<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) : MARCH 12, 1998
--------------
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) 688-7100
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name or former address, if changed since last report)
<PAGE>
Item 7 of the Registrant's Current Report on Form 8-K, event date March 12,
1998, is amended to read in its entirety as follows:
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Item 7(a). Financial Statements of Business Acquired.
INDEX TO FINANCIAL STATEMENTS TO CURRENT REPORT ON FORM 8-K/A
Report of Price Waterhouse LLP, Independent Accountants
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996, and 1995
Consolidated Statements of Stockholders' Equity (Deficit) for
the years ended December 31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996, and 1995
Notes to Consolidated Financial Statements for the years
ended December 31, 1997, 1996, and 1995
2
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders
of Mobile Technology Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity (deficit) and
of cash flows present fairly, in all material respects, the financial
position of Mobile Technology Inc. and its subsidiaries at December 31, 1997
and 1996, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Los Angeles, California
March 5, 1998
3
<PAGE>
Mobile Technology Inc.
Consolidated Balance Sheets
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
--------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $10,845 $ 4,902
Accounts receivable, net of allowance for doubtful
accounts of $892 and $928 9,865 8,897
Other receivables 678 747
Prepaid expenses 2,338 1,848
Deferred income taxes 457 724
--------------------
Total current assets 24,183 17,118
Equipment, net 33,901 24,425
Deposits 326 430
Investments in unconsolidated joint ventures 40 25
Other assets 980 2,986
--------------------
$59,430 $44,984
--------------------
--------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations and notes payable -
current portion $ 7,179 $ 4,781
Accounts payable and accrued liabilities 8,782 8,888
--------------------
Total current liabilities 15,961 13,669
Senior secured debt 15,000 15,000
Capital lease obligations and notes payable, less
current portion 21,226 13,605
Deferred income taxes 3,066 2,291
Other long-term liabilities 53 160
--------------------
Total liabilities 55,306 44,725
--------------------
Commitments - -
--------------------
Minority interest in consolidated joint ventures 284 204
--------------------
Stockholders' equity:
Common stock, $0.01 par value:
Authorized shares - 2,000,000
Issued and outstanding shares - 1,018,200 in 1997
and 1,000,000 in 1996 10 10
Warrants to purchase common stock 97 97
Additional paid-in capital and other 38,967 38,949
Accumulated deficit (35,234) (39,001)
--------------------
Total stockholders' equity 3,840 55
--------------------
Total liabilities and stockholders' equity $59,430 $44,984
--------------------
--------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
Mobile Technology Inc.
Consolidated Statements of Operations
(amounts in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995
---------------------------------
<S> <C> <C> <C>
Revenues $69,244 $66,871 $62,989
---------------------------------
Expenses:
Direct operating, excluding depreciation
and amortization 41,697 44,574 41,472
Sales, general and administrative 10,031 9,794 10,263
Depreciation and amortization 7,768 7,708 8,974
---------------------------------
Total operating expenses 59,496 62,076 60,709
---------------------------------
Operating income 9,748 4,795 2,280
---------------------------------
Other expense (income):
Debt restructuring costs - - 189
Interest expense 4,086 3,807 4,016
Interest income and other, net (988) (652) (773)
---------------------------------
Total other expense 3,098 3,155 3,432
---------------------------------
Income (loss) before income taxes, minority
interest and extraordinary item 6,650 1,640 (1,152)
Income tax provision (2,804) (1,605) (70)
---------------------------------
Income (loss) before minority interest and
extraordinary item 3,846 35 (1,222)
Minority interest in consolidated joint ventures (79) (185) (362)
---------------------------------
Income (loss) before extraordinary item 3,767 (150) (1,584)
Extraordinary item, net of income taxes -
gain on debt restructuring - 32,375 -
---------------------------------
Net income (loss) $ 3,767 $32,225 $ (1,584)
---------------------------------
---------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
Mobile Technology Inc.
Consolidated Statements of Stockholders' Equity (Deficit)
(amounts in thousands, except share data)
<TABLE>
<CAPTION>
Common Stock Additional Purchase Price Warrants
---------------- Paid-In in Excess of Net to Purchase Accumulated
Amount Shares Capital Assets Acquired Common Stock Deficit Total
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $ - 1,000 $31,341 $(10,189) $ - $(69,545) $(48,393)
Net loss - - - - - (1,584) (1,584)
-------------------------------------------------------------------------------------------
Balance at December 31, 1995 - 1,000 31,341 (10,189) - (71,129) (49,977)
Retirement of common stock in
connection with debt restructuring - (1,000) - - - - -
Recapitalization in connection with
debt restructuring 10 1,000,000 17,797 - - - 17,807
Warrants issued to stockholders in
connection with debt restructuring - - - - 97 (97) -
Net income - - - - - 32,225 32,225
-------------------------------------------------------------------------------------------
Balance at December 31, 1996 10 1,000,000 49,138 (10,189) 97 (39,001) 55
Issuance of common stock - 18,700 18 - - - 18
Retirement of common stock - (500) - - - - -
Net income - - - - - 3,767 3,767
-------------------------------------------------------------------------------------------
Balance at December 31, 1997 $10 1,018,200 $49,156 $(10,189) $97 $(35,234) $ 3,840
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
6
<PAGE>
Mobile Technology Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,767 $32,225 $ (1,584)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 7,768 7,708 8,974
Premium amortization from 1994 debt restructuring - (325) (560)
Provision for allowance for doubtful accounts 4,520 3,004 2,654
Minority interest in consolidated joint ventures 79 185 362
Gain on sale of assets (641) (536) (566)
Gain on sale of unconsolidated joint ventures - - (195)
Deferred income tax provision 1,041 1,567 -
Extraordinary gain on debt restructuring before
related costs - (33,413) -
Changes in assets and liabilities:
Accounts receivable (5,488) (3,607) (1,865)
Other receivables 69 (342) 713
Prepaid expenses (490) (431) (2)
Other assets 1,559 (288) (269)
Accounts payable and accrued liabilities (106) 3,257 (1,081)
-----------------------------------------
Net cash provided by operating activities 12,078 9,004 6,581
-----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Minority interest distributions - (48) (662)
Proceeds from sale of unconsolidated joint venture - - 200
Capital expenditures (995) (526) (2,364)
Proceeds from sale of assets 2,240 1,020 1,853
Other (15) - -
-----------------------------------------
Net cash provided by (used in) investing activities 1,230 446 (973)
-----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
(Repayment) proceeds from borrowings under line of credit - (1,763) 1,763
Repayment of notes payable (2,274) (1,091) (1,138)
Repayment of senior secured debt - - (2,082)
Repayment of capital lease obligations (5,109) (2,694) (3,619)
Issuance of common stock 18 - -
-----------------------------------------
Net cash used in financing activities (7,365) (5,548) (5,076)
-----------------------------------------
Net increase in cash and cash equivalents 5,943 3,902 532
Cash and cash equivalents at beginning of year 4,902 1,000 468
-----------------------------------------
Cash and cash equivalents at end of year $ 10,845 $ 4,902 $ 1,000
-----------------------------------------
-----------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 3,733 $ 1,478 $ 3,718
Income taxes (net of refunds) 2,258 580 79
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS.
7
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data)
1. DESCRIPTION OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
Mobile Technology Inc. (the "Company"), a Delaware corporation, provides
mobile and fixed site diagnostic and treatment services to hospitals,
clinics, physician groups, and outpatients throughout the country. Diagnostic
services include magnetic resonance imaging ("MR") and computerized
tomography ("CT"). The Company also provides kidney lithotripsy ("LI") and
high-dosage radiation brachytherapy ("BT") treatment services. Prior to
August 6, 1996, the Company was a wholly owned subsidiary of MTI Holdings II,
Inc. (NOTE 5).
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Mobile
Technology Inc., its wholly owned subsidiaries and general partnerships in
which the Company has controlling interest. Investments in other joint
venture partnerships are accounted for under the equity method. All
significant intercompany balances and transactions have been eliminated.
REVENUES
Revenues are recognized in the period in which services are performed.
Revenues are presented net of contractual allowances and adjustments.
EQUIPMENT
Equipment is carried at cost. Depreciation and amortization of equipment are
computed using the straight-line method over the estimated useful lives of
the assets or remaining lease term, whichever is shorter. The depreciable
lives of the equipment range from three to ten years. Expenditures for
repairs and maintenance are charged to expense as incurred.
8
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
1. DESCRIPTION OF THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF. SFAS No. 121
establishes accounting standards for the impairment of long-lived assets to be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. In addition, SFAS
No. 121 requires that certain long-lived assets be reported at the lower of
the carrying amount or fair value less cost to sell. The adoption of SFAS No.
121 did not have a significant impact on the Company's consolidated financial
position or results of operations.
STOCK-BASED COMPENSATION
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company has adopted the
disclosure-only provisions of SFAS No. 123 effective January 1, 1997, and has
elected to continue to account for stock-based compensation related to
employees under APB 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
interpretations.
INCOME TAXES
The provision for income taxes is computed on income as reported in the
consolidated financial statements and is determined by using the liability
method. A deferred tax liability is recognized for taxable temporary
differences and deferred tax assets are recognized for deductible temporary
differences and operating loss and credit carryforwards. A valuation
allowance would reduce deferred tax assets if it is more likely than not that
all, or some portion of such assets, will not be realized.
USE OF ESTIMATES
The presentation of the Company's financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
9
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
2. CONSOLIDATED STATEMENTS OF CASH FLOWS
The Company considers all highly liquid, short-term investments with an original
maturity of three months or less to be cash equivalents.
Non-cash investing activities comprised the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------------
<S> <C> <C> <C>
Capital expenditures financed by
capital lease obligations and
installment notes $17,401 $10,230 $4,186
--------------------------------------
--------------------------------------
Non-cash financing activities comprised
the following:
1997 1996 1995
--------------------------------------
Extinguishment of senior secured
notes and certain related accrued
interest payable (NOTE 5) $ - $33,413 $ -
--------------------------------------
--------------------------------------
</TABLE>
3. EQUIPMENT
Equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
-----------------------
<S> <C> <C>
MR, CT, LI and BT units $66,422 $67,362
Ancillary equipment and other 6,462 6,721
-----------------------
72,884 74,083
Less: Accumulated depreciation and amortization 38,983 49,658
-----------------------
$33,901 $24,425
-----------------------
-----------------------
</TABLE>
Equipment included assets of $38,463 and $24,520 financed by capital leases as
of December 31, 1997 and 1996, respectively. Accumulated amortization for assets
financed by capital leases amounted to $9,012 and $6,281 at December 31, 1997
and 1996, respectively. Amortization expense for these assets totaled $4,679,
$3,066 and $2,840 in 1997, 1996 and 1995, respectively.
10
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
December 31,
1997 1996
-------- --------
<S> <C> <C>
Accounts payable $ 1,084 $ 1,153
Accrued compensation and related expenses 2,639 2,329
Accrued taxes, other than income 2,259 2,477
Accrued interest payable 909 731
Other accrued liabilities 1,891 2.198
-------- --------
$ 8,782 $ 8,888
-------- --------
-------- --------
</TABLE>
5. LONG-TERM DEBT AND COMMITMENTS
RECAPITALIZATION, DEBT RESTRUCTURING AND SENIOR SECURED DEBT
The Company completed a debt restructuring agreement on August 6, 1996. Under
the terms of the agreement, the Company's common stock was recapitalized at a
par value of $0.01 per share. The holders of the common stock of MTI Holdings
II, Inc. agreed to merge MTI Holdings II, Inc. with and into the Company in
exchange for 37,500 shares of the Company's common stock, Series A Common
Stock Purchase Warrants ("Series A Warrants") to purchase up to an aggregate
of 30,000 shares of the Company's common stock, and Series B Common Stock
Purchase Warrants ("Series B Warrants") to purchase up to an aggregate of
70,000 shares of the Company's common stock. Series A Warrants entitle their
holders to purchase the Company's common stock at an initial exercise price
of $19.30 per share and expire on August 6, 2000. Series B Warrants entitle
their holders to purchase the Company's common stock at an initial exercise
price of $34.30 per share and expire on August 6, 2001. The initial price of
the Series A and B Warrants are subject to certain antidilution adjustments.
Senior secured notes with an aggregate carrying value of $63,613 and all
related accrued interest amounting to $2,606 at the restructure date were
exchanged for $15,000 of new senior secured notes and 962,500 newly issued
shares of common stock of the Company with an estimated fair value of
$17,806. As a result of the debt restructuring transaction, the Company
recorded an extraordinary gain of $32,375 net of related transaction costs.
Interest on the new notes is 12% per annum; payable on January 1, and July 1,
of each year through July 1, 2003. Three scheduled principal payments of
$5,000 will occur on July 1, in each of the years 2001, 2002 and 2003.
11
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
5. LONG-TERM DEBT AND COMMITMENTS (CONTINUED)
LINE OF CREDIT
The Company has a $4,000 revolving line of credit agreement which expired in
February 1998, secured by customer contracts, accounts receivable and other
assets. Borrowings under the line of credit bear interest at the lender's
prime reference rate (8.50% at December 31, 1997) plus 3% per annum. The
agreement also contains certain covenants for cash flows, working capital and
cross default provisions to the restructured senior secured notes. At
December 31, 1997 and 1996 there were no outstanding borrowings under the
line of credit. At December 31, 1997, $2,617 was available for borrowings.
CAPITAL LEASE OBLIGATIONS AND NOTES PAYABLE
Capital lease obligations and notes payable consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
--------------------
<S> <C> <C>
Installment notes $18,604 $ 3,476
Capital lease obligations payable through 2002,
with interest rates ranging from 7.75% to 15%
per annum 9,801 14,910
--------------------
28,405 18,386
Less: current portion 7,179 4,781
--------------------
$21,226 $13,605
--------------------
--------------------
</TABLE>
Maturities of capital lease obligations and notes payable at December 31,
1997 are as follow:
<TABLE>
<S> <C>
1998 $ 7,179
1999 7,402
2000 6,197
2001 5,072
2002 2,555
-------
$28,405
-------
-------
</TABLE>
12
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
5. LONG-TERM DEBT AND COMMITMENTS (CONTINUED)
LEASES
The Company leases equipment and facilities under operating and capital
leases. Certain facility leases contain renewal options and rent escalation
provisions. Leases are secured by equipment and, in some cases, by customer
contracts and accounts receivable. Leases were secured by accounts receivable
of approximately $89 and $177 at December 31, 1997 and 1996, respectively.
Certain capital lease agreements provide for bargain purchase options at the
end of the lease term. Certain equipment leasing and financing obligations
contain cross default provisions relating to the restructured senior secured
notes. Total rental expense under operating leases was $14,071, $15,029 and
$13,792 in 1997, 1996 and 1995, respectively.
Future minimum lease payments under capital leases and non-cancelable
operating leases at December 31, 1997 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-----------------------
<S> <C> <C>
1998 $ 4,311 $10,730
1999 3,937 5,840
2000 2,135 2,369
2001 825 847
2002 123 422
Thereafter - 238
-----------------------
11,331 $20,446
----------
----------
Less: amount representing interest 1,530
------------
Present value of minimum lease payments 9,801
Less: current portion 3,484
------------
$ 6,317
------------
------------
</TABLE>
13
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
6. INCOME TAXES
The provision (benefit) for income tax consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
-------------------------------
<S> <C> <C> <C>
Current
Federal $1,454 $ 23 $ -
State 309 15 70
-------------------------------
1,763 38 70
-------------------------------
Deferred
Federal 388 1,712 -
State 653 (145) -
-------------------------------
1,041 1,567 -
-------------------------------
$2,804 $1,605 $70
-------------------------------
-------------------------------
</TABLE>
The difference between the tax provision (benefit) computed based on applying
the U.S. statutory income tax rate to the income (loss) before income taxes
and the recorded provision is due primarily to the following:
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- ------
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% (34.0%)
State income taxes (net of federal benefit) 8.0 (6.8) 1.2
Capitalized restructuring costs - 19.1 -
Change in valuation allowance (0.2) 42.4 31.2
Other 0.4 9.1 5.2
----- ----- ------
42.2% 97.8% 3.6%
----- ----- ------
----- ----- ------
</TABLE>
The Internal Revenue Code imposes limitations on the annual amount of net
operating loss ("NOL") and investment tax credit ("ITC") carryforwards which
may be utilized subsequent to an "ownership change". The debt restructuring
transaction during 1996 qualified as such an ownership change (NOTE 5).
Consequently at December 31, 1997, the Company has "pre-change" federal NOL
carryfowards of $49,058 which may only offset taxable income of approximately
$40 per year, and will likely not be fully utilized prior to their expiration
in the years 1998 through 2010. Accordingly, only the limited NOL allowed is
reflected in the consolidated financial statements as a deferred tax asset.
14
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
6. INCOME TAXES (CONTINUED)
Deferred tax assets/(liabilities) consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1997 1996
------ ------
<S> <C> <C>
DEFERRED TAX ASSETS
Accrued liabilities $ 323 $ 524
Basis difference in partnerships 598 378
Allowance for doubtful accounts 278 307
Net operating losses 16,857 16,958
Other 21 60
--------- ---------
Total deferred tax assets 18,076 18,225
--------- ---------
DEFERRED TAX LIABILITIES
Depreciable, amortizable and other property (3,634) (2,526)
Prepaid expenses (386) (514)
--------- ---------
Total deferred tax liabilities (4,020) (3,040)
--------- ---------
Net deferred tax assets before valuation
allowance 14,057 15,185
Valuation allowance (16,666) (16,752)
--------- ---------
Net deferred tax liability $ (2,609) $ (1,567)
--------- ---------
--------- ---------
</TABLE>
7. STOCK PURCHASE PLAN
Effective November 1996, the Company adopted, and the Board of Directors
approved, the 1996 Equity Plan. The Plan provides for the Company's Compensation
Committee of the Board of Directors to make available shares of common stock for
purchase by certain key employees, directors or consultants. In April 1997, the
Company made available for purchase by certain members of management common
stock of the Company under stock offerings pursuant to the 1996 Equity Plan.
Additional offerings may be provided in each first quarter of the years 1998
through 2000. The aggregate number of shares of stock to be offered shall not
exceed 60,000 shares in total. The purchase price per share is the greater of
one dollar or net book value as defined. Shares offered under the Plan must
15
<PAGE>
Mobile Technology Inc.
Notes to Consolidated Financial Statements (continued)
(amounts in thousands, except share data)
7. STOCK PURCHASE PLAN (CONTINUED)
be purchased within sixty days from the date offered and all shares are
immediately vested. Upon termination of employment, the Company retains the
right of repurchase at the then prevailing net book value. In the event of a
change of control or an initial public offering, the repurchase feature
lapses.
In 1997, 18,700 shares were offered and purchased under the Plan. No
compensation charge to income was recognized. Had the Company adopted the
fair value method prescribed in SFAS No. 123, the purchase of these shares
would have resulted in a decrease to net income of $355 which represents the
estimated fair value of the offers.
8. SUBSEQUENT EVENT
On January 13, 1998, the Company entered into a definitive agreement with
Alliance Imaging, Inc. ("Alliance") under which the common stock of the
Company will be acquired by a subsidiary of Alliance. The consummation of the
transaction will be subject to customary conditions and necessary regulatory
approvals.
16
<PAGE>
Item 7(b). Pro Forma Financial Information
Pro forma financial information that would be required pursuant to
Article 11 of Regulation S-X.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined balance sheet at
December 31, 1997 gives effect to Alliance Imaging, Inc.'s ("Alliance")
acquisition ("MTI acquisition") of all the outstanding common stock of Mobile
Technology Inc. ("MTI") in a transaction accounted for as a purchase business
combination.
The following unaudited pro forma condensed combined statement of
operations for the year ended December 31, 1997 has been prepared as if the
acquisition had occurred on January 1, 1997.
The unaudited pro forma condensed combined financial information is
based on the consolidated financial statements of Alliance giving effect to
the MTI acquisition under the assumptions and adjustments outlined in the
accompanying notes to unaudited pro forma condensed combined balance sheet
and statement of operations. Such pro forma adjustments are based upon
available information and upon certain assumptions that the Company's
management believes are reasonable under the circumstances. The unaudited
pro forma condensed combined balance sheet and statement of operations are
provided for comparative purposes only and do not purport to represent the
results that would have been obtained had the MTI acquisition occurred on the
date indicated or that may be achieved in the future.
The unaudited pro forma condensed combined balance sheet and statement
of operations and accompanying notes should be read in conjunction with the
consolidated financial statements of Alliance contained in Alliance's Annual
Report on Form 10-K for the year ended December 31, 1997, and MTI's audited
consolidated financial statements for the years ended December 31, 1997,
1996, and 1995 included in this Form 8-K/A.
17
<PAGE>
Alliance Imaging, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HISTORICAL HISTORICAL
ALLIANCE MTI ADJUSTMENTS PRO FORMA
---------- ---------- ----------- ---------
Assets
Current assets:
Cash and short-term investments $ 10,798 $ 10,845 ($ 8,679)(a) $ 12,964
Receivables, net 13,100 10,543 - 23,643
Deferred income taxes 2,478 457 - 2,935
Other current assets 1,285 2,338 - 3,623
---------- ---------- ----------- ---------
Total current assets 27,661 24,183 (8,679) 43,165
Equipment, net 112,213 33,901 (10,976)(b)
- - 3,147 (a) 138,285
Intangible assets, net 36,149 - 77,953 (b) 114,102
Deferred financing costs 13,641 - 2,814 (a)
- - (1,300)(c) 15,155
Other assets 3,991 1,346 - 5,337
---------- ---------- ----------- ---------
Total assets $193,655 $ 59,430 $ 62,959 $316,044
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 6,677 $ 1,084 $ - $ 7,761
Accrued compensation and related expenses 5,982 2,639 - 8,621
Other accrued liabilities 8,021 5,059 2,006 (b)
- - (408)(a) 14,678
Current portion of capital lease obligations
and notes payable - 7,179 (5,027)(a) 2,152
Current portion of long-term debt 6,351 - 900 (a) 7,251
---------- ---------- ----------- ---------
Total current liabilities 27,031 15,961 (2,529) 40,463
Other liabilities 86 53 4,226 (b) 4,365
Long-term debt, net of current portion 227,874 15,000 (15,000)(a)
- - 94,494 (a) 322,368
Capital lease obligations and notes payable,
net of current portion - 21,226 (13,092)(a) 8,134
Deferred income taxes 6,865 3,066 - 9,931
---------- ---------- ----------- ---------
Total liabilities 261,856 55,306 68,099 385,261
Minority interest in consolidated joint ventures - 284 - 284
Redeemable preferred stock 14,487 - - 14,487
Stockholders' equity (deficit):
Paid-in-capital (deficit) (59,697) 39,074 (39,074)(b) (59,697)
Accumulated deficit (22,991) (35,234) 35,234 (b) (22,991)
- - (1,300)(c) (1,300)
---------- ---------- ----------- --------
Total stockholders' equity (deficit) (82,688) 3,840 (5,140)(b) (83,988)
Total liabilities and stockholders'
equity (deficit) $193,655 $ 59,430 $ 62,959 $316,044
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
18
</TABLE>
<PAGE>
Alliance Imaging, Inc.
Notes to Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
<S> <C>
(a) Sources:
--------
Term loan facility (including current portion) $ 90,000
Revolving loan facility 5,394
--------
Total sources $ 95,394
--------
--------
Uses:
-----
Purchase of MTI stock $ 58,342
Purchase of equipment 3,147
Repay outstanding MTI indebtedness:
Accrued interest 408
Current portion of capital lease obligations and notes payable 5,027
Capital lease obligations and notes payable, net of current
portion 13,092
Long-term debt, net of current portion 15,000
Prepayment penalty 894
MTI acquisition costs 5,349
Deferred financing costs 2,814
Decrease in MTI/Alliance cash balances (8,679)
--------
Total Uses $ 95,394
--------
--------
(b) Purchase price allocation and calculation of purchased
intangibles:
Purchase of MTI stock $ 58,342
MTI acquisition costs 5,349
Current portion of MTI unfavorable lease obligations 1,635
Long-term portion of MTI unfavorable lease obligations 4,226
Prepayment penalty 894
Other liabilities 371
Adjustment of equipment to fair market value 10,976
Elimination of MTI book equity (3,840)
--------
Total Purchased Intangibles $ 77,953
--------
--------
</TABLE>
(c) Write-off of deferred financing costs in connection with Alliance's debt
modification made in connection with the MTI acquisition and recorded in
the first quarter of 1998.
The above allocation of the MTI purchase price is tentative pending
completion of fair value determinations for the net assets acquired. The
allocation may change with the completion of these determinations.
19
<PAGE>
ALLIANCE IMAGING, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year ended December 31, 1997
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Historical Historical
Alliance MTI Adjustments Pro Forma (a)
---------- ---------- ----------- ---------
Revenues $ 86,474 $ 69,244 - $155,718
Operating expenses, excluding depreciation 38,997 41,697 (3,041)(b) 77,653
Depreciation expense 15,993 7,768 (2,700)(c) 21,061
Selling, general and administrative expenses 8,857 10,031 - 18,888
Amortization expense, primarily goodwill 2,426 - 4,372 (d) 6,798
Interest expense, net of interest income 7,808 3,098 204 (b)
- - 5,209 (e) 16,319
Recapitalization merger costs 16,350 - - 16,350
---------- ---------- ----------- ---------
Total costs and expenses 90,431 62,594 4,044 157,069
Income (loss) before income taxes, minority
interest and extraordinary gains (3,957) 6,650 (4,044) (1,351)
Minority interest in consolidated joint ventures - (79) - (79)
Provision for income taxes 1,700 2,804 1,746 (f) 6,250
---------- ---------- ----------- ---------
Income (loss) before extraordinary gains ($5,657) $ 3,767 ($5,790) ($7,680)
---------- ---------- ----------- ---------
---------- ---------- ----------- ---------
Income (loss) before extraordinary gains per
share - basic and diluted (g) ($0.41) ($0.60)
---------- ---------
---------- ---------
</TABLE>
20
<PAGE>
Alliance Imaging, Inc.
Notes to Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended December 31, 1997
(a) Non-recurring charges of $1,300,000 comprised of an extrordinary loss
related to the write-off of deferred financing costs in connection with
Alliance's debt modification were recorded during Alliance's quarter ended
March 31, 1998.
(b) Reflects a reduction to operating expenses and an increase to interest
expense related to the amortization of the MTI unfavorable lease
obligations.
(c) Reflects a reduction in depreciation expense related to the write-down of
equipment to fair market value.
(d) Reflects goodwill amortization of $3,898 using a 20 year life, and deferred
financing costs amortization of $474.
(e) Incremental interest expense, as adjusted, reflects the elimination of MTI
historical interest expense due to the retirement of certain existing MTI
debt obligations and assumes that the following indebtedness was
outstanding as of the beginning of the reporting period (in thousands):
<TABLE>
<CAPTION>
Annual Interest
Principal Expense
------------ ---------------
<S> <C> <C>
Term loan facility, interest at LIBOR
plus 2.50% (currently 8.19%) $ 40,000 $ 3,276
Term loan facility, interest at LIBOR
plus 2.75% (currently 8.47%) 50,000 4,235
Revolving loan facility, interest at LIBOR
plus 2.25% (currently 7.94%) (including
0.50% annual commitment fee on pro forma
unutilized balance of $69,606) 5,394 776
Other debt, weighted average interest at
approximately 9.80% 10,286 1,008
Elimination of MTI historical interest expense (4,086)
---------------
$ 5,209
---------------
---------------
</TABLE>
(f) Income tax effect of pro forma adjustments determined on a separate return
basis.
(g) Loss per share information calculated based on 10,743,000 shares, the
weighted average number of Alliance Imaging, Inc. shares outstanding in
1997. In calculating per share amounts, loss before extraordinary gains
has been increased by $626,000 of Alliance preferred stock dividends and
reduced by $1,906,000 of excess of carrying amount of Alliance preferred
stock repurchased over consideration paid.
21
<PAGE>
Item 7(c). Index of Exhibits
2 Agreement and Plan of Merger dated as of January 13, 1998,
between MTI Acquisition Corp. and Mobile Technology Inc.
(incorporated by reference to Exhibit 2 of the Registrant's
Current Report on Form 8-K, event date January 13, 1998).
4 Stockholders' Agreement dated as of January 13, 1998 among
MTI Acquisition Corp. and certain shareholders of Mobile
Technology Inc. (incorporated by reference to Exhibit 4 of
the Registrant's Current Report on Form 8-K, event date
January 13, 1998).
99.01 Press Release dated January 13, 1998 (incorporated by
reference to Exhibit 99 of the Registrant's Current Report
on Form 8-K, event date January 13, 1998).
99.02 Press Release dated March 12, 1998 (incorporated by
reference to Exhibit 99.02 of the Registrant's Current
Report on Form 8-K, event date March 12, 1998).
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIANCE IMAGING, INC.
By: /s/ Kenneth S. Ord
----------------------
Kenneth S. Ord
Senior Vice President and
Chief Financial Officer
Date: May 26, 1998
23
