SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 2, 2002
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CONCENTRA OPERATING CORPORATION
(Exact name of Registrant as specified in its charter)
Nevada 001-15699 75-2822620
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification Number)
5080 Spectrum Drive
Suite 400 - West Tower 75001
Addison, Texas (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (972) 364-8000
Not Applicable
(former address if changed since last report)
Item 2. Acquisition or Disposition of Assets
On December 2, 2002, Concentra Operating Corporation's parent company,
Concentra Inc. ("Concentra Holding"), completed the acquisition of Em3
Corporation ("Em3"), a privately-held company located in Addison, Texas, in a
transaction valued at $30.7 million. Under the terms of the transaction,
Concentra Holding issued approximately $30.1 million of its common stock for
Em3's assets and liabilities. Concurrent with this acquisition, Concentra
Holding contributed the Em3 assets and liabilities to Concentra Operating
Corporation (the "Company") and repaid $0.6 million of Em3's indebtedness to its
largest stockholder, Welsh, Carson, Anderson & Stowe ("WCAS"). This repayment
was financed through existing cash on hand and by borrowing under the Company's
existing revolving credit line. Because there has been no active trading market
for Concentra Holding's common stock, the Board of Directors relied upon
independent valuation analyses, internal financial analyses and negotiation with
the principal shareholders of Em3 to determine the fair value of the Concentra
Holding's common stock and number of shares to issue in the transaction.
Since its inception in 2000, Em3 established a nationwide network of
primary care physicians specializing in occupational healthcare. Its approach to
the integration and management of workers' compensation care attracted several
large national employers as its clients. Em3's business is complementary in
nature to the Company's businesses. Em3 had revenue of $174,000 for the nine
months ended September 30, 2002.
On December 2, 2002, Concentra Holding also acquired the assets and
liabilities of OccMed Systems, Inc. ("OccMed"), a privately-held company located
in Addison, Texas, in a transaction valued at $16.6 million. Under the terms of
the transaction, Concentra Holding issued approximately $12.8 million of its
common stock for OccMed's assets and liabilities. Concurrent with this
acquisition, Concentra Holding contributed the OccMed assets and liabilities to
the Company and repaid $1.0 million of OccMed's indebtedness to its largest
stockholder, WCAS, and $2.8 of other indebtedness. This repayment was financed
through existing cash on hand and by borrowing under the Company's existing
revolving credit line. Because there has been no active trading market for
Concentra Holding's common stock, the Board of Directors relied upon independent
valuation analyses, internal financial analyses and negotiation with the
principal shareholders of OccMed to determine the fair value of the Company's
common stock and number of shares to issue in the transaction.
OccMed, established in 2001, developed 12 occupational healthcare centers
across six geographic markets in the United States. When integrated into the
Company's existing national network of health centers, the acquisition will
increase the Company's total number of centers to 244. OccMed had revenue of
$7.1 million for the nine months ended September 30, 2002.
Because the Company is controlled by its primary shareholder, WCAS, and
because WCAS also owned approximately 66% of Em3 and 69% of OccMed, the
acquisitions of Em3 and OccMed are treated as a reorganization of entities under
common control for accounting purposes. Accordingly, the Company will carry over
at the historical costs 66% and 69%, respectively, of the assets and liabilities
of Em3 and OccMed. The remaining 34% of Em3 and 31% of OccMed assets and
liabilities acquired will be accounted for under the purchase method of
accounting in accordance with Statement of Financial Accounting Standards No.
141, "Business Combinations," whereby assets and liabilities are recorded at
fair value; any purchase price in excess of the amounts allocated to
identifiable intangible assets acquired will be allocated to goodwill. As these
acquisitions will be accounted for in a manner similar to a pooling, the Company
will retroactively restate its historical financial statements to consolidate
the historical results of Em3 and OccMed beginning with the periods the entities
were under the control of WCAS, which were 2000 and 2001, respectively. The
equity interests of other investors, which are 34% for Em3 and 31% for OccMed,
will be reflected as a "minority interest" in the Company's financial statements
for periods prior to the date of acquisition. The effective date of these
acquisitions is December 1, 2002.
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Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Financial statements of Em3 will be provided by amendment to this Current
Report by February 17, 2003. Financial statements for OccMed will not be
provided because OccMed is not considered a significant business as defined
by Article 11-01(b) of Regulation S-X.
(b) Pro forma financial information
Pro forma financial information will be provided by amendment to this
Current Report by February 17, 2003.
(c) Exhibits
2.1 Asset Purchase Agreement by and among Concentra Inc., Concentra Operating
Corporation, and Em3 Corporation, dated as of December 1, 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONCENTRA OPERATING CORPORATION
(Registrant)
By: /s/ Richard A. Parr II
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Name: Richard A. Parr II
Title: Executive Vice President, General Counsel
& Secretary
Date: December 13, 2002
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INDEX TO EXHIBITS
EXHIBIT
NUMBER
2.1 Asset Purchase Agreement by and among Concentra Inc., Concentra Operating
Corporation, and Em3 Corporation, dated as of December 1, 2002.
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