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SECURITIES AND EXCHANGE COMMISSION

FORM 8-K

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 26, 2003

OrthoLogic Corp.

Delaware

Registrant’s telephone number, including area code: (602) 286-5520

Not Applicable

 

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	Item 2. Acquisition or Disposition of Assets
	Item 7. Financial Statements and Exhibits
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
	Notes to Unaudited Pro forma Consolidated Balance Sheets:
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
	Notes to Unaudited Pro forma Consolidated Statements of Operations
SIGNATURES
EXHIBIT INDEX
EX-2.1
EX-2.2

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Item 2. Acquisition or Disposition of Assets

     On November 26, 2003, OrthoLogic Corp. completed its previously announced sale of substantially all its bone device business assets pursuant to an Asset Purchase Agreement dated October 8, 2003, as amended on November 26, 2003 (the “Asset Purchase Agreement”). At the closing, OrthoLogic Corp. received $93.0 million from dj Orthopedics, LLC, a wholly-owned subsidiary of dj Orthopedics, Inc., as the purchase price of the bone device business assets (the “Bone Device Business”), of which $7.5 million was put into escrow accounts and from which certain escrow fees were paid. dj Orthopedics, LLC also assumed approximately $1.4 million of OrthoLogic Corp.’s liabilities.

     Of the $7.5 million deposited into escrow accounts, $7.0 million was placed into an account that dj Orthopedics, LLC may draw upon to fund any claims against OrthoLogic Corp. deemed eligible for indemnification. The remaining $0.5 million was placed into an escrow account to fund the payment of employee stay-bonuses described in the Asset Purchase Agreement. Any remaining funds held in escrow in excess of the aggregate amount of any pending claims, together with any earnings or interest, will be released to OrthoLogic Corp. on the second anniversary of the closing.

     The purchase price was determined in an arm’s length negotiation. Neither dj Orthopedics, LLC nor dj Orthopedics, Inc. was affiliated with OrthoLogic Corp., its directors, officers or any associates of any OrthoLogic Corp. director or officer.

     A copy of the press release announcing the transaction was filed as exhibit 99.1 to OrthoLogic Corp.’s Form 8-K filed November 26, 2003. A copy of the executed Asset Purchase Agreement and the Amendment No. 1 to the Asset Purchase Agreement are filed with this Form 8-K and are incorporated herein by reference. The foregoing description of the transaction is qualified in its entirety by the complete text of the Asset Purchase Agreement and Amendment No. 1 to the Asset Purchase Agreement attached hereto.

Item 7. Financial Statements and Exhibits

(a)

Financial statements of the business acquired. None.

(b)

Pro forma financial information.

See below.

 

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

     The following unaudited pro forma condensed consolidated financial statements are based on the historical consolidated financial statements of OrthoLogic Corp. and subsidiaries, adjusted to give effect to the disposition of the bone device business assets (the “Bone Device Business”) in accordance with the Asset Purchase Agreement dated October 8, 2003 between us and dj Orthopedics, LLC.

     The unaudited pro forma consolidated balance sheets give effect to the proposed transaction as if it occurred on the date of the balance sheet. The cash proceeds and resulting gain are only included in the September 30, 2003 balance sheet. The unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2003 and 2002 and the years ended December 31, 2002, 2001 and 2000 give effect to the transaction as if it had occurred as of January 1, 2000.

     The pro forma consolidated financial information is presented for illustrative purposes only, and is not necessarily indicative of the operating results or financial position that would have occurred if all of the events as described above had occurred on the first day of the respective periods presented, nor is it necessarily indicative of our future operating results or financial position. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with OrthoLogic’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
September 30, 2003

See notes to unaudited pro forma consolidated balance sheets.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
December 31, 2002

See notes to unaudited pro forma consolidated balance sheets.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)
December 31, 2001

See notes to unaudited pro forma consolidated balance sheets.

 

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Notes to Unaudited Pro forma Consolidated Balance Sheets:

Divestiture

On November 26, 2003, OrthoLogic Corp. completed its previously announced sale of substantially all its bone device business assets pursuant to an Asset Purchase Agreement dated October 8, 2003, as amended on November 26, 2003. At the closing, OrthoLogic Corp. received $93.0 million from dj Orthopedics, LLC, a wholly-owned subsidiary of dj Orthopedics, Inc., as the purchase price of the bone device business assets, of which $7.5 million was put into escrow accounts and from which certain escrow fees were paid. dj Orthopedics, LLC also assumed approximately $1.4 million of Orthologic Corp.’s liabilities.

Of the $7.5 million deposited into escrow accounts, $7.0 million was placed into an account that dj Orthopedics, LLC may draw upon to fund any claims against OrthoLogic Corp. deemed eligible for indemnification. The remaining $0.5 million was placed into an escrow account to fund the payment of employee stay-bonuses described in the Asset Purchase Agreement. Any remaining funds held in escrow in excess of the aggregate amount of any pending claims, together with any earnings or interest, will be released to OrthoLogic Corp. on the second anniversary of the closing.

(1)

To give effect to the disposition of the Bone Device Business as of balance sheet date presented. Pursuant to the Asset Purchase Agreement, Orthologic Corp. sold substantially all of the assets of the Bone Device Business, including substantially all of the related machinery, equipment, inventory, work in process, licenses, customer lists and intellectual property and certain agreements and contracts to dj Orthopedics. dj Orthopedics assumed substantially all of the Bone Device Business trade payables and other current liabilities less payables in an amount approximately equal to the amount of retained Medicare receivables. Therefore, the adjustment removes the related historical assets and liabilities of the Bone Device Business that will not be retained by OrthoLogic Corp.

(2)

To give effect to the net cash proceeds, gain on disposition and related income taxes as a result of the sale of the Bone Device Business as if it occurred on September 30, 2003. The cash amount reflects the $93.0 million payment from djOrthopedics net of the $7.5 million placed in escrow, shown as escrow deposit receivable, and direct costs of the transaction of $5.0 million, for net proceeds of $80.5 million. The gain reflected in accumulated deficit is composed primarily of the cash proceeds, net of the net assets sold, direct costs, and related income taxes payable and the increase of the valuation allowance for the remaining deferred tax asset.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
Nine months ended September 30, 2003

See notes to unaudited pro forma consolidated statements of operations.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
Nine months ended September 30, 2002

See notes to unaudited pro forma consolidated statements of operations.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
Year ended December 31, 2002

See notes to unaudited pro forma consolidated statements of operations.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
Year ended December 31, 2001

See notes to unaudited pro forma consolidated statements of operations.

 

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ORTHOLOGIC CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share and per share data)
Year ended December 31, 2000

See notes to unaudited pro forma consolidated statements of operations.

 

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Notes to Unaudited Pro forma Consolidated Statements of Operations

Divestiture

On November 26, 2003, OrthoLogic Corp. completed its previously announced sale of substantially all its bone device business assets pursuant to an Asset Purchase Agreement dated October 8, 2003, as amended on November 26, 2003. At the closing, OrthoLogic Corp. received $93.0 million from dj Orthopedics, LLC, a wholly-owned subsidiary of dj Orthopedics, Inc., as the purchase price of the bone device business assets, of which $7.5 million was put into escrow accounts and from which certain escrow fees were paid. dj Orthopedics, LLC also assumed approximately $1.4 million of OrthoLogic Corp.’s liabilities.

Of the $7.5 million deposited into escrow accounts, $7.0 million was placed into an account that dj Orthopedics, LLC may draw upon to fund any claims against OrthoLogic Corp. deemed eligible for indemnification. The remaining $0.5 million was placed into an escrow account to fund the payment of employee stay-bonuses described in the Asset Purchase Agreement. Any remaining funds held in escrow in excess of the aggregate amount of any pending claims, together with any earnings or interest, will be released to OrthoLogic Corp. on the second anniversary of the closing.

(1)

To reflect the elimination of the historical revenues as well as historical costs and expenses relating to the operations of the Bone Device Business pursuant to the Asset Purchase Agreement, as if the transactions were consummated as of January 1, 2000. Any gain related to this transaction is not reflected in the pro forma statements of operations. The historical expenses of the Bone Device Business were derived using a variety of factors including percentage of revenues, headcount and specific identification which management believes are reasonable and representative of such historical expenses.

(c) Exhibits

2.1

Asset Purchase Agreement between OrthoLogic Corp. and dj Orthopedics, LLC dated October 8, 2003

2.2

Amendment No. 1 dated November 26, 2003 to the Asset Purchase Agreement between OrthoLogic Corp. and dj Orthopedics, LLC dated October 8, 2003

**OrthoLogic Corp. agrees to furnish supplementally a copy of any schedule to the Asset Purchase Agreement dated October 8, 2003 and to the Amendment No. 1 omitted from this filing to the Securities and Exchange Commission upon its request.

 

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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 hereunto duly authorized.

 

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EXHIBIT INDEX

**		OrthoLogic Corp. agrees to furnish supplementally a copy of any schedule to the Asset Purchase Agreement dated October 8, 2003 and to the Amendment No. 1 omitted from this filing to the Securities and Exchange Commission upon its request.