<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED : MARCH 31, 1997
COMMISSION FILE NUMBER: 0-16334
ALLIANCE IMAGING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0239910
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1065 NORTH PACIFICENTER DRIVE
SUITE 200
ANAHEIM, CALIFORNIA 92806
(Address of principal executive office)
(714) 921-5656
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 April 30, 1997:
Common Stock, $.01 par value, 10,927,471
1
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ALLIANCE IMAGING, INC.
FORM 10-Q
March 31, 1997
Index
Page
PART I -- FINANCIAL INFORMATION
Item 1 -- Condensed Financial Statements:
Condensed Consolidated Balance Sheets -- 3
March 31, 1997 and December 31, 1996
Condensed Consolidated Statements of Income 4
Three months ended March 31, 1997 and 1996
Condensed Consolidated Statements of Cash Flows 5
Three months ended March 31, 1997 and 1996
Note to Condensed Consolidated Financial Statements 6
Item 2 -- Management's Discussion and Analysis 7
of Financial Condition and Results of
Operations
PART II -- OTHER INFORMATION 12
SIGNATURES 18
2
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996*
---------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and short-term investments $ 13,305,000 $ 10,867,000
Accounts receivable, net of allowance
for doubtful accounts 8,696,000 8,889,000
Prepaid expenses 688,000 710,000
Other receivables 32,000 345,000
----------- -----------
Total current assets 22,721,000 20,811,000
Equipment, at cost 128,480,000 121,354,000
Less--Accumulated depreciation (45,906,000) (43,735,000)
----------- -----------
82,574,000 77,619,000
Goodwill 27,424,000 27,990,000
Deposits and other assets 1,783,000 2,090,000
----------- -----------
Total assets $134,502,000 $128,510,000
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,666,000 $ 1,765,000
Accrued compensation and related expenses 2,814,000 3,465,000
Other accrued liabilities 8,240,000 6,341,000
Current portion of long-term debt 17,693,000 16,323,000
----------- -----------
Total current liabilities 31,413,000 27,894,000
Long-term debt, net of current portion 56,910,000 72,702,000
Other liabilities 2,207,000 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 18,388,000 388,000
Common stock 109,000 109,000
Additional paid-in capital 36,163,000 34,404,000
Accumulated deficit (15,519,000) (18,541,000)
----------- -----------
Total non-redeemable preferred and common
stockholders' equity 39,141,000 16,360,000
----------- -----------
Total liabilities and stockholders' equity $134,502,000 $128,510,000
----------- -----------
----------- -----------
</TABLE>
* Derived from audited financial statements
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Revenues $19,106,000 $14,685,000
Costs and expenses:
Operating expenses, excluding depreciation 8,681,000 7,181,000
Depreciation expense 3,485,000 2,866,000
Selling, general and administrative expenses 1,897,000 1,507,000
Amortization expense, primarily goodwill 571,000 344,000
Interest expense, net of interest income 1,933,000 1,185,000
----------- -----------
Total costs and expenses 16,567,000 13,083,000
----------- -----------
Income before income taxes and extraordinary gain 2,539,000 1,602,000
Provision for income taxes 835,000 239,000
----------- -----------
Income before extraordinary gain 1,704,000 1,363,000
Extraordinary gain, net of taxes 1,332,000 --
----------- -----------
Net income 3,036,000 1,363,000
Less: Preferred stock dividends -- (233,000)
Add: Excess of carrying amount of preferred stock
repurchased over consideration paid 1,906,000 --
----------- -----------
Income applicable to common stock $ 4,942,000 $ 1,130,000
----------- -----------
----------- -----------
Weighted average common and common equivalent
shares outstanding 11,985,000 11,309,000
----------- -----------
----------- -----------
Earnings per share:
Income before items below $ 0.14 $ 0.10
Excess of carrying amount of preferred stock
repurchased over consideration paid 0.16 --
----------- -----------
Income before extraordinary gain 0.30 0.10
Extraordinary gain, net of taxes 0.11 --
----------- -----------
Income applicable to common stock $ 0.41 $ 0.10
----------- -----------
----------- -----------
</TABLE>
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
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ALLIANCE IMAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,036,000 $ 1,363,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary gain (1,332,000) --
Depreciation and amortization 4,056,000 3,210,000
Amortization of deferred financing charges 14,000 32,000
Distributions in excess of equity
in income of investee 58,000 75,000
Changes in operating assets and liabilities:
Accounts receivable, net 193,000 (1,322,000)
Prepaid expenses 22,000 (145,000)
Other receivables 313,000 92,000
Other assets (9,000) (33,000)
Accounts payable, accrued compensation and
other accrued liabilities 250,000 1,201,000
Other liabilities 983,000 146,000
----------- -----------
Net cash provided by operating activities 7,584,000 4,619,000
INVESTING ACTIVITIES:
Equipment purchases (8,440,000) (6,200,000)
Decrease in deposits on equipment 239,000 978,000
Purchase of contracts and related assets of
Mobile M.R. Venture, Ltd. -- (455,000)
----------- -----------
Net cash used in investing activities (8,201,000) (5,677,000)
FINANCING ACTIVITIES:
Payment of preferred stock dividends (265,000) --
Repurchase of senior subordinated debentures (2,286,000) --
Repurchase of Series A preferred stock (2,523,000) --
Principal payments on long-term debt (4,613,000) (2,470,000)
Proceeds from long-term debt 7,601,000 4,316,000
Proceeds from senior bridge loan 5,128,000 --
Proceeds from exercise of employee stock options 13,000 9,000
Decrease in minority interests in partnership -- (5,000)
----------- -----------
Net cash provided by financing activities 3,055,000 1,850,000
----------- -----------
Net increase in cash and short-term investments 2,438,000 792,000
Cash and short-term investments, beginning of period 10,867,000 11,128,000
----------- -----------
Cash and short-term investments, end of period $13,305,000 $11,920,000
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $2,050,000 $1,280,000
Income taxes paid 70,000 38,000
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Conversion of senior bridge loan into Series D
4% convertible preferred stock $18,000,000 --
</TABLE>
SEE NOTE TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
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Alliance Imaging, Inc.
Note to Condensed Consolidated Financial Statements
March 31, 1997
(Unaudited)
BASIS OF PREPARATION
The accompanying unaudited condensed consolidated financial statements
have been prepared by Alliance Imaging, Inc. (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 three month period ended March 31, 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 three month periods ended March
31, 1997 and 1996 are based upon weighted average common and common
equivalent shares outstanding during the period. For the three month period
ended March 31, 1996 common equivalent shares include vested stock options
with an exercise price lower than current market value and reflect preferred
dividend requirements of $233,000. For the three month period ended March
31, 1997, common equivalent shares include warrants and vested 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 quarter ended March 31, 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 $0.13 per share. This calculation ignores amounts reported in the
1997 historical results as gain arising from the repurchase of the senior
subordinated debentures and as 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 $0.14 per share "income before
items below" reported in the Company's first quarter 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 primary earnings per
share, the dilutive effect of stock options and the Series D convertible
preferred stock will be excluded. The impact of Statement 128 on the
calculation of earnings per share for the quarters ended March 31, 1997 and
1996 is not expected to be material.
The provisions for income taxes for the three month periods ended March
31, 1997 and 1996 are less than the statutory federal rate due to utilization
of certain net operating loss carryforwards during the periods.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The Company's financial performance depends substantially upon the scan
volume of its magnetic resonance imaging (MRI) systems. Revenues are
generally derived from one to eight year contracts with health care
providers. Since a majority of the Company's expenses are fixed, increased
revenues as a result of higher scan volumes significantly improve the
Company's profitability. Conversely, 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 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 quarter 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 three years. Additionally, the Company continues to evaluate
the profitability of certain existing customer relationships with a view
toward eliminating unprofitable accounts and redeploying or otherwise
disposing of certain equipment.
The Company intends to continue its ongoing equipment trade-in and
upgrade program which has substantially improved the marketability and
productivity of its MRI and computed axial tomography (CT) systems. The
Company intends to either trade in older, less marketable MRI systems in
connection with new system purchases, or to upgrade them with new computers,
software and coils to enable its MRI systems to remain competitive in the
marketplace.
RESULTS OF OPERATIONS -- COMPARISON OF QUARTER ENDED MARCH 31, 1997 TO QUARTER
ENDED MARCH 31, 1996 -- Revenues for the first three months of 1997 were
$19,106,000, an increase of $4,421,000, or 30.1%, over 1996. Excluding
revenues of $2,050,000 relating to MRI operations which were acquired
subsequent to the first quarter of 1996, the increase in revenues was
$2,371,000, or 16.1%. This increase reflects a scan-based MRI revenue increase
of $3,970,000, or 30.4% ($2,050,000, or 15.6%, as a result of MRI operations
acquired subsequent to the first
7
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quarter of 1996), resulting from a 32.5% increase in total scan volume
partially offset by a 1.6% decrease in the average revenue realized per MRI
scan. MRI operations acquired subsequent to the first quarter of 1996 were
responsible for 16.5% of the scan volume increase and 0.5% of the offsetting
price per scan decrease. The average number of scans per day for each MRI
system increased 9.6% to 6.8 from 6.2 in 1996. Management attributes the
non-acquisition 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 recently
implemented marketing programs. Management believes the decrease in average
revenues realized per scan is the result of: continuing competitive pressure
in the MRI service industry and cost containment efforts by health care
payers; obtaining contracts with customers that have high scan volumes which
justify lower scan prices; and many customers achieving discount price levels
by virtue of attaining higher scan volumes. Revenue under fixed fee contracts
increased $29,000, or 4.8%. Other revenue increased $264,000 primarily as a
result of the implementation in late 1996 of a program providing management
services for a large portfolio of imaging systems. CT revenue increased
$158,000, or 17.4%, as a result of internal growth and the fourth quarter
1996 acquisition of a small CT business.
The Company operated 87 MRI systems at March 31, 1997 compared to 81 MRI
systems at March 31, 1996. The average number of MRI systems operated by the
Company was 85 during the first quarter of 1997, compared to 80.5 during the
first quarter of 1996.
Operating expenses, excluding depreciation, totaled $8,681,000 in the
first three months of 1997, an increase of $1,500,000, or 20.9%, from the
first quarter of 1996. Excluding expenses of $862,000 related to operations
which were acquired after the first quarter of 1996, the increase in
operating expenses was $638,000, or 8.9%. Payroll and related employee
expenses increased $615,000, or 19.2%, which was in line with the revenue
increase. Equipment rental expense increased $202,000, or 41.8%, resulting
from a higher number of leased MRI systems in operation and the Company's
leasing of 20 new tractors after the first quarter of 1996. Repairs and
maintenance increased $178,000, or 52.5%, due to an increased number of
systems in service. Fuel and other vehicle expenses collectively increased
$152,000, or 53.1%, primarily due to increasing fuel prices and the addition
of new mobile MRI systems.
Depreciation expense during the first quarter of 1997 totaled
$3,485,000, an increase of $619,000, or 21.6%. Excluding depreciation
expense of $112,000 related to operations which were acquired after the first
quarter of 1996, depreciation expense increased $507,000, or 17.7%, from the
1996 level principally due to a higher amount of depreciable assets
associated with equipment additions and upgrades. Amortization expense
during the first three months of 1997 increased $227,000, or 66.0%, over the
1996 period as a result of the acquisitions made after the first quarter of
1996.
Selling, general and administrative expenses totaled $1,897,000 in the
first quarter of 1997, an increase of $390,000, or 25.9%, from the same
period in 1996. Payroll and related expenses increased $217,000, or 19.4%,
primarily as a result of increased incentive compensation related to
financial performance and increased staffing levels. Professional services
expenses increased $105,000 primarily due to costs associated with increased
investor relations efforts.
8
<PAGE>
Interest expense of $1,933,000 in the first quarter of 1997 was
$748,000, or 63.1%, higher than 1996, as a result of higher average
outstanding debt balances during 1997 as compared to 1996. This increase was
primarily related to the senior bridge loan (which was converted into Series
D convertible preferred stock on March 26, 1997) and to debt assumed in
connection with acquisitions made subsequent to the first quarter of 1996.
An income tax provision of $835,000 was recorded in in the first quarter
of 1997, which was higher than the tax provision recorded in the first
quarter of 1996 by $596,000, or 249.4%. 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 32.9% in 1997 from 14.9%
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 $1,704,000 in the
first quarter of 1997 compared to net income of $1,363,000 in the first
quarter of 1996, an increase of $341,000, or 25.0%, primarily attributable to
the increase in revenues achieved without a proportionate increase in
operating and selling, general and administrative expenses. Earnings per
common share directly related to operations totaled $0.14 in the first
quarter of 1997, compared to earnings per common share of $0.10 for the same
period in 1996, an increase of 40.0%. The Company 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 addition the
Company recorded earnings of $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. Earnings per common share
totaled $0.41 in the first quarter of 1997. The earnings per common share
calculations reflect preferred dividend requirements of $233,000 in the first
quarter of 1996 and none in the first quarter of 1997.
LIQUIDITY AND CAPITAL RESOURCES -- At March 31, 1997, cash and short-term
investments were $13,305,000 compared to $10,867,000 at December 31, 1996,
and the aggregate of the Company's long-term debt was $56,910,000 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 $7,584,000 in net cash from operating activities
during the first quarter of 1997, compared to $4,619,000 for the same period
in 1996, an increase of $2,965,000, or 64.2%. This cash flow was sufficient
to meet the Company's debt service obligations and capital expenditures not
financed. During the first three months of 1997, the Company financed
$7,601,000 of capital expenditures and repaid $4,613,000 of long-term debt.
The Company believes its continuing cash flow from operations as well as its
cash balances and other credit sources will be adequate for anticipated
operating, debt service, preferred dividend and capital expenditure
requirements.
9
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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 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.
On April 26, 1996, the Company acquired all of the outstanding shares of
Royal Medical Health Services, Inc. (Royal) of Pittsburgh, Pennsylvania, and
certain related assets. Like the Company, Royal is a provider of
comprehensive MRI services to hospitals. The Company issued 3,876 shares of a
new Series C convertible preferred stock valued at $388,000, common stock
warrants valued at $212,000 and paid $1,914,000 in cash as consideration for
the acquisition of Royal. The acquisition has been accounted for as a
purchase and, accordingly, the results of operations of Royal have been
included in the Company's consolidated financial statements from the date of
acquisition. The Series C convertible preferred stock bears a dividend of 5%
of its original liquidation value ($388,000) payable annually in cash and is
redeemable at the Company's option. Holders of Series C convertible preferred
stock may convert their stock into common stock at a price of $5 per common
share.
In the event of liquidation, dissolution or winding up of the Company,
the holders of Series C, 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
10
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distributions to common stockholders. No sinking fund has been or will be
established for the retirement or redemption of shares Series C, D or E
convertible preferred stock.
CAPITAL EXPENDITURES -- The Company purchased five new high-field MRI systems
and upgraded two other MRI systems at a total approximate cost of $8,440,000
during the first three months of 1997. Over 90% of this amount was financed
by long-term secured loans. During the first quarter of 1997 the Company
also disposed of four less technologically advanced mid-field MRI systems.
The Company currently plans to purchase 15 additional new high-field MRI
systems in 1997 and plans to upgrade several existing systems by year-end,
subject to obtaining related MRI service contracts with customers and
obtaining financing for the equipment acquisitions. The Company intends to
use a combination of existing cash reserves, cash flow from operations and
long-term secured equipment financing to finance its capital expenditures,
although there can be no assurance that such financing will be available to
the Company. The Company intends to continue focusing on acquiring
state-of-the-art equipment while disposing of older systems, and expects to
dispose of most of its remaining older systems during 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. These transactions were primarily funded with $2,850,000 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.
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.
11
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PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit No. Note Description
---------- ---- -----------
3.1 (21) Restated Certificate of Incorporation of Alliance
Imaging, Inc.
3.2 (1) By-Laws of Alliance Imaging, Inc., 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.
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.
12
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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.
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.
13
<PAGE>
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.
9.1 (1) Amended and Restated Voting Trust Agreement
between Donaldson, Lufkin & Jenrette Capital
Corporation and Meridian Trust Company dated
December 29, 1988.
10.4 (20) Amended and Restated 1991 Stock Option Plan of
Alliance Imaging, Inc., including forms of
agreement used thereunder.
10.16 (1) Form of Indemnification Agreement between
Alliance Imaging, Inc. and its directors and/or
officers.
10.18 (2) Lease Agreement dated September 13, 1991, by
and between Alliance Imaging, Inc. and Crestview
Partners.
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.
10.24 (7) Employment Agreement dated as of September 9,
1993, between Alliance Imaging, Inc. and
Richard N. Zehner.
10.25 (7) Employment Agreement dated as of September 9,
1993, 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.
14
<PAGE>
10.28 (7) Employment Agreement dated as of September 9,
1993, 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.
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 (17) Long-Term Executive Incentive Plan dated as of
March 28, 1995, adopted in final form November 28,
1995.
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.
15
<PAGE>
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 15, 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.
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.
___________________
(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.
16
<PAGE>
(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.
(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.
17
<PAGE>
(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.
(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.
(b) REPORTS ON FORM 8-K IN THE FIRST QUARTER OF 1997:
None filed for the quarter ended March 31, 1997.
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.
May 9, 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 May 9, 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)
18
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