<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA-1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 25, 1996
-------------------------------
(November 13, 1996)
-------------------------------
DIAGNOSTIC HEALTH SERVICES, INC.
Delaware 0-21758 22-2960048
- -------- ------- ----------
(State or other (Commission File (IRS Employer
jurisdiction of Number) ID Number)
incorporation)
2777 Stemmons Freeway, Suite 1525, Dallas, Texas 75207
--------------------------------------------------------------
(Address of principal executive offices)
(214) 634-0403
--------------------------------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------
(Former name or former address, if changed since last report.)
This first amendment to the Company's report on Form 8-K, originally
dated November 25, 1996, is being filed for the purposes of providing and
including (a) the required special-purpose statements of Advanced Clinical
Technology, Inc. and Horizon MDS Corporation (collectively "ACT") related to the
assets acquired and liabilities assumed, (b) the combined pro forma financial
information, and (c) the consent of Simonton, Kutac & Barnidge, L.L.P.,
independent public accountants.
Consistent with the foregoing, only Item 7 of the report on Form 8-K
is being amended, and the financial statements, pro forma financial information
and accountants' consent are attached hereto.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
- --------------------------------------------------------------------------
(a) Special-purpose financial statements of Diagnostic Health Services, Inc.
1. Statements of assets acquired and liabilities assumed from Advanced
Clinical Technology, Inc. and Horizon MDS Corporation (collectively
"ACT") as of September 30, 1996 and May 31, 1996.
2. Statements of operations related to assets acquired and liabilities
assumed from ACT for the four months ended September 30, 1996 and the
years ended May 31, 1996 and 1995.
3. Statements of cash flows related to assets acquired and liabilities
assumed from ACT for the four months ended September 30, 1996 and the
years ended May 31, 1996 and 1995.
(b) Pro forma financial information.
(c) The following Exhibits are filed as part of this Form 8-KA-1:
1. Consent of Simonton, Kutac & Barnidge, L.L.P.
<PAGE>
ITEM 7(a)
SPECIAL PURPOSE FINANCIAL STATEMENTS OF
ADVANCED CLINICAL TECHNOLOGY, INC.
AND
HORIZON MDS CORPORATION
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors
of Diagnostic Health Services, Inc.
We have audited the accompanying special-purpose statements of assets acquired
and liabilities assumed by Diagnostic Health Services, Inc. ("the Company") from
Advanced Clinical Technology, Inc. and Horizon MDS Corporation (collectively
"ACT") as of September 30, 1996 and May 31, 1996, and the related special-
purpose statements of operations and cash flows for the four months ended
September 30, 1996 and the years ended May 31, 1996 and 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying special-purpose financial statements were prepared for the
purpose of presenting the assets acquired and liabilities assumed pursuant to an
asset purchase agreement dated September 27, 1996 (consummated November 13,
1996), between the Company and ACT as discussed in Note 1, and are not intended
to be a presentation of financial position, results of operations, and cash
flows of the Company in accordance with generally accepted accounting
principles.
In our opinion, the special-purpose financial statements referred to above
present fairly, in all material respects, the assets acquired and liabilities
assumed from ACT as of September 30, 1996 and May 31, 1996, and the statements
of operations and cash flows for the four months ended September 30, 1996 and
the years ended May 31, 1996 and 1995 on the basis of accounting described in
Note 2.
/S/ Simonton, Kutac & Barnidge, L.L.P.
Simonton, Kutac & Barnidge, L.L.P.
Houston, Texas
December 12, 1996
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
STATEMENTS OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
-----------------------------------------------------
FROM ADVANCED CLINICAL TECHNOLOGY, INC. AND HORIZON MDS CORPORATION
-------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
------
September 30, May 31,
1996 1996
------------- -----------
<S> <C> <C>
Current Assets:
Accounts receivable:
Trade, net of allowance for doubtful accounts
of $1,400,981 and $489,011, respectively $ 3,574,303 $ 3,908,868
Other current assets 41,509 44,116
Prepaid expenses 258,417 222,238
----------- -----------
Total Current Assets 3,874,229 4,175,222
----------- -----------
Property & Equipment:
Equipment 12,714,757 11,853,920
Less: Accumulated depreciation and amortization (4,278,805) (3,957,800)
----------- -----------
Total Property & Equipment 8,435,952 7,896,120
----------- -----------
Other Assets:
Goodwill, net 8,702,383 8,778,723
Deposits and other 267,261 267,261
----------- -----------
Total Other Assets 8,969,644 9,045,984
----------- -----------
Total Assets $21,279,825 $21,117,326
=========== ===========
LIABILITIES & NET ASSETS
------------------------
Current Liabilities:
Current lease obligations $ 684,559 $ 562,231
Account payable 264,004 526,836
Other 92,614 54,615
----------- -----------
Total Current Liabilities 1,041,177 1,143,682
Long-term lease obligations 3,775,108 3,099,994
Other liabilities 145,843 191,676
----------- -----------
Total Liabilities 4,962,128 4,435,352
----------- -----------
Net Assets 16,317,697 16,681,974
----------- -----------
Total Liabilities & Net Assets $21,279,825 $21,117,326
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
STATEMENT OF OPERATIONS RELATED TO ASSETS ACQUIRED AND LIABILITIES ASSUMED
--------------------------------------------------------------------------
FROM ADVANCED CLINICAL TECHNOLOGY, INC. AND HORIZON MDS CORPORATION
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Four Months
Ended Year Ended Year Ended
September 30, May 31, May 31,
1996 1996 1995
------------- ----------- ----------
<S> <C> <C> <C>
Net revenues $4,440,026 $12,393,131 $6,908,374
---------- ----------- ----------
Expenses:
General & administrative 214,401 660,650 379,335
Salaries & employee benefits 2,564,636 6,745,694 3,620,106
Technical operating expenses 623,651 1,948,668 919,988
Provision for doubtful accounts 754,001 255,795 --
Depreciation and amortization 646,629 1,405,046 663,042
---------- ----------- ----------
Total operating expenses 4,803,318 11,015,853 5,582,471
---------- ----------- ----------
Income (loss) from operations (363,292) 1,377,278 1,325,903
---------- ----------- ----------
Other expense:
Other expense 133,857 286,538 392,662
Interest expense 167,416 417,120 349,283
---------- ----------- ----------
Total other expense 301,273 703,658 741,945
---------- ----------- ----------
Income (loss) before taxes (664,565) 673,620 583,958
Income tax expense -- 224 2,811
---------- ----------- ----------
Net income (loss) $ (664,565) $ 673,396 $ 581,147
========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
STATEMENTS OF CASH FLOWS RELATED TO ASSETS ACQUIRED AND LIABILITIES ASSUMED
---------------------------------------------------------------------------
FROM ADVANCED CLINICAL TECHNOLOGY, INC. AND HORIZON MDS CORPORATION
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Four Months
Ended Year Ended Year Ended
September 30, May 31, May 31,
1996 1996 1995
-------------- ------------- ------------
<S> <C> <C> <C>
Cash Flows from Operations:
Net (loss) income $ (664,565) $ 673,396 $ 581,147
Adjustments to Reconcile Net Income to
Net Cash Provided by Operations:
Depreciation and amortization 722,969 1,593,970 764,656
Decrease (increase) in trade receivable 334,565 (2,450,800) (538,352)
Decrease (increase) in other receivable 2,606 (23,905) 310,334
Decrease (increase) in prepaid
expenses and other assets (36,179) (97,301) (78,281)
Increase (decrease) in accounts payable (224,833) 304,885 (1,411,320)
Increase in other liabilities (45,431) 191,676 --
----------- ------------ -----------
Net Cash Provided (Used) by Operations 89,132 191,921 (371,816)
----------- ------------ -----------
Cash Flows from Investing Activities:
Cash payments for the purchase of
property (1,132,565) (5,345,415) (1,820,961)
Net acquisition of businesses -- (4,966,253) --
----------- ------------ -----------
Net Cash Used by Investing
Activities (1,132,565) (10,311,668) (1,820,961)
----------- ------------ -----------
Cash Flows from Financing Activities:
Net borrowings on line of credit 41,681 8,766,141 920,807
Increase in capital lease obligations 797,442 1,217,866 1,766,656
----------- ------------ -----------
Net Cash Provided in Financing
Activities 839,123 9,984,007 2,687,463
----------- ------------ -----------
Net (decrease) increase in cash (204,310) (135,740) 494,686
Cash, beginning of year 451,671 587,411 92,725
----------- ------------ -----------
Cash, end of year $ 247,361 $ 451,671 $ 587,411
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS RELATED TO ASSETS ACQUIRED AND LIABILITIES ASSUMED
- --------------------------------------------------------------------------------
FROM ADVANCED CLINICAL TECHNOLOGY, INC. AND HORIZON MDS CORPORATION
-------------------------------------------------------------------
NOTE 1 - BUSINESS AND ASSET ACQUISITION FROM ADVANCED CLINICAL TECHNOLOGY, INC.
- -------------------------------------------------------------------------------
AND HORIZON MDS CORPORATION ("ACT")
- ----------------------------------
On November 13, 1996, Diagnostic Health Services, Inc., through its wholly-owned
subsidiary, DHS Management Services, Inc. ("Company"), purchased substantially
all of the operating assets (exclusive of cash) of the Ultrasound Division ("the
Division") of Advanced Clinical Technology, Inc. and Horizon MDS Corporation
(collectively "ACT"), each of which is a wholly-owned subsidiary of Horizon/CMS
Healthcare Corporation.
The business of the Division consists primarily of providing non-invasive
ultrasound services on a mobile and in-house basis to hospitals and acute care
facilities primarily located in the west and southwestern United States.
NOTE 2 - BASIS OF PRESENTATION
- ------------------------------
The special-purpose financial statements included herein do not include all
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles.
In the opinion of management, the special-purpose financial statements include
all necessary adjustments for the fair presentation of the statements of assets
acquired and liabilities assumed and the related statements of operations and
cash flows for the periods noted therein.
The statements of operations for all periods presented reflect allocations of a
proportionate share of general and administrative expenses incurred by ACT.
Management believes that the allocation methods are reasonable and that
allocated costs and expenses approximate what such amounts would be if the
Division was operated on a stand-alone basis.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
Equipment --- Equipment is carried at cost. Depreciation is calculated on a
straight-line basis over the estimated useful life of the asset or over the
lease term, if shorter. Lease terms are generally five to seven years for
equipment and furniture.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
NOTES TO FINANCIAL STATEMENTS RELATED TO ASSETS ACQUIRED AND LIABILITIES ASSUMED
- --------------------------------------------------------------------------------
FROM ADVANCED CLINICAL TECHNOLOGY, INC. AND HORIZON MDS CORPORATION
-------------------------------------------------------------------
NOTE 4 - LEASES
- ---------------
The Company, as lessee, has entered into and/or assumed various non-cancelable
leases for machinery, service equipment, vehicles, and office facilities. The
following assets, subject to capital leases, are included in the balance sheet
under the corresponding asset categories at May 31, 1996.
Future minimum lease payments under non-cancelable leases at May 31, 1996 are as
follows:
<TABLE>
<CAPTION>
For the Years Ending Capital
May 31, Leases
-------------------- ----------
<S> <C>
1997 $ 862,005
1998 861,453
1999 904,936
2000 922,355
2001 829,219
Thereafter 188,902
----------
Total minimum lease payments 4,568,870
Less: amount representing interest 906,645
----------
Present value of minimum lease payments 3,662,225
Less: current portion 562,231
----------
Long-term capital lease obligation $3,099,994
==========
</TABLE>
Rent expense during the years ended May 31, 1996 and 1995 and the four months
ended September 30, 1996 for all operating leases was $10,680 and $18,850, and
$6,280, respectively, and is included in operating expenses.
<PAGE>
ITEM 7(b)
PRO FORMA FINANCIAL STATEMENTS
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA BALANCE SHEET (UNAUDITED)
-----------------------------------
SEPTEMBER 30, 1996
------------------
ASSETS
------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $11,583,276 $ 247,361 $(6,298,088) $ 5,532,549
Accounts receivable, net 3,482,561 3,574,303 (400,000) 6,656,864
Prepaid expenses 1,129,237 258,416 -- 1,387,653
Other current assets 1,655,696 41,510 -- 1,697,206
----------- ----------- ----------- -----------
Total Current Assets 17,850,770 4,121,590 (6,698,088) 15,274,272
----------- ----------- ----------- -----------
Property and equipment 13,500,467 12,714,757 (4,278,805) 21,936,419
Less: accumulated
depreciation (4,603,778) (4,278,805) 4,278,805 (4,603,778)
----------- ----------- ----------- -----------
Property and equipment,
net 8,896,689 8,435,952 -- 17,332,641
----------- ----------- ----------- -----------
Other Assets:
Deposits and other 4,762,211 267,261 (267,261) 4,762,211
Deferred acquisition costs 143,191 165,064 (165,064) 143,191
Non-compete agreements 1,507,473 -- -- 1,507,473
Goodwill 5,975,893 8,702,383 (2,423,318) 12,254,958
Less: accumulated
amortization (1,240,799) -- -- (1,240,799)
----------- ----------- ----------- -----------
Total Other Assets 11,147,969 9,134,708 (2,855,643) 17,427,034
----------- ----------- ----------- -----------
Total Assets $37,895,428 $21,692,250 $(9,553,731) $50,033,947
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA BALANCE SHEET (UNAUDITED) (CONTINUED)
----------------------------------------------
SEPTEMBER 30, 1996
------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Current Liabilities:
Accounts payable $ 874,782 $ 568,715 $ -- $ 1,443,497
Accrued expenses 181,499 152,007 242,071 575,577
Current portion of long-term debt 296,164 -- -- 296,164
Current portion of senior bank
term debt 620,000 -- 1,109,437 1,729,437
Current portion capital leases 1,390,027 915,137 -- 2,305,164
Other current liabilities 833,555 -- -- 833,555
----------- ----------- ------------ -----------
Total Current Liabilities 4,196,027 1,635,859 1,351,508 7,183,394
Long-term senior bank term debt 2,252,386 -- 5,460,136 7,712,522
Long-term lease obligations 2,074,585 3,544,530 -- 5,619,115
Other liabilities 852,624 145,843 -- 998,467
Deferred tax liability 205,961 493,816 (493,816) 205,961
----------- ----------- ------------ -----------
Total Liabilities 9,581,583 5,820,048 6,317,828 21,719,459
----------- ----------- ------------ -----------
Stockholders' equity:
Preferred stock, $.001 par value,
authorized 3,000,000 shares; 642,857
shares issued and outstanding;
$4.5 million liquidation preference -- -- 643 643
Common stock, $.001 par value,
authorized 15,000,000 shares;
issued 8,297,332 shares; outstanding
8,064,073 shares 8,297 -- -- 8,297
Intercompany due to parent -- 14,838,149 (14,838,149) --
Additional paid-in-capital 26,694,459 -- -- 26,694,459
Retained earnings (deficit) 1,828,496 1,034,053 (1,034,053) 1,828,496
Foreign currency translation
adjustment (6,256) -- -- (6,256)
Stockholder receivable (103,500) -- -- (103,500)
Treasury stock (at cost) (107,651) -- -- (107,651)
----------- ----------- ------------ -----------
Total Stockholders' Equity 28,313,845 15,872,202 (15,871,559) 28,314,488
----------- ----------- ------------ -----------
Total Liabilities and
Stockholders' Equity $37,895,428 $21,692,250 $ (9,553,731) $50,033,947
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA STATEMENT OF OPERATIONS (UNAUDITED)
---------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
--------------------------------------------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Gross Revenues $16,747,158 $10,566,390 $ -- $27,313,548
----------- ----------- ---------- -----------
Expenses:
General & administrative 925,005 536,773 -- 1,461,778
Salaries & employee benefits 8,264,697 6,014,756 (325,163) 13,954,290
Legal & professional 86,594 21,133 -- 107,727
Rent & utilities 267,995 207,101 -- 475,096
Taxes & insurance 301,887 184,912 -- 486,799
Technical operating expenses 2,315,352 939,144 -- 3,254,496
Provision (credit) for doubtful
accounts (1,458) 316,992 -- 315,534
Depreciation and amortization 1,639,442 1,530,345 -- 3,169,787
----------- ----------- ---------- -----------
Total operating expenses 13,799,514 9,751,156 (325,163) 23,225,507
----------- ----------- ---------- -----------
Income from operations 2,947,644 815,234 325,163 4,088,041
Other income (expense):
Other income 246,111 70,778 -- 316,889
Interest expense (663,785) (388,262) 38,166 (1,013,881)
----------- ----------- ---------- -----------
Total other income (expense) (417,674) (317,484) 38,166 (696,992)
----------- ----------- ---------- -----------
Income before income tax 2,529,970 497,750 363,329 3,391,049
Provision for income taxes 809,590 169,235 123,532 1,102,357
----------- ----------- ---------- -----------
Net income $ 1,720,380 $ 328,515 $ 239,797 $ 2,288,692
=========== =========== ========== ===========
Earnings per share:
Primary $ 0.19 $ 0.04 $ 0.03 $ 0.26
=========== =========== ========== ===========
Fully diluted $ 0.18 $ 0.03 $ 0.03 $ 0.24
=========== =========== ========== ===========
Weighted average common shares -
primary 8,967,269 8,967,269 8,967,269 8,967,269
=========== =========== ========== ===========
Weighted average common shares -
fully diluted 9,580,044 9,580,044 9,580,044 9,580,044
=========== =========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA BALANCE SHEET (UNAUDITED)
-----------------------------------
DECEMBER 31, 1995
-----------------
ASSETS
------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 705,179 $ 247,361 $11,206,592 $12,159,132
Accounts receivable, net 2,810,912 3,574,303 (400,000) 5,985,215
Prepaid expenses 397,807 258,416 -- 656,223
Other current assets 757,123 41,510 -- 798,633
----------- ----------- ----------- -----------
Total Current Assets 4,671,021 4,121,590 10,806,592 19,599,203
----------- ----------- ----------- -----------
Property and equipment 10,201,189 12,714,757 (4,278,805) 18,637,141
Less: accumulated depreciation (3,705,988) (4,278,805) 4,278,805 (3,705,988)
----------- ----------- ----------- -----------
Property and equipment, net 6,495,201 8,435,952 -- 14,931,153
----------- ----------- ----------- -----------
Other Assets:
Deposits and other 1,820,801 267,261 (267,261) 1,820,801
Deferred acquisition costs 57,523 165,064 (165,064) 57,523
Non-compete agreements 1,335,892 -- -- 1,335,892
Goodwill 5,584,306 8,702,383 (2,423,318) 11,863,371
Less: accumulated amortization (673,215) -- -- (673,215)
----------- ----------- ----------- -----------
Total Other Assets 8,125,307 9,134,708 (2,855,643) 14,404,372
----------- ----------- ----------- -----------
Total Assets $19,291,529 $21,692,250 $ 7,950,949 $48,934,728
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA BALANCE SHEET (UNAUDITED) (CONTINUED)
----------------------------------------------
DECEMBER 31, 1995
-----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Current Liabilities:
Accounts payable $ 1,070,915 $ 568,715 $ -- $ 1,639,630
Accrued expenses 198,883 152,007 242,071 592,961
Current portion of long-term debt 1,403,463 -- -- 1,403,463
Current portion of senior bank
term debt 700,000 -- 1,109,437 1,809,437
Current lease obligations 759,079 915,137 -- 1,674,216
Other current liabilities 23,965 -- -- 23,965
----------- ----------- ------------ -----------
Total Current Liabilities 4,156,305 1,635,859 1,351,508 7,143,672
Long-term senior bank term debt 4,418,396 -- 5,460,136 9,878,532
Long-term lease obligations 1,243,231 3,544,530 -- 4,787,761
Other liabilities 353,192 145,843 -- 499,035
Deferred tax liability 205,961 493,816 (493,816) 205,961
----------- ----------- ------------ -----------
Total Liabilities 10,377,085 5,820,048 6,317,828 22,514,961
----------- ----------- ------------ -----------
Stockholders' equity:
Preferred stock, $.001 par value,
authorized 3,000,000 shares; 642,857
shares issued and outstanding;
$4.5 million liquidation preference -- -- 643 643
Common stock, $.001 par value,
authorized 15,000,000 shares;
issued 8,161,361 shares; outstanding
7,928,102 shares 5,206 -- 2,955 8,161
Intercompany due to Parent -- 14,838,149 (14,838,149) --
Additional paid-in-capital 9,018,442 -- 17,501,725 26,520,167
Retained earnings (deficit) 108,118 1,034,053 (1,034,053) 108,118
Foreign currency translation
adjustment (6,171) -- -- (6,171)
Stockholder receivable (103,500) -- -- (103,500)
Treasury stock (at cost) (107,651) -- -- (107,651)
----------- ----------- ------------ -----------
Total Stockholders' Equity 8,914,444 15,872,202 1,633,121 26,419,767
----------- ----------- ------------ -----------
Total Liabilities and
Stockholders' Equity $19,291,529 $21,692,250 $ 7,950,949 $48,934,728
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
PRO-FORMA STATEMENT OF OPERATIONS (UNAUDITED)
---------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
------------------------------------
<TABLE>
<CAPTION>
Pro-Forma Pro-Forma
DHS ACT Adjustments Combined
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Gross Revenues $17,083,447 $9,639,677 $ -- $26,723,124
----------- ---------- ---------- -----------
Expenses:
General & administrative 1,112,212 489,696 -- 1,601,908
Salaries & employee benefits 9,449,639 5,124,564 (130,241) 14,443,962
Legal & professional 231,063 19,279 -- 250,342
Rent & utilities 290,464 188,938 -- 479,402
Taxes & insurance 400,213 168,694 -- 568,907
Technical operating expenses 2,380,849 1,375,515 -- 3,756,364
Provision for doubtful accounts 37,529 289,190 -- 326,719
Depreciation and amortization 1,434,443 969,369 -- 2,403,812
----------- ---------- ---------- -----------
Total operating expenses 15,336,412 8,625,245 (130,241) 23,831,416
----------- ---------- ---------- -----------
Income from operations 1,747,035 1,014,432 130,241 2,891,708
Other income (expense):
Other income 97,509 80,376 -- 177,885
Interest expense (441,928) (358,426) 18,706 (781,648)
----------- ---------- ---------- -----------
Total other income (expense) (344,419) (278,050) 18,706 (603,763)
----------- ---------- ---------- -----------
Income before income tax expense 1,402,616 736,382 148,947 2,287,945
Income tax expense 174,903 250,370 50,642 475,915
----------- ---------- ---------- -----------
Net income $ 1,227,713 $ 486,012 $ 98,305 $ 1,812,030
=========== ========== ========== ===========
Earnings per share:
Primary $ 0.15 $ 0.06 $ 0.01 $ 0.22
=========== ========== ========== ===========
Fully diluted $ 0.14 $ 0.06 $ 0.01 $ 0.21
=========== ========== ========== ===========
Weighted average common shares -
primary 8,363,643 8,363,643 8,363,643 8,363,643
=========== ========== ========== ===========
Weighted average common shares -
fully diluted 8,771,188 8,771,188 8,771,188 8,771,188
=========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
-----------------------------------------------
NOTES TO PRO-FORMA FINANCIAL STATEMENTS
---------------------------------------
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
On November 13, 1996, Diagnostic Health Services, Inc., through its wholly-owned
subsidiary, DHS Management Services, Inc. ("Company"), purchased substantially
all of the operating assets (exclusive of cash) of the Ultrasound Division ("the
Division") of Advanced Clinical Technology, Inc. and Horizon MDS Corporation
(collectively "ACT"), each of which is a wholly-owned subsidiary of Horizon/CMS
Healthcare Corporation.
The pro-forma financial statements included herein do not include all
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles.
In the opinion of management, the pro-forma financial statements include all
necessary adjustments for the fair presentation of the balance sheets and the
related statements of operations for the periods noted therein.
The balance sheets show pro-forma adjustments to reflect the issuance of common
stock and receipt of net proceeds associated with the completion of the public
offering as described below. The actual common shares issued and outstanding,
as previously reported at December 31, 1995, have been adjusted by 2,955,000
shares. The weighted average common shares outstanding used in calculating
primary and fully diluted earnings per share amounts for the periods noted
therein, have been adjusted to reflect an issuance date of January 1, 1995, for
the shares related to the public offering.
The statements of operations for all periods presented reflect allocations of a
proportionate share of general and administrative expenses incurred by ACT.
Management believes that the allocation methods are reasonable and that
allocated costs and expenses approximate what such amounts would be if the
Division was operated on a stand-alone basis.
NOTE 2 - SECONDARY OFFERING
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On June 12, 1996, the Company completed a public offering (the "Secondary
Offering") of 3,000,000 shares of common stock at an offering price to the
public of $6.75 per share. Of the shares sold, 2,555,000 were sold by the
Company, and 445,000 shares were sold by selling stockholders. Net proceeds to
the Company, after incurred expenses, were approximately $14,980,000.
On July 5, 1996, the investment banking firm of Rodman & Renshaw, Inc., as
representative of the several underwriters in the Secondary Offering, exercised
their over-allotment option to purchase from DHS an additional 400,000 shares of
common stock. The additional net proceeds to DHS were $2,524,500.
DHS realized total net proceeds from the Secondary Offering of approximately
$17,504,500. The proceeds have been and will be used for this and other
acquisitions, capital expenditures, working capital and retirement of
outstanding debt.
<PAGE>
DIAGNOSTIC HEALTH SERVICES, INC. & SUBSIDIARIES
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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 hereto duly authorized.
DIAGNOSTIC HEALTH SERVICES, INC.
(Registrant)
Dated: December 20, 1996 By: /S/ Max W. Batzer
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Max W. Batzer, Chairman and
Chief Executive Officer
<PAGE>
ITEM 7(c)
EXHIBITS
<PAGE>
EXHIBIT 1
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CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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We consent to the use in this Form 8-K of our report dated December 12, 1996
relating to the Statement of Assets Acquired and Liabilities Assumed from
Advanced Clinical Technology, Inc. and Horizon MDS Corporation (collectively
"ACT") as of September 30, 1996 and May 31, 1996 and the Statements of
Operations and Cash Flows for the four months ended September 30, 1996 and years
ending May 31, 1996 and 1995.
/S/ Simonton, Kutac & Barnidge, L.L.P.
Simonton, Kutac & Barnidge, L.L.P.
Houston, Texas
December 20, 1996
