAS No.131, and all of the other ancillary services and strategic initiatives operating segments have been combined and disclosed in the other segments category. The Companys operating segment financial information is prepared on an internal management reporting basis that the Chief Executive Officer uses to allocate resources and analyze the performance of operating segments. For internal management reporting, segment operations include direct segment operating expenses with the exception of stock-based compensation expense and equity investment gains (losses). The following is a summary of segment revenues, segment operating margin (loss), and a reconciliation of segment margin to income before income taxes: Three months ended June30, Six months ended June30, 2009 2008 2009 2008 Segment revenues: Dialysis and related lab services (1) $ 1,441,165 $ 1,351,646 $ 2,817,728 $ 2,647,957 Other Ancillary services and strategic initiatives 77,876 55,658 148,953 104,071 Consolidated revenues $ 1,519,041 $ 1,407,304 $ 2,966,681 $ 2,752,028 Segment operating margin (loss): Dialysis and related lab services $ 250,731 $ 237,693 $ 487,683 $ 466,260 Other Ancillary services and strategic initiatives (3,750 ) (9,594 ) (9,071 ) (22,306 ) Total segment margin $ 246,981 $ 228,099 $ 478,612 $ 443,954 Reconciliation of segment margin to income before income taxes: Stock-based compensation (11,403 ) (9,669 ) (22,412 ) (19,216 ) Equity investment income (loss) 376 4 358 (523 ) Consolidated operating income 235,954 218,434 456,558 424,215 Debt expense (47,088 ) (55,320 ) (95,389 |
12.Changes in DaVita Inc.'s ownership interest in consolidated subsidiaries | 12. Changes in DaVita Inc.s ownership interest in consolidated subsidiaries The effects of changes in DaVita Inc.s ownership interest on the Companys equity are as follows: Threemonths ended June30, 2009 Sixmonths ended June30,2009 Net income attributable to DaVita Inc. $ 105,819 $ 202,030 Decrease in paid-in capital for sales of noncontrolling interest in three and seven joint ventures, respectively (159 ) (334 ) Decrease in paid-in capital for the purchase of a noncontrolling interest in two and three joint ventures, respectively (1,660 ) (2,455 ) Net transfer from noncontrolling interests (1,819 ) (2,789 ) Change from net income attributable to DaVita Inc. and transfers (to) from noncontrolling interests $ 104,000 $ 199,241 |
13.Variable interest entities | 13. Variable interest entities In June 2009, the FASB issued SFAS No.167 Amendments to FASB Interpretation No.46(R). This standard amends Interpretation No.46(R) Consolidation of Variable Interest Entities and nullifies FASB Staff Position FAS 140-4 and FIN 46(R)-8 Disclosure by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities (FSP FAS 140-4 and FIN 46(R)-8) by eliminating the quantitative approach previously required for determining the primary beneficiary of a variable interest entity, and by requiring additional disclosures about an enterprises involvement in variable interest entities. This standard requires an enterprise to perform an analysis to determine whether the enterprises variable interest or interests give it a controlling financial interest in a variable interest entity by having both the power to direct the activities of a variable interest entity that most significantly impact the entitys economic performance and the obligation to absorb losses of the entity, or the right to receive benefits from the entity. In addition, this standard establishes guidance for determining whether an entity is a variable interest entity, requires an ongoing reassessment of whether an enterprise is the primary beneficiary of a variable interest entity, and adds an additional reconsideration event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that the holders of the equity investment are at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entitys economic performance. This standard is effective as of the beginning of each reporting entitys first annual reporting period that begins after November15, 2009. The Company is currently in process of assessing the expected impact of this standard on its consolidated financial statements. In December 2008, the FASB issued FASB Staff Position No. FAS 140-4 and FIN 46(R)-8. FSP FAS 140-4 and FIN 46(R)-8 amends FASB Statement No.140 Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, to require public entities to provide additional disclosures about transfers of financial assets and amends FASB Interpretation No.46 (revised December 2003) Consolidation of Variable Interest Entities, to require public enterprises to provide additional disclosures about their involvement in variable interest entities and certain special purpose entities. Because FSP 140-4 and FIN 46(R)-8 impact disclosures and not the accounting treatment for transfers of financial assets and interests in variable interest entities, adoption of FSP FAS 140-4 and FIN 46(R)-8 did not impact the Companys financial condition or results of operations. The Company is deemed to be the primary beneficiary of all of the variable interest entities (VIEs) with which it is associated. These VIEs are principally operating subsidiaries owned by related party nominee owners for the Companys benefit in jurisdictions in which the Company does not qualify f |
14.Condensed consolidating financial statements | 14. Condensed consolidating financial statements The following information is presented in accordance with Rule 3-10 of Regulation S-X. The operating and investing activities of the separate legal entities included in the consolidated financial statements are fully interdependent and integrated. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other services. The senior notes and the senior subordinated notes were issued by the Company and are guaranteed by substantially all of the Companys direct and indirect wholly-owned subsidiaries. Each of the guarantor subsidiaries has guaranteed the notes on a joint and several, full and unconditional basis. Non-wholly-owned subsidiaries, joint venture partnerships and other third parties are not guarantors of these obligations. Condensed Consolidating Statements of Income For the three months ended June30, 2009 DaVitaInc. Guarantor subsidiaries Non-Guarantor subsidiaries Consolidating adjustments Consolidated total Net operating revenues $ 99,102 $ 1,268,285 $ 256,664 $ (105,010 ) $ 1,519,041 Operating expenses 63,033 1,114,298 210,766 (105,010 ) 1,283,087 Operating income 36,069 153,987 45,898 235,954 Debt (expense) (47,718 ) (38,640 ) (353 ) 39,623 (47,088 ) Other income 40,716 180 (39,623 ) 1,273 Income tax expense 11,630 57,052 1,825 70,507 Equity earnings in subsidiaries 88,382 29,214 (117,596 ) Net income 105,819 87,509 43,900 (117,596 ) 119,632 Less: Net income attributable to noncontrolling interests (13,813 ) (13,813 ) Net income attributable to DaVita Inc. $ 105,819 $ 87,509 $ 43,900 $ (131,409 ) $ 105,819 For the three months ended June30, 2008 Net operating revenues $ 62,562 $ 1,190,272 $ 224,800 $ (70,330 ) $ 1,407,304 Operating expenses 33,643 1,037,240 188,317 (70,330 ) 1,188,870 Operating income 28,919 153,032 36,483 218,434 Debt (expense) (56,224 ) (45,107 ) (1,587 ) 47,598 (55,320 ) Other income 50,445 140 (47,598 ) 2,987 Income tax expense 8,704 48,931 638 58,273 Equity earnings in subsidiaries 80,515 22,034 (102,549 ) Net income 94,951 81,028 34,398 (102,549 ) 107,828 Less: Net income attributable to noncontrolling interests (12,877 ) (12,877 ) Net income attributable to DaVita Inc. $ 94,951 |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | ||
6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| |
Entity [Text Block] | ||
Trading Symbol | DVA | |
Entity Registrant Name | DAVITA INC | |
Entity Central Index Key | 0000927066 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 104,000,000 | |
Entity Public Float | $5,200,000,000 |