-----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, UexCTQRiUrzn6C2tIymKpnhebg1LsbQldTY9Hh1WeLayRHuj5kBhSNtDyKhI3DOr TEtWhuYeP8fxljBFLpg61g== 0000912057-97-030814.txt : 19970918 0000912057-97-030814.hdr.sgml : 19970918 ACCESSION NUMBER: 0000912057-97-030814 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970915 ITEM INFORMATION: FILED AS OF DATE: 19970915 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSIGHT HEALTH SERVICES CORP CENTRAL INDEX KEY: 0001012697 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MEDICAL LABORATORIES [8071] IRS NUMBER: 330702770 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 333-02935 FILM NUMBER: 97680711 BUSINESS ADDRESS: STREET 1: 4440 VON KARMAN AVENUE STE 320 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 7144760733 MAIL ADDRESS: STREET 1: 4440 VON KARMAN AVE., STE 320 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 8-K/A 1 8-K/A WASHINGTON, D.C. 20549 ----------------- FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) September 15, 1997 -------------------------------- 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) (714) 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 business acquired. The financial statements of Desmond L. Fischer, M.D. ,(d/b/a/ Chattanooga Outpatient Center) required by this item are attached. (b) PRO FORMA FINANCIAL INFORMATION. The Unaudited Pro Forma Condensed Financial Statements are presented which reflect the acquisition of certain assets of Desmond L. Fischer, M.D., (d/b/a/ Chattanooga Outpatient Center) (COC) by InSight Health Services Corp. ("Registrant") through its wholly owned subsidiary, InSight Health Corp. ("InSight"). The Unaudited Pro Forma 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 Condensed Consolidated Balance Sheet is based on the historical balance sheet as of March 31, 1997 and is presented as if the acquisition had been consummated at that date. The Unaudited Pro Forma Condensed Consolidated Statement of Income is based on the historical statements of operations of each of InSight and COC for the nine months ended March 31, 1997, and reflects certain adjustments to give effect to the acquisition as if it had occurred on July 1, 1996. 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 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 Condensed Consolidated Statement of Income. (c) Exhibits. 99.1 (a) Chattanooga Outpatient Center Financial Statements (Unaudited) for the Year Ended June 30, 1997. 2 (b)(i) PRO FORMA FINANCIAL INFORMATION INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (AMOUNTS IN THOUSANDS)
As reported Pro Forma Pro Forma March 31, 1997 Adjustments March 31, 1997 -------------- ----------- -------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 6,504 $ - $ 6,504 Trade accounts receivable 13,841 - 13,841 Other current assets 2,914 - 2,914 --------- --------- --------- Total current assets 23,259 - 23,259 PROPERTY AND EQUIPMENT 30,309 1,100 (A) 31,409 OTHER ASSETS 18,975 9,839 (B) 28,814 --------- --------- --------- $ 72,543 $ 10,939 $ 83,482 --------- --------- --------- --------- --------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued expenses $ 13,154 - $ 13,154 Current portion of equipment and other notes 11,716 802 (C,D) 12,518 Current portion of deferred gain on debt restructure 821 - 821 --------- --------- --------- Total current liabilities 25,691 802 26,493 --------- --------- --------- LONG-TERM LIABILITIES: Equipment and other notes, less current portion 37,103 10,137 (C,D) 47,240 Deferred gain on debt restructure, less current portion 902 - 902 Other long-term liabilities 766 - 766 --------- --------- --------- Total long-term liabilities 38,771 10,137 48,908 --------- --------- --------- MINORITY INTEREST 1,929 - 1,929 --------- --------- --------- STOCKHOLDERS' EQUITY Convertible Series A preferred stock 6,750 - 6,750 Common stock 3 - 3 Additional paid-in capital 23,100 - 23,100 Accumulated deficit (23,701) - (23,701) --------- --------- --------- Total stockholders' equity 6,152 - 6,152 --------- --------- --------- $ 72,543 $ 10,939 $ 83,482 --------- --------- --------- --------- --------- ---------
SEE NOTES TO UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 3 INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
INSIGHT HEALTH INSIGHT HEALTH SERVICES CORP. SERVICES CORP. AND SUBSIDIARIES AND SUBSIDIARIES AS REPORTED COC PRO FORMA FOR THE NINE FOR THE NINE FOR THE NINE MONTHS ENDED MONTHS ENDED PRO FORMA MONTHS ENDED MARCH 31, 1997 MARCH 31, 1997 ADJUSTMENTS MARCH 31, 1997 --------------- -------------- ----------- ------------------ REVENUES Contract services $ 35,186 $ - $ - $ 35,186 Patient services 31,153 3,342 - 34,495 Other 1,790 161 - 1,951 -------- ------ -------- -------- Total revenues 68,129 3,503 - 71,632 -------- ------ -------- -------- COSTS OF OPERATIONS Cost of services 37,386 1,768 - 39,154 Provision for doubtful accounts 1,116 87 - 1,203 Equipment leases 13,822 - - 13,822 Depreciation and amortization 7,203 516 369(A) 8,088 -------- ------ -------- -------- Total costs of operations 59,527 2,371 369 62,267 -------- ------ -------- -------- GROSS PROFIT 8,602 1,132 (369) 9,365 CORPORATE OPERATING EXPENSES 5,343 - - 5,343 -------- ------ -------- -------- INCOME FROM COMPANY OPERATIONS 3,259 1,132 (369) 4,022 EQUITY IN EARNING OF UNCONSOLIDATED PARTNERSHIPS 364 - - 364 -------- ------ -------- -------- OPERATING INCOME (LOSS) 3,623 1,132 (369) 4,386 INTEREST EXPENSE, Net 2,741 92 724(B) 3,557 -------- ------ -------- -------- INCOME BEFORE TAXES 882 1,040 (1,093) 829 INCOME TAX EXPENSE 134 - - 134 -------- ------ -------- -------- NET INCOME $ 748 $1,040 $ (1,093) $ 695 -------- ------ -------- -------- INCOME PER COMMON SHARE: Net income $ .014 $ .013 -------- -------- Weighted average number of common shares outstanding 5,444,308 5,444,308
SEE NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 4 (b)(iii) INSIGHT HEALTH SERVICES CORP. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS. NOTE 1: UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS The Unaudited Pro Forma Condensed Consolidated Balance Sheet of the Registrant as of March 31, 1997, gives affect to the following pro forma adjustments: (A) To record the property and equipment acquired at their estimated fair value. The property and equipment will be depreciated over one to five years. (B) To record the goodwill related to the assets acquired. The goodwill will be amortized over an assumed 20 year period. (C) To record the assumption of the current and long-term portions of the long-term debt, related to the property and equipment acquired. (D) To record the current and long-term portions of the $9,000,000 debt borrowed from General Electric Medical Systems (GEMS). NOTE 2: UNAUDITED PRO FORMA STATEMENT OF INCOME ADJUSTMENTS The Unaudited Pro Forma Condensed Consolidated Statement of Income of the Registrant for the nine months ended March 31, 1997, gives affect to the following pro forma adjustments: (A) To record the amortization of the goodwill associated with the acquisition over an assumed 20 year period. (B) To record interest expense on the long-term debt borrowed from GEMS associated with the acquisition at a rate of 10.25 percent per annum. 5 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: September 15, 1997 INSIGHT HEALTH SERVICES CORP. BY: /S/ E. LARRY ATKINS ------------------------------------------ E. Larry Atkins President and Chief Executive Officer 6 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) F-1 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) BALANCE SHEET JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ ASSETS ------ CURRENT ASSETS - -------------- Cash $ 360,300 Accounts receivable, less allowance for uncollectible accounts of $33,751 1,134,401 Prepaid expenses and other assets 26,693 ---------- Total current assets 1,521,394 ---------- NET PROPERTY AND EQUIPMENT 2,174,272 - -------------------------- ---------- OTHER ASSETS - ------------ Intangible assets, net of accumulated amortization 125,754 ---------- TOTAL ASSETS $3,821,420 - ------------ ---------- ---------- LIABILITIES AND PROPRIETOR'S EQUITY ----------------------------------- CURRENT LIABILITIES - ------------------- Accounts payable and accrued expenses $ 712,092 Current maturities of long-term liabilities and obligations under capital leases 128,897 Notes payable 88,904 ---------- Total current liabilities 929,893 ---------- LONG-TERM LIABILITIES 1,716,675 - --------------------- ---------- PROPRIETOR'S EQUITY 1,174,852 - ------------------- ---------- TOTAL LIABILITIES AND PROPRIETOR'S EQUITY $3,821,420 - ----------------------------------------- ---------- ---------- The accompanying notes are an integral part of the financial statements. F-2 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) STATEMENT OF INCOME YEAR ENDED JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ REVENUES - -------- Net patient service revenue $4,456,332 Other revenue 214,838 ---------- Total revenues 4,671,170 ---------- COSTS OF OPERATIONS - ------------------- Cost of services 2,356,774 Provision for doubtful accounts 116,082 Depreciation and amortization 688,192 ---------- Total costs of operations 3,161,048 ---------- GROSS PROFIT 1,510,122 - ------------ Interest expense, net 122,329 ---------- NET INCOME $1,387,793 - ---------- ---------- ---------- The accompanying notes are an integral part of the financial statements. F-3 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) STATEMENT OF CHANGES IN PROPRIETOR'S EQUITY YEAR ENDED JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- BALANCE - Beginning of year $1,620,697 Net income 1,387,793 Proprietor withdrawals (1,833,638) ---------- BALANCE - End of year $1,174,852 ---------- ---------- The accompanying notes are an integral part of the financial statements. F-4 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES - ------------------------------------ Net income $1,387,793 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 688,192 Decrease in accounts receivable 108,978 Decrease in prepaid expenses and other assets 1,607 Increase in accounts payable and accrued expenses 64,096 --------- Net cash provided by operating activities 2,250,666 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES - ------------------------------------ Purchase of property and equipment (118,927) --------- Net cash used by investing activities (118,927) --------- CASH FLOWS FROM FINANCING ACTIVITIES - ------------------------------------ Proceeds from short-term borrowings 88,904 Principal payments on borrowings and capital lease obligations (129,266) Distributions to proprietor (1,833,638) --------- Net cash used by financing activities (1,874,000) --------- INCREASE IN CASH AND CASH EQUIVALENTS 257,739 - ------------------------------------- Cash and cash equivalents - beginning of fiscal year 102,561 --------- Cash and cash equivalents - end of fiscal year $ 360,300 --------- --------- SUPPLEMENTAL CASH FLOW INFORMATION - ---------------------------------- Cash paid for interest $127,484 --------- --------- The accompanying notes are an integral part of the financial statements. F-5 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF BUSINESS Desmond L. Fischer, M.D. d/b/a the Chattanooga Outpatient Center (the Center) is a proprietorship which provides diagnostic imaging, treatment and related services to its patients in the Chattanooga, Tennessee area. REVENUE RECOGNITION Revenues from patient services are recognized when services are provided and are presented net of related contractual adjustments. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. CASH EQUIVALENTS For purposes of the statement of cash flows, the Center considers highly liquid investments with original maturities of three months or less to be cash equivalents. PROPERTY AND EQUIPMENT Property and equipment are depreciated and amortized on the straight-line method using the following estimated useful lives: Building and improvements 15 to 25 years Vehicles 3 years Computer and office equipment 5 to 7 years Diagnostic and related equipment 5 to 7 years Equipment under capital leases Term of lease F-6 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Center capitalizes expenditures for betterments 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 accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in the results of operations. INTANGIBLE ASSETS Intangibles consist of loan costs and goodwill and is being amortized over seven years. Amortization expense charged to operations amounted to approximately $50,000 for the year ended June 30, 1997. INCOME TAXES The Center does not provide for income taxes as operations for the Center are reported on the income tax return for the sole proprietor. FAIR VALUE OF FINANCIAL INSTRUMENTS The Center has a number of financial instruments, none of which are held for trading purposes. Fair value of financial instruments are estimated using available market information and other valuation methodologies. The fair value of the Center's financial instruments is estimated to approximate the related book value. SOLE PROPRIETORSHIP The accompanying financial statements reflect the financial position and results of operations of Desmond L. Fisher, M.D. d/b/a the Chattanooga Outpatient Center, a proprietorship. The financial statements do not include the personal assets and liabilities of the proprietor or accounts of any other businesses in which he may be involved. CONTINGENT RISK REGARDING CASH BALANCES From time to time the Center has on deposit in institutions whose accounts are insured by agencies of the United States Government, funds which total in excess of the insured maximum of $100,000. As of June 30, 1997 this at-risk amount was $316,662; however, this at-risk amount is subject to significant fluctuations on a daily basis throughout the year. F-7 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NOTE 2 - LONG-TERM LIABILITIES Long-term liabilities at June 30, 1997 consist of: Notes payable to bank $1,839,313 Obligation under capital lease 6,259 ---------- 1,845,572 Less current maturities of long-term liabilities and obligations under capital leases 128,897 ---------- $1,716,675 ---------- ---------- The note payable to bank is payable in monthly installments of $18,011 through August, 1997 and $21,879 commencing September 1997 through August, 2007. Interest is payable at 6.15% through August 1977 and 7.65% thereafter. The note is collateralized by land, building and certain equipment. Interest expense totaled $127,484 for the year ended June 30, 1997. The capital lease is for certain medical equipment and has been fully paid in August, 1997. Aggregate annual principal payments applicable to long-term liabilities, are as follows: 1998 $ 128,897 1999 135,181 2000 145,893 2001 157,453 2002 169,930 Thereafter 1,108,218 ---------- $1,845,572 ---------- ---------- NOTE 3 - RETIREMENT SAVINGS PLAN The Center sponsors a defined contribution plan which began in January, 1989 for all employees who elect to participate. The Center makes contributions into the plan as a percentage of the amount an employee contributes with the maximum employer annual contribution being $900 per employee. The Center recognized expense related to its contribution to the plan of approximately $8,588. F-8 CHATTANOOGA OUTPATIENT CENTER (A PROPRIETORSHIP) NOTES TO FINANCIAL STATEMENTS JUNE 30, 1997 (UNAUDITED) - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ NOTE 4 - COMMITMENT AND CONTINGENCIES In the normal course of business the Center is exposed as a potential responsible party to claims related to services rendered. As of the date of these financial statements, management is not aware of any claims or potential claims that are likely to have a material effect on the financial statements. The Center provides administrative services for a nuclear cardiology group under a fixed fee management agreement expiring December 31, 1997. Revenues related this agreement amounted to $188,700 for the year ending June 30, 1997. NOTE 5 - PROPERTY AND EQUIPMENT Property and equipment consist of: Land $ 670,373 Buildings and improvements 1,314,195 Computer and office equipment 83,719 Vehicles 12,086 Diagnostic and related equipment 2,761,374 Equipment under capital leases 214,691 ---------- 5,056,438 Less accumulated depreciation and amortization 2,882,166 ---------- $2,174,272 ---------- ---------- NOTE 6 - NOTE PAYABLE The Center has established with a local bank a letter of credit arrangement in a total amount of $301,000. Borrowings against the letter of credit bear interest at the prime rate, currently 8.5%. The letter of credit expires May 1, 1998. Drawings against the line of credit totaled $88,904 at June 30, 1997. NOTE 7 - SUBSEQUENT EVENT On July 1, 1997 the operations of the Center were sold to InSight Health Services Corp. along with certain operating assets and liabilities. InSight provides diagnostic imaging, treatment and related services to hospitals, physicians and their patients throughout the United States. F-9 -----END PRIVACY-ENHANCED MESSAGE-----