<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) NOVEMBER 3, 2000
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RADIOLOGIX, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
000-23311 75-2648089
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(Commission File Number) (I.R.S. Employer Identification No.)
3600 CHASE TOWER, 2200 ROSS AVENUE, DALLAS, TEXAS 75201-2776
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(Address of Principal Executive Offices) (Zip Code)
(214) 303-2776
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(Registrant's Telephone Number, Including Area Code)
<PAGE>
ITEM 5. OTHER EVENTS.
The following unaudited pro forma consolidated balance sheet data of
Radiologix, Inc. gives effect to the merger, including the merger financing and
acquisitions, as if it had occurred on September 30, 2000. The unaudited pro
forma consolidated statement of operations information gives effect to (a) the
merger and the merger financing, (b) the acquisition of assets from San Jose
Radiological Medical Group, Inc. and Osceola Imaging Center during the nine
months ended September 30, 2000, (c) the acquisition of assets from Braff
Associates, P.C., Open MRI of Columbia, Dimensions Imaging Services and Questar
Imaging, Inc. during the fiscal year ended December 31, 1999 and (d) the buyout
of an operating lease for several MRI machines, by which we will acquire the
related assets and associated expenses, as if each had occurred on January 1,
1999. The unaudited pro forma consolidated statements of operations exclude the
following nonrecurring items, net of tax, directly attributable to the merger:
transaction fees and expenses of $4.4 million and a cash payment to
optionholders of $2.2 million. The unaudited pro forma consolidated statements
of operations also exclude the following extraordinary items, net of tax,
directly attributable to the merger: prepayment penalty on existing debt of $2.4
million and the write-off of existing deferred financing costs of $2.2 million.
The pro forma adjustments were applied to the historical consolidated financial
statements of Radiologix, Inc. to reflect and account for the merger as a
recapitalization. The pro forma adjustments assume that the maximum number of
post-merger shares (20%) are retained by our pre-merger stockholders and
optionholders in the merger. Accordingly, the historical cost basis of our
assets and liabilities has not been adjusted by the merger. The unaudited pro
forma consolidated financial data are not necessarily indicative of the
consolidated operating results or financial position that would have occurred if
the merger had been consummated on the dates indicated, nor are they necessarily
indicative of future operating results or financial position.
2
<PAGE>
RADIOLOGIX, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ACQUISITIONS RECAPITALIZATION PRO FORMA
---------- ------------ ---------------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 4,704 $(17,900)(1) $13,196(1) $ --
Accounts receivable, net..................... 77,775 -- -- 77,775
Due from affiliates.......................... 8,325 -- -- 8,325
Other current assets......................... 10,482 -- -- 10,482
-------- -------- ------- --------
Total current assets....................... 101,286 (17,900) 13,196 96,582
Property and equipment......................... 59,629 5,000 (2) -- 64,629
Investments in joint ventures.................. 7,707 -- -- 7,707
Intangible assets, net......................... 92,997 12,900 (2) -- 105,897
Deferred financing costs, net.................. 4,085 -- 4,615 (3) 8,700
Other assets................................... 5,886 -- 7,037 (4) 12,923
-------- -------- ------- --------
Total assets............................... $271,590 $ -- $24,848 $296,438
======== ======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses........ $ 18,996 $ -- $(1,961)(5) $ 17,035
Accrued physician retention.................. 9,692 -- -- 9,692
Accrued salaries and benefits................ 3,508 -- -- 3,508
Current portion of long-term debt............ 36,359 -- (36,359)(6) --
Current portion of capital lease
obligations.................................. 6,187 -- -- 6,187
Deferred income taxes........................ 1,651 -- -- 1,651
Other current liabilities.................... 158 -- -- 158
-------- -------- ------- --------
Total current liabilities.................. 76,551 -- (38,320) 38,231
Deferred income taxes.......................... 384 -- (384)(4) --
Long-term debt, net of current portion......... 142,710 -- 110,178 (6) 252,888
Capital lease obligations, net of current
portion...................................... 12,207 -- -- 12,207
Other liabilities.............................. 101 -- -- 101
-------- -------- ------- --------
Total liabilities.......................... 231,953 -- 71,474 303,427
Minority interests in consolidated
subsidiaries................................. 1,548 -- -- 1,548
Stockholders' equity (deficit):
Common stock................................. 2 -- (1)(7) 1
Additional paid-in capital................... (578) -- (35,294)(7) (35,872)
Note receivable from stockholder............. -- -- (200)(8) (200)
Retained earnings............................ 38,665 -- (11,131)(9) 27,534
-------- -------- ------- --------
Total stockholders' equity (deficit)....... 38,089 -- (46,626) (8,537)
-------- -------- ------- --------
Total liabilities and stockholders' equity
(deficit).................................. $271,590 $ -- $24,848 $296,438
======== ======== ======= ========
</TABLE>
3
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(1) REFLECTS THE FOLLOWING:
<TABLE>
<S> <C>
Sources:
Notes offered......................................... $250,000
Common stock investment............................... 87,680
Exercise of stock options............................. 37
Proceeds from new revolving credit facility........... 2,888
Retained common equity (non-cash)..................... 21,920
--------
Total sources of funds.............................. 362,525
--------
Uses:
Redemption of common equity........................... $123,212
Retained common equity (non-cash)..................... 21,920
Cash payment to optionholders......................... 3,628
Repayment of existing debt............................ 181,030
Prepayment penalty on existing debt................... 3,539
Estimated transaction fees and expenses............... 16,000
--------
Total uses of funds................................. 349,329
--------
Net sources of funds from merger.................... 13,196
Lease buyout (see footnote 2)......................... (17,900)
--------
Net use of funds.................................... $ 4,704
========
</TABLE>
(2) Reflects the estimated fair market value of the assets and intangible
assets created through the lease buyout.
(3) Reflects the following:
<TABLE>
<S> <C>
Net of the write-off of the existing deferred financing fees
associated with the company's existing credit facility and
$20,000 convertible note.................................. $(4,085)
Financing fees associated with placing the $250,000 of notes
offered................................................... 7,500
Financing fees associated with the new $60,000 revolving
credit facility........................................... 1,200
-------
$ 4,615
=======
</TABLE>
(4) Reflects the tax effect of the following pro forma adjustments:
<TABLE>
<S> <C>
Transaction fees and expenses............................... $2,920
Prepayment penalty on existing debt......................... 1,416
Write-off of existing deferred financing costs.............. 1,634
Cash payment to optionholders............................... 1,451
Deferred tax liability...................................... (384)
------
$7,037
======
</TABLE>
(5) Reflects the payment of accrued interest on the $20,000 convertible note.
4
<PAGE>
(6) Reflects the following:
<TABLE>
<S> <C>
Notes offered............................................... $250,000
Borrowings under new revolving credit facility.............. 2,888
Retirement of existing credit facility, current portion..... (35,550)
Retirement of existing credit facility, long-term........... (122,450)
Retirement of bank notes, current portion................... (809)
Retirement of bank notes, long-term......................... (260)
Retirement of convertible note.............................. (20,000)
--------
$ 73,819
========
</TABLE>
(7) Reflects the following:
<TABLE>
<S> <C>
Redemption of common equity................................. $(123,212)
Common stock investment..................................... 87,680
Proceeds from the exercise of options....................... 237
---------
$ (35,295)
=========
</TABLE>
(8) Reflects the balance of a loan made to an executive officer for the
exercise of stock options immediately prior to the merger.
(9) Reflects the following:
<TABLE>
<S> <C>
Transaction costs, net of tax............................... $ (4,380)
Prepayment penalty on existing debt, net of tax............. (2,123)
Write-off of existing deferred financing costs, net of
tax....................................................... (2,451)
Cash payment to optionholders, net of tax................... (2,177)
--------
$(11,131)
========
</TABLE>
5
<PAGE>
RADIOLOGIX, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
----------------------------------------------------------
RECAPITAL-
HISTORICAL ACQUISITIONS IZATION PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Service fee revenue........................... $199,700 $19,257 (1) $ -- $218,957
Costs and expenses:
Salaries and benefits....................... 52,826 5,167 (2) -- 57,993
Field supplies.............................. 11,630 1,245 (3) -- 12,875
Field rent and lease expense................ 18,444 (654)(4) -- 17,790
Other field expenses........................ 32,278 3,791 (5) -- 36,069
Bad debt expense............................ 18,838 1,443 (6) -- 20,281
Corporate general and administrative........ 11,192 -- 750 (10) 11,942
Depreciation and amortization............... 18,403 3,633 (7) 1,338 (11) 23,374
Interest expense, net....................... 12,357 2,238 (8) 18,039 (12) 32,634
-------- ------- -------- --------
Total costs and expenses.................. 175,968 16,863 20,127 212,958
-------- ------- -------- --------
Income (loss) before taxes, minority interests
in consolidated subsidiaries and equity in
earnings of investments..................... 23,732 2,394 (20,127) 5,999
Equity in earnings of investments............. 3,581 -- -- 3,581
Minority interests in consolidated
subsidiaries................................ (910) (109)(9) -- (1,019)
-------- ------- -------- --------
Income (loss) before taxes.................... 26,403 2,285 (20,127) 8,561
Income tax expenses........................... 10,346 914 (13) (8,050)(13) 3,210
-------- ------- -------- --------
Net income (loss)............................. $ 16,057 $ 1,371 $(12,077) $ 5,351
======== ======= ======== ========
</TABLE>
6
<PAGE>
RADIOLOGIX, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
---------------------------------------------------------
RECAPITAL-
HISTORICAL ACQUISITIONS IZATION PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Service fee revenue............................. $183,517 $ 197 (1) $ -- $183,714
Costs and expenses:
Salaries and benefits......................... 48,082 99 (2) -- 48,181
Field supplies................................ 9,698 32 (3) -- 9,730
Field rent and lease expense.................. 22,251 (3,610)(4) -- 18,641
Other field expenses.......................... 30,958 562 (5) -- 31,520
Bad debt expense.............................. 15,976 29 (6) -- 16,005
Corporate general and administrative.......... 8,332 -- 562 (10) 8,894
Depreciation and amortization................. 16,430 743 (7) 1,003 (11) 18,176
Interest expense, net......................... 13,101 1,678 (8) 9,792 (12) 24,571
-------- ------- -------- --------
Total costs and expenses.................... 164,828 (467) 11,357 175,718
-------- ------- -------- --------
Income (loss) before taxes, minority interests
in consolidated subsidiaries and equity in
earnings of investments....................... 18,689 664 (11,357) 7,996
Equity in earnings of investments............... 3,203 -- -- 3,203
Minority interests in consolidated
subsidiaries.................................. (735) -- -- (735)
-------- ------- -------- --------
Income (loss) before taxes...................... 21,157 664 (11,357) 10,464
Income tax expenses............................. 8,455 265 (13) (4,542)(13) 4,178
-------- ------- -------- --------
Net income (loss)............................... $ 12,702 $ 399 $ (6,815) $ 6,286
======== ======= ======== ========
</TABLE>
7
<PAGE>
RADIOLOGIX, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
---------------------------------------------------------
RECAPITAL-
HISTORICAL ACQUISITIONS IZATION PRO FORMA
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Service fee revenue............................. $240,632 $ 1,203 (1) $ -- $241,835
Costs and expenses:
Salaries and benefits......................... 62,780 225 (2) -- 63,005
Field supplies................................ 13,008 76 (3) -- 13,084
Field rent and lease expense.................. 27,822 (5,140)(4) -- 22,682
Other field expenses.......................... 40,543 925 (5) -- 41,468
Bad debt expense.............................. 21,420 115 (6) -- 21,535
Corporate general and administrative.......... 11,320 -- 750 (10) 12,070
Depreciation and amortization................. 21,885 1,019 (7) 1,338 (11) 24,242
Interest expense, net......................... 17,163 2,238 (8) 13,549 (12) 32,950
-------- ------- -------- --------
Total costs and expenses.................... 215,941 (542) 15,637 231,036
-------- ------- -------- --------
Income (loss) before taxes, minority interests
in consolidated subsidiaries and equity in
earnings of investments....................... 24,691 1,745 (15,637) 10,799
Equity in earnings of investments............... 4,303 -- -- 4,303
Minority interests in consolidated
subsidiaries.................................. (974) -- -- (974)
-------- ------- -------- --------
Income (loss) before taxes...................... 28,020 1,745 (15,637) 14,128
Income tax expenses............................. 11,269 697 (13) (6,254)(13) 5,712
-------- ------- -------- --------
Net income (loss)............................... $ 16,751 $ 1,048 $ (9,383) $ 8,416
======== ======= ======== ========
</TABLE>
8
<PAGE>
(1) Reflects revenue associated with the acquisitions.
(2) Reflects the following:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
Adjustment associated with the acquisitions......... $5,119 $63 $177
Lease buyout........................................ 48 36 48
------ --- ----
$5,167 $99 $225
====== === ====
</TABLE>
(3) Reflects the following:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
Costs associated with the acquisitions.............. $1,234 $24 $65
Lease buyout........................................ 11 8 11
------ --- ---
$1,245 $32 $76
====== === ===
</TABLE>
(4) REFLECTS THE FOLLOWING:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
Rental savings associated with the lease buyout..... $(4,888) $(3,666) $(5,289)
Additional rental expense associated with the
acquisitions...................................... 4,234 56 149
------- ------- -------
$ (654) $(3,610) $(5,140)
======= ======= =======
</TABLE>
(5) Reflects the following:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
Costs associated with the acquisitions.............. $3,168 $117 $302
Lease buyout........................................ 623 445 623
------ ---- ----
$3,791 $562 $925
====== ==== ====
</TABLE>
(6) Reflects bad debt expense associated with the acquisitions.
(7) Reflects the following:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
Additional depreciation of equipment and goodwill
amortization associated with the acquisitions..... $2,674 $24 $59
Lease buyout........................................ 959 719 960
------ ---- ------
$3,633 $743 $1,019
====== ==== ======
</TABLE>
(8) Reflects the increase in incremental interest costs associated with the
acquisitions.
(9) Reflects the increase in minority interest associated with the
acquisitions.
9
<PAGE>
(10) Reflects the annual advisory services fees payable to SKM-RD LLC and Audax
Management Company, LLC.
(11) Reflects amortization of deferred financing costs associated with the
merger.
(12) Reflects the following:
<TABLE>
<CAPTION>
NINE MONTHS TWELVE MONTHS
YEAR ENDED ENDED ENDED
12/31/99 9/30/00 9/30/00
----------- ------------ --------------
<S> <C> <C> <C>
The increase in incremental interest cost associated
with the $250,000 of notes at an assumed rate of
12.5%............................................. $17,739 $9,567 $13,249
Commitment fee of 0.50% on the new $60,000 revolving
credit facility................................... 300 225 300
------- ------ -------
$18,039 $9,792 $13,549
======= ====== =======
</TABLE>
Every incremental increase in the interest rate by 0.25% on the $250,000 of
notes will increase interest expense by $625 for a twelve-month period and
by $469 for a nine-month period.
(13) Reflects the income tax effect of the pro forma adjustments assuming a rate
of 40%.
10
<PAGE>
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.
RADIOLOGIX, INC.
By: /s/ Mark L. Wagar
-----------------------------------
Mark L. Wagar
Chairman of the Board, President
and Chief Executive Officer
November 3, 2000
