SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT 1934
Date of Report: MARCH 30, 1998
US DIAGNOSTIC INC.
(Exact name of registrant as specified in charter)
DELAWARE
(State of other jurisdiction of incorporation)
1-13392 11-3146389
(Commission File Number) (IRS Employer Identification No.)
777 SOUTH FLAGLER DRIVE, SUITE 1201, EAST TOWER, WEST PALM BEACH, FLORIDA 33401
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (561)832-0006
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Item 5. OTHER EVENTS
On March 30, 1998, the Company entered into a definitive agreement to sell
certain non-core assets, specifically the Company's mobile subsidiary Medical
Diagnostics, Inc. ("MDI") to Alliance Imaging Inc. for $35.6 million in cash,
including assumption of debt. The agreement, which is subject to
Hart-Scott-Rodino clearance, is expected to close in May 1998. The proceeds of
the sale will be used to reduce the Company's debt and to bolster the Company's
cash reserves, which have been negatively affected by the events of 1997. Mobile
imaging operations do not conform with the Company's core business of fixed site
MRI and mutimodality imaging centers.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
99 Press Release dated March 31, 1998
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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.
US DIAGNOSTIC INC.
Dated: April 1, 1998 By: /S/ JOSEPH A. PAUL
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Joseph A. Paul
President and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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99 Press Release dated March 31, 1998
EXHIBIT 99
US DIAGNOSTIC INC.
INVESTOR CONTACT:
Randy C. Sklar EVP
Investor Relations
(561) 833-1495 ext. 233
website: www.usdl.com
For Immediate Release
US DIAGNOSTIC INC. REPORTS
THE SALE OF MEDICAL DIAGNOSTICS, INC.
West Palm Beach, FL, March 31, 1998 - US Diagnostic Inc. (NASDAQ:USDL) announced
today that it has entered into a definitive agreement to sell certain non-core
assets, specifically the Company's mobile subsidiary Medical Diagnostics, Inc.
("MDI") to Alliance Imaging Inc. for $35.6 million in cash, including assumption
of debt. The agreement, which is subject to Hart-Scott-Rodino clearance is
expected to close in May. The proceeds of the sale will be used to reduce the
Company's debt and to bolster the Company's cash reserves, which have been
negatively affected by the events of 1997. Mobile imaging operations do not
conform with the Company's core business of fixed site MRI and multimodality
imaging centers.
The Company also reported that it has filed for a 15 day extension with which to
file with the Securities and Exchange Commission its Annual Report on Form 10-K
for the fiscal year ended December 31, 1997 and will report its results no later
than April 15, 1998. This extension is primarily due to the complexity of
accounting for the impairment of the goodwill charge discussed below, and the
tax consequences thereof.
The Company expects to record a pre-tax charge during the fourth quarter of
approximately $90 million related primarily to the impairment of goodwill of
certain imaging centers acquired during 1995 and 1996. The impairment of
goodwill is a non-cash charge.
Although definitive financial results are not yet available, the Company will
post a loss for the year ended December 31, 1997. Net revenue and scan volume
for the year, however, reached record levels.
Joseph A. Paul, President and Chief Executive Officer of US Diagnostic stated,
"We have addressed the challenges of 1997, and the decisive changes which were
effected on our Balance Sheet now enable the Company to deploy a four part
strategy for growth:
/bullet/ Continue the cost reduction plan implemented in the first quarter of
1998. The cost reduction plan, now underway, includes a significant
reduction in nonessential staff and other consolidation synergy,
heretofore not applied. The aggregate reduction of these
employee-related expenses is expected to save approximately $5 million
annually. The Company continues to focus upon other efficiencies in
its operations and expects to see significant improvement in the
quarter ending March 31, 1998.
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/bullet/ Divest non-core assets and focus upon our core business. In addition
to the MDI transaction described above, the Company is currently
reviewing other non-core assets and will pursue other such sales as
warranted.
/bullet/ Refinance the Company's long term debt, and
/bullet/ once the first three steps have been accomplished, institute a
sustained strategy of prudent acquisitions and new center development.
While the resumption of significant acquisition activity is contingent
upon the aforementioned growth strategy, the Company is continually
pursuing the development of new imaging sites, which complement the
Company's network strategy. Such sites include new state-of-the-art
multimodality centers in Queens, NY, Wilkes Barre, PA, and Chatham,
NJ, all opened or to be opened during the first and second quarters of
1998."
US Diagnostic Inc. is the leading provider of radiology services focused on the
development, acquisition, operation and management of multi-modality diagnostic
imaging centers and related medical facilities in the United States. The Company
has locations in 18 states and owns or operates 111 fixed site diagnostic
imaging facilities, provides mobile imaging services to 40 hospitals and manages
19 additional facilities.
Statements contained in this press release, which are not historical facts, are
forward looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are based
largely on the Company's expectations and are subject to a number of risks and
uncertainties, including but not limited to economic, competitive and other
factors affecting the Company's operations, markets, expansion strategies, the
remittance of payments by third party payors, adequate collection of accounts
receivable, available financing, government regulations involving the Company,
facts and events not known at the time of this press release, and other factors
discussed in the Company's filings with the Securities and Exchange Commission.
Many of these factors are beyond the Company's control. Actual results could
differ materially from the forward-looking statements. In light of these risks
and uncertainties, there can be no assurance that the results anticipated in the
forward-looking information in this press release will, in fact, occur.
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