Via Facsimile and U.S. Mail
Mail Stop 6010
July 11, 2005
Mr. Don Waite
Chief Financial Officer and Secretary
Dialysis Corporation of America
27 Miller Avenue
Lemoyne, PA 17043
Re: Dialysis Corporation of America
Form 10-K for the Fiscal Year Ended December 31, 2004
File No. 000-08527
Dear Mr. Waite:
We have reviewed your response letter dated June 29, 2005 to
our comment letter dated June 20, 2005 and have the following
comments. Where indicated, we think you should revise your Form
10-K
for the year ended December 31, 2004 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 information so we may better
understand your disclosure. After reviewing this information, we
may
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 any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. Please revise your disclosures to include the information you
provided in response to comments one through three, the first
sentence of comment four, and comments five through seven.
Regarding
comment three, please also discuss why your days sales outstanding
had increased and why the aging of your receivables had
deteriorated.
Item 7. Management`s Discussion and Analysis of Financial
Condition
and ..., page 36
Results of Operations, page 39
2. For all of the underlying factors that caused a material change
in
medical services revenues, please disclose and quantify the effect
on
revenue. These factors would presumably include changes based on
facilities, service type, prices and volume.
Liquidity and Capital Resources, page 43
3. Please revise your discussion to address all material sources
and
uses of cash in your operating activities, as required by Section
IV.B. of Financial Reporting Release 72.
Aggregate Contractual Obligations, page 45
4. Please revise your table to include your acquisition
liabilities,
advances from parent, and expected interest payments, consistent
with
Item 303(a)(5) of Regulation S-K and Financial Reporting Release
67.
Critical Accounting Policies and Estimates, page 46
5. In response to comment one, you noted that "a receivable is
uncollectible when claimed as worthless and that there is no
future
likelihood of recovery". In response to part (b) of comment two,
you
noted that you took "a conservative approach" in including, in
your
provision for doubtful accounts, receivables where you believed
delays in collection would be resolved and payments would be made.
In each case, please justify how this complied with SFAS 5,
including
paragraphs 8, 22 and 23 of SFAS 5.
Item 15(a)(1) and (2) - Financial Statements, page F-1
Report of Independent Certified Public Accountants, page F-3
6. Please have the auditor revise their report to comply with
PCAOB
Auditing Standard 1.
Notes to Consolidated Financial Statements, page F-8
7. Based on your response to comment six, it is not clear how the
options meet the conditions of paragraph 10(e)(3) of SFAS 133, as
the
purchase price appears to be affected by EBITDA, not a specified
volume of sales or service revenues. In addition, based on your
response, it is unclear why it is appropriate to analogize to
paragraph 11(c), as the options do not appear to represent
contingent
consideration. As such, please clarify these matters for us.
Furthermore, as you believe the options are not subject to SFAS
133,
please cite the specific literature that supports your accounting,
as
we had requested.
Note 1 - Summary of Significant Accounting Policies, page F-8
8. Please provide a breakdown of your medical services revenue
within
your financial statements, as required by paragraph 37 of SFAS
131.
Estimates, page F-8
9. Please revise your disclosures so that your financial
statements
no longer reference information located outside of the financial
statements.
Note 10 - Acquisitions, page F-25
10. For each acquisition that resulted in the recognition of
goodwill, please disclose the factors that contributed to that
recognition, as required by paragraph 51(b) of SFAS 141.
As appropriate, please amend your filings and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested information. Detailed cover letters
greatly
facilitate our review. You should file the letter on EDGAR under
the
form type label CORRESP. Please understand that we may have
additional comments after reviewing your amendment and responses
to
our comments.
You may contact Tabatha Akins, Staff Accountant, at (202) 551-3658
or
Oscar Young, Senior Staff Accountant, at (202) 551-3622 if you
have
questions regarding the comments. Please contact me at (202) 551-
3679 with any other questions.
Sincerely,
for Jim B. Rosenberg
Senior Assistant Chief Accountant
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Mr. Don Waite
Dialysis Corporation of America
July 11, 2005
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