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Delaware | 8071 | 33-0702770 | ||
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer | ||
incorporation or organization) | Classification Code Number) | Identification No.) |
Suite 100
Lake Forest, California 92630
(949) 282-6000
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Executive Vice President and General Counsel
26250 Enterprise Court
Suite 100
Lake Forest, California 92630
(949) 282-6000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Stephen C. Koval, Esq.
Kaye Scholer LLP
425 Park Avenue
New York, New York 10022
(212) 836-8019
Proposed Maximum | ||||||||||||||
Title of Each Class of | Amount to | Offering Price | Proposed Maximum | Amount of | ||||||||||
Securities to be Registered | be Registered | Per Unit | Aggregate Offering Price (1) | Registration Fee | ||||||||||
Senior Secured Floating Rate Notes due 2011 | $2,500,000 | 100% | $2,500,000 | $76.75(2) | ||||||||||
Guarantees of Senior Secured Floating Rate Notes due 2011(3) | — | — | — | (4) | ||||||||||
(1) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. | |
(2) | Previously paid. | |
(3) | See inside facing page for additional registrant guarantors. | |
(4) | Pursuant to Rule 457(n) under the Securities Act of 1933, as amended, no separate fee is payable with respect to the guarantees. |
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I.R.S. Employer | ||||||||
Exact Name of Registrant Guarantor | State or Other Jurisdiction of | Identification | ||||||
as Specified in its Charter | Incorporation or Organization | Number | ||||||
InSight Health Services Holdings Corp. | Delaware | 04-3570028 | ||||||
InSight Health Corp. | Delaware | 52-1278857 | ||||||
Signal Medical Services, Inc. | Delaware | 33-0802413 | ||||||
Open MRI, Inc. | Delaware | 94-3251529 | ||||||
Maxum Health Corp. | Delaware | 75-2287276 | ||||||
Maxum Health Services Corp. | Delaware | 75-2135957 | ||||||
MRI Associates, L.P. | Indiana | 35-1881106 | ||||||
Maxum Health Services of North Texas, Inc. | Texas | 75-2435797 | ||||||
Maxum Health Services of Dallas, Inc. | Texas | 75-2615132 | ||||||
NDDC, Inc. | Texas | 75-2407830 | ||||||
Wilkes-Barre Imaging, L.L.C | Pennsylvania | 52-2238781 | ||||||
Orange County Regional PET Center — Irvine, LLC | California | 91-2070190 | ||||||
San Fernando Valley Regional PET Center, LLC | California | 91-2070191 | ||||||
Valencia MRI, LLC | California | 91-2070193 | ||||||
Parkway Imaging Center, LLC | Nevada | 33-0872858 | ||||||
Comprehensive Medical Imaging, Inc. | Delaware | 95-4662473 | ||||||
Comprehensive Medical Imaging Centers, Inc. | Delaware | 95-4666946 | ||||||
TME Arizona, Inc. | Texas | 76-0539851 | ||||||
Comprehensive Medical Imaging — Fairfax, Inc. | Delaware | 95-4666947 | ||||||
Comprehensive OPEN MRI — Carmichael/ Folsom, LLC | California | 77-0505765 | ||||||
Syncor Diagnostics Sacramento, LLC | California | 91-1838444 | ||||||
Syncor Diagnostics Bakersfield, LLC | California | 77-0469131 | ||||||
Phoenix Regional PET Center — Thunderbird, LLC | Arizona | 77-0578521 | ||||||
Mesa MRI | Texas | 76-0316425 | ||||||
Mountain View MRI | Texas | 86-0651713 | ||||||
Los Gatos Imaging Center | Texas | 94-3040209 | ||||||
Woodbridge MRI | Texas | 54-1623177 | ||||||
Jefferson MRI — Bala | Texas | 76-0300719 | ||||||
Jefferson MRI | Texas | 23-2579343 |
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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy the securities in any state where the offer or sale is not permitted.
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EX-21.1: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES | ||||||||
EX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP |
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• | overcapacity and competition in our markets; | ||
• | reductions, limitations and delays in reimbursement by third-party payors; | ||
• | contract renewals and financial stability of customers; | ||
• | conditions within the healthcare environment; | ||
• | the potential for rapid and significant changes in technology and their effect on our operations; | ||
• | operating, legal, governmental and regulatory risks; | ||
• | economic, political and competitive forces affecting our business; | ||
• | our ability to successfully implement asset dispositions; and | ||
• | our ability to successfully integrate acquisitions. |
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• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
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Predecessor (1) | Successor | ||||||||||||||||||||||||||||||||||||
Pro Forma | Three | One | Two | ||||||||||||||||||||||||||||||||||
for the Year | Months | Month | Months | ||||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||||||
Years Ended June 30, | June 30, | September 30, | July 31, | September 30, | |||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007(2) | 2007(2) | 2006 | 2007(2) | 2007 | |||||||||||||||||||||||||||||
Ratio of earnings to fixed charges | 1.2x | 1.1x | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
(1) | Upon Holdings’ and InSight’s emergence from chapter 11, we adopted fresh-start reporting in accordance with SOP 90-7. The provisions of fresh-start reporting require that we revalue our assets and liabilities to fair value, reestablish stockholders’ equity using the reorganized value established in connection with the plan of reorganization, and record any applicable reorganization value in excess of amounts allocable to identifiable assets as an intangible asset. The adoption of fresh-start reporting also results in our becoming a new entity for financial reporting purposes. Accordingly, our consolidated financial statements on or after August 1, 2007 are not comparable to our consolidated financial statements prior to that date. | |
(2) | The ratio of earnings to fixed charges excludes reorganization items, net of approximately $17.5 million of expense for the year ended June 30, 2007 on an actual and pro forma basis and approximately $199.0 of income for the one month ended July 31, 2007, respectively. | |
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Issuer | InSight Health Services Corp., a Delaware corporation. | |
Securities | $2.5 million aggregate principal amount of senior secured floating rate notes due 2011. | |
Maturity | November 1, 2011. | |
Interest | Interest on the new notes will accrue at the rate per annum, reset quarterly, equal to LIBOR plus 5.25%. | |
Interest Payment Dates | Each February 1, May 1, August 1 and November 1. The first scheduled interest payment on the new notes was November 1, 2007. | |
Guarantees | All $315 million in principal amount of issued and outstanding notes are unconditionally guaranteed on a senior secured basis by Holdings and each of InSight’s existing and future domestic wholly owned restricted subsidiaries, which are collectively referred to in this prospectus as the guarantors. | |
Ranking | All $315 million in principal amount of issued and outstanding notes and the related guarantees are general senior secured obligations. Accordingly, they will rank: |
• | equally in right of payment with all existing and any future senior indebtedness that we and the guarantors may incur under the indenture; | ||
• | effectively senior to our and the guarantors’ obligations under our credit facility (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity”) and any of our and the guarantors’ unsecured obligations, in each case only to the extent of the value of the collateral securing the notes and the guarantees; | ||
• | effectively subordinated to our obligations under our credit facility, any of our and the guarantors’ other secured indebtedness, in each case to the extent of the value of the collateral in which the holders of those obligations have a lien; and | ||
• | effectively subordinated to any obligations, including trade payables, of any of our subsidiaries that do not guarantee the notes. |
Collateral | All $315 million in principal amount of issued and outstanding notes and the guarantees are secured by a first priority lien on substantially all of InSight’s and the guarantors’ existing and future tangible and intangible personal property including, without limitation, equipment, certain contracts, intellectual property and certain owned real property, but are not secured by a lien on their accounts receivables and related assets, cash accounts related to accounts receivable and certain other assets. In addition, the notes and the guarantees are secured by a portion of InSight’s stock and the stock or other equity interests of certain of our subsidiaries. See “Description of Notes — Collateral.” The lenders under our credit facility have a first priority lien on Holdings’, InSight’s and the borrowers’ accounts receivables and related assets and cash accounts related to receivables. |
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Optional Redemption | On or after January 1, 2008, we may redeem some or all of the notes at any time at the redemption prices described in the section entitled “Description of Notes — Optional Redemption.” | |
Mandatory Offer to Repurchase | If we or any of our restricted subsidiaries receive net cash proceeds from asset sales in excess of a specified amount that are not reinvested in the business or if a change of control occurs, we must offer to purchase the notes at the prices set forth in the section entitled “Description of Notes — Repurchase at the Option of Holders.” | |
Basic Covenants of the Indenture | The indenture governing the notes restricts our ability and the ability of our restricted subsidiaries to, among other things: |
• | incur other indebtedness and issue preferred stock; | ||
• | pay dividends, redeem capital stock and prepay and/or redeem subordinated indebtedness; | ||
• | make investments; | ||
• | create liens; | ||
• | engage in mergers, consolidations, and sales of assets; and | ||
• | enter into certain transactions with affiliates. |
For more details, see the section entitled “Description of Notes — Certain Covenants.” | ||
Absence of a Public Market | There is no public market for the new notes. We do not intend to apply for the new notes to be listed on any securities exchange or to arrange for any quotation system to quote them. Accordingly, if an active public market does not develop, the market price and liquidity of the new notes may be adversely affected. | |
Risk Factors | See the section entitled “Risk Factors” for a description of certain of the risks you should consider prior to investing in the notes. |
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Predecessor(1) | Successor | ||||||||||||||||||||||||||||||||||||
Pro Forma | Three | One | Two | ||||||||||||||||||||||||||||||||||
for the Year | Months | Month | Months | ||||||||||||||||||||||||||||||||||
Ended | Ended | Ended | Ended | ||||||||||||||||||||||||||||||||||
Years Ended June 30, | June 30, | September 30, | July 31, | September 30, | |||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2007 | 2006 | 2007 | 2007 | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||||||
Revenues | $ | 237,752 | $ | 290,884 | $ | 316,873 | $ | 306,298 | $ | 286,914 | $ | 286,914 | $ | 73,672 | $ | 22,362 | $ | 45,390 | |||||||||||||||||||
Gross profit | 57,708 | 57,463 | 48,716 | 35,026 | 25,488 | 17,307 | 6,583 | 1,812 | 2,676 | ||||||||||||||||||||||||||||
Income (loss) before income taxes(2)(3) | 8,188 | 4,874 | (12,148 | ) | (225,042 | ) | (96,866 | ) | (89,586 | ) | (11,982 | ) | 196,388 | (7,081 | ) | ||||||||||||||||||||||
Net income (loss)(2)(3) | 4,922 | 2,924 | (27,217 | ) | (210,218 | ) | (99,041 | ) | (91,761 | ) | (12,132 | ) | 196,326 | (7,985 | ) | ||||||||||||||||||||||
Net income (loss) per common share(4)(5): | |||||||||||||||||||||||||||||||||||||
Basic | $ | 5.70 | $ | 3.38 | $ | (31.50 | ) | $ | (243.31 | ) | $ | (114.63 | ) | $ | (10.62 | ) | $ | (14.04 | ) | $ | 227.23 | $ | (0.92 | ) | |||||||||||||
Diluted | 5.59 | 3.32 | (31.50 | ) | (243.31 | ) | (114.63 | ) | (10.62 | ) | (14.04 | ) | 227.23 | (0.92 | ) | ||||||||||||||||||||||
Weighted average number of common shares outstanding(5): | |||||||||||||||||||||||||||||||||||||
Basic | 864 | 864 | 864 | 864 | 864 | 8,644 | 864 | 864 | 8,644 | ||||||||||||||||||||||||||||
Diluted | 880 | 882 | 864 | 864 | 864 | 8,644 | 864 | 864 | 8,644 | ||||||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 19,554 | $ | 30,412 | $ | 20,839 | $ | 28,208 | $ | 20,832 | — | $ | 22,438 | — | $ | 20,256 | |||||||||||||||||||||
Total assets | 577,317 | 675,631 | 624,523 | 408,204 | 323,051 | — | 393,405 | — | 377,668 | ||||||||||||||||||||||||||||
Total debt | 446,119 | 539,823 | 501,568 | 503,382 | 506,356 | — | 503,045 | — | 297,238 | ||||||||||||||||||||||||||||
Cash Flow Data: | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 61,756 | $ | 62,904 | $ | 64,045 | $ | 37,628 | $ | 9,065 | — | $ | 352 | $ | (6,839 | ) | $ | 1,955 | |||||||||||||||||||
Net cash provided by (used in) investing activities | (102,705 | ) | (145,034 | ) | (35,759 | ) | (28,507 | ) | (16,045 | ) | — | (3,748 | ) | 181 | 2,311 | ||||||||||||||||||||||
Net cash provided by (used in) financing activities | 42,720 | 92,988 | (37,859 | ) | (1,752 | ) | (396 | ) | — | (2,374 | ) | 7,298 | (860 | ) | |||||||||||||||||||||||
Other Data: | |||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 56,967 | $ | 46,734 | $ | 30,459 | $ | 30,927 | $ | 16,163 | — | $ | 4,045 | $ | — | $ | 2,206 | ||||||||||||||||||||
Adjusted EBITDA(6) | 95,047 | 104,289 | 98,313 | 79,295 | 60,062 | — | 17,205 | 4,776 | 9,211 | ||||||||||||||||||||||||||||
Depreciation and amortization | 49,345 | 58,733 | 65,601 | 64,852 | 57,040 | 65,221 | 15,533 | 4,468 | 10,039 | ||||||||||||||||||||||||||||
Number of fixed-site centers | 88 | 118 | 120 | 116 | 101 | 101 | 113 | — | 99 | ||||||||||||||||||||||||||||
Number of mobile facilities | 100 | 118 | 115 | 108 | 112 | 112 | 111 | — | 108 | ||||||||||||||||||||||||||||
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(1) | Upon Holdings’ and InSight’s emergence from chapter 11, we adopted fresh-start reporting in accordance with SOP 90-7. The provisions of fresh-start reporting require that we revalue our assets and liabilities to fair value, reestablish stockholders’ equity using the reorganized value established in connection with the plan of reorganization, and record any applicable reorganization value in excess of amounts allocable to identifiable assets as an intangible asset. The adoption of fresh-start reporting also results in our becoming a new entity for financial reporting purposes. Accordingly, our consolidated financial statements on or after August 1, 2007 are not comparable to our consolidated financial statements prior to that date. |
(2) | Includes impairment charges related to our goodwill of approximately $29.6 million and goodwill and other intangible assets of approximately $190.8 million for the years ended June 30, 2007 and 2006, respectively. |
(3) | Includes reorganization items, net of approximately $17.5 million of expense for the year ended June 30, 2007 and approximately $199.0 of income for the one month ended July 31, 2007, respectively. |
(4) | No cash dividends have been paid on Holdings’ common stock for the periods indicated above. |
(5) | The historical number of shares outstanding has been adjusted to reflect the reverse stock split of one share for 6.326392 shares of common stock implemented prior to the consummation of the plan of reorganization. |
(6) | Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation and amortization, excluding the gain on repurchase of notes payable, the loss on dissolution of partnership and impairment of goodwill and other intangible assets for the year ended June 30, 2006 and the impairment of goodwill and reorganization items, net for the year ended June 30, 2007 and reorganization items, net for the one month ended July 31, 2007. Adjusted EBITDA has been included because we believe that it is a useful tool for us and our investors to measure our ability to provide cash flows to meet debt service, capital projects and working capital requirements. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, income from company operations or other traditional indicators of operating performance and cash flow from operating activities determined in accordance with accounting principles generally accepted in the United States. We present the discussion of Adjusted EBITDA because covenants in the agreements governing our material indebtedness contain ratios based on this measure. While Adjusted EBITDA is used as a measure of liquidity and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. Our reconciliation of net cash provided by operating activities to Adjusted EBITDA is as follows (amounts in thousands) (unaudited): |
Predecessor (1) | Successor | |||||||||||||||||||||||||||||||
Three Months | One Month | Two Months | ||||||||||||||||||||||||||||||
Years Ended June 30, | Ended September 30, | Ended July 31, | Ended September 30, | |||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2006 | 2007 | 2007 | |||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 61,756 | $ | 62,904 | $ | 64,045 | $ | 37,628 | $ | 9,065 | $ | 352 | $ | (6,839 | ) | $ | 1,955 | |||||||||||||||
Cash used for reorganization items | — | — | — | — | 11,367 | — | 3,263 | 3,547 | ||||||||||||||||||||||||
Provision (benefit) for income taxes | 3,266 | 1,950 | 15,069 | (14,824 | ) | 2,175 | 150 | 62 | 904 | |||||||||||||||||||||||
Interest expense, net | 37,514 | 40,682 | 44,860 | 50,754 | 52,780 | 13,654 | 2,918 | 6,253 | ||||||||||||||||||||||||
Gain (loss) on sales of centers | — | 2,129 | (170 | ) | — | — | — | — | — | |||||||||||||||||||||||
Amortization of bond discount | — | — | — | — | — | — | — | (790 | ) | |||||||||||||||||||||||
Amortization of deferred financing costs | — | (2,911 | ) | (3,173 | ) | (3,051 | ) | (3,158 | ) | (789 | ) | (145 | ) | — | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | 2,181 | 2,613 | 3,072 | 3,030 | 752 | 174 | 263 | ||||||||||||||||||||||||
Distributions from unconsolidated partnerships | — | (2,054 | ) | (2,621 | ) | (3,387 | ) | (3,008 | ) | (716 | ) | (58 | ) | (604 | ) | |||||||||||||||||
Net change in operating assets and liabilities | (7,489 | ) | (592 | ) | (7,086 | ) | (6,121 | ) | (12,189 | ) | 3,802 | 5,401 | (1,537) | |||||||||||||||||||
Net change in deferred income taxes | — | — | (15,224 | ) | 15,224 | — | — | — | (780 | ) | ||||||||||||||||||||||
Adjusted EBITDA | $ | 95,047 | $ | 104,289 | $ | 98,313 | $ | 79,295 | $ | 60,062 | $ | 17,205 | $ | 4,776 | $ | 9,211 | ||||||||||||||||
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(Amounts in thousands, except per share data)
Historical | Adjustments | Pro Forma | ||||||||||
Revenues | $ | 286,914 | $ | — | $ | 286,914 | ||||||
Costs of operations | 261,426 | 8,181 | (1) | 269,607 | ||||||||
Gross profit | 25,488 | (8,181 | ) | 17,307 | ||||||||
Corporate operating expenses | (25,496 | ) | — | (25,496 | ) | |||||||
Equity in earnings of unconsolidated partnerships | 3,030 | — | 3,030 | |||||||||
Interest expense, net | (52,780 | ) | (15,461 | )(2) | (37,319 | ) | ||||||
Impairment of goodwill | (29,595 | ) | — | (29,595 | ) | |||||||
Loss before reorganization items and income taxes | (79,353 | ) | 7,280 | (72,073 | ) | |||||||
Reorganization items, net | (17,513 | ) | — | (17,513 | ) | |||||||
Loss before income taxes | (96,866 | ) | 7,280 | (89,586 | ) | |||||||
Provision for income taxes | 2,175 | — | 2,175 | |||||||||
Net loss | $ | (99,041 | ) | $ | 7,280 | $ | (91,761 | ) | ||||
Basic and diluted net loss per common share: | $ | (114.63 | ) | $ | (10.62 | ) | ||||||
Weighted average number of basic and diluted common shares outstanding: | 864 | 7,780 | (3) | 8,644 | ||||||||
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(1) | An adjustment for the year ended June 30, 2007 to increase depreciation expense of $6,137 and amortization expense of $2,044 related to the increase in fair value of our property and equipment and other identifiable intangible assets. | |
(2) | An adjustment for the year ended June 30, 2007 to reverse interest expense of $17,066 related to the senior subordinated notes which were exchanged for common stock and interest expense of $3,158 for the amortization of deferred financing costs which were written off as part of the revaluation of assets, partially offset by interest expense of $1,594 on the additional notes and interest expense of $3,709 related to the discount on the floating rate notes. | |
(3) | The issuance of 7,780 shares of Holdings’ common stock to holders of InSight’s senior subordinated notes. | |
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• | making it more difficult for us to satisfy our obligations with respect to the notes and our other debt; | ||
• | limiting our ability to obtain additional financing to fund future working capital, capital projects, acquisitions or other general corporate requirements; | ||
• | requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes; | ||
• | increasing our vulnerability to general adverse economic and industry conditions; | ||
• | limiting our flexibility in planning for, or reacting to, changes in our business and the markets in which we operate; | ||
• | placing us at a competitive disadvantage compared to our competitors that have less debt; and | ||
• | increasing our cost of borrowing. |
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• | incur additional debt; | ||
• | create liens; | ||
• | pay dividends, redeem capital stock and prepay and/or redeem subordinated indebtedness; | ||
• | make investments; | ||
• | engage in mergers, consolidations and sales of assets; and | ||
• | engage in transactions with affiliates. |
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• | the guarantee was incurred with the intent to hinder, delay or defraud any of such guarantor’s present or future creditors, or | ||
• | the guarantor, at the time the debt evidenced by the guarantee was incurred, received less than reasonably equivalent value or fair consideration for the incurrence of such debt; and |
• | was insolvent or rendered insolvent by reason of such incurrence, | ||
• | was engaged in a business or transaction for which such guarantor’s remaining assets constituted unreasonably small capital, or | ||
• | intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they mature. |
• | the sum of its debts, including contingent liabilities, were greater than the fair saleable value of all of its assets; | ||
• | the present fair saleable value of its assets were less than the amount that would be required to pay its probable liability on its existing debts, including contingent liabilities, as they become absolute and mature; or | ||
• | it could not pay its debts as they become due. |
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• | changes in the overall market for non-investment grade securities; | ||
• | changes in our financial performance or prospects; | ||
• | the financial performance or prospects for companies in our industry generally; | ||
• | the number of holders of the new notes; | ||
• | the interest of securities dealers in making a market for the new notes; and | ||
• | prevailing interest rates and general economic conditions. |
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• | demands on management related to the increase in our size after an acquisition; | ||
• | the diversion of our management’s attention from daily operations to the integration of operations; | ||
• | integration of information systems; | ||
• | risks associated with unanticipated events or liabilities; | ||
• | difficulties in the assimilation and retention of employees; | ||
• | potential adverse effects on operating results; | ||
• | challenges in retaining customers and referral sources; and | ||
• | amortization or write-offs of acquired intangible assets. |
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• | the federal False Claims Act; | ||
• | the federal Medicare and Medicaid Anti-kickback Law, and state anti-kickback prohibitions; | ||
• | the federal Civil Money Penalty Law; | ||
• | the federal Health Insurance Portability and Accountability Act of 1996; | ||
• | the federal physician self-referral prohibition commonly known as the Stark Law and the state law equivalents of the Stark Law; | ||
• | state laws that prohibit the practice of medicine by non-physicians, and prohibit fee-splitting arrangements involving physicians; | ||
• | U.S. Food and Drug Administration requirements; | ||
• | state licensing and certification requirements, including certificates of need; and | ||
• | federal and state laws governing the diagnostic imaging equipment used in our business concerning patient safety, equipment operating specifications and radiation exposure levels. |
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• | authorize additional shares of Holdings’ capital stock; | ||
• | amend Holdings’ certificate of incorporation or bylaws; | ||
• | elect Holdings’ directors; or | ||
• | effect or reject a merger, sale of assets or other fundamental transaction. |
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Predecessor(1) | Successor | ||||||||||||||||||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||||||||||||||
for the Year | Three Months Ended | One Month Ended | Two Months Ended | ||||||||||||||||||||||||||||||||||
Years Ended June 30, | Ended | September 30, | July 31, | September 30, | |||||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | June 30, 2007 | 2006 | 2007 | 2007 | |||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||||||
Revenues | $ | 237,752 | $ | 290,884 | $ | 316,873 | $ | 306,298 | $ | 286,914 | $ | 286,914 | $ | 73,672 | $ | 22,362 | $ | 45,390 | |||||||||||||||||||
Costs of operations | 180,044 | 233,421 | 268,157 | 271,272 | 261,426 | 269,607 | 67,089 | 20,550 | 42,714 | ||||||||||||||||||||||||||||
Gross profit | 57,708 | 57,463 | 48,716 | 35,026 | 25,488 | 17,307 | 6,583 | 1,812 | 2,676 | ||||||||||||||||||||||||||||
Corporate operating expenses | (13,750 | ) | (16,217 | ) | (18,447 | ) | (23,655 | ) | (25,496 | ) | (25,496 | ) | (5,663 | ) | (1,678 | ) | (3,767 | ) | |||||||||||||||||||
Gain (loss) on sales of centers | — | 2,129 | (170 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||
Equity in earnings of unconsolidated subsidiaries | 1,744 | 2,181 | 2,613 | 3,072 | 3,030 | 3,030 | 752 | 174 | 263 | ||||||||||||||||||||||||||||
Interest expense, net | (37,514 | ) | (40,682 | ) | (44,860 | ) | (50,754 | ) | (52,780 | ) | (37,319 | ) | (13,654 | ) | (2,918 | ) | (6,253 | ) | |||||||||||||||||||
Gain on repurchase of notes payable | — | — | — | 3,076 | — | — | — | — | — | ||||||||||||||||||||||||||||
Loss on dissolution of partnership | — | — | — | (1,000 | ) | — | — | — | — | — | |||||||||||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | — | (190,807 | ) | (29,595 | ) | (29,595 | ) | — | — | — | |||||||||||||||||||||||||
Income (loss) before reorganization items and income taxes | 8,188 | 4,874 | (12,148 | ) | (225,042 | ) | (79,353 | ) | (72,073 | ) | (11,982 | ) | (2,610 | ) | (7,081 | ) | |||||||||||||||||||||
Reorganization items, net | — | — | — | — | (17,513 | ) | (17,513 | ) | — | 198,998 | — | ||||||||||||||||||||||||||
Income (loss) before income taxes | 8,188 | 4,874 | (12,148 | ) | (225,042 | ) | (96,866 | ) | (89,586 | ) | (11,982 | ) | 196,388 | (7,081 | ) | ||||||||||||||||||||||
Provision (benefit) for income taxes | 3,266 | 1,950 | 15,069 | (14,824 | ) | 2,175 | 2,175 | 150 | 62 | 904 | |||||||||||||||||||||||||||
Net income (loss) | $ | 4,922 | $ | 2,924 | $ | (27,217 | ) | $ | (210,218 | ) | $ | (99,041 | ) | $ | (91,761 | ) | $ | (12,132 | ) | $ | 196,326 | $ | (7,985 | ) | |||||||||||||
Net income (loss) per common share(2)(3): | |||||||||||||||||||||||||||||||||||||
Basic | $ | 5.70 | $ | 3.38 | $ | (31.50 | ) | $ | (243.31 | ) | $ | (114.63 | ) | $ | (10.62 | ) | $ | (14.04 | ) | $ | 227.23 | $ | (0.92 | ) | |||||||||||||
Diluted | 5.59 | 3.32 | (31.50 | ) | (243.31 | ) | (114.63 | ) | 10.62 | ) | (14.04 | ) | 227.23 | (0.92 | ) | ||||||||||||||||||||||
Weighted average number of common shares outstanding(3): | |||||||||||||||||||||||||||||||||||||
Basic | 864 | 864 | 864 | 864 | 864 | 8,644 | 864 | 864 | 8,644 | ||||||||||||||||||||||||||||
Diluted | 880 | 882 | 864 | 864 | 864 | 8,644 | 864 | 864 | 8,644 | ||||||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 19,554 | $ | 30,412 | $ | 20,839 | $ | 28,208 | $ | 20,832 | — | $ | 22,438 | — | $ | 20,256 | |||||||||||||||||||||
Working capital | 32,580 | 48,116 | 36,068 | 34,550 | 24,567 | — | 33,308 | — | 32,397 | ||||||||||||||||||||||||||||
Total assets | 577,317 | 675,631 | 624,523 | 408,204 | 323,051 | — | 393,405 | — | 377,668 | ||||||||||||||||||||||||||||
Total debt | 446,119 | 539,823 | 501,568 | 503,382 | 506,356 | — | 503,045 | — | 297,238 | ||||||||||||||||||||||||||||
Stockholders’ equity (deficit) | 91,614 | 94,941 | 67,724 | (141,893 | ) | (241,432 | ) | — | (154,452 | ) | — | 29,508 | |||||||||||||||||||||||||
Cash Flow Data: | |||||||||||||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 61,756 | $ | 62,904 | $ | 64,045 | $ | 37,628 | $ | 9,065 | — | $ | 352 | $ | (6,839 | ) | $ | 1,955 | |||||||||||||||||||
Net cash provided by (used in) investing activities | (102,705 | ) | (145,034 | ) | (35,759 | ) | (28,507 | ) | (16,045 | ) | — | (3,748 | ) | 181 | (2,311 | ) | |||||||||||||||||||||
Net cash provided by (used in) financing activities | 42,720 | 92,988 | (37,859 | ) | (1,752 | ) | (396 | ) | — | (2,374 | ) | 7,298 | (860 | ) | |||||||||||||||||||||||
Other Data: | |||||||||||||||||||||||||||||||||||||
Capital expenditures | $ | 56,967 | $ | 46,734 | $ | 30,459 | $ | 30,927 | $ | 16,163 | — | $ | 4,045 | $ | — | $ | 2,206 | ||||||||||||||||||||
Adjusted EBITDA(4) | 95,047 | 104,289 | 98,313 | 72,295 | 60,062 | — | 17,205 | 4,776 | 9,211 | ||||||||||||||||||||||||||||
Depreciation and amortization | 49,345 | 58,733 | 65,601 | 64,852 | 57,040 | 65,221 | 15,533 | 4,468 | 10,039 | ||||||||||||||||||||||||||||
Number of fixed-site centers | 88 | 118 | 120 | 116 | 101 | 101 | 113 | — | 99 | ||||||||||||||||||||||||||||
Number of mobile facilities | 100 | 118 | 115 | 108 | 112 | 112 | 111 | — | 108 |
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(1) | Upon Holdings’ and InSight’s emergence from chapter 11, we adopted fresh-start reporting in accordance with SOP 90-7. The provisions of fresh-start reporting require that we revalue our assets and liabilities to fair value, reestablish stockholders’ equity using the reorganized value established in connection with the plan of reorganization, and record any applicable reorganization value in excess of amounts allocable to identifiable assets as an intangible asset. The adoption of fresh-start reporting also results in our becoming a new entity for financial reporting purposes. Accordingly, our consolidated financial statements on or after August 1, 2007 are not comparable to our consolidated financial statements prior to that date. |
(2) | No cash dividends have been paid on Holdings’ common stock for the periods indicated above. |
(3) | The historical number of shares outstanding has been adjusted to reflect the reverse stock split of one share for 6.326392 shares of common stock implemented prior to the consummation of the plan of reorganization. |
(4) | Adjusted EBITDA represents earnings before interest expense, income taxes, depreciation and amortization, excluding the gain on repurchase of notes payable, the loss on dissolution of partnership and impairment of goodwill and other intangible assets for the year ended June 30, 2006 and the impairment of goodwill and reorganization items, net for the year ended June 30, 2007 and reorganization items, net for the one month ended July 31, 2007. Adjusted EBITDA has been included because we believe that it is a useful tool for us and our investors to measure our ability to provide cash flows to meet debt service, capital projects and working capital requirements. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, income from company operations or other traditional indicators of operating performance and cash flow from operating activities determined in accordance with accounting principles generally accepted in the United States. We present the discussion of Adjusted EBITDA because covenants in the agreements governing our material indebtedness contain ratios based on this measure. While Adjusted EBITDA is used as a measure of liquidity and the ability to meet debt service requirements, it is not necessarily comparable to other similarly titled captions of other companies due to differences in methods of calculation. Our reconciliation of net cash provided by operating activities to Adjusted EBITDA is as follows (amounts in thousands) (unaudited): |
Predecessor (1) | Successor | |||||||||||||||||||||||||||||||||
Years Ended June 30, | Three Months Ended September 30, | One Month Ended July 31, | Two Months Ended September 30, | |||||||||||||||||||||||||||||||
2003 | 2004 | 2005 | 2006 | 2007 | 2006 | 2007 | 2007 | |||||||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 61,756 | $ | 62,904 | $ | 64,045 | $ | 37,628 | $ | 9,065 | $ | 352 | $ | (6,839 | ) | $ | 1,955 | |||||||||||||||||
Cash used for reorganization items | — | — | — | — | 11,367 | — | 3,263 | 3,547 | ||||||||||||||||||||||||||
Provision (benefit) for income taxes | 3,266 | 1,950 | 15,069 | (14,824 | ) | 2,175 | 150 | 62 | 904 | |||||||||||||||||||||||||
Interest expense, net | 37,514 | 40,682 | 44,860 | 50,754 | 52,780 | 13,654 | 2,918 | 6,253 | ||||||||||||||||||||||||||
Gain (loss) on sales of centers | — | 2,129 | (170 | ) | — | — | — | — | — | |||||||||||||||||||||||||
Amortization of bond discount | — | — | — | — | — | — | — | (790 | ) | |||||||||||||||||||||||||
Amortization of deferred financing costs | — | (2,911 | ) | (3,173 | ) | (3,051 | ) | (3,158 | ) | (789 | ) | (145 | ) | — | ||||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | 2,181 | 2,613 | 3,072 | 3,030 | 752 | 174 | 263 | ||||||||||||||||||||||||||
Distributions from unconsolidated partnerships | — | (2,054 | ) | (2,621 | ) | (3,387 | ) | (3,008 | ) | (716 | ) | (58 | ) | (604 | ) | |||||||||||||||||||
Net change in operating assets and liabilities | (7,489 | ) | (592 | ) | (7,086 | ) | (6,121 | ) | (12,189 | ) | 3,802 | 5,401 | (1,537 | ) | ||||||||||||||||||||
Net change in deferred income taxes | — | — | (15,224 | ) | 15,224 | — | — | — | (780 | ) | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 95,047 | $ | 104,289 | $ | 98,313 | $ | 79,295 | $ | 60,062 | $ | 17,205 | $ | 4,776 | $ | 9,211 | ||||||||||||||||||
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(Amounts in thousands, except per share data)
Historical | Adjustments | Pro Forma | ||||||||||
Revenues | $ | 286,914 | $ | — | $ | 286,914 | ||||||
Costs of operations | 261,426 | 8,181 | (1) | 269,607 | ||||||||
Gross profit | 25,488 | (8,181 | ) | 17,307 | ||||||||
Corporate operating expenses | (25,496 | ) | — | (25,496 | ) | |||||||
Equity in earnings of unconsolidated partnerships | 3,030 | — | 3,030 | |||||||||
Interest expense, net | (52,780 | ) | (15,461 | )(2) | (37,319 | ) | ||||||
Impairment of goodwill | (29,595 | ) | — | (29,595 | ) | |||||||
Loss before reorganization items and income taxes | (79,353 | ) | 7,280 | (72,073 | ) | |||||||
Reorganization items, net | (17,513 | ) | — | (17,513 | ) | |||||||
Loss before income taxes | (96,866 | ) | 7,280 | (89,586 | ) | |||||||
Provision for income taxes | 2,175 | — | 2,175 | |||||||||
Net loss | $ | (99,041 | ) | $ | 7,280 | $ | (91,761 | ) | ||||
Basic and diluted net loss per common share: | $ | (114.63 | ) | $ | (10.62 | ) | ||||||
Weighted average number of basic and diluted common shares outstanding: | 864 | 7,780 | (3) | 8,644 | ||||||||
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• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
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• | attract patient referrals from physician groups and hospitals; | ||
• | maximize procedure volume; | ||
• | maintain our existing contracts and enter into new ones with managed care organizations and commercial insurance carriers; and |
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• | acquire or develop new fixed-site centers. |
• | establish new mobile customers within our core markets; | ||
• | structure efficient mobile routes that maximize equipment utilization and reduce vehicle operations costs; and | ||
• | renew existing contracts with our mobile customers. |
• | overcapacity in the diagnostic imaging industry, which has reduced our procedure volume; | ||
• | reductions in reimbursement from certain third-party payors including planned reductions from Medicare; | ||
• | reductions in compensation paid by our mobile customers; | ||
• | competition from other mobile providers; | ||
• | competition from equipment manufacturers which have caused some of our referral sources, some of our mobile customers, and our mobile customers’ referral sources to invest in their own diagnostic imaging equipment; and | ||
• | industry-wide increases in salaries and benefits for technologists. |
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Percentage of Total Revenues | ||||
Hospitals, physician groups and other healthcare providers (1) | 46 | % | ||
Managed care and insurance | 38 | % | ||
Medicare | 10 | % | ||
Medicaid | 2 | % | ||
Workers’ compensation | 2 | % | ||
Other, including self-pay patients | 2 | % |
(1) | No single hospital, physician group or other healthcare provider accounted for more than 5% of our total revenues. |
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120 days | ||||||||||||||||||||||||
Current | 30 days | 60 days | 90 days | and older | Total | |||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Hospitals, physician groups and other healthcare providers | $ | 9,461 | $ | 4,983 | $ | 1,325 | $ | 566 | $ | 2,217 | $ | 18,552 | ||||||||||||
Managed care and insurance | 18,924 | 8,357 | 4,679 | 2,781 | 15,817 | 50,558 | ||||||||||||||||||
Medicare/Medicaid | 5,126 | 2,148 | 1,187 | 801 | 3,649 | 12,911 | ||||||||||||||||||
Workers’ compensation | 1,183 | 930 | 531 | 467 | 2,287 | 5,398 | ||||||||||||||||||
Other, including self-pay patients | 572 | 127 | 129 | 99 | — | 927 | ||||||||||||||||||
Trade accounts receivables | 35,266 | 16,545 | 7,851 | 4,714 | 23,970 | 88,346 | ||||||||||||||||||
Less: Allowances for professional fees | (4,051 | ) | (1,682 | ) | (959 | ) | (619 | ) | (3,459 | ) | (10,770 | ) | ||||||||||||
Allowances for contractual adjustments | (11,900 | ) | (5,077 | ) | (2,805 | ) | (204 | ) | (1,887 | ) | (21,873 | ) | ||||||||||||
Allowances for doubtful accounts | (21 | ) | (4 | ) | (4 | ) | (1,883 | ) | (11,535 | ) | (13,447 | ) | ||||||||||||
Trade accounts receivables, net | $ | 19,294 | $ | 9,782 | $ | 4,083 | $ | 2,008 | $ | 7,089 | $ | 42,256 | ||||||||||||
Predecessor | Combined | |||||||
Three Months Ended September 30, | ||||||||
2006 | 2007 | |||||||
(unaudited) | ||||||||
REVENUES: | ||||||||
Contract services | $ | 33,175 | $ | 30,312 | ||||
Patient services | 40,497 | 37,440 | ||||||
Total revenues | 73,672 | 67,752 | ||||||
COSTS OF OPERATIONS: | ||||||||
Costs of services | 49,111 | 45,229 | ||||||
Provision for doubtful accounts | 1,376 | 1,232 | ||||||
Equipment leases | 1,069 | 2,296 | ||||||
Depreciation and amortization | 15,533 | 14,507 | ||||||
Total costs of operations | 67,089 | 63,264 | ||||||
Gross profit | 6,583 | 4,488 | ||||||
CORPORATE OPERATING EXPENSES | (5,663 | ) | (5,445 | ) | ||||
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS | 752 | 437 | ||||||
INTEREST EXPENSE, net | (13,654 | ) | (9,171 | ) | ||||
Loss before reorganization items and income taxes | (11,982 | ) | (9,691 | ) | ||||
REORGANIZATION ITEMS, net | — | 198,998 | ||||||
(Loss) income before income taxes | (11,982 | ) | 189,307 | |||||
PROVISION FOR INCOME TAXES | 150 | 966 | ||||||
Net (loss) income | $ | (12,132 | ) | $ | 188,341 | |||
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Predecessor | Predecessor | Combined | ||||||||||||||||||
Years Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2005 | 2006 | 2007 | 2006 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
REVENUES | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
COSTS OF OPERATIONS: | ||||||||||||||||||||
Costs of services | 61.4 | 64.6 | 67.1 | 66.7 | 66.8 | |||||||||||||||
Provision for doubtful accounts | 1.8 | 1.7 | 2.0 | 1.9 | 1.8 | |||||||||||||||
Equipment leases | 0.7 | 1.1 | 2.1 | 1.4 | 3.4 | |||||||||||||||
Depreciation and amortization | 20.7 | 21.2 | 19.9 | 21.1 | 21.4 | |||||||||||||||
Total costs of operations | 84.6 | 88.6 | 91.1 | 19.1 | 93.4 | |||||||||||||||
Gross profit | 15.4 | 11.4 | 8.9 | 8.9 | 6.6 | |||||||||||||||
CORPORATE OPERATING EXPENSES | (5.8 | ) | (7.7 | ) | (8.9 | ) | (7.7 | ) | (8.0 | ) | ||||||||||
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS | 0.8 | 1.0 | 1.1 | 1.0 | 0.6 | |||||||||||||||
INTEREST EXPENSE, net | (14.2 | ) | (16.6 | ) | (18.5 | ) | (18.5 | ) | (13.5 | ) | ||||||||||
GAIN ON REPURCHASE OF NOTES PAYABLE | — | 1.0 | — | — | — | |||||||||||||||
LOSS ON DISSOLUTION OF PARTNERSHIP | — | (0.3 | ) | — | — | — | ||||||||||||||
IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS | — | (62.3 | ) | (10.3 | ) | — | — | |||||||||||||
Loss before reorganization items and income taxes | (3.8 | ) | (73.5 | ) | (27.7 | ) | (16.3 | ) | (14.3 | ) | ||||||||||
REORGANIZATION ITEMS, net | — | — | (6.1 | ) | — | 293.7 | ||||||||||||||
(Loss) income before income taxes | (3.8 | ) | (73.5 | ) | (33.8 | ) | (16.3 | ) | 279.4 | |||||||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 4.8 | (4.8 | ) | 0.8 | 0.2 | 1.4 | ||||||||||||||
Net (loss) income | (8.6 | )% | (68.6 | )% | (34.6 | )% | (16.5 | )% | 278.0 | % | ||||||||||
Predecessor | Predecessor | Combined | ||||||||||||||||||
Years Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2005 | 2006 | 2007 | 2006 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Fixed operations | $ | 196,482 | $ | 191,637 | $ | 180,115 | $ | 46,040 | $ | 43,152 | ||||||||||
Mobile operations | 120,391 | 114,661 | 106,799 | 27,632 | 24,600 | |||||||||||||||
Total | $ | 316,873 | $ | 306,298 | $ | 286,914 | $ | 73,672 | $ | 67,752 | ||||||||||
Costs of Operations | ||||||||||||||||||||
Fixed operations | $ | 150,105 | $ | 154,377 | $ | 151,447 | $ | 38,796 | $ | 36,929 | ||||||||||
Mobile operations | 98,147 | 97,586 | 91,345 | 23,953 | 22,803 | |||||||||||||||
Other | 19,905 | 19,309 | 18,634 | 4,340 | 3,532 | |||||||||||||||
Total | $ | 268,157 | $ | 271,272 | $ | 261,426 | $ | 67,089 | $ | 63,264 | ||||||||||
Costs of Operations as a Percentage of Revenues | ||||||||||||||||||||
Fixed operations | 76.4 | % | 80.6 | % | 84.1 | % | 84.3 | % | 85.6 | % | ||||||||||
Mobile operations | 81.5 | 85.1 | 85.5 | 86.7 | 92.7 | |||||||||||||||
Total | 84.6 | % | 88.6 | % | 91.1 | % | 91.1 | % | 93.4 | % | ||||||||||
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• | a reduction in the amounts available under our revolving credit facility, and therefore a decline in our borrowing base; | ||
• | difficulty funding our capital projects; and | ||
• | more stringent financing and leasing terms from equipment manufacturers and other financing resources. |
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• | interest payments relating to our floating rate notes and credit facility; | ||
• | capital projects; | ||
• | working capital requirements; and | ||
• | potential acquisitions. |
• | the volume of procedures at our fixed-site centers; | ||
• | the reimbursement we receive for our services; | ||
• | the demand for our mobile services; | ||
• | our ability to control expenses; and | ||
• | our ability to collect our trade accounts receivables from third-party payors, hospitals, physician groups, other healthcare providers and patients. |
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Predecessor | Predecessor | Combined | ||||||||||||||||||
Years Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2005 | 2006 | 2007 | 2006 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 64,045 | $ | 37,628 | $ | 9,065 | $ | 352 | $ | (4,884 | ) | |||||||||
Net cash used in investing activities | (35,759 | ) | (28,507 | ) | (16,045 | ) | (3,748 | ) | (2,130 | ) | ||||||||||
Net cash (used in) provided by financing activities | (37,859 | ) | (1,752 | ) | (396 | ) | (2,374 | ) | 6,438 | |||||||||||
Increase (decrease) in cash and cash equivalents | $ | (9,573 | ) | $ | 7,369 | $ | (7,376 | ) | $ | (5,770 | ) | $ | (576 | ) | ||||||
Predecessor | Predecessor | Combined | ||||||||||||||||||
Years Ended June 30, | Three Months Ended September 30, | |||||||||||||||||||
2005 | 2006 | 2007 | 2006 | 2007 | ||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net cash provided by operating activities | $ | 64,045 | $ | 37,628 | $ | 9,065 | $ | 352 | $ | (4,884 | ) | |||||||||
Cash used for reorganization items | — | — | 11,367 | — | 6,810 | |||||||||||||||
Provision (benefit) for income taxes | 15,069 | (14,824 | ) | 2,175 | 150 | 966 | ||||||||||||||
Interest expense, net | 44,860 | 50,754 | 52,780 | 13,654 | 9,171 | |||||||||||||||
Loss on sales of centers | (170 | ) | — | — | — | — | ||||||||||||||
Amortization of bond discount | — | — | — | — | (790 | ) | ||||||||||||||
Amortization of deferred financing costs | (3,173 | ) | (3,051 | ) | (3,158 | ) | (789 | ) | (145 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | 2,613 | 3,072 | 3,030 | 752 | 437 | |||||||||||||||
Distributions from unconsolidated partnerships | (2,621 | ) | (3,387 | ) | (3,008 | ) | (716 | ) | (662 | ) | ||||||||||
Net change in operating assets and liabilities | (7,086 | ) | (6,121 | ) | (12,189 | ) | 3,802 | 3,864 | ||||||||||||
Net change in deferred income taxes | (15,224 | ) | 15,224 | — | — | (780 | ) | |||||||||||||
Adjusted EBITDA | $ | 98,313 | $ | 79,295 | $ | 60,062 | $ | 17,205 | $ | 13,987 | ||||||||||
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Payments Due by Period | ||||||||||||||||||||
Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Total | 1 Year | Years | Years | 5 Years | ||||||||||||||||
Long-term debt obligations | $ | 730,817 | $ | 56,622 | $ | 102,928 | $ | 571,267 | $ | — | ||||||||||
Capital lease obligations | 6,970 | 3,265 | 2,442 | 1,263 | — | |||||||||||||||
Operating lease obligations | 54,888 | 14,070 | 22,401 | 13,947 | 4,470 | |||||||||||||||
Purchase commitments | 2,423 | 2,423 | — | — | — | |||||||||||||||
Total contractual obligations | $ | 795,098 | $ | 76,380 | $ | 127,771 | $ | 586,477 | $ | 4,470 | ||||||||||
• | the market value of Holdings’ 8,644,444 shares of common stock when such shares first traded after consummation of the confirmed plan of reorganization and for a short period of time thereafter. The value range of Holdings’ common stock was estimated from a low of $35 million (based on $4 per share) to a high of $61 million (based on $7 per share). The range of enterprise value to correspond with the foregoing range would be from a low of $357 million to a high of $383 million. Management recognizes that the common stock valuation approach may be somewhat limited because the shares of common stock issued after the consummation of the confirmed plan of reorganization did not necessarily have the same liquidity as shares issued in connection with an underwritten public offering. Nevertheless, management determined that benefits of this valuation method outweighed this limitation and management relied primarily on this valuation method. |
• | the market value of the $194.5 million of senior subordinated notes for a period of time leading up to cancellation of such debt on the date of the consummation of the confirmed plan of reorganization. The value range of InSight’s senior subordinated notes was estimated from a low of $65 million to a high of $74 million during an approximately 30 day period of time leading up to the date of consummation of the plan. The range of enterprise value to correspond with the foregoing range would be from a low of $387 million to a high of $396 million. |
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Room 1024
Washington, D.C. 20549
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• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
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• | Ultrasound systems use, detect and process high frequency sound waves to generate images of soft tissues and internal body organs. | ||
• | X-ray is the most common energy source used in imaging the body and is now employed in conventional x-ray systems, CT and digital x-ray systems. | ||
• | Mammography is a low-level conventional examination of the breasts. Its primary purpose is to detect lesions in the breast that may be too small or deeply buried to be felt in a regular breast examination. | ||
• | Bone densitometry uses an advanced technology called dual-energy x-ray absorptiometry, or DEXA, which safely, accurately and painlessly measures bone density and the mineral content of bone for the diagnosis of osteoporosis. |
• | broadening our physician referral base and generating new sources of revenues through selective marketing activities; | ||
• | focusing our marketing efforts on attracting additional managed care customers; | ||
• | emphasizing quality of care and convenience to our customers; and | ||
• | expanding current imaging applications of existing modalities to increase overall procedure volume. |
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• | developing new fixed-site centers, mobile routes, and joint ventures with hospitals or radiologists and making disciplined acquisitions where attractive returns on investment can be achieved and sustained; and | ||
• | selling or closing certain existing fixed-site centers, restructuring or terminating certain mobile routes and redeploying such capital to obtain more attractive returns. |
• | Failure to comply with the many technical billing requirements applicable to our Medicare and Medicaid business. | ||
• | Failure to comply with Medicare requirements concerning the circumstances in which a hospital, rather than we, must bill Medicare for diagnostic imaging services we provide to outpatients treated by the hospital. | ||
• | Failure of our hospital customers to accurately identify and report our reimbursable and allowable services to Medicare. |
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• | Failure to comply with the prohibition against billing for services ordered or supervised by a physician who is excluded from any federal healthcare programs, or the prohibition against employing or contracting with any person or entity excluded from any federal healthcare programs. | ||
• | Failure to comply with the Medicare physician supervision requirements for the services we provide, or the Medicare documentation requirements concerning physician supervision. | ||
• | The past conduct of the businesses we have acquired. |
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Wayne B. Lowell | 52 | Chairman of the Board and Director | ||||
Richard Nevins | 60 | Interim Chief Executive Officer and Director | ||||
Louis E. Hallman, III | 49 | Interim Chief Operating Officer | ||||
Patricia R. Blank | 57 | Executive Vice President — Clinical Services and Support of InSight | ||||
Donald F. Hankus | 53 | Executive Vice President and Chief Information Officer of InSight | ||||
Mitch C. Hill | 48 | Executive Vice President and Chief Financial Officer | ||||
Eugene Linden | 60 | Director | ||||
Marilyn U. MacNiven-Young | 56 | Executive Vice President, General Counsel and Secretary | ||||
James A. Ovenden | 44 | Director | ||||
Keith E. Rechner | 50 | Director | ||||
Steven G. Segal | 47 | Director |
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• | Prepare the audit committee report required by SEC rules to be included in Holdings’ annual proxy statement. | ||
• | Assist the board of directors in fulfilling its responsibility to oversee management regarding: | ||
• | the conduct and integrity of Holdings’ financial reporting to any governmental or regulatory body, stockholders, other users of Holdings’ financial reports, and the public; | ||
• | Holdings’ legal and regulatory compliance; | ||
• | the qualifications, engagement, compensation, independence, and performance of Holdings’ independent registered public accounting firm, its conduct of the annual audit of Holdings’ financial statements, and its engagement to provide any other services; and | ||
• | the performance of Holdings’ internal audit function and systems of internal control over financial reporting and disclosure controls and procedures. | ||
• | Maintain through regularly scheduled meetings, a line of communication between the board of directors and Holdings’ management, internal auditor and the independent registered public accounting firm. |
• | review the compensation of the Chief Executive Officer; | ||
• | administer Holdings’ stock option or other equity-based compensation plans and programs; and |
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• | oversee Holdings’ management compensation and benefits policies, including both qualified and non-qualified plans. |
• | review the compensation of the Chief Executive Officer; | ||
• | administer Holdings’ stock option or other equity-based compensation plans and programs; and | ||
• | oversee Holdings’ management compensation and benefits policies, including both qualified and non-qualified plans. |
• | attract and retain individuals of superior ability and managerial talent; | ||
• | ensure executive compensation is aligned with our corporate strategies, business objectives and the long-term interests of our stockholders; | ||
• | create the incentive to achieve key strategic and financial performance measures by linking incentive award opportunities to the achievement of performance goals in these areas; and | ||
• | enhance the executives’ incentive to increase stockholder value, as well as promote retention of key people, by providing an equity interest in Holdings. |
• | annual base salary; |
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• | cash incentive awards; | ||
• | equity awards; and | ||
• | perquisites. |
• | considered marketplace data for comparable positions and the relative performance and contribution of each executive to the business; | ||
• | did not rely solely on predetermined formulas or a limited set of criteria when it evaluated the performance of the named executive officers; | ||
• | reviewed base salary levels annually to ensure competitiveness; and | ||
• | based on annual review and individual performance of each executive, implemented base salary increases, if appropriate. |
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• | Medical Insurance. At our sole cost, we provide to each named executive officer and the named executive officer’s eligible dependents such health, dental and vision insurance as we may from time to time make available. | ||
• | Life and Disability Insurance. At our sole cost, we provide each named executive officer such disability and/or life insurance as we in our sole discretion may from time to time make available. | ||
• | 401(k) Savings Plan. We currently make matching contributions to our 401(k) Savings Plan in an amount equal to fifty cents for each dollar of participant contributions, up to a maximum of six percent of the participant’s compensation for each pay period and subject to certain other limits. Participation is not limited to named executive officers, and all full-time employees are eligible to participate in the 401(k) Savings Plan. | ||
• | Automobile Allowance and Operating Expenses. Mr. Jorgensen received an automobile allowance of $1,000 per month until his resignation as of November 15, 2007, and the other named executive officers receive an automobile allowance of $750 per month. We pay the named executive officers’ expenses incidental to the operation of an automobile. | ||
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• | Mr. Jorgensen’s resignation from Holdings and InSight effective as of November 15, 2007; | ||
• | effective as of November 16, 2007 and continuing through May 16, 2008, Mr. Jorgensen will provide to us such consulting services as our board of directors reasonably requests; | ||
• | in consideration for such consulting services, we will pay Mr. Jorgensen on a monthly basis in arrears an amount equal to $34,083.33 without withholding or deduction (the aggregate total of all payments for consulting services shall be $204,499.98), plus reimbursement of his reasonable out-of-pocket expenses incurred in providing such services; | ||
• | Mr. Jorgensen shall not be entitled to receive any bonus for any period after June 30, 2007, nor shall he be entitled to receive any equity securities or equity-like securities of Holdings; | ||
• | we agree to continue to provide to Mr. Jorgensen benefits, such as life insurance, medical, dental and health insurance, that he was entitled to receive prior to his resignation, until November 15, 2008, until Mr. Jorgensen becomes eligible for comparable employment benefits as the result of full-time employment with another employer or until Mr. Jorgensen’s employment by a competitor of us; | ||
• | customary releases in favor of us by Mr. Jorgensen and customary releases in favor of Mr. Jorgensen by us; and | ||
• | Mr. Jorgensen’s agreement to comply with certain noncompetition and nonsolicitation covenants (relating to our employees and customers) during the twelve-month period ending on November 15, 2008. | ||
• | Mr. Nevins will provide to us such consulting services consistent with the position of Interim Chief Executive Officer and shall report to our board of directors; | ||
• | the engagement of Mr. Nevins as Interim Chief Executive Officer is on a week-to-week basis; | ||
• | in consideration for such consulting services, we will pay Mr. Nevins on a weekly basis an amount equal to $10,000 without withholding or deduction, plus reimbursement of his reasonable out-of-pocket expenses incurred in providing such services; | ||
• | at the conclusion of the engagement, Mr. Nevins may request a discretionary bonus; however, he has no right to the discretionary bonus, which shall be awarded, if at all, in the sole discretion of our board of directors; and | ||
• | while serving as Interim Chief Executive Officer, Mr. Nevins will not be entitled to any meeting or committee fees that he would otherwise be entitled to receive as a director; however, he will be entitled to his annual retainer and any equity award that he would otherwise receive as a director. | ||
Fiscal | Non-Equity | |||||||||||||||||||
Year | Incentive Plan | All Other | ||||||||||||||||||
Ended | Salary | Compensation(1) | Compensation(2) | Total | ||||||||||||||||
Name and Principal Position | June 30, | ($) | ($) | ($) | ($) | |||||||||||||||
Bret W. Jorgensen | 2007 | 406,231 | 773,050 | 76,802 | 1,256,083 | |||||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||
Mitch C. Hill | 2007 | 279,284 | 423,484 | 56,470 | 759,238 | |||||||||||||||
Executive Vice President and Chief Financial Officer | ||||||||||||||||||||
Marilyn U. MacNiven-Young | 2007 | 279,284 | 423,484 | 29,443 | 732,211 | |||||||||||||||
Executive Vice President, General Counsel and Secretary | ||||||||||||||||||||
Louis E. Hallman, III | 2007 | 279,909 | 277,291 | 29,253 | 586,453 | |||||||||||||||
Executive Vice President and Chief Strategy Officer | ||||||||||||||||||||
Patricia R. Blank | 2007 | 279,284 | 82,000 | 39,663 | 400,947 | |||||||||||||||
Executive Vice President - Clinical Services and Support |
(1) | Cash incentive awards which are based on our performance are earned and accrued during the fiscal year and paid subsequent to the end of each fiscal year. The amounts include payments under the management incentive plan to Messrs. Jorgensen, Hill and Hallman and Ms. MacNiven-Young. The components of Non-Equity Incentive Plan Compensation are annual cash incentive awards and payments under the management incentive plan (no further payments will be made under such management incentive plan). |
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Set forth below are the different components of non-equity incentive plan compensation paid to the named executive officers. |
Management | Annual | Total | ||||||||||
Incentive | Cash | Non-Equity | ||||||||||
Plan | Incentive | Incentive Plan | ||||||||||
Named Executive Officer | Payments | Award | Compensation | |||||||||
Bret W. Jorgensen | $ | 511,250 | $ | 261,800 | $ | 773,050 | ||||||
Mitch C. Hill | 351,484 | 72,000 | 423,484 | |||||||||
Marilyn U. MacNiven-Young | 351,484 | 72,000 | 423,484 | |||||||||
Louis E. Hallman, III | 210,891 | 66,400 | 277,291 | |||||||||
Patricia R. Blank | — | 82,000 | 82,000 |
(2) | Amounts of All Other Compensation are comprised of the following perquisites: (1) automobile allowances, (2) automobile operating expenses, (3) the Company’s contributions to our 401(k) Savings Plan, (4) specified premiums on executive life insurance arrangements, (5) specified premiums on executive health and disability insurance arrangements and (6) certain professional membership dues. With respect to specified premiums on executive health and disability insurance arrangements, the Company paid $33,889 and $31,772, respectively, on behalf of Messrs. Jorgensen and Hill. |
Estimated Future | ||||||||||
Payouts Under | ||||||||||
Non-Equity | ||||||||||
Incentive Plan Awards | ||||||||||
Threshold | Target/Maximum | |||||||||
Named Executive Officer | Grant Date(1) | ($)(2) | ($)(3) | |||||||
Bret W. Jorgensen | July 1, 2006 | $ | 30,675 | $ | 409,000 | |||||
November 14, 2006 | 255,625 | 511,250 | ||||||||
Mitch C. Hill | July 1, 2006 | 8,436 | 112,475 | |||||||
November 14, 2006 | 175,472 | 351,484 | ||||||||
Marilyn U. MacNiven-Young | July 1, 2006 | 8,436 | 112,475 | |||||||
November 14, 2006 | 175,472 | 351,484 | ||||||||
Louis E. Hallman, III | July 1, 2006 | 8,436 | 112,475 | |||||||
November 14, 2006 | 105,145 | 210,891 | ||||||||
Patricia R. Blank | July 1, 2006 | 8,436 | 112,475 |
(1) | Potential cash incentive awards were granted as of July 1, 2006 and potential management incentive plan payments were granted as of November 14, 2006. | |
(2) | The threshold amount assumes that (i) the minimum level of budgetary performance was met for the cash incentive award, but the personal management objectives were not achieved, and (ii) the occurrence of a specified date for the management incentive plan. |
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(3) | The target amount assumes (i) that the targeted level of performance (both targeted budget and personal management objectives) was met for the cash incentive awards, and (ii) the achievement of the strategic milestone for the management incentive plan. The maximum amount is equal to the target amount because (a) with respect to the management incentive plan the target amount is the maximum amount, and (b) with respect to cash incentive awards, if level of performance exceeds the targeted budget, the named executive officers may receive a discretionary award, but the amount of any discretionary award above the target amount is subject to the discretion of the compensation committee. Actual amounts earned under these granted awards in fiscal year 2007 are reflected in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table above. |
Number of | Number of | |||||||||||||||
Securities | Securities | |||||||||||||||
Underlying | Underlying | |||||||||||||||
Unexercised | Unexercised | Option | Option | |||||||||||||
Options (#) | Options (#) | Exercise | Expiration | |||||||||||||
Named Executive Officer | Exercisable | Unexercisable | Price ($) | Date (1) | ||||||||||||
Bret W. Jorgensen | 37,235 | 211,011 | (2) | $ | 19.82 | 7/1/2015 | ||||||||||
Mitch C. Hill | 8,000 | 32,000 | (3) | $ | 19.82 | 1/10/2015 | ||||||||||
Marilyn U. MacNiven-Young | 10,500 | 19,500 | (3) | $ | 18.00 | 10/17/2011 | ||||||||||
2,000 | 8,000 | (3) | $ | 19.82 | 1/10/2015 | |||||||||||
Louis E. Hallman, III | 4,000 | 36,000 | (3) | $ | 19.82 | 8/10/2015 | ||||||||||
Patricia R. Blank | 10,500 | 19,500 | (3) | $ | 18.00 | 10/17/2011 | ||||||||||
6,000 | 24,000 | (3) | $ | 19.82 | 1/10/2015 |
(1) | The stock option plan was terminated and all outstanding options were cancelled on August 1, 2007 upon consummation of the plan of reorganization. | |
(2) | These options would have vested and become exercisable on the following vesting schedule: 15% upon each anniversary of the grant date on the second through sixth anniversary of the grant date, 25% upon the achievement of certain performance targets on an equity exit or a liquidity event. | |
(3) | These options would have vested and become exercisable on the following vesting schedule: 10% upon each anniversary of the grant date on the second through sixth anniversary of the grant date, 50% upon the achievement of certain performance targets on an equity exit or a liquidity event. |
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(1) | Upon the executive’s permanent and total disability, i.e., the executive is unable substantially to perform his or her services required by the employment agreement for three (3) consecutive months or shorter periods aggregating three (3) months during any twelve (12) month period; provided, however that our obligation to make payments of 12 months of compensation at the annual salary rate then in effect may be reduced by the amount which the executive is entitled to receive under the terms of our long-term disability insurance policy. | ||
(2) | Upon InSight’s 30 days’ written notice to the executive of the termination of the executive’s employment without cause. The employment agreements generally define cause as the occurrence of one of the following: |
• | the executive has been convicted or pled guilty or no contest to any crime or offense (other than any crime or offense relating to the operation of an automobile) which is likely to have a material adverse impact on the business operations or financial or other condition of our business, or any felony offense; | ||
• | the executive has committed fraud or embezzlement; | ||
• | the executive has breached any of his or her obligations under the employment agreement and failed to cure the breach within 30 business days following receipt of written notice of such breach; | ||
• | we, after reasonable investigation, find that the executive has violated our material written policies and procedures, including but not necessarily limited to, policies and procedures pertaining to harassment and discrimination; | ||
• | the executive has failed to obey a specific written direction from the board of directors (unless such specific written instruction represents an illegal act), provided that (i) such failure continues for a period of 30 business days after receipt of such specific written direction, and (ii) such specific written direction includes a statement that the failure to comply therewith will be a basis for termination hereunder; or | ||
• | any willful act or omission on the executive’s part which is materially injurious to the financial condition or business reputation of InSight or any of its subsidiaries. | ||
(3) | If the executive terminates his or her employment with InSight for good reason. The employment agreements generally define good reason as: | ||
• | the relocation by InSight, without the executive’s consent, of the executive’s principal place of employment to a site that is more than a specified number of miles from executive’s principal residence; | ||
• | a reduction by InSight, without the executive’s consent, in the executive’s annual salary, duties and responsibilities, and title, as they may exist from time to time; or | ||
• | a failure by InSight to comply with any material provision of the employment agreement which is not cured within 30 days after notice of such noncompliance has been given by the executive, or if such failure is not capable of being cured in such time, for which a cure shall not have been diligently initiated by InSight within the 30 day period. | ||
(4) | If the executive’s employment is terminated by InSight without cause or he or she terminates his or her employment for good reason within 12 months of a change in control. The consummation of the exchange offer (Holdings’ common stock for senior subordinated notes) and the plan of reorganization did not constitute a change in control under the employment agreements with the named executive officers. A change in control shall generally be deemed to have occurred if: | ||
• | any person, or any two or more persons acting as a group, and all affiliates of such person or persons (a “Group”), who prior to such time beneficially owned less than 50% of the then outstanding capital stock of InSight or Holdings, shall acquire shares of InSight’s or Holdings’ capital stock in one or more transactions or series of transactions, including by merger, and after such transaction or transactions such person or group and affiliates beneficially own 50% or more of InSight’s or Holdings’ outstanding capital stock, or | ||
• | InSight or Holdings shall sell all or substantially all of its assets to any Group which, immediately prior to the time of such transaction, beneficially owned less than 50% of the then outstanding capital stock of InSight or Holdings. |
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Named Executive Officer | Salary | Benefits (1) | Total | |||||||||
Bret W. Jorgensen | $409,000 | $28,265 | $437,265 | (2) | ||||||||
Mitch C. Hill | 281,187 | 32,125 | 313,312 | |||||||||
Marilyn U. MacNiven-Young | 281,187 | 8,257 | 289,444 | |||||||||
Louis E. Hallman, III | 281,187 | 15,514 | 296,701 | |||||||||
Patricia R. Blank | 281,187 | 18,220 | 299,407 | |||||||||
(1) | For purposes of this table we have assumed that (i) the terminated executive would not commence receiving benefits with a new employer until 12 months after the date of termination, and (ii) cost of benefits for the 12 month period following termination would be consistent with the actual costs incurred during fiscal 2007. Benefits include all life insurance, medical, health and accident and disability plans or programs, in which the executive was entitled to participate immediately prior to the date of termination. We have not included in this table the value of outstanding stock options as of June 30, 2007 because such stock options were out of the money as of that date and were cancelled on August 1, 2007 upon consummation of the plan of reorganization. | |
(2) | The estimated payments set forth in this table with respect to Mr. Jorgensen have been superseded by the terms of the resignation agreement effective as of October 26, 2007. See “Employment, Resignation and Consulting Agreements” above. | |
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Amount and Nature | Percentage of | |||||||
of Beneficial | Common Stock | |||||||
Ownership of | Beneficially | |||||||
Names and Addresses of Beneficial Owners | Common Stock (1) | Owned (1) | ||||||
James D. Bennett(2) | 2,040,000 | 23.6 | % | |||||
2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | ||||||||
Bennett Restructuring Fund, L.P.(3) | 1,206,000 | 14.0 | % | |||||
2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | ||||||||
Bennett Offshore Restructuring Fund, Inc.(4) | 730,000 | 8.4 | % | |||||
2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | ||||||||
Blackport Capital Fund, Ltd.(5) | 690,000 | 8.0 | % | |||||
345 Park Avenue, 31st Floor New York, New York 10154 | ||||||||
J.W. Childs Equity Partners II, L.P.(6) | 687,641 | 8.0 | % | |||||
111 Huntington Avenue, Suite 2900 Boston, Massachusetts 02199 | ||||||||
Morgan Keegan Select Fund, Inc.(7) | 1,223,200 | 14.2 | % | |||||
50 North Front Street Memphis, Tennessee 38103 | ||||||||
Regions Morgan Keegan Select High Income Fund, Inc.(8) | 451,000 | 5.2 | % | |||||
50 North Front Street Memphis, Tennessee 38103 | ||||||||
Wayne B. Lowell | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Eugene Linden(9) | — | — | ||||||
2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | ||||||||
Richard Nevins | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
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Amount and Nature | Percentage of | |||||||
of Beneficial | Common Stock | |||||||
Ownership of | Beneficially | |||||||
Names and Addresses of Beneficial Owners | Common Stock (1) | Owned (1) | ||||||
James A. Ovenden | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Keith E. Rechner | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Steven G. Segal(10) | — | — | ||||||
111 Huntington Avenue, Suite 2900 Boston, Massachusetts 02199 | ||||||||
Bret W. Jorgensen (11) | — | — | ||||||
7891 Muirfield Way P. O. Box 675926 Rancho Sante Fe, CA 92067 | ||||||||
Mitch C. Hill | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Marilyn U. MacNiven-Young | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Louis E. Hallman, III | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
Patricia R. Blank | — | — | ||||||
26250 Enterprise Court, Suite 100 Lake Forest, California 92630 | ||||||||
All executive officers and directors, as a group (11 persons)(11) | — | — | ||||||
(1) | For purposes of this table, a person is deemed to have “beneficial ownership” of any security that such person has the right to acquire within 60 days after November 30, 2007. | |
(2) | Based on information provided pursuant to stockholder questionnaire forms dated September 17, 2007 and September 18, 2007. Includes 1,206,000 shares of common stock owned directly by Bennett Restructuring Fund, L.P., 104,000 shares of common stock owned directly by affiliate BRF High Value, L.P. and 730,000 shares of common stock owned directly by affiliate Bennett Offshore Restructuring Fund, Inc. The general partner of Bennett Restructuring Fund, L.P. and BRF High Value, L.P. is Restructuring Capital Associates, L.P., a Delaware limited partnership, and the general partner of Restructuring Capital Associates, L.P. is Bennett Capital Corporation, a Delaware corporation, of which James D. Bennett is President and sole stockholder. Mr. Bennett, Bennett Capital Corporation and Restructuring Capital Associates, L.P. may be deemed to beneficially own an aggregate of 1,310,000 shares of common stock held by Bennett Restructuring Fund, L.P. and BRF High Value, L.P. together. The investment manager of Bennett Offshore Restructuring Fund, Inc. is Bennett Offshore Investment Corporation, a Connecticut corporation, of which James D. Bennett is the President and, together with the BT Trust U/D 12/9/2004, the owner. Mr. Bennett, BT Trust U/D 12/9/2004 and Bennett Offshore Investment Corporation may be deemed to beneficially own the 730,000 shares of common stock held by Bennett Offshore Restructuring Fund, Inc. Each of Mr. Bennett, BT Trust, Restructuring Capital Associates, L.P., Bennett Capital Corporation and Bennett Offshore Investment Corporation specifically disclaim beneficial ownership of the shares of common stock deemed to be beneficially owned except to the extent of his or its pecuniary interest therein. | |
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(3) | Based on information provided pursuant to a stockholder questionnaire form dated September 17, 2007. Includes 1,206,000 shares of common stock owned directly by Bennett Restructuring Fund, L.P. The general partner of Bennett Restructuring Fund, L.P. is Restructuring Capital Associates, L.P., a Delaware limited partnership, and the general partner of Restructuring Capital Associates, L.P. is Bennett Capital Corporation, a Delaware corporation, of which James D. Bennett is President and sole stockholder. Mr. Bennett, Bennett Capital Corporation and Restructuring Capital Associates, L.P. may be deemed to beneficially own an aggregate of 1,206,000 shares of common stock held by Bennett Restructuring Fund, L.P. Each of Mr. Bennett, Restructuring Capital Associates, L.P., and Bennett Capital Corporation specifically disclaim beneficial ownership of the shares of common stock deemed to be beneficially owned except to the extent of his or its pecuniary interest therein. | |
(4) | Based on information provided pursuant to a stockholder questionnaire form dated September 17, 2007. Includes 730,000 shares of common stock owned directly by Bennett Offshore Restructuring Fund, Inc. The investment manager of Bennett Offshore Restructuring Fund, Inc. is Bennett Offshore Investment Corporation, a Connecticut corporation, of which James D. Bennett is the President and, together with the BT Trust U/D 12/9/2004, the owner. Mr. Bennett, BT Trust U/D 12/9/2004 and Bennett Offshore Investment Corporation may be deemed to beneficially own the 730,000 shares of common stock held by Bennett Offshore Restructuring Fund, Inc. Each of Mr. Bennett, BT Trust U/D 12/9/2004 and Bennett Offshore Investment Corporation specifically disclaim beneficial ownership of the shares of common stock deemed to be beneficially owned except to the extent of his or its pecuniary interest therein. | |
(5) | Based on information provided pursuant to a stockholder questionnaire form dated September 19, 2007. | |
(6) | Based on information provided by this entity to our company. Includes 634,130 shares of our common stock owned directly by J.W. Childs Equity Partners II, L.P. and 53,511 shares of our common stock owned directly by JWC-InSight Co-invest LLC, an affiliate of J.W. Childs Equity Partners II, L.P. The general partner of J.W. Childs Equity Partners II, L.P. is J.W. Childs Advisors II, L.P., a Delaware limited partnership. The general partner of J.W. Childs Advisors II, L.P. is J.W. Childs Associates, L.P., a Delaware limited partnership. The general partner of J.W. Childs Associates, L.P. is J.W. Childs Associates, Inc., a Delaware corporation. J.W. Childs Advisors II, L.P., J.W. Childs Associates, L.P. and J.W. Childs Associates, Inc. may be deemed to beneficially own the 687,641 shares of our common stock held by J.W. Childs Equity Partners II, L.P. and JWC-InSight Co-invest LLC. John W. Childs, Glenn A. Hopkins, Adam L. Suttin, William E. Watts, and David Fiorentino, as well as Steven G. Segal (as indicated in footnote 9), share voting and investment control over, and therefore may be deemed to beneficially own, the shares of common stock held by these entities. | |
(7) | Based on the information provided pursuant to a Schedule 13G filed with the SEC on October 5, 2007 by Morgan Keegan Select Fund, Inc. Includes 451,000 shares of common stock owned directly by Regions Morgan Keegan Select High Income Fund, Inc., a series of Morgan Keegan Select Fund, Inc., 221,000 shares of common stock held by RMK Multi-Sector High Income Fund, Inc., 202,200 shares of common stock owned directly by RMK Advantage Income Fund, Inc., 189,000 shares of common stock owned directly by RMK Strategic Income Fund, Inc., and 160,000 shares of common stock owned directly by RMK High Income Fund, Inc. Includes 451,000 shares of common stock owned directly by RMK Select High Income Fund, Inc., 160,000 shares of common stock owned directly by RMK High Income Fund, Inc., 189,000 shares of common stock owned directly by RMK Strategic Income Fund, Inc., 202,200 shares of common stock owned directly by RMK Advantage Income Fund, Inc., and 221,000 shares of common stock held by RMK Multi-Sector High Income Fund, Inc. Morgan Asset Management, Inc. is the manager/investor of the foregoing fund entities. | |
(8) | Based on the information provided pursuant to a Schedule 13G filed with the SEC on October 5, 2007 by Morgan Keegan Select Fund, Inc. Includes 451,000 shares of common stock owned directly by Regions Morgan Keegan Select High Income Fund, Inc., a series of Morgan Keegan Select Fund, Inc. | |
(9) | As the Chief Investment Strategist of Bennett Management Corporation, an affiliate of James D. Bennett, Mr. Linden may be deemed to beneficially own the shares of common stock beneficially held by Mr. Bennett and his affiliated entities. Mr. Linden disclaims beneficial ownership of such shares. | |
(10) | As a Special Limited Partner of J.W. Childs Associates, L.P., which manages J.W. Childs Equity Partners II, L.P., and a member of JWC-InSight Co-invest LLC, Mr. Segal may be deemed to beneficially own the 634,130 shares of our common stock owned by J.W. Childs Equity Partners II, L.P. and the 53,511 shares of our common stock held directly by JWC-InSight Co-invest LLC. Mr. Segal disclaims beneficial ownership of such shares. | |
(11) | Mr. Jorgensen resigned as a director and officer of our company as of November 15, 2007. | |
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Number of Shares | ||||||
Remaining Available for | ||||||
Future Issuance Under | ||||||
Number of Shares to be | Weighted Average | Equity Compensation | ||||
Issued Upon Exercise of | Exercise Price of | Plans (Excluding Shares | ||||
Plan Category | Outstanding Options | Outstanding Options | Reflected in Column (a)) | |||
(a) | (b) | (c) | ||||
Equity compensation plans approved by stockholders | 789,726 | $17.68 | 175,500 |
(1) | The stock option plan was terminated and all outstanding options were cancelled on August 1, 2007 upon consummation of the plan of reorganization. |
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• | are general senior secured obligations of the Company; | ||
• | are secured by security interests in the Collateral on a first priority basis; | ||
• | rank equally in right of payment with all existing and future Pari Passu Indebtedness of the Company; and | ||
• | rank senior in right of payment to all existing and future Subordinated Indebtedness of the Company. |
• | is a senior secured obligation of the Guarantor; | ||
• | is secured, on a first priority basis, by security interests in the Collateral owned by the Guarantor; | ||
• | is senior in right of payment to all existing and future Subordinated Indebtedness of the Guarantor; and |
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• | ranks equally in right of payment with all existing and future Pari Passu Indebtedness of the Guarantor. |
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1. | any interest in real property (other than the fee interest owned by InSight Health Corp. in the real property located at (x) 1199 Eighth Avenue, Fort Worth, Texas 76104 and (y) 1301 McCallie Avenue, Chattanooga, Tennessee 37404, and the mortgage and security interest by InSight Health Corp. in such real property granted in favor of the Collateral Agent); | ||
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2. | assets securing Capitalized Lease Obligations or Indebtedness under purchase money mortgages incurred pursuant to clause (8) of the third paragraph under the caption, “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock,” provided that such assets that are released from such security in connection with the incurrence of Indebtedness pursuant to clause (16) of the third paragraph under the caption, “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stocks” shall not be Excluded Assets; | ||
3. | Excluded Contracts; | ||
4. | any Voting Stock that is issued by a Foreign Subsidiary (that is a corporation for United States federal income tax purposes) and owned by the Company or any Guarantor, if and to the extent that the inclusion of such Voting Stock in the Collateral would cause the Collateral pledged by the Company or such Guarantor, as the case may be, to include in the aggregate more than 65% of the total combined voting power of all classes of Voting Stock of such Foreign Subsidiary; | ||
5. | any Capital Stock owned by the Company or a Guarantor and issued by an entity that is not a Wholly Owned Subsidiary of the Company or a Guarantor to the extent (and only with respect to such portion of such Capital Stock that would be prohibited as referred to below) that any joint venture agreement, between or among the Company and/or any Guarantor and one or more third parties with respect to a Permitted Joint Venture, by the express terms of a valid and enforceable restriction in favor of such third parties prohibits, or requires any consent for, the granting of a security interest in such Capital Stock by the Company or such Guarantor; | ||
6. | Receivables and Related Assets; | ||
7. | any Capital Stock and other securities of the Company, any of its Subsidiaries or any of the Parent’s subsidiaries to the extent that the pledge of such Capital Stock or other securities to secure the Notes or the Guarantees would cause the Company, such Subsidiary or such subsidiary of the Parent, as the case may be, to be required to file separate financial statements with the Commission pursuant to Rule 3-16 of Regulation S-X (as in effect from time to time); and | ||
8. | proceeds and products from any and all of the foregoing excluded collateral described in clauses (1) through (7), unless such proceeds or products would otherwise constitute Collateral securing the Notes. |
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1. | first, to the payment of advances made and liabilities incurred by the Collateral Agent in order to protect the Liens granted by the Security Documents or the Collateral, with interest thereon at the rate specified in the Security Documents, and the payment of all reasonable out-of-pocket costs and expenses incurred by the Collateral Agent or the Trustee in connection with the preservation, collection, foreclosure or enforcement of the Liens granted by the Security Documents or any interest, right, power or remedy of the Collateral Agent or in connection with the collection or enforcement of any of the Notes or the Security Documents in any insolvency proceeding, including all reasonable out-of-pocket fees and disbursements of attorneys, accountants, consultants, appraisers and other professionals engaged by the Collateral Agent or the Trustee and reasonable compensation of the Collateral Agent or the Trustee for services in connection therewith; | ||
2. | second, to the payment of accrued and unpaid interest on the Notes; | ||
3. | third, to the payment of any due and unpaid premium, if any, in respect of the prepayment or payment of the Notes; | ||
4. | fourth, to the payment of any due and unpaid principal of the Notes; | ||
5. | fifth, to any remaining unpaid amounts of the Note Obligations; and | ||
6. | sixth, to any other persons as their interests may appear or as instructed by a court of competent jurisdiction. |
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1. | in whole, as to all property subject to such Liens which has been taken by eminent domain, condemnation or other similar circumstances; | ||
2. | in whole, as to all property subject to such Liens, upon: |
a. | payment in full of the principal of, accrued and unpaid interest and premium on the Notes; or | ||
b. | defeasance of the Notes or discharge of the Indenture as set forth under the caption, “— Legal Defeasance and Covenant Defeasance”; or |
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3. | in part, as to any property that (a) is sold, transferred or otherwise disposed of by the Parent, the Company or any of their Subsidiaries in a transaction not prohibited by the Indenture, at the time of such sale, transfer or disposition, to the extent of the interest sold, transferred or disposed of or (b) is owned or at any time acquired by a Guarantor that has been released from its Guarantee, concurrently with the release of such Guarantee. |
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Year | Redemption Price | |||
2008 | 103.00 | % | ||
2009 and thereafter | 102.00 | % |
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1. | the purchase price and the purchase date, which will be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed or such later date as is necessary to comply with the requirements under the Exchange Act; | ||
2. | that any Note not tendered will continue to accrue interest; | ||
3. | that, unless the Company defaults in the payment of the purchase price, any Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control purchase date; and | ||
4. | certain other procedures that a Holder must follow to accept a Change of Control Offer or to withdraw such acceptance. |
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1. | the consideration received by the Company or such Restricted Subsidiary for such Asset Sale is not less than the fair market value of the assets sold evidenced by a resolution of the board of directors of such entity set forth in an officers’ certificate delivered to the Trustee; provided that if the fair market value of the assets sold exceeds $5 million, such determination will at the option of the Company be based upon an opinion or appraisal issued by an accounting or investment banking or appraisal firm of national standing, a copy of which opinion or appraisal shall accompany the officers’ certificate; | ||
2. | the consideration received by the Company or the relevant Restricted Subsidiary in respect of such Asset Sale consists of at least 75% cash or Cash Equivalents (for purposes of this clause (2), cash and Cash Equivalents includes (1) if such Asset Sale does not involve Collateral, any liabilities (as reflected in the Company’s consolidated balance sheet) of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Guarantee) that are assumed by any transferee of any such assets or other property in such Asset Sale, and where the Company or the relevant Restricted Subsidiary is released from any further liability in connection therewith with respect to such liabilities, (2) any securities, notes or other similar obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted within 180 days of the consummation of the related Asset Sale by the Company or such Restricted Subsidiary into cash and Cash Equivalents (to the extent of the net cash proceeds or the Cash Equivalents (net of related costs) received upon such conversion), (3) any Designated Noncash Consideration received by the Company or any such Restricted Subsidiary in the Asset Sale having an aggregate fair market value, as determined by the Board of the Company, taken together with all other Designated Noncash Consideration received pursuant to this clause that has not been converted into cash or Cash Equivalents, not to exceed $10 million; and |
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3. | if such Asset Sale involves the transfer of Collateral, |
a. | all consideration received in such Asset Sale shall consist of assets that are not Excluded Assets; and | ||
b. | all consideration (including cash and cash equivalents) received in such Asset Sale shall be expressly made subject to a first priority perfected Lien (subject to Permitted Liens) in favor of the Collateral Agent. |
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a. | declare or pay any dividend on, or make any distribution to holders of, any shares of the Capital Stock of the Company or any Restricted Subsidiary, other than (i) dividends or distributions payable solely in Qualified Equity Interests or (ii) dividends or distributions by a Restricted Subsidiary payable to the Company or a Wholly Owned Restricted Subsidiary or to all holders of Capital Stock of such Restricted Subsidiary on a pro rata basis; | ||
b. | purchase, redeem or otherwise acquire or retire for value, directly or indirectly, any shares of Capital Stock, or any options, warrants or other rights to acquire such shares of Capital Stock, of the Company, any direct or indirect parent of the Company or any Subsidiary of the Company (other than a Wholly Owned Restricted Subsidiary); | ||
c. | make any principal payment on, or repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled principal payment, sinking fund payment or maturity, any Subordinated Indebtedness; and | ||
d. | make any Investment (other than a Permitted Investment) in any Person (such payments or other actions described in (but not excluded from) clauses (a) through (d) being referred to as “Restricted Payments”). |
(a) | the repurchase, redemption or other acquisition or retirement for value of any shares of Capital Stock of the Company, in exchange for, or out of the net cash proceeds of a substantially concurrent issuance and sale (other than to a Subsidiary) of, Qualified Equity Interests of the Company or of the Parent, the proceeds of which are contributed to the Company as a capital contribution on a substantially concurrent basis; | ||
(b) | the purchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Indebtedness in exchange for, or out of the net cash proceeds of a substantially concurrent issuance and sale (other than to a Subsidiary) of, shares of Qualified Equity Interests of the Company or of the Parent, the proceeds of which are contributed to the Company as a capital contribution on a substantially concurrent basis; | ||
(c) | the purchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Indebtedness in exchange for, or out of the net cash proceeds of a substantially concurrent issuance or sale (other than to a Subsidiary) of, Subordinated Indebtedness, so long as the Company or a Restricted Subsidiary would be permitted to refinance such original Subordinated Indebtedness with such new Subordinated Indebtedness pursuant to clause (4) of the definition of Permitted Indebtedness set forth in the covenant entitled “Incurrence of Indebtedness and Issuance of Disqualified Stock”; | ||
(d) | the repurchase of any Subordinated Indebtedness at a purchase price not greater than 101% of the principal amount of such Subordinated Indebtedness in the event of a Change of Control in accordance with provisions similar to the “Change of Control” covenant; provided that, prior to or simultaneously with such repurchase, the Company has made the Change of Control Offer as provided in such covenant with respect to the Notes and has repurchased all Notes validly tendered for payment in connection with such Change of Control Offer; |
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(e) | within 90 days after the completion of an Excess Proceeds Offer pursuant to the covenant described under the caption “— Repurchase at the Option of Holders — Asset Sales” (including the purchase of all Notes tendered), any purchase or redemption of Indebtedness of the Company that is subordinated in right of payment to the Notes and that is required to be repurchased or redeemed pursuant to the terms thereof as a result of the related Asset Sale, at a purchase price not greater than 100% of the outstanding principal amount thereof (plus accrued and unpaid interest); | ||
(f) | the purchase, redemption, acquisition, cancellation or other retirement for value of shares of Capital Stock of the Company, options on any such shares or related stock appreciation rights or similar securities, or any dividend, distribution or advance to the Parent for the purchase, redemption, acquisition, cancellation or other retirement for value of shares of Capital Stock of the Parent, options on any such shares or related stock appreciation rights or similar securities, in each case held by officers, directors or employees or former officers, directors or employees (or their estates or beneficiaries under their estates) of the Company, the Parent or any Subsidiary of the Company, as applicable, or by any employee benefit plan of the Company, the Parent or any Subsidiary of the Company, as applicable, upon death, disability, retirement or termination of employment or pursuant to the terms of any employee benefit plan or any other agreement under which such shares of stock or related rights were issued; provided that the aggregate amount of cash applied by the Company for such purchase, redemption, acquisition, cancellation or other retirement of such shares of Capital Stock of the Company or the Parent after the Reference Date does not exceed $3 million in the aggregate (excluding for purposes of calculating such amount the aggregate amount received by any Person in connection with such purchase, redemption, acquisition, cancellation or other retirement of such shares that is concurrently used to repay loans made to such Person by the Company pursuant to clause (f) of the definition of “Permitted Investment”); | ||
(g) | the payment of dividends or other distributions or the making of loans or advances to the Parent in amounts required for the Parent to pay franchise taxes and other fees required to maintain its existence and provide for all other customary operating costs of the Parent to the extent attributable to the ownership and operation of the Company and its Restricted Subsidiaries, including, without limitation, in respect of director fees and expenses, administrative, legal and accounting services provided by third parties and other customary costs and expenses including all costs and expenses with respect to filings with the Commission; | ||
(h) | the payment of dividends or other distributions by the Company to the Parent in amounts required to pay the tax obligations of the Parent attributable to the Company and its Subsidiaries, determined as if the Company and its Subsidiaries had filed a separate consolidated, combined or unitary return for the relevant taxing jurisdiction; provided that (x) the amount of dividends paid pursuant to this clause (i) to enable the Parent to pay Federal and state income taxes (and franchise taxes based on income) at any time shall not exceed the amount of such Federal and state income taxes (and franchise taxes based on income) actually owing by the Parent at such time to the respective tax authorities for the respective period and (y) any refunds received by the Parent attributable to the Company or any of its Restricted Subsidiaries shall promptly be remitted by the Parent to the Company through a contribution or purchase of common stock (other than Disqualified Stock) of the Company; and | ||
(i) | Restricted Payments deemed to have been made as a result of a Restricted Subsidiary being designated an Unrestricted Subsidiary in accordance with the “Unrestricted Subsidiaries” covenant in an amount not to exceed $10 million at any one time outstanding. |
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(1) | Indebtedness of the Company or any Subsidiary Guarantor under the Credit Agreement (and the incurrence by any Subsidiary Guarantor of guarantees thereof) in an aggregate principal amount at any one time outstanding not to exceed $125 million, less (A) any amounts applied to the permanent reduction of such credit facilities pursuant to the provisions of the covenant described under the caption “— Repurchase at the Option of Holders — Asset Sales” and (B) up to $50 million of cash (or the fair market value of any other assets) to the extent applied to repurchase Existing Notes on the Issue Date or within two Business Days from the Issue Date; | ||
(2) | Indebtedness represented by the Notes (other than the Additional Notes) and the related Guarantees; | ||
(3) | Existing Indebtedness; | ||
(4) | the incurrence by the Company of Permitted Refinancing Indebtedness in exchange for, or the net cash proceeds of which are used to refund, refinance or replace, any Indebtedness that is permitted to be incurred under clause (2) or (3) above; | ||
(5) | Indebtedness owed by the Company to any Restricted Subsidiary or owed by any Restricted Subsidiary to the Company or a Restricted Subsidiary (provided that such Indebtedness is held by the Company or such Restricted Subsidiary); provided, that: |
a. | any Indebtedness of the Company or any Subsidiary Guarantor owing to any such Restricted Subsidiary is unsecured and subordinated in right of payment from and after such time as the Notes shall become due and payable (whether at Stated Maturity, acceleration, or otherwise) to the payment and performance of the Company’s obligations under the Notes or the Subsidiary Guarantor’s obligations under its Guarantee, as the case may be; and | ||
b. | (i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); |
(6) | Indebtedness of the Company or any Restricted Subsidiary under Hedging Obligations incurred in the ordinary course of business; | ||
(7) | Indebtedness of the Company or any Restricted Subsidiary consisting of guarantees, indemnities or obligations in respect of purchase price adjustments in connection with the acquisition or disposition of assets, including, without limitation, shares of Capital Stock; | ||
(8) | either (A) Capitalized Lease Obligations of the Company or any Restricted Subsidiary or (B) Indebtedness under purchase money mortgages or secured by purchase money security interests so long as (x) such Indebtedness is not secured by any property or assets of the Company or any Restricted Subsidiary other than the property and assets so acquired and (y) such Indebtedness is created within 90 days of the acquisition of the related property; provided that the aggregate amount of Indebtedness under clauses (A) and (B) does not exceed 15% of Consolidated Tangible Assets less the amount of any Indebtedness incurred under clause (16) below at any one time outstanding; |
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(9) | Guarantees by any Restricted Subsidiary made in accordance with the provisions of the covenant described under the caption “— Guarantees of Indebtedness by Restricted Subsidiaries”; | ||
(10) | Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within two business days of incurrence; | ||
(11) | Indebtedness of the Company or any of its Restricted Subsidiaries represented by letters of credit for the account of the Company or such Restricted Subsidiary, as the case may be, in order to provide security for workers’ compensation claims, payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; | ||
(12) | the incurrence of Non-Recourse Indebtedness by Permitted Joint Ventures that are Restricted Subsidiaries; | ||
(13) | Indebtedness incurred by a Receivables Subsidiary pursuant to a Receivables Program; provided that, after giving effect to any such incurrence of Indebtedness, the aggregate principal amount of all Indebtedness incurred under this clause (13) and then outstanding does not exceed $30 million; | ||
(14) | unsecured subordinated Indebtedness not permitted by any other clause of this definition, in an aggregate principal amount not to exceed $30 million at any one time outstanding; | ||
(15) | Indebtedness represented by Attributable Debt related to a Sale and Leaseback transaction involving tractors existing on the Issue Date; provided that (i) the aggregate amount of such Indebtedness does not exceed $7 million and (ii) such Indebtedness is incurred within 12 months from the Issue Date; and | ||
(16) | the incurrence of Indebtedness represented by Additional Notes and the related Guarantees in an aggregate principal amount of $15 million. |
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1. | pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock; | ||
2. | pay any Indebtedness owed to the Company or any other Restricted Subsidiary; | ||
3. | make loans or advances to the Company or any other Restricted Subsidiary; or | ||
4. | transfer any of its properties or assets to the Company or any other Restricted Subsidiary. |
1. | any agreement (including the Revolving Credit Agreement) in effect on the Issue Date; | ||
2. | customary non-assignment provisions of any lease, license or other contract entered into in the ordinary course of business by the Company or any Restricted Subsidiary; | ||
3. | the refinancing or successive refinancing of Indebtedness incurred under the agreements in effect on the Issue Date (including the Revolving Credit Agreement), so long as such encumbrances or restrictions are no more restrictive, taken as a whole, than those contained in such original agreement; | ||
4. | any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired; | ||
5. | purchase money obligations for acquired property permitted under the covenant entitled “— Incurrence of Indebtedness and Issuance of Disqualified Stock” that impose restrictions of the nature described in clause (4) of the preceding paragraph on the property so acquired; | ||
6. | any agreement for the sale of a Restricted Subsidiary or an asset that restricts distributions by that Restricted Subsidiary or transfers of such asset pending its sale; | ||
7. | secured Indebtedness otherwise permitted to be incurred pursuant to the provisions of the covenant described above under the caption “— Liens” that limits the right of the debtor to dispose of the assets securing such Indebtedness; | ||
8. | restrictions on cash or other deposits or net worth imposed by leases entered into in the ordinary course of business; | ||
9. | Non-Recourse Indebtedness of any Permitted Joint Venture permitted to be incurred under the Indenture; | ||
10. | applicable law or regulation; | ||
11. | a Receivables Program with respect to a Receivables Subsidiary; and |
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12. | customary provisions in joint venture, limited liability company operating, partnership, shareholder and other similar agreements entered into in the ordinary course of business reasonably consistent with past practice by the Company or any Restricted Subsidiary. |
a. | either (i) the Company or the Parent, as the case may be, is the surviving corporation or (ii) the entity or the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made (the “Surviving Entity”) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of the Company or the Parent, as the case may be, under the Notes, the Indenture, the Security Documents and the Registration Rights Agreement pursuant to agreements in form and substance reasonably satisfactory to the Trustee; | ||
b. | immediately after giving effect to such transaction and treating any obligation of the Company in connection with or as a result of such transaction as having been incurred as of the time of such transaction, no Default or Event of Default has occurred and is continuing; | ||
c. | if such transaction involves the Company, the Company (or the Surviving Entity if the Company is not the continuing obligor under the Indenture) could, at the time of such transaction and after giving pro forma effect thereto as if such transaction had occurred at the beginning of the applicable four quarter period, incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the first paragraph of “— Incurrence of Indebtedness and Issuance of Disqualified Stock”; | ||
d. | each Guarantor, unless it is the other party to the transaction described above, has by supplemental indenture confirmed that its Guarantee applies to the Surviving Entity’s obligations under the Indenture and the Notes; | ||
e. | if any of the property or assets of the Company or any of its Restricted Subsidiaries would thereupon become subject to any Lien, the provisions of the covenant described above under the caption “— Liens” are complied with; and | ||
f. | the Company or the Parent, as the case may be, delivers, or causes to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an officers’ certificate and an opinion of counsel, each stating that such transaction complies with the requirements of the Indenture. |
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A. | transactions among the Company and/or its Restricted Subsidiaries; | ||
B. | the Company from paying reasonable and customary regular compensation, indemnification, reimbursement and fees to officers of the Company or any Restricted Subsidiary and to directors of the Company or any Restricted Subsidiary who are not employees of the Company or any Restricted Subsidiary; | ||
C. | transactions permitted by the provisions of the covenant described under the caption “Certain Covenants — Restricted Payments”; | ||
D. | advances to employees for moving, entertainment and travel expenses and similar expenditures in the ordinary course of business and consistent with past practice; | ||
E. | any Receivables Program of the Company or a Restricted Subsidiary; | ||
F. | the agreements described herein under the caption “Certain Relationships and Related Transactions” and certain other agreements listed on a schedule to the Indenture, in each case as in effect as of the Issue Date or any amendment thereto (so long as the amended agreement is not more disadvantageous to the Holders in any material respect than such agreement immediately prior to such amendment) or any transaction contemplated thereby; and | ||
G. | issuances of Equity Interests (other than Disqualified Stock) of the Parent or the Company to Affiliates. |
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1. | Company or such Restricted Subsidiary, as applicable, could have (a) incurred Indebtedness in an amount equal to the Attributable Debt relating to such Sale and Leaseback Transaction pursuant to the covenant described under the caption “— Incurrence of Indebtedness and Issuance of Disqualified Stock” and (b) incurred a Lien to secure such Indebtedness pursuant to the covenant described under the caption “— Liens”; | ||
2. | the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the fair market value of the property that is the subject of that Sale and Leaseback Transaction; and | ||
3. | the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, the covenant described above under the caption “— Repurchase at the Option of Holders — Asset Sales.” |
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(a) | default in the payment of any interest on any Note when it becomes due and payable, and continuance of such default for a period of 30 days; | ||
(b) | default in the payment of the principal of (or premium, if any, on) any Note when due; | ||
(c) | failure to perform or comply with the Indenture provisions described under the captions “— Repurchase at the Option of Holders — Change of Control,” “— Repurchase at the Option of Holders — Asset Sales,” “— Certain Covenants — Restricted Payments,” “Incurrence of Indebtedness and Issuance of Disqualified Stock” or “— Merger, Consolidation or Sale of Assets”; | ||
(d) | default in the performance, or breach, of any covenant or agreement of the Company or any Guarantor contained in the Indenture or in any Guarantee (other than a default in the performance, or breach, of a covenant or agreement that is specifically dealt with elsewhere herein), and continuance of such default or breach for a period of 60 days after written notice has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Notes then outstanding; | ||
(e) | (i) an event of default has occurred under any mortgage, bond, indenture, loan agreement or other document evidencing an issue of Indebtedness of the Company, the Parent or any Restricted Subsidiary, which issue individually or in the aggregate has an aggregate outstanding principal amount of not less than $10 million, and such default has resulted in such Indebtedness becoming, whether by declaration or otherwise, due and payable prior to the date on which it would otherwise become due and payable or (ii) a default in any payment when due at final maturity of any such Indebtedness; | ||
(f) | failure by the Company, the Parent or any of its Restricted Subsidiaries to pay one or more final judgments the uninsured portion of which exceeds in the aggregate $10 million, which judgment or judgments are not paid, discharged or stayed for a period of 60 days; | ||
(g) | any Guarantee ceases to be in full force and effect or is declared null and void or any such Guarantor denies that it has any further liability under any Guarantee, or gives notice to such effect (other than by reason of the termination of the Indenture or the release of any such Guarantee in accordance with the Indenture); | ||
(h) | the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to the Company, the Parent or any Significant Subsidiary; | ||
(i) | default by the Company or any Restricted Subsidiary in the performance of the Security Documents which adversely affects the enforceability, validity, perfection or priority of such Liens, the repudiation or disaffirmation by the Company or any Restricted |
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Subsidiary of its material obligations under the Security Documents or the determination in a judicial proceeding that the Security Documents are unenforceable or invalid against the Company or any Restricted Subsidiary party thereto for any reason with respect to the Collateral (which default, repudiation, disaffirmation or determination is not rescinded, stayed, or waived by the Persons having such authority pursuant to the Security Documents or otherwise cured within 60 days after the Company receives written notice thereof specifying such occurrence from the Trustee or the Holders of at least 25% of the outstanding principal amount of the Notes and demanding that such default be remedied); or |
(j) | failure by the Company to issue Additional Notes in an aggregate principal amount of $15 million as contemplated by the commitment letter dated May 29, 2007 among the Company, the Parent, J.P. Morgan Securities Inc. and Black Diamond Capital Management, L.L.C. (the “Commitment Parties”) relating to the issuance and purchase of Additional Notes (as amended, supplemented or otherwise modified, the “Commitment Letter”), by the earlier of (x) the 30th day following the effective date of any plan of reorganization or (y) the 16th day following approval of such issuance by any court having jurisdiction over any proceeding described in clause (h) above to which the Company is subject becoming a final order (unless, in either case, the failure of the Company to issue any such Additional Notes is caused solely by the failure of any Commitment Party to be ready, willing and able to consummate its purchase thereof as contemplated by the Commitment Letter) and continuance of such failure for a period of 30 days after written notice has been given to the Company by any Commitment Party that was not able to purchase Additional Notes notwithstanding that it was ready, willing and able to do so as contemplated under the Commitment Letter. |
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a. | change the Stated Maturity of the principal of, or any installment of interest on, any Note, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or change the coin or currency in which any Note or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment after the Stated Maturity thereof (or, in the case of redemption, on or after the redemption date); | ||
b. | amend, change or modify the obligation of the Company to make and consummate an Excess Proceeds Offer with respect to any Asset Sale in accordance with the covenant described under the covenant entitled “Repurchase at the Option of Holders — Asset Sales” or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with the covenant entitled “Repurchase at the Option of Holders — Change of Control,” including, in each case, amending, changing or modifying any definition relating thereto; | ||
c. | reduce the percentage in principal amount of outstanding Notes, the consent of whose Holders is required for any waiver of compliance with certain provisions of, or certain defaults and their consequences provided for under, the Indenture; | ||
d. | waive a default in the payment of principal of, or premium, if any, or interest on the Notes or reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults; | ||
e. | modify the ranking or priority of the Notes or the Guarantee of any Guarantor; or | ||
f. | release any Guarantor from any of its obligations under its Guarantee or the Indenture other than in accordance with the terms of the Indenture. |
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1. | DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes and the Company fails to appoint a successor depositary within 90 days or (b) has ceased to be a clearing agency registered under the Exchange Act; | ||
2. | the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or | ||
3. | there shall have occurred and be continuing a Default or Event of Default with respect to the Notes. |
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1. | in respect of Asset Sales involving Collateral, Indebtedness secured on a first priority basis by the Collateral; or | ||
2. | in respect of Asset Sales not involving Collateral, Pari Passu Indebtedness. |
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a. | the consummation of any transaction (including, without limitation, any merger or consolidation) (a) prior to a Public Equity Offering by the Company or the Parent, the result of which is that the Principals and their Related Parties become the “beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) of less than 50% of the Voting Stock of the Company or the Parent, as the case may be (measured by voting power rather than the number of shares), or (b) after a Public Equity Offering of the Company or the Parent, any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than the Principals and their Related Parties, become the beneficial owner (as defined above), directly or indirectly, of 35% or more of the Voting Stock of the Company or the Parent, as the case may be, and such person is or becomes, directly or indirectly, the beneficial owner of a greater percentage of the voting power of the Voting Stock of the Company or the Parent, as the case may be, calculated on a fully diluted basis, than the percentage beneficially owned by the Principals and their Related Parties; | ||
b. | the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries or the Parent and its Subsidiaries, in each case, taken as a whole, to any “person” (as the term is defined in Section 13(d)(3) of the Exchange Act) other than the Principals or Related Parties of the Principals; | ||
c. | the first day on which a majority of the members of the Board of the Company or the Parent are not Continuing Directors; or |
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d. | the Company or the Parent is liquidated or dissolved or adopts a plan of liquidation or dissolution, other than in a transaction that complies with the provisions described under “Certain Covenants — Consolidation, Merger or Sale of Assets.” |
1. | was a member of such Board on the Reference Date; | ||
2. | was nominated for election or elected to such Board with the approval of the majority of the Continuing Directors who were members of such Board at the time of such nomination or election; or | ||
3. | was nominated by one or more of the Principals and the Related Parties. |
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(a) | Investments in (i) United States dollars (including such dollars as are held as overnight bank deposits and demand deposits with banks); (ii) securities with a maturity of one year or less issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof); (iii) certificates of deposit, Euro-dollar time deposits or acceptances with a maturity of one year or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus of not less than $500,000,000; (iv) any shares of money market mutual or similar funds having assets in excess of $500,000,000; (v) repurchase obligations with a term not exceeding seven days for underlying securities of the types described in clauses (ii) and (iii) above entered into with any financial institution meeting the qualifications specified in clause (iii) above; and (vi) commercial paper with a maturity of one year or less issued by a corporation that is not an Affiliate of the Company and is organized under the laws of any state of the United States or the District of Columbia and having a rating (A) from Moody’s Investors Service, Inc. of at least P-1 or (B) from Standard & Poor’s Ratings Group of at least A-1; | ||
(b) | Investments by the Company or any Restricted Subsidiary in another Person, if as a result of such Investment (i) such other Person becomes a Restricted Subsidiary or (ii) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary; | ||
(c) | Investments by the Company or a Restricted Subsidiary in the Company or a Restricted Subsidiary; | ||
(d) | Investments in existence on the Reference Date; | ||
(e) | promissory notes or other evidence of Indebtedness received as a result of Asset Sales permitted under the covenant entitled “Repurchase at the Option of Holders — Asset Sales”; | ||
(f) | loans or advances to officers, directors and employees of the Company or any of its Restricted Subsidiaries made (i) in the ordinary course of business in an amount not to exceed $5 million in the aggregate at any one time outstanding or (ii) in connection with the purchase by such Persons of Equity Interests of the Parent so long as the cash proceeds of such purchase received by the Parent are contemporaneously remitted by the Parent to the Company as a capital contribution; | ||
(g) | any Investment by the Company or any Restricted Subsidiary of the Company in Permitted Joint Ventures made after the Reference Date having an aggregate fair market value, when taken together with all other Investments made pursuant to this clause (g) that are at the time outstanding, not exceeding the greater of (i) $30 million and (ii) 10% of the Consolidated Tangible Assets of the Company as of the last day of the most recent full fiscal quarter ending immediately prior to the date of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value); | ||
(h) | any Investment by the Company or any Restricted Subsidiary in a trust, limited liability company, special purpose entity or other similar entity in connection with a Receivables Program; provided that (A) such Investment is made by a Receivables Subsidiary and (B) the only assets transferred to such trust, limited liability company, special purpose entity or other similar entity consists of Receivables and Related Assets of such Receivables Subsidiary; and | ||
(i) | other Investments (together with Restricted Payments made in reliance on clause (i) of the second paragraph of the covenant entitled “Restricted Payments”) that do not exceed $20 million in the aggregate. |
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1. | Liens on Receivables and Related Assets securing Indebtedness incurred under clause (1) of the covenant described under the caption “Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock” in an aggregate principal amount not to exceed $125 million less (A) up to $50 million of cash (or the fair market value of any other assets) to the extent applied to repurchase Existing Notes on the Issue Date or within two Business Days from the Issue Date and (B) the aggregate principal amount of any Additional Notes issued by the Company; | ||
2. | Liens in favor of the Company or any Restricted Subsidiary that is a Guarantor; | ||
3. | Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary; | ||
4. | Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company, provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Restricted Subsidiary; | ||
5. | Liens securing the Notes (other than Additional Notes) and the related Guarantees; | ||
6. | Liens existing on the Issue Date; | ||
7. | Liens securing Permitted Refinancing Indebtedness; provided that such Liens do not extend to any property or assets other than the property or assets that secure the Indebtedness being refinanced; | ||
8. | Liens to secure Indebtedness (including Capitalized Lease Obligations) permitted by clause (8) of the third paragraph of the covenant described under the caption “— Certain Covenants — Incurrence of Indebtedness and Issuance of Disqualified Stock”; provided that any such Lien (i) covers only the assets acquired, constructed or improved with such Indebtedness and (ii) is created within 90 days of such acquisition, construction or improvement; |
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9. | Liens on cash or cash equivalents securing Hedging Obligations of the Company or any of its Restricted Subsidiaries (a) that are incurred for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, or (b) securing letters of credit that support such Hedging Obligations; | ||
10. | Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other social security obligations; | ||
11. | Liens, deposits or pledges to secure the performance of bids, tenders, contracts (other than contracts for the payment of Indebtedness), leases, or other similar obligations arising in the ordinary course of business; | ||
12. | Carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business in respect of obligations not overdue for a period in excess of 60 days or which are being contested in good faith by appropriate proceedings promptly instituted and diligently prosecuted; provided, however, that any reserve or other appropriate provision as will be required to conform with GAAP will have been made for that reserve or provision; | ||
13. | survey exceptions, encumbrances, easements or reservations of, or rights of others for, rights of way, zoning or other restrictions as to the use of properties, and defects in title which, in the case of any of the foregoing, were not incurred or created to secure the payment of Indebtedness, and which in the aggregate do not materially adversely affect the value of such properties or materially impair the use for the purposes of which such properties are held by the Company or any of its Restricted Subsidiaries; | ||
14. | judgment and attachment Liens not giving rise to an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made; | ||
15. | Liens, deposits or pledges to secure public or statutory obligations, surety, stay, appeal, indemnity, performance or other similar bonds or obligations; any encumbrance on rights of the Company or any Guarantor to pledge interest in, or grant control over, Patient Receivables to third parties pursuant to applicable statutes; Liens, deposits or pledges in lieu of such bonds or obligations, or to secure such bonds or obligations, or to secure letters of credit in lieu of or supporting the payment of such bonds or obligations; and Liens of sellers of goods to the Company and any of its Restricted Subsidiaries arising under Article 2 of the UCC in the ordinary course of business, covering only the goods sold and securing only the unpaid purchase price for such goods and related expenses; | ||
16. | Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary thereof on deposit with or in possession of such bank; | ||
17. | any interest or title of a lessor, licensor or sublicensor in the property subject to any lease, license or sublicense (other than any property that is the subject of a Sale Leaseback Transaction); | ||
18. | Liens for taxes, assessments and governmental charges not yet delinquent or being contested in good faith and for which adequate reserves have been established to the extent required by GAAP; | ||
19. | Liens arising from precautionary UCC financing statements regarding operating leases or consignments; |
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20. | Liens or assets directly related to a Sale and Leaseback Transaction to secure related Attributable Debt; | ||
21. | any interest of title of a buyer in connection with, and Liens arising from UCC financing statements relating to, a sale of Receivables and Related Assets pursuant to a Receivables Program; provided that such Liens do not extend to any assets other than Receivables and Related Assets; | ||
22. | Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto; provided that such insurance policies are purchased in the ordinary course of business; | ||
23. | Liens securing Additional Notes and the related Guarantees incurred pursuant to clause (xvi) of the third paragraph of the covenant entitled “Incurrence of Indebtedness and Issuance of Disqualified Stock”; and | ||
24. | Liens not otherwise permitted by the Indenture so long as the aggregate outstanding principal amount of the obligations secured thereby does not exceed $1.5 million at any one time outstanding. |
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1. | any controlling stockholder, partner, member, 80% (or more) owned Subsidiary, or immediate family member (in the case of an individual) of any Principal; or | ||
2. | any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of any one or more Principals and/or such other Persons referred to in the immediately preceding clause. |
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F-3 | ||
F-4 | ||
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September 21, 2007, except for the presentation of net loss per common share as disclosed in paragraphs h. and l. of Note 3 and in Note 15, as to which the date is September 28, 2007
F-2
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(DEBTOR AND DEBTOR-IN-POSSESSION)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND 2006
(Amounts in thousands, except share data)
2007 | 2006 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 20,832 | $ | 28,208 | ||||
Trade accounts receivables, net | 42,683 | 43,690 | ||||||
Other current assets | 8,335 | 8,389 | ||||||
Total current assets | 71,850 | 80,287 | ||||||
PROPERTY AND EQUIPMENT, net | 144,823 | 181,026 | ||||||
INVESTMENTS IN PARTNERSHIPS | 3,413 | 3,051 | ||||||
OTHER ASSETS | 7,881 | 17,904 | ||||||
OTHER INTANGIBLE ASSETS, net | 30,216 | 31,473 | ||||||
GOODWILL | 64,868 | 94,463 | ||||||
$ | 323,051 | $ | 408,204 | |||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES: | ||||||||
Current portion of notes payable | $ | 5,737 | $ | 555 | ||||
Current portion of capital lease obligations | 2,927 | 5,105 | ||||||
Accounts payable and other accrued expenses | 38,619 | 40,077 | ||||||
Total current liabilities | 47,283 | 45,737 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Notes payable, less current portion | 299,890 | 494,203 | ||||||
Liabilities subject to compromise | 205,704 | — | ||||||
Capital lease obligations, less current portion | 3,302 | 3,519 | ||||||
Other long-term liabilities | 4,832 | 3,166 | ||||||
Deferred income taxes | 3,472 | 3,472 | ||||||
Total long-term liabilities | 517,200 | 504,360 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 11) | ||||||||
STOCKHOLDERS’ DEFICIT: | ||||||||
Common stock, $.001 par value, 10,000,000 shares authorized, 5,468,814 shares issued and outstanding at June 30, 2007 and 2006 | 5 | 5 | ||||||
Additional paid-in capital | 87,081 | 87,081 | ||||||
Accumulated other comprehensive income | 103 | 601 | ||||||
Accumulated deficit | (328,621 | ) | (229,580 | ) | ||||
Total stockholders’ deficit | (241,432 | ) | (141,893 | ) | ||||
$ | 323,051 | $ | 408,204 | |||||
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(DEBTOR AND DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2007, 2006 AND 2005
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
REVENUES: | ||||||||||||
Contract services | $ | 128,693 | $ | 134,406 | $ | 136,537 | ||||||
Patient services | 158,221 | 171,892 | 180,336 | |||||||||
Total revenues | 286,914 | 306,298 | 316,873 | |||||||||
COSTS OF OPERATIONS: | ||||||||||||
Costs of services | 192,599 | 197,812 | 194,507 | |||||||||
Provision for doubtful accounts | 5,643 | 5,351 | 5,723 | |||||||||
Equipment leases | 6,144 | 3,257 | 2,326 | |||||||||
Depreciation and amortization | 57,040 | 64,852 | 65,601 | |||||||||
Total costs of operations | 261,426 | 271,272 | 268,157 | |||||||||
Gross profit | 25,488 | 35,026 | 48,716 | |||||||||
CORPORATE OPERATING EXPENSES | (25,496 | ) | (23,655 | ) | (18,447 | ) | ||||||
LOSS ON SALES OF CENTERS | — | — | (170 | ) | ||||||||
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS | 3,030 | 3,072 | 2,613 | |||||||||
INTEREST EXPENSE, net | (52,780 | ) | (50,754 | ) | (44,860 | ) | ||||||
GAIN ON REPURCHASE OF NOTES PAYABLE | — | 3,076 | — | |||||||||
LOSS ON DISSOLUTION OF PARTNERSHIP | — | (1,000 | ) | — | ||||||||
IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE ASSETS | (29,595 | ) | (190,807 | ) | — | |||||||
Loss before reorganization items and income taxes | (79,353 | ) | (225,042 | ) | (12,148 | ) | ||||||
REORGANIZATION ITEMS | (17,513 | ) | — | — | ||||||||
Loss before income taxes | (96,866 | ) | (225,042 | ) | (12,148 | ) | ||||||
PROVISION (BENEFIT) FOR INCOME TAXES | 2,175 | (14,824 | ) | 15,069 | ||||||||
Net loss | $ | (99,041 | ) | $ | (210,218 | ) | $ | (27,217 | ) | |||
Basic and diluted loss per common share | $ | (114.63 | ) | $ | (243.31 | ) | $ | (31.50 | ) | |||
Weighted average number of basic and diluted common shares outstanding | 864 | 864 | 864 |
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(DEBTOR AND DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2007, 2006 AND 2005
(Amounts in thousands, except share data)
Accumulated | |||||||||||||||||||||||||
Additional | Other | Retained | |||||||||||||||||||||||
Common Stock | Paid-In | Comprehensive | Earnings | ||||||||||||||||||||||
Shares | Amount | Capital | Gain (Loss) | (Deficit) | Total | ||||||||||||||||||||
BALANCE AT JUNE 30, 2004 | 5,468,814 | $ | 5 | $ | 87,081 | $ | — | $ | 7,855 | $ | 94,941 | ||||||||||||||
Net loss | — | — | — | — | (27,217 | ) | (27,217 | ) | |||||||||||||||||
BALANCE AT JUNE 30, 2005 | 5,468,814 | 5 | 87,081 | — | (19,362 | ) | 67,724 | ||||||||||||||||||
Net loss | — | — | — | — | (210,218 | ) | (210,218 | ) | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||
Unrealized gain attributable to change in fair value of derivative | — | — | — | 601 | — | 601 | |||||||||||||||||||
Comprehensive loss | (209,617 | ) | |||||||||||||||||||||||
BALANCE AT JUNE 30, 2006 | 5,468,814 | 5 | 87,081 | 601 | (229,580 | ) | (141,893 | ) | |||||||||||||||||
Net loss | — | — | — | — | (99,041 | ) | (99,041 | ) | |||||||||||||||||
Other comprehensive income: | |||||||||||||||||||||||||
Unrealized loss attributable to change in fair value of derivative | — | — | — | (498 | ) | — | (498 | ) | |||||||||||||||||
Comprehensive loss | (99,539 | ) | |||||||||||||||||||||||
BALANCE AT JUNE 30, 2007 | 5,468,814 | $ | 5 | $ | 87,081 | $ | 103 | $ | (328,621 | ) | $ | (241,432 | ) | ||||||||||||
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(DEBTOR AND DEBTOR-IN-POSSESSION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2007, 2006 AND 2005
(Amounts in thousands)
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net loss | $ | (99,041 | ) | $ | (210,218 | ) | $ | (27,217 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Cash used for reorganization items | 11,367 | — | — | |||||||||
Write-off of deferred financing costs, included in reorganization items | 6,146 | — | — | |||||||||
Loss on sales of centers | — | — | 170 | |||||||||
Depreciation and amortization | 57,040 | 64,852 | 65,601 | |||||||||
Amortization of deferred financing costs | 3,158 | 3,051 | 3,173 | |||||||||
Equity in earnings of unconsolidated partnerships | (3,030 | ) | (3,072 | ) | (2,613 | ) | ||||||
Distributions from unconsolidated partnerships | 3,008 | 3,387 | 2,621 | |||||||||
Gain on repurchase of notes payable | — | (3,076 | ) | — | ||||||||
Loss on dissolution of partnership | — | 1,000 | — | |||||||||
Impairment of goodwill and other intangible assets | 29,595 | 190,807 | — | |||||||||
Deferred income taxes | — | (15,224 | ) | 15,224 | ||||||||
Changes in operating assets and liabilites: | ||||||||||||
Trade accounts receivables, net | 1,007 | 3,016 | 8,096 | |||||||||
Other current assets | 81 | (407 | ) | (1,736 | ) | |||||||
Accounts payable, other accrued expenses and accrued interest subject to compromise | 11,101 | 3,512 | 726 | |||||||||
Net cash provided by operating activities before reorganization items | 20,432 | 37,628 | 64,045 | |||||||||
Cash used for reorganization items | (11,367 | ) | — | — | ||||||||
Net cash provided by operating activities | 9,065 | 37,628 | 64,045 | |||||||||
INVESTING ACTIVITIES: | ||||||||||||
Acquisition of fixed-site center, net of cash acquired | — | (2,345 | ) | — | ||||||||
Proceeds from sales of centers | — | — | 2,810 | |||||||||
Additions to property and equipment | (16,163 | ) | (30,927 | ) | (30,459 | ) | ||||||
Sale (purchase) of short-term investments | — | 5,000 | (5,000 | ) | ||||||||
Other | 118 | (235 | ) | (3,110 | ) | |||||||
Net cash used in investing activities | (16,045 | ) | (28,507 | ) | (35,759 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||||
Principal payments of notes payable and capital lease obligations | (6,529 | ) | (293,109 | ) | (37,781 | ) | ||||||
Proceeds from issuance of notes payable | 1,145 | 298,500 | — | |||||||||
Borrowings on credit facility | 5,000 | — | — | |||||||||
Payments made in connection with refinancing notes payable | — | (6,836 | ) | — | ||||||||
Payment for interest rate cap contract | — | (307 | ) | — | ||||||||
Other | (12 | ) | — | (78 | ) | |||||||
Net cash used in financing activities | (396 | ) | (1,752 | ) | (37,859 | ) | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: | (7,376 | ) | 7,369 | (9,573 | ) | |||||||
Cash, beginning of period | 28,208 | 20,839 | 30,412 | |||||||||
Cash, end of period | $ | 20,832 | $ | 28,208 | $ | 20,839 | ||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
Interest paid | $ | 42,116 | $ | 42,852 | $ | 42,461 | ||||||
Income taxes paid | 318 | 422 | 202 | |||||||||
Equipment additions under capital leases | 3,358 | 737 | — |
F-6
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007
1. | NATURE OF BUSINESS |
2. | REORGANIZATION |
• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
F-7
Table of Contents
Year Ended | ||||
June 30, 2007 | ||||
Professional fees | $ | 7,559 | ||
Write-off of deferred financing costs | 6,146 | |||
Consent fees | 1,250 | |||
Management incentive | 1,698 | |||
Other | 860 | |||
$ | 17,513 | |||
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | CONSOLIDATED FINANCIAL STATEMENTS |
b. | USE OF ESTIMATES |
F-8
Table of Contents
c. | REVENUE RECOGNITION |
d. | CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS |
e. | TRADE ACCOUNTS RECEIVABLES |
f. | LONG-LIVED ASSETS |
Vehicles | 3 to 8 years | |
Buildings | 7 to 20 years | |
Leasehold improvements | Lesser of the useful life or term of lease | |
Computer and office equipment | 3 to 5 years | |
Diagnostic and related equipment | 5 to 8 years | |
Equipment and vehicles under capital leases | Lesser of the useful life or term of lease |
F-9
Table of Contents
g. | DEFERRED FINANCING COSTS |
h. | SHARE-BASED COMPENSATION |
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Net loss: As reported | $ | (99,041 | ) | $ | (210,218 | ) | $ | (27,217 | ) | |||
Expense | (259 | ) | (291 | ) | (245 | ) | ||||||
Pro forma | $ | (99,300 | ) | $ | (210,509 | ) | $ | (27,462 | ) | |||
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Basic and diluted net loss per common share: | ||||||||||||
As reported | $ | (114.63 | ) | $ | (243.31 | ) | $ | (31.50 | ) | |||
Pro forma | (114.93 | ) | (243.64 | ) | (31.78 | ) |
F-10
Table of Contents
Years Ended June 30, | ||||||||
Assumptions | 2006 | 2005 | ||||||
Weighted average estimated fair value per option granted | $ | 6.65 | $ | 6.80 | ||||
Risk-free interest rate | 4.06-4.40 | % | 4.13-4.50 | % | ||||
Volatility | 0.00 | % | 0.00 | % | ||||
Expected dividend yield | 0.00 | % | 0.00 | % | ||||
Estimated life | 10.00 years | 10.00 years |
i. | GOODWILL AND OTHER INTANGIBLE ASSETS |
j. | INCOME TAXES |
F-11
Table of Contents
k. | COMPREHENSIVE INCOME (LOSS) |
l. | LOSS PER COMMON SHARE |
m. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
n. | NEW PRONOUNCEMENTS |
F-12
Table of Contents
4. | TRADE ACCOUNTS RECEIVABLES |
June 30, | ||||||||
2007 | 2006 | |||||||
Trade accounts receivables | $ | 87,246 | $ | 85,972 | ||||
Less: Allowances for professional fees | 10,461 | 9,782 | ||||||
Allowances for contractual adjustments | 21,454 | 22,712 | ||||||
Allowances for doubtful accounts | 12,648 | 9,788 | ||||||
Trade accounts receivables, net | $ | 42,683 | $ | 43,690 | ||||
5. | OTHER CURRENT ASSETS |
June 30, | ||||||||
2007 | 2006 | |||||||
Prepaid expenses | $ | 6,234 | $ | 7,405 | ||||
Amounts due from our unconsolidated partnerships | 2,101 | 984 | ||||||
$ | 8,335 | $ | 8,389 | |||||
6. | PROPERTY AND EQUIPMENT |
June 30, | ||||||||
2007 | 2006 | |||||||
Vehicles | $ | 5,066 | $ | 5,382 | ||||
Land, building and leasehold improvements | 35,045 | 30,706 | ||||||
Computer and office equipment | 49,674 | 48,517 | ||||||
Diagnostic and related equipment | 245,576 | 249,801 | ||||||
Equipment and vehicles under capital leases | 66,068 | 71,499 | ||||||
401,429 | 405,905 | |||||||
Less: Accumulated depreciation and amortization | 256,606 | 224,879 | ||||||
Property and equipment, net | $ | 144,823 | $ | 181,026 | ||||
F-13
Table of Contents
7. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Mobile | Fixed | Consolidated | ||||||||||
Goodwill, June 30, 2005 | $ | 104,264 | $ | 174,266 | $ | 278,530 | ||||||
Acquired in acquisitions | — | 2,404 | (1) | 2,404 | ||||||||
Goodwill impairment charge (2) | (62,564 | ) | (126,869 | ) | (189,433 | ) | ||||||
Adjustments to goodwill | 2,472 | (3) | 490 | (4) | 2,962 | |||||||
Goodwill, June 30, 2006 | 44,172 | 50,291 | 94,463 | |||||||||
Goodwill impairment charge (2) | — | (29,595 | ) | (29,595 | ) | |||||||
Goodwill, June 30, 2007 | $ | 44,172 | $ | 20,696 | $ | 64,868 | ||||||
(1) | In March 2006, we purchased a majority ownership interest in a joint venture that operates an MRI fixed-site center in San Ramon, California. In connection with this purchase, we recorded a $2.4 million increase in goodwill. | |
(2) | We recorded goodwill impairment charges discussed above. | |
(3) | In December 2005, we dissolved a mobile lithotripsy partnership in Connecticut. In connection with this dissolution, we recorded a $1.0 million reduction in associated goodwill. In 2006, we increased the balance of goodwill by $3.5 million as a result of recording a deferred tax liability on the indefinite-lived intangible assets acquired in Holdings’ fiscal 2002 acquisition of InSight and its subsidiaries not previously recorded. | |
(4) | In October 2005, we purchased the remaining ownership interest in a joint venture in Buffalo, New York. In connection with this purchase, we recorded a $0.5 million increase in goodwill. |
F-14
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June 30, 2007 | June 30, 2006 | |||||||||||||||
Gross | Gross | |||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | |||||||||||||
Value | Amortization | Value | Amortization | |||||||||||||
Amortized intangible assets: | ||||||||||||||||
Managed care contracts | $ | 24,410 | $ | 4,202 | $ | 24,410 | $ | 3,388 | ||||||||
Wholesale contracts | 14,006 | 12,678 | 14,006 | 12,235 | ||||||||||||
38,416 | 16,880 | 38,416 | 15,623 | |||||||||||||
Unamortized intangible assets: | ||||||||||||||||
Trademark | 8,680 | — | 8,680 | — | ||||||||||||
Other intangible assets | $ | 47,096 | $ | 16,880 | $ | 47,096 | $ | 15,623 | ||||||||
Managed care contracts | 30 years | |
Wholesale contracts | 5 to 7 years |
2008 | $ | 1,257 | ||
2009 | 1,257 | |||
2010 | 1,257 | |||
2011 | 814 | |||
2012 | 814 |
8. | ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES |
June 30, | ||||||||
2007 | 2006 | |||||||
Accounts payable | $ | 2,651 | $ | 3,723 | ||||
Accrued equipment related costs | 3,529 | 3,447 | ||||||
Accrued payroll and related costs | 12,744 | 12,977 | ||||||
Accrued interest expense | 5,289 | 8,444 | ||||||
Accrued professional fees | 2,020 | 2,206 | ||||||
Accrued legal fees | 3,309 | 1,489 | ||||||
Other accrued expenses | 9,077 | 7,791 | ||||||
$ | 38,619 | $ | 40,077 | |||||
F-15
Table of Contents
9. | LIABILITIES SUBJECT TO COMPROMISE |
June 30, | ||||||||
2007 | 2006 | |||||||
Unsecured senior subordinated notes payable | $ | 194,500 | $ | — | ||||
Accrued interest expense | 11,204 | — | ||||||
$ | 205,704 | $ | — | |||||
(1) | Includes accrued interest from November 1, 2006 to May 29, 2007. |
June 30, | ||||||||
2007 | 2006 | |||||||
Senior secured floating rate notes payable (floating rate notes), bearing interest at LIBOR plus 5.25% (10.61% at June 30, 2007), interest payable quarterly, principal due in November 2011. At June 30, 2007, the fair value of the notes was approximately $292.5 million. | $ | 300,000 | $ | 300,000 | ||||
Unsecured senior subordinated notes payable (senior subordinated notes), bearing interest at 9.875%, interest payable semi-annually, principal due in November 2011. At June 30, 2007, the fair value of the notes was approximately $62.2 million. | 194,500 | 194,500 | ||||||
Revolving credit facility, bearing interest at LIBOR plus 2.5% or prime rate (8.25% at June 30, 2007), interest payable monthly, principal due in November 2011. | 5,000 | — | ||||||
Other notes payable | 1,777 | 1,614 | ||||||
Total notes payable | 501,277 | 496,114 | ||||||
Less: Unamortized discount on floating rate notes | 1,150 | 1,356 | ||||||
Less: Amounts classified as liabilities subject to compromise | 194,500 | — | ||||||
Less: Current portion | 5,737 | 555 | ||||||
Long-term notes payable | $ | 299,890 | $ | 494,203 | ||||
F-16
Table of Contents
2008 | $ | 5,737 | ||
2009 | 636 | |||
2010 | 167 | |||
2011 | 180 | |||
2012 | 300,057 | |||
$ | 306,777 | |||
F-17
Table of Contents
Capital | Operating | |||||||
2008 | $ | 3,265 | $ | 14,070 | ||||
2009 | 1,359 | 12,139 | ||||||
2010 | 1,083 | 10,262 | ||||||
2011 | 884 | 8,263 | ||||||
2012 | 379 | 5,684 | ||||||
Thereafter | — | 4,470 | ||||||
Total minimum lease payments | 6,970 | $ | 54,888 | |||||
Less: Amounts representing interest | 741 | |||||||
Present value of capital lease obligations | 6,229 | |||||||
Less: Current portion | 2,927 | |||||||
Long-term capital lease obligations | $ | 3,302 | ||||||
F-18
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F-19
Table of Contents
Weighted | ||||||||||||||||
Weighted | Average | |||||||||||||||
Weighted | Average | Remaining | ||||||||||||||
Number of | Average | Grant Date | Contractual | |||||||||||||
Options | Exercise Price | Fair Value | Term (years) | |||||||||||||
Outstanding, June 30, 2004 | 602,990 | $ | 16.10 | $ | 6.57 | |||||||||||
Granted | 209,500 | 19.82 | 6.80 | |||||||||||||
Forfeited | (195,500 | ) | 18.07 | 6.57 | ||||||||||||
Outstanding, June 30, 2005 | 616,990 | 16.74 | 6.65 | |||||||||||||
Granted | 338,236 | 19.82 | 6.65 | |||||||||||||
Forfeited | (105,500 | ) | 19.43 | 6.58 | ||||||||||||
Outstanding, June 30, 2006 | 849,726 | 17.74 | 6.66 | |||||||||||||
Forfeited | (60,000 | ) | 18.58 | 6.63 | ||||||||||||
Outstanding, June 30, 2007 | 789,726 | $ | 17.68 | $ | 6.66 | |||||||||||
Exercisable at June 30, 2007 | 291,075 | $ | 14.63 | $ | 6.65 | 6.55 | ||||||||||
Non-vested, June 30, 2006 | 608,311 | $ | 19.42 | $ | 6.66 | �� | ||||||||||
Vested | (76,735 | ) | 19.36 | 6.64 | ||||||||||||
Forfeited | (32,925 | ) | 18.92 | 6.66 | ||||||||||||
Non-vested, June 30, 2007 | 498,651 | $ | 19.46 | $ | 6.66 | |||||||||||
Exercisable at: | ||||||||||||||||
June 30, 2005 | 204,565 | $ | 12.56 | |||||||||||||
June 30, 2006 | 241,415 | $ | 13.50 | |||||||||||||
June 30, 2007 | 291,075 | $ | 14.63 |
Exercise Price | Weighted Average | Options | Total Options | Remaining Contractual | ||||||||||||
Range | Exercise Price | Exercisable | Outstanding | Life | ||||||||||||
$ 8.37 | $ | 8.37 | 123,490 | 123,490 | 4.33 years | |||||||||||
18.00 - 19.82 | 19.40 | 167,585 | 666,236 | 6.71 years | ||||||||||||
291,075 | 789,726 | |||||||||||||||
F-20
Table of Contents
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Current provision: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
State | 2,175 | 400 | (155 | ) | ||||||||
2,175 | 400 | (155 | ) | |||||||||
Deferred taxes arising from temporary differences: | ||||||||||||
State income taxes | 88 | 9 | (9 | ) | ||||||||
Accrued expenses | 335 | 181 | (741 | ) | ||||||||
Reserves | (631 | ) | 103 | (1,376 | ) | |||||||
Depreciation | (7,652 | ) | (7,114 | ) | 3,604 | |||||||
Amortization | (1,249 | ) | (38,625 | ) | 5,367 | |||||||
Creation/utilization of net operating losses | (14,758 | ) | (6,143 | ) | (11,758 | ) | ||||||
Section 481 adjustment | — | — | 1,161 | |||||||||
Changes in valuation allowance | 23,811 | 39,855 | 20,694 | |||||||||
Non-goodwill intangible amortization | (89 | ) | (11 | ) | (1,001 | ) | ||||||
(Loss) income from partnerships | 124 | (3,480 | ) | (536 | ) | |||||||
Other | 21 | 1 | (181 | ) | ||||||||
Total deferred taxes arising from temporary differences | — | (15,224 | ) | 15,224 | ||||||||
Total provision (benefit) for income taxes | $ | 2,175 | $ | (14,824 | ) | $ | 15,069 | |||||
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Federal statutory tax rate | 34.0 | % | 34.0 | % | 34.0 | % | ||||||
State income taxes, net of federal benefit | (2.2 | ) | 0.6 | (11.8 | ) | |||||||
Permanent items, including goodwill and non-deductible merger costs | (0.2 | ) | (0.1 | ) | (1.5 | ) | ||||||
Changes in valuation allowance | (29.7 | ) | (15.7 | ) | (138.9 | ) | ||||||
Impairment of goodwill and other intangible assets | (4.1 | ) | (9.7 | ) | — | |||||||
Other, net | (0.1 | ) | (2.5 | ) | (5.8 | ) | ||||||
Net effective tax rate | (2.3 | )% | 6.6 | % | (124.0 | )% | ||||||
F-21
Table of Contents
June 30, | ||||||||
2007 | 2006 | |||||||
Accrued expenses | $ | 1,576 | $ | 1,911 | ||||
Depreciation | (13,283 | ) | (20,934 | ) | ||||
Amortization | 24,650 | 23,400 | ||||||
Reserves | 2,718 | 2,087 | ||||||
Income (loss) from partnerships | 3,348 | 3,472 | ||||||
State income taxes | (85 | ) | 3 | |||||
Non-goodwill intangible amortization | (10,046 | ) | (10,135 | ) | ||||
NOL carryforwards | 77,034 | 62,218 | ||||||
Other | 57 | 78 | ||||||
Net deferred asset | 85,969 | 62,100 | ||||||
Valuation allowance | (89,441 | ) | (65,572 | ) | ||||
$ | (3,472 | ) | $ | (3,472 | ) | |||
F-22
Table of Contents
June 30, | ||||||||
2007 | 2006 | |||||||
Combined Financial Position: | ||||||||
Current assets: | ||||||||
Cash | $ | 3,334 | $ | 3,275 | ||||
Trade accounts receivables, net | 3,499 | 2,958 | ||||||
Other | 218 | 66 | ||||||
Property and equipment, net | 3,550 | 3,073 | ||||||
Other assets | 400 | — | ||||||
Intangible assets, net | 2 | 34 | ||||||
Total assets | 11,003 | 9,406 | ||||||
Current liabilities | (1,723 | ) | (1,958 | ) | ||||
Due to the Company | (1,797 | ) | (873 | ) | ||||
Long-term liabilities | (130 | ) | (364 | ) | ||||
Net assets | $ | 7,353 | $ | 6,211 | ||||
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Operating Results: | ||||||||||||
Revenues | $ | 28,505 | $ | 27,430 | $ | 25,935 | ||||||
Expenses | 21,026 | 20,439 | 19,558 | |||||||||
Net income | $ | 7,479 | $ | 6,991 | $ | 6,377 | ||||||
Equity in earnings of unconsolidated partnerships | $ | 3,030 | $ | 3,072 | $ | 2,613 | ||||||
F-23
Table of Contents
Mobile | Fixed | Other | Consolidated | |||||||||||||
Contract services revenues | $ | 106,799 | $ | 21,894 | $ | — | $ | 128,693 | ||||||||
Patient services revenues | — | 158,221 | — | 158,221 | ||||||||||||
Total revenues | 106,799 | 180,115 | — | 286,914 | ||||||||||||
Depreciation and amortization | 25,674 | 24,898 | 6,468 | 57,040 | ||||||||||||
Total costs of operations | 91,345 | 151,447 | 18,634 | 261,426 | ||||||||||||
Corporate operating expenses | — | — | (25,496 | ) | (25,496 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 3,030 | — | 3,030 | ||||||||||||
Interest expense, net | (4,014 | ) | (4,227 | ) | (44,539 | ) | (52,780 | ) | ||||||||
Impairment of goodwill and other intangible assets | — | (29,595 | ) | — | (29,595 | ) | ||||||||||
Income (loss) before reorganization items and income taxes | 11,440 | (2,124 | ) | (88,669 | ) | (79,353 | ) | |||||||||
Additions to property and equipment | 2,918 | 10,767 | 2,478 | 16,163 |
Mobile | Fixed | Other | Consolidated | |||||||||||||
Contract services revenues | $ | 113,757 | $ | 20,649 | $ | — | $ | 134,406 | ||||||||
Patient services revenues | 904 | 170,988 | — | 171,892 | ||||||||||||
Total revenues | 114,661 | 191,637 | — | 306,298 | ||||||||||||
Depreciation and amortization | 30,565 | 25,280 | 9,007 | 64,852 | ||||||||||||
Total costs of operations | 97,586 | 154,377 | 19,309 | 271,272 | ||||||||||||
Corporate operating expenses | — | — | (23,655 | ) | (23,655 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 3,072 | — | 3,072 | ||||||||||||
Interest expense, net | (6,131 | ) | (5,748 | ) | (38,875 | ) | (50,754 | ) | ||||||||
Gain on repurchase of notes payable | — | — | 3,076 | 3,076 | ||||||||||||
Loss on dissolution of partnership | (1,000 | ) | — | — | (1,000 | ) | ||||||||||
Impairment of goodwill and other intangible assets | (63,938 | ) | (126,869 | ) | — | (190,807 | ) | |||||||||
Loss before income taxes | (53,994 | ) | (92,285 | ) | (78,763 | ) | (225,042 | ) | ||||||||
Additions to property and equipment | 12,517 | 12,798 | 5,612 | 30,927 |
Mobile | Fixed | Other | Consolidated | |||||||||||||
Contract services revenues | $ | 118,891 | $ | 17,646 | $ | — | $ | 136,537 | ||||||||
Patient services revenues | 1,500 | 178,836 | — | 180,336 | ||||||||||||
Total revenues | 120,391 | 196,482 | — | 316,873 | ||||||||||||
Depreciation and amortization | 31,176 | 25,301 | 9,124 | 65,601 | ||||||||||||
Total costs of operations | 98,147 | 150,105 | 19,905 | 268,157 | ||||||||||||
Corporate operating expenses | — | — | (18,447 | ) | (18,447 | ) | ||||||||||
Loss on sales of centers | — | (170 | ) | — | (170 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 2,613 | — | 2,613 | ||||||||||||
Interest expense, net | (8,572 | ) | (7,058 | ) | (29,230 | ) | (44,860 | ) | ||||||||
Income (loss) before income taxes | 13,672 | 41,762 | (67,582 | ) | (12,148 | ) | ||||||||||
Additions to property and equipment | 14,361 | 14,974 | 1,124 | 30,459 |
F-24
Table of Contents
First | Second | Third | Fourth | |||||||||||||||||
Quarter | Quarter | Quarter | Quarter | Total | ||||||||||||||||
(amounts in thousands, except share data) | ||||||||||||||||||||
2007: | ||||||||||||||||||||
Revenues | $ | 73,672 | $ | 71,966 | $ | 70,065 | $ | 71,211 | $ | 286,914 | ||||||||||
Gross profit | 6,583 | 4,543 | 6,890 | 7,472 | 25,488 | |||||||||||||||
Net loss | (12,132 | ) | (43,546 | ) | (11,474 | ) | (31,889 | ) | (99,041 | ) | ||||||||||
Basic and diluted net loss per common share: | (14.04 | ) | (50.40 | ) | (13.28 | ) | (36.91 | ) | (114.63 | ) | ||||||||||
2006: | ||||||||||||||||||||
Revenues | $ | 78,708 | $ | 75,639 | $ | 76,560 | $ | 75,391 | $ | 306,298 | ||||||||||
Gross profit | 12,463 | 9,333 | 7,533 | 5,697 | 35,026 | |||||||||||||||
Net loss | (2,447 | ) | (9,819 | ) | (11,205 | ) | (186,747 | ) | (210,218 | ) | ||||||||||
Basic and diluted net loss per common share: | (2.83 | ) | (11.36 | ) | (12.97 | ) | (216.14 | ) | (243.31 | ) |
F-25
Table of Contents
Fresh-Start Adjustments | ||||||||||||||||
(b) | ||||||||||||||||
(a) | Revaluation | |||||||||||||||
Settlement | of Assets | Pro Forma | ||||||||||||||
June 30, | of Unsecured | and | June 30, | |||||||||||||
2007 | Claims | Liabilities | 2007 | |||||||||||||
(unaudited) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 20,832 | $ | — | $ | 7,750 | $ | 28,582 | ||||||||
Trade accounts receivables, net | 42,683 | — | — | 42,683 | ||||||||||||
Other current assets | 8,335 | — | — | 8,335 | ||||||||||||
Total current assets | 71,850 | — | 7,750 | 79,600 | ||||||||||||
Property and equipment, net | 144,823 | — | — | 144,823 | ||||||||||||
Investments in partnerships | 3,413 | — | 2,607 | 6,020 | ||||||||||||
Other assets | 7,881 | — | (7,881 | ) | — | |||||||||||
Reorganization value in excess of amounts allocable to identifiable assets | — | 108,972 | 58,786 | 167,758 | ||||||||||||
Other intangible assets, net | 30,216 | (4,208 | ) | 26,008 | ||||||||||||
Goodwill | 64,868 | — | (64,868 | ) | — | |||||||||||
$ | 323,051 | $ | 108,972 | $ | (7,814 | ) | $ | 424,209 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | 8,664 | $ | — | $ | (5,000 | ) | $ | 3,664 | |||||||
Accounts payable and other accrued expenses | 38,619 | — | 7,286 | 45,905 | ||||||||||||
Total current liabilities | 47,283 | — | 2,286 | 49,569 | ||||||||||||
Long-term liabilities: | ||||||||||||||||
Notes payable and capital lease obligations, less current portion | 303,192 | — | (10,100 | ) | 293,092 | |||||||||||
Liabilities subject to compromise | 205,704 | (205,704 | ) | — | — | |||||||||||
Other long-term liabilities | 8,304 | — | — | 8,304 | ||||||||||||
Total long-term liabilities | 517,200 | (205,704 | ) | (10,100 | ) | 301,396 | ||||||||||
Stockholders’ equity (deficit) | ||||||||||||||||
Common stock | 5 | 4 | — | 9 | ||||||||||||
Additional paid-in capital | 87,081 | (13,846 | ) | — | 73,235 | |||||||||||
Accumulated other comprehensive income | 103 | (103 | ) | — | — | |||||||||||
Accumulated deficit | (328,621 | ) | 328,621 | — | — | |||||||||||
Total stockholders’ equity (deficit) | (241,432 | ) | 314,676 | — | 73,244 | |||||||||||
$ | 323,051 | $ | 108,972 | $ | (7,814 | ) | $ | 424,209 | ||||||||
(a) | Settlement of Unsecured Claims.This reflects the cancellation of approximately $205.7 million of liabilities subject to compromise pursuant to the terms of the plan of reorganization. The unsecured creditors received 7,780,000 shares of Holdings’ common stock in satisfaction of such claims. |
F-26
Table of Contents
(b) | Revaluation of Assets and Liabilities.Fresh-start adjustments are made to reflect asset values at their estimated fair value and liabilities at estimated fair value, based on an estimated total reorganization value of approximately $370.0 million: |
• | Adjustments to cash and cash equivalents and notes payable to reflect the issuance of $15.0 million aggregate principal amount of floating rate notes in exchange for approximately $12.8 million of cash. | ||
• | Adjustments to cash and cash equivalents and notes payable to reflect the repayment of approximately $5.0 million on the credit facility. | ||
• | Adjustments of approximately $2.6 million to increase the fair value of investments in partnerships. | ||
• | Adjustments of approximately $7.9 million to reduce the value of deferred loan fees. | ||
• | Adjustments of approximately $4.2 million to reduce the value of other intangible assets. | ||
• | Adjustments of approximately $64.9 million to reduce the value of goodwill. | ||
• | Adjustment of approximately $7.3 million to accounts payable and other accrued expenses to reflect the remaining fees and expenses related to the chapter 11 proceedings. |
• | Adjustments of approximately $22.9 million to reduce the value of floating rate notes. | ||
• | The elimination of the Holdings’ existing equity accounts. | ||
• | Additionally, goodwill of approximately $167.8 million is recorded to reflect the excess of the estimated fair value of identifiable assets over liabilities and equity. |
F-27
Table of Contents
JUNE 30, 2007
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 17,960 | $ | 2,872 | $ | — | $ | 20,832 | ||||||||||||
Trade accounts receivables, net | — | — | 36,525 | 6,158 | — | 42,683 | ||||||||||||||||||
Other current assets | — | — | 8,072 | 263 | — | 8,335 | ||||||||||||||||||
Intercompany accounts receivable | 87,086 | 501,435 | 10,207 | — | (598,728 | ) | — | |||||||||||||||||
Total current assets | 87,086 | 501,435 | 72,764 | 9,293 | (598,728 | ) | 71,850 | |||||||||||||||||
Property and equipment, net | — | — | 125,737 | 19,086 | — | 144,823 | ||||||||||||||||||
Investments in partnerships | — | — | 3,413 | — | — | 3,413 | ||||||||||||||||||
Investments in consolidated subsidiaries | (328,518 | ) | (331,697 | ) | 13,984 | — | 646,231 | — | ||||||||||||||||
Other assets | — | 260 | 7,621 | — | — | 7,881 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 89,224 | 5,860 | — | 95,084 | ||||||||||||||||||
$ | (241,432 | ) | $ | 169,998 | $ | 312,743 | $ | 34,239 | $ | 47,503 | $ | 323,051 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | — | $ | — | $ | 6,861 | $ | 1,803 | $ | — | $ | 8,664 | ||||||||||||
Accounts payable and other accrued expenses | — | — | 37,406 | 1,213 | — | 38,619 | ||||||||||||||||||
Intercompany accounts payable | — | — | 588,521 | 10,207 | (598,728 | ) | — | |||||||||||||||||
Total current liabilities | — | — | 632,788 | 13,223 | (598,728 | ) | 47,283 | |||||||||||||||||
Notes payable and capital lease obligations, less current portion | — | 303,850 | (5,000 | ) | 4,342 | — | 303,192 | |||||||||||||||||
Liabilities subject to compromise | — | 194,500 | 11,204 | — | — | 205,704 | ||||||||||||||||||
Other long-term liabilities | — | 166 | 5,448 | 2,690 | — | 8,304 | ||||||||||||||||||
Stockholders’ (deficit) equity | (241,432 | ) | (328,518 | ) | (331,697 | ) | 13,984 | 646,231 | (241,432 | ) | ||||||||||||||
$ | (241,432 | ) | $ | 169,998 | $ | 312,743 | $ | 34,239 | $ | 47,503 | $ | 323,051 | ||||||||||||
F-28
Table of Contents
JUNE 30, 2006
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 25,944 | $ | 2,264 | $ | — | $ | 28,208 | ||||||||||||
Trade accounts receivables, net | — | — | 37,540 | 6,150 | — | 43,690 | ||||||||||||||||||
Other current assets | — | — | 7,960 | 429 | — | 8,389 | ||||||||||||||||||
Intercompany accounts receivable | 87,086 | 496,110 | 15,452 | — | (598,648 | ) | — | |||||||||||||||||
Total current assets | 87,086 | 496,110 | 86,896 | 8,843 | (598,648 | ) | 80,287 | |||||||||||||||||
Property and equipment, net | — | — | 164,637 | 16,389 | — | 181,026 | ||||||||||||||||||
Investments in partnerships | — | — | 3,051 | — | — | 3,051 | ||||||||||||||||||
Investments in consolidated subsidiaries | (228,979 | ) | (232,656 | ) | 7,046 | — | 454,589 | — | ||||||||||||||||
Other assets | — | 905 | 16,989 | 10 | — | 17,904 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 121,433 | 4,503 | — | 125,936 | ||||||||||||||||||
$ | (141,893 | ) | $ | 264,359 | $ | 400,052 | $ | 29,745 | $ | (144,059 | ) | $ | 408,204 | |||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | — | $ | — | $ | 4,730 | $ | 930 | $ | — | $ | 5,660 | ||||||||||||
Accounts payable and other accrued expenses | — | — | 38,613 | 1,464 | — | 40,077 | ||||||||||||||||||
Intercompany accounts payable | — | — | 583,196 | 15,452 | (598,648 | ) | — | |||||||||||||||||
Total current liabilities | — | — | 626,539 | 17,846 | (598,648 | ) | 45,737 | |||||||||||||||||
Notes payable and capital lease obligations, less current portion | — | 493,143 | 2,479 | 2,100 | — | 497,722 | ||||||||||||||||||
Other long-term liabilities | — | 195 | 3,690 | 2,753 | — | 6,638 | ||||||||||||||||||
Stockholders’ (deficit) equity | (141,893 | ) | (228,979 | ) | (232,656 | ) | 7,046 | 454,589 | (141,893 | ) | ||||||||||||||
$ | (141,893 | ) | $ | 264,359 | $ | 400,052 | $ | 29,745 | $ | (144,059 | ) | $ | 408,204 | |||||||||||
F-29
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2007
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 120,765 | $ | 7,928 | $ | — | $ | 128,693 | ||||||||||||
Patient services | — | — | 132,391 | 25,830 | — | 158,221 | ||||||||||||||||||
Total revenues | — | — | 253,156 | 33,758 | — | 286,914 | ||||||||||||||||||
Costs of operations | — | — | 228,583 | 32,843 | — | 261,426 | ||||||||||||||||||
Gross profit | — | — | 24,573 | 915 | — | 25,488 | ||||||||||||||||||
Corporate operating expenses | — | — | (25,496 | ) | — | — | (25,496 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 3,030 | — | — | 3,030 | ||||||||||||||||||
Interest expense, net | — | — | (51,960 | ) | (820 | ) | — | (52,780 | ) | |||||||||||||||
Impairment of goodwill | — | — | (29,595 | ) | — | — | (29,595 | ) | ||||||||||||||||
(Loss) income before reorganization items and income taxes | — | — | (79,448 | ) | 95 | — | (79,353 | ) | ||||||||||||||||
Reorganization items | — | — | (17,513 | ) | — | — | (17,513 | ) | ||||||||||||||||
(Loss) income before income taxes | — | — | (96,961 | ) | 95 | — | (96,866 | ) | ||||||||||||||||
Provision for income taxes | — | — | 2,175 | — | — | 2,175 | ||||||||||||||||||
(Loss) income before equity in (loss) income of consolidated subsidiaries | — | — | (99,136 | ) | 95 | — | (99,041 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (99,041 | ) | (99,041 | ) | 95 | — | 197,987 | — | ||||||||||||||||
Net (loss) income | $ | (99,041 | ) | $ | (99,041 | ) | $ | (99,041 | ) | $ | 95 | $ | 197,987 | $ | (99,041 | ) | ||||||||
F-30
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2006
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 127,092 | $ | 7,314 | $ | — | $ | 134,406 | ||||||||||||
Patient services | — | — | 142,755 | 29,137 | — | 171,892 | ||||||||||||||||||
Total revenues | — | — | 269,847 | 36,451 | — | 306,298 | ||||||||||||||||||
Costs of operations | — | — | 237,060 | 34,212 | — | 271,272 | ||||||||||||||||||
Gross profit | — | — | 32,787 | 2,239 | — | 35,026 | ||||||||||||||||||
Corporate operating expenses | — | — | (23,655 | ) | — | — | (23,655 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 3,072 | — | — | 3,072 | ||||||||||||||||||
Interest expense, net | — | — | (49,756 | ) | (998 | ) | — | (50,754 | ) | |||||||||||||||
Gain on repurchase of notes payable | — | 3,076 | — | — | — | 3,076 | ||||||||||||||||||
Loss on dissolution of partnership | — | — | (1,000 | ) | — | — | (1,000 | ) | ||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | (190,807 | ) | — | — | (190,807 | ) | ||||||||||||||||
Income (loss) before income taxes | — | 3,076 | (229,359 | ) | 1,241 | — | (225,042 | ) | ||||||||||||||||
Benefit for income taxes | — | — | (14,824 | ) | — | — | (14,824 | ) | ||||||||||||||||
Income (loss) before equity in (loss) income of consolidated subsidiaries | — | 3,076 | (214,535 | ) | 1,241 | — | (210,218 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (210,218 | ) | (213,294 | ) | 1,241 | — | 422,271 | — | ||||||||||||||||
Net (loss) income | $ | (210,218 | ) | $ | (210,218 | ) | $ | (213,294 | ) | $ | 1,241 | $ | 422,271 | $ | (210,218 | ) | ||||||||
F-31
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2005
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 128,619 | $ | 7,918 | $ | — | $ | 136,537 | ||||||||||||
Patient services | — | — | 146,953 | 33,383 | — | 180,336 | ||||||||||||||||||
Total revenues | — | — | 275,572 | 41,301 | — | 316,873 | ||||||||||||||||||
Costs of operations | — | — | 231,144 | 37,013 | — | 268,157 | ||||||||||||||||||
Gross profit | — | — | 44,428 | 4,288 | — | 48,716 | ||||||||||||||||||
Corporate operating expenses | — | — | (18,447 | ) | — | — | (18,447 | ) | ||||||||||||||||
Loss on sales of centers | — | — | (170 | ) | — | — | (170 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 2,613 | — | — | 2,613 | ||||||||||||||||||
Interest expense, net | — | — | (43,615 | ) | (1,245 | ) | — | (44,860 | ) | |||||||||||||||
(Loss) income before income taxes | — | — | (15,191 | ) | 3,043 | — | (12,148 | ) | ||||||||||||||||
Provision for income taxes | — | — | 15,069 | — | — | 15,069 | ||||||||||||||||||
(Loss) income before equity in (loss) income of consolidated subsidiaries | — | — | (30,260 | ) | 3,043 | — | (27,217 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (27,217 | ) | (27,217 | ) | 3,043 | — | 51,391 | — | ||||||||||||||||
Net (loss) income | $ | (27,217 | ) | $ | (27,217 | ) | $ | (27,217 | ) | $ | 3,043 | $ | 51,391 | $ | (27,217 | ) | ||||||||
F-32
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2007
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net (loss) income | $ | (99,041 | ) | $ | (99,041 | ) | $ | (99,041 | ) | $ | 95 | $ | 197,987 | $ | (99,041 | ) | ||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||||||||||||||
Cash used for reorganization items | — | — | 11,367 | 11,367 | ||||||||||||||||||||
Write-off of deferred financing costs, included in reorganization items | — | — | 6,146 | 6,146 | ||||||||||||||||||||
Depreciation and amortization | — | — | 51,308 | 5,732 | — | 57,040 | ||||||||||||||||||
Amortization of deferred financing costs | — | — | 3,158 | — | — | 3,158 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (3,030 | ) | — | — | (3,030 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 3,008 | — | — | 3,008 | ||||||||||||||||||
Impairment of goodwill | — | — | 29,595 | — | — | 29,595 | ||||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | 99,041 | 99,041 | (95 | ) | — | (197,987 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | 1,015 | (8 | ) | — | 1,007 | |||||||||||||||||
Intercompany receivables, net | — | (5,325 | ) | 5,084 | 241 | — | — | |||||||||||||||||
Other current assets | — | — | (112 | ) | 193 | — | 81 | |||||||||||||||||
Accounts payable, other accrued expenses and accrued interest subject to compromise | — | — | 11,352 | (251 | ) | — | 11,101 | |||||||||||||||||
Net cash (used in) provided by operating activities before reorganization items | — | (5,325 | ) | 19,755 | 6,002 | — | 20,432 | |||||||||||||||||
Cash used for reorganization items | — | — | (11,367 | ) | — | — | (11,367 | ) | ||||||||||||||||
Net cash (used in) provided by operating activities | — | (5,325 | ) | 8,388 | 6,002 | — | 9,065 | |||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Additions to property and equipment | — | — | (11,074 | ) | (5,089 | ) | — | (16,163 | ) | |||||||||||||||
Other | — | 118 | 63 | (63 | ) | — | 118 | |||||||||||||||||
Net cash provided by (used in) investing activities | — | 118 | (11,011 | ) | (5,152 | ) | — | (16,045 | ) | |||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | 207 | (5,348 | ) | (1,388 | ) | — | (6,529 | ) | |||||||||||||||
Proceeds from issuance of notes payable | — | — | — | 1,145 | — | 1,145 | ||||||||||||||||||
Borrowings on revolving credit facility | — | 5,000 | — | — | — | 5,000 | ||||||||||||||||||
Other | — | — | (13 | ) | 1 | — | (12 | ) | ||||||||||||||||
Net cash provided by (used in) financing activities | — | 5,207 | (5,361 | ) | (242 | ) | — | (396 | ) | |||||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | — | (7,984 | ) | 608 | — | (7,376 | ) | ||||||||||||||||
Cash, beginning of year | — | — | 25,944 | 2,264 | — | 28,208 | ||||||||||||||||||
Cash, end of year | $ | — | $ | — | $ | 17,960 | $ | 2,872 | $ | — | $ | 20,832 | ||||||||||||
F-33
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2006
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net (loss) income | $ | (210,218 | ) | $ | (210,218 | ) | $ | (213,294 | ) | $ | 1,241 | $ | 422,271 | $ | (210,218 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | — | — | 59,716 | 5,136 | — | 64,852 | ||||||||||||||||||
Amortization of deferred financing costs | — | — | 3,051 | — | — | 3,051 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (3,072 | ) | — | — | (3,072 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 3,387 | — | — | 3,387 | ||||||||||||||||||
Gain on repurchase of notes payable | — | (3,076 | ) | — | — | — | (3,076 | ) | ||||||||||||||||
Loss on dissolution of partnership | — | — | 1,000 | — | — | 1,000 | ||||||||||||||||||
Impairment of goodwill and other intangible assets | — | — | 190,807 | — | — | 190,807 | ||||||||||||||||||
Deferred income taxes | — | — | (15,224 | ) | — | — | (15,224 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | 210,218 | 213,294 | (1,241 | ) | — | (422,271 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | 2,731 | 285 | — | 3,016 | ||||||||||||||||||
Intercompany receivables, net | — | (3,920 | ) | 8,191 | (4,271 | ) | — | — | ||||||||||||||||
Other current assets | — | — | (473 | ) | 66 | — | (407 | ) | ||||||||||||||||
Accounts payable and other accrued expenses | — | — | 3,698 | (186 | ) | — | 3,512 | |||||||||||||||||
Net cash (used in) provided by operating activities | — | (3,920 | ) | 39,277 | 2,271 | — | 37,628 | |||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Acquisition of fixed-site center | — | — | (2,345 | ) | — | — | (2,345 | ) | ||||||||||||||||
Additions to property and equipment | — | — | (29,603 | ) | (1,324 | ) | — | (30,927 | ) | |||||||||||||||
Sale of short-term investments | — | — | 5,000 | — | — | 5,000 | ||||||||||||||||||
Other | — | (22 | ) | 647 | (860 | ) | — | (235 | ) | |||||||||||||||
Net cash used in investing activities | — | (22 | ) | (26,301 | ) | (2,184 | ) | — | (28,507 | ) | ||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | (287,415 | ) | (5,003 | ) | (691 | ) | — | (293,109 | ) | ||||||||||||||
Proceeds from issuance of notes payable | — | 298,500 | — | — | — | 298,500 | ||||||||||||||||||
Payments made in connection with refinancing notes payable | — | (6,836 | ) | — | — | — | (6,836 | ) | ||||||||||||||||
Payment for interest rate cap contract | — | (307 | ) | — | — | — | (307 | ) | ||||||||||||||||
Net cash provided by (used in) financing activities | — | 3,942 | (5,003 | ) | (691 | ) | — | (1,752 | ) | |||||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | — | 7,973 | (604 | ) | — | 7,369 | |||||||||||||||||
Cash, beginning of year | — | — | 17,971 | 2,868 | — | 20,839 | ||||||||||||||||||
Cash, end of year | $ | — | $ | — | $ | 25,944 | $ | 2,264 | $ | — | $ | 28,208 | ||||||||||||
F-34
Table of Contents
FOR THE YEAR ENDED JUNE 30, 2005
(Amounts in thousands)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net (loss) income | $ | (27,217 | ) | $ | (27,217 | ) | $ | (27,217 | ) | $ | 3,043 | $ | 51,391 | $ | (27,217 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||
Loss on sales of centers | — | — | 170 | — | — | 170 | ||||||||||||||||||
Depreciation and amortization | — | — | 60,261 | 5,340 | — | 65,601 | ||||||||||||||||||
Amortization of deferred financing costs | — | — | 3,173 | — | — | 3,173 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (2,613 | ) | — | — | (2,613 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 2,621 | — | — | 2,621 | ||||||||||||||||||
Deferred income taxes | — | — | 15,224 | — | — | 15,224 | ||||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | 27,217 | 27,217 | (3,043 | ) | — | (51,391 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | 6,634 | 1,462 | — | 8,096 | ||||||||||||||||||
Intercompany receivables, net | — | 32,219 | (24,931 | ) | (7,288 | ) | — | — | ||||||||||||||||
Other current assets | — | — | (1,397 | ) | (339 | ) | — | (1,736 | ) | |||||||||||||||
Accounts payable and other accrued expenses | — | — | 539 | 187 | — | 726 | ||||||||||||||||||
Net cash provided by operating activities | — | 32,219 | 29,421 | 2,405 | — | 64,045 | ||||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Proceeds from sales of centers | — | — | 2,810 | — | — | 2,810 | ||||||||||||||||||
Additions to property and equipment | — | — | (28,449 | ) | (2,010 | ) | — | (30,459 | ) | |||||||||||||||
Net purchases of short-term investments | — | — | (5,000 | ) | — | — | (5,000 | ) | ||||||||||||||||
Other | — | — | (1,627 | ) | (1,483 | ) | — | (3,110 | ) | |||||||||||||||
Net cash used in investing activities | — | — | (32,266 | ) | (3,493 | ) | — | (35,759 | ) | |||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | (32,195 | ) | (4,950 | ) | (636 | ) | — | (37,781 | ) | ||||||||||||||
Other | — | (24 | ) | (54 | ) | — | — | (78 | ) | |||||||||||||||
Net cash used in financing activities | — | (32,219 | ) | (5,004 | ) | (636 | ) | — | (37,859 | ) | ||||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | — | — | (7,849 | ) | (1,724 | ) | — | (9,573 | ) | |||||||||||||||
Cash, beginning of year | — | — | 25,820 | 4,592 | — | 30,412 | ||||||||||||||||||
Cash, end of year | $ | — | $ | — | $ | 17,971 | $ | 2,868 | $ | — | $ | 20,839 | ||||||||||||
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Balance at | Balance at | |||||||||||||||||||
Beginning of | Charges to | Charges to | End of | |||||||||||||||||
Year | Expenses | Revenues | Other | Year | ||||||||||||||||
June 30, 2005: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 8,097 | $ | 5,723 | $ | — | $ | (4,933 | )(A) | $ | 8,887 | |||||||||
Allowance for contractual adjustments | 37,209 | — | 194,928 | (202,725 | )(B) | 29,412 | ||||||||||||||
$ | 45,306 | $ | 5,723 | $ | 194,928 | $ | (207,658 | ) | $ | 38,299 | ||||||||||
June 30, 2006: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 8,887 | $ | 5,351 | $ | — | $ | (4,450 | )(A) | $ | 9,788 | |||||||||
Allowance for contractual adjustments | 29,412 | — | 183,751 | (190,451 | )(B) | 22,712 | ||||||||||||||
$ | 38,299 | $ | 5,351 | $ | 183,751 | $ | (194,901 | ) | $ | 32,500 | ||||||||||
June 30, 2007: | ||||||||||||||||||||
Allowance for doubtful accounts | $ | 9,788 | $ | 5,643 | $ | — | $ | (2,783 | )(A) | $ | 12,648 | |||||||||
Allowance for contractual adjustments | 22,712 | — | 175,085 | (176,343 | )(B) | 21,454 | ||||||||||||||
$ | 32,500 | $ | 5,643 | $ | 175,085 | $ | (179,126 | ) | $ | 34,102 | ||||||||||
(A) | Write-off of uncollectible accounts. | |
(B) | Write-off of contractual adjustments, representing the difference between our charge for a procedure and what we receive from payors. |
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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
AS OF SEPTEMBER 30, 2007 AND JUNE 30, 2007
(Amounts in thousands, except share data)
Successor | Predecessor | ||||||||
September 30, | June 30, | ||||||||
2007 | 2007 | ||||||||
ASSETS | |||||||||
CURRENT ASSETS: | |||||||||
Cash and cash equivalents | $ | 20,256 | $ | 20,832 | |||||
Trade accounts receivables, net | 42,256 | 42,683 | |||||||
Other current assets | 7,235 | 8,335 | |||||||
Total current assets | 69,747 | 71,850 | |||||||
PROPERTY AND EQUIPMENT, net of accumulated depreciation and amortization of $9,496 and $224,879, respectively | 151,371 | 144,823 | |||||||
INVESTMENTS IN PARTNERSHIPS | 10,886 | 3,413 | |||||||
OTHER ASSETS | 131 | 7,881 | |||||||
OTHER INTANGIBLE ASSETS, net | 35,457 | 30,216 | |||||||
GOODWILL | 110,076 | 64,868 | |||||||
$ | 377,668 | $ | 323,051 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||
CURRENT LIABILITIES: | |||||||||
Current portion of notes payable | $ | 665 | $ | 5,737 | |||||
Current portion of capital lease obligations | 2,046 | 2,927 | |||||||
Accounts payable and other accrued expenses | 34,639 | 38,619 | |||||||
Total current liabilities | 37,350 | 47,283 | |||||||
LONG-TERM LIABILITIES: | |||||||||
Notes payable, less current portion | 291,505 | 299,890 | |||||||
Liabilities subject to compromise | — | 205,704 | |||||||
Capital lease obligations, less current portion | 3,022 | 3,302 | |||||||
Other long-term liabilities | 4,624 | 4,832 | |||||||
Deferred income taxes | 11,659 | 3,472 | |||||||
Total long-term liabilities | 310,810 | 517,200 | |||||||
COMMITMENTS AND CONTINGENCIES (Note 15) | |||||||||
STOCKHOLDERS’ EQUITY (DEFICIT): | |||||||||
Predecessor common stock, $.001 par value, 10,000,000 shares authorized, 864,444 shares issued and outstanding at June 30, 2007 | — | 1 | |||||||
Successor common stock, $.001 par value, 10,000,000 shares authorized, 8,644,444 shares issued and outstanding at September 30, 2007 | 9 | — | |||||||
Additional paid-in capital | 37,448 | 87,085 | |||||||
Accumulated other comprehensive income | 36 | 103 | |||||||
Accumulated deficit | (7,985 | ) | (328,621 | ) | |||||
Total stockholders’ equity (deficit) | 29,508 | (241,432 | ) | ||||||
$ | 377,668 | $ | 323,051 | ||||||
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007, THE ONE MONTH ENDED JULY 31, 2007 AND
THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in thousands, except per share data)
Successor | Predecessor | ||||||||||||
Two | One | Three | |||||||||||
Months | Month | Months | |||||||||||
Ended | Ended | Ended | |||||||||||
September 30, | July 31, | September 30, | |||||||||||
2007 | 2007 | 2006 | |||||||||||
REVENUES: | |||||||||||||
Contract services | $ | 20,261 | $ | 10,051 | $ | 33,175 | |||||||
Patient services | 25,129 | 12,311 | 40,497 | ||||||||||
Total revenues | 45,390 | 22,362 | 73,672 | ||||||||||
COSTS OF OPERATIONS: | |||||||||||||
Costs of services | 30,296 | 14,933 | 49,111 | ||||||||||
Provision for doubtful accounts | 843 | 389 | 1,376 | ||||||||||
Equipment leases | 1,536 | 760 | 1,069 | ||||||||||
Depreciation and amortization | 10,039 | 4,468 | 15,533 | ||||||||||
Total costs of operations | 42,714 | 20,550 | 67,089 | ||||||||||
Gross profit | 2,676 | 1,812 | 6,583 | ||||||||||
CORPORATE OPERATING EXPENSES | (3,767 | ) | (1,678 | ) | (5,663 | ) | |||||||
EQUITY IN EARNINGS OF UNCONSOLIDATED PARTNERSHIPS | 263 | 174 | 752 | ||||||||||
INTEREST EXPENSE, net | (6,253 | ) | (2,918 | ) | (13,654 | ) | |||||||
Loss before reorganization items and income taxes | (7,081 | ) | (2,610 | ) | (11,982 | ) | |||||||
REORGANIZATION ITEMS, net | — | 198,998 | — | ||||||||||
(Loss) income before income taxes | (7,081 | ) | 196,388 | (11,982 | ) | ||||||||
PROVISION FOR INCOME TAXES | 904 | 62 | 150 | ||||||||||
Net (loss) income | $ | (7,985 | ) | $ | 196,326 | $ | (12,132 | ) | |||||
Basic and diluted (loss) income per common share | $ | (0.92 | ) | $ | 227.23 | $ | (14.04 | ) | |||||
Weighted average number of basic and diluted common shares outstanding | 8,644 | 864 | 864 |
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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited)
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007 AND THE ONE MONTH ENDED JULY 31, 2007
(Amounts in thousands, except share data)
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Common Stock | Paid-In | Comprehensive | Accumulated | |||||||||||||||||||||
Shares | Amount | Capital | Income | Deficit | Total | |||||||||||||||||||
Balance at June 30, 2007 (Predecessor) | 864,444 | $ | 1 | $ | 87,085 | $ | 103 | $ | (328,621 | ) | $ | (241,432 | ) | |||||||||||
Net income from July 1 to July 31, 2007 | — | — | — | — | 196,326 | 196,326 | ||||||||||||||||||
Fresh-start adjustments: | ||||||||||||||||||||||||
Elimination of Predecessor common stock, additional paid-in capital, accumulated other comprehensive income and accumulated deficit | (864,444 | ) | (1 | ) | (87,085 | ) | (103 | ) | 132,295 | 45,106 | ||||||||||||||
Reorganization value ascribed to Successor | — | — | 37,456 | — | — | 37,456 | ||||||||||||||||||
Balance at July 31, 2007 (Predecessor) | — | — | 37,456 | — | — | 37,456 | ||||||||||||||||||
Issuance of 864,444 shares of common stock to existing stockholders | 864,444 | 1 | — | — | — | 1 | ||||||||||||||||||
Issuance of 7,780,000 shares of common stock to holders of senior subordinated notes | 7,780,000 | 8 | (8 | ) | — | — | — | |||||||||||||||||
Net loss from August 1 to September 30, 2007 | — | — | — | — | (7,985 | ) | (7,985 | ) | ||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||
Unrealized gain attributable to change in fair value of derivative | — | — | — | 36 | — | 36 | ||||||||||||||||||
Comprehensive income (loss) | (7,949 | ) | ||||||||||||||||||||||
Balance at September 30, 2007 (Successor) | 8,644,444 | $ | 9 | $ | 37,448 | $ | 36 | $ | (7,985 | ) | $ | 29,508 | ||||||||||||
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007, THE ONE MONTH ENDED JULY 31, 2007
AND THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in thousands)
Successor | Predecessor | ||||||||||||
Two | One | Three | |||||||||||
Months | Month | Months | |||||||||||
Ended | Ended | Ended | |||||||||||
September 30, | July 31, | September 30, | |||||||||||
2007 | 2007 | 2006 | |||||||||||
OPERATING ACTIVITIES: | |||||||||||||
Net (loss) income | $ | (7,985 | ) | $ | 196,326 | $ | (12,132 | ) | |||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | |||||||||||||
Cash used for reorganization items | 3,547 | 3,263 | — | ||||||||||
Noncash reorganization items | — | (207,025 | ) | — | |||||||||
Depreciation and amortization | 10,039 | 4,468 | 15,533 | ||||||||||
Amortization of bond discount | 790 | — | — | ||||||||||
Amortization of deferred financing costs | — | 145 | 789 | ||||||||||
Equity in earnings of unconsolidated partnerships | (263 | ) | (174 | ) | (752 | ) | |||||||
Distributions from unconsolidated partnerships | 604 | 58 | 716 | ||||||||||
Deferred income taxes | 780 | — | — | ||||||||||
Cash (used in) provided by changes in operating assets and liabilities: | |||||||||||||
Trade accounts receivables, net | (83 | ) | 510 | (2,464 | ) | ||||||||
Other current assets | 518 | 387 | 1,084 | ||||||||||
Accounts payable and other accrued expenses | (2,445 | ) | (1,534 | ) | (2,422 | ) | |||||||
Net cash provided by (used in) operating activities before reorganization items | 5,502 | (3,576 | ) | 352 | |||||||||
Cash used for reorganization items | (3,547 | ) | (3,263 | ) | — | ||||||||
Net cash provided by (used in) operating activities | 1,955 | (6,839 | ) | 352 | |||||||||
INVESTING ACTIVITIES: | |||||||||||||
Additions to property and equipment | (2,206 | ) | — | (4,045 | ) | ||||||||
Other | (105 | ) | 181 | 297 | |||||||||
Net cash (used in) provided by investing activities | (2,311 | ) | 181 | (3,748 | ) | ||||||||
FINANCING ACTIVITIES: | |||||||||||||
Principal payments of notes payable and capital lease obligations | (909 | ) | (470 | ) | (2,374 | ) | |||||||
Principal payments on credit facility | — | (5,000 | ) | — | |||||||||
Proceeds from issuance of notes payable | — | 12,768 | — | ||||||||||
Other | 49 | — | — | ||||||||||
Net cash (used in) provided by financing activities | (860 | ) | 7,298 | (2,374 | ) | ||||||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS: | (1,216 | ) | 640 | (5,770 | ) | ||||||||
Cash, beginning of period | 21,472 | 20,832 | 28,208 | ||||||||||
Cash, end of period | $ | 20,256 | $ | 21,472 | $ | 22,438 | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||||
Interest paid | $ | 1,613 | $ | 8,184 | $ | 7,851 | |||||||
Income taxes paid | 297 | — | 75 | ||||||||||
Equipment additions under capital leases | 21 | — | 1,665 |
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Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
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Predecessor | ||||
June 30, | ||||
2007 | ||||
Senior subordinated notes payable | $ | 194,500 | ||
Accrued interest expense | 11,204 | |||
$ | 205,704 | |||
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Predecessor | ||||
One Month | ||||
Ended | ||||
July 31, 2007 | ||||
Gain on discharge of debt | $ | 168,248 | ||
Revaluation of assets and liabilities | 38,674 | |||
Professional fees | (4,962 | ) | ||
Consent fees | (2,954 | ) | ||
Other | (8 | ) | ||
$ | 198,998 | |||
• | the market value of Holdings’ 8,644,444 shares of common stock when such shares first traded after consummation of the confirmed plan of reorganization and for a short period of time thereafter. The value range of Holdings’ common stock was estimated from a low of $35 million (based on $4 per share) to a high of $61 million (based on $7 per share). The range of enterprise value to correspond with the foregoing range would be from a low of $357 million to a high of $383 million. Management recognizes that the common stock valuation approach may be somewhat limited because the shares of common stock issued after the consummation of the confirmed plan of reorganization did not necessarily have the same liquidity as shares issued in connection with an underwritten public offering. Nevertheless, management determined that benefits of this valuation method outweighed this limitation and management relied primarily on this valuation method. | ||
• | the market value of the $194.5 million of senior subordinated notes for a period of time leading up to cancellation of such debt on the date of the consummation of the confirmed plan of reorganization. The value range of InSight’s senior subordinated notes was estimated from a low of $65 million to a high of $74 million during an approximately 30 day period of time leading up to the date of consummation of the plan. The range of enterprise value to correspond with the foregoing range would be from a low of $387 million to a high of $396 million. | ||
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F-44
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Successor | ||||||||||||||||
Fresh-Start Adjustments | Reorganized | |||||||||||||||
Revaluation | Balance | |||||||||||||||
Predecessor | of Assets | Sheet | ||||||||||||||
July 31, | Debt | and | August 1, | |||||||||||||
2007 | Discharge (a) | Liabilities (b) | 2007 | |||||||||||||
(unaudited) | ||||||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 21,472 | $ | — | $ | — | $ | 21,472 | ||||||||
Trade accounts receivables, net | 42,173 | — | — | 42,173 | ||||||||||||
Other current assets | 7,948 | — | (195 | ) | 7,753 | |||||||||||
Total current assets | 71,593 | — | (195 | ) | 71,398 | |||||||||||
Property and equipment, net | 140,345 | — | 18,295 | 158,640 | ||||||||||||
Investments in partnerships | 3,529 | — | 7,698 | 11,227 | ||||||||||||
Other assets | 7,731 | — | (7,587 | ) | 144 | |||||||||||
Other intangible assets, net | 30,111 | — | 5,889 | 36,000 | ||||||||||||
Goodwill | 64,868 | — | 45,208 | 110,076 | ||||||||||||
$ | 318,177 | $ | — | $ | 69,308 | $ | 387,485 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | 3,359 | $ | — | $ | — | $ | 3,359 | ||||||||
Accounts payable and other accrued expenses | 37,084 | — | — | 37,084 | ||||||||||||
Total current liabilities | 40,443 | — | — | 40,443 | ||||||||||||
Long-term liabilities: | ||||||||||||||||
Notes payable and capital lease obligations, less current portion | 315,795 | — | (21,818 | ) | 293,977 | |||||||||||
Liabilities subject to compromise | 205,704 | (205,704 | ) | — | — | |||||||||||
Other long-term liabilities | 8,365 | — | 7,243 | 15,608 | ||||||||||||
Total long-term liabilities | 529,864 | (205,704 | ) | (14,575 | ) | 309,585 | ||||||||||
Stockholders’ equity (deficit) | ||||||||||||||||
Predecessor | ||||||||||||||||
Common stock | 1 | — | (1 | ) | — | |||||||||||
Additional paid-in capital | 87,085 | — | (87,085 | ) | — | |||||||||||
Accumulated other comprehensive income | 103 | — | (103 | ) | — | |||||||||||
Accumulated deficit | (339,319 | ) | 168,248 | 171,071 | — | |||||||||||
Successor | ||||||||||||||||
Common stock | — | 8 | 1 | 9 | ||||||||||||
Additional paid-in capital | — | 37,448 | — | 37,448 | ||||||||||||
Total stockholders’ equity (deficit) | (252,130 | ) | 205,704 | 83,883 | 37,457 | |||||||||||
$ | 318,177 | $ | — | $ | 69,308 | $ | 387,485 | |||||||||
(a) | Debt Discharge. This reflects the cancellation of $205,704 of liabilities subject to compromise pursuant to the terms of the plan of reorganization. The holders of senior subordinated notes received 7,780 shares of Holdings’ common stock in satisfaction of such claims. | |
(b) | Revaluation of Assets and Liabilities. Fresh-start adjustments made to reflect asset and liability values at estimated fair value are summarized as follows: |
• | Other current assets. An adjustment of $195 was recorded to decrease the value of deferred tax benefit. | ||
• | Property and equipment, net. An adjustment of $18,295 was recorded to increase the net book value of property and equipment, net. | ||
• | Investments in partnerships. An adjustment of $7,698 was recorded to recognize the estimated fair value of our investments in partnerships. | ||
• | Other assets. Adjustments of $7,587 were recorded to reduce the value of deferred financing costs and the value of the interest rate cap contract. | ||
• | Other intangible assets, net. An adjustment of $5,889 was recorded to recognize identifiable intangible assets. These intangible assets reflect the estimated fair value of our trademark, wholesale contracts and certificates of need. These assets will be subject to an annual impairment review (Note 5). |
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• | Goodwill. An adjustment of $45,208 was recorded to reflect reorganization value of the successor equity in excess of the fair value of tangible and identified intangible assets and liabilities. This amount is determined as the stockholders’ deficit immediately prior to Holdings’ and InSight’s emergence from bankruptcy ($252,130), offset by the gain on discharge of debt ($168,248) and revaluation of assets and liabilities ($38,674) (Note 5). | ||
• | Notes payable. An adjustment of $21,818 was recorded to reflect a net fair value discount associated with InSight’s senior secured floating rate notes due 2011, to be amortized in interest expense over the remaining life of such notes. The fair market value of the notes was determined based on the quoted market value as of August 1, 2007, which represents the present value of amounts to be paid at appropriate current interest rates. | ||
• | Other long-term liabilities. An adjustment of $7,243 was recorded to increase the value of deferred tax liabilities related to the increase in value of our other indefinite-lived intangible assets. | ||
• | Total stockholders’ deficit. The adoption of fresh-start reporting resulted in a new entity with no beginning retained earnings or accumulated deficit. The condensed consolidated balance sheet reflects initial stockholders’ equity value of approximately $37,457 estimated as described above. |
F-46
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F-47
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Successor | Predecessor | ||||||||||||||||
September 30, 2007 | June 30, 2007 | ||||||||||||||||
Gross | Gross | ||||||||||||||||
Carrying | Accumulated | Carrying | Accumulated | ||||||||||||||
Value | Amortization | Value | Amortization | ||||||||||||||
(unaudited) | |||||||||||||||||
Amortized intangible assets: | |||||||||||||||||
Managed care contracts | $ | — | $ | — | $ | 24,410 | $ | 4,202 | |||||||||
Wholesale contracts | 16,500 | 543 | 14,006 | 12,678 | |||||||||||||
16,500 | 543 | 38,416 | 16,880 | ||||||||||||||
Unamortized intangible assets: | |||||||||||||||||
Trademark | 8,900 | — | 8,680 | — | |||||||||||||
Certificates of need | 10,600 | — | — | — | |||||||||||||
Other intangible assets | $ | 36,000 | $ | 543 | $ | 47,096 | $ | 16,880 | |||||||||
The amortizable other intangible assets are amortized on a straight-line method using the following estimated useful lives: | |||||||||||||||||
Managed care contracts | 30 years | ||||||||||||||||
Wholesale contracts | 5 to 7 years |
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• | Holders of InSight’s senior subordinated notes received 7,780,000 shares of newly issued Holdings’ common stock, which represented 90% of all shares of Holdings’ common stock outstanding after consummation of the plan of reorganization. | ||
• | Holders of Holdings’ common stock prior to the effective date received 864,444 shares of newly issued Holdings’ common stock, which represented 10% of all shares of Holdings’ common stock after consummation of the plan of reorganization. |
F-49
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F-50
Table of Contents
Mobile | Fixed | Other | Consolidated | |||||||||||||
Successor | ||||||||||||||||
Contract services revenues | $ | 16,431 | $ | 3,830 | $ | — | $ | 20,261 | ||||||||
Patient services revenues | — | 25,129 | — | 25,129 | ||||||||||||
Total revenues | 16,431 | 28,959 | — | 45,390 | ||||||||||||
Depreciation and amortization | 4,367 | 4,442 | 1,230 | 10,039 | ||||||||||||
Total costs of operations | 15,885 | 25,009 | 1,820 | 42,714 | ||||||||||||
Corporate operating expenses | — | — | (3,767 | ) | (3,767 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 263 | — | 263 | ||||||||||||
Interest expense, net | (448 | ) | (547 | ) | (5,258 | ) | (6,253 | ) | ||||||||
Income (loss) before income taxes | 98 | 3,666 | (10,845 | ) | (7,081 | ) | ||||||||||
Additions to property and equipment | 134 | 1,478 | 594 | 2,206 |
Mobile | Fixed | Other | Consolidated | |||||||||||||
Predecessor | ||||||||||||||||
Contract services revenues | $ | 8,169 | $ | 1,882 | $ | — | $ | 10,051 | ||||||||
Patient services revenues | — | 12,311 | — | 12,311 | ||||||||||||
Total revenues | 8,169 | 14,193 | — | 22,362 | ||||||||||||
Depreciation and amortization | 1,958 | 2,045 | 465 | 4,468 | ||||||||||||
Total costs of operations | 6,918 | 11,920 | 1,712 | 20,550 | ||||||||||||
Corporate operating expenses | — | — | (1,678 | ) | (1,678 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 174 | — | 174 | ||||||||||||
Interest expense, net | (243 | ) | (289 | ) | (2,386 | ) | (2,918 | ) | ||||||||
Income (loss) before reorganization items, net and income taxes | 1,008 | 2,158 | (5,776 | ) | (2,610 | ) | ||||||||||
Additions to property and equipment | — | — | — | — |
Mobile | Fixed | Other | Consolidated | |||||||||||||
Contract services revenues | $ | 27,632 | $ | 5,543 | $ | — | $ | 33,175 | ||||||||
Patient services revenues | — | 40,497 | — | 40,497 | ||||||||||||
Total revenues | 27,632 | 46,040 | — | 73,672 | ||||||||||||
Depreciation and amortization | 7,356 | 6,538 | 1,639 | 15,533 | ||||||||||||
Total costs of operations | 23,953 | 38,796 | 4,340 | 67,089 | ||||||||||||
Corporate operating expenses | — | — | (5,663 | ) | (5,663 | ) | ||||||||||
Equity in earnings of unconsolidated partnerships | — | 752 | — | 752 | ||||||||||||
Interest expense, net | (1,191 | ) | (1,238 | ) | (11,225 | ) | (13,654 | ) | ||||||||
Income (loss) before income taxes | 2,488 | 6,758 | (21,228 | ) | (11,982 | ) | ||||||||||
Additions to property and equipment | 108 | 3,465 | 472 | 4,045 |
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Successor | Predecessor | |||||||||||
Two | One | Three | ||||||||||
Months | Month | Months | ||||||||||
Ended | Ended | Ended | ||||||||||
September 30, | July 31, | September 30, | ||||||||||
2007 | 2007 | 2006 | ||||||||||
(unaudited) | ||||||||||||
Net (loss) income | $ | (7,985 | ) | $ | 196,326 | $ | (12,132 | ) | ||||
Unrealized gain (loss) attributable to change in fair value of interest rate cap | 36 | — | (427 | ) | ||||||||
Comprehensive (loss) income | $ | (7,949 | ) | $ | 196,326 | $ | (12,559 | ) | ||||
F-52
Table of Contents
(a) | Market approach — prices and other relevant information generated by market conditions involving identical or comparable assets or liabilities; | |
(b) | Cost approach — amount that would be required to replace the service capacity of an asset (replacement cost); and | |
(c) | Income approach — techniques to convert future amounts to single present amounts based on market expectations (including present value techniques, option-pricing and excess earnings models). |
Fair Value Measurements Using | ||||||||||||||||||||
Quoted price | Significant | Significant | ||||||||||||||||||
in active | other | other | ||||||||||||||||||
Successor | markets for | observable | unobservable | |||||||||||||||||
September 30, | identical assets | inputs | inputs | Valuation | ||||||||||||||||
2007 | (Level 1) | (Level 2) | (Level 3) | Technique | ||||||||||||||||
Interest rate cap contract | $ | 131 | $ | 131 | $ | — | $ | — | (a | ) |
Fair Value Measurements Using | ||||||||||||||||||||||||
Quoted price | Significant | Significant | ||||||||||||||||||||||
in active | other | other | ||||||||||||||||||||||
Successor | markets for | observable | unobservable | |||||||||||||||||||||
August 1, | identical assets | inputs | inputs | Total | Valuation | |||||||||||||||||||
2007 | (Level 1) | (Level 2) | (Level 3) (1) | Gain (loss) | Technique | |||||||||||||||||||
Property and equipment | $ | 158,640 | $ | — | $ | — | $ | 158,640 | $ | 18,296 | (b | ) | ||||||||||||
Investments in partnerships | 11,227 | — | — | 11,227 | 7,698 | (b | )(c) | |||||||||||||||||
Interest rate cap contract | 144 | 144 | — | — | (11 | ) | (a | ) | ||||||||||||||||
Indefinite-lived intangible assets (2) | 19,500 | — | — | 19,500 | (4,931 | ) | (c | ) | ||||||||||||||||
Definite-lived intangible assets (2) | 16,500 | — | — | 16,500 | 10,820 | (c | ) | |||||||||||||||||
Floating rate notes | 289,800 | 289,800 | — | — | 21,981 | (a | ) | |||||||||||||||||
Capital lease obligations and other notes payable | 7,536 | — | 7,536 | — | — | (b | ) |
(1) | These valuations were based on the present value of future cash flows for specific assets derived from our projections of future revenues, cash flows and market conditions. These cash flows were then discounted to their present value using a rate of return that considers the relative risk of not realizing the estimated annual cash flows and time value of money. | |
(2) | Note 5. |
F-53
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F-54
Table of Contents
F-55
Table of Contents
SEPTEMBER 30, 2007
(Amounts in thousands)
(Successor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 17,903 | $ | 2,353 | $ | — | $ | 20,256 | ||||||||||||
Trade accounts receivables, net | — | — | 36,028 | 6,228 | — | 42,256 | ||||||||||||||||||
Other current assets | — | — | 6,948 | 287 | — | 7,235 | ||||||||||||||||||
Intercompany accounts receivable | 37,457 | 290,589 | 9,905 | — | (337,951 | ) | — | |||||||||||||||||
Total current assets | 37,457 | 290,589 | 70,784 | 8,868 | (337,951 | ) | 69,747 | |||||||||||||||||
Property and equipment, net | — | — | 133,776 | 17,595 | — | 151,371 | ||||||||||||||||||
Investments in partnerships | — | — | 10,886 | — | — | 10,886 | ||||||||||||||||||
Investments in consolidated subsidiaries | (7,949 | ) | (7,949 | ) | 13,380 | — | 2,518 | — | ||||||||||||||||
Other assets | — | — | 131 | — | — | 131 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 139,673 | 5,860 | — | 145,533 | ||||||||||||||||||
$ | 29,508 | $ | 282,640 | $ | 368,630 | $ | 32,323 | $ | (335,433 | ) | $ | 377,668 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | — | $ | — | $ | 959 | $ | 1,752 | $ | — | $ | 2,711 | ||||||||||||
Accounts payable and other accrued expenses | — | — | 33,458 | 1,181 | — | 34,639 | ||||||||||||||||||
Intercompany accounts payable | — | — | 328,346 | 9,605 | (337,951 | ) | — | |||||||||||||||||
Total current liabilities | — | — | 362,763 | 12,538 | (337,951 | ) | 37,350 | |||||||||||||||||
Notes payable and capital lease obligations, less current portion | — | 290,589 | — | 3,938 | — | 294,527 | ||||||||||||||||||
Other long-term liabilities | — | — | 13,816 | 2,467 | — | 16,283 | ||||||||||||||||||
Stockholders’ equity (deficit) | 29,508 | (7,949 | ) | (7,949 | ) | 13,380 | 2,518 | 29,508 | ||||||||||||||||
$ | 29,508 | $ | 282,640 | $ | 368,630 | $ | 32,323 | $ | (335,433 | ) | $ | 377,668 | ||||||||||||
F-56
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JUNE 30, 2007
(Amounts in thousands)
(Predecessor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Current assets: | ||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 17,960 | $ | 2,872 | $ | — | $ | 20,832 | ||||||||||||
Trade accounts receivables, net | — | — | 36,525 | 6,158 | — | 42,683 | ||||||||||||||||||
Other current assets | — | — | 8,072 | 263 | — | 8,335 | ||||||||||||||||||
Intercompany accounts receivable | 87,086 | 501,435 | 10,207 | — | (598,728 | ) | — | |||||||||||||||||
Total current assets | 87,086 | 501,435 | 72,764 | 9,293 | (598,728 | ) | 71,850 | |||||||||||||||||
Property and equipment, net | — | — | 125,737 | 19,086 | — | 144,823 | ||||||||||||||||||
Investments in partnerships | — | — | 3,413 | — | — | 3,413 | ||||||||||||||||||
Investments in consolidated subsidiaries | (328,518 | ) | (331,697 | ) | 13,984 | — | 646,231 | — | ||||||||||||||||
Other assets | — | 260 | 7,621 | — | — | 7,881 | ||||||||||||||||||
Goodwill and other intangible assets, net | — | — | 89,224 | 5,860 | — | 95,084 | ||||||||||||||||||
$ | (241,432 | ) | $ | 169,998 | $ | 312,743 | $ | 34,239 | $ | 47,503 | $ | 323,051 | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||||||
Current portion of notes payable and capital lease obligations | $ | — | $ | — | $ | 6,861 | $ | 1,803 | $ | — | $ | 8,664 | ||||||||||||
Accounts payable and other accrued expenses | — | — | 37,406 | 1,213 | — | 38,619 | ||||||||||||||||||
Intercompany accounts payable | — | — | 588,521 | 10,207 | (598,728 | ) | — | |||||||||||||||||
Total current liabilities | — | — | 632,788 | 13,223 | (598,728 | ) | 47,283 | |||||||||||||||||
Notes payable and capital lease obligations, less current portion | — | 303,850 | (5,000 | ) | 4,342 | — | 303,192 | |||||||||||||||||
Liabilities subject to compromise | — | 194,500 | 11,204 | — | — | 205,704 | ||||||||||||||||||
Other long-term liabilities | — | 166 | 5,448 | 2,690 | — | 8,304 | ||||||||||||||||||
Stockholders’ (deficit) equity | (241,432 | ) | (328,518 | ) | (331,697 | ) | 13,984 | 646,231 | (241,432 | ) | ||||||||||||||
$ | (241,432 | ) | $ | 169,998 | $ | 312,743 | $ | 34,239 | $ | 47,503 | $ | 323,051 | ||||||||||||
F-57
Table of Contents
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007
(Amounts in thousands)
(Successor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 18,829 | $ | 1,432 | $ | — | $ | 20,261 | ||||||||||||
Patient services | — | — | 21,059 | 4,070 | — | 25,129 | ||||||||||||||||||
Total revenues | — | — | 39,888 | 5,502 | — | 45,390 | ||||||||||||||||||
Costs of operations | — | — | 37,355 | 5,359 | — | 42,714 | ||||||||||||||||||
Gross profit | — | — | 2,533 | 143 | — | 2,676 | ||||||||||||||||||
Corporate operating expenses | — | — | (3,767 | ) | — | — | (3,767 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 263 | — | — | 263 | ||||||||||||||||||
Interest expense, net | — | — | (6,134 | ) | (119 | ) | — | (6,253 | ) | |||||||||||||||
(Loss) income before income taxes | — | — | (7,105 | ) | 24 | — | (7,081 | ) | ||||||||||||||||
Provision for income taxes | — | — | 904 | — | — | 904 | ||||||||||||||||||
(Loss) income before equity in (loss) income of consolidated subsidiaries | — | — | (8,009 | ) | 24 | — | (7,985 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (7,985 | ) | (7,985 | ) | 24 | — | 15,946 | — | ||||||||||||||||
Net (loss) income | $ | (7,985 | ) | $ | (7,985 | ) | $ | (7,985 | ) | $ | 24 | $ | 15,946 | $ | (7,985 | ) | ||||||||
F-58
Table of Contents
FOR THE ONE MONTH ENDED JULY 31, 2007
(Amounts in thousands)
(Predecessor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 9,371 | $ | 680 | $ | — | $ | 10,051 | ||||||||||||
Patient services | — | — | 10,226 | 2,085 | — | 12,311 | ||||||||||||||||||
Total revenues | — | — | 19,597 | 2,765 | — | 22,362 | ||||||||||||||||||
Costs of operations | — | — | 17,866 | 2,684 | — | 20,550 | ||||||||||||||||||
Gross profit | — | — | 1,731 | 81 | — | 1,812 | ||||||||||||||||||
Corporate operating expenses | — | — | (1,678 | ) | — | — | (1,678 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 174 | — | — | 174 | ||||||||||||||||||
Interest expense, net | — | — | (2,854 | ) | (64 | ) | — | (2,918 | ) | |||||||||||||||
(Loss) income before reorganization items and income taxes | — | — | (2,627 | ) | 17 | — | (2,610 | ) | ||||||||||||||||
Reorganization items, net | — | 168,248 | 30,750 | — | — | 198,998 | ||||||||||||||||||
Income before income taxes | — | 168,248 | 28,123 | 17 | — | 196,388 | ||||||||||||||||||
Provision for income taxes | — | — | 62 | — | — | 62 | ||||||||||||||||||
Income before equity in income of consolidated subsidiaries | — | 168,248 | 28,061 | 17 | — | 196,326 | ||||||||||||||||||
Equity in income of consolidated subsidiaries | 196,326 | 28,078 | 17 | — | (224,421 | ) | — | |||||||||||||||||
Net income | $ | 196,326 | $ | 196,326 | $ | 28,078 | $ | 17 | $ | (224,421 | ) | $ | 196,326 | |||||||||||
F-59
Table of Contents
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in thousands)
(Predecessor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATION | CONSOLIDATED | |||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Contract services | $ | — | $ | — | $ | 31,209 | $ | 1,966 | $ | — | $ | 33,175 | ||||||||||||
Patient services | — | — | 33,704 | 6,793 | — | 40,497 | ||||||||||||||||||
Total revenues | — | — | 64,913 | 8,759 | — | 73,672 | ||||||||||||||||||
Costs of operations | — | — | 58,624 | 8,465 | — | 67,089 | ||||||||||||||||||
Gross profit | — | — | 6,289 | 294 | — | 6,583 | ||||||||||||||||||
Corporate operating expenses | — | — | (5,663 | ) | — | — | (5,663 | ) | ||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | 752 | — | — | 752 | ||||||||||||||||||
Interest expense, net | — | — | (13,431 | ) | (223 | ) | — | (13,654 | ) | |||||||||||||||
(Loss) income before income taxes | — | — | (12,053 | ) | 71 | — | (11,982 | ) | ||||||||||||||||
Provision for income taxes | — | — | 150 | — | — | 150 | ||||||||||||||||||
(Loss) income before equity in (loss) income of consolidated subsidiaries | — | — | (12,203 | ) | 71 | — | (12,132 | ) | ||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (12,132 | ) | (12,132 | ) | 71 | — | 24,193 | — | ||||||||||||||||
Net (loss) income | $ | (12,132 | ) | $ | (12,132 | ) | $ | (12,132 | ) | $ | 71 | $ | 24,193 | $ | (12,132 | ) | ||||||||
F-60
Table of Contents
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007
(Amounts in thousands)
(Successor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net (loss) income | $ | (7,985 | ) | $ | (7,985 | ) | $ | (7,985 | ) | $ | 24 | $ | 15,946 | $ | (7,985 | ) | ||||||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||
Cash used for reorganization items | — | — | 3,547 | — | — | 3,547 | ||||||||||||||||||
Depreciation and amortization | — | — | 9,028 | 1,011 | — | 10,039 | ||||||||||||||||||
Amortization of bond discount | — | — | 790 | — | — | 790 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (263 | ) | — | — | (263 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 604 | — | — | 604 | ||||||||||||||||||
Deferred income taxes | — | — | 780 | — | — | 780 | ||||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | 7,985 | 7,985 | (24 | ) | — | (15,946 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | 274 | (357 | ) | — | (83 | ) | ||||||||||||||||
Intercompany receivables, net | — | — | 1,043 | (1,043 | ) | — | ||||||||||||||||||
Other current assets | — | — | 504 | 14 | — | 518 | ||||||||||||||||||
Accounts payable and other accrued expenses | — | — | (2,333 | ) | (112 | ) | — | (2,445 | ) | |||||||||||||||
Net cash provided by (used in) operating activities before reorganization items | — | — | 5,965 | (463 | ) | — | 5,502 | |||||||||||||||||
Cash used for reorganization items | — | — | (3,547 | ) | — | — | (3,547 | ) | ||||||||||||||||
Net cash provided by (used in) operating activities | — | — | 2,418 | (463 | ) | — | 1,955 | |||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Additions to property and equipment | — | — | (2,177 | ) | (29 | ) | — | (2,206 | ) | |||||||||||||||
Other | — | — | (105 | ) | — | — | (105 | ) | ||||||||||||||||
Net cash used in investing activities | — | — | (2,282 | ) | (29 | ) | — | (2,311 | ) | |||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | — | (618 | ) | (291 | ) | — | (909 | ) | |||||||||||||||
Other | — | — | 49 | — | — | 49 | ||||||||||||||||||
Net cash used in financing activities | — | — | (569 | ) | (291 | ) | — | (860 | ) | |||||||||||||||
DECREASE IN CASH AND CASH EQUIVALENTS | — | — | (433 | ) | (783 | ) | — | (1,216 | ) | |||||||||||||||
Cash, beginning of period | — | — | 18,336 | 3,136 | — | 21,472 | ||||||||||||||||||
Cash, end of period | $ | — | $ | — | $ | 17,903 | $ | 2,353 | $ | — | $ | 20,256 | ||||||||||||
F-61
Table of Contents
FOR THE ONE MONTH ENDED JULY 31, 2007
(Amounts in thousands)
(Predecessor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net income | $ | 196,326 | $ | 196,326 | $ | 28,078 | $ | 17 | $ | (224,421 | ) | $ | 196,326 | |||||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||||||||||||||
Cash used for reorganization items | — | — | 3,263 | — | — | 3,263 | ||||||||||||||||||
Noncash reorganization items | — | 168,248 | ) | (38,777 | ) | — | — | (207,025 | ) | |||||||||||||||
Depreciation and amortization | — | — | 3,956 | 512 | — | 4,468 | ||||||||||||||||||
Amortization of deferred financing costs | — | — | 145 | — | — | 145 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (174 | ) | — | — | (174 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 58 | — | — | 58 | ||||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | (196,326 | ) | (28,078 | ) | (17 | ) | — | 224,421 | — | |||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | 223 | 287 | — | 510 | ||||||||||||||||||
Intercompany receivables, net | — | (7,768 | ) | 8,208 | (440 | ) | — | — | ||||||||||||||||
Other current assets | — | — | 425 | (38 | ) | — | 387 | |||||||||||||||||
Accounts payable and other accrued expenses | — | — | (1,614 | ) | 80 | — | (1,534 | ) | ||||||||||||||||
Net cash (used in) provided by operating activities before reorganization items | — | (7,768 | ) | 3,774 | 418 | — | (3,576 | ) | ||||||||||||||||
Cash used for reorganization items | — | — | (3,263 | ) | — | — | (3,263 | ) | ||||||||||||||||
Net cash (used in) provided by operating activities | — | (7,768 | ) | 511 | 418 | — | (6,839 | ) | ||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Other | — | — | 171 | 10 | — | 181 | ||||||||||||||||||
Net cash provided by investing activities | — | — | 171 | 10 | — | 181 | ||||||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | — | (306 | ) | (164 | ) | — | (470 | ) | |||||||||||||||
Principal payments on revolving credit facility | — | (5,000 | ) | — | — | — | (5,000 | ) | ||||||||||||||||
Proceeds from issuance of notes payable | — | 12,768 | — | — | — | 12,768 | ||||||||||||||||||
Net cash provided by (used in) financing activities | — | 7,768 | (306 | ) | (164 | ) | — | 7,298 | ||||||||||||||||
INCREASE IN CASH AND CASH EQUIVALENTS | — | — | 376 | 264 | — | 640 | ||||||||||||||||||
Cash, beginning of period | — | — | 17,960 | 2,872 | — | 20,832 | ||||||||||||||||||
Cash, end of period | $ | — | $ | — | $ | 18,336 | $ | 3,136 | $ | — | $ | 21,472 | ||||||||||||
F-62
Table of Contents
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(Amounts in thousands)
(Predecessor)
GUARANTOR | NON-GUARANTOR | |||||||||||||||||||||||
HOLDINGS | INSIGHT | SUBSIDIARIES | SUBSIDIARIES | ELIMINATIONS | CONSOLIDATED | |||||||||||||||||||
OPERATING ACTIVITIES: | ||||||||||||||||||||||||
Net (loss) income | $ | (12,132 | ) | $ | (12,132 | ) | $ | (12,132 | ) | $ | 71 | $ | 24,193 | $ | (12,132 | ) | ||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||||||||||||||
Depreciation and amortization | — | — | 14,134 | 1,399 | — | 15,533 | ||||||||||||||||||
Amortization of deferred financing costs | — | — | 789 | — | — | 789 | ||||||||||||||||||
Equity in earnings of unconsolidated partnerships | — | — | (752 | ) | — | — | (752 | ) | ||||||||||||||||
Distributions from unconsolidated partnerships | — | — | 716 | — | — | 716 | ||||||||||||||||||
Equity in (loss) income of consolidated subsidiaries | 12,132 | 12,132 | (71 | ) | — | (24,193 | ) | — | ||||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||||||||||
Trade accounts receivables, net | — | — | (1,550 | ) | (914 | ) | — | (2,464 | ) | |||||||||||||||
Intercompany receivables, net | — | (59 | ) | (569 | ) | 628 | — | — | ||||||||||||||||
Other current assets | — | — | 1,119 | (35 | ) | — | 1,084 | |||||||||||||||||
Accounts payable and other accrued expenses | — | — | (2,864 | ) | 442 | — | (2,422 | ) | ||||||||||||||||
Net cash (used in) provided by operating activities | — | (59 | ) | (1,180 | ) | 1,591 | — | 352 | ||||||||||||||||
INVESTING ACTIVITIES: | ||||||||||||||||||||||||
Additions to property and equipment | — | — | (2,437 | ) | (1,608 | ) | — | (4,045 | ) | |||||||||||||||
Other | — | 9 | (225 | ) | 513 | — | 297 | |||||||||||||||||
Net cash provided by (used in) investing activities | — | 9 | (2,662 | ) | (1,095 | ) | — | (3,748 | ) | |||||||||||||||
FINANCING ACTIVITIES: | ||||||||||||||||||||||||
Principal payments of notes payable and capital lease obligations | — | 50 | (1,806 | ) | (618 | ) | — | (2,374 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | — | 50 | (1,806 | ) | (618 | ) | — | (2,374 | ) | |||||||||||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | — | — | (5,648 | ) | (122 | ) | — | (5,770 | ) | |||||||||||||||
Cash, beginning of period | — | — | 25,944 | 2,264 | — | 28,208 | ||||||||||||||||||
Cash, end of period | $ | — | $ | — | $ | 20,296 | $ | 2,142 | $ | — | $ | 22,438 | ||||||||||||
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ITEM | AMOUNT | |||
SEC registration fee | $ | * | ||
Printing and engraving expenses | $ | * | ||
Legal fees and expenses | $ | * | ||
Accounting fees and expenses | $ | * | ||
Miscellaneous expenses | $ | * |
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EXHIBIT NUMBER | DESCRIPTION AND REFERENCES | |
*2.1 | Second Amended Joint Prepackaged Plan of Reorganization of InSight Health Services Holdings Corp. (the “Company”), et al. dated May 29, 2007, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*2.2 | Amended Plan Supplement of the Company, et al. dated July 7, 2007, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*3.1 | Amended and Restated Certificate of Incorporation of the Company, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*3.2 | Second Amended and Restated Bylaws of the Company, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*4.1 | Indenture, dated September 22, 2005, by and among InSight Health Services Corp. (“InSight”), the Company, the subsidiary guarantors (named therein) and U.S. Bank National Association, (the “Trustee”), with respect to Senior Secured Floating Rate Notes due 2011, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on October 28, 2005. | |
*4.2 | First Supplemental Indenture, dated as of May 18, 2006, to the Indenture dated September 22, 2005, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 27, 2006. | |
*4.3 | Second Supplemental Indenture, dated as of May 29, 2007, to the Indenture dated September 22, 2005, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on June 4, 2007. | |
*4.4 | Third Supplemental Indenture, dated as of July 9, 2007, to the Indenture dated September 22, 2005, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*4.5 | Security Agreement, dated September 22, 2005, by and among the Loan Parties (as defined therein) and U.S. Bank National Association, as Collateral Agent, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on October 28, 2005. | |
*4.6 | Pledge Agreement, dated September 22, 2005, by and among the Loan Parties (as defined therein) and U.S. Bank National Association, as Collateral Agent, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on October 28, 2005. |
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EXHIBIT NUMBER | DESCRIPTION AND REFERENCES | |
*4.7 | Collateral Agency Agreement, dated September 22, 2005, among the Loan Parties (as defined therein) and U.S. Bank National Association, as Trustee and Collateral Agent, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on October 28, 2005. | |
*4.8 | Registration Rights Agreement, dated as of August 1, 2007, by and among the Company and certain holders of the Company’s common stock, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
*4.9 | Registration Rights Agreement, dated as of July 9, 2007, by and among InSight, the Company, the Subsidiary Guarantors (named therein) and the Purchasers (named therein), previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
5.1 | Opinion of Kaye Scholer LLP, to be filed by amendment. | |
*10.1 | Second Amended and Restated Loan and Security Agreement, dated August 31, 2007, by and among InSight’s subsidiaries listed therein, the lenders named therein and Bank of America, N.A. as collateral and administrative agent, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on August 7, 2007. | |
*10.2 | Executive Employment Agreement, dated July 1, 2005, among InSight, the Company and Bret W. Jorgensen, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on July 8, 2005. | |
*10.3 | Executive Employment Agreement, dated October 22, 2004, among InSight, the Company and Patricia R. Blank, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on January 26, 2005. | |
*10.4 | Executive Employment Agreement, dated January 10, 2005, among InSight, the Company and Mitch C. Hill, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on January 14, 2005. | |
*10.5 | Executive Employment Agreement, dated August 10, 2005, among InSight, the Company and Louis E. Hallman, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on August 15, 2005. | |
*10.6 | Executive Employment Agreement, dated December 27, 2001, between InSight and Marilyn U. MacNiven-Young, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on December 27, 2001. | |
*10.7 | Executive Employment Agreement, dated August 10, 2005, among InSight, the Company and Donald F. Hankus, previously filed and incorporated herein by reference from the Company’s Current Report on Form 8-K, filed on September 30, 2005. | |
*10.8 | Form of Amended and Restated Indemnification Agreement, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 22, 2005. | |
*10.9 | Form of the Company’s and InSight’s Indemnification Agreement, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. |
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EXHIBIT NUMBER | DESCRIPTION AND REFERENCES | |
*10.10 | Resignation Agreement, dated as of October 26, 2007, by and among the Company, InSight and Bret W. Jorgensen, previously filed and incorporated herein by reference from the Company's Current Report on Form 8-K, filed on October 31, 2007. | |
*10.11 | Consulting Agreement, dated as of October 26, 2007, by and between the Company and Richard Nevins, previously filed and incorporated herein by reference from the Company's Current Report on Form 8-K, filed on October 31, 2007. | |
12.1 | Computation of Ratio of Earnings to Fixed Charges, filed herewith. | |
*21.1 | Subsidiaries of the Company, previously filed and incorporated herein by reference from the Company’s Annual Report on Form 10-K, filed on September 21, 2007. | |
23.1 | Consent of PricewaterhouseCoopers LLP, filed herewith. | |
23.4 | Consent of Kaye Scholer LLP, included with Exhibit 5.1. | |
*25.1 | Statement of Eligibility on Form T-1 of the Trustee under the Indenture dated September 22, 2005, between InSight and U.S. Bank National Association, previously filed and incorporated herein by reference from InSight’s Registration Statement on Form S-4, filed on September 28, 2007. |
* | Previously filed |
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(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(2) | That, for the purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | ||
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
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INSIGHT HEALTH SERVICES CORP. INSIGHT HEALTH SERVICES HOLDINGS CORP. | ||||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer of each of the foregoing entities | |||||
Signature | Title | Date | ||||
/s/ Richard Nevins | Interim Chief Executive Officer and Director (Principal Executive Officer) | December 7, 2007 | ||||
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | December 7, 2007 | ||||
/s/ Wayne B. Lowell | Chairman of the Board and Director | December 7, 2007 | ||||
/s/ Eugene Linden | Director | December 7, 2007 | ||||
/s/ Keith E. Rechner | Director | December 7, 2007 | ||||
/s/ Steven G. Segal | Director | December 7, 2007 |
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INSIGHT HEALTH CORP. SIGNAL MEDICAL SERVICES, INC. OPEN MRI, INC. MAXUM HEALTH CORP. MAXUM HEALTH SERVICES CORP. MAXUM HEALTH SERVICES OF NORTH TEXAS, INC. MAXUM HEALTH SERVICES OF DALLAS, INC. NDDC, INC. COMPREHENSIVE MEDICAL IMAGING, INC. COMPREHENSIVE MEDICAL IMAGING CENTERS, INC. TME ARIZONA, INC. COMPREHENSIVE MEDICAL IMAGING-FAIRFAX, INC. | ||||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer of each of the foregoing entities | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director (principal executive officer) of each the foregoing entities | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer (principal financial and accounting officer) of each the foregoing entities | |
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MRI ASSOCIATES, L.P. | ||||||
By: | InSight Health Corp., its general partner | |||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director of InSight Health Corp., its general partner (principal executive officer) | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer of InSight Health Corp., its general partner (principal financial and accounting officer) | |
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WILKES-BARRE IMAGING, L.L.C. | ||||||
By: | InSight Health Corp., its sole member and manager | |||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director of InSight Health Corp., its sole member and sole manager (principal executive officer) | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer of InSight Health Corp., its sole member and sole manager (principal financial and accounting officer) | |
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ORANGE COUNTY REGIONAL PET CENTER-IRVINE, LLC SAN FERNANDO VALLEY REGIONAL PET CENTER, LLC | ||||||
VALENCIA MRI, LLC | ||||||
By: | InSight Health Corp., its sole member | |||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director of InSight Health Corp., its sole member (principal executive officer) | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer of InSight Health Corp., its sole member (principal financial and accounting officer) | |
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PARKWAY IMAGING CENTER, LLC | ||||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Manager | |||||
SIGNATURE | ||
/s/ Richard Nevins | Manager (principal executive officer) | |
/s/ Mitch C. Hill | Manager (principal financial and accounting officer) | |
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COMPREHENSIVE OPEN MRI-CARMICHAEL/ FOLSOM, LLC SYNCOR DIAGNOSTICS SACRAMENTO, LLC SYNCOR DIAGNOSTICS BAKERSFIELD, LLC MESA MRI MOUNTAIN VIEW MRI LOS GATOS IMAGING CENTER WOODBRIDGE MRI JEFFERSON MRI-BALA JEFFERSON MRI | ||||||
By: | Comprehensive Medical Imaging, Inc. and Comprehensive Medical Imaging Centers, Inc., its members | |||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director of Comprehensive Medical Imaging, Inc. and Comprehensive Medical Imaging Centers, Inc., its members (principal executive officer) | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer of Comprehensive Medical Imaging, Inc. and Comprehensive Medical Imaging Centers, Inc., its members (principal financial and accounting officer) | |
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PHOENIX REGIONAL PET CENTER-THUNDERBIRD, LLC | ||||||
By: | Comprehensive Medical Imaging Centers, Inc., its sole member | |||||
By: | /s/ Richard Nevins | |||||
Name: | ||||||
Title: | Interim Chief Executive Officer | |||||
SIGNATURE | ||
/s/ Richard Nevins | Interim Chief Executive Officer and sole Director of Comprehensive Medical Imaging Centers, Inc., its sole member (principal executive officer) | |
/s/ Mitch C. Hill | Executive Vice President and Chief Financial Officer of Comprehensive Medical Imaging Centers, Inc., its sole member (principal financial and accounting officer) | |
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