COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2012

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

(9)  COMMITMENTS AND CONTINGENCIES

Operating Lease Obligations

The Company leases office space under leases accounted for as operating leases. The original lease terms are generally one to five years with options to renew the leases for specific periods subsequent to their original terms. Rent expense for these leases totaled $4,175,073, $4,314,063 and $4,303,217 for the years ended December 31, 2010, 2011 and 2012, respectively.

Future minimum lease commitments for operating leases with remaining terms of one or more years are as follows:

Years ending December 31,
2013	$	3,527,285
2014		3,064,108
2015		2,304,569
2016		1,503,431
2017		717,095
Thereafter		262,834
	$	11,379,322

Certain of the Company's office space leases are structured to include scheduled and specified rent increases over the lease term.  From time to time the Company receives incentives from the landlord including tenant improvement discounts and periods of free rent.  The Company recognizes the effects of these rent escalations, tenant improvement discounts and periods of free rent on a straight-line basis over the lease terms.

Contingent Liabilities

As part of the Office acquisitions completed in 2009, the Company recorded contingent liabilities to recognize an estimated amount to be paid as part of the acquisition agreement.  These contingent liabilities are recorded at estimated fair values as of the date of acquisition, are payable beginning after four years from the acquisition date and are calculated at a multiple of the then trailing twelve-months operating cash flows.  The Company remeasures the contingent liability to fair value each reporting date until the contingency is resolved.  Any changes to the fair value are recognized into the income statement when determined.

On November 2, 2011, the Company terminated for cause a dentist whose Office had been acquired on December 30, 2009.  As part of the acquisition, the Company recorded an estimated fair value of contingent liabilities of $280,000 assumed in the acquisition.  Pursuant to the purchase agreement, the Company paid $5,000 to terminate the agreement.  As a result, $280,000 of contingent liabilities were extinguished and recognized as other income during the quarter ended December 31, 2011.

During the quarter ended December 31, 2011, the Company remeasured and reduced the value of contingent liabilities by $550,000 and recognized this as other income.  As of December 31, 2011, approximately $1.0 million of contingent liabilities were recorded on the consolidated balance sheets, which are payable starting in September 2013.

Litigation

From time to time the Company is subject to litigation incidental to its business, which could include litigation as a result of the dental services provided at the Offices, although the Company does not engage in the practice of dentistry or control the practice of dentistry. The Company maintains general liability insurance for itself and provides for professional liability insurance to the dentists, dental hygienists and dental assistants at the Offices. Management believes the Company is not presently a party to any material litigation.