EX-99.2 4 dex992.htm CERTAIN SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OTHER INFORMATION Certain summary historical consolidated financial and other information

EXHIBIT 99.2

 

Summary Historical Consolidated Financial and Other Information

 

The following table sets forth the summary historical consolidated financial and operating data of Primedex. Primedex, our parent company, is a guarantor of the notes and has no material assets or operations of its own other than its ownership of 100% of the capital stock of RadNet. As a result, with the exception of Primedex’s obligation under its 11.5% Series A Convertible Subordinated Debentures due June 30, 2008 ($16.2 million outstanding as of January 31, 2004 and the liability with respect to which is solely Primedex’s) and any cash held by Primedex, the consolidated financial position and results of operations of Primedex are substantially the same as those of RadNet and its subsidiaries. The summary consolidated financial data for the years ended October 31, 2001, 2002 and 2003 are derived from Primedex’s audited consolidated financial statements and the notes thereto included in Primedex’s Annual Report on Form 10-K for the fiscal year ended October 31, 2003. The selected consolidated statement of operations data set forth below for the three-month periods ended January 31, 2003 and 2004 and the twelve-month period ended January 31, 2004 and the consolidated balance sheet data set forth below as of January 31, 2004 are derived from our audited and unaudited consolidated financial statements and the notes thereto included in Primedex’s Annual Report on Form 10-K for the fiscal year ended October 31, 2003 and in Primedex’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2004, which, in our opinion, include all adjustments, consisting of normally recurring adjustments, necessary for a fair presentation of the information. The results for the three months and twelve months ended January 31, 2004 are not necessarily indicative of results for the entire fiscal year. The summary historical consolidated financial data set forth below should be read in conjunction with and is qualified in its entirety by reference to the audited and unaudited consolidated financial statements and the related notes referenced above, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Primedex’s Annual Report on Form 10-K for the fiscal year ended October 31, 2003 and in Primedex’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2004 and Exhibit 99.3. Because BRMG is a consolidated entity in our financial statements, any transactions between BRMG and us, including advances we have received from or made to BRMG, are not reflected in our consolidated financial statements or in the data below.

 

     Year Ended October 31,

   

Three Months
Ended

January 31,


    Twelve Months
Ended
January 31,


 
     2001

    2002

    2003

    2003

     2004

    2004

 
                       (unaudited)     (unaudited)  
     (dollars in thousands)  

Statement of Operations Data:

                                                 

Net revenue

   $ 107,567     $ 134,078     $ 140,259     $ 34,381      $ 34,047     $ 139,924  

Operating expenses:

                                                 

Operating expenses

     75,457       102,286       106,078       25,913        25,463       105,628  

Depreciation and amortization

     10,315       15,010       16,874       4,215        4,365       17,023  

Provision for bad debts

     3,851       6,892       4,944       1,871        1,258       4,330  

Income (loss) from continuing operations

     13,813       (6,435 )     (5,464 )     (2,138 )      (1,305 )     (4,633 )

Income from discontinued operation

     688       884       3,197       142              3,056  

Net income (loss)

     14,501       (5,551 )     (2,267 )     (1,996 )      (1,305 )     (1,577 )

Other Financial Data:

                                                 

Cash flows provided by (used in):

                                                 

Operating activities

   $ 15,357     $ 14,505     $ 20,271     $ 4,475      $ 2,425     $ 18,221  

Investing activities

     (2,580 )     (6,115 )     (1,702 )     (1,684 )      (710 )     (728 )

Financing activities

     (12,773 )     (8,394 )     (18,575 )     (2,777 )      (1,744 )     (17,542 )

Adjusted EBITDA(1)

     30,235       27,009       32,356       7,182        7,297       32,471  

Adjusted EBITDA margin(1)(2)

     32.6 %     24.1 %     27.5 %     24.8 %      25.3 %     27.6 %

Interest expense(3)

     13,521       16,627       17,948       4,609        4,237       17,579  

Capital expenditures(4)

     30,992       40,787       11,431       8,227        6,681       9,885  

Ratio of earnings to fixed charges

     1.64 x         (5 )         (5 )         (5 )          (5 )         (5 )

 

1


     Year Ended October 31,

 
     2001

    2002

   2003

 

Operating Data:

                 

Total facilities owned or managed (at beginning of year)

   42     46    58  

Facilities added by:

                 

Acquisition

   3     1     

Internal development

   4     11    3  

Facilities closed or sold

   (3 )      (6 )
    

 
  

Total facilities owned (at end of year)

   46     58    55  
    

 
  

Total number of MRI, CT and PET systems (at end of year)

   52     60    63  

Total number of scans performed

   690,484     877,574    947,032  

 

     As of
January 31, 2004


 
     (dollars in thousands)  

Pro Forma Balance Sheet Data (unaudited)(6):

        

Total current assets

   $ 26,808  

Property, plant and equipment

     84,259  

Total assets

     148,447  

Total current liabilities

     26,138  

Senior debt(7)

     152,055  

Total debt

     168,270  

Total liabilities(8)

     194,064  

Stockholders’ deficit

     (45,617 )

Working capital

     670  
Other Pro Forma Financial Data (unaudited)(6):    Twelve Months
Ended
January 31, 2004


 
     (dollars in thousands)  

Adjusted EBITDA(1)

   $ 32,471  

Adjusted EBITDA margin(1)(2)

     27.6 %

Ratio of pro forma senior debt to Adjusted EBITDA(1)(7)

     4.68 x

(1) The Securities and Exchange Commission, or the SEC, acting pursuant to the Sarbanes-Oxley Act of 2002, has approved the adoption of new rules regulating the use of financial measures of performance that are not calculated in accordance with generally accepted accounting principles in the United States, or GAAP. EBITDA, Adjusted EBITDA and ratios using Adjusted EBITDA are considered “non-GAAP financial measures,” as defined under Regulation S-K promulgated by the SEC. EBITDA is defined as net income (loss), plus depreciation and amortization expense, interest expense and income tax benefit. Adjusted EBITDA is defined as EBITDA minus gain from extinguishment of debt, income from discontinued operation and gain from sales or closures of facilities, plus litigation expense and conversion of operating leases into capital leases. We use these non-GAAP financial measures in our decision-making because they provide supplemental information that we believe facilitates internal comparisons to historical operating performance of prior periods and external comparisons to competitors’ historical operating performance. In addition, we anticipate that EBITDA will be a component of a financial maintenance covenant contained in the new credit facility described in Exhibit 99.6 and, as a result, provides additional information for determining our ability to satisfy certain debt compliance standards.
   EBITDA and Adjusted EBITDA do not purport to be alternatives to operating income as indicators of operating performance or to cash flows from operating activities as measures of liquidity. Additionally, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under GAAP. Some of these limitations include:
  EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures, or contractual commitments;
  EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

 

2


  EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt; and
  although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements.

Because not all companies use identical calculations, the presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. You are encouraged to evaluate each adjustment and the reasons we consider it appropriate for supplemental analysis.

The calculations of EBITDA and Adjusted EBITDA are shown below (dollars in thousands):

    

Year Ended

October 31,


    

Three Months

Ended

January 31,


    

Twelve Months

Ended

January 31,


 
     2001

     2002

     2003

     2003

     2004

     2004

 
            (unaudited)      (unaudited)  

Net income (loss)

   $ 14,501      $ (5,551 )    $ (2,267 )    $ (1,996 )    $ (1,305 )    $ (1,577 )

Depreciation and amortization expense

     10,315        15,010        16,874        4,215        4,365        17,023  

Interest expense

     13,521        16,627        17,948        4,609        4,237        17,579  

Income tax benefit

     (5,110 )                                   

Income from discontinued operation

     (688 )      (884 )      (3,197 )      (142 )             (3,056 )
    


  


  


  


  


  


EBITDA

     32,539        25,202        29,358        6,686        7,297        29,969  

(Gain) from extinguishment of debt.

     (554 )      (1 )                            

(Gain) from sales or closures of facilities

     (3,527 )                                   

Litigation expense(i)

                   1,235        44               1,191  

Conversion of operating leases(ii)

     1,777        1,808        1,763        452               1,311  
    


  


  


  


  


  


Adjusted EBITDA

   $ 30,235      $ 27,009      $ 32,356      $ 7,182      $ 7,297      $ 32,471  
    


  


  


  


  


  


 
  (i)   Consists of legal expenses incurred in connection with our “pre-packaged” Chapter 11 plan of reorganization and our settlement of litigation with Tower Imaging Medical Group, Inc. For a discussion of these items, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Primedex’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2004.
  (ii)   Represents rental expense relating to operating leases that were converted into capital leases effective November 1, 2003.
(2) Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by net revenue less professional reading fees of $14.9 million, $21.8 million and $22.8 million for each of the fiscal years ended October 31, 2001, 2002 and 2003, respectively, $5.6 million and $5.2 million for each of the three months ended January 31, 2003 and 2004, respectively, and $22.3 million for the last twelve months ended January 31, 2004.
(3) Interest expense includes amortization of debt issuance costs. Interest expense for the fiscal years ended October 31, 2001, 2002 and 2003, for the three months ended January 31, 2003 and for the twelve months ended January 31, 2004 has not been adjusted to include operating leases that were converted to capital leases effective November 1, 2003 and which are reflected in our calculation of Adjusted EBITDA. See note 1 above.
(4) Includes cash capital expenditures and non-cash capital expenditures comprised of capital lease obligations and notes payable incurred to finance the acquisition of equipment.
(5) The amount by which fixed charges exceeded earnings for fiscal 2002 and 2003, the three months ended January 31, 2003 and 2004 and the twelve months ended January 31, 2004 was $6.4 million, $5.5 million, $2.1 million, $1.3 million and $4.6 million, respectively.
(6) Pro forma balance sheet data gives effect to (i) the offering of the notes and the application of the net proceeds therefrom and (ii) implementation of our agreement with DVI Financial Services, Inc., or DVI, to repay at a discount of approximately $11.2 million debt we owe to DVI, less a write-off of approximately $2.5 million of historical debt issue costs, resulting in anticipated gain on settlement and extinguishment of debt of $8.7 million, as described in Primedex’s Quarterly Report on Form 10-Q for the quarterly period ended January 31, 2004.

 

3


(7) Senior debt excludes Primedex’s 11.5% Series A Convertible Subordinated Debentures due June 30, 2008. Neither RadNet nor any subsidiary of RadNet is a guarantor of these debentures.
(8) Includes minority interest in consolidated subsidiaries.

 

4