SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Amendment: September 30, 1996
MEDICAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of other jurisdiction)
0-20440 13-3584552
(Commission File Number) (I.R.S. Employer Identification No.)
155 State Street, Hackensack, New Jersey 07601
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 488-6230
N/A
(Former name and former address, if changed since last report)
- --------------------------------------------------------------------------------
AMENDMENT NO. 1
The undersigned registrant hereby amends its Current Report
on Form 8-K dated August 30, 1996 to add Item 7 as set forth
herein.
<PAGE>
Item 7 Financial Statements and Exhibits
(b) Unaudited Pro Forma Combined Financial Statements
<PAGE>
The following unaudited pro forma combined financial statements include an
unaudited pro forma combined balance sheet of Medical Resources, Inc. (the
"Company" or "Medical Resources"), (the "Unaudited Pro Forma Combined Balance
Sheet") as of June 30, 1996, an unaudited pro forma combined statement of
operations for the year ended December 31, 1995 (the "Unaudited Pro Forma
Combined Statement of Operations") and an unaudited pro forma combined statement
of operations for the six months ended June 30, 1996 (the "Unaudited Pro Forma
Combined Statement of Operations for the Six Months Ended June 30, 1996"). These
unaudited pro forma combined financial statements include historical amounts for
Medical Resources and NMR of America, Inc. ("NMR") adjusted to reflect the
acquisition of NMR by a wholly owned subsidiary of the Company (the "NMR
Acquisition") and other historical acquisitions of both companies as described
below.
Medical Resources' historical acquisitions during the year ended December
31, 1995 and six months ended June 30, 1996 included New England MRI, Inc. and
PCC Imaging, Inc., which were effective on May 26, 1995 and June 19, 1995,
respectively, MRI-CT, Inc. which was effective on January 9, 1996, Nurse Care
Plus, Inc. which was effective on January 12, 1996, Americare Imaging Centers,
Inc. and MRI Associates of Tarpon Springs, Inc. which were effective on April
19, 1996, Access Imaging Center, Inc. which was effective on April 30, 1996 and
We Care-Allied Health Care, Inc. which was effective on June 28, 1996.
NMR's historical acquisitions during its fiscal year ended March 31, 1996
included Morgan Medical Holdings, Inc. and Central Diversey MRI Center, Inc.,
which were effective on September 15, 1995 and January 1, 1996,respectively.
Medical Resources' fiscal year end is December 31 and NMR's fiscal year end
is March 31. Accordingly, the Unaudited Pro Forma Combined Statement of
Operations has been presented as if the NMR Acquisition and the historical
acquisitions by Medical Resources had occurred on January 1, 1995 and as if the
historical acquisitions by NMR had occurred on April 1, 1995. The Unaudited Pro
Forma Combined Statement of Operations for the Six Months Ended June 30, 1996
has been prepared on the basis that the NMR Acquisition and the other historical
acquisitions by Medical Resources occurred as of January 1, 1996. For purposes
of presenting the Unaudited Pro Forma Combined Balance Sheet, the NMR
Acquisition is considered to have occurred on June 30, 1996. NMR made no
acquisitions subsequent to January 1, 1996. The NMR Acquisition was accounted
for under the purchase method of accounting and, therefore, these statements are
prepared on such a basis.
These unaudited pro forma combined financial statements do not purport to
be indicative of the actual financial position or results of operations that
would have been achieved had the transactions been consummated on such date, or
at the beginning of the periods, for which the unaudited pro forma combined
financial statements are presented, nor do they purport to be indicative of
future operating results or financial position of the combined entity.
The following unaudited pro forma combined financial statements should be
read in conjunction with the historical consolidated financial statements and
related notes thereto of Medical Resources and NMR included in the Company's
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission on September 27, 1996, certain data and notes normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, and the notes to the Unaudited Pro
Forma Combined Financial Statements.
1
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
June 30, 1996
(In thousands)
<TABLE>
<CAPTION>
Medical
Resources
Medical and
Resources NMR NMR
June 30, June 30, Pro Forma Pro Forma
1996 1996(1) Adjustments Combined
--------- ------- ----------- --------
<S> <C> <C> <C> <C>
Cash and cash equivalents ......................... $ 8,015 $ 2,362 $ (1,168)(A) $ 7,984
(1,225)(B)
Short-term investments ............................ -- 1,830 1,830
Accounts receivable, net .......................... 18,645 14,947 33,592
Other assets ...................................... 4,491 1,302 5,793
--------- --------- --------- ---------
Total current assets ............................ 31,151 20,441 (2,393) 49,199
Medical diagnostic and office equipment, net ...... 14,437 14,007 (2,908)(C) 25,536
Goodwill, net ..................................... 17,707 10,660 (10,660)(D) 52,990
35,283 (E)
Other assets ...................................... 3,520 1,424 1,409 (F) 5,374
(830)(G)
(149)(J)
--------- --------- --------- ---------
Total assets .................................... $ 66,815 $ 46,532 $ 19,752 $ 133,099
========= ========= ========= =========
Current portion of notes payable .................. $ 1,835 $ 4,591 $ 6,426
Current portion of obligations under capital leases 4,511 604 5,115
Line of credit .................................... 4,325 -- 4,325
Accounts payable and accrued expenses ............. 5,572 4,449 10,021
Other current liabilities ......................... 1,525 -- $ 2,054 (H) 3,579
Income taxes payable .............................. 469 -- 469
--------- --------- --------- ---------
Total current liabilities ....................... 18,237 9,644 2,054 29,935
Notes payable ..................................... 4,870 10,012 14,882
Obligations under capital leases .................. 8,455 1,009 9,464
Convertible debentures ............................ 7,260 1,891 9,151
Other long-term liabilities ....................... 1,097 2,328 3,425
--------- --------- --------- ---------
Total liabilities ............................... 39,919 24,884 2,054 66,857
Common stock ...................................... 91 67 (67)(I) 136
45 (E)
Common stock to be issued ......................... 1,721 -- 1,721
Additional paid in capital ........................ 27,897 17,073 (17,073)(I) 67,198
39,301 (E)
Retained (deficit) earnings ....................... (1,394) 6,220 (6,220)(I) (1,394)
Treasury stock .................................... (1,419) (1,712) 1,712 (I) (1,419)
--------- --------- --------- ---------
Total stockholders' equity ...................... 26,896 21,648 17,698 66,242
--------- --------- --------- ---------
Total liabilities and stockholders' equity ...... $ 66,815 $ 46,532 $ 19,752 $ 133,099
========= ========= ========= =========
</TABLE>
- ----------
(1) As reclassified to conform with the Company's presentation of financial
information.
See Accompanying Notes (A) to (I) to Unaudited Pro Forma
Combined Financial Statements
2
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Year Ended December 31, 1995
(In thousands, except per share data)
<TABLE>
<CAPTION>
Medical
Resources/
NMR
Combined
and
Medical Medical Medical
Medical Resources Resources NMR Resources/
Resources NMR and Historical Historical NMR
Year Ended Year Ended NMR Acquisitions Acquisitions Historical
December 31, March 31, Pro Forma Pro Forma Pro Forma Pro Forma Acquisitions
1995 1996(1) Adjustments Combined Adjustments Adjustments Pro Forma
------------ --------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net service revenues .............. $ 51,994 $ 23,957 $ (1,791)(a) $ 74,307 $ 22,122(j) $ 3,467(m) $ 99,896
147 (b)
Operating costs, excluding
interest, depreciation and
amortization .................... 31,564 13,125 (1,754)(a) 42,935 15,107(j) 1,641(k) 59,683
Provision for uncollectible
accounts receivable .............. 3,378 -- 3,378 1,045(j) 4,423
Corporate general and
administrative ................... 4,978 2,916 356 (c) 8,250 2,480(j) 344(k) 11,074
Depreciation and amortization ..... 4,567 3,094 (532)(a) 8,049 2,438(j) 408(k) 10,895
(420)(d)
1,764 (e)
(60)(f)
(364)(g)
-------- -------- -------- -------- -------- -------- --------
Operating income ................ 7,507 4,822 (634) 11,695 1,052 1,074 13,821
Interest expense .................. 1,829 1,678 (518)(a) 2,989 301(j) 356(k) 3,646
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before minority
interest and taxes ............... 5,678 3,144 (116) 8,706 751 718 10,175
Minority interest ................. (124) 411 -- 287 -- -- 287
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations before income
taxes ............................ 5,802 2,733 (116) 8,429 751 718 9,888
Income taxes ...................... 1,659 956 (46)(h) 2,569 300(j) 238(k) 3,107
-------- -------- -------- -------- -------- -------- --------
Income from continuing
operations ....................... $ 4,143 $ 1,777 $ (70) $ 5,851 $ 451 $ 480 $ 6,781
======== ======== ======== ======== ======== ======== ========
Earnings per share:
Primary(2) ....................... $ 0.53 $ 0.30 $ 0.50 $ 0.51
======== ======== ======== ========
Weighted average shares
outstanding ...................... 7,785 5,870 4,036 (i) 11,820 1,092(l) 378(m) 13,291
======== ======== ======== ======== ======== ======== ========
</TABLE>
- ----------
(1) As reclassified to conform with the Company's presentation of financial
information.
(2) Fully diluted earnings per share equals primary earnings per share.
See Accompanying Notes (a) to (m) to Unaudited Pro Forma
Combined Financial Statements
3
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
Six Months Ended June 30, 1996
(In thousands, except per share data)
<TABLE>
<CAPTION>
Medical
Resources/NMR
Medical Combined
Medical Resources and Medical
Medical Resources Historical Resources
Resources NMR and NMR Acquisitions Historical
June 30, June 30, Pro Forma Pro Forma Pro Forma Acquisitions
1996 1996(1) Adjustments Combined Adjustments Pro Forma
-------- -------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net service revenues ................ $ 36,776 $ 14,228 $ (952)(aa) $ 50,052 $5,293 (jj) $ 55,345
Operating costs, excluding
interest, depreciation
and amortization ................... 23,486 7,456 (1,066)(aa) 29,876 3,481 (jj) 33,357
Provision for uncollectible
accounts receivable ................ 1,762 -- 1,762 144 (jj) 1,906
Corporate general and
administration ..................... 3,433 1,877 140 (cc) 5,450 437 (jj) 5,887
Depreciation and
amortization ....................... 2,740 1,689 (270)(aa) 4,490 528 (jj) 5,017
(322)(dd)
882 (ee)
(48)(ff)
(182)(gg)
Transaction costs ................... -- 301 (301)(bb)
-------- -------- -------- -------- ------ --------
Operating income .................. 5,355 2,905 215 8,474 703 9,178
Interest expense .................... 1,288 910 (261)(aa) 1,936 48 (jj) 1,985
-------- -------- -------- -------- ------ --------
Income from continuing
operations before minority
interest and taxes ................. 4,067 1,995 476 6,538 655 7,193
Minority interest ................... 64 197 261 261
-------- -------- -------- -------- ------ --------
Income from continuing
operations before
income taxes ....................... 4,003 1,798 476 6,277 655 6,932
Income taxes ........................ 1,099 579 190 (hh) 1,868 262 (jj) 2,130
-------- -------- -------- -------- ------ --------
Income from continuing
operations ......................... $ 2,904 $ 1,219 $ 286 $ 4,409 $ 393 $ 4,802
======== ======== ======== ======== =========== ========
Earnings per share:
Primary ............................ $ 0.33 $ 0.19 $ 0.33 $ 0.35
Fully diluted ...................... $ 0.31 $ 0.19 $ 0.32 $ 0.34
======== ======== ======== ========
Weighted average shares
outstanding ........................ 8,835 6,440 4,428 (ii) 13,263 272 (kk) 13,535
======== ======== ======== ======== =========== ========
</TABLE>
- ----------
(1) As reclassifed to conform with the Company's presentation of financial
information.
See Accompanying Notes (aa) to (kk) to Unaudited Pro Forma
Combined Financial Statements
4
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The Historical Financial Statements
The unaudited pro forma combined financial statements are presented for
illustrative purposes only, giving effect to the NMR Acquisition and other
historical acquisitions of Medical Resources and NMR, and therefore, are not
necessarily indicative of the financial position or financial results that might
have been achieved had the NMR Acquisition occurred as of an earlier date, nor
are they necessarily indicative of the financial position or financial results
which may occur in the future. The Unaudited Pro Forma Combined Balance Sheet
has been presented assuming the NMR Acquisition occurred on June 30, 1996.
Medical Resources' fiscal year end is December 31 and NMR's fiscal year end is
March 31. Accordingly, the Unaudited Pro Forma Combined Statement of Operations
been presented as if the NMR Acquisition and other historical acquisitions of
Medical Resources had occurred on January 1, 1995 and as if the historical
acquisitions of NMR had occurred on April 1, 1995. The Unaudited Pro Forma
Combined Statement of Operations for the Six Months Ended June 30, 1996 has been
prepared on the basis that the NMR Acquisition and the other 1996 historical
acquisitions of Medical Resources occurred as of January 1, 1996. The NMR
Acquisition was accounted for under the purchase method of accounting, whereby
the respective assets and liabilities of NMR are recorded at their estimated
fair values. The total purchase cost of the transaction is estimated to be
approximately $39,346,000 and the excess of the purchase cost over the estimated
fair value of net assets acquired is estimated to be approximately $35,134,000.
The Pro Forma Combined Statement of Operations for the fiscal year ended
December 31, 1995 reflects the impact of historical acquisitions made by Medical
Resources and NMR. Medical Resources' acquisitions of New England MRI ("NEM")
and PCC Imaging, Inc. ("PCC"), which were effective on May 26, 1995 and June 19,
1995 respectively, and of MRI-CT, Inc. ("MRI-CT") on January 9, 1996, Nurse Care
Plus, Inc. ("NurseCare") on January 12, 1996, Americare Imaging Centers, Inc.
and MRI Associates of Tarpon Springs, Inc. (collectively known as "Americare")
on April 19, 1996, Access Imaging Center, Inc. ("Access") on April 30, 1996 and
We Care-Allied Health Care, Inc. ("We Care") on June 28, 1996, are reflected as
if such acquisitions had occurred on January 1, 1995. NMR's acquisition of
Morgan Medical Holdings, Inc. ("Morgan") and Central Diversey MRI Center, Inc.
("CD MRI"), which were effective on September 15, 1995 and January 1, 1996,
respectively, are reflected as if these transactions had occurred on April 1,
1995.
The Unaudited Pro Forma Combined Statement of Income for the Six Months
Ended June 30, 1996 reflects the impact of historical acquisitions made by
Medical Resources. Medical Resources' aforementioned acquisition of MRI-CT,
NurseCare, Americare, Access and We Care are reflected as if these transactions
had occurred on January 1, 1996.
As mentioned, Medical Resources' fiscal year-end is December 31 and NMR's
is March 31. As a result, the operating results for NMR for the three months
ended March 31 have been included in the Pro Forma Combined Statement of Income
for the fiscal year ended December 31, 1995 and the Unaudited Pro Forma Combined
Statement of Operations for the Six Months Ended June 30, 1996. Unaudited net
service revenues and net income for this period were $6,960,000 and $630,000,
respectively.
2. Revenue Recognition
For Medical Resources' centers and those centers that NMR acquired (as
opposed to developed, see next paragraph), revenues are recognized on an accrual
basis as earned and consist of patient service revenues adjusted for contractual
adjustments (net patient service revenue) allocated to Medical Resources and NMR
under the terms of management agreements maintained. This revenue is derived
from charges for patient services rendered in diagnostic imaging centers under
the terms of certain payment arrangements with various third party payors, such
charges are paid at less than Medical Resources' established rates.
For the centers which NMR has developed, agreements have been entered into
with physicians engaging in business as professional associations ("Physicians")
pursuant to which NMR maintains and operates imaging systems in
5
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
offices operated by the Physicians. The agreements have terms of up to six years
and are renewable at NMR's option. Under the agreements, Physicians have agreed
to be obligated to contract for radiological services at the centers and to
sublease each facility. NMR is obligated to make necessary leasehold
improvements, provide furniture and fixtures and perform certain administrative
functions relating to the provisions of technical aspects of the centers'
operations for which Physicians pay a quarterly fee composed of a fixed sum
based on the cost of the respective imaging system installed, including the
related financing costs, a charge per invoice processed and a charge based upon
system usage for each NMR-installed imaging system in operation. These fees, net
of a contractual allowance based upon Physicians ability to pay after Physicians
have fulfilled their obligations under facility subleases and radiological
service contracts as set forth above, constitute NMR's net revenue for sites
developed by NMR.
Medical Resources also recognizes revenue from temporary nurse staffing.
3. Earnings Per Share
The Medical Resources and NMR Pro Forma earnings per share presented on the
Unaudited Pro Forma Combined Statement of Operations has been calculated by
dividing net income by the number of shares outstanding during the period,
including the effect of the 4,456,455 shares of Medical Resources Common Stock
issued in the NMR Acquisition. Pro Forma earnings per share for the year ended
December 31, 1995 has been calculated assuming the 600,000 shares issued and
600,000 shares of Medical Resources Common Stock to be issued by Medical
Resources in conjunction with the acquisition of NEM and the 194,113, 228,571
and 192,063 shares of Medical Resources Common Stock issued by Medical Resources
in conjunction with the acquisition of MRI-CT, Americare and Access,
respectively, were issued on January 1, 1995; and the 1,195,848 and 10,000
shares of NMR Common Stock issued by NMR for the acquisition of Morgan and CD
MRI respectively, were issued on April 1, 1995. Pro Forma earnings per share for
the Six Months Ended June 30, 1996 has been calculated assuming the 4,456,455
shares issued in the NMR Acquisition, the 194,113, 228,571 and 192,063 shares of
Common Stock issued by Medical Resources in conjunction with the acquisition of
MRI-CT, Americare and Access, respectively, were issued on January 1, 1996. The
potential dilutive effect of warrants issued upon consummation of the NMR
Acquisition and the conversion of all NMR options and warrants into Medical
Resources options and warrants was taken into consideration in the pro forma
earnings per share calculation.
6
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
4. Pro Forma Adjustments
Unaudited Pro Forma Combined Balance Sheet
(A) To reflect expenditure of estimated professional fees and other costs
expected to be expended by Medical Resources and NMR relating to the NMR
Acquisition, including investment banking, legal, accounting and appraisal
fees.
Medical Resources:
Investment banking ......................... $265
Fixed asset appraisal ...................... 30
Printing and mailing ....................... 85
Financial advisory ......................... 175
Accounting ................................. 150
Legal ...................................... 200
----
$ 905
Cash disbursed as of June 30, 1996 ........... 149
------
756
NMR:
Investment banking .......................... $215
Accounting .................................. 50
Legal ....................................... 150
----
415
Cash disbursed as of June 30, 1996 ........... 3
------
412
------
Estimated remaining NMR Acquisition related
expenditures ............................... $1,168
======
(B) To reflect lump sum cash payments to certain executives of NMR in
consideration of the termination of existing employment agreements pursuant
to terms of the NMR Acquisition. These payments were made in conjunction
with the consummation of the NMR Acquisition.
(C) To adjust NMR's fixed assets to their estimated fair value based upon
independent appraisals obtained by the Company.
(D) To eliminate NMR's historical goodwill.
(E) To record the estimated goodwill and equity relating to the NMR Acquisition
based upon a purchase price of approximately $39,346,000 calculated based
on the issuance of 4,456,000 shares of Common Stock in exchange for the
outstanding stock of NMR. For purposes of pro forma presentation, Common
Stock was valued at $8.83 per share.
<TABLE>
<CAPTION>
<S> <C> <C>
NMR historical book value as of June 30, 1996 $ 21,648
To reflect the expenditure of costs related to
the NMR Acquisition (412) (see (A))
To reflect lump sum payments to certain executives
of NMR (1,225) (see (B))
To adjust fixed assets to appraised fair value (2,908) (see (C))
To remove historical goodwill (10,660) (see (D))
To adjust the deferred tax asset, net 1,409 (see (F))
To adjust intangible and other assets (830) (see (G))
To adjust accrued liabilities (2,054) (see (H))
--------
Adjusted book value of NMR (net assets acquired) $ 4,968
========
Purchase price $39,346
Adjusted book value of NMR (net assets
acquired) 4,968
-------
Excess of purchase price over net assets
acquired 34,378
Capitalized NMR Acquisition costs 905 (see (A))
-------
Goodwill $35,283
=======
</TABLE>
7
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
(F) To reflect the adjustment of pro forma combined deferred income tax assets
and liabilities based upon the tax effect of adjustments (C) and (G) as
follows:
Medical
Resources NMR
June 30, June 30, Pro Forma Pro Forma
1996 1996 Adjustments Combined
------- ------- ----------- --------
Assets:
Deferred income taxes ....... $ 3,136 $ 2,718 $ 5,854
Valuation allowance ......... (150) -- (150)
Liabilities:
Deferred income taxes ....... 101 2,808 (1,163)(1) 1,500
(246)(2)
------- ------- ------- -------
Net deferred tax asset ...... $ 2,885 ($ 90) ($1,409) $ 4,204
======= ======= ======= =======
- ----------
(1) To adjust NMR's deferred tax liability related to fixed assets for the tax
effect impact, using 40%, of pro forma adjustment (C) to adjust NMR's fixed
assets by $2,908,000.
(2) To adjust NMR's deferred tax liability related to an intangible asset for
tax effect impact, using 40%, of the portion of pro forma adjustment (G)
related to the adjustment of the book value of a joint venture/purchase
option.
For purposes of pro forma presentation, as of June 30, 1996, the tax effect
of the combined company's future deductible amounts exceeds future taxable
amounts, as defined under Statement of Financial Accounting Standard No.
109 "Accounting for Income Taxes", by approximately $4,204,000 and is
reflected in the unaudited pro forma balance sheet as of March 31, 1996 as
a component of other assets.
As discussed in Note 10 to NMR's 1996 Consolidated Financial Statements, as
of March 31, 1996, NMR had recorded deferred tax assets of $2,332,000
related to net operating loss carryforwards of $6,389,000. Utilization of
certain of these net operating loss carryforwards is limited to $520,000
(pre tax effect) per year and could be limited further if there are future
changes in the ownership of NMR. The NMR Acquisition may result in further
limitations on the utilization of certain of these net operating loss
carryforwards. Adjustments, if any are required, will be made within the
allocation period permitted by APB No. 16.
(G) To eliminate NMR's joint venture option and to reflect the adjustment of
other assets including deferred organizational costs and other
miscellaneous assets for items that Medical Resources accounts for as
period expenses.
Joint venture/purchase option ................ $615
Deferred organizational costs ................ 108
Miscellaneous other assets ................... 107
----
$830
====
(H) To reflect liabilities that arise as a result of potential actions to be
taken by Medical Resources following the NMR Acquisition as follows:
Center closing costs (1) ..................... $1,565
Accrual of corporate rent (2) ................ 269
------
Employee severance (3) ....................... 220
$2,054
======
----------
(1) Represents liabilities assumed as of the consummation date in
conjunction with the closing of the Elgin and Bel Air centers. The
components of the costs are: $1,200,000 for the remaining facility
rental terms; $100,000 for the removal of the equipment at the Bel Air
facility; $200,000 to restore rental facilities to the condition
required under the terms of the respective leases; and $65,000 for
severance to involuntarily terminated employees. There can be no
assurance that the cost of such closing will not be greater than the
anticipated amount shown herein.
(2) Represents the rental liability related to NMR's corporate office
which is expected to be closed after the NMR Acquisition.
(3) Represents the severance for employees at NMR's corporate office that
are expected to be involuntarily terminated as a result of the NMR
Acquisition.
8
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
(I) To eliminate NMR's historical stockholders' equity.
(J) To reclass amounts related to the expenditure of cash on acquisition costs
from other assets to Goodwill(See (A)).
Unaudited Pro Forma Combined Statement of Operations
(a) To eliminate the operations of NMR's Bel Air and Elgin centers which
Medical Resources expects it will close after the NMR Acquisition. The unaudited
historical operating results of the centers to be closed are as follows:
For the year
ended
March 31, 1996
(unaudited)
--------------
Revenue, net
Bel Air .............................. $1,706
Elgin ................................ 85
------
$1,791
======
Operating costs
Bel Air .............................. $1,399
Elgin ................................ 355
------
$1,754
======
Depreciation
Bel Air .............................. $ 518
Elgin ................................ 14
------
$ 532
======
Interest
Bel Air .............................. $ 514
Elgin ................................ 4
------
$ 518
======
(b) To reflect the increase in other income relating to the elimination of
the losses at the Austin, Texas center (in which NMR owned a minority interest)
which, for pro forma purposes, is assumed to have been disposed on January 1,
1995 (the center was closed on December 31, 1995).
(c) To reflect the increase of corporate general and administrative expense
resulting from non-competition and consulting agreements entered into in
connection with the NMR Acquisition offset by the elimination of the related
historical compensation.
Executive compensation (1) ............ $ (468)
Non-competition and consulting (2) .... 824
------
Net increase in corporate general
and administrative .................. $ 356
======
----------
(1) Represents the elimination of the certain historical compensation as
discussed above.
(2) Represents the expenses to be incurred during the pro forma period
presented relating to the non competition and consulting agreements
entered into in connection with the NMR Acquisition.
(d) To eliminate amortization expense relating to NMR's historical
goodwill.
(e) To reflect the amortization of the estimated $35,283,000 of goodwill
that results from the NMR Acquisition using the straight-line method over 20
years.
(f) To eliminate amortization expense relating to NMR's intangible assets
adjusted in footnote (G).
9
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
(g) To reflect the decrease in depreciation of fixed assets (not including
land) based upon adjustments to record the assets at the estimated fair value as
determined by independent appraisal, depreciated over an estimated weighted
average remaining useful life of eight years.
Adjustment to decrease fixed assets to independent
appraisal of fair value $ (2,908)
Weighted average depreciable life (years) 8
--------
Pro forma decrease in depreciation expense $ (364)
========
(h) To reflect the pro forma income taxes calculated at statutory rates.
(i) To adjust weighted average shares outstanding for the shares issued in
conjunction with the NMR Acquisition.
(j) To reflect pro forma operating results for Medical Resources'
acquisition of NEM on May 26, 1995, PCC on June 19, 1995, MRI-CT on January 9,
1996, NurseCare on January 12, 1996, Americare on April 19, Access on April 30,
1996 and We Care on June 28, 1996, as though the transactions were consummated
on January 1, 1995.
(k) To reflect pro forma operating results for NMR's acquisition of Morgan
on September 15, 1995 and CD MRI on January 1, 1996 as though the transactions
were consummated on April 1, 1995.
(l) To reflect the pro forma effect of the shares issued in conjunction
with the acquisitions noted in (j) on the weighted average of shares
outstanding.
(m) To reflect the pro forma effect of the shares issued in conjunction
with the acquisition noted in (k) on the weighted average of shares outstanding.
The shares were also adjusted for the 0.6875 Exchange Ratio.
Unaudited Pro Forma Combined Statement of Operations for the Six Months
Ended June 30, 1996
(aa) To eliminate the operations of NMR's Bel Air and Elgin centers which
Medical Resources expects it will close. The unaudited historical operating
results of the centers to be closed are as follows:
For the six
months ended
June 30, 1996
(unaudited)
-------------
Revenue, net
Bel Air .................................... $ 917
Elgin ...................................... 35
------
$ 952
======
Operating costs
Bel Air .................................... $ 924
Elgin ...................................... 142
------
$1,066
======
Depreciation
Bel Air .................................... $ 260
Elgin ...................................... 10
------
$ 270
======
Interest
Bel Air .................................... $ 259
Elgin ...................................... 2
------
$ 261
======
(bb) To eliminate the NMR Acquisition transaction costs incurred and expensed by
NMR.
10
<PAGE>
MEDICAL RESOURCES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
(cc) To reflect the increase of corporate general and administrative expense
resulting from non-competition and consulting agreements entered into in
connection with the NMR Acquisition offset by the elimination of the
related historical compensation.
Executive compensation(1) ................................... $ (272)
Non competition and consulting(2) ........................... 412
------
Net increase in corporate general and administrative ........ $ 140
======
----------
(1) Represents the elimination of the certain historical compensation as
discussed above.
(2) Represents the expenses to be incurred during the pro forma period
presented relating to the non competition and consulting agreements
entered into in connection with the NMR Acquisition.
(dd) To eliminate amortization expense relating to NMR's historical goodwill.
(ee) To reflect the amortization of the estimated $35,283,000 of goodwill that
results from the NMR Acquisition using the straight-line method over 20
years.
(ff) To eliminate amortization expense relating to NMR's intangible assets
adjusted in footnote (G).
(gg) To reflect the decrease in depreciation of fixed assets (not including
land) based upon adjustments to record the assets at the estimated fair
value as determined by independent appraisal, depreciated over an estimated
weighted average remaining useful life of eight years.
Adjustment to decrease fixed assets to independent
appraisal of fair value $ (2,908)
Weighted average depreciable life (years) 8
Pro forma decrease in depreciation expense (364)
Six months expense (half-year) (DIVIDED) 2
--------
Pro forma quarterly decrease in depreciation expense $ (182)
========
(hh) To reflect the pro forma income taxes calculated at statutory rates.
(ii) To adjust weighted average shares outstanding for the shares issued in
conjunction with the NMR Acquisition.
(jj) To reflect pro forma operating results for Medical Resources' acquisition
of MRI-CT on January 9, 1996, NurseCare on January 12, 1996, Americare on
April 19, 1996, Access on April 30, 1996 and We Care on June 28, 1996, as
though the transactions were consummated on January 1, 1996.
(kk) To reflect the pro forma effect of the shares issued in conjunction with
the acquisitions noted in (jj) on the weighted average of shares
outstanding.
11
<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.
MEDICAL RESOURCES, INC.
By: /s/ STEPHEN M. DAVIS
Name: Stephen M. Davis
Title: Secretary
Dated: September 30, 1996
12