UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED : SEPTEMBER 30, 1997
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COMMISSION FILE NUMBER: 0-16334
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ALLIANCE IMAGING, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 33-0239910
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
1065 NORTH PACIFICENTER DRIVE
SUITE 200
ANAHEIM, CALIFORNIA 92806
--------------------------
(Address of principal executive office)
(714) 688-7100
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Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934,
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1997:
Common Stock, $.01 par value, 11,023,344
ALLIANCE IMAGING, INC.
FORM 10-Q
September 30, 1997
Index
Page
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PART I - FINANCIAL INFORMATION
Item 1 - Condensed Financial Statements:
Condensed Consolidated Balance Sheets 3
September 30, 1997 and December 31, 1996
Condensed Consolidated Statements of Income 4
Three and nine months ended September 30, 1997 and 1996
Condensed Consolidated Statements of Cash Flows 5
Nine months ended September 30, 1997 and 1996
Notes to Condensed Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis 10
of Financial Condition and Results of
Operations
PART II - OTHER INFORMATION 18
SIGNATURES 26
ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
1997 1996*
---- -----
(UNAUDITED)
ASSETS
Current assets:
Cash and short-term investments $ 10,557,000 $ 10,867,000
Accounts receivable, net of allowance for doubtful accounts 10,597,000 8,889,000
Prepaid expenses 997,000 710,000
Other receivables 115,000 345,000
------------ ------------
Total current assets 22,266,000 20,811,000
Equipment, at cost 152,113,000 121,354,000
Less--Accumulated depreciation (52,511,000) (43,735,000)
------------ ------------
99,602,000 77,619,000
Goodwill 26,657,000 27,990,000
Deposits and other assets 3,098,000 2,090,000
------------ ------------
Total assets $151,623,000 $128,510,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,039,000 $ 1,765,000
Accrued compensation and related expenses 3,399,000 3,465,000
Other accrued liabilities 11,268,000 6,341,000
Current portion of long-term debt 20,476,000 16,323,000
------------ ------------
Total current liabilities 38,182,000 27,894,000
Long-term debt, net of current portion 62,597,000 72,702,000
Other liabilities 2,188,000 2,029,000
Deferred income taxes 4,831,000 4,831,000
Redeemable preferred stock - 4,694,000
Non-redeemable preferred and common stockholders' equity:
Convertible preferred stock 18,000,000 388,000
Common stock 110,000 109,000
Additional paid-in capital 36,561,000 34,404,000
Accumulated deficit (10,846,000) (18,541,000)
------------ ------------
Total non-redeemable preferred and common stockholders' equity 43,825,000 16,360,000
------------ ------------
Total liabilities and stockholders' equity $151,623,000 $128,510,000
------------ ------------
------------ ------------
*Derived from audited financial statements
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenues $22,374,000 $17,795,000 $62,285,000 $49,097,000
Cost and expenses:
Operating expenses, excluding depreciation 9,684,000 8,530,000 27,499,000 23,549,000
Depreciation expense 4,078,000 3,122,000 11,222,000 9,170,000
Selling, general and administrative expenses 2,261,000 1,719,000 6,251,000 4,879,000
Amortization expense, primarily goodwill 602,000 564,000 1,767,000 1,309,000
Interest expense, net of interest income 1,758,000 1,501,000 5,315,000 4,184,000
----------- ----------- ----------- -----------
Total costs and expenses 18,383,000 15,436,000 52,054,000 43,091,000
----------- ----------- ----------- -----------
Income before income taxes and extraordinary gain 3,991,000 2,359,000 10,231,000 6,006,000
Provision for income taxes 1,355,000 410,000 3,480,000 955,000
----------- ----------- ----------- -----------
Income before extraordinary gain 2,636,000 1,949,000 6,751,000 5,051,000
Extraordinary gain, net of taxes - - 1,332,000 -
----------- ----------- ----------- -----------
Net income 2,636,000 1,949,000 8,083,000 5,051,000
Less: Preferred stock dividends - (238,000) - (706,000)
Add: Excess of carrying amount of preferred stock
repurchased over consideration paid - - 1,906,000 -
----------- ----------- ----------- -----------
Income applicable to common stock $ 2,636,000 $ 1,711,000 $ 9,989,000 $ 4,345,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average common and common equivalent
shares outstanding 15,130,000 11,558,000 14,028,000 11,463,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share:
Income before items below $ 0.17 $ 0.15 $ 0.48 $ 0.38
Excess of carrying amount of preferred stock
repurchased over consideration paid - - 0.14 -
----------- ----------- ----------- -----------
Income before extraordinary gain 0.17 0.15 0.62 0.38
Extraordinary gain, net of taxes - - 0.09 -
----------- ----------- ----------- -----------
Income applicable to common stock $ 0.17 $ 0.15 $ 0.71 $ 0.38
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
---- ----
OPERATING ACTIVITIES
Net income $ 8,083,000 $ 5,051,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary gain (1,332,000) -
Depreciation and amortization 12,989,000 10,479,000
Amortization of deferred financing charges 42,000 325,000
Distributions in excess of (undistributed) income
of investee 85,000 (74,000)
Changes in operating assets and liabilities:
Accounts receivable, net (1,630,000) (1,696,000)
Prepaid expenses (287,000) (566,000)
Other receivables 230,000 247,000
Other assets (1,302,000) (31,000)
Accounts payable, accrued compensation and
other accrued liabilities 5,053,000 2,496,000
Other liabilities 159,000 1,117,000
----------- -----------
Net cash provided by operating activities 22,090,000 17,348,000
INVESTING ACTIVITIES:
Equipment purchases (32,940,000) (20,504,000)
Decrease in deposits on equipment 150,000 1,297,000
Purchase of contracts and related assets of Mobile
M.R. Venture, Ltd. - (455,000)
Purchase of common stock of Royal Medical
Health Services, Inc., net of cash acquired - (1,844,000)
Purchase of common stock of Sun MRI
Services, Inc., net of cash acquired - (269,000)
Purchase of contracts and related assets of
West Coast Mobile Imaging - (90,000)
Purchase of MRI contracts and related assets of
Pacific Medical Imaging, Inc. (756,000) -
----------- -----------
Net cash used in investing activities (33,546,000) (21,865,000)
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
---- ----
FINANCING ACTIVITIES:
Payment of preferred stock dividends (653,000) (930,000)
Repurchase of senior subordinated debentures (2,286,000) -
Repurchase of Series A preferred stock (2,523,000) -
Principal payments on long-term debt (14,324,000) (9,567,000)
Proceeds from long-term debt 25,782,000 15,618,000
Proceeds from senior bridge loan 5,128,000 -
Proceeds from exercise of employee stock options 22,000 21,000
Increase in deferred financing charges - (76,000)
------------ -----------
Net cash provided by financing activities 11,146,000 5,066,000
------------ -----------
Net (decrease) increase in cash and short-term
investments (310,000) 549,000
Cash and short-term investments, beginning of period 10,867,000 11,128,000
------------ -----------
Cash and short-term investments, end of period $10,557,000 $11,677,000
------------ -----------
------------ -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ 5,562,000 $ 4,176,000
Income taxes paid 337,000 307,000
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Conversion of senior bridge loan into Series D 4%
convertible preferred stock $18,000,000 -
Conversion of Series C 5% convertible preferred stock into
common stock $ 388,000 -
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6
Alliance Imaging, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(Unaudited)
1. BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by Alliance Imaging, Inc. ("Alliance" or "the Company")
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of the Company, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine month period ended September 30,
1997, are not necessarily indicative of the results that may be expected
for the year ending December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1996.
The earnings per common share for the nine month periods ended
September 30, 1997 and 1996 are based upon weighted average common and
common equivalent shares outstanding during the period. For the nine month
period ended September 30, 1996, common equivalent shares include the
dilutive effect of stock options with an exercise price lower than current
market value and reflect preferred dividend requirements of $706,000. For
the nine month period ended September 30, 1997, common equivalent shares
include the dilutive effect of warrants and stock options with exercise
prices lower than current market value, as well as the assumed conversion
of the Series D convertible preferred stock into common shares.
Supplemental earnings per share for the nine months ended September 30,
1997 based on historical earnings per share adjusted assuming the
conversion of the senior bridge loan into Series D convertible preferred
stock had occurred on January 1, 1997 is $0.47 per share. This calculation
ignores amounts reported in the 1997 historical results as gain arising
from the repurchase of the senior subordinated debentures and the earnings
per share benefit arising from the excess of carrying value of the
preferred stock repurchased over the consideration paid. Therefore, this
supplemental earnings per share calculation is the most comparable to the
$0.48 per share "income before items below" reported in the Company's first
nine months ended 1997 historical results of operations.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share", which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change
the method currently used to compute earnings per share and to restate all
prior periods. Under the new requirements for calculating basic earnings
per share, the dilutive effect of stock options, warrants and the Series D
convertible preferred stock will be excluded. The impact is expected to
result in an increase to basic earnings per share for the nine months ended
September 30, 1997 and 1996 of $.10 and $.02, per share respectively.
7
Alliance Imaging, Inc.
Notes to Condensed Consolidated Financial Statements (continued)
September 30, 1997
(Unaudited)
The provisions for income taxes for the nine month periods ended September
30, 1997 and 1996 are less than the statutory federal rate due to
utilization of certain net operating loss carryforwards during the periods.
2. SUBSEQUENT EVENT
On July 23, 1997, Alliance entered into an Agreement and Plan of
Merger as amended, (the "Recapitalization Merger Agreement"). Under the
terms of the Recapitalization Merger Agreement, an entity formed by
affiliates of Apollo Management, L.P. (collectively, "Apollo") will merge
with and into Alliance (the "Recapitalization"). Each share of Alliance
common stock, par value $.01 per share, issued and outstanding immediately
prior to the effective time of the Recapitalization, other than dissenting
shares, either (1) will be converted into the right to receive $11.00 in
cash or (2) will be retained by such stockholder. The Recapitalization
Merger Agreement requires that 409,091 shares in the aggregate of common
stock be retained by Alliance's existing stockholders; therefore, the right
to receive either $11.00 in cash for each share or to retain that share of
Alliance common stock is subject to proration.
The proposed Recapitalization is subject to stockholder approval.
However, pursuant to a Stockholder Agreement, stockholders representing
beneficial ownership of not less than 54.4% of Alliance common stock (the
"Stockholders") have agreed to vote all shares beneficially owned by them
in favor of the approval of the Recapitalization Merger Agreement and the
Recapitalization and to convert or exercise all securities they hold that
are convertible into or exercisable for shares of Alliance common stock
prior to the time of the special meeting of shareholders called in
connection with the Recapitalization. In addition, each Stockholder has
granted to Apollo an option to acquire their shares of common stock, and a
proxy to vote such shares in favor of the Recapitalization. At the closing
of the Recapitalization, significant new sources of financing will be
provided to Alliance for the purchase of shares of common stock in the
Recapitalization, repayment of indebtedness, and for working capital
purposes, among other uses.
The Recapitalization Merger Agreement originally contemplated that, in
connection with the closing of the Recapitalization, Alliance would also
acquire all of the capital stock of the parent corporation of SMT Health
Services Inc. ("SMT") from Apollo, in exchange for additional shares of
Alliance common stock. The Recapitalization Merger Agreement has been
amended to eliminate that transaction; as a result, SMT will not be
acquired by Alliance in connection with the Recapitalization, and instead
will remain an independent company owned by Apollo.
8
Alliance Imaging, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 1997
(Unaudited)
After the consummation of the Recapitalization, the Company will adopt a
new employee stock option plan pursuant to which options (the "New Options")
with respect to a total of, 454,545 shares of Alliance common stock (the "New
Option Shares") will be available for grant. The New Option Shares will be
allocated in amounts agreed upon between Apollo and the Company. Of the new
Option Shares, 50% will vest in equal increments over four years ending on the
fourth anniversary of the last day of the consummation of the Recapitalization.
The remaining 50% will vest seven and one-half years after the date of grant,
subject to acceleration if certain per-share equity targets are achieved.
Vesting of New Options occurs only during an employee's term of employment. The
exercise price for the New Options is expected to be at the fair market value
at a grant date (i.e., $11.00 per share at the consummation of the
Recapitalization).
As a part of the new financing to be provided, Alliance plans to sell $165
million of Senior Subordinated Notes (the "Notes") in an underwritten public
offering. The Notes are to be unconditionally guaranteed, on a senior
subordinated basis, jointly and severally, by all significant direct and
indirect consolidated subsidiaries of Alliance, which consist of Royal Medical
Health Services, Inc., Alliance Imaging of Central Georgia, Inc., Alliance
Imaging of Ohio, Inc. and Alliance Imaging of Michigan, Inc.
On October 20, 1997 the Company announced execution of a definitive
agreement to acquire Medical Consultants Imaging Co. ("MCIC"), a Cleveland,
Ohio based provider of mobile MRI services, CT services and other outsourced
healthcare services. The acquisition also includes MCIC's one-half interest in
an operating joint venture in Michigan. The purchase price consists of $13
million cash (subject to certain reductions) plus the assumption of
approximately $5 million in financing arrangements. MCIC operates 14 mobile MRI
systems and several other diagnostic imaging systems, primarily in Ohio,
Michigan, Indiana and Pennsylvania. The transaction is expected to close in
November 1997.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
OVERVIEW
The Company is a leading nationwide provider of diagnostic imaging services
and related outsourced radiology services. The Company primarily provides
magnetic resonance imaging (MRI) systems and services to hospitals and other
health care providers on a mobile, shared user basis. The Company also provides
dedicated, full-time MRI systems and services as well as full-service management
of imaging operations for selected hospitals. The Company's services enable
small to mid-size hospitals to gain access to advanced diagnostic imaging
technology and related value-added services without making a substantial
investment in equipment and personnel. The Company operates a fleet of 95 MRI
systems and services over 355 MRI customers in 36 states under exclusive
contracts with average remaining length of approximately 24 months as of
September 30, 1997.
The Company's revenues are principally a function of the number of systems
in service, scan volumes and fees per scan. The Company generates substantially
all of its revenues under exclusive one to eight-year contracts with hospitals
and health care providers. The Company's contracts typically offer tiered
pricing with lower fees per scan on incremental scans, allowing customers to
benefit from increased scan volumes and the Company to benefit from the
operating leverage associated with increased scan volumes.
The Company also provides CT services and imaging systems. Revenues from
CT services and imaging systems accounted for less than 5% of the Company's
revenues for the year ended December 31, 1996.
The principal components of the Company's operating costs include salaries
paid to technologists and drivers, annual system maintenance costs, insurance
and transportation costs. Because a majority of these expenses are fixed,
increased revenues as a result of higher scan volumes significantly improve the
Company's profitability while lower scan volumes result in lower profitability.
Among other things, the Company is subject to the risk that customers will
cease using the Company's MRI services, upon expiration of contracts, to
purchase or lease their own MRI systems. In the past, when this has occurred,
the Company has generally been able to obtain replacement customers. However,
it is not always possible to immediately obtain replacement customers, and some
replacement customers have been smaller facilities and have had lower scan
volumes.
The health care industry is highly regulated and very competitive. The
current health care environment is characterized by cost containment pressures
which management believes have resulted in decreasing revenues per scan.
Although scan prices appear to have stabilized, the Company expects modest
continuing downward pressure on pricing levels. However, in many cases higher
scan volumes associated with new customer contracts justify lower scan prices
and
10
such contracts do not adversely impact the Company's revenues and profitability.
Although the Company has experienced increased scan volumes in 1995, 1996, and
in the first nine months of 1997, it has also had periods of declining volumes
in earlier years, and there can be no assurance that the recent positive trends
will continue.
The Company has implemented numerous cost containment and efficiency
measures to reduce operating, payroll and selling, general and administrative
costs. It has also developed a new marketing plan to refocus and expand its
sales and marketing efforts, and has substantially upgraded its MRI systems over
the last few years. Additionally, the Company continues to evaluate the
profitability of certain existing customer relationships with a view toward
eliminating unprofitable accounts.
The Company's ongoing equipment trade-in and upgrade program has
substantially improved the marketability and productivity of its MRI and
computed axial tomography (CT) systems. The Company periodically evaluates its
older, less marketable MRI systems to determine if it is more beneficial for
them to continue in profitable, although reduced, revenue service, or to trade
in such equipment in connection with new system purchases. The Company expects
to operate its few remaining older systems for another one to two years, after
which time such systems will be traded-in or otherwise disposed of.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996 -- Revenues for the first nine months of 1997 were $62,285,000, an increase
of $13,188,000, or 26.9%, over 1996. This increase reflects a scan-based MRI
revenue increase of $11,706,000, or 26.9% ($2,515,000 or 5.8% as a result of MRI
operations acquired subsequent to the first quarter of 1996), resulting from a
29.2% increase in total scan volume partially offset by a 1.8% decrease in the
average revenue realized per MRI scan. The average daily scan volume per MRI
system increased 7.5% to 7.2 from 6.7 in 1996. Management attributes the
volume increase to the Company's continuing MRI systems upgrade program, which
has enabled the Company to obtain new, long-term contracts from both existing
and new customers, and to the effect of marketing programs implemented in early
1997. Management believes the decrease in average revenue realized per scan is
the result of: many customers achieving discount price levels on incremental
scan volumes; obtaining contracts with customers that have high scan volumes
which justify lower scan prices; and continuing competitive pressure in the MRI
service industry and cost containment efforts by health care payers. CT
revenues increased $782,000, or 29.4%, as a result of internal growth and the
fourth quarter 1996 acquisition of a small CT business. Other revenues
increased $548,000 primarily as a result of the implementation in late 1996 of a
program providing management services for a large portfolio of imaging systems
owned by others.
The Company operated 95 MRI systems at September 30, 1997 compared to 86
MRI systems at September 30, 1996. The average number of MRI systems operated
by the Company was 89 during the first nine months of 1997, compared to 84
during the first nine months of 1996.
11
Operating expenses, excluding depreciation, totaled $27,499,000 in the
first nine months of 1997, an increase of $3,950,000, or 16.8%, from the first
nine months of 1996. Payroll and related employee expenses increased
$2,028,000, or 19.1%, primarily as a result of an increase in operating staffing
levels necessary to support revenue growth. Repairs and maintenance expense
increased $477,000, or 40.0%, due to an increased number of systems in service.
Fuel and other vehicle expenses collectively increased $387,000, or 36.8%,
primarily due to increasing fuel prices and the addition of new mobile MRI
systems. Preventative maintenance and cryogen contract expense increased
$186,000, or 2.8%, due to the expiration of the warranties on an increased
number of MRI systems. Other operating expenses (including insurance, site
fees, office expenses, equipment rental, supplies and professional services)
increased $872,000, or 21.0 %, as a result of the increased level of operations.
Depreciation expense during the first nine months of 1997 totaled
$11,222,000, an increase of $2,052,000, or 22.4%, from the 1996 level
principally due to a higher amount of depreciable assets associated with
equipment additions and upgrades. Amortization expense during the first nine
months of 1997 increased $458,000, or 35.0%, over the 1996 period as a result of
goodwill amortization associated with recent business acquisitions.
Selling, general and administrative expenses totaled $6,251,000 in the
first nine months of 1997, an increase of $1,372,000, or 28.1%, from the same
period in 1996. Professional services expenses increased $566,000, or 147.0%,
primarily due to costs associated with increased investor relations efforts and
merger and acquisition activity. Payroll and related expenses increased
$436,000, or 12.0%, primarily as a result of increased staffing levels necessary
to support the Company's increased level of operations. Other expenses increased
primarily as a result of expanded marketing programs and costs associated with
relocating the Company's corporate offices.
Interest expense of $5,315,000 in the first nine months of 1997 was
$1,131,000, or 27.0%, higher than the same period in 1996, as a result of higher
average outstanding debt balances during 1997 as compared to 1996. This
increase was primarily related to the senior bridge loan (which was converted
into Series D convertible preferred stock on March 26, 1997) and to the
financing of several new imaging systems during the first nine months of 1997.
An income tax provision of $3,480,000 was recorded in the first nine months
of 1997, which was higher than the tax provision recorded in the same period in
1996 by $2,525,000, or 264.4%. The increase resulted from the increase in
income before taxes and an increase in the Company's effective tax rate. The
effective income tax rate increased to 34.0% in 1997 from 15.9% in 1996 because
the Company's taxable income in 1997 is expected to exceed remaining available
net operating loss carryforwards.
The Company's income before extraordinary gain was $6,751,000 in the first
nine months of 1997 compared to net income of $5,051,000 in the first nine
months of 1996, an increase of $1,700,000, or 33.7%, primarily attributable to
the increase in revenues achieved without a proportionate increase in costs and
administrative expenses. The Company reported an extraordinary gain, net of
income taxes, in the first quarter of 1997 of $1,332,000 on early extinguishment
of debt in January 1997.
12
Earnings per common share directly related to operations totaled $0.48 in
the first nine months of 1997, compared to earnings per common share of $0.38
for the same period in 1996, an increase of 26.3%. Alliance reported an
extraordinary gain, net of income taxes, in the first quarter of 1997 of
$1,332,000, or $0.11 per common share, on early extinguishment of debt in
January 1997. In addition, Alliance recorded $1,906,000 or $0.16 per common
share related to the excess of the carrying amount of the Series A 6% cumulative
preferred stock repurchased over the consideration paid in January 1997.
Although the preceding earnings per share amounts for the first nine months of
1997 are not representative of operating performance in accordance with
generally accepted accounting principles ("GAAP"), they have been provided to
highlight the significant non-recurring elements contained within the GAAP
earnings per share calculation. Earnings per common share totaled $0.71 in the
first nine months of 1997. The earnings per common share calculations reflect
preferred dividend requirements of $706,000 in the first nine months of 1996 and
none in 1997.
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO QUARTER ENDED SEPTEMBER 30, 1996 --
Revenues for the third quarter of 1997 were $22,374,000, an increase of
$4,579,000, or 25.7%, over the third quarter of 1996. This increase reflects a
scan-based MRI revenue increase of $3,991,000, or 25.2%, resulting from a 27.2%
increase in total scan volume partially offset by a 1.6% decrease in the average
revenue realized per MRI scan. The average daily scan volume per MRI system
increased 7.1% to 7.5 from 7.0 in 1996. Management attributes the volume
increase to: the Company's continuing MRI systems upgrade program, which has
enabled the Company to obtain new, long-term contracts from both existing and
new customers; certain smaller business acquisitions; and to the effect of
recently implemented marketing programs. Management believes the decrease in
average revenue realized per scan is the result of: many customers achieving
discount price levels on incremental scan volumes; obtaining contracts with
customers that have high scan volumes which justify lower scan prices; and
continuing competitive pressure in the MRI service industry and cost containment
efforts by health care payers. CT revenues increased $385,000, or 46.9%, as a
result of internal growth and the fourth quarter 1996 acquisition of a small CT
business. Other revenues increased $248,000 primarily as a result of the
implementation in late 1996 of a program providing management services for a
large portfolio of imaging systems owned by others.
The average number of MRI systems operated by the Company was 93 during the
third quarter of 1997, compared to 88 during the third quarter of 1996.
Operating expenses, excluding depreciation, totaled $9,684,000 in the third
quarter of 1997, an increase of $1,154,000, or 13.5%, from the third quarter of
1996. Payroll and related employee expenses increased $777,000, or 20.2%,
primarily as a result of an increase in operating staffing levels necessary to
support revenue growth. Repairs and maintenance increased $112,000, or 23.8%,
due to an increased number of systems in service. Fuel and other vehicle
expenses collectively increased $98,000, or 22.7%, primarily due to increasing
fuel prices and the addition of new mobile MRI systems. Preventative maintenance
and cryogen contract expense increased $48,000, or 2.3%, due to the expiration
of the warranties on an increased number of MRI systems. Other operating
expenses (including insurance, office
13
supplies, equipment rental, supplies and professional services) increased
$119,000, or 7.7%, as a result of the increased level of operations.
Depreciation expense during the third quarter of 1997 totaled $4,078,000,
an increase of $956,000, or 30.6%, from the 1996 level principally due to a
higher amount of depreciable assets associated with equipment additions and
upgrades. Amortization expense during the third quarter of 1997 increased
$38,000, or 6.7%, over the 1996 period as a result of goodwill amortization
associated with a recent business acquisition.
Selling, general and administrative expenses totaled $2,261,000 in the
third quarter of 1997, an increase of $542,000 or 31.5%, from the same period in
1996. Professional services expenses increased $269,000, or 199.1%, primarily
due to costs associated with increased merger and acquisition activity. Payroll
and related expenses increased $179,000, or 14.5%, primarily as a result of
increased staffing levels necessary to support the Company's increased level of
operations. Other expenses increased primarily as a result of expanded marketing
programs and costs associated with relocating the Company's corporate offices.
Interest expense of $1,758,000 in the third quarter of 1997 was $257,000,
or 17.1%, higher than 1996, as a result of higher average outstanding debt
balances during 1997 as compared to 1996. This increase was primarily related
to financed purchases of new equipment.
An income tax provision of $1,355,000 was recorded in the third quarter of
1997, which was higher than the tax provision recorded in the same period of
1996 by $945,000, or 230.5%. The increase resulted from the increase in income
before taxes and an increase in the Company's effective tax rate. The effective
income tax rate increased to 34.0% in the third quarter of 1997 from 17.4% in
1996 because the Company's taxable income in 1997 is expected to exceed
remaining available net operating loss carryforwards.
The Company's net income was $2,636,000 in the third quarter of 1997
compared to net income of $1,949,000 in the third quarter of 1996, an increase
of $687,000, or 35.2%, primarily attributable to the increase in revenues
achieved without a proportionate increase in costs and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, cash and short-term investments were $10,557,000
compared to $10,867,000 at December 31, 1996, and the aggregate of the Company's
long-term debt was $62,597,000 compared to $72,702,000 at December 31, 1996.
The Company maintains a $3,000,000 revolving line of credit secured by accounts
receivable. This line, which has not been utilized, is intended to act as a
temporary supplement to fund working capital needs.
The Company generated $22,090,000 in net cash from operating activities
during the first nine months of 1997, compared to $17,348,000 for the same
period in 1996, an increase of $4,742,000, or 27.3%. The increase in cash
provided by operating activities reflects the increase in scan volumes and
improved operating performance. Capital expenditures, consisting primarily of
new equipment purchases, totaled $34,175,000 during the first nine months of
1997.
14
During the first three quarters of 1997, The Company has upgraded two MRI
systems and purchased 20 new MRI systems, including replacement systems. As of
December 31, 1996, The Company had binding equipment purchase commitments
totaling approximately approximately $29,200,000. The Company expects to
purchase the equipment under these commitments in 1997 and finance such
purchases with installment debt primarily provided by the equipment
manufacturers.
The Company's primary cash needs consist of capital expenditures and
debt service. The Company incurs capital expenditures for the purposes of
(i) providing routine upgrades of its MRI systems; (ii) replacing or making
major upgrades to older, less advanced systems with new state-of-the-art
systems; and (iii) purchasing new systems. The Company estimates that
routine annual upgrade expenditures average approximately $25,000 per system
or approximately $2,400,000 in the aggregate, based on the fleet size at
September 30, 1997. In addition to these routine expenditures, the Company
expects capital expenditures to be approximately $6,300,000 in the last three
months of 1997, which reflects the anticipated purchase of four new systems,
including replacement systems. The Company expects capital expenditures to be
approximately $20,000,000 in 1998, which includes the anticipated purchase of
10 new MRI systems and routine upgrade expenditures. The Company's decision
to purchase a new system is typically predicated on obtaining new or
extending existing customer contracts which serve as the basis of demand for
the new system.
On December 31, 1996, the Company entered into a Bridge Loan Agreement
(enabling the Company to borrow up to $18,000,000) and borrowed $12,872,000
under a senior bridge loan; an additional $5,128,000 was borrowed on January 2,
1997. The senior bridge loan was convertible into 18,000 shares of a new Series
D 4% convertible preferred stock. On December 31, 1996, the Company used the
proceeds of the senior bridge loan to repurchase $11,345,000 carrying value of
its senior subordinated debentures (Debentures) and $11,071,000 of its Series A
6% redeemable preferred stock at a discount (plus related accrued interest and
dividends). In connection with this transaction, on January 2, 1997, the
Company used the additional senior bridge loan proceeds to repurchase the
remaining balance of its Debentures and Series A redeemable preferred stock at a
discount (plus related accrued interest and dividends). On March 26, 1997, the
holder of the senior bridge loan exercised its option to convert the senior
bridge loan into 18,000 shares of Series D convertible preferred stock. At that
time, senior notes not to exceed $9,000,000 held by the same investor became
convertible into a new Series E convertible preferred stock on or after January
1, 1998. The senior note agreement contains limitations on equipment additions,
incurrence of debt and other similar items.
In connection with the Company's debt refinancing effective December 31,
1996, the Company authorized 18,000 shares of a new Series D convertible
preferred stock and 9,000 shares of a new Series E convertible preferred
stock. The holders of the Series D and E convertible preferred stock, when
issued, are entitled to receive cumulative dividends at the rate of 4% per
annum of the stated liquidation value. Unpaid dividends accumulate and are
payable quarterly by the Company in cash. Shares of Series D convertible
preferred stock are convertible at the option of the holder at any time on or
before December 31, 2006 into shares of common stock at a conversion price of
$6.00 per common share, subject to adjustment. Shares of Series E
convertible preferred stock are convertible at the option of the holder at
any time on or before December 31, 2006 into shares of common stock at a
conversion price of the greater of $6.00 per
15
share of common stock or the market price (as defined) per common share at
date of issuance of the Series E convertible preferred stock. Shares of
Series D and E convertible preferred stock are subject to redemption at the
option of the Company after December 31, 2006. In the event of liquidation,
dissolution or winding up of the Company, the holders of Series D and E
convertible preferred stock shall be entitled to receive an amount equal to
the stated liquidation value per share (plus accumulated but unpaid
dividends) prior to any distributions to common stockholders. No sinking
fund has been or will be established for the retirement or redemption of
shares Series D or E convertible preferred stock.
On August 29, 1997, the Company called for the redemption of its Series C
convertible redeemable preferred stock on September 30, 1997. All of the
holders thereof elected to convert their Series C shares into common stock of
the Company. In addition, in connection with the Recapitalization Merger
Agreement, the holder of all of the outstanding Series D convertible preferred
stock agreed that, in connection with the closing of the Recapitalization, such
stock will be converted into common stock of the Company.
RECAPITALIZATION MERGER -- On July 23, 1997, Alliance entered into an Agreement
and Plan of Merger, as amended, (the "Recapitalization Merger Agreement") with
Newport Investment LLC (the "Investor"), a Delaware limited liability company
and an affiliate of Apollo Management, L.P. ("Apollo"). Pursuant to the
Recapitalization Merger Agreement, at the effective time of the Recapitalization
Merger (the "Recapitalization Effective Time"), a new corporation formed by the
Investor ("Newco") will be merged into Alliance (the "Recapitalization Merger"),
the separate corporate existence of Newco will cease, and Alliance will continue
as the surviving corporation (the "Recapitalization Company"). Pursuant to the
Recapitalization Merger, each share of Alliance common stock, par value $.01
("Common Stock"), issued and outstanding immediately prior to the
Recapitalization Effective Time other than dissenting shares, either (1) will be
converted into the right to receive $11.00 in cash (the "Cash Merger Price"), or
(2) will be retained by such stockholder. Because the Recapitalization Merger
Agreement requires that 409,091 shares in the aggregate of Common Stock be
retained by Alliance's existing shareholders, the right to either receive $11.00
in cash for each share or to retain that share of Alliance Common Stock is
subject to proration, as set forth in the Recapitalization Merger Agreement and
as described in Amendment No. 3 to the Form S-4 (reg. No. 333-33787) filed by
Alliance on or about November 10, 1997 (the "Form S-4").
After the Recapitalization Merger and the Acquisition, affiliates of Apollo
will own approximately 90% of the outstanding Common Stock of Alliance, and
Alliance's existing shareholders will own approximately 10% of the outstanding
Common Stock of Alliance.
In connection with the Recapitalization Merger Agreement, the Investor
entered into a Stockholder Agreement, dated as of July 23, 1997 (the
"Stockholder Agreement"), with certain beneficial owners of shares of Alliance
Common Stock (the "Stockholders") representing beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
approximately 66% of Alliance's Common Stock. Pursuant to the Stockholder
Agreement, the Stockholders have agreed to vote all shares beneficially owned by
them in favor of the approval of the Recapitalization Merger Agreement and the
Recapitalization Merger. The Stockholders that hold securities convertible into
or exercisable for shares of Alliance Common
16
Stock have further agreed to convert or exercise all such securities prior to
the time of the special meeting of shareholders called in connection with the
Recapitalization Merger. In addition, each Stockholder has granted Investor an
option to acquire their shares of Common Stock, and a proxy to vote such shares
in favor of the Recapitalization Merger and the Recapitalization Merger
Agreement, among other things.
At the closing of the Recapitalization Merger and the Acquisition,
significant new sources of financing will be provided to Alliance for the
purchase of shares of Common Stock in the Recapitalization Merger, repayment of
indebtedness and for working capital purposes, among other uses. Details
concerning the impact of the Recapitalization Merger and the Acquisition, and
the related financing on the capitalization of Alliance are provided in the Form
S-4, and in Amendment No. 3 to the Form S-2 (reg. No. 333-33817) filed by
Alliance on or about November 10, 1997.
In February 1996, the Company acquired four MRI systems and associated MRI
contracts from Mobile M.R. Venture, Ltd. In connection with the Royal
acquisition, the Company acquired six MRI systems. In August, the Company
acquired all of the outstanding shares of Sun MRI Services, Inc., a northern
California based MRI service provider. In connection with this transaction, the
Company obtained one MRI system and six hospital contracts. In late September
1996, the Company acquired certain assets and associated contracts from West
Coast Mobile Imaging, a southern California based CT service provider. Although
the acquisition was comparatively small, it added 16 new CT customers. In May
1997, the Company acquired two MRI systems and related customer contracts from
Pacific Medical Imaging, Inc. These transactions were primarily funded with
approximately $3,600,000 from existing cash reserves, debt assumed and issuance
of equity securities. Additional investments of this nature may be made in the
future (subject to certain conditions contained in the Company's long-term
financing arrangements) from a combination of cash reserves, cash flow from
operations, common or preferred equity and long-term secured or unsecured
financing, if available.
On October 20, 1997 the Company announced execution of a definitive
agreement to acquire Medical Consultants Imaging Co. ("MCIC"), a Cleveland,
Ohio based provider of mobile MRI services, CT services and other outsourced
healthcare services. The acquisition also includes MCIC's one-half interest in
an operating joint venture in Michigan. The purchase price consists of $13
million cash (subject to certain reductions) plus the assumption of
approximately $5 million in financing arrangements. MCIC operates 14 mobile MRI
systems and several other diagnostic imaging systems, primarily in Ohio,
Michigan, Indiana and Pennsylvania. The transaction is expected to close in
November 1997.
If the Company adds MRI systems at a more rapid rate than is currently
planned, or if it acquires additional business entities, or if the net cash
generated by operations declines from current or anticipated levels, the Company
could be required to raise additional capital. However, there can be no
assurance that the Company would be able to raise such capital, or do so on
terms acceptable to the Company.
17
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT NO. NOTE DESCRIPTION
---------- ---- -----------
2.1 (22) Stockholder Agreement among Newport Investment LLC and the
individuals listed on Schedule A attached thereto, dated
as of July 23, 1997.
2.2 (22) Agreement and Plan of Merger between Alliance Imaging,
Inc., and Newport Investment LLC, dated as of July 23,
1997.
2.3 (24) Amendment No. 1 dated as of August 13, 1997 to the
Recapitalization Merger Agreement.
2.4 (24) Amendment No. 2 dated as of October 13, 1997 to the
Recapitalization Merger Agreement.
2.4.1 (24) Amendment No. 3 dated as of November 10, 1997 to the
Recapitalization Merger Agreement.
2.5 (24) Guaranty Letter dated July 22, 1997, from AJF III to
Alliance.
3.1 (21) Restated Certificate of Incorporation of Alliance Imaging,
Inc.
3.2 (1) By-Laws of Alliance Imaging, Inc., as amended.
3.3 (24) Amendment to Restated Certificate of Incorporation of
Alliance.
3.4 (24) Form of Amended and Restated Certificate of Incorporation
of Alliance.
3.5 (24) Form of By-Laws of Alliance, as amended.
4.1 (1) Specimen of Common Stock Certificate.
4.2 (9) Amended and Restated Purchase Agreement dated as of
December 31, 1994 among the Registrant and the holders
of the Registrant's Senior Subordinated Debentures due
2005.
18
4.2.1 (8) Amendment No. 1 to Amended and Restated Purchase Agreement
dated as of December 31, 1994 among the Registrant and the
holders of the Registrant's Senior Subordinated Debentures.
4.2.2 (18) Amendment No. 2 to Amended and Restated Purchase Agreement
dated as of April 15, 1996 among the Registrant and the
holders of the Registrant's Senior Subordinated Debentures
due 2005.
4.3 (1) Note Purchase Agreement dated as of April 14, 1989 governing
sale of Senior Notes by Alliance Imaging, Inc.
4.4 (1) First Amendment to Note Purchase Agreement dated as of
September 20, 1990 among Alliance Imaging, Inc., CIGNA
Property and Casualty Insurance Company, Connecticut General
Life Insurance Company, Insurance Company of America and
Life Insurance Company of North America.
4.4.1 (1) Amendment No. 2 to Note Purchase Agreement dated as of June
3, 1991.
4.4.2 (2) Amendment No. 3 to Note Purchase Agreement dated as of
December 1, 1991.
4.4.3 (3) Amendment No. 4 to Note Purchase Agreement dated as of
December 31, 1992.
4.4.4 (4) Amendment No. 5 to Note Purchase Agreement dated as of June
30, 1993.
4.4.5 (6) Amendment No. 6 to Note Purchase Agreement dated as of
January 1, 1994.
4.4.9 (10) Amendment No. 7 to Note Purchase Agreement dated as of
December 31, 1994.
4.4.10 (8) Amendment No. 8 to Note Purchase Agreement dated as of
December 31, 1994.
4.4.11 (18) Amendment No. 9 to Note Purchase Agreement dated as of April
15, 1996.
4.4.12 (19) Amendment No. 10 to Note Purchase Agreement dated as of
November 6, 1996.
4.4.13 (21) Amendment No. 11 to Note Purchase Agreement dated as of
March 25, 1997.
19
4.5 (1) Amended and Restated Shareholders Agreement dated as of
April 17, 1989.
4.6 (11) Security Agreement dated as of December 31, 1994 among the
Registrant, the holders of the Senior Notes and the
Collateral Agent for the Senior Noteholders.
4.7 (12) Guaranty dated as of December 31, 1994 of the Registrant's
obligations to the Senior Noteholders and the Senior
Subordinated Debentureholders executed by the subsidiaries
of the Registrant identified therein.
4.8 (13) Registration Rights Agreement dated as of December 31, 1994
among the Registrant, the Senior Noteholders and the Senior
Subordinated Debentureholders.
4.9 (14) Certificate of Designation concerning the Registrant's
Series A 6.0% Cumulative Preferred Stock.
4.10 (15) Certificate of Designation concerning the Registrant's
Series B Convertible Preferred Stock.
4.11 (18) Certificate of Designation concerning the Registrant's
Series C 5% Cumulative Convertible Redeemable Preferred
Stock.
4.12 (21) Amended Certificate of Designation concerning the
Registrant's Series D 4% Cumulative Convertible Redeemable
Preferred Stock.
4.13 (21) Amended Certificate of Designation concerning the
Registrant's Series E 4% Cumulative Convertible Redeemable
Convertible Preferred Stock.
4.14 (21) Certificate of Elimination concerning the Registrant's
Series A 6% Cumulative Preferred Stock and Series B
Convertible Redeemable Preferred Stock.
4.15 (24) Commitment Letter from Bankers Trust Company, dated July 22,
1997.
10.4 (20) Amended and Restated 1991 Stock Option Plan of Alliance
Imaging, Inc., including forms of agreement used thereunder.
10.4.1 (24) 1997 Alliance Imaging, Inc. Stock Option Plan, including
form of agreement used thereunder.
20
10.15 (24) Agreement Not to Compete dated as of July 23, 1997 among
Newport Investment LLC, Alliance, Richard N. Zehner and
Vincent S. Pino.
10.16 (1) Form of Indemnification Agreement between Alliance Imaging,
Inc. and its directors and/or officers.
10.20 (5) Georgia Magnetic Imaging Center, Ltd. Limited Partnership
Agreement dated as of March 22, 1985.
10.20.1 (5) Amendment to Georgia Magnetic Imaging Center, Ltd. Limited
Partnership Agreement dated as of July 1, 1993.
[10.23 (24) Form of Registration Rights Agreement dated as of November
[X], 1997 between Alliance and the Investor.]
10.24 (23) Amended and Restated Employment Agreement dated as of May
15, 1997, between Alliance Imaging, Inc. and Richard N.
Zehner.
10.25 (23) Amended and Restated Employment Agreement dated as of May
15, 1997, between Alliance Imaging, Inc. and Vincent S.
Pino.
10.26 (7) Employment Agreement dated as of September 9, 1993, between
Alliance Imaging, Inc. and Terry A. Andrues.
10.27 (7) Employment Agreement dated as of September 9, 1993, between
Alliance Imaging, Inc. and Jay A. Mericle.
10.28 (23) Amended and Restated Employment Agreement dated as of May
15, 1997, between Alliance Imaging, Inc. and Terrence M.
White.
10.29 (7) Employment Agreement dated as of June 6, 1994, between
Alliance Imaging, Inc. and Neil M. Cullinan.
10.30 (7) Employment Agreement dated as of June 6, 1994, between
Alliance Imaging, Inc. and Cheryl A. Ford.
10.31 (21) Amended and Restated Standstill Agreement dated as of
December 31, 1996 between the Registrant and Connecticut
General Life Insurance Company, CIGNA Property and Casualty
Insurance Company, Insurance Company of North America and
Life Insurance Company of North America.
21
10.32 (21) Amended and Restated Standstill Agreement, dated as of
December 31, 1996, between Richard N. Zehner and Alliance
Imaging, Inc.
10.33 (21) Amended and Restated Standstill Agreement, dated as of
December 31, 1996, between each of The Northwestern Mutual
Life Insurance Company, The Travelers Indemnity Company, The
Travelers Insurance Company, The Travelers Life and Annuity
Company, The Lincoln National Life Insurance Company and
Bedrock Asset Trust I and Alliance Imaging, Inc.
10.34 (21) Amended and Restated Standstill Agreement, dated as of
December 31, 1996, between DLJ Capital Corporation and
Alliance Imaging, Inc.
10.36 (16) Employment Agreement dated July 7, 1995 between Alliance
Imaging, Inc. and Michael W. Grismer.
10.37 (23) Amended and Restated Long-Term Executive Incentive Plan
dated as of July 22, 1997.
10.38 (17) Loan and Security Agreement with Comerica Bank-California,
dated as of December 21, 1995.
10.39 (18) Royal Medical Health Services, Inc. Merger Agreement dated
as of April 16, 1996.
10.40 (18) A & M Trucking, Inc. Acquisition Agreement dated as of April
16, 1996.
10.41 (18) Form of Warrant Agreement concerning 100,000 common shares
with an exercise price of $3.9375 per share dated as of
April 15, 1996.
10.42 (18) Form of Warrant Agreement concerning 96,900 common shares
with an exercise price of $5.00 per share dated as of April
26, 1996.
10.43 (19) Form of Warrant Agreement concerning 125,000 common shares
with an exercise price of $5.00 per share dated as of
November 6, 1996.
10.44 (21) Bridge Loan Agreement dated as of December 31, 1996 between
Alliance Imaging, Inc. and General Electric Company, acting
through GE Medical Systems.
22
10.45 (21) Form of Senior Bridge Note in the aggregate principal amount
of $18,000,000, dated December 31, 1996.
10.46 (21) Assignment, dated December 31, 1996, by The Northwestern
Mutual Life Insurance Company, The Travelers Indemnity
Company, The Travelers Insurance Company, The Travelers Life
and Annuity Company, The Lincoln National Life Insurance
Company and Bedrock Asset Trust I to Alliance Imaging, Inc.
10.47 (21) Stock Purchase Agreement dated as of March 25, 1997, between
Alliance Imaging, Inc. and General Electric Company, acting
through GE Medical Systems.
10.48 (25) Acquisition Agreement dated as of October 17, 1997 among
Medical Consultants Imaging Corp., Bondcat Corp., Chip-Cat
Corp., Medical Consultants Scanning Systems, Inc., Alliance
Imaging of Ohio, Inc., Alliance Imaging of Michigan, Inc.,
and Alliance Imaging, Inc.
11 (25) Statement of Computation of Per Share Earnings.
21.1 (24) List of Subsidiaries.
- --------------------
(1) Incorporated by reference herein to the indicated exhibits filed in
response to Item 16, "Exhibits" of the Company's Registration
Statement on Form S-1, No. 33-40805, initially filed on May 24, 1991.
(2) Incorporated by reference herein to the indicated exhibits filed in
response to Item 21, "Exhibits" of the Company's Registration
Statement on Form S-4, No. 33-46052, initially filed on February 28,
1992.
(3) Incorporated by reference herein to the indicated exhibits filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report
on Form 10-K for the year ended December 31, 1992.
(4) Incorporated by reference herein to the indicated exhibits filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1993.
(5) Incorporated by reference herein to the indicated exhibits filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993.
(6) Incorporated by reference herein to the indicated exhibits filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
23
(7) Incorporated by reference herein to the indicated exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1994.
(8) Incorporated by reference herein to the indicated exhibits filed in
response to Item 14(a)(3), "Exhibits" of the Company's Annual Report
on Form 10-K for the year ended December 31, 1994.
(9) Incorporated by reference herein to Exhibit 4.4 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(10) Incorporated by reference herein to Exhibit 4.1 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(11) Incorporated by reference herein to Exhibit 4.2 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(12) Incorporated by reference herein to Exhibit 4.3 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(13) Incorporated by reference herein to Exhibit 4.5 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(14) Incorporated by reference herein to Exhibit 4.6 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(15) Incorporated by reference herein to Exhibit 4.7 filed in response to
Item 7, "Exhibits" of the Company's Form 8-K Current Report dated
January 25, 1995.
(16) Incorporated by reference herein to Exhibit 10.36 filed in response to
Item 6(a), "Exhibits" of the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1995.
(17) Incorporated by reference herein to the indicated Exhibit in response
to Item 14(a)(3), "Exhibits" of the Company's Annual Report on Form
10-K for the year ended December 31, 1995.
(18) Incorporated by reference herein to the indicated Exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996.
(19) Incorporated by reference herein to the indicated Exhibit filed in
response to Item 6(a), "Exhibits" of the Company's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1996.
24
(20) Incorporated by reference herein to Exhibits filed with the Company's
Registration Statement on Form S-1, No. 33-40805, initially filed on
May 24, 1991 and the Company's definitive Proxy Statement with respect
to its Annual Meeting of Stockholders held May 16, 1996.
(21) Incorporated by reference herein to the indicated Exhibit in response
to Item 14(a)(3), "Exhibits" of the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
(22) Incorporated by reference herein to Exhibits 2.1 and 2.2 filed in
response to Item 7, "Exhibits" of the Company's Form 8-K Current
Report dated August 1, 1997.
(23) Incorporated by reference herein to the indicated Exhibit in response
to Item 6(a), "Exhibits" of the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997.
(24) Incorporated by reference herein to the indicated Exhibit in response
to Item 21(a), "Exhibits" of the Company's Form S-4 Registration
No. 333-33787.
(25) Filed herewith.
(b) REPORTS ON FORM 8-K IN THE THIRD QUARTER OF 1997:
Form 8-K dated August 1, 1997
Item 1. Changes in Control of Registrant -
Certain stockholders entered into a stockholder agreement
with Newport Investment LLC (the "Investor") on July 23, 1997
granting the Investor an option to purchase the stock of the
certain stockholders.
Item 5. Other Events -
On July 23, 1997, the Company entered into the Merger
Agreement with the Investor.
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLIANCE IMAGING, INC.
November 10, 1997 By: /s/ Richard N. Zehner
------------------------------
Richard N. Zehner
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on November 10, 1997.
Signature Title
--------- -----
/s/ Richard N. Zehner Chairman of the Board of Directors,
- ------------------------------ President and Chief Executive Officer
Richard N. Zehner (Principal Executive Officer)
/s/ Terrence M. White Senior Vice President, Chief
- ------------------------------ Financial Officer and Secretary
Terrence M. White (Principal Financial Officer)
26