Mail Stop 3-09
March 28, 2005
Russell D. Phillips, Jr.
General Counsel and Secretary
Alliance Imaging, Inc.
1900 S. State College Blvd., Suite 600
Anaheim, CA 92806
Re: Alliance Imaging, Inc.
Amendment No. 1 to the Registration Statement on Form S-3
File No. 333-122453
Form 10-K for the fiscal year ended December 31, 2004
File Number 001-16609
Dear Mr. Phillips:
We have reviewed your filings and have the following
comments.
Where indicated, we think you should revise your documents in
response to these comments. If you disagree, we will consider
your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
supplemental information so we may better understand your
disclosure.
After reviewing this information, we may or may not raise
additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended December 31, 2004
Management`s Discussion and Analysis of Financial Condition and
Results of Operations
Year Ended December 31, 2004 Compared to Year Ended December 31,
2003, page 33
1. We acknowledge your disclosures about changes in cost of
revenue
and selling, general, and administrative (SG&A) expense components
for the current year compared to the previous year. Although you
consistently provide comparisons of the current year amounts from
the
prior year, there are several areas where your discussion does not
disclose the reasons for the change. Consider your statement that
compensation and related employee expenses related to cost of
revenue
increased by $7.7M (7.7%) primarily as a result of the number of
employees necessary to support new PET and PET/CT systems in
operation and an increase in worker`s compensation expense. We
note
on page 8 that your number of employees decreased by 141 from the
previous year. Please clarify your disclosure about how
compensation
and related employee expenses increased since you have 141 fewer
employees. Quantify the increase as it relates to compensation
and
related employee expenses and that related to worker`s
compensation
expense.
Liquidity and Capital Resources, page 37
2. You state within Results from Operations that your provision
for
doubtful accounts decreased by $2M. We note in your financial
statements that your accounts receivable balance, gross of the
allowance for doubtful accounts, increased by approximately $4M
from
the previous year. Disclose what events and circumstances have
changed from the previous year warranting your provision to
decrease
while the receivable related to the provision increased.
Financial Statement
Consolidated Statements of Operation, page 47
3. We acknowledge your response to our comment number 39 related
to
minority interest and income (loss) from equity investments. You
state that revenue from unconsolidated investees ($900K for the
year
ended 2003 and $4M for the year ended 2004) were offset against
SG&A.
Classifying income from unconsolidated investees for these two
years
has the effect of showing a declining trend in the amount of your
SG&A expenses of 5% when in reality, SG&A expense increase by 1%.
Additionally, $4 million of income from unconsolidated investees
for
2004 is material to your loss before income taxes and minority
interest expense and to your net loss for 2004. Please
disaggregate
the amounts included in revenue and netted against SG&A related to
unconsolidated investees and report the amount in a separate line
item in your statement of operations as required by rule 5-03(b)
of
Regulation S-X, and provide the disclosures as required by rule 4-
08(g) of Regulation S-X.
Notes to Consolidated and Basis of Financial Statement
Presentation,
page 51
4. We acknowledge your response to our comment number 41 about
your
revenue recognition policy. You state that you have revenue
streams
aside from performing MRI/PET scans. Please provide your revenue
recognition policy for these other revenue streams and the point
when
revenue is earned. Explain in your disclosure how that point
meets
the criteria for recognizing revenue in SAB 104.
8-K Dated March 7, 2005
5. We note several non-GAAP measures in your fourth quarter
results
reported in the Form 8-K dated March 7, 2005 included in exhibits
99.1 and 99.2 to the Form 8-K. Instructions 2 of Item 202 of Form
8-
K requires that you comply with Item 10(e)(1)(i) of Regulation S-K
related to these non-GAAP disclosures. Tell us how these
discussions
comply with paragraph (e)(1)(i)(C) and (D) of Item 10 of
Regulation
S-K.
As appropriate, please amend your registration statement and
your Form 10-K in response to these comments. You may wish to
provide us with marked copies of the amendments to expedite our
review. Please furnish a cover letter with your amendments that
keys
your responses to our comments and provides any requested
supplemental information. Detailed cover letters greatly
facilitate
our review. Please file your cover letter on EDGAR under the form
type label CORRESP. Please understand that we may have additional
comments after reviewing your amendments and responses to our
comments.
You may contact Christine Allen at (202) 824-5533 or
James
Rosenberg, Senior Assistant Chief Accountant at (202) 942-1803 if
you
have questions regarding comments on the financial statements and
related matters. Please contact Song Brandon at (202) 942-2831,
Suzanne Hayes, Legal Branch Chief at (202) 942-1789 or me at (202)
942-1840 with any other questions.
Sincerely,
Jeffrey Riedler
Assistant Director
cc: Nicholas S. O`Keefe, Esq.
Latham & Watkins LLP
135 Commonwealth Drive
Menlo Park, CA 94025
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Russell D. Phillips, Jr.
Alliance Imaging, Inc.
March 28, 2005
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