##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
 FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 0-27640
 RENAL CARE GROUP, INC.
  Delaware
    
    62-1622383(State or other Jurisdiction of
    
    (I.R.S. EmployerIncorporation or Organization)
    
    Identification No.)
 2525 West End Avenue, Suite 600
Nashville, Tennessee 37203
   Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Stock, $0.01 par value
    
    New York Stock ExchangeSeries A Junior Participating Preferred Stock Purchase Rights
    
    New York Stock Exchange
  þ o
 o þ
 þ o
 o
  þ o o
 o þ




---



##### Table of Contents



DOCUMENTS INCORPORATED BY REFERENCE
  2




---



##### 



TABLE OF CONTENTS
 PART IItem 1. BusinessItem 1A. Risk FactorsItem 1B. Unresolved Staff CommentsItem 2. PropertiesItem 3. Legal ProceedingsItem 4. Submission of Matters to a Vote of Security HoldersPART IIItem 5.
Market for Registrants Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity SecuritiesItem 6. Selected Financial DataItem 7. Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 7A. Quantitative and Qualitative Disclosures About Market RiskItem 8. Financial Statements and Supplementary DataItem 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 9A. Controls and ProceduresItem 9B. Other InformationPART IIIItem 10.
Directors and Executive Officers of the RegistrantItem 11. Executive CompensationItem 12.
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder MattersItem 13. Certain Relationships and Related TransactionsItem 14. Principal Accountant Fees and ServicesPART IVItem 15.
Exhibits and Financial Statement SchedulesSIGNATURESEXHIBIT INDEXEx-10.19 Agreement No. 20010240, between Renal Care Group, Inc. and Amgen Inc.Ex-21.1  List of subsidiaries of the CompanyEx-23.1.1  Consent of Ernst & Young LLPEx-23.1.2  Consent of Ernst & Young LLPEx-31.1  Section 302 Certification of the CEOEx-31.2  Section 302 Certification of the CFOEx-32.1  Section 906 Certification of the CEOEx-32.2  Section 906 Certification of the CFO
  3




---



##### Table of Contents



FORWARD LOOKING STATEMENTS
  
    
    our expectations regarding financial condition or results of operations for periods after December 31, 2005;
    
    the agreement by Fresenius Medical Care to acquire Renal Care
Group;
    
    our critical accounting policies;
    
    our business strategies and our ability to grow our business;
    
    the reimbursement levels of third-party payors; and
    
    our future sources of and needs for liquidity and capital resources.
       
 PART I
 
 Item 1. Business
 ACQUISITION BY FRESENIUS MEDICAL CARE
  4




---



##### Table of Contents



GENERAL
    INDUSTRY OVERVIEW
 End-Stage Renal Disease
     5




---



##### Table of Contents



Treatment Options for End-Stage Renal Disease
  
    
    hemodialysis performed in a hospital setting, an outpatient facility or a patients home,
    
    peritoneal dialysis, which is generally performed in the patients home, and
    
    kidney transplant surgery.
     OPERATIONS
 Location, Capacity and Use of Facilities
  Operation of Facilities
   6




---



##### Table of Contents



Home Dialysis
  Inpatient Care
  Nephrologists
   Medical Directors
   7




---



##### Table of Contents



Ancillary Services
 ®
 QUALITY ASSURANCE
  Medical Advisory Board
  Quality Criteria
  CORPORATE COMPLIANCE PROGRAM
    8




---



##### Table of Contents



REIMBURSEMENT
 Sources of Net Revenue
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Medicare
    
    
    49
    %
    
    
    49
    %
    
    
    52
    %Medicaid
    
    
    6
    
    
    
    4
    
    
    
    4Commercial and other payors
    
    
    40
    
    
    
    42
    
    
    
    39Acute dialysis services
    
    
    5
    
    
    
    5
    
    
    
    5Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Medicare
      9




---



##### Table of Contents



Changes in the Medicare ESRD Composite Rate
     Medicare Reimbursement for EPO
   Medicaid Reimbursement
  10




---



##### Table of Contents



Non-governmental Reimbursement
   GOVERNMENT REGULATION
 General
    11




---



##### Table of Contents



Government Investigations
      Medicare and Medicaid Certification and Reimbursement
    12




---



##### Table of Contents



The Anti-Kickback Statute
       The Stark Law
  13




---



##### Table of Contents



14




---



##### Table of Contents



The Health Insurance Portability and Accountability Act of 1996
       15




---



##### Table of Contents




    
    to obtain patient authorization prior to certain uses or disclosures of protected health information,
    
    to provide notice of privacy practices to patients and obtain an acknowledgement that the patient has received the notice,
    
    to respond to requests from patients for access to or to obtain a copy of their information,
    
    to respond to patient requests for amendments of their information,
    
    to designate a privacy officer,
    
    to use and disclose only the minimum necessary information to accomplish a particular purpose, and
    
    to establish policies and procedures with respect to uses and disclosures of protected health information.
   The False Claims Act
   Civil Monetary Penalties
  
    
    for physician services the person or entity knew or should have known were rendered by a
person who was unlicensed, or misrepresented either (1) his or her qualifications in
obtaining his or her license or (2) his or her certification in a medical specialty;
    
    that were furnished by a person who was, at the time the claim was made, excluded from
the program to which the claim was made; or
    
    that show a pattern of medically unnecessary items or services.
 16




---



##### Table of Contents



Health Care Legislation and Regulatory Developments
  Joint Ventures
  COMPETITION
   INSURANCE
  17




---



##### Table of Contents



EMPLOYEES
  INTERNET WEBSITE
 www.renalcaregroup.com.
 
 Item 1A. Risk Factors
 You should carefully consider the risks described below before investing in Renal Care Group.
The risks and uncertainties described below are not the only ones facing Renal Care Group. Other
risks and uncertainties that we have not predicted or assessed may also adversely affect us.
 If any of the following risks occurs, our earnings, financial condition or business could be
materially harmed, and the trading price of our common stock could decline, resulting in the loss
of all or part of your investment.
 Completion of the Fresenius Medical Care transaction is subject to various conditions; as a result
we can not assure you that our transaction with Fresenius Medical Care will be completed.
  
    
    the termination or expiration of the waiting period under the Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended, or the approval of the transaction under that act;
    
    the absence of a temporary restraining order, preliminary or permanent injunction or other
order issued by any court or other legal restraint or prohibition preventing the
consummation of the transaction;
    
    the accuracy of the representations and warranties of Renal Care Group and Fresenius
Medical Care in the merger agreement;
    
    the performance in all material respects by Renal Care Group and Fresenius Medical Care
of all obligations required to be performed by each of them under the merger agreement at or
prior to the effective time of the transaction;
    
    the absence of an event, change, effect or development that, individually or in the
aggregate, has had or would reasonably be expected to have, a material adverse effect on
Renal Care Group as defined in the merger agreement; or
    
    the satisfaction or waiver by the lenders of the conditions precedent to the initial
funding of Fresenius Medical Cares financing commitments that are related to the delivery
of releases of liens encumbering the assets of Renal Care Group and the delivery of
financial statements of Renal Care Group.
  18




---



##### Table of Contents



Failure to complete the Fresenius Medical Care transaction could negatively impact the market price
of our common stock and our ability to operate our business.
  
    
    the market price of our common stock could decline;
    
    we must pay some of the costs related to the transaction, such as legal and accounting
fees and a portion of the investment banking fees and, in specified circumstances,
termination fees and expense reimbursement payments, even if the transaction is not
completed, and those costs will be expensed in the fiscal period in which termination
occurs;
    
    the diversion of managements attention from our day-to-day business and the unavoidable
disruption to our associates and our relationships with patients, medical directors,
attending physicians and suppliers, during the period before completion of the transaction,
may make it difficult for us to regain our financial and market position if the transaction
does not occur; and
    
    the loss of key management, clinical and technical personnel who may be uncertain about
their future roles and relationships with Renal Care Group following the completion of the
transaction with Fresenius Medical Care could make it difficult for us to operate our
business effectively and profitably if we are unable to replace these employees if the
transaction with Fresenius Medical Care is not completed.
  Our profits are dependent on the services we provide to a small portion of our patients who are
covered by private insurance.
   
    
    any number of economic or demographic factors could cause private insurers, hospitals or
managed care companies to reduce the rates they pay us or to refuse to pay price increases
or to work to reduce the rate of our price increases;
    
    a portion of our business that is currently reimbursed by private insurers or hospitals
may become reimbursed by managed care organizations, which generally have lower rates for
our services; or
 19




---



##### Table of Contents




    
    a portion of our business that is currently reimbursed by private insurers at rates based
on our billed charges may become reimbursed under a contract at lower rates.
 If Congress or CMS changes the Medicare or Medicaid programs for dialysis, then our net revenue and
earnings could decrease.
  
    
    a reduction of the amount paid to us under government programs;
    
    an increase in the costs associated with performing our services that are subject to
inflation, such as labor and supply costs, without a corresponding increase in reimbursement
rates;
    
    the inclusion of some or all ancillary services, for which we are now reimbursed
separately, in the flat composite rate for a dialysis treatment; or
    
    changes in laws, or the interpretations of laws, which could cause us to modify our
operations.
  If states lower Medicaid reimbursement, then we would be less profitable.
  If reimbursement for EPO decreases, then we could be less profitable.
  20




---



##### Table of Contents



If Amgen raises the price for EPO or if EPO becomes in short supply, then we could be less
profitable.
  If
Amgen markets Aranesp® for ESRD patients, then we could be less profitable.
 ® ® ® ®
 
    
    our margins realized from the administration of
Aranesp® could be lower than the margins
realized on the administration of EPO; or
    
    physicians could decide to administer
Aranesp® in their offices, and we would not
recognize net revenue or profit from the administration of EPO or
Aranesp®.
 Changes in our clinical practices or reimbursement rules for EPO and other drugs could
substantially reduce our revenue and earnings.
  If our business is alleged or found to violate heath care or other applicable laws, our net revenue
and earnings could decrease.
  
    
    fraud and abuse prohibitions under state and federal health care laws;
    
    prohibitions and limitations on patient referrals;
    
    billing and reimbursement rules, including false claims prohibitions under health care reimbursement laws;
    
    rules regarding the collection, use, storage and disclosure of patient health
information, including HIPAA, and state law equivalents of HIPAA;
    
    facility licensure;
    
    health and safety requirements;
    
    environmental compliance; and
    
    medical and toxic waste disposal.
 21




---



##### Table of Contents




    
    criminal or civil penalties, including significant fines;
    
    claims by people who believe their health information has been improperly used or disclosed; and
    
    administrative penalties by payors.
 Government investigations could adversely affect Renal Care Group.
      If our joint ventures violate the law, our business could be damaged.
  22




---



##### Table of Contents



Changes in the health care delivery, financing or reimbursement systems could adversely affect our
business.
  If local physicians stop sending patients to our centers or were prohibited from doing so for
regulatory reasons, then our revenue and earnings would decline.
   The dialysis business is highly competitive. If we do not compete effectively in our markets, then
we could lose market share and our rate of growth could slow.
  If we are unable to make acquisitions in the future, then our rate of growth will slow.
  23




---



##### Table of Contents



If acquired businesses have unknown liabilities, then we could be exposed to liabilities that could
harm our business and profitability.
  We may not have sufficient cash flow from our business to pay our substantial debt.
    The large amount and terms of our outstanding debt may prevent us from taking actions we would
otherwise consider in our best interest.
  
    
    incurring additional debt;
    
    acquiring and developing new dialysis centers;
    
    making investments;
    
    creating liens;
    
    creating restrictions on the ability of our subsidiaries to pay dividends or other amounts to us;
    
    disposing of assets;
    
    paying dividends on our capital stock;
 24




---



##### Table of Contents




    
    repurchasing our capital stock;
    
    engaging in transactions with our affiliates; or
    
    consolidating, merging or selling all or substantially all of our assets.
   
    
    having to use much of our cash flow for scheduled debt service rather than for
operations, future business opportunities or other purposes, such as funding working capital
and capital expenditures;
    
    being unable to increase our borrowings under our credit facility or obtain other debt
financing for future working capital, capital expenditures, acquisitions or other corporate
purposes;
    
    being less able to take advantage of significant business opportunities, including acquisitions or divestitures;
    
    difficulty satisfying our obligations under our 9.0% senior subordinated notes;
    
    increasing our vulnerability to general adverse economic and industry conditions; and
    
    causing us to be at a competitive disadvantage to competitors with less debt.
 If our costs of insurance and claims increase, then our earnings could decrease.
  
    
    increases in premiums, deductibles and self-insurance retentions;
    
    increases in the number of liability claims against us or the cost of settling or trying cases related to those claims; and
    
    an inability to obtain one or more types of insurance on acceptable terms.
 If our board of directors does not approve an acquisition or change in control, then our
shareholders may not realize the full value of their stock
  25




---



##### Table of Contents




    
    a staggered board of directors that would require two annual meetings to replace a
majority of the board of directors;
    
    restrictions on calling special meetings at which an acquisition or change in control
might be brought to a vote of the shareholders;
    
    blank check preferred stock that may be issued by our board of directors without
shareholder approval and that may be substantially dilutive or contain preferences or rights
objectionable to an acquirer; and
    
    a poison pill that would substantially dilute the interest sought by an acquirer.
  Our stock price is volatile and as a result, the value of your investment may go down for reasons
unrelated to the performance of our business.
  
    
    the failure to complete the transaction with Fresenius Medical Care;
    
    future announcements concerning us, our competitors or the health care market;
    
    the threat, commencement or outcome of litigation or government investigation;
    
    changes in government regulations; and
    
    changes in earnings estimates by analysts.
  Forward-Looking Statements
  
    
    the statements discuss our future expectations;
    
    the statements contain projections of our future earnings or of our financial condition; and
    
    the statements state other forward-looking information.
  26




---



##### Table of Contents



Item 1B. Unresolved Staff Comments
  27




---



##### Table of Contents



Item 2. Properties
 PROPERTIES
  OUTPATIENT FACILITIES BY STATE
 Alabama
    
    
    19Alaska
    
    
    4Arizona
    
    
    31Arkansas
    
    
    11Colorado
    
    
    3Florida
    
    
    20Georgia
    
    
    21Idaho
    
    
    2Illinois
    
    
    34Indiana
    
    
    25Iowa
    
    
    1Kansas
    
    
    13Kentucky
    
    
    9Louisiana
    
    
    8Massachusetts
    
    
    2Michigan
    
    
    12Mississippi
    
    
    35Missouri
    
    
    26Nebraska
    
    
    3Nevada
    
    
    3New Jersey
    
    
    16New Mexico
    
    
    4North Carolina
    
    
    1Ohio
    
    
    29Oklahoma
    
    
    7Oregon
    
    
    10Pennsylvania
    
    
    17Rhode Island
    
    
    2South Carolina
    
    
    3Tennessee
    
    
    21Texas
    
    
    48Virginia
    
    
    4Washington
    
    
    10Wisconsin
    
    
    2TOTAL
    
    
    456
    28




---



##### Table of Contents



Item 3. Legal Proceedings
   Plumbers Local #65 Pension Fund,
on behalf of itself and all others similarly situated, Plaintiff, vs. Renal Care Group, Inc.,
William P. Johnston, Gary Brukardt, Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V.
Lapham, Thomas A. Lowery, Stephen D. McMurray and C. Thomas Smith, Defendants Hawaii Structural Ironworkers Pension Trust Fund, on behalf of itself
and all others similarly situated, Plaintiff, vs. Renal Care Group, Inc., William P. Johnston, Gary
Brukardt, Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V. Lapham, Thomas A. Lowery,
Stephen D. McMurray and C. Thomas Smith, Defendants. Indiana State District Council of Laborers and Hod Carriers Pension Fund, on behalf of
itself and others similar situated, Plaintiff, vs. Renal Care Group, Inc., William P. Johnston,
Gary Brukardt, Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V. Lapham, Thomas A.
Lowery, Stephen D. McMurray and C. Thomas Smith, Defendants
  29




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities
 PRICE RANGE OF COMMON STOCK
  2004
    
    High
    
    LowFirst quarter
    
    $
    31.43
    
    
    $
    27.55Second quarter
    
    $
    34.29
    
    
    $
    29.93Third quarter
    
    $
    33.24
    
    
    $
    30.09Fourth quarter
    
    $
    36.10
    
    
    $
    30.00
 2005
    
    High
    
    LowFirst quarter
    
    $
    40.00
    
    
    $
    35.60Second quarter
    
    $
    46.38
    
    
    $
    37.20Third quarter
    
    $
    47.32
    
    
    $
    46.15Fourth quarter
    
    $
    47.44
    
    
    $
    46.85
 HOLDERS
  DIVIDEND POLICY
  30




---



##### Table of Contents



Item 6. Selected Financial Data
  
 Year Ended December 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005INCOME STATEMENT DATA:Net revenue
    
    $
    755,082
    
    
    $
    903,387
    
    
    $
    1,005,319
    
    
    $
    1,345,047
    
    
    $
    1,570,226Patient care costs
    
    
    489,271
    
    
    
    589,696
    
    
    
    653,307
    
    
    
    893,478
    
    
    
    1,039,268General and administrative expenses
    
    
    64,530
    
    
    
    78,079
    
    
    
    90,249
    
    
    
    106,823
    
    
    
    141,210Provision for doubtful accounts
    
    
    20,290
    
    
    
    23,501
    
    
    
    26,200
    
    
    
    32,550
    
    
    
    31,978Depreciation and amortization
    
    
    38,945
    
    
    
    40,432
    
    
    
    44,905
    
    
    
    58,349
    
    
    
    71,400Total operating costs and expenses
    
    
    613,036
    
    
    
    731,708
    
    
    
    814,661
    
    
    
    1,091,200
    
    
    
    1,283,856Income from operations
    
    
    142,046
    
    
    
    171,679
    
    
    
    190,658
    
    
    
    253,847
    
    
    
    286,370Interest expense, net
    
    
    2,636
    
    
    
    1,140
    
    
    
    629
    
    
    
    20,628
    
    
    
    32,908Income before minority interest and income taxes
    
    
    139,410
    
    
    
    170,539
    
    
    
    190,029
    
    
    
    233,219
    
    
    
    253,462Minority interest
    
    
    15,478
    
    
    
    21,410
    
    
    
    25,431
    
    
    
    35,169
    
    
    
    35,837Income before income taxes
    
    
    123,932
    
    
    
    149,129
    
    
    
    164,598
    
    
    
    198,050
    
    
    
    217,625Provision for income taxes
    
    
    47,331
    
    
    
    56,669
    
    
    
    62,542
    
    
    
    76,217
    
    
    
    87,912Net income
    
    $
    76,601
    
    
    $
    92,460
    
    
    $
    102,056
    
    
    $
    121,833
    
    
    $
    129,713Basic net income per share
    
    $
    1.06
    
    
    $
    1.26
    
    
    $
    1.40
    
    
    $
    1.80
    
    
    $
    1.90Basic weighted average shares outstanding
    
    
    72,170
    
    
    
    73,467
    
    
    
    72,719
    
    
    
    67,581
    
    
    
    68,110Diluted net income per share
    
    $
    1.01
    
    
    $
    1.21
    
    
    $
    1.37
    
    
    $
    1.74
    
    
    $
    1.83Diluted weighted average shares outstanding
    
    
    75,650
    
    
    
    76,151
    
    
    
    74,753
    
    
    
    69,892
    
    
    
    70,834
 December 31,2001
    
    
    2002
    
    
    2003
    
    
    2004
    
    
    2005BALANCE SHEET DATA:Working capital
    
    $
    104,047
    
    
    $
    110,481
    
    
    $
    122,667
    
    
    $
    126,965
    
    
    $
    140,191Total assets
    
    
    651,049
    
    
    
    740,123
    
    
    
    819,873
    
    
    
    1,429,585
    
    
    
    1,662,033Long-term debt
    
    
    3,776
    
    
    
    10,161
    
    
    
    2,652
    
    
    
    479,645
    
    
    
    533,923Stockholders equity
    
    
    510,251
    
    
    
    543,888
    
    
    
    570,845
    
    
    
    592,121
    
    
    
    739,637
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis contains forward-looking statements about our plans and
expectations of what may happen in the future. Forward-looking statements are based on a number of
assumptions and estimates that are inherently subject to significant risks and uncertainties, and
our results could differ materially from the results anticipated by our forward-looking statements
as a result of many known or unknown factors, including, but not limited to, those factors
discussed on pages 18 to 27 under the heading Risk Factors. Also, please read the cautionary
notice regarding forward-looking statements set forth at the beginning of this annual report.
 Please read the following discussion in conjunction with our consolidated financial statements
and the related notes contained elsewhere in this annual report on Form 10-K .
 Overview
  31




---



##### Table of Contents




    
    outpatient hemodialysis services;
    
    ancillary services associated with outpatient dialysis, primarily the administration of EPO and other drugs;
    
    home dialysis services;
    
    inpatient hemodialysis services provided to acute care hospitals and skilled nursing facilities;
    
    laboratory services; and
    
    management contracts with hospital-based medical university dialysis programs.
      32




---



##### Table of Contents



Critical Accounting Policies
 Cautionary Advice Regarding
Disclosure About Critical Accounting Policies
   Net Revenue and Contractual Provisions
   Provision for Doubtful Accounts
  33




---



##### Table of Contents



Self-Insurance Accruals
  Impairment of Goodwill and Long-Lived Assets
 Goodwill and Other Intangible Assets
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 Income Taxes
  Results of Operations
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Net revenue
    
    $
    1,005,319
    
    
    
    100.0
    %
    
    $
    1,345,047
    
    
    
    100.0
    %
    
    $
    1,570,226
    
    
    
    100.0
    %Patient care costs
    
    
    653,307
    
    
    
    65.0
    
    
    
    893,478
    
    
    
    66.4
    
    
    
    1,039,268
    
    
    
    66.2General and administrative expenses
    
    
    90,249
    
    
    
    9.0
    
    
    
    106,823
    
    
    
    7.9
    
    
    
    141,210
    
    
    
    9.0Provision for doubtful accounts
    
    
    26,200
    
    
    
    2.6
    
    
    
    32,550
    
    
    
    2.4
    
    
    
    31,978
    
    
    
    2.0Depreciation and amortization
    
    
    44,905
    
    
    
    4.4
    
    
    
    58,349
    
    
    
    4.3
    
    
    
    71,400
    
    
    
    4.5Total operating costs and expenses
    
    
    814,661
    
    
    
    81.0
    
    
    
    1,091,200
    
    
    
    81.1
    
    
    
    1,283,856
    
    
    
    81.8Income from operations
    
    
    190,658
    
    
    
    19.0
    
    
    
    253,847
    
    
    
    18.9
    
    
    
    286,370
    
    
    
    18.2Interest expense, net
    
    
    629
    
    
    
    0.1
    
    
    
    20,628
    
    
    
    1.5
    
    
    
    32,908
    
    
    
    2.1Minority interest
    
    
    25,431
    
    
    
    2.5
    
    
    
    35,169
    
    
    
    2.6
    
    
    
    35,837
    
    
    
    2.3Income before income taxes
    
    
    164,598
    
    
    
    16.4
    
    
    
    198,050
    
    
    
    14.7
    
    
    
    217,625
    
    
    
    13.9Provision for income taxes
    
    
    62,542
    
    
    
    6.2
    
    
    
    76,217
    
    
    
    5.7
    
    
    
    87,912
    
    
    
    5.6Net income
    
    $
    102,056
    
    
    
    10.2
    %
    
    $
    121,833
    
    
    
    9.1
    %
    
    $
    129,713
    
    
    
    8.3
    %
 34




---



##### Table of Contents



Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
 Net Revenue.
 Patient Care Costs.
 General and Administrative Expenses.
 Provision for Doubtful Accounts.
 Depreciation and Amortization.
 35




---



##### Table of Contents



Income from Operations.
 Interest Expense, Net.
 Minority Interest.
 Provision for Income Taxes.
 Net Income.
 Year Ended December 31, 2004 Compared to Year Ended December 31, 2003
 Net Revenue.
 Patient Care Costs.
 General and Administrative Expenses.
 36




---



##### Table of Contents



Provision for Doubtful Accounts.
 Depreciation and Amortization.
 Income from Operations.
 Interest Expense, Net.
 Minority Interest.
 Provision for Income Taxes.
 Net Income.
 Liquidity and Capital Resources
   37




---



##### Table of Contents



38




---



##### Table of Contents



Commission Statement about Managements Discussion and
Analysis of Financial Condition and Results of Operations
 Payments Due by Period (in thousands)Less than 1Contractual Obligations
    
    Total
    
    
    year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    After 5 yearsLong-term debt
    
    $
    550,695
    
    
    $
    42,260
    
    
    $
    287,031
    
    
    $
    61,719
    
    
    $
    159,685Capital leases
    
    
    7,126
    
    
    
    800
    
    
    
    1,401
    
    
    
    1,191
    
    
    
    3,734Operating leases
    
    
    302,306
    
    
    
    47,961
    
    
    
    86,376
    
    
    
    66,054
    
    
    
    101,915Medical director fee obligations
    
    
    168,511
    
    
    
    28,971
    
    
    
    52,686
    
    
    
    38,847
    
    
    
    48,007Total contractual cash obligations
    
    $
    1,028,638
    
    
    $
    119,992
    
    
    $
    427,494
    
    
    $
    167,811
    
    
    $
    313,341
 Newly Issued Accounting Standards
 Share-Based Payment Accounting for
Stock-Based Compensation Accounting
for Stock Issued to Employees Statement of Cash Flows
  Impact of Inflation
  Off-Balance Sheet Arrangements
  39




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Cash Balances
  Outstanding Debt
  
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
    
 Item 9B. Other Information
  40




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  www.renalcaregroup.com
 
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
 Securities Authorized for Issuance Under Equity Compensation Plans
  Number of SharesRemaining AvailableNumber of Shares to
    
    
    Weighted-Average
    
    
    For Future IssuanceBe Issued Upon
    
    
    Exercise Price of
    
    
    Under EquityExercise of
    
    
    Outstanding
    
    
    Compensation PlansOutstanding
    
    
    Options,
    
    
    (ExcludingOptions, Warrants
    
    
    Warrants and
    
    
    Securities ReflectedAnd Rights
    
    
    Rights
    
    
    In Column (a))Plan Category (1)
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by stockholders
    
    
    7,893
    
    
    $
    20.83
    
    
    
    7,116Equity compensation plans not approved by stockholders (2)
    
    
    124
    
    
    $
    7.80
    
    
    
    Total
    
    
    8,017
    
    
    $
    21.48
    
    
    
    7,116
 
 (1)
    
    Renal Care Group currently has three option plans that were assumed in connection with a
merger, acquisition or other transaction. The first such plan was adopted by Renal Disease
Management by Physicians, Inc. in 1997, and there are 9 options issued and outstanding to
purchase shares at a weighted average exercise price of $15.16. The second plan was adopted by
Dialysis Centers of America, Inc. in 1995, and there are 18 options issued and outstanding to
purchase shares at a weighted average exercise price of $17.05. The third plan was adopted in
1994, and there are 13 options issued and outstanding under such plan to purchase shares at a
weighted average exercise price of $2.22.(2)
    
    These options were issued outside of our existing stock option plans to certain employees,
officers, directors, and other key persons. These options vest over various periods up to five
years and have a term of 10 years from the date of issuance.   
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accountant Fees and Services
  41




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Page(a)
    
    
    
    
    
    Documents filed as part of this Report:(1
    )
    
    Consolidated Financial StatementsManagements Report on Internal Control over Financial Reporting
    
    F- 1Report of Independent Registered Public Accounting Firm
    
    F- 2Report of Independent Registered Public Accounting Firm
    
    F- 3Consolidated Balance Sheets at December 31, 2004 and 2005
    
    F- 4Consolidated Income Statements for the years ended December 31, 2003, 2004, and 2005
    
    F- 6Consolidated Statements of Stockholders Equity for the years ended December 31, 2003, 2004, and 2005
    
    F- 7Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004, and 2005
    
    F- 8Notes to Consolidated Financial Statements
    
    F-10(2
    )
    
    Consolidated Financial Statement SchedulesSchedule II  Consolidated Schedule-Valuation and Qualifying Accounts
    
    F-30(3
    )
    
    The Exhibits are listed in the Index of Exhibits Required by Item 601 of Regulation S-K included
herewith, which is incorporated by reference.(b)
    
    
    
    
    
    None.
 42




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
     /s/ Gary A. BrukardtPresident and Chief Executive Officer/s/ David M. DillExecutive Vice President and Chief
Financial Officer
 F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Nashville, Tennessee
    
    /s/ ERNST & YOUNG LLPMarch 10, 2006
 F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     .
  Nashville, Tennessee
    
    /s/ ERNST & YOUNG LLPMarch 10, 2006
 F-3




---



##### Table of Contents



Renal Care Group, Inc.
 
 Consolidated Balance Sheets
(in thousands)
 December 312004
    
    
    2005ASSETSCurrent assets:Cash and cash equivalents
    
    $
    17,931
    
    
    $
    2,511Accounts receivable, less allowance for doubtful accounts of $45,131 in 2004 and $28,560 in 2005
    
    
    275,373
    
    
    
    297,983Inventories
    
    
    23,359
    
    
    
    34,801Prepaid expenses and other current assets
    
    
    26,817
    
    
    
    30,976Income taxes receivable
    
    
    
    
    
    
    3,700Deferred income taxes
    
    
    29,604
    
    
    
    32,989Total current assets
    
    
    373,084
    
    
    
    402,960Property, plant and equipment, net
    
    
    316,532
    
    
    
    362,224Intangible assets, net
    
    
    34,320
    
    
    
    39,177Goodwill
    
    
    694,264
    
    
    
    849,879Other assets
    
    
    10,780
    
    
    
    7,793Total assets
    
    $
    1,428,980
    
    
    $
    1,662,033
  F-4




---



##### Table of Contents



Renal Care Group, Inc.
 Consolidated Balance Sheets
(in thousands, except per share data)
 December 312004
    
    
    2005LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    29,075
    
    
    $
    34,158Accrued compensation
    
    
    54,129
    
    
    
    62,335Due to third-party payors
    
    
    80,007
    
    
    
    60,156Income taxes payable
    
    
    399
    
    
    
    Accrued expenses and other current liabilities
    
    
    56,326
    
    
    
    63,922Current portion of long-term debt
    
    
    23,969
    
    
    
    42,198Total current liabilities
    
    
    243,905
    
    
    
    262,769Long-term debt, net of current portion
    
    
    479,645
    
    
    
    533,923Deferred income taxes
    
    
    51,419
    
    
    
    55,827Other long-term liabilities
    
    
    16,271
    
    
    
    17,102Minority interest
    
    
    45,619
    
    
    
    52,775Total liabilities
    
    
    836,859
    
    
    
    922,396Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value, 10,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $0.01 par value, 150,000 shares authorized, 82,317 and
83,286 shares issued at December 31, 2004 and 2005, respectively
    
    
    823
    
    
    
    833Treasury stock, 14,514 and 14,766 shares of common stock at December
31, 2004 and 2005, respectively
    
    
    (372,249
    )
    
    
    (381,635
    )Additional paid-in capital
    
    
    411,888
    
    
    
    437,478Retained earnings
    
    
    551,863
    
    
    
    681,576Accumulated other comprehensive (loss) income, net of tax
    
    
    (204
    )
    
    
    1,385Total stockholders equity
    
    
    592,121
    
    
    
    739,637Total liabilities and stockholders equity
    
    $
    1,428,980
    
    
    $
    1,662,033
  F-5




---



##### Table of Contents



Renal Care Group, Inc.
 
 Consolidated Income Statements
(in thousands, except per share data)
 Year Ended December 312003
    
    
    2004
    
    
    2005Net revenue
    
    $
    1,005,319
    
    
    $
    1,345,047
    
    
    $
    1,570,226Operating costs and expenses:Patient care costs
    
    
    653,307
    
    
    
    893,478
    
    
    
    1,039,268General and administrative expenses
    
    
    90,249
    
    
    
    106,823
    
    
    
    141,210Provision for doubtful accounts
    
    
    26,200
    
    
    
    32,550
    
    
    
    31,978Depreciation and amortization
    
    
    44,905
    
    
    
    58,349
    
    
    
    71,400Total operating costs and expenses
    
    
    814,661
    
    
    
    1,091,200
    
    
    
    1,283,856Income from operations
    
    
    190,658
    
    
    
    253,847
    
    
    
    286,370Interest expense, net
    
    
    629
    
    
    
    20,628
    
    
    
    32,908Income before minority interest and income taxes
    
    
    190,029
    
    
    
    233,219
    
    
    
    253,462Minority interest
    
    
    25,431
    
    
    
    35,169
    
    
    
    35,837Income before income taxes
    
    
    164,598
    
    
    
    198,050
    
    
    
    217,625Provision for income taxes
    
    
    62,542
    
    
    
    76,217
    
    
    
    87,912Net income
    
    $
    102,056
    
    
    $
    121,833
    
    
    $
    129,713Net income per share:Basic
    
    $
    1.40
    
    
    $
    1.80
    
    
    $
    1.90Diluted
    
    $
    1.37
    
    
    $
    1.74
    
    
    $
    1.83Weighted average shares outstanding:Basic
    
    
    72,719
    
    
    
    67,581
    
    
    
    68,110Diluted
    
    
    74,753
    
    
    
    69,892
    
    
    
    70,834
  F-6




---



##### Table of Contents



Renal Care Group, Inc.
 
 Consolidated Statements of Stockholders Equity
(in thousands)
 AccumulatedOtherAdditional
    
    
    
    
    
    
    Comprehensive
    
    
    TotalCommon Stock
    
    
    Treasury Stock
    
    
    Paid-In
    
    
    Retained
    
    
    (Loss)/Income
    
    
    StockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Net of Tax
    
    
    EquityBalance at December 31, 2002
    
    
    76,764
    
    
    $
    768
    
    
    
    4,475
    
    
    $
    (93,953
    )
    
    $
    309,099
    
    
    $
    327,974
    
    
    $
    
    
    
    $
    543,888Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,056
    
    
    
    
    
    
    
    102,056Common stock issued and
related income tax benefit
    
    
    3,701
    
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    65,315
    
    
    
    
    
    
    
    
    
    
    
    65,352Repurchase of common stock held
in treasury
    
    
    
    
    
    
    
    
    
    
    5,487
    
    
    
    (140,451
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (140,451
    )Balance at December 31, 2003
    
    
    80,465
    
    
    
    805
    
    
    
    9,962
    
    
    
    (234,404
    )
    
    
    374,414
    
    
    
    430,030
    
    
    
    
    
    
    
    570,845Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,833
    
    
    
    
    
    
    
    121,833Other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (204
    )
    
    
    (204
    )Total
comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    121,833
    
    
    
    (204
    )
    
    
    121,629Common stock issued and
related income tax benefit
    
    
    1,852
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    37,474
    
    
    
    
    
    
    
    
    
    
    
    37,492Repurchase of common stock
held in treasury
    
    
    
    
    
    
    
    
    
    
    4,552
    
    
    
    (137,845
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (137,845
    )Balance at December 31, 2004
    
    
    82,317
    
    
    
    823
    
    
    
    14,514
    
    
    
    (372,249
    )
    
    
    411,888
    
    
    
    551,863
    
    
    
    (204
    )
    
    
    592,121Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,713
    
    
    
    
    
    
    
    129,713Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,589
    
    
    
    1,589Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,713
    
    
    
    1,589
    
    
    
    131,302Common stock issued and
related income tax benefit
    
    
    969
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    25,590
    
    
    
    
    
    
    
    
    
    
    
    25,600Repurchase of common stock
held in treasury
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    (9,386
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,386
    )Balance at December 31, 2005
    
    
    83,286
    
    
    $
    833
    
    
    
    14,766
    
    
    $
    (381,635
    )
    
    $
    437,478
    
    
    $
    681,576
    
    
    $
    1,385
    
    
    $
    739,637
  F-7




---



##### Table of Contents



Renal Care Group, Inc.
 
 Consolidated Statements of Cash Flows
(in thousands)
 Year Ended December 312003
    
    
    2004
    
    
    2005OPERATING ACTIVITIESNet income
    
    $
    102,056
    
    
    $
    121,833
    
    
    $
    129,713Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    44,905
    
    
    
    58,349
    
    
    
    71,400Loss on sale of property and equipment
    
    
    886
    
    
    
    1,123
    
    
    
    589Income applicable to minority interest
    
    
    25,431
    
    
    
    35,169
    
    
    
    35,837Distributions to minority shareholders
    
    
    (24,634
    )
    
    
    (26,073
    )
    
    
    (21,966
    )Deferred income taxes
    
    
    19,517
    
    
    
    15,821
    
    
    
    10,321Changes in operating assets and liabilities, net of effects from acquisitions:Accounts receivable
    
    
    (20,253
    )
    
    
    (56,284
    )
    
    
    (21,488
    )Inventories
    
    
    (2,754
    )
    
    
    8,762
    
    
    
    (10,929
    )Prepaid expenses and other current assets
    
    
    (8,564
    )
    
    
    4,208
    
    
    
    (3,690
    )Accounts payable
    
    
    3,140
    
    
    
    (18,265
    )
    
    
    4,271Accrued compensation
    
    
    8,553
    
    
    
    1,646
    
    
    
    8,078Due to third-party payors
    
    
    13,313
    
    
    
    26,741
    
    
    
    (19,851
    )Accrued expenses and other current liabilities
    
    
    8,838
    
    
    
    (15,673
    )
    
    
    2,758Income taxes
    
    
    10,217
    
    
    
    13,696
    
    
    
    5,376Other long-term liabilities
    
    
    5,898
    
    
    
    6,473
    
    
    
    (447
    )Net cash provided by operating activities
    
    
    186,549
    
    
    
    177,526
    
    
    
    189,972INVESTING ACTIVITIESProceeds from sale of property and equipment
    
    
    2,270
    
    
    
    4,569
    
    
    
    483Cash paid for acquisitions, net of cash acquired
    
    
    (14,154
    )
    
    
    (297,885
    )
    
    
    (146,809
    )Cash paid for noncontrolling interests in consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    (50,984
    )Purchases of property and equipment
    
    
    (63,762
    )
    
    
    (103,363
    )
    
    
    (91,408
    )Change in other assets
    
    
    (2,858
    )
    
    
    (11,158
    )
    
    
    3,205Net cash used in investing activities
    
    
    (78,504
    )
    
    
    (407,837
    )
    
    
    (285,513
    )FINANCING ACTIVITIESNet proceeds from issuance of long-term debt
    
    
    
    
    
    
    325,000
    
    
    
    100,000Payments on long-term debt
    
    
    (380
    )
    
    
    (12,188
    )
    
    
    (22,345
    )Net payments under line of credit
    
    
    (7,080
    )
    
    
    (1,831
    )
    
    
    (5,148
    )Net proceeds from issuance of common stock
    
    
    51,802
    
    
    
    24,811
    
    
    
    17,000Repurchase of treasury shares
    
    
    (140,451
    )
    
    
    (137,845
    )
    
    
    (9,386
    )Net cash (used in) provided by financing activities
    
    
    (96,109
    )
    
    
    197,947
    
    
    
    80,121Increase (decrease) in cash and cash equivalents
    
    
    11,936
    
    
    
    (32,364
    )
    
    
    (15,420
    )Cash and cash equivalents, at beginning of year
    
    
    38,359
    
    
    
    50,295
    
    
    
    17,931Cash and cash equivalents, at end of year
    
    $
    50,295
    
    
    $
    17,931
    
    
    $
    2,511
  F-8




---



##### Table of Contents



Renal Care Group, Inc.
 Consolidated Statements of Cash Flows
(in thousands)
 Year Ended December 312003
    
    
    2004
    
    
    2005DISCLOSURES OF CASH FLOW INFORMATION:Cash paid during the year for:Interest
    
    $
    922
    
    
    $
    19,198
    
    
    $
    36,548Income taxes
    
    $
    32,808
    
    
    $
    47,588
    
    
    $
    69,548DISCLOSURES OF BUSINESS ACQUISITIONS:Fair value of assets acquired
    
    $
    14,388
    
    
    $
    567,576
    
    
    $
    150,486Liabilities assumed
    
    
    234
    
    
    
    269,691
    
    
    
    3,677Cash paid for acquisitions, net of cash acquired
    
    $
    14,154
    
    
    $
    297,885
    
    
    $
    146,809
  F-9




---



##### Table of Contents



Renal Care Group, Inc.
 
 Notes to Consolidated Financial Statements
 (dollars in thousands, except per share data)
 December 31, 2005
 1. ORGANIZATION
  2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation and Consolidation
  Use of Estimates
  Cash Equivalents
  Inventories
  Property, Plant and Equipment
  Goodwill and Other Intangibles
 Goodwill and Other Intangible Assets
  F-10




---



##### Table of Contents



Due to Third-Party Payors
  Minority Interest
  Stock Based Compensation
 Accounting for Stock-Based Compensation-Transition and Disclosure Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees ,
 Share-Based Payment Statement of Cash Flows
  Net Revenue
  
    
    Outpatient hemodialysis;
    
    Ancillary services associated with outpatient dialysis, primarily the administration of erythropoietin (EPO) and other drugs;
    
    Home dialysis services;
    
    Inpatient hemodialysis services provided to acute care hospitals and skilled nursing facilities;
 F-11




---



##### Table of Contents




    
    Laboratory services; and
    
    Management contracts with hospital-based medical university dialysis programs.
  Medicare
  Medicaid
  Third-Party
Settlements
  Other
   Provision for Doubtful Accounts
  Income Taxes
  Self Insurance
  F-12




---



##### Table of Contents



Fair Value of Financial Instruments
 Cash and Cash Equivalents
  Accounts Receivable, Accounts Payable and Accrued Liabilities
  Long-Term Debt
  Concentration of Credit Risks
   Impairment of Goodwill and Long-Lived Assets to be Disposed Of
 Goodwill and Other Intangible Assets,
 Accounting for the Impairment or Disposal of Long-Lived Assets,
 Derivative Financial Instruments
  F-13




---



##### Table of Contents



Reclassifications
  3. ACQUISITION BY FRESENIUS MEDICAL CARE AG
    Plumbers Local #65 Pension Fund,
on behalf of itself and all others similarly situated, Plaintiff, vs. Renal Care Group, Inc.,
William P. Johnston, Gary Brukardt, Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V.
Lapham, Thomas A. Lowery, Stephen D. McMurray and C. Thomas Smith, Defendants Hawaii Structural Ironworkers Pension Trust Fund,
on behalf of itself and all others similarly situated, Plaintiff, vs. Renal Care Group, Inc.,
William P. Johnston, Gary Brukardt, Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V.
Lapham, Thomas A. Lowery, Stephen D. McMurray and C. Thomas Smith, Defendants. Indiana State District Council of Laborers and Hod Carriers Pension Fund, on behalf of itself and
others similar situated, Plaintiff, vs. Renal Care Group, Inc., William P. Johnston, Gary Brukardt,
Peter J. Grua, Joseph C. Hutts, Harry R. Jacobson, William V. Lapham, Thomas A. Lowery, Stephen D.
McMurray and C. Thomas Smith, Defendants
  F-14




---



##### Table of Contents



4. BUSINESS ACQUISITIONS
 2005 Acquisitions
   Accounts receivable, net
    
    $
    1,122Inventory and other current assets
    
    
    807Property, plant and equipment, net
    
    
    17,199Intangible assets
    
    
    7,341Goodwill
    
    
    124,017Total assets acquired
    
    
    150,486Total liabilities assumed, net
    
    
    (3,677
    )Net assets acquired
    
    $
    146,809
   2004 Acquisitions
   F-15




---



##### Table of Contents



Accounts receivable, net
    
    $
    45,410Inventory and other current assets
    
    
    23,778Property, plant and equipment, net
    
    
    50,713Intangible assets
    
    
    20,646Goodwill
    
    
    407,686Other Assets
    
    
    19,343Total assets acquired
    
    
    567,576Total liabilities assumed
    
    
    (269,691
    )Net assets acquired
    
    $
    297,885
   2003 Acquisitions
   Accounts receivable, net
    
    $
    986Inventory
    
    
    255Property, plant and equipment, net
    
    
    1,579Intangible assets
    
    
    656Goodwill
    
    
    10,912Total assets acquired
    
    
    14,388Total liabilities assumed
    
    
    (234
    )Net assets acquired
    
    $
    14,154
   F-16




---



##### Table of Contents



Pro Forma Data (unaudited)
  2004
    
    
    2005Pro forma net revenue
    
    $
    1,419,259
    
    
    $
    1,595,441Pro forma net income
    
    $
    130,807
    
    
    $
    132,444Pro forma net income per shareBasic
    
    $
    1.94
    
    
    $
    1.94Diluted
    
    $
    1.87
    
    
    $
    1.87
  5. PROPERTY, PLANT AND EQUIPMENT
  December 31,2004
    
    
    2005Medical equipment
    
    $
    190,267
    
    
    $
    224,543Computer software and equipment
    
    
    69,072
    
    
    
    86,570Furniture and fixtures
    
    
    34,011
    
    
    
    38,858Leasehold improvements
    
    
    145,882
    
    
    
    179,705Buildings
    
    
    45,132
    
    
    
    53,033Construction-in-progress
    
    
    16,341
    
    
    
    15,462500,705
    
    
    
    598,171Less accumulated depreciation
    
    
    (184,173
    )
    
    
    (235,947
    )$
    316,532
    
    
    $
    362,224
  6. GOODWILL AND INTANGIBLE ASSETS
   Balance as of December 31, 2003
    
    $
    286,578Goodwill acquired during the period
    
    
    407,686Balance as of December 31, 2004
    
    
    694,264Goodwill acquired during the period
    
    
    124,017Goodwill resulting from acquiring noncontrolling interests
    
    
    40,386Purchase price allocation period adjustment
    
    
    (8,788
    )Balance as of December 31, 2005
    
    $
    849,879
 F-17




---



##### Table of Contents



December 31,2004
    
    
    2005Carrying amount
    
    $
    49,012
    
    
    $
    59,737Accumulated amortization
    
    
    (14,692
    )
    
    
    (20,560
    )Net
    
    $
    34,320
    
    
    $
    39,177
  Year ending December 31,
    
    Amount2006
    
    $
    6,1262007
    
    
    5,4562008
    
    
    5,0882009
    
    
    3,8572010
    
    
    2,868
 7. LONG-TERM DEBT
  December 31,
    
    
    December 31,2004
    
    
    2005Term loan facility, bearing interest at a variable rate (5.7% at December 31, 2005)
    
    $
    312,813
    
    
    $
    290,469Second term loan, bearing interest at a variable rate (5.4% at December 31, 2005)
    
    
    
    
    
    
    100,0009.0% senior subordinated notes
    
    
    159,685
    
    
    
    159,685Obligations under capital leases
    
    
    4,151
    
    
    
    4,624Other
    
    
    3,357
    
    
    
    542Total indebtedness, excluding fair value premium
    
    
    480,006
    
    
    
    555,320Add: 9.0% senior subordinated notes fair value premium
    
    
    23,608
    
    
    
    20,801Total long-term debt
    
    
    503,614
    
    
    
    576,121Less: current portion
    
    
    23,969
    
    
    
    42,198$
    479,645
    
    
    $
    533,923
 Credit Agreements
   9.0% Senior Subordinated Notes
  F-18




---



##### Table of Contents



Interest Rate Swap
 Accounting for
Derivative Instruments and Hedging Activities
 Obligations Under Capital Leases
  Other
  Maturities of Long-Term Debt
  2006
    
    $
    42,1982007
    
    
    80,2502008
    
    
    207,9772009
    
    
    61,9932010
    
    
    318Thereafter
    
    
    162,584$
    555,320
 F-19




---



##### Table of Contents



Guarantor Information
  Condensed Consolidating Balance Sheets
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalAs of December 31, 2004Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    31,945
    
    
    $
    (14,014
    )
    
    $
    17,931Accounts receivable, net
    
    
    
    
    
    
    198,778
    
    
    
    76,595
    
    
    
    
    
    
    
    275,373Other current assets
    
    
    45,749
    
    
    
    23,320
    
    
    
    10,711
    
    
    
    
    
    
    
    79,780Total current assets
    
    
    45,749
    
    
    
    222,098
    
    
    
    119,251
    
    
    
    (14,014
    )
    
    
    373,084Property, plant and equipment, net
    
    
    29,542
    
    
    
    189,434
    
    
    
    96,408
    
    
    
    1,148
    
    
    
    316,532Goodwill
    
    
    1,483
    
    
    
    574,815
    
    
    
    117,666
    
    
    
    300
    
    
    
    694,264Other assets
    
    
    10,828
    
    
    
    99,033
    
    
    
    7,436
    
    
    
    (72,197
    )
    
    
    45,100Total assets
    
    $
    87,602
    
    
    $
    1,085,380
    
    
    $
    340,761
    
    
    $
    (84,763
    )
    
    $
    1,428,980Current liabilities (including intercompany assets and liabilities)
    
    $
    (699,042
    )
    
    $
    813,091
    
    
    $
    157,344
    
    
    $
    (27,488
    )
    
    $
    243,905Long-term debt
    
    
    476,184
    
    
    
    (259
    )
    
    
    3,720
    
    
    
    
    
    
    
    479,645Long-term liabilities
    
    
    64,976
    
    
    
    2,253
    
    
    
    461
    
    
    
    
    
    
    
    67,690Minority interest
    
    
    
    
    
    
    39,610
    
    
    
    5,989
    
    
    
    20
    
    
    
    45,619Stockholders equity
    
    
    245,484
    
    
    
    230,685
    
    
    
    173,247
    
    
    
    (57,295
    )
    
    
    592,121Total liabilities and stockholders equity
    
    $
    87,602
    
    
    $
    1,085,380
    
    
    $
    340,761
    
    
    $
    (84,763
    )
    
    $
    1,428,980
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalAs of December 31, 2005Cash and cash equivalents
    
    $
    
    
    
    $
    
    
    
    $
    24,006
    
    
    $
    (21,495
    )
    
    $
    2,511Accounts receivable, net
    
    
    
    
    
    
    230,013
    
    
    
    69,154
    
    
    
    (1,184
    )
    
    
    297,983Other current assets
    
    
    50,919
    
    
    
    35,516
    
    
    
    12,332
    
    
    
    3,699
    
    
    
    102,466Total current assets
    
    
    50,919
    
    
    
    265,529
    
    
    
    105,492
    
    
    
    (18,980
    )
    
    
    402,960Property, plant and equipment, net
    
    
    35,000
    
    
    
    236,315
    
    
    
    86,094
    
    
    
    4,815
    
    
    
    362,224Goodwill
    
    
    1,483
    
    
    
    734,116
    
    
    
    113,980
    
    
    
    300
    
    
    
    849,879Other assets
    
    
    9,885
    
    
    
    104,985
    
    
    
    6,066
    
    
    
    (73,966
    )
    
    
    46,970Total assets
    
    $
    97,287
    
    
    $
    1,340,945
    
    
    $
    311,632
    
    
    $
    (87,831
    )
    
    $
    1,662,033Current liabilities (including intercompany assets and liabilities)
    
    $
    (694,545
    )
    
    $
    920,339
    
    
    $
    81,436
    
    
    $
    (44,461
    )
    
    $
    262,769Long-term debt
    
    
    529,236
    
    
    
    265
    
    
    
    4,422
    
    
    
    
    
    
    
    533,923Long-term liabilities
    
    
    63,098
    
    
    
    6,558
    
    
    
    1,888
    
    
    
    1,385
    
    
    
    72,929Minority interest
    
    
    
    
    
    
    42,713
    
    
    
    10,114
    
    
    
    (52
    )
    
    
    52,775Stockholders equity
    
    
    199,498
    
    
    
    371,070
    
    
    
    213,772
    
    
    
    (44,703
    )
    
    
    739,637Total liabilities and stockholders equity
    
    $
    97,287
    
    
    $
    1,340,945
    
    
    $
    311,632
    
    
    $
    (87,831
    )
    
    $
    1,662,033
 F-20




---



##### Table of Contents



Condensed Consolidating Income Statements
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2003Net revenue
    
    $
    1,524
    
    
    $
    688,379
    
    
    $
    319,680
    
    
    $
    (4,264
    )
    
    $
    1,005,319Total operating costs and expenses
    
    
    43,611
    
    
    
    520,870
    
    
    
    254,444
    
    
    
    (4,264
    )
    
    
    814,661Income (loss) from operations
    
    
    (42,087
    )
    
    
    167,509
    
    
    
    65,236
    
    
    
    
    
    
    
    190,658Interest expense, net
    
    
    629
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    629Minority interest
    
    
    
    
    
    
    23,853
    
    
    
    1,578
    
    
    
    
    
    
    
    25,431Provision (benefit) for income taxes
    
    
    (16,231
    )
    
    
    54,584
    
    
    
    24,189
    
    
    
    
    
    
    
    62,542Net income (loss)
    
    $
    (26,485
    )
    
    $
    89,072
    
    
    $
    39,469
    
    
    $
    
    
    
    $
    102,056
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2004Net revenue
    
    $
    2,224
    
    
    $
    926,046
    
    
    $
    422,419
    
    
    $
    (5,642
    )
    
    $
    1,345,047Total operating costs and expenses
    
    
    48,077
    
    
    
    731,419
    
    
    
    317,346
    
    
    
    (5,642
    )
    
    
    1,091,200Income (loss) from operations
    
    
    (45,853
    )
    
    
    194,627
    
    
    
    105,073
    
    
    
    
    
    
    
    253,847Interest expense, net
    
    
    16,966
    
    
    
    2,630
    
    
    
    1,032
    
    
    
    
    
    
    
    20,628Minority interest
    
    
    
    
    
    
    32,418
    
    
    
    2,751
    
    
    
    
    
    
    
    35,169Provision (benefit) for income taxes
    
    
    (24,174
    )
    
    
    61,411
    
    
    
    38,980
    
    
    
    
    
    
    
    76,217Net income (loss)
    
    $
    (38,645
    )
    
    $
    98,168
    
    
    $
    62,310
    
    
    $
    
    
    
    $
    121,833
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2005Net revenue
    
    $
    2,990
    
    
    $
    1,132,875
    
    
    $
    441,025
    
    
    $
    (6,664
    )
    
    $
    1,570,226Total operating costs and expenses
    
    
    78,655
    
    
    
    876,422
    
    
    
    335,443
    
    
    
    (6,664
    )
    
    
    1,283,856Income (loss) from operations
    
    
    (75,665
    )
    
    
    256,453
    
    
    
    105,582
    
    
    
    
    
    
    
    286,370Interest expense (income), net
    
    
    36,433
    
    
    
    (4,433
    )
    
    
    908
    
    
    
    
    
    
    
    32,908Minority interest
    
    
    
    
    
    
    32,727
    
    
    
    3,110
    
    
    
    
    
    
    
    35,837Provision (benefit) for income taxes
    
    
    (38,933
    )
    
    
    87,774
    
    
    
    39,071
    
    
    
    
    
    
    
    87,912Net income (loss)
    
    $
    (73,165
    )
    
    $
    140,385
    
    
    $
    62,493
    
    
    $
    
    
    
    $
    129,713
 F-21




---



##### Table of Contents



Condensed Consolidating Statements of Cash Flows
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2003Cash flows from operating activities:Net income (loss)
    
    $
    (26,485
    )
    
    $
    89,072
    
    
    $
    39,469
    
    
    $
    
    
    
    $
    102,056Changes in operating and intercompany assets
and liabilities and non-cash items included in
net income
    
    
    136,739
    
    
    
    (53,679
    )
    
    
    10,517
    
    
    
    (9,084
    )
    
    
    84,493Net cash provided by operating activities
    
    
    110,254
    
    
    
    35,393
    
    
    
    49,986
    
    
    
    (9,084
    )
    
    
    186,549Net cash used in investing activities
    
    
    (9,985
    )
    
    
    (35,231
    )
    
    
    (34,052
    )
    
    
    764
    
    
    
    (78,504
    )Net cash used in financing activities
    
    
    (80,112
    )
    
    
    
    
    
    
    (24,633
    )
    
    
    8,636
    
    
    
    (96,109
    )Increase (decrease) in cash and cash equivalents
    
    
    20,157
    
    
    
    162
    
    
    
    (8,699
    )
    
    
    316
    
    
    
    11,936Cash and cash equivalents, at beginning of period
    
    
    
    
    
    
    2,484
    
    
    
    36,191
    
    
    
    (316
    )
    
    
    38,359Cash and cash equivalents, at end of period
    
    $
    20,157
    
    
    $
    2,646
    
    
    $
    27,492
    
    
    $
    
    
    
    $
    50,295
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2004Cash flows from operating activities:Net income (loss)
    
    $
    (38,645
    )
    
    $
    98,168
    
    
    $
    62,310
    
    
    $
    
    
    
    $
    121,833Changes in operating and intercompany assets
and liabilities and non-cash items included in
net income
    
    
    (83,456
    )
    
    
    100,204
    
    
    
    9,845
    
    
    
    29,100
    
    
    
    55,693Net cash
provided by (used in) operating activities
    
    
    (122,101
    )
    
    
    198,372
    
    
    
    72,155
    
    
    
    29,100
    
    
    
    177,526Net cash used in investing activities
    
    
    (167,881
    )
    
    
    (200,068
    )
    
    
    (41,478
    )
    
    
    1,590
    
    
    
    (407,837
    )Net cash provided by (used in) financing activities
    
    
    269,825
    
    
    
    (950
    )
    
    
    (26,224
    )
    
    
    (44,704
    )
    
    
    197,947Increase (decrease) in cash and cash equivalents
    
    
    (20,157
    )
    
    
    (2,646
    )
    
    
    4,453
    
    
    
    (14,014
    )
    
    
    (32,364
    )Cash and cash equivalents, at beginning of period
    
    
    20,157
    
    
    
    2,646
    
    
    
    27,492
    
    
    
    
    
    
    
    50,295Cash and cash equivalents, at end of period
    
    $
    
    
    
    $
    
    
    
    $
    31,945
    
    
    $
    (14,014
    )
    
    $
    17,931
 Parent
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Consolidating
    
    
    ConsolidatedCompany
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    TotalFor the year ended December 31, 2005Cash flows from operating activities:Net income (loss)
    
    $
    (73,165
    )
    
    $
    140,385
    
    
    $
    62,493
    
    
    $
    
    
    
    $
    129,713Changes in operating and intercompany assets
and liabilities and non-cash items included in
net income
    
    
    10,123
    
    
    
    107,500
    
    
    
    (40,958
    )
    
    
    (16,406
    )
    
    
    60,259Net cash
provided by (used in) operating activities
    
    
    (63,042
    )
    
    
    247,885
    
    
    
    21,535
    
    
    
    (16,406
    )
    
    
    189,972Net cash used in investing activities
    
    
    (25,229
    )
    
    
    (248,409
    )
    
    
    (8,208
    )
    
    
    (3,667
    )
    
    
    (285,513
    )Net cash provided by (used in) financing activities
    
    
    88,271
    
    
    
    524
    
    
    
    (21,266
    )
    
    
    12,592
    
    
    
    80,121Decrease in cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (7,939
    )
    
    
    (7,481
    )
    
    
    (15,420
    )Cash and cash equivalents, at beginning of period
    
    
    
    
    
    
    
    
    
    
    31,945
    
    
    
    (14,014
    )
    
    
    17,931Cash and cash equivalents, at end of period
    
    $
    
    
    
    $
    
    
    
    $
    24,006
    
    
    $
    (21,495
    )
    
    $
    2,511
 F-22




---



##### Table of Contents



8. INCOME TAXES
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Current:Federal
    
    $
    38,716
    
    
    $
    52,274
    
    
    $
    66,910State and local
    
    
    4,309
    
    
    
    8,020
    
    
    
    10,68143,025
    
    
    
    60,294
    
    
    
    77,591Deferred:Federal
    
    
    17,152
    
    
    
    14,062
    
    
    
    9,580State and local
    
    
    2,365
    
    
    
    1,861
    
    
    
    74119,517
    
    
    
    15,923
    
    
    
    10,321Provision for income taxes
    
    $
    62,542
    
    
    $
    76,217
    
    
    $
    87,912
    December 31,2004
    
    
    2005Deferred tax assets:Net operating loss carryforwards
    
    $
    9,531
    
    
    $
    7,539Capital loss carryforward
    
    
    828
    
    
    
    853Allowance for doubtful accounts
    
    
    6,973
    
    
    
    9,999Accrued vacation and other accrued liabilities
    
    
    28,243
    
    
    
    29,165Notes revaluation
    
    
    8,971
    
    
    
    7,904Investment in partnerships
    
    
    226
    
    
    
    1,205Other
    
    
    781
    
    
    
    114Less: valuation allowance
    
    
    (10,359
    )
    
    
    (8,323
    )45,194
    
    
    
    48,456Deferred tax liabilities:Depreciation
    
    
    25,967
    
    
    
    19,843Amortization
    
    
    41,042
    
    
    
    51,45167,009
    
    
    
    71,294Net deferred tax liability
    
    $
    21,815
    
    
    $
    22,838
  F-23




---



##### Table of Contents



Year Ended December 31,2003
    
    
    2004
    
    
    2005U.S. federal income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income tax, net of federal income tax benefit
    
    
    1.7
    
    
    
    2.5
    
    
    
    4.2Decrease in valuation allowances
    
    
    1.0
    
    
    
    0.7
    
    
    
    (0.8
    )Nondeductible merger-related costs
    
    
    
    
    
    
    
    
    
    
    1.8Other
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.2Effective income tax rate
    
    
    38.0
    %
    
    
    38.5
    %
    
    
    40.4
    %
 9. STOCKHOLDERS EQUITY (numbers of shares in thousands)
 Stock Option Plans
        F-24




---



##### Table of Contents



Free
 Standing
    
    

2004
 Employee
 Plan
    
    

1999
 Employee
 Plan
    
    

1996

Employee 
Plan
    
    

Equity

Plan
    
    

1994
Plan
    
    

Directors
Plan
    
    

RDM 
Plan
    
    

Exercise
Price 
Range
    
    

Weighted
Average
Exercise

PriceBalance at
December 31, 2002
    
    
    926
    
    
    
    
    
    
    
    6,600
    
    
    
    2,896
    
    
    
    25
    
    
    
    13
    
    
    
    110
    
    
    
    20
    
    
    $
    2.22$21.80
    
    
    $
    14.44Granted
    
    
    
    
    
    
    
    
    
    
    2,868
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43
    
    
    
    
    
    
    
    20.00  25.21
    
    
    
    22.97Exercised
    
    
    (344
    )
    
    
    
    
    
    
    (1,986
    )
    
    
    (1,200
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (7
    )
    
    
    2.22  19.35
    
    
    
    13.87Forfeited
    
    
    (52
    )
    
    
    
    
    
    
    (817
    )
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.63  23.10
    
    
    
    18.35Balance at
December 31, 2003
    
    
    530
    
    
    
    
    
    
    
    6,665
    
    
    
    1,604
    
    
    
    24
    
    
    
    13
    
    
    
    153
    
    
    
    13
    
    
    
    2.22  25.21
    
    
    
    17.13Granted
    
    
    
    
    
    
    1,639
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    27.92  33.16
    
    
    
    31.57Exercised
    
    
    (189
    )
    
    
    
    
    
    
    (847
    )
    
    
    (546
    )
    
    
    (6
    )
    
    
    
    
    
    
    (34
    )
    
    
    (4
    )
    
    
    2.22  23.10
    
    
    
    14.02Forfeited
    
    
    (34
    )
    
    
    (5
    )
    
    
    (114
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.63  31.57
    
    
    
    20.94Balance at
December 31, 2004
    
    
    307
    
    
    
    1,634
    
    
    
    5,704
    
    
    
    1,053
    
    
    
    18
    
    
    
    13
    
    
    
    212
    
    
    
    9
    
    
    
    2.22  33.16
    
    
    
    20.44Granted
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    39.49  46.36
    
    
    
    42.04Exercised
    
    
    (183
    )
    
    
    (50
    )
    
    
    (338
    )
    
    
    (220
    )
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    5.33  31.57
    
    
    
    14.94Forfeited
    
    
    
    
    
    
    (28
    )
    
    
    (247
    )
    
    
    (9
    )
    
    
    (1
    )
    
    
    (13
    )
    
    
    
    
    
    
    (1
    )
    
    
    2.22  31.57
    
    
    
    21.14Balance at
December 31, 2005
    
    
    124
    
    
    
    1,656
    
    
    
    5,119
    
    
    
    824
    
    
    
    16
    
    
    
    
    
    
    
    271
    
    
    
    7
    
    
    $
    2.22$46.36
    
    
    $
    21.48Available for grant at
December 31, 2005
    
    
    
    
    
    
    5,056
    
    
    
    1,684
    
    
    
    367
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    Exercisable at
December 31, 2003
    
    
    441
    
    
    
    
    
    
    
    1,560
    
    
    
    1,499
    
    
    
    24
    
    
    
    13
    
    
    
    152
    
    
    
    14Exercisable at
December 31, 2004
    
    
    289
    
    
    
    25
    
    
    
    2,499
    
    
    
    1,038
    
    
    
    18
    
    
    
    13
    
    
    
    212
    
    
    
    9Exercisable at
December 31, 2005
    
    
    124
    
    
    
    1,656
    
    
    
    5,119
    
    
    
    824
    
    
    
    16
    
    
    
    
    
    
    
    271
    
    
    
    7
   Number
    
    Weighted
    
    
    
    
    
    NumberOutstanding as
    
    Average
    
    Weighted
    
    Exercisable as
    
    Weightedof
    
    Remaining
    
    Average
    
    of
    
    AverageRange of
    
    December 31,
    
    Contractual
    
    Exercise
    
    December 31,
    
    ExerciseExercise Prices
    
    2005
    
    Life
    
    Price
    
    2005
    
    Price$2.22  $18.68
    
    
    2,298
    
    
    
    3.70
    
    
    $
    13.11
    
    
    
    2,298
    
    
    $
    13.11$18.87  $23.10
    
    
    3,597
    
    
    
    7.06
    
    
    
    21.01
    
    
    
    3,597
    
    
    
    21.01$23.26  $39.49
    
    
    2,063
    
    
    
    8.48
    
    
    
    30.92
    
    
    
    2,063
    
    
    
    30.92$46.36  $46.36
    
    
    59
    
    
    
    9.44
    
    
    
    46.36
    
    
    
    59
    
    
    
    46.36$2.22  $46.36
    
    
    8,017
    
    
    
    6.48
    
    
    $
    21.48
    
    
    
    8,017
    
    
    $
    21.48
  Year Ended December 31,2003
    
    
    2004
    
    
    2005Expected volatility
    
    
    39
    %
    
    
    37
    %
    
    
    35
    %Expected dividend yield
    
    None
    
    
    None
    
    
    NoneRisk-free interest rate
    
    
    3.25
    %
    
    
    3.70
    %
    
    
    4.20
    %Expected life of options
    
    5 years
    
    
    4 years
    
    
    4 years
 F-25




---



##### Table of Contents



Accounting for
Stock-Based Compensation
 Year Ended December 312003
    
    
    2004
    
    
    2005Net income, as reported
    
    $
    102,056
    
    
    $
    121,833
    
    
    $
    129,713Add: stock-based
compensation expense, net
of related tax effects,
included in the
determination of net income
as reported
    
    
    424
    
    
    
    244
    
    
    
    431Less: stock-based
compensation expense, net
of related tax effects,
determined by the fair
value-based method
    
    
    (8,663
    )
    
    
    (10,365
    )
    
    
    (23,236
    )Pro forma net income
    
    $
    93,817
    
    
    $
    111,712
    
    
    $
    106,908Net income per share:Basic, as reported
    
    $
    1.40
    
    
    $
    1.80
    
    
    $
    1.90Basic, pro forma
    
    $
    1.29
    
    
    $
    1.65
    
    
    $
    1.57Diluted, as reported
    
    $
    1.37
    
    
    $
    1.74
    
    
    $
    1.83Diluted, pro forma
    
    $
    1.26
    
    
    $
    1.60
    
    
    $
    1.51
  Stock Split
  Authorized Shares
  F-26




---



##### Table of Contents



10. LEASES
  Operating
    
    
    CapitalLeases
    
    
    Leases2006
    
    $
    47,961
    
    
    $
    8002007
    
    
    45,417
    
    
    
    7432008
    
    
    40,959
    
    
    
    6582009
    
    
    35,226
    
    
    
    5882010
    
    
    30,828
    
    
    
    603Thereafter
    
    
    101,915
    
    
    
    3,734Less: portion representing interest
    
    
    
    
    
    
    (2,502
    )$
    302,306
    
    
    $
    4,624
  11. EMPLOYEE BENEFIT PLANS
 Defined Contribution Plans
  Defined Benefit Plans
 Employers Accounting for Pensions.
  Employee Stock Purchase Plan
  12. EARNINGS PER SHARE
  F-27




---



##### Table of Contents



2003
    
    
    2004
    
    
    2005Numerator:Numerator for basic and diluted net income per share
    
    $
    102,056
    
    
    $
    121,833
    
    
    $
    129,713Denominator:Denominator for basic net income per share weighted-average shares
    
    
    72,719
    
    
    
    67,581
    
    
    
    68,110Effect of dilutive securities:Stock options
    
    
    2,034
    
    
    
    2,311
    
    
    
    2,724Denominator for diluted net income per share-adjusted
weighted-average shares and assumed conversions
    
    
    74,753
    
    
    
    69,892
    
    
    
    70,834Basic net income per share
    
    $
    1.40
    
    
    $
    1.80
    
    
    $
    1.90Diluted net income per share
    
    $
    1.37
    
    
    $
    1.74
    
    
    $
    1.83
 13. COMMITMENTS AND CONTINGENCIES
       F-28




---



##### Table of Contents



14. SELECTED QUARTERLY FINANCIAL DATA (unaudited)
  2004First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterNet revenue
    
    $
    278,028
    
    
    $
    340,854
    
    
    $
    356,111
    
    
    $
    370,054Operating expenses
    
    
    209,158
    
    
    
    265,239
    
    
    
    274,200
    
    
    
    284,254Depreciation and amortization
    
    
    12,163
    
    
    
    14,900
    
    
    
    15,344
    
    
    
    15,942Income from operations
    
    
    56,707
    
    
    
    60,715
    
    
    
    66,567
    
    
    
    69,858Interest expense, net
    
    
    965
    
    
    
    5,765
    
    
    
    6,869
    
    
    
    7,029Minority interest
    
    
    7,214
    
    
    
    7,690
    
    
    
    10,158
    
    
    
    10,107Income before income taxes
    
    
    48,528
    
    
    
    47,260
    
    
    
    49,540
    
    
    
    52,722Provision for income taxes
    
    
    18,441
    
    
    
    18,077
    
    
    
    19,072
    
    
    
    20,627Net income
    
    $
    30,087
    
    
    $
    29,183
    
    
    $
    30,468
    
    
    $
    32,095Net income per share:Basic
    
    $
    0.43
    
    
    $
    0.44
    
    
    $
    0.45
    
    
    $
    0.48Diluted
    
    $
    0.42
    
    
    $
    0.42
    
    
    $
    0.44
    
    
    $
    0.46
 2005First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterNet revenue
    
    $
    373,509
    
    
    $
    384,329
    
    
    $
    402,230
    
    
    $
    410,158Operating expenses
    
    
    285,413
    
    
    
    299,862
    
    
    
    307,560
    
    
    
    319,621Depreciation and amortization
    
    
    16,787
    
    
    
    17,775
    
    
    
    18,173
    
    
    
    18,665Income from operations
    
    
    71,309
    
    
    
    66,692
    
    
    
    76,497
    
    
    
    71,872Interest expense, net
    
    
    7,261
    
    
    
    7,981
    
    
    
    8,715
    
    
    
    8,951Minority interest
    
    
    9,362
    
    
    
    9,132
    
    
    
    9,915
    
    
    
    7,428Income before income taxes
    
    
    54,686
    
    
    
    49,579
    
    
    
    57,867
    
    
    
    55,493Provision for income taxes
    
    
    21,054
    
    
    
    21,362
    
    
    
    22,636
    
    
    
    22,860Net income
    
    $
    33,632
    
    
    $
    28,217
    
    
    $
    35,231
    
    
    $
    32,633Net income per share:Basic
    
    $
    0.50
    
    
    $
    0.41
    
    
    $
    0.52
    
    
    $
    0.48Diluted
    
    $
    0.48
    
    
    $
    0.40
    
    
    $
    0.50
    
    
    $
    0.46
 F-29




---



##### Table of Contents



Schedule II
 Renal Care Group, Inc.
Consolidated Schedule  Valuation and Qualifying Accounts
(in thousands)
 Balance
    
    
    
    
    
    Amount
    
    
    
    
    
    BalanceBeginning
    
    Allowances
    
    Charged to
    
    
    
    
    
    End ofof Period
    
    Acquired
    
    Expense
    
    Write-Offs
    
    PeriodAllowance for doubtful accounts:Year ended December 31, 2003
    
    $
    43,677
    
    
    $
    
    
    
    $
    26,200
    
    
    $
    (37,716
    )
    
    $
    32,161Year ended December 31, 2004
    
    $
    32,161
    
    
    $
    19,651
    
    
    $
    32,550
    
    
    $
    (39,231
    )
    
    $
    45,131Year ended December 31, 2005
    
    $
    45,131
    
    
    $
    
    
    
    $
    31,978
    
    
    $
    (48,549
    )
    
    $
    28,560
 F-30




---



##### Table of Contents



SIGNATURES
 th
  By:
    
    /s/ Gary A. BrukardtGary A. BrukardtPresident and Chief Executive
Officer
   /s/ Gary A. Brukardt

Gary A. Brukardt
    
    President, Chief Executive
Officer and Director
(Principal ExecutiveOfficer)
    
    March 13, 2006/s/ David M. Dill

David M. Dill
    
    Executive Vice President,
ChiefFinancial Officer and
Treasurer(Principal
Financial and Accounting
Officer)
    
    March 13, 2006/s/ Peter J. Grua

Peter J. Grua
    
    Director
    
    March 13, 2006/s/ Joseph C. Hutts

Joseph C. Hutts
    
    Director
    
    March 13, 2006/s/ Harry R. Jacobson, M.D.

Harry R. Jacobson, M.D.
    
    Director
    
    March 13, 2006/s/ William P. Johnston

William P. Johnston
    
    Chairman of the Board Director
    
    March 13, 2006/s/ William V. Lapham

William V. Lapham
    
    Director
    
    March 13, 2006/s/ Thomas A. Lowery, M.D.

Thomas A. Lowery, M.D.
    
    Director
    
    March 13, 2006/s/ Stephen D. McMurray, M.D.

Stephen D. McMurray, M.D.
    
    Director
    
    March 13, 2006/s/ C. Thomas Smith

C. Thomas Smith
    
    Director
    
    March 13, 2006
 43




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description of Exhibits2.1
    
    Agreement and Plan of Merger dated February 2, 2004 by and among Renal Care Group, Inc., Titan Merger
Subsidiary, Inc., National Nephrology Associates, Inc. and certain equity holders of National Nephrology
Associates, Inc.(24)2.1.1
    
    Agreement, dated May 3, 2005, by
and among Renal Care Group, Inc., Fresenius Medical Care AG,
Fresenius Medical Care Holdings, Inc. and Florence Acquisitions, Inc.(28)2.1.2
    
    Letter Agreement among Fresenius
AG, Fresenius Medical Care AG, Fresenius Medical Care Holdings, Inc.
and Renal Care Group, Inc., dated May 3, 2005(28)3.1
    
    Amended and Restated Certificate of Incorporation of the Company (1)3.1.1
    
    Certificate of Amendment of Certificate of Incorporation of the Company(2)3.1.2
    
    Certificate of Designation, Preferences, and Rights of Series A Junior Participating Preferred Stock of
the Company (2)3.1.3
    
    Certificate of Amendment of Amended and Restated Certification of Incorporation of the Company(10)3.1.4
    
    Certificate of Amendment of Amended
and Restated Certificate of Incorporation of the Company (26)3.2
    
    Amended and Restated Bylaws of the Company (1)4.1
    
    Indenture, dated as of October 22, 2003, by and among National Nephrology Associates, Inc., the
Guarantors named therein, and Wells Fargo Bank Minnesota, N.A.(24)4.2
    
    First Supplemental Indenture, dated as of April 2, 2004, by and among Renal Care Group, Inc., the
Guarantors named therein and Wells Fargo Bank, N.A.(24)4.3
    
    Reserved4.4
    
    Purchase Agreement, dated as of October 16, 2003, by and among National Nephrology Associates, Inc., the
Guarantors named therein and the Initial Purchasers named therein(24)4.5
    
    Registration Rights Agreement dated as of October 22, 2003, by and among National Nephrology Associates,
Inc., the Guarantors named herein and the Initial Purchasers named herein(24)4.6
    
    Form of 9.0% Senior Subordinated Note Due 2011, including Form of Guarantee (included in Exhibit 4.1)4.7
    
    First Amendment, dated as of May 3,
2005, to the Shareholder Protection Rights Agreement dated as of May
2, 1990 between Renal Care Group, Inc. and Wachovia Bank, National
Association, as rights agent (incorporated by reference from Exhibit
4.1 to the Companys current report on Form 8-K filed on May 3,
2005)10.1
    
    Employment Agreement, effective as of December 15, 2003, between the Company and Raymond Hakim, M.D.(22)*10.2
    
    Medical Director Services Agreement, dated February 12, 1996, between the Company and Indiana Dialysis
Management, P.C. (4)10.2.1
    
    Amendment Number 1, to Medical Director Services Agreement, effective as of January 1, 1999, between the
Company and Indiana Dialysis Management, P.C.(22)10.2.2
    
    Amendment Number 2 to Medical Director Services Agreement, effective as of February 12, 2002, between the
Company and Indiana Dialysis Management.(22)10.3
    
    Medical Director Services Agreement, effective as of February 12, 2003, between the Company and Tyler
Nephrology Associates, P.A.(22)10.4
    
    Lease Agreement, dated February 12, 1996, among the Company and Thomas A. Lowery, M.D., James R. Cotton,
M.D., Roy D. Gerard, M.D. and Kevin A. Curran, M.D., relating to property in Carthage, Texas (4)10.5
    
    Lease Agreement, dated February 12, 1996, among the Company and Thomas A. Lowery, M.D., James R. Cotton,
M.D., Roy D. Gerard, M.D., and Kevin A. Curran, M.D., relating to property in Tyler, Texas (4)10.6
    
    Sublease Agreement, dated February 12, 1996, with Tyler Nephrology Associates, Inc. (4)10.7
    
    Dialysis Center Management Agreement, effective as of July 1, 2001, between Renal Group, Inc. and
Vanderbilt University (22)
 44




---



##### Table of Contents



ExhibitNumber
    
    Description of Exhibits10.8
    
    1996 Stock Option Plan for Outside Directors (1)*10.9
    
    Fourth Amended and Restated 1996 Stock Incentive Plan (5)*10.10
    
    Amended and Restated Employee Stock Purchase Plan (2)*10.11
    
    Employment Agreement, April 28, 2003, between the Company and Gary Brukardt (20)*10.12
    
    Credit Agreement, dated as of February 10, 2004, by and among Renal Care Group, Inc., the Guarantors (as
defined therein), the Lenders (as defined therein) and Bank of America, N.A. as Administrative Agent (16)10.12.1
    
    Incremental Term Loan Commitment
Agreement, dated as of May 27, 2005, by and among Renal Care Group,
Inc., Guarantors (as defined therein) and Bank of America, N.A. (29)10.13
    
    Stock Option Agreement, dated April 30, 1997, between the Company and Gary Brukardt (2)*10.14
    
    Asset Purchase Agreement with an effective date of February 1, 1997 among the Company, RCG Indiana, LLC,
Eastern Indiana Kidney Center, Indiana Kidney Center, Indiana Kidney Center South, LLC, St. Vincent
Dialysis Center, Saint Joseph Dialysis Center and Indiana Dialysis Services PC and Community Hospitals of
Indiana, Inc., Seton Health Corporation of Central Indiana, Inc., Reid Hospital & Health Care Services,
Inc., and Saint Joseph Hospital and Health Care Center of Kokomo, Indiana, Inc. and Indiana Dialysis
Services, PC, Reid Hospital Physicians, Greenwood Dialysis Services, PC and certain individuals named on
the signature pages thereto and Indiana Nephrology & Internal Medicine, P.C. (6)10.15
    
    Stock Option Agreement, dated May 22, 1998, between the Company and Gary A. Brukardt (7)*10.16
    
    Stock Option Agreement, dated May 22, 1998, between the Company and Raymond Hakim, M.D. (7)*10.17
    
    Stock Option Agreement, dated June 5, 1998, between the Company and Joseph C. Hutts (7)*10.18
    
    Stock Option Agreement, dated June 5, 1998, between the Company and Harry R. Jacobson, M.D. (7)*10.19
    
    Agreement No. 20060024, between Renal Care Group, Inc. and Amgen Inc. (The Company has requested
confidential treatment of certain portions of this Exhibit.)10.20
    
    Restricted Stock Award Agreement, dated January 25, 1999, between the Company and Harry R. Jacobson (8)*10.21
    
    Restricted Stock Award Agreement, dated January 25, 1999, between the Company and Stephen D. McMurray (8)*10.22
    
    Renal Care Group, Inc. 1999 Long-Term Incentive Plan (9)*10.22.1
    
    Amendment to the Renal Care Group, Inc. 1999 Long-Term Incentive Plan (12)*10.22.2
    
    Amended and Restated Renal Care Group, Inc. 1999 Long-Term Incentive Plan (19)*10.23
    
    Stock Option Agreement, dated August 30, 1999, between the Company and Gary A. Brukardt (11)*10.24
    
    Stock Option Agreement, dated August 30, 1999, between the Company and Raymond Hakim, M.D. (11)*10.25
    
    Stock Option Agreement, dated June 2, 1999, between the Company and Joseph C. Hutts (11)*
 45




---



##### Table of Contents



ExhibitNumber
    
    Description of Exhibits10.26
    
    Stock Option Agreement, dated June 2, 1999, between the Company and Harry R. Jacobson, M.D. (11)*10.27
    
    Stock Option Agreement, dated July 22, 1999, between the Company and William V. Lapham (11)*10.28
    
    Stock Option Agreement, dated June 8, 2000, between the Company and Joseph C. Hutts (13)*10.29
    
    Stock Option Agreement, dated June 8, 2000, between the Company and Harry R. Jacobson, M.D.(13)*10.30
    
    Stock Option Agreement, dated June 8, 2000, between the Company and William V. Lapham(13)*10.31
    
    Stock Option Agreement, dated September 19, 2000, between the Company and Gary A. Brukardt(13)*10.32
    
    Stock Option Agreement, dated September 19, 2000, between the Company and Raymond Hakim, M.D.(13)*10.33
    
    Stock Option Agreement dated August 2, 2001 between the Company and Gary Brukardt(14)*10.34
    
    Stock Option Agreement dated August 2, 2001 between the Company and Raymond Hakim(14)*10.35
    
    Stock Option Agreement dated June 7, 2001 between the Company and Joseph C. Hutts(15)*10.36
    
    Stock Option Agreement dated June 7, 2001 between the Company and William V. Lapham(15)*10.37
    
    Form of Stock Option Agreement for stock option grants to executive employees under the Companys 1999
Long-Term Incentive Plan(17)10.38
    
    Form of Stock Option Agreement for stock option grants to non-management directors under the Companys
1996 Stock Option Plan for Outside Directors(17)10.39
    
    Medical Director Services Agreement, dated May 1, 2002, between the Company and Tyler Nephrology
Associates, P.A.(18)10.40
    
    Medical Director Services Agreement, dated July 11, 2002 between the Company and Tyler Nephrology
Associates, P.A.(18)10.41
    
    Renal Care Group Supplemental Benefit Plan(19)*10.42
    
    [RESERVED]10.43
    
    Form of Indemnity Agreement between the Company and directors and certain officers(19)10.44
    
    Employment Agreement, effective as of November 3, 2003, between the Company and David M. Dill(22)*10.45
    
    Employment Agreement, effective as of November 30, 2003, between the Company and Timothy P. Martin(22)*10.46
    
    Employment Agreement effective as of December 31, 2003 between the Company and Douglas B. Chappell(22)*10.47
    
    2004 Stock and Incentive Compensation Plan(23)10.48
    
    Form of Stock Option Agreement for stock option grants to executive employees under the Companys 2004
Stock and Incentive Compensation Plan(25)10.49
    
    Employment Agreement, effective as
of February 3, 2005, between the Company and David M. Maloney(26)*10.50
    
    Supplemental Executive Retirement
Plan for certain executive officers effective January 1, 2005(27)10.51
    
    Limited Liability Company Agreement
for Maumee Dialysis Services, LLC effective December 1, 2001(27)10.51.1
    
    Management Agreement dated December
1, 2001 between Maumee Dialysis Services, LLC and DMN of Indiana
Corporation(27)10.51.2
    
    Amendment Number 1 to Limited
Liability Company Agreement dated July 1, 2002 between Maumee
Dialysis Services LLC, RCG Indiana, LLC and Indiana Dialysis Management,
P.C.(27)
 46




---



##### Table of Contents



ExhibitNumber
    
    Description of Exhibits10.52
    
    Limited Liability Company Agreement
for Three Rivers Dialysis Services, LLC effective March 31, 2001(27)10.52.1
    
    Management Agreement dated March
31, 2001 between Three Rivers Dialysis Services, LLC and DMN of
Indiana Corporation(27)10.52.2
    
    Amendment Number 1 to Limited
Liability Company Agreement dated July 1, 2002 between Three Rivers
Dialysis Services, LLC, RCG Indiana, LLC and Indiana Dialysis
Management, P.C.(27)21.1
    
    List of subsidiaries of the Company23.1.1
    
    Consent of Ernst & Young LLP23.1.2
    
    Consent of Ernst & Young LLP24.1
    
    Power of Attorney (contained on the signature page of this report)31.1
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1* *
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2* *
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 (1)
    
    Incorporated by reference to the Companys Registration Statement on Form S-1 (Reg. No.
333-80221) effective February 6, 1996.(2)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30, 1997
(Commission File No. 0-27640).(3)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed May 5, 1997
(Commission File No. 0-27640).(4)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended March 31, 1996
(Commission File No. 0-27640).(5)
    
    Incorporated by reference to Appendix A to the Companys definitive Proxy Statement filed
April 27, 1998 relating to the 1998 Annual Meeting of Stockholders (Commission File No.
0-27640).(6)
    
    Incorporated by reference to the Companys Form 10-K for the year ended December 31, 1996
(Commission File No. 0-27640).(7)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30, 1998
(Commission File No. 0-27640).(8)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended March 31, 1999
(Commission File No. 0-27640).(9)
    
    Incorporated by reference to Appendix A to the Companys definitive Proxy Statement filed
April 27, 1999 relating to the 1999 Annual Meeting of Stockholders (Commission File No.
0-27640).(10)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30, 1999
(Commission File No. 0-27640).(11)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 1999
(Commission File No. 0-27640).(12)
    
    Incorporated by reference to the Companys definitive Proxy Statement filed April 28, 2000
relating to the 2001 Annual Meeting of Stockholders (Commission File No. 0-27640).(13)
    
    Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2000
(Commission File No. 0-27640).(14)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2001
(Commission File No. 0-27640).(15)
    
    Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2001
(Commission File No. 0-27640).(16)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30, 2002
(Commission File No. 0-27640).(17)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2002
(Commission File No. 0-27640).(18)
    
    Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2002
(Commission File No. 0-27640).(19)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended March 31, 2003
(Commission File No. 0-27640).(20)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended June 30, 2003
(Commission File No. 0-27640).(21)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2003
(Commission File No. 0-27640).(22)
    
    Incorporated by reference to the Companys Form 10-K for the year ended December 31, 2003
(Commission File No. 0-27640).(23)
    
    Incorporated by reference to the Companys definitive Proxy Statement filed May 6, 2004
relating to the 2004 Annual Meeting of Stockholders (Commission File No. 0-27640).(24)
    
    Incorporated by reference to the Companys Form 8-K dated as of April 26, 2004 (Commission
File No. 0-27640).(25)
    
    Incorporated by reference to the Companys Form 10-Q for the quarter ended September 30, 2004
(Commission File No. 0-27640).(26)
    
    Incorporated by reference to the Companys Form 10-K for
the year ended December 31, 2005
(Commission File No. 0-27640).(27)
    
    Incorporated by reference to the Companys Form 10-Q for
the quarter ended March 31, 2005
(Commission File No. 0-27640).(28)
    
    Incorporated by reference to the Companys Form 8-K
dated as of May 3, 2005 (Commission File No. 000-27640). 47