Table of Contents
Delaware | 8071 | 33-0702770 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
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. |
Table of Contents
I.R.S. Employer | ||||||
State or Other Jurisdiction of | Identification | |||||
Exact Name of Registrant Guarantor 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 |
Table of Contents
Page | ||||||||
1 | ||||||||
11 | ||||||||
25 | ||||||||
26 | ||||||||
29 | ||||||||
32 | ||||||||
56 | ||||||||
58 | ||||||||
70 | ||||||||
82 | ||||||||
85 | ||||||||
87 | ||||||||
126 | ||||||||
129 | ||||||||
130 | ||||||||
130 | ||||||||
130 | ||||||||
130 | ||||||||
F-1 | ||||||||
EX-5.1: OPINION OF KAYE SCHOLER LLP | ||||||||
EX-23.1: CONSENT OF PRICEWATERHOUSECOOPERS LLP |
Table of Contents
• | 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. |
ii
Table of Contents
1
Table of Contents
• | 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. |
2
Table of Contents
Predecessor(1) | |||||||||||||||||||||||||||||||||||||
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 | 1.2 | x | 1.1 | x | — | — | — | — | — | — | — |
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%. |
3
Table of Contents
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. | |
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.” |
4
Table of Contents
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. |
5
Table of Contents
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 | ||||||||||||||||||||||||||||
(1) | Upon Holdings’ and InSight’s emergence from chapter 11, we adopted fresh-start reporting in accordance withSOP 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 |
6
Table of Contents
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 | |||||||||||||||||||||||||||||||
Ended | Ended | Ended | |||||||||||||||||||||||||||||||
Years Ended June 30, | September 30, | July 31, | 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 | |||||||||||||||||
7
Table of Contents
8
Table of Contents
For the Year Ended June 30, 2007
Historical | Adjustments | Pro Forma | ||||||||||
(Amounts in thousands, except per share data) | ||||||||||||
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 |
9
Table of Contents
(Amounts in thousands)
10
Table of Contents
• | 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. |
11
Table of Contents
• | incur additional debt; | |
• | create liens; | |
• | pay dividends, redeem capital stock and prepayand/or redeem subordinated indebtedness; | |
• | make investments; | |
• | engage in mergers, consolidations and sales of assets; and | |
• | engage in transactions with affiliates. |
12
Table of Contents
13
Table of Contents
14
Table of Contents
15
Table of Contents
• | 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. |
16
Table of Contents
• | 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. |
17
Table of Contents
18
Table of Contents
19
Table of Contents
20
Table of Contents
21
Table of Contents
• | 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. |
22
Table of Contents
23
Table of Contents
• | 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. |
24
Table of Contents
• | 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. |
25
Table of Contents
Predecessor(1) | |||||||||||||||||||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||||||||||||||
for | Successor | ||||||||||||||||||||||||||||||||||||
the Year | Three Months | One Month | Two 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 | |||||||||||||||||||
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 |
26
Table of Contents
Predecessor(1) | |||||||||||||||||||||||||||||||||||||
Pro Forma | |||||||||||||||||||||||||||||||||||||
for | Successor | ||||||||||||||||||||||||||||||||||||
the Year | Three Months | One Month | Two 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) | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||
(1) | Upon Holdings’ and InSight’s emergence from chapter 11, we adopted fresh-start reporting in accordance withSOP 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 |
27
Table of Contents
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 | Two Months | ||||||||||||||||||||||||||||||||
Ended | One Month | Ended | |||||||||||||||||||||||||||||||
Years Ended June 30, | September 30, | Ended July 31, | 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 | |||||||||||||||||
28
Table of Contents
29
Table of Contents
Historical | Adjustments | Pro Forma | ||||||||||
(Amounts in thousands, except per share data) | ||||||||||||
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 |
30
Table of Contents
(Amounts in thousands)
31
Table of Contents
32
Table of Contents
• | 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. |
33
Table of Contents
34
Table of Contents
• | 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 | |
• | 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. |
35
Table of Contents
36
Table of Contents
37
Table of Contents
38
Table of Contents
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. |
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 | |||||||||||
39
Table of Contents
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 | |||
40
Table of Contents
Predecessor | ||||||||||||||||||||
Years Ended | Predecessor | Combined | ||||||||||||||||||
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 | % | ||||||||||
41
Table of Contents
Predecessor | ||||||||||||||||||||
Years Ended | Predecessor | Combined | ||||||||||||||||||
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 | % | ||||||||||
42
Table of Contents
43
Table of Contents
44
Table of Contents
45
Table of Contents
46
Table of Contents
• | 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. |
47
Table of Contents
• | 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. |
48
Table of Contents
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 | ) | ||||||
49
Table of Contents
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 | ||||||||||
50
Table of Contents
51
Table of Contents
52
Table of Contents
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 from August 3, 2007, the date the shares first traded after consummation of the confirmed plan of reorganization, through September 30, 2007. 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 |
53
Table of Contents
• | 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. |
54
Table of Contents
55
Table of Contents
56
Table of Contents
57
Table of Contents
58
Table of Contents
• | 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. |
59
Table of Contents
60
Table of Contents
• | 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 conventionalx-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. |
• | 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 |
61
Table of Contents
• | 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. | |
• | 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. |
62
Table of Contents
• | 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. |
63
Table of Contents
64
Table of Contents
65
Table of Contents
66
Table of Contents
67
Table of Contents
68
Table of Contents
69
Table of Contents
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 |
70
Table of Contents
• | Prepare the audit committee report required by SEC rules to be included in Holdings’ annual proxy statement. |
71
Table of Contents
• | 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 | |
• | oversee Holdings’ management compensation and benefits policies, including both qualified and non-qualified plans. |
72
Table of Contents
• | 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; | |
• | 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 |
73
Table of Contents
• | based on annual review and individual performance of each executive, implemented base salary increases, if appropriate. |
74
Table of Contents
• | 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 disabilityand/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. |
75
Table of Contents
• | 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 $10,000 without withholding or deduction, plus reimbursement of his reasonable out-of-pocket expenses incurred in providing such services; | |
• | at the conclusion of the engagement, Mr. Nevins may request a discretionary bonus; however, he has no right to the discretionary bonus, which shall be awarded, if at all, in the sole discretion of our board of directors; and | |
• | while serving as Interim Chief Executive Officer, Mr. Nevins will not be entitled to any meeting or committee fees that he would otherwise be entitled to receive as a director; however, he will be entitled to his annual retainer and any equity award that he would otherwise receive as a director. |
76
Table of Contents
Fiscal | Non-Equity | |||||||||||||||||||
Year | Incentive Plan | All Other | ||||||||||||||||||
Ended | Salary | Compensation(1) | Compensation(2) | Total | ||||||||||||||||
Name and Principal Position | June 30, | ($) | ($) | ($) | ($) | |||||||||||||||
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 | |||||||||||||||
Interim Chief Operating Officer(3) | ||||||||||||||||||||
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). |
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 $31,772, respectively, on behalf of Messrs. Jorgensen and Hill. |
(3) | Effective October 29, 2007, Mr. Hallman’s title changed from Executive Vice President and Chief Strategy Officer to Interim Chief Operating Officer. |
77
Table of Contents
Estimated Future | ||||||||||
Payouts Under Non-Equity | ||||||||||
Incentive Plan Awards | ||||||||||
Threshold | Target/Maximum | |||||||||
Named Executive Officer | Grant Date(1) | ($)(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. | |
(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 |
78
Table of Contents
(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. |
• | 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. |
• | 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; |
79
Table of Contents
• | 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. |
• | 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. |
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. |
80
Table of Contents
81
Table of Contents
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 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | 2,040,000 | 23.6 | % | |||||
Bennett Restructuring Fund, L.P.(3) 2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | 1,206,000 | 14.0 | % | |||||
Bennett Offshore Restructuring Fund, Inc.(4) 2 Stamford Plaza, Suite 1501 Stamford, Connecticut 06901 | 730,000 | 8.4 | % | |||||
Blackport Capital Fund, Ltd.(5) 345 Park Avenue, 31st Floor New York, New York 10154 | 690,000 | 8.0 | % | |||||
J.W. Childs Equity Partners II, L.P.(6) 111 Huntington Avenue, Suite 2900 Boston, Massachusetts 02199 | 687,641 | 8.0 | % | |||||
Morgan Keegan Select Fund, Inc.(7) 50 North Front Street Memphis, Tennessee 38103 | 1,223,200 | 14.2 | % | |||||
Regions Morgan Keegan Select High Income Fund, Inc.(8) 50 North Front Street Memphis, Tennessee 38103 | 451,000 | 5.2 | % | |||||
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 | — | — | ||||||
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 | — | — |
82
Table of Contents
Amount and Nature | Percentage of | |||||||
of Beneficial | Common Stock | |||||||
Ownership of | Beneficially | |||||||
Names and Addresses of Beneficial Owners | Common Stock(1) | Owned(1) | ||||||
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. | |
(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 |
83
Table of Contents
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/D12/9/2004, 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. |
84
Table of Contents
Number of Shares | ||||||||||||
Remaining Available for | ||||||||||||
Number of Shares to | Future Issuance Under | |||||||||||
be Issued Upon | Weighted Average | Equity Compensation | ||||||||||
Exercise of | Exercise Price of | Plans (Excluding Shares | ||||||||||
Outstanding Options | Outstanding Options | Reflected in Column (a)) | ||||||||||
Plan Category | (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. |
85
Table of Contents
86
Table of Contents
• | 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 | |
• | ranks equally in right of payment with all existing and future Pari Passu Indebtedness of the Guarantor. |
87
Table of Contents
88
Table of Contents
89
Table of Contents
90
Table of Contents
91
Table of Contents
92
Table of Contents
93
Table of Contents
Year | Redemption Price | |||
2008 | 103.00 | % | ||
2009 and thereafter | 102.00 | % |
94
Table of Contents
95
Table of Contents
96
Table of Contents
97
Table of Contents
98
Table of Contents
99
Table of Contents
100
Table of Contents
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
107
Table of Contents
108
Table of Contents
109
Table of Contents
110
Table of Contents
111
Table of Contents
112
Table of Contents
113
Table of Contents
114
Table of Contents
115
Table of Contents
116
Table of Contents
117
Table of Contents
118
Table of Contents
119
Table of Contents
120
Table of Contents
121
Table of Contents
122
Table of Contents
123
Table of Contents
124
Table of Contents
125
Table of Contents
126
Table of Contents
127
Table of Contents
128
Table of Contents
129
Table of Contents
130
Page Number | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-7 – F-38 | ||||
F-39 | ||||
F-40 | ||||
F-41 | ||||
F-42 | ||||
F-43 | ||||
F-44 – F-67 |
F-1
Table of Contents
F-2
Table of Contents
(DEBTOR ANDDEBTOR-IN-POSSESSION)
2007 | 2006 | |||||||
(Amounts in thousands, except share data) | ||||||||
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 | |||||
F-3
Table of Contents
(DEBTOR ANDDEBTOR-IN-POSSESSION)
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Amounts in thousands, except per share data) | ||||||||||||
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 |
F-4
Table of Contents
(DEBTOR ANDDEBTOR-IN-POSSESSION)
FOR THE YEARS ENDED JUNE 30, 2007, 2006 AND 2005
Accumulated | ||||||||||||||||||||||||
Additional | Other | Retained | ||||||||||||||||||||||
Common Stock | Paid-in | Comprehensive | Earnings | |||||||||||||||||||||
Shares | Amount | Capital | Gain (Loss) | (Deficit) | Total | |||||||||||||||||||
(Amounts in thousands, except share data) | ||||||||||||||||||||||||
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 | ) | |||||||||||
F-5
Table of Contents
(DEBTOR ANDDEBTOR-IN-POSSESSION)
Years Ended June 30, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
(Amounts in thousands) | ||||||||||||
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
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 | |||
F-8
Table of Contents
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
a. | CONSOLIDATED FINANCIAL STATEMENTS |
b. | USE OF ESTIMATES |
c. | REVENUE RECOGNITION |
d. | CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS |
e. | TRADE ACCOUNTS RECEIVABLES |
F-9
Table of Contents
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 |
g. | DEFERRED FINANCING COSTS |
h. | SHARE-BASED COMPENSATION |
F-10
Table of Contents
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 | ) |
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 |
F-11
Table of Contents
j. | INCOME TAXES |
k. | COMPREHENSIVE INCOME (LOSS) |
l. | LOSS PER COMMON SHARE |
F-12
Table of Contents
m. | FAIR VALUE OF FINANCIAL INSTRUMENTS |
n. | NEW PRONOUNCEMENTS |
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 | ||||
F-13
Table of Contents
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 | ||||
7. | GOODWILL AND OTHER INTANGIBLE ASSETS |
F-14
Table of Contents
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. |
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 |
F-15
Table of Contents
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 | |||||
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. |
F-16
Table of Contents
10. | NOTES PAYABLE |
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-17
Table of Contents
2008 | $ | 5,737 | ||
2009 | 636 | |||
2010 | 167 | |||
2011 | 180 | |||
2012 | 300,057 | |||
$ | 306,777 | |||
F-18
Table of Contents
11. | LEASE OBLIGATIONS, COMMITMENTS AND CONTINGENCIES |
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-19
Table of Contents
F-20
Table of Contents
12. | CAPITAL STOCK |
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 |
F-21
Table of Contents
Remaining | ||||||||||||||||
Weighted Average | Options | Total Options | Contractual | |||||||||||||
Exercise Price 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 | |||||||||||||||
13. | INCOME TAXES |
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 | |||||
F-22
Table of Contents
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 | )% | ||||||
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-23
Table of Contents
14. | RETIREMENT SAVINGS PLAN |
15. | LOSS PER COMMON SHARE |
16. | INVESTMENTS IN AND TRANSACTIONS WITH PARTNERSHIPS |
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 | ||||
F-24
Table of Contents
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 | ||||||
17. | RELATED PARTY TRANSACTIONS |
18. | SEGMENT INFORMATION |
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 |
F-25
Table of Contents
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-26
Table of Contents
19. | RESULTS OF QUARTERLY OPERATIONS (Unaudited) |
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 | ) |
20. | HEDGING ACTIVITIES |
21. | PRO FORMA FRESH-START BALANCE SHEET (Unaudited) |
F-27
Table of Contents
F-28
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 | ||||||||
F-29
Table of Contents
(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. | |
(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. |
22. | SUPPLEMENTAL CONDENSED CONSOLIDATED FINANCIAL INFORMATION |
F-30
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-31
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-32
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-33
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-34
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-35
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-36
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-37
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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 | ||||||||||||
F-38
Table of Contents
Balance at | Balance at | |||||||||||||||||||
Beginning of | Charges to | Charges to | End of | |||||||||||||||||
Year | Expenses | Revenues | Other | Year | ||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||
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. |
F-39
Table of Contents
Successor | Predecessor | ||||||||
September 30, | June 30, | ||||||||
2007 | 2007 | ||||||||
(Amounts in thousands, | |||||||||
except share data) | |||||||||
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 | ||||||
F-40
Table of Contents
Successor | Predecessor | ||||||||||||
Two | One | Three | |||||||||||
Months | Month | Months | |||||||||||
Ended | Ended | Ended | |||||||||||
September 30, | July 31, | September 30, | |||||||||||
2007 | 2007 | 2006 | |||||||||||
(Amounts in thousands, except per share data) | |||||||||||||
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 |
F-41
Table of Contents
Accumulated | ||||||||||||||||||||||||
Additional | Other | |||||||||||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | |||||||||||||||||||||
Shares | Amount | Capital | Income | Deficit | Total | |||||||||||||||||||
(Amounts in thousands, except share data) | ||||||||||||||||||||||||
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 | ||||||||||||
F-42
Table of Contents
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
Successor | Predecessor | ||||||||||||
Two | One | Three | |||||||||||
Months | Month | Months | |||||||||||
Ended | Ended | Ended | |||||||||||
September 30, | July 31, | September 30, | |||||||||||
2007 | 2007 | 2006 | |||||||||||
(Amounts in thousands) | |||||||||||||
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 |
F-43
Table of Contents
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-44
Table of Contents
Predecessor | ||||
June 30, | ||||
2007 | ||||
Senior subordinated notes payable | $ | 194,500 | ||
Accrued interest expense | 11,204 | |||
$ | 205,704 | |||
F-45
Table of Contents
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 from August 3, 2007, the date the shares first traded after consummation of the confirmed plan of reorganization, through September 30, 2007. 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 primarily relied on this valuation method because (i) orderly observable trading activity in the common stock, though limited in volume, did take place, (ii) the trading activity did not indicate that the transactions were forced or distressed sales, and (iii) as articulated by the hierarchy of inputs set forth in SFAS 157, observable inputs (regardless as to whether an active market exists) generally are more useful in calculating fair value than unobservable inputs, which require a reporting entity to develop its own assumptions. |
F-46
Table of Contents
• | 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. |
F-47
Table of Contents
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 | |||||||||
F-48
Table of Contents
(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). | |
• | 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-49
Table of Contents
3. | INTERIM FINANCIAL STATEMENTS |
4. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
5. | GOODWILL AND OTHER INTANGIBLE ASSETS |
F-50
Table of Contents
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 | |||||||||
Managed care contracts | 30 years | |||
Wholesale contracts | 5 to 7 years |
6. | NOTES PAYABLE |
F-51
Table of Contents
7. | EQUITY AND SHARE-BASED COMPENSATION |
F-52
Table of Contents
• | 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. |
8. | INCOME TAXES |
F-53
Table of Contents
9. | SEGMENT INFORMATION |
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 |
F-54
Table of Contents
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 |
10. | NEW PRONOUNCEMENTS |
11. | HEDGING ACTIVITIES |
F-55
Table of Contents
12. | COMPREHENSIVE LOSS |
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 | ) | ||||
13. | (LOSS) INCOME PER COMMON SHARE |
14. | FAIR VALUE MEASUREMENTS |
F-56
Table of Contents
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. |
15. | COMMITMENTS AND CONTINGENCIES |
F-57
Table of Contents
F-58
Table of Contents
16. | SUPPLEMENTAL CONDENSED CONSOLIDATING FINANCIAL INFORMATION |
F-59
Table of Contents
SEPTEMBER 30, 2007
(Successor)
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-60
Table of Contents
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-61
Table of Contents
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-62
Table of Contents
FOR THE ONE MONTH ENDED JULY 31, 2007
(Predecessor)
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-63
Table of Contents
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Elimination | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-64
Table of Contents
FOR THE TWO MONTHS ENDED SEPTEMBER 30, 2007
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-65
Table of Contents
FOR THE ONE MONTH ENDED JULY 31, 2007
(Predecessor)
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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-66
Table of Contents
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2006
(Predecessor)
Guarantor | Non-Guarantor | |||||||||||||||||||||||
Holdings | InSight | Subsidiaries | Subsidiaries | Eliminations | Consolidated | |||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||||||||
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 | ||||||||||||
F-67
Table of Contents
Table of Contents
Item 13. | Other Expenses of Issuance and Distribution. |
Item | Amount | |||
SEC registration fee | $ | 76.75 | ||
Printing and engraving expenses | $ | 150,000.00 | ||
Legal fees and expenses | $ | 118,000.00 | ||
Accounting fees and expenses | $ | 97,775.00 | ||
Miscellaneous expenses | $ | — |
* | To be filed by amendment. |
Item 14. | Indemnification of Directors and Officers. |
II-1
Table of Contents
Item 15. | Recent Sales of Unregistered Securities. |
II-2
Table of Contents
Item 16. | Exhibits. |
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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm S-4, filed on October 28, 2005. | ||
*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 onForm 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 onForm 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 onForm 10-K, filed on September 21, 2007. | ||
5 | .1 | Opinion of Kaye Scholer LLP, filed herewith. | ||
*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 onForm 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 onForm 8-K, filed on July 8, 2005. |
II-3
Table of Contents
Exhibit | ||||
Number | Description and References | |||
*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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 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 onForm 10-K, filed on September 21, 2007. | ||
*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 onForm 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 onForm 8-K, filed on October 31, 2007. | ||
*12 | .1 | Computation of Ratio of Earnings to Fixed Charges, previously filed and incorporated herein by reference from InSight’s Registration Statement onForm S-1, filed on December 7, 2007. | ||
*21 | .1 | Subsidiaries of the Company, previously filed and incorporated herein by reference from the Company’s Annual Report onForm 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 onForm 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 onForm S-4, filed on September 28, 2007. |
* | Previously filed |
Item 17. | Undertakings. |
II-4
Table of Contents
II-5
Table of Contents
INSIGHT HEALTH SERVICES HOLDINGS CORP.
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer of each of the foregoing entities |
Signature | Title | Date | ||||
/s/ Richard Nevins Richard Nevins | Interim Chief Executive Officer and Director (Principal Executive Officer) | December 26, 2007 | ||||
/s/ Mitch C. Hill Mitch C. Hill | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | December 26, 2007 | ||||
/s/ Wayne B. Lowell Wayne B. Lowell | Chairman of the Board and Director | December 26, 2007 | ||||
/s/ Eugene Linden Eugene Linden | Director | December 26, 2007 | ||||
/s/ James A. Ovenden James A. Ovenden | Director | December 26, 2007 | ||||
/s/ Keith E. Rechner Keith E. Rechner | Director | December 26, 2007 |
II-6
Table of Contents
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer of each of the foregoing entities |
Signature | ||||
/s/ Richard Nevins Richard Nevins | Interim Chief Executive Officer and sole Director (principal executive officer) of each the foregoing entities | |||
/s/ Mitch C. Hill Mitch C. Hill | Executive Vice President and Chief Financial Officer (principal financial and accounting officer) of each the foregoing entities |
II-7
Table of Contents
By: | InSight Health Corp., its general partner | |
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer |
Signature | ||||
/s/ Richard Nevins Richard Nevins | Interim Chief Executive Officer and sole Director of InSight Health Corp., its general partner (principal executive officer) | |||
/s/ Mitch C. Hill Mitch C. Hill | Executive Vice President and Chief Financial Officer of InSight Health Corp., its general partner (principal financial and accounting officer) |
II-8
Table of Contents
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer |
Signature | ||||
/s/ Richard Nevins 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 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) |
II-9
Table of Contents
CENTER, LLC
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer |
Signature | ||||
/s/ Richard Nevins Richard Nevins | Interim Chief Executive Officer and sole Director of InSight Health Corp., its sole member (principal executive officer) | |||
/s/ Mitch C. Hill Mitch C. Hill | Executive Vice President and Chief Financial Officer of InSight Health Corp., its sole member (principal financial and accounting officer) |
II-10
Table of Contents
By: | /s/ Richard Nevins |
Title: | Manager |
Signature | ||||
/s/ Richard Nevins Richard Nevins | Manager (principal executive officer) | |||
/s/ Mitch C. Hill Mitch C. Hill | Manager (principal financial and accounting officer) |
II-11
Table of Contents
By: | Comprehensive Medical Imaging, Inc. and |
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer |
Signature | ||||
/s/ Richard Nevins 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 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) |
II-12
Table of Contents
THUNDERBIRD, LLC
By: | Comprehensive Medical Imaging Centers, Inc., its sole member | |
By: | /s/ Richard Nevins |
Title: | Interim Chief Executive Officer |
Signature | ||||
/s/ Richard Nevins 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 Mitch C. Hill | Executive Vice President and Chief Financial Officer of Comprehensive Medical Imaging Centers, Inc., its sole member (principal financial and accounting officer) |
II-13