-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, COcq036ZvoFhL41A8xe5tsimfq6DZeeomt1vO6JYIelPnRIzt5qgRVHswioz9qrU b1oirquuftRlL6tNUsojdA== /in/edgar/work/20000814/0000912057-00-037400/0000912057-00-037400.txt : 20000921 0000912057-00-037400.hdr.sgml : 20000921 ACCESSION NUMBER: 0000912057-00-037400 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000814 ITEM INFORMATION: FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT HEALTH SERVICES CORP CENTRAL INDEX KEY: 0001012697 STANDARD INDUSTRIAL CLASSIFICATION: [8071 ] IRS NUMBER: 330702770 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-28622 FILM NUMBER: 699862 BUSINESS ADDRESS: STREET 1: 4400 MACARTHUR BLVD STREET 2: SUITE 800 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 9494760733 MAIL ADDRESS: STREET 1: 4400 VON KARMAN AVE STE 800 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 8-K/A 1 a8-ka.txt FORM 8-KA SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. -------------- FORM 8-K/A AMENDMENT NO. 1 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) AUGUST 14, 2000 ------------------------------ InSight Health Services Corp. - -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) Delaware 0-28622 33-0702770 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 4400 MacArthur Boulevard, Suite 800, Newport Beach, CA 92660 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) (949) 476-0733 - -------------------------------------------------------------------------------- (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) N/A - -------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial statements of businesses acquired. The financial statements of Wilkes-Barre Imaging, a New York general partnership ("Wilkes-Barre") required by this item are attached as Exhibit 99.1 (a). (b) Pro forma financial information (unaudited). The unaudited pro forma combined condensed financial statements presented reflect the acquisition of substantially all of the assets of Wilkes-Barre by InSight Health Services Corp. ("Registrant") through its wholly owned subsidiary, InSight Health Corp. The unaudited pro forma combined condensed financial statements are provided for informational purposes only and are not necessarily indicative of the results that actually would have occurred had the acquisition been in effect for the period presented. The unaudited pro forma combined condensed balance sheet is based on the historical balance sheet as of March 31, 2000 and is presented as if the acquisition had been consummated at that date. The unaudited pro forma combined condensed consolidated statements of income are based on the historical statements of income of each of Registrant and Wilkes-Barre for the nine months ended March 31, 2000, and reflect certain adjustments to give effect to the acquisition as if it had occurred on July 1, 1999, and for the year ended June 30, 1999, and reflect certain adjustments to give effect to the acquisition as if it had occurred on July 1, 1998. Pro forma adjustments are based on the purchase method of accounting and a preliminary allocation of the purchase price. However, changes to the adjustments included in the unaudited pro forma combined condensed financial statements are expected as evaluations of assets and liabilities are completed and additional information becomes available. Accordingly, the final allocated values will differ from the amounts used to calculate the adjustments in the unaudited pro forma combined condensed consolidated statements of income. (c) Exhibits. 99.1(a) Financial Statements of Wilkes-Barre Imaging (filed herewith). 99.1(b) Unaudited Pro Forma Combined Condensed Financial Statements of InSight Health Services Corp. (filed herewith). 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 14, 2000 INSIGHT HEALTH SERVICES CORP. BY: /s/ Thomas V. Croal ------------------------------------- Thomas V. Croal Executive Vice President and Chief Financial Officer 3 EXHIBIT INDEX EXHIBIT NO. DOCUMENT DESCRIPTION 99.1(a) Financial Statements of Wilkes-Barre Imaging (filed herewith). 99.1(b) Unaudited Pro Forma Combined Condensed Financial Statements of InSight Health Services Corp. (filed herewith). 4 EX-99.1(A) 2 ex-99_1a.txt EXHIBIT 99.1(A) EXHIBIT 99.1 (a) WILKES-BARRE IMAGING INDEX TO FINANCIAL STATEMENTS
PAGE ---- Report of Independent Certified Public Accountants 6 Balance Sheets as of December 31, 1999 and 1998 7 Statements of Income for the Years Ended December 31, 1999 and 1998 8 Statements of Partners' Capital for the Years Ended December 31, 1999 and 1998 9 Statements of Cash Flows for the Years Ended December 31, 1999 and 1998 10 Notes to Financial Statements 11-16 Balance Sheets (unaudited) as of March 31, 2000 and December 31, 1999 17 Statements of Income (unaudited) for the Three Months Ended March 31, 2000 and 1999 18 Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2000 and 1999 19 Notes to Financial Statements 20
5 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Partners of Wilkes-Barre Imaging: We have audited the accompanying balance sheets of Wilkes-Barre Imaging, a New York general partnership (the "Partnership") as of December 31, 1999 and 1998, and the related statements of income, partners' capital and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wilkes-Barre Imaging as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP West Palm Beach, Florida, August 9, 2000. 6 WILKES-BARRE IMAGING BALANCE SHEETS DECEMBER 31, 1999 AND 1998 (IN THOUSANDS)
ASSETS 1999 1998 ---- ---- CURRENT ASSETS: Cash and cash equivalents $ 412 $ 279 Trade accounts receivable, net 1,668 827 Other current assets 70 43 ------ ----- Total current assets 2,150 1,149 PROPERTY AND EQUIPMENT, net of accumulated depreciation of $997 and $99 in 1999 and 1998, respectively 6,075 2,756 OTHER ASSETS 2 4 ------ ----- Total assets $8,227 $3,909 ====== ====== LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable and other accrued expenses $ 436 $ 417 Advances and accrued management fees due to partner 250 184 Current portion of long-term debt and obligations under capital leases 757 209 ------ ----- Total current liabilities 1,443 810 ------ ----- LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES, less current portion 5,259 2,310 PARTNERS' CAPITAL 1,525 789 ------ ----- Total liabilities and partners' capital $8,227 $3,909 ====== ======
The accompanying notes to financial statements are an integral part of these balance sheets. 7 WILKES-BARRE IMAGING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (IN THOUSANDS)
1999 1998 REVENUES: Patient services $8,177 $4,731 Other -- 4 ------ ------ Total revenues 8,177 4,735 OPERATING EXPENSES: Cost of services 3,364 2,722 Provision for doubtful accounts 314 141 Depreciation and amortization 969 84 ------ ------ Total operating expenses 4,647 2,947 ------ ------ Income from operations 3,530 1,788 INTEREST EXPENSE, net 640 26 ------ ------ Net income $2,890 $1,762 ====== ======
The accompanying notes to financial statements are an integral part of these statements. 8 WILKES-BARRE IMAGING STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (IN THOUSANDS)
BALANCE, December 31, 1997 $ 286 Distributions, net (1,259) Net income 1,762 ------- BALANCE, December 31, 1998 789 Distributions, net (2,154) Net income 2,890 ------- BALANCE, December 31, 1999 $ 1,525 =======
The accompanying notes to financial statements are an integral part of these statements. 9 WILKES-BARRE IMAGING STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998 (IN THOUSANDS)
1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 2,890 $ 1,762 ------- ------- Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 969 84 Changes in assets and liabilities: Trade accounts receivable, net (841) (462) Other current assets (27) (26) Other assets 2 -- Accounts payable and other accrued expenses 19 238 Advances and accrued management fees due to partner 66 (77) ------- ------- Total adjustments 188 (243) ------- ------- Net cash provided by operating activities 3,078 1,519 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (434) (2,590) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments of long-term debt (174) (65) Proceeds from issuance of debt 483 2,584 Payments on capital leases (666) -- Partner distributions, net (2,154) (1,259) ------- ------- Net cash (used in) provided by financing activities (2,511) 1,260 ------- ------- Net increase in cash and cash equivalents 133 189 CASH AND CASH EQUIVALENTS, beginning of year 279 90 ------- ------- CASH AND CASH EQUIVALENTS, end of year $ 412 $ 279 ======= ======= SUPPLEMENTAL DISCLOSURES: Cash paid during the year for interest $ 650 $ 157 ======= ======= Equipment additions under capital leases $ 3,854 $ -- ======= =======
The accompanying notes to financial statements are an integral part of these statements. 10 WILKES-BARRE IMAGING NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1999 AND 1998 1. NATURE OF BUSINESS Wilkes-Barre Imaging (the "Partnership"), a 60 percent owned subsidiary of US Diagnostic Inc., is a New York general partnership which started business on April 1, 1996. The Partnership provides diagnostic imaging services, including magnetic resonance imaging ("MRI"), computed tomography ("CT"), open MRI, mammography, ultrasound, nuclear medicine, nuclear cardiology and radiography and fluoroscopy in Wilkes-Barre, Pennsylvania. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect certain amounts of assets and liabilities at the date of the financial statements and certain reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to contractual and bad debt allowances on accounts receivable and useful lives of medical equipment. Future events could alter such estimates in the near term. In addition, healthcare industry reforms and reimbursement practices will continue to impact the Partnership's operations and the determination of contractual and other allowance estimates. As such, actual results could differ from those estimates. REVENUE RECOGNITION Revenues are recognized when services are provided. Patient services revenues are reported at the estimated net realizable amounts from patients, third-party payors and others for services rendered including estimated prospectively determined adjustments under reimbursement agreements with third-party payors. These adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. Other revenues are recognized over the applicable contract period. If revenues are collected in advance, they are recorded as unearned revenue. CASH AND CASH EQUIVALENTS Cash and cash equivalents are comprised of cash and certain liquid investments with maturity of three months or less when purchased. The carrying amount of cash equivalents approximates fair value due to their short-term nature. 11 PROPERTY AND EQUIPMENT Property and equipment are stated at cost. Depreciation and amortization are provided using the straight-line method over the following estimated useful lives: Equipment under capital leases Term of lease Building 10 years Diagnostic and related equipment 5 to 7 years Computer and office equipment 3 to 5 years The Partnership capitalizes expenditures for improvements and major renewals. Maintenance, repairs and minor replacements are charged to operations as incurred. When assets are sold or otherwise disposed of, the cost and related reserves are removed from the accounts and any resulting gain or loss is included in the results of operations. INCOME TAXES Taxable earnings of the Partnership flow through directly to its partners. Each partner is treated as the owner of its proportionate share of the net assets, income and expenses and each is subject to Federal and State taxation on its share of income. COMPREHENSIVE INCOME The Partnership has adopted SFAS No. 130, "Reporting Comprehensive Income". This standard requires that all items that meet the definition of components of comprehensive income be reported in a full set of general purpose financial statements for the period in which they are recognized. Components of comprehensive income include revenues, expenses, gains and losses that under accounting principles generally accepted in the United States are included in comprehensive income, but excluded from net income. There are no differences between the Partnership's net income, as reported, and comprehensive income, as defined, for the periods presented and, therefore, no separate statement of comprehensive income has been presented. ADVANCES AND ACCRUED MANAGEMENT FEES DUE TO PARTNER Advances are comprised of amounts owed for the portion of services received under national contracts entered into by one of the partners. These contracts are used in order to take advantage of volume discounts. Accrued management fees are comprised of amounts owed to one partner for corporate accounting services provided. These fees are based on a percentage of patient services revenues. 3. TRADE ACCOUNTS RECEIVABLE, NET Trade accounts receivable, net are comprised of the following at December 31, 1999 and 1998:
1999 1998 (Amounts in thousands) ------------ ------------ Trade accounts receivable $1,949 $ 974 Allowance for doubtful accounts (281) (147) ------ ------ $1,668 $827 ------ ------ ------ ------
The Partnership's imaging center grants credit without collateral to its patients, most of whom are residents of Wilkes-Barre, Pennsylvania and are insured under third-party payor agreements. 12 The mix of receivables from third-party payors and patients is as follows at December 31, 1999 and 1998:
1999 1998 ---- ---- Medicare and Medicaid 21% 26% Workers' Compensation and Self Pay 14 14 Commercial 18 15 Managed Care 34 33 Other 13 12 --- --- Total 100% 100% --- ---
The allowance for doubtful accounts include management's estimate of the amounts expected to be written off on specific accounts and for write offs on other unidentified accounts included in accounts receivable. In estimating the write offs and adjustments on specific accounts, management relies on a combination of in-house analysis and a review of contractual payment rates from private health insurance programs or under the federal Medicare program. In estimating the allowance for unidentified write offs and adjustments, management relies on historical experience. The amounts the Partnership will ultimately realize could differ materially in the near term from the amounts assumed in arriving at the allowance for doubtful accounts in the financial statements. 4. PROPERTY AND EQUIPMENT, NET Property and equipment, net, are stated at cost and are comprised of the following at December 31, 1999 and 1998:
1999 1998 ---- ---- (Amounts in thousands) Equipment under capital leases $3,798 $ -- Building 2,670 21 Diagnostic and related equipment 557 520 Computer and office equipment 47 47 Construction in progress -- 2,267 ------ ------ 7,072 2,855 Less: Accumulated depreciation 997 99 ------ ------ Property and equipment, net $6,075 $2,756 ------ ------ ------ ------
13 Accumulated depreciation and depreciation expense for equipment under capital leases were approximately $564,000 and $0 as of December 31, 1999 and 1998, respectively. 5. ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES Accounts payable and other accrued expenses are comprised of the following at December 31, 1999 and 1998:
1999 1998 ---- ---- (Amounts in thousands) Accounts payable $202 $112 Accrued payroll and related costs 35 52 Accrued radiology fees 27 54 Other accrued expenses 172 199 ---- ---- $436 $417 ---- ---- ---- ----
6. LONG-TERM DEBT Long-term debt is comprised of the following at December 31, 1999 and 1998:
1999 1998 ---- ---- (Amounts in thousands) Notes payable to GE, bearing interest at rates which range from 5.5 percent to 10.25 percent, maturing at various dates through February 2006. The notes are primarily secured by a building and certain diagnostic equipment $2,446 $2,073 Notes payable to DVI Financial Services bearing interest rates which range from 10.11 percent to 10.5 percent, maturing at various dates through June 2004 The notes are primarily secured by certain diagnostic equipment 382 446 ------ ------ Total long-term debt 2,828 2,519 Less: Current portion 150 209 ------ ------ Long-term debt $2,678 $2,310 ------ ------ ------ ------
14 Scheduled maturities of long-term debt at December 31, 1999, are as follows (amounts in thousands):
2000 $ 150 2001 166 2002 948 2003 257 2004 500 Thereafter 807 ------------ $ 2,828 ------------ ------------
7. LEASE OBLIGATIONS The Partnership leases the land under the building which houses its operations. The lease expires in December 2007 and will be renewed under certain conditions. The rent is $523 per month. The Partnership is leasing diagnostic equipment under various capital leases. Future minimum scheduled payments required under these noncancelable leases at December 31, 1999 are as follows (amounts in thousands):
2000 $ 904 2001 986 2002 986 2003 986 2004 111 ----------- Total minimum lease payments 3,973 Less: Amounts representing interest (785) ----------- Present value of capital lease obligations 3,188 Less: Current portion (607) ----------- Long-term capital lease obligations $ 2,581 ===========
8. 401(K) PROFIT SHARING PLAN The US Diagnostic Inc. 401(k) Profit Sharing Plan (the "401(k) Plan") was offered to full-time employees who completed six months of service. Eligible employees made elective deferrals in any amount up to 15% of their compensation. The Partnership contributed 100% of the amount withheld from the Participant's compensation (up to a maximum of 3%) and were allowed additional discretionary contributions. Employer contributions to the 401(k) Plan totaled approximately $13,000 and $8,000 in fiscal 1999 and 1998, respectively. In connection with the asset sale described in Note 9, the Partnership's participation in the 401(k) Plan is expected to discontinue, with Participant balances transferring to a new plan. 9. SUBSEQUENT EVENTS The Partnership had an agreement with General Medical Services Corporation ("GMS"), now doing business as Wyoming Valley Physician Network, pursuant to which GMS provided Wilkes-Barre Imaging with one or more radiologists, as necessary, to read and interpret all diagnostic imaging (except nuclear cardiology). On April 5, 2000, the Partnership received written notice that Wyoming Valley Physician Network was terminating the Physician Services Agreement effective August 3, 2000. 15 On May 31, 2000, the Partnership sold substantially all of its assets (the "Assets"), to InSight Health Corp., a Delaware corporation and a wholly owned subsidiary of InSight Health Services Corp., a Delaware corporation, pursuant to an Asset Purchase Agreement dated May 2, 2000 (the "Purchase Agreement"). The Assets sold under the Purchase Agreement consist of certain tangible and intangible assets, including diagnostic imaging equipment, customer contracts and other agreements held in connection with providing diagnostic imaging services to customers in Wilkes-Barre, Pennsylvania. The aggregate purchase price for the Assets was approximately $17.4 million. The purchase price was paid entirely in cash and is subject to certain post-closing adjustments. 16 WILKES-BARRE IMAGING BALANCE SHEETS MARCH 31, 2000 AND DECEMBER 31, 1999 (IN THOUSANDS) (UNAUDITED)
2000 1999 ------ ------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 423 $ 412 Trade accounts receivables, net 2,023 1,668 Other current assets 56 70 ------ ------ Total current assets 2,502 2,150 PROPERTY AND EQUIPMENT, net 5,859 6,075 OTHER ASSETS -- 2 ------ ------ Total assets $8,361 $8,227 ------ ------ ------ ------ LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable and other accrued expenses $ 708 $ 686 Current portion of long-term debt and obligation under capital leases 757 757 ------ ------ Total current liabilities 1,465 1,443 ------ ------ LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES, less current portion 5,059 5,259 PARTNERS' CAPITAL 1,837 1,525 ------ ------ Total liabilities and partners' capital $8,361 $8,227 ------ ------ ------ ------
The accompanying notes to financial statements are an integral part of these balance sheets. 17 WILKES-BARRE IMAGING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (In thousands) (Unaudited)
2000 1999 ---- ---- REVENUES: Patient services $2,244 $1,767 ------ ------ Total revenues 2,244 1,767 ------ ------ OPERATING EXPENSES: Costs of services 959 648 Provision for doubtful accounts 93 66 Depreciation and amortization 234 248 ------ ------ Total operating expenses 1,286 962 ------ ------ Income from operations 958 805 INTEREST EXPENSE, net 156 145 ------ ------ Net income $ 802 $ 660 ------ ------ ------ ------
The accompanying notes to financial statements are an integral part of these statements. 18 WILKES-BARRE IMAGING STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 (IN THOUSANDS) (UNAUDITED)
2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 802 $ 660 ----- ----- Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 234 248 Change in assets and liabilities: Trade accounts receivable, net (355) (485) Other current assets 16 1 Accounts payable and other accrued expenses 22 2 ----- ----- Total adjustments (83) (234) ----- ----- Net cash provided by operating activities 719 426 ----- ----- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (18) (568) ----- ----- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds (principal payments) of debt and capital lease obligations (200) 421 Partner distributions, net (490) (225) ----- ----- Net cash (used in) provided by financing activities (690) 196 ----- ----- Net increase in cash and cash equivalents 11 54 CASH AND CASH EQUIVALENTS, beginning of period 412 279 ----- ----- CASH AND CASH EQUIVALENTS, end of period $ 423 $ 333 ----- ----- ----- ----- SUPPLEMENTAL DISCLOSURES: Cash paid during the period for interest $ 159 $ 144 ----- ----- ----- -----
The accompanying notes to financial statements are an integral part of these statements. 19 WILKES-BARRE IMAGING NOTES TO FINANCIAL STATEMENTS MARCH 31, 2000 AND 1997 (UNAUDITED) (1) BASIS OF PRESENTATION In the opinion of management, the financial information reflects all adjustments which are necessary to a fair presentation of the financial position, results of operations and cash flows for the interim periods presented and are of a normal recurring nature, unless otherwise disclosed in this report. The statements should be read in conjunction with the notes to the financial statements of Wilkes-Barre Imaging (Wilkes-Barre) as of and for the years ended December 31, 1999 and 1998. (2) ACQUISITION BY INSIGHT HEALTH CORP. On May 31, 2000, substantially all of the assets of Wilkes-Barre were acquired by InSight Health Corp., a wholly owned subsidiary of InSight Health Services Corp. (InSight), from US Diagnostic Inc. (USD). The aggregate purchase price was approximately $17.4 million, subject to certain post-closing adjustments. 20 EX-99.1(B) 3 ex-99_1b.txt EXHIBIT 99.1(B) Exhibit 99.1 (b) (b) (I) PRO FORMA FINANCIAL INFORMATION INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET MARCH 31, 2000 (Amounts in thousands)
WILKES-BARRE PRO HISTORICAL HISTORICAL ACQUISITION FORMA INSIGHT WILKES-BARRE ADJUSTMENTS COMBINED ---------- ------------ ------------ -------- ASSETS Current assets: Cash and cash equivalents $ 13,968 $ 423 $ (423)(1) $ 13,968 Trade accounts receivables, net 44,234 2,023 (2,023)(1) 44,234 Other current assets 7,968 56 -- 8,024 --------- --------- --------- --------- Total current assets 66,170 2,502 (2,446) 66,226 Property and equipment, net 138,494 5,859 (347)(1) 144,006 Investments in partnerships 1,505 -- -- 1,505 Other assets 7,838 -- -- 7,838 Intangible assets, net 83,256 -- 12,043(1) 95,299 --------- --------- --------- --------- $ 297,263 $ 8,361 $ 9,250 $ 314,874 --------- --------- --------- --------- --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of equipment, capital leases and other notes $ 21,764 $ 757 $ 1,797(1) $ 24,318 Accounts payable and other accrued expenses 21,955 708 (702)(1) 21,961 --------- --------- --------- --------- Total current liabilities 43,719 1,465 1,095 46,279 Equipment, capital leases and other notes, less current portion 203,590 5,059 9,992(1) 218,641 Other long-term liabilities 1,047 -- -- 1,047 Stockholders' equity (deficit) 48,907 1,837 (1,837)(1) 48,907 --------- --------- --------- --------- $ 297,263 $ 8,361 $ 9,250 $ 314,874 --------- --------- --------- --------- --------- --------- --------- ---------
The pro forma condensed combined balance sheet as of March 31, 2000 reflects the following pro forma adjustments: (1) To record the acquisition of assets of Wilkes-Barre for $17,610 and the resulting goodwill of $12,043. The above reflects the acquisition of Wilkes-Barre by InSight using the purchase method of accounting. Under the principles of purchase accounting, the assets and liabilities of Wilkes-Barre are stated at fair market value (FMV). The excess purchase price is allocated to goodwill. 21 (b) (ii) INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE YEAR ENDED JUNE 30, 1999 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
WILKES-BARRE PRO HISTORICAL HISTORICAL ACQUISITION FORMA INSIGHT WILKES-BARRE ADJUSTMENTS COMBINED ------- ------------ ----------- -------- Revenues $ 161,992 $ 6,349 $ - $ 168,341 Costs of operations: Costs of services 85,317 2,990 (107)(3) 88,200 Provision for doubtful accounts 2,618 237 - 2,855 Equipment leases 18,522 - - 18,522 Depreciation and amortization 24,468 521 591 (1) 25,213 - - (367) (2) - -------- ------ ----- ------- Total costs of operations 130,925 3,748 117 134,790 -------- ------ ----- ------- Gross profit 31,067 2,601 (117) 33,551 Corporate operating expenses 10,893 - - 10,893 Provision for reorganization and other costs 3,300 - - 3,300 -------- ------ ----- -------- Income from company operations 16,874 2,601 (117) 19,358 Equity in earnings of unconsolidated partnerships 548 - - 548 -------- ------ ----- ------- Operating income 17,422 2,601 (117) 19,906 Interest expense, net 14,500 336 1,088 (4) 15,924 -------- ------ ------ ------- Income before income taxes 2,922 2,265 (1,205) 3,982 Provision (benefit) for income taxes (3,190) - 170 (5) (3,020) -------- ------ ------ ------- Net income $ 6,112 $ 2,265 $ (1,375) $ 7,002 -------- ------ --------- ------- -------- ------ --------- ------- Income per common and converted preferred share: Basic $ 0.67 $ 0.76 -------- ------- -------- ------- Diluted $ 0.65 $ 0.75 -------- ------- -------- ------- Weighted average number of common and preferred shares outstanding: Basic 9,158 9,158 -------- ------- -------- ------- Diluted 9,376 9,376 -------- ------- -------- -------
The pro forma combined condensed statement of income for the year ended June 30, 1999 reflects the following pro forma adjustments: (1) To record amortization of goodwill over 20 years. (2) To record depreciation expense on the estimated fair market value of assets acquired. (3) To reverse management fees charged by USD of $413 and record management fees charged by InSight of $306. (4) To record interest expense for acquisition financing. (5) To record the tax effect on the above entries at estimated effective rates. 22 (b) (iii) INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED MARCH 31, 2000 (Amounts in thousands, except per share data)
WILKES-BARRE PRO HISTORICAL HISTORICAL ACQUISITION FORMA INSIGHT WILKES-BARRE ADJUSTMENTS COMBINED ------- ------------ ----------- -------- Revenues $139,977 $ 6,554 $ -- $146,531 Costs of operations: Costs of services 75,663 2,863 (122)(3) 78,404 Provision for doubtful accounts 2,109 262 -- 2,371 Equipment leases 11,297 -- -- 11,297 Depreciation and amortization 24,256 726 444 25,151 -- -- (275)(2) -- -------- -------- -------- -------- Total costs of operations 113,325 3,851 47 117,223 -------- -------- -------- -------- Gross profit 26,652 2,703 (47) 29,308 Corporate operating expenses 8,215 -- -- 8,215 -------- -------- -------- -------- Income from company operations 18,437 2,703 (47) 21,093 Equity in earnings of unconsolidated partnerships 624 -- -- 624 -------- -------- -------- -------- Operating income 19,061 2,703 (47) 21,717 Interest expense, net 13,548 478 622(4) 14,648 -------- -------- -------- -------- Income before income taxes 5,513 2,225 (669) 7,069 Provision for income taxes 881 -- 249(5) 1,130 -------- -------- -------- -------- Net income $ 4,632 $ 2,225 $ (918) $ 5,939 -------- -------- -------- -------- -------- -------- -------- -------- Income per common and converted preferred share: Basic $ 0.50 $ 0.64 -------- -------- -------- -------- Diluted $ 0.49 $ 0.63 -------- -------- -------- -------- Weighted average number of common and preferred shares outstanding: Basic 9,245 9,245 -------- -------- -------- -------- Diluted 9,383 9,383 -------- -------- -------- --------
The pro forma combined condensed statement of income for the nine months ended March 31, 2000 reflects the following pro forma adjustments: (1) To record amortization of goodwill over 20 years. (2) To record depreciation expense on the estimated fair market value of assets acquired. (3) To reverse management fees charged by USD of $436 and record management fees charged by InSight of $315. (4) To record interest expense for acquisition financing. (5) To record the tax effect on the above entries at estimated effective rates. 23 -----END PRIVACY-ENHANCED MESSAGE-----