QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE |
SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2014 |
Commission file number 333-184233-14 |
Guernsey | 98-1022387 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
12930 West Interstate 10 San Antonio, Texas | 78249 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | Accelerated filer | |||
Non-accelerated filer | X | (Do not check if a smaller reporting company) | Smaller reporting company |
Page No. | |||
• | the terms the “Company,” “we,” “our,” and “us” refer to Centaur Guernsey L.P. Inc. (“Centaur”) and its consolidated subsidiaries. |
• | the term “Merger” refers to the transaction completed on November 4, 2011 pursuant to which Kinetic Concepts, Inc. was merged with Chiron Merger Sub, Inc. (“Merger Sub”), a direct subsidiary of Chiron Holdings, Inc. (“Holdings”) and an indirect subsidiary of Centaur Guernsey L.P. Inc. |
▪ | the term “KCI” means Kinetic Concepts, Inc. and its subsidiaries. |
▪ | the term “LifeCell” means LifeCell Corporation and its subsidiaries. |
▪ | the term “Systagenix” means Systagenix Wound Management B.V., its subsidiaries, and its U.S.-based affiliate, Systagenix Wound Management (US), Inc. |
June 30, 2014 | December 31, 2013 | ||||||
(unaudited) | |||||||
Assets: | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 213,667 | $ | 206,949 | |||
Accounts receivable, net | 371,061 | 407,578 | |||||
Inventories, net | 185,491 | 181,567 | |||||
Deferred income taxes | 32,551 | 23,621 | |||||
Prepaid expenses and other | 43,248 | 53,161 | |||||
Total current assets | 846,018 | 872,876 | |||||
Net property, plant and equipment | 306,642 | 333,725 | |||||
Debt issuance costs, net | 89,960 | 102,054 | |||||
Deferred income taxes | 35,734 | 31,459 | |||||
Goodwill | 3,378,931 | 3,378,661 | |||||
Identifiable intangible assets, net | 2,472,073 | 2,549,201 | |||||
Other non-current assets | 5,219 | 4,669 | |||||
$ | 7,134,577 | $ | 7,272,645 | ||||
Liabilities and Equity: | |||||||
Current liabilities: | |||||||
Accounts payable | 54,846 | 50,316 | |||||
Accrued expenses and other | 428,491 | 328,975 | |||||
Current installments of long-term debt | 26,100 | 26,311 | |||||
Income taxes payable | 4,099 | 3,368 | |||||
Deferred income taxes | 17,219 | 2,199 | |||||
Total current liabilities | 530,755 | 411,169 | |||||
Long-term debt, net of current installments and discount | 4,856,928 | 4,865,503 | |||||
Non-current tax liabilities | 53,989 | 53,682 | |||||
Deferred income taxes | 860,070 | 1,003,784 | |||||
Other non-current liabilities | 133,360 | 40,432 | |||||
Total liabilities | 6,435,102 | 6,374,570 | |||||
Equity: | |||||||
General partner’s capital | — | — | |||||
Limited partners’ capital | 701,433 | 900,218 | |||||
Accumulated other comprehensive loss, net | (1,958 | ) | (2,143 | ) | |||
Total equity | 699,475 | 898,075 | |||||
$ | 7,134,577 | $ | 7,272,645 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue: | |||||||||||||||
Rental | $ | 175,235 | $ | 190,245 | $ | 341,793 | $ | 378,408 | |||||||
Sales | 289,936 | 242,434 | 570,917 | 470,155 | |||||||||||
Total revenue | 465,171 | 432,679 | 912,710 | 848,563 | |||||||||||
Rental expenses | 87,038 | 90,382 | 172,830 | 187,733 | |||||||||||
Cost of sales | 82,307 | 59,325 | 165,609 | 115,556 | |||||||||||
Gross profit | 295,826 | 282,972 | 574,271 | 545,274 | |||||||||||
Selling, general and administrative expenses | 170,585 | 204,983 | 346,946 | 366,425 | |||||||||||
Research and development expenses | 18,233 | 20,397 | 35,723 | 38,179 | |||||||||||
Acquired intangible asset amortization | 48,754 | 46,461 | 99,443 | 94,007 | |||||||||||
Wake Forest settlement | 198,578 | — | 198,578 | — | |||||||||||
Operating earnings (loss) | (140,324 | ) | 11,131 | (106,419 | ) | 46,663 | |||||||||
Interest income and other | 127 | 904 | 222 | 1,062 | |||||||||||
Interest expense | (101,805 | ) | (105,658 | ) | (204,000 | ) | (213,746 | ) | |||||||
Loss on extinguishment of debt | — | (2,164 | ) | — | (2,164 | ) | |||||||||
Foreign currency gain (loss) | 3,852 | (7,772 | ) | 4,088 | (3,197 | ) | |||||||||
Derivative instruments gain (loss) | (4,297 | ) | 10,556 | (4,300 | ) | 10,040 | |||||||||
Loss from continuing operations before income tax benefit | (242,447 | ) | (93,003 | ) | (310,409 | ) | (161,342 | ) | |||||||
Income tax benefit | (89,730 | ) | (31,056 | ) | (111,309 | ) | (56,024 | ) | |||||||
Loss from continuing operations | (152,717 | ) | (61,947 | ) | (199,100 | ) | (105,318 | ) | |||||||
Loss from discontinued operations, net of tax | — | (628 | ) | — | (2,044 | ) | |||||||||
Net loss | $ | (152,717 | ) | $ | (62,575 | ) | $ | (199,100 | ) | $ | (107,362 | ) |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Net loss | $ | (152,717 | ) | $ | (62,575 | ) | $ | (199,100 | ) | $ | (107,362 | ) | |||
Unrealized investment gain, net of tax benefit (expense) of $629 and $1 in 2014 and ($385) and ($1,075) in 2013 | (1,005 | ) | 614 | (2 | ) | 1,716 | |||||||||
Foreign currency translation adjustment, net of tax benefit (expense) of ($440) and ($502) in 2014 and $171 and $559 in 2013 | (103 | ) | (2,359 | ) | 187 | (4,135 | ) | ||||||||
Total comprehensive loss | $ | (153,825 | ) | $ | (64,320 | ) | $ | (198,915 | ) | $ | (109,781 | ) |
CENTAUR GUERNSEY L.P. INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited) | |||||||
Six months ended June 30, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (199,100 | ) | $ | (107,362 | ) | |
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Amortization of debt issuance costs and discount | 19,409 | 17,205 | |||||
Depreciation and other amortization | 160,528 | 171,194 | |||||
Loss on disposition of assets | — | 3,315 | |||||
Amortization of fair value step-up in inventory | 6,680 | — | |||||
Fixed asset and inventory impairment | — | 30,259 | |||||
Write-off of other intangible assets | — | 13,400 | |||||
Wake Forest settlement | 198,578 | — | |||||
Provision for bad debt | 8,239 | 3,521 | |||||
Loss on extinguishment of debt | — | 2,164 | |||||
Equity-based compensation expense | 2,103 | 1,196 | |||||
Deferred income tax benefit | (141,532 | ) | (71,357 | ) | |||
Unrealized gain on derivative instruments | (3,785 | ) | (11,697 | ) | |||
Unrealized gain on revaluation of cross currency debt | (3,104 | ) | (4,318 | ) | |||
Change in assets and liabilities: | |||||||
Decrease in accounts receivable, net | 27,186 | 5,912 | |||||
Increase in inventories, net | (10,881 | ) | (10,997 | ) | |||
Decrease (increase) in prepaid expenses and other | 9,765 | (15,315 | ) | ||||
Increase in accounts payable | 4,412 | 2,939 | |||||
Increase (decrease) in accrued expenses and other | (17,827 | ) | 8,359 | ||||
Increase in tax liabilities, net | 707 | 1,975 | |||||
Net cash provided by operating activities | 61,378 | 40,393 | |||||
Cash flows from investing activities: | |||||||
Additions to property, plant and equipment | (28,382 | ) | (39,981 | ) | |||
Increase in inventory to be converted into equipment for short-term rental | (4,121 | ) | (8,523 | ) | |||
Dispositions of property, plant and equipment | 532 | 432 | |||||
Businesses acquired in purchase transaction, net of cash acquired | (4,613 | ) | — | ||||
Increase in identifiable intangible assets and other non-current assets | (4,230 | ) | (2,558 | ) | |||
Net cash used by investing activities | (40,814 | ) | (50,630 | ) | |||
Cash flows from financing activities: | |||||||
Settlement of profits interest units | (1,416 | ) | — | ||||
Distribution to limited partners | — | (1,572 | ) | ||||
Repayments of long-term debt and capital lease obligations | (13,271 | ) | (52,926 | ) | |||
Payment of debt issuance costs | — | (21,122 | ) | ||||
Net cash used by financing activities | (14,687 | ) | (75,620 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 841 | (1,676 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 6,718 | (87,533 | ) | ||||
Cash and cash equivalents, beginning of period | 206,949 | 383,150 | |||||
Cash and cash equivalents, end of period | $ | 213,667 | $ | 295,617 |
December 31, 2013 | Adjustment | June 30, 2014 | |||||||||
Goodwill | $ | 171,086 | $ | 270 | $ | 171,356 | |||||
Identifiable intangible assets | |||||||||||
Customer relationships | 103,301 | 103,301 | |||||||||
Developed technology | 91,700 | 91,700 | |||||||||
Tradenames | 56,800 | 56,800 | |||||||||
In-process research and development | 1,766 | 1,766 | |||||||||
Tangible assets acquired and liabilities assumed: | |||||||||||
Accounts receivable | 50,807 | 50,807 | |||||||||
Inventories | 27,450 | 27,450 | |||||||||
Other current assets | 1,902 | 1,902 | |||||||||
Property, plant and equipment | 44,016 | 44,016 | |||||||||
Other non-current assets | 139 | 139 | |||||||||
Current liabilities | (34,752 | ) | (270 | ) | (35,022 | ) | |||||
Other non-current liabilities | (79 | ) | (79 | ) | |||||||
Net deferred tax liability | (35,388 | ) | (35,388 | ) | |||||||
Total purchase price | $ | 478,748 | $ | — | $ | 478,748 |
Three months ended June 30, | Six months ended June 30, | ||||||
2013 | 2013 | ||||||
Pro forma revenue | $ | 484,771 | $ | 951,765 | |||
Pro forma net loss | $ | (61,656 | ) | $ | (114,794 | ) |
June 30, 2014 | December 31, 2013 | ||||||
Gross trade accounts receivable: | |||||||
Billed trade accounts receivable | $ | 399,904 | $ | 418,804 | |||
Unbilled receivables | 31,518 | 50,841 | |||||
Less: Allowance for revenue adjustments | (59,138 | ) | (67,631 | ) | |||
Gross trade accounts receivable | 372,284 | 402,014 | |||||
Less: Allowance for bad debt | (13,166 | ) | (8,483 | ) | |||
Net trade accounts receivable | 359,118 | 393,531 | |||||
Other receivables | 11,943 | 14,047 | |||||
$ | 371,061 | $ | 407,578 |
June 30, 2014 | December 31, 2013 | ||||||
Finished goods and tissue available for distribution | $ | 126,494 | $ | 110,937 | |||
Goods and tissue in-process | 12,387 | 12,994 | |||||
Raw materials, supplies, parts and unprocessed tissue | 69,454 | 71,876 | |||||
208,335 | 195,807 | ||||||
Less: Amounts expected to be converted into equipment for short-term rental | (8,073 | ) | (3,952 | ) | |||
Reserve for excess and obsolete inventory | (14,771 | ) | (10,288 | ) | |||
$ | 185,491 | $ | 181,567 |
June 30, 2014 | December 31, 2013 | ||||||
Senior Dollar Term E-1 Credit Facility (1) – due 2018 | $ | 1,936,975 | $ | 1,946,708 | |||
Senior Euro Term E-1 Credit Facility (1) – due 2018 | 332,937 | 337,820 | |||||
Senior Term E-2 Credit Facility (1) – due 2016 | 316,944 | 318,537 | |||||
10.5% Second Lien Senior Secured Notes due 2018 | 1,750,000 | 1,750,000 | |||||
12.5% Senior Unsecured Notes due 2019 | 612,000 | 612,000 | |||||
3.25% Convertible Senior Notes due 2015 | 101 | 101 | |||||
Notional amount of debt | 4,948,957 | 4,965,166 | |||||
Senior Dollar Term E-1 Credit Facility Discount, net of accretion | (27,621 | ) | (30,926 | ) | |||
Senior Euro Term E-1 Credit Facility Discount, net of accretion | (9,469 | ) | (10,693 | ) | |||
Senior Term E-2 Credit Facility Discount, net of accretion | (3,727 | ) | (4,486 | ) | |||
Second Lien Senior Secured Notes Discount, net of accretion | (22,268 | ) | (24,222 | ) | |||
Senior Unsecured Notes Discount, net of accretion | (2,844 | ) | (3,025 | ) | |||
Net discount on debt | (65,929 | ) | (73,352 | ) | |||
Total debt, net of discount | 4,883,028 | 4,891,814 | |||||
Less: Current installments | (26,100 | ) | (26,311 | ) | |||
$ | 4,856,928 | $ | 4,865,503 |
Effective Dates | Outstanding Notional Amount | Fixed Interest Rate | ||
12/31/13-12/31/16 | $507,100 | 2.256% | ||
12/31/13-12/31/16 | $507,100 | 2.249% | ||
12/31/13-12/31/16 | $507,100 | 2.250% |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance Sheet Location | Fair Value | Balance Sheet Location | Fair Value | ||||||||||||||||
June 30, 2014 | December 31, 2013 | June 30, 2014 | December 31, 2013 | ||||||||||||||||
Derivatives not designated as hedging instruments | |||||||||||||||||||
Interest rate swap agreements | Prepaid expenses and other | $ | — | $ | — | Accrued expenses and other | $ | 14,713 | $ | 345 | |||||||||
Interest rate swap agreements | Other non-current assets | — | — | Other non-current liabilities | 14,175 | 31,906 | |||||||||||||
Foreign currency exchange contracts | Prepaid expenses and other | — | 146 | Accrued expenses and other | — | 569 | |||||||||||||
Total derivatives | $ | — | $ | 146 | $ | 28,888 | $ | 32,820 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Interest rate swap agreements | $ | (4,287 | ) | $ | 9,953 | $ | (4,362 | ) | $ | 9,252 | |||||
Interest rate cap agreements | — | 1 | — | (5 | ) | ||||||||||
Foreign currency exchange contracts | (10 | ) | 602 | 62 | 793 | ||||||||||
$ | (4,297 | ) | $ | 10,556 | $ | (4,300 | ) | $ | 10,040 |
Accumulated Foreign Currency Translation Adjustment | Investment Gain | Accumulated Other Comprehensive Income (Loss) | |||||||||
Balances at December 31, 2013 | $ | (4,384 | ) | $ | 2,241 | $ | (2,143 | ) | |||
Unrealized investment gain, net of tax benefit of $1 | — | (2 | ) | (2 | ) | ||||||
Foreign currency translation adjustment, net of tax expense of $502 | 187 | — | 187 | ||||||||
Balances at June 30, 2014 | $ | (4,197 | ) | $ | 2,239 | $ | (1,958 | ) |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenue: | |||||||||||||||
Advanced Wound Therapeutics | $ | 351,655 | $ | 317,765 | $ | 687,634 | $ | 623,647 | |||||||
Regenerative Medicine | 113,516 | 114,914 | 225,076 | 224,916 | |||||||||||
Total revenue | $ | 465,171 | $ | 432,679 | $ | 912,710 | $ | 848,563 | |||||||
Operating earnings (loss): | |||||||||||||||
Advanced Wound Therapeutics | $ | 106,507 | $ | 110,897 | $ | 191,257 | $ | 200,318 | |||||||
Regenerative Medicine | 33,764 | 31,197 | 64,772 | 61,066 | |||||||||||
Non-allocated costs: | |||||||||||||||
General headquarter expense (1) | (2,398 | ) | (40,003 | ) | (5,207 | ) | (53,112 | ) | |||||||
Equity-based compensation | (1,162 | ) | (663 | ) | (2,103 | ) | (1,196 | ) | |||||||
Merger and restructuring-related expenses (2) | (29,703 | ) | (43,836 | ) | (57,117 | ) | (66,406 | ) | |||||||
Acquired intangible asset amortization (3) | (48,754 | ) | (46,461 | ) | (99,443 | ) | (94,007 | ) | |||||||
Wake Forest settlement | (198,578 | ) | — | (198,578 | ) | — | |||||||||
Total non-allocated costs | (280,595 | ) | (130,963 | ) | (362,448 | ) | (214,721 | ) | |||||||
Total operating earnings | $ | (140,324 | ) | $ | 11,131 | $ | (106,419 | ) | $ | 46,663 |
(1) | The second quarter and six months ended June 30, 2013 includes $4.0 million and $13.4 million, respectively, of write-offs of in-process research and development costs due to discontinuation of related projects and a $30.3 million fixed asset impairment charge. |
(2) | Represents expenses related to the Merger including management fees and restructuring-related expenses. |
(3) | 2014 includes amortization of acquired intangible assets related to our acquisition of Systagenix in October 2013 and our Merger in November 2011. 2013 includes amortization of acquired intangible assets related to our Merger in November 2011. |
(1) | a sale or other disposition (including by way of consolidation or merger) of the capital stock of such guarantor or the sale or disposition of all or substantially all the assets of such subsidiary guarantor (other than to the Company or a restricted subsidiary) otherwise permitted by the 10.5% Second Lien Notes or 12.5% Unsecured Notes indentures, |
(2) | the designation in accordance with the 10.5% Second Lien Notes or 12.5% Unsecured Notes indenture of the guarantor as an unrestricted subsidiary or the occurrence of any event after which the guarantor is no longer a restricted subsidiary, |
(3) | defeasance or discharge of the 10.5% Second Lien Notes or 12.5% Unsecured Notes, or |
(4) | upon the achievement of investment grade status by the 10.5% Second Lien Notes or 12.5% Unsecured Notes; provided that such guarantee shall be reinstated upon the reversion date. |
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Assets: | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 398 | $ | 126,932 | $ | — | $ | 86,337 | $ | — | $ | 213,667 | |||||||||||
Accounts receivable, net | — | 162,526 | 63,091 | 145,444 | — | 371,061 | |||||||||||||||||
Inventories, net | — | 90,347 | 109,130 | 100,722 | (114,708 | ) | 185,491 | ||||||||||||||||
Deferred income taxes | — | 3,850 | 28,701 | — | — | 32,551 | |||||||||||||||||
Prepaid expenses and other | — | 23,774 | 5,376 | 278,730 | (264,632 | ) | 43,248 | ||||||||||||||||
Intercompany receivables | 166 | 1,811,567 | 2,337,871 | 80,410 | (4,230,014 | ) | — | ||||||||||||||||
Total current assets | 564 | 2,218,996 | 2,544,169 | 691,643 | (4,609,354 | ) | 846,018 | ||||||||||||||||
Net property, plant and equipment | — | 291,799 | 76,384 | 199,214 | (260,755 | ) | 306,642 | ||||||||||||||||
Debt issuance costs, net | — | 89,960 | — | — | — | 89,960 | |||||||||||||||||
Deferred income taxes | — | — | — | 35,734 | — | 35,734 | |||||||||||||||||
Goodwill | — | 2,483,240 | 732,771 | 162,920 | — | 3,378,931 | |||||||||||||||||
Identifiable intangible assets, net | — | 329,408 | 1,811,914 | 330,751 | — | 2,472,073 | |||||||||||||||||
Other non-current assets | — | 1,209 | 186 | 94,724 | (90,900 | ) | 5,219 | ||||||||||||||||
Intercompany loan receivables | — | 789,037 | 421,051 | — | (1,210,088 | ) | — | ||||||||||||||||
Intercompany investments | 705,089 | 348,120 | 371,682 | — | (1,424,891 | ) | — | ||||||||||||||||
$ | 705,653 | $ | 6,551,769 | $ | 5,958,157 | $ | 1,514,986 | $ | (7,595,988 | ) | $ | 7,134,577 | |||||||||||
Liabilities and Equity: | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable | $ | — | $ | 17,339 | $ | 12,147 | $ | 25,360 | $ | — | $ | 54,846 | |||||||||||
Accrued expenses and other | — | 297,686 | 246,871 | 80,664 | (196,730 | ) | 428,491 | ||||||||||||||||
Intercompany payables | 5,526 | 980,902 | 2,628,650 | 614,936 | (4,230,014 | ) | — | ||||||||||||||||
Current installments of long-term debt | — | 26,100 | — | — | — | 26,100 | |||||||||||||||||
Income taxes payable | — | — | 1,527 | 2,572 | — | 4,099 | |||||||||||||||||
Deferred income taxes | — | — | — | 17,219 | — | 17,219 | |||||||||||||||||
Total current liabilities | 5,526 | 1,322,027 | 2,889,195 | 740,751 | (4,426,744 | ) | 530,755 | ||||||||||||||||
Long-term debt, net of current installments and discount | — | 4,856,928 | — | — | — | 4,856,928 | |||||||||||||||||
Non-current tax liabilities | — | 29,422 | 4,373 | 20,194 | — | 53,989 | |||||||||||||||||
Deferred income taxes | — | 42,161 | 760,615 | 57,294 | — | 860,070 | |||||||||||||||||
Other non-current liabilities | 652 | 122,509 | 9,023 | 1,176 | — | 133,360 | |||||||||||||||||
Intercompany loan payables | — | 414,369 | 770,000 | 25,720 | (1,210,089 | ) | — | ||||||||||||||||
Total liabilities | 6,178 | 6,787,416 | 4,433,206 | 845,135 | (5,636,833 | ) | 6,435,102 | ||||||||||||||||
Total equity | 699,475 | (235,647 | ) | 1,524,951 | 669,851 | (1,959,155 | ) | 699,475 | |||||||||||||||
$ | 705,653 | $ | 6,551,769 | $ | 5,958,157 | $ | 1,514,986 | $ | (7,595,988 | ) | $ | 7,134,577 |
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Assets: | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | 398 | $ | 87,771 | $ | 118 | $ | 118,662 | $ | — | $ | 206,949 | |||||||||||
Accounts receivable, net | — | 184,723 | 71,457 | 151,398 | — | 407,578 | |||||||||||||||||
Inventories, net | — | 54,809 | 101,779 | 101,751 | (76,772 | ) | 181,567 | ||||||||||||||||
Deferred income taxes | — | 14,991 | 6,610 | 2,020 | — | 23,621 | |||||||||||||||||
Prepaid expenses and other | — | 35,832 | 5,434 | 321,427 | (309,532 | ) | 53,161 | ||||||||||||||||
Intercompany receivables | 166 | 1,687,528 | 2,326,181 | 21,241 | (4,035,116 | ) | — | ||||||||||||||||
Total current assets | 564 | 2,065,654 | 2,511,579 | 716,499 | (4,421,420 | ) | 872,876 | ||||||||||||||||
Net property, plant and equipment | — | 311,122 | 80,963 | 223,987 | (282,347 | ) | 333,725 | ||||||||||||||||
Debt issuance costs, net | — | 102,054 | — | — | — | 102,054 | |||||||||||||||||
Deferred income taxes | — | — | — | 31,459 | — | 31,459 | |||||||||||||||||
Goodwill | — | 2,483,240 | 732,771 | 162,650 | — | 3,378,661 | |||||||||||||||||
Identifiable intangible assets, net | — | 361,640 | 1,829,452 | 358,109 | — | 2,549,201 | |||||||||||||||||
Other non-current assets | — | 715 | 192 | 94,662 | (90,900 | ) | 4,669 | ||||||||||||||||
Intercompany loan receivables | — | 990,972 | 404,688 | — | (1,395,660 | ) | — | ||||||||||||||||
Intercompany investments | 901,902 | 432,884 | 372,093 | — | (1,706,879 | ) | — | ||||||||||||||||
$ | 902,466 | $ | 6,748,281 | $ | 5,931,738 | $ | 1,587,366 | $ | (7,897,206 | ) | $ | 7,272,645 | |||||||||||
Liabilities and Equity: | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts payable | $ | — | $ | 15,266 | $ | 14,929 | $ | 20,121 | $ | — | $ | 50,316 | |||||||||||
Accrued expenses and other | — | 185,790 | 246,977 | 77,843 | (181,635 | ) | 328,975 | ||||||||||||||||
Intercompany payables | 4,110 | 852,892 | 2,559,407 | 618,707 | (4,035,116 | ) | — | ||||||||||||||||
Current installments of long-term debt | — | 26,311 | — | — | — | 26,311 | |||||||||||||||||
Income taxes payable | — | — | 3,368 | — | — | 3,368 | |||||||||||||||||
Deferred income taxes | — | — | — | 2,199 | — | 2,199 | |||||||||||||||||
Total current liabilities | 4,110 | 1,080,259 | 2,824,681 | 718,870 | (4,216,751 | ) | 411,169 | ||||||||||||||||
Long-term debt, net of current installments and discount | — | 4,865,503 | — | — | — | 4,865,503 | |||||||||||||||||
Non-current tax liabilities | — | 28,850 | 4,284 | 20,548 | — | 53,682 | |||||||||||||||||
Deferred income taxes | — | 231,713 | 718,930 | 53,141 | — | 1,003,784 | |||||||||||||||||
Other non-current liabilities | 281 | 38,667 | 334 | 1,150 | — | 40,432 | |||||||||||||||||
Intercompany loan payables | — | 399,690 | 780,000 | 215,970 | (1,395,660 | ) | — | ||||||||||||||||
Total liabilities | 4,391 | 6,644,682 | 4,328,229 | 1,009,679 | (5,612,411 | ) | 6,374,570 | ||||||||||||||||
Total equity | 898,075 | 103,599 | 1,603,509 | 577,687 | (2,284,795 | ) | 898,075 | ||||||||||||||||
$ | 902,466 | $ | 6,748,281 | $ | 5,931,738 | $ | 1,587,366 | $ | (7,897,206 | ) | $ | 7,272,645 |
For the three months ended June 30, 2014 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental | $ | — | $ | 144,440 | $ | 1,606 | $ | 29,189 | $ | — | $ | 175,235 | |||||||||||
Sales | — | 69,469 | 250,425 | 217,734 | (247,692 | ) | 289,936 | ||||||||||||||||
Total revenue | — | 213,909 | 252,031 | 246,923 | (247,692 | ) | 465,171 | ||||||||||||||||
Rental expenses | 37 | 70,687 | 4,329 | 53,929 | (41,944 | ) | 87,038 | ||||||||||||||||
Cost of sales | 39 | 76,573 | 162,673 | 90,636 | (247,614 | ) | 82,307 | ||||||||||||||||
Gross profit (loss) | (76 | ) | 66,649 | 85,029 | 102,358 | 41,866 | 295,826 | ||||||||||||||||
Selling, general and administrative expenses | 1,085 | 73,021 | 42,549 | 54,000 | (70 | ) | 170,585 | ||||||||||||||||
Research and development expenses | — | 6,241 | 6,535 | 5,457 | — | 18,233 | |||||||||||||||||
Acquired intangible asset amortization | — | 15,737 | 19,718 | 13,299 | — | 48,754 | |||||||||||||||||
Wake Forest settlement | — | 198,578 | — | — | — | 198,578 | |||||||||||||||||
Operating earnings (loss) | (1,161 | ) | (226,928 | ) | 16,227 | 29,602 | 41,936 | (140,324 | ) | ||||||||||||||
Non-operating intercompany transactions | — | 5,958 | (20,244 | ) | (22,982 | ) | 37,268 | — | |||||||||||||||
Interest income and other | — | 17,301 | 3,063 | 47 | (20,284 | ) | 127 | ||||||||||||||||
Interest expense | — | (104,834 | ) | (17,221 | ) | (34 | ) | 20,284 | (101,805 | ) | |||||||||||||
Foreign currency gain (loss) | — | 3,839 | 349 | (336 | ) | — | 3,852 | ||||||||||||||||
Derivative instruments loss | — | (4,297 | ) | — | — | — | (4,297 | ) | |||||||||||||||
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries | (1,161 | ) | (308,961 | ) | (17,826 | ) | 6,297 | 79,204 | (242,447 | ) | |||||||||||||
Income tax expense (benefit) | — | (110,451 | ) | 24,228 | (3,507 | ) | — | (89,730 | ) | ||||||||||||||
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries | (1,161 | ) | (198,510 | ) | (42,054 | ) | 9,804 | 79,204 | (152,717 | ) | |||||||||||||
Equity in earnings (loss) of subsidiaries | (151,556 | ) | (34,014 | ) | 9,804 | — | 175,766 | — | |||||||||||||||
Earnings (loss) from continuing operations | (152,717 | ) | (232,524 | ) | (32,250 | ) | 9,804 | 254,970 | (152,717 | ) | |||||||||||||
Earnings (loss) from discontinued operations, net of tax | — | — | — | — | — | — | |||||||||||||||||
Net earnings (loss) | $ | (152,717 | ) | $ | (232,524 | ) | $ | (32,250 | ) | $ | 9,804 | $ | 254,970 | $ | (152,717 | ) | |||||||
Total comprehensive income (loss) | $ | (153,825 | ) | $ | (233,632 | ) | $ | (33,358 | ) | $ | 8,696 | $ | 258,294 | $ | (153,825 | ) |
For the three months ended June 30, 2013 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental | $ | — | $ | 155,244 | $ | 1,013 | $ | 33,988 | $ | — | $ | 190,245 | |||||||||||
Sales | — | 74,428 | 196,572 | 160,448 | (189,014 | ) | 242,434 | ||||||||||||||||
Total revenue | — | 229,672 | 197,585 | 194,436 | (189,014 | ) | 432,679 | ||||||||||||||||
Rental expenses | 13 | 61,149 | 3,328 | 56,413 | (30,521 | ) | 90,382 | ||||||||||||||||
Cost of sales | 29 | 47,596 | 144,151 | 59,251 | (191,702 | ) | 59,325 | ||||||||||||||||
Gross profit (loss) | (42 | ) | 120,927 | 50,106 | 78,772 | 33,209 | 282,972 | ||||||||||||||||
Selling, general and administrative expenses | 621 | 120,228 | 47,902 | 36,291 | (59 | ) | 204,983 | ||||||||||||||||
Research and development expenses | — | 8,454 | 8,265 | 3,678 | — | 20,397 | |||||||||||||||||
Acquired intangible asset amortization | — | 20,414 | 18,088 | 7,959 | — | 46,461 | |||||||||||||||||
Operating earnings (loss) | (663 | ) | (28,169 | ) | (24,149 | ) | 30,844 | 33,268 | 11,131 | ||||||||||||||
Non-operating intercompany transactions | — | 8,300 | (101 | ) | (28,829 | ) | 20,630 | — | |||||||||||||||
Interest income and other | — | 18,510 | 3,063 | 40 | (20,709 | ) | 904 | ||||||||||||||||
Interest expense | — | (108,622 | ) | (17,661 | ) | (84 | ) | 20,709 | (105,658 | ) | |||||||||||||
Loss on extinguishment of debt | — | (2,164 | ) | — | — | — | (2,164 | ) | |||||||||||||||
Foreign currency loss | — | (5,943 | ) | (135 | ) | (1,694 | ) | — | (7,772 | ) | |||||||||||||
Derivative instruments gain | — | 10,556 | — | — | — | 10,556 | |||||||||||||||||
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries | (663 | ) | (107,532 | ) | (38,983 | ) | 277 | 53,898 | (93,003 | ) | |||||||||||||
Income tax expense (benefit) | — | (18,526 | ) | (8,917 | ) | (3,613 | ) | — | (31,056 | ) | |||||||||||||
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries | (663 | ) | (89,006 | ) | (30,066 | ) | 3,890 | 53,898 | (61,947 | ) | |||||||||||||
Equity in earnings (loss) of subsidiaries | (61,912 | ) | (25,033 | ) | 4,540 | — | 82,405 | — | |||||||||||||||
Earnings (loss) from continuing operations | (62,575 | ) | (114,039 | ) | (25,526 | ) | 3,890 | 136,303 | (61,947 | ) | |||||||||||||
Earnings (loss) from discontinued operations, net of tax | — | (1,527 | ) | — | 650 | 249 | (628 | ) | |||||||||||||||
Net earnings (loss) | $ | (62,575 | ) | $ | (115,566 | ) | $ | (25,526 | ) | $ | 4,540 | $ | 136,552 | $ | (62,575 | ) | |||||||
Total comprehensive income (loss) | $ | (64,320 | ) | $ | (117,311 | ) | $ | (27,271 | ) | $ | 2,795 | $ | 141,787 | $ | (64,320 | ) |
For the six months ended June 30, 2014 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental | $ | — | $ | 280,204 | $ | 3,187 | $ | 58,402 | $ | — | $ | 341,793 | |||||||||||
Sales | — | 135,338 | 455,780 | 426,200 | (446,401 | ) | 570,917 | ||||||||||||||||
Total revenue | — | 415,542 | 458,967 | 484,602 | (446,401 | ) | 912,710 | ||||||||||||||||
Rental expenses | 80 | 139,478 | 7,620 | 108,040 | (82,388 | ) | 172,830 | ||||||||||||||||
Cost of sales | 45 | 141,914 | 279,649 | 183,470 | (439,469 | ) | 165,609 | ||||||||||||||||
Gross profit (loss) | (125 | ) | 134,150 | 171,698 | 193,092 | 75,456 | 574,271 | ||||||||||||||||
Selling, general and administrative expenses | 1,978 | 152,303 | 89,951 | 102,887 | (173 | ) | 346,946 | ||||||||||||||||
Research and development expenses | — | 11,863 | 13,279 | 10,581 | — | 35,723 | |||||||||||||||||
Acquired intangible asset amortization | — | 32,162 | 39,890 | 27,391 | — | 99,443 | |||||||||||||||||
Wake Forest settlement | — | 198,578 | — | — | — | 198,578 | |||||||||||||||||
Operating earnings (loss) | (2,103 | ) | (260,756 | ) | 28,578 | 52,233 | 75,629 | (106,419 | ) | ||||||||||||||
Non-operating intercompany transactions | — | (668 | ) | (28,526 | ) | (30,989 | ) | 60,183 | — | ||||||||||||||
Interest income and other | — | 34,501 | 12,891 | 77 | (47,247 | ) | 222 | ||||||||||||||||
Interest expense | — | (216,850 | ) | (34,358 | ) | (39 | ) | 47,247 | (204,000 | ) | |||||||||||||
Foreign currency gain | — | 3,379 | 303 | 406 | — | 4,088 | |||||||||||||||||
Derivative instruments loss | — | (4,300 | ) | — | — | — | (4,300 | ) | |||||||||||||||
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries | (2,103 | ) | (444,694 | ) | (21,112 | ) | 21,688 | 135,812 | (310,409 | ) | |||||||||||||
Income tax expense (benefit) | — | (190,439 | ) | 56,485 | 22,645 | — | (111,309 | ) | |||||||||||||||
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries | (2,103 | ) | (254,255 | ) | (77,597 | ) | (957 | ) | 135,812 | (199,100 | ) | ||||||||||||
Equity in earnings (loss) of subsidiaries | (196,997 | ) | (84,764 | ) | (957 | ) | — | 282,718 | — | ||||||||||||||
Earnings (loss) from continuing operations | (199,100 | ) | (339,019 | ) | (78,554 | ) | (957 | ) | 418,530 | (199,100 | ) | ||||||||||||
Earnings (loss) from discontinued operations, net of tax | — | — | — | — | — | — | |||||||||||||||||
Net earnings (loss) | $ | (199,100 | ) | $ | (339,019 | ) | $ | (78,554 | ) | $ | (957 | ) | $ | 418,530 | $ | (199,100 | ) | ||||||
Total comprehensive income (loss) | $ | (198,915 | ) | $ | (338,834 | ) | $ | (78,369 | ) | $ | (772 | ) | $ | 417,975 | $ | (198,915 | ) |
For the six months ended June 30, 2013 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Rental | $ | — | $ | 305,712 | $ | 3,253 | $ | 69,443 | $ | — | $ | 378,408 | |||||||||||
Sales | — | 143,637 | 416,255 | 322,348 | (412,085 | ) | 470,155 | ||||||||||||||||
Total revenue | — | 449,349 | 419,508 | 391,791 | (412,085 | ) | 848,563 | ||||||||||||||||
Rental expenses | 13 | 123,498 | 8,170 | 113,335 | (57,283 | ) | 187,733 | ||||||||||||||||
Cost of sales | 54 | 97,731 | 253,909 | 119,908 | (356,046 | ) | 115,556 | ||||||||||||||||
Gross profit (loss) | (67 | ) | 228,120 | 157,429 | 158,548 | 1,244 | 545,274 | ||||||||||||||||
Selling, general and administrative expenses | 1,129 | 202,656 | 92,565 | 70,254 | (179 | ) | 366,425 | ||||||||||||||||
Research and development expenses | — | 15,356 | 16,521 | 6,302 | — | 38,179 | |||||||||||||||||
Acquired intangible asset amortization | — | 41,651 | 36,367 | 15,989 | — | 94,007 | |||||||||||||||||
Operating earnings (loss) | (1,196 | ) | (31,543 | ) | 11,976 | 66,003 | 1,423 | 46,663 | |||||||||||||||
Non-operating intercompany transactions | — | 60,252 | 58,754 | (52,353 | ) | (66,653 | ) | — | |||||||||||||||
Interest income and other | — | 36,194 | 6,126 | 69 | (41,327 | ) | 1,062 | ||||||||||||||||
Interest expense | — | (219,761 | ) | (35,218 | ) | (94 | ) | 41,327 | (213,746 | ) | |||||||||||||
Loss on extinguishment of debt | — | (2,164 | ) | — | — | — | (2,164 | ) | |||||||||||||||
Foreign currency gain (loss) | — | 5,480 | (213 | ) | (8,464 | ) | — | (3,197 | ) | ||||||||||||||
Derivative instruments gain (loss) | — | 10,040 | — | — | — | 10,040 | |||||||||||||||||
Earnings (loss) from continuing operations before income taxes (benefit) and equity in earnings (loss) of subsidiaries | (1,196 | ) | (141,502 | ) | 41,425 | 5,161 | (65,230 | ) | (161,342 | ) | |||||||||||||
Income tax expense (benefit) | — | (46,097 | ) | (4,183 | ) | (5,744 | ) | — | (56,024 | ) | |||||||||||||
Earnings (loss) from continuing operations before equity in earnings (loss) of subsidiaries | (1,196 | ) | (95,405 | ) | 45,608 | 10,905 | (65,230 | ) | (105,318 | ) | |||||||||||||
Equity in earnings (loss) of subsidiaries | (106,166 | ) | 55,260 | 10,814 | — | 40,092 | — | ||||||||||||||||
Earnings (loss) from continuing operations | (107,362 | ) | (40,145 | ) | 56,422 | 10,905 | (25,138 | ) | (105,318 | ) | |||||||||||||
Earnings (loss) from discontinued operations, net of tax | — | (2,394 | ) | (2 | ) | (91 | ) | 443 | (2,044 | ) | |||||||||||||
Net earnings (loss) | $ | (107,362 | ) | $ | (42,539 | ) | $ | 56,420 | $ | 10,814 | $ | (24,695 | ) | $ | (107,362 | ) | |||||||
Total comprehensive income (loss) | $ | (109,781 | ) | $ | (44,958 | ) | $ | 54,001 | $ | 8,395 | $ | (17,438 | ) | $ | (109,781 | ) |
For the six months ended June 30, 2014 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net earnings (loss) | $ | (199,100 | ) | $ | (339,019 | ) | $ | (78,554 | ) | $ | (957 | ) | $ | 418,530 | $ | (199,100 | ) | ||||||
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities | 3,518 | 145,948 | 116,189 | 95,906 | (101,083 | ) | 260,478 | ||||||||||||||||
Net cash provided (used) by operating activities | (195,582 | ) | (193,071 | ) | 37,635 | 94,949 | 317,447 | 61,378 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Net additions to property, plant and equipment | — | (55,257 | ) | (3,587 | ) | (30,561 | ) | 57,434 | (31,971 | ) | |||||||||||||
Businesses acquired in purchase transaction, net of cash acquired | — | — | (4,500 | ) | (113 | ) | — | (4,613 | ) | ||||||||||||||
Decrease (increase) in identifiable intangible assets and other non-current assets | — | (424 | ) | (3,711 | ) | (95 | ) | — | (4,230 | ) | |||||||||||||
Net cash provided (used) by investing activities | — | (55,681 | ) | (11,798 | ) | (30,769 | ) | 57,434 | (40,814 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Settlement of profits interest units | (1,416 | ) | — | — | — | — | (1,416 | ) | |||||||||||||||
Repayments of long-term debt and capital lease obligations | — | (13,240 | ) | — | (31 | ) | — | (13,271 | ) | ||||||||||||||
Proceeds (payments) on intercompany loans | — | 216,613 | (26,363 | ) | (190,250 | ) | — | — | |||||||||||||||
Proceeds (payments) on intercompany investments | 196,998 | 84,540 | 408 | 92,935 | (374,881 | ) | — | ||||||||||||||||
Net cash provided (used) by financing activities | 195,582 | 287,913 | (25,955 | ) | (97,346 | ) | (374,881 | ) | (14,687 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 841 | — | 841 | |||||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | 39,161 | (118 | ) | (32,325 | ) | — | 6,718 | |||||||||||||||
Cash and cash equivalents, beginning of period | 398 | 87,771 | 118 | 118,662 | — | 206,949 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 398 | $ | 126,932 | $ | — | $ | 86,337 | $ | — | $ | 213,667 |
For the six months ended June 30, 2013 | |||||||||||||||||||||||
Centaur Guernsey L.P. Inc. Parent Company | Kinetic Concepts, Inc. and KCI USA, Inc. Borrower | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||
Cash flows from operating activities: | |||||||||||||||||||||||
Net earnings (loss) | $ | (107,362 | ) | $ | (42,539 | ) | $ | 56,420 | $ | 10,814 | $ | (24,695 | ) | $ | (107,362 | ) | |||||||
Adjustments to reconcile net loss to net cash provided (used) by operating activities | 2,767 | 145,087 | (12,136 | ) | (49,950 | ) | 61,987 | 147,755 | |||||||||||||||
Net cash provided (used) by operating activities | (104,595 | ) | 102,548 | 44,284 | (39,136 | ) | 37,292 | 40,393 | |||||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||
Net additions to property, plant and equipment | — | (90,855 | ) | (8,962 | ) | (67,434 | ) | 119,179 | (48,072 | ) | |||||||||||||
Decrease (increase) in identifiable intangible assets and other non-current assets | — | (49 | ) | (2,375 | ) | (134 | ) | — | (2,558 | ) | |||||||||||||
Net cash provided (used) by investing activities | — | (90,904 | ) | (11,337 | ) | (67,568 | ) | 119,179 | (50,630 | ) | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||
Distribution to limited partners | (1,572 | ) | — | — | — | — | (1,572 | ) | |||||||||||||||
Repayments of long-term debt and capital lease obligations | — | (52,959 | ) | — | 33 | — | (52,926 | ) | |||||||||||||||
Payment of debt issuance costs | — | (21,122 | ) | — | — | — | (21,122 | ) | |||||||||||||||
Proceeds (payments) on intercompany loans | — | 14,786 | (16,371 | ) | 1,585 | — | — | ||||||||||||||||
Proceeds (payments) on intercompany investments | 106,167 | (56,265 | ) | (16,576 | ) | 123,145 | (156,471 | ) | — | ||||||||||||||
Net cash provided (used) by financing activities | 104,595 | (115,560 | ) | (32,947 | ) | 124,763 | (156,471 | ) | (75,620 | ) | |||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | (1,676 | ) | — | (1,676 | ) | |||||||||||||||
Net increase (decrease) in cash and cash equivalents | — | (103,916 | ) | — | 16,383 | — | (87,533 | ) | |||||||||||||||
Cash and cash equivalents, beginning of period | 398 | 276,788 | — | 105,964 | — | 383,150 | |||||||||||||||||
Cash and cash equivalents, end of period | $ | 398 | $ | 172,872 | $ | — | $ | 122,347 | $ | — | $ | 295,617 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Advanced Wound Therapeutics revenue: | |||||||||||||||||||||
Rental | $ | 173,629 | $ | 189,232 | (8.2 | )% | $ | 338,606 | $ | 375,155 | (9.7 | )% | |||||||||
Sales | 178,026 | 128,533 | 38.5 | 349,028 | 248,492 | 40.5 | |||||||||||||||
Total – Advanced Wound Therapeutics | 351,655 | 317,765 | 10.7 | 687,634 | 623,647 | 10.3 | |||||||||||||||
Regenerative Medicine revenue: | |||||||||||||||||||||
Rental | 1,606 | 1,013 | 58.5 | 3,187 | 3,253 | (2.0 | ) | ||||||||||||||
Sales | 111,910 | 113,901 | (1.7 | ) | 221,889 | 221,663 | 0.1 | ||||||||||||||
Total – Regenerative Medicine | 113,516 | 114,914 | (1.2 | ) | 225,076 | 224,916 | 0.1 | ||||||||||||||
Total consolidated revenue: | |||||||||||||||||||||
Rental | 175,235 | 190,245 | (7.9 | ) | 341,793 | 378,408 | (9.7 | ) | |||||||||||||
Sales | 289,936 | 242,434 | 19.6 | 570,917 | 470,155 | 21.4 | |||||||||||||||
Total consolidated revenue | $ | 465,171 | $ | 432,679 | 7.5 | % | $ | 912,710 | $ | 848,563 | 7.6 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Americas revenue: | |||||||||||||||||||||
Rental | $ | 150,404 | $ | 160,735 | (6.4 | )% | $ | 292,008 | $ | 318,614 | (8.4 | )% | |||||||||
Sales | 196,263 | 191,738 | 2.4 | 389,666 | 373,527 | 4.3 | |||||||||||||||
Total – Americas | 346,667 | 352,473 | (1.6 | ) | 681,674 | 692,141 | (1.5 | ) | |||||||||||||
EMEA/APAC revenue: | |||||||||||||||||||||
Rental | 24,831 | 29,510 | (15.9 | ) | 49,785 | 59,794 | (16.7 | ) | |||||||||||||
Sales | 93,673 | 50,696 | 84.8 | 181,251 | 96,628 | 87.6 | |||||||||||||||
Total – EMEA/APAC | 118,504 | 80,206 | 47.7 | 231,036 | 156,422 | 47.7 | |||||||||||||||
Total consolidated revenue: | |||||||||||||||||||||
Rental | 175,235 | 190,245 | (7.9 | ) | 341,793 | 378,408 | (9.7 | ) | |||||||||||||
Sales | 289,936 | 242,434 | 19.6 | 570,917 | 470,155 | 21.4 | |||||||||||||||
Total consolidated revenue | $ | 465,171 | $ | 432,679 | 7.5 | % | $ | 912,710 | $ | 848,563 | 7.6 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||||
Advanced Wound Therapeutics revenue | 75.6 | % | 73.4 | % | 220 | bps | 75.3 | % | 73.5 | % | 180 | bps | |||||||
Regenerative Medicine revenue | 24.4 | 26.6 | (220 | ) | bps | 24.7 | 26.5 | (180 | ) | bps | |||||||||
Total consolidated revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Americas revenue | 74.5 | % | 81.5 | % | (700 | ) | bps | 74.7 | % | 81.6 | % | (690 | ) | bps | |||||
EMEA/APAC revenue | 25.5 | 18.5 | 700 | bps | 25.3 | 18.4 | 690 | bps | |||||||||||
Total consolidated revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Rental revenue | 37.7 | % | 44.0 | % | (630 | ) | bps | 37.4 | % | 44.6 | % | (720 | ) | bps | |||||
Sales revenue | 62.3 | 56.0 | 630 | bps | 62.6 | 55.4 | 720 | bps | |||||||||||
Total consolidated revenue | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Rental expenses | $ | 87,038 | $ | 90,382 | (3.7 | )% | $ | 172,830 | $ | 187,733 | (7.9 | )% |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Cost of sales | $ | 82,307 | $ | 59,325 | 38.7 | % | $ | 165,609 | $ | 115,556 | 43.3 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||||
Gross profit margin | 63.6 | % | 65.4 | % | (180 | ) | bps | 62.9 | % | 64.3 | % | (140 | ) | bps |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||||
Selling, general and administrative expenses | $ | 170,585 | $ | 204,983 | (16.8 | )% | $ | 346,946 | $ | 366,425 | (5.3 | )% |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||||||||
Research and development expenses | $ | 18,233 | $ | 20,397 | (10.6)% | $ | 35,723 | $ | 38,179 | (6.4)% | |||||||||||||
As a percent of total revenue | 3.9 | % | 4.7 | % | (80 | ) | bps | 3.9 | % | 4.5 | % | (60 | ) | bps |
Six months ended June 30, | |||||||
2014 | 2013 | ||||||
Net cash provided by operating activities | $ | 61,378 | $ | 40,393 | |||
Net cash used by investing activities | (40,814 | ) | (50,630 | ) | |||
Net cash used by financing activities | (14,687 | ) | (75,620 | ) | |||
Effect of exchange rates changes on cash and cash equivalents | 841 | (1,676 | ) | ||||
Net increase (decrease) in cash and cash equivalents | $ | 6,718 | $ | (87,533 | ) |
Senior Secured Credit Facility | Maturity Date | Effective Interest Rate | Amount Outstanding (1) | Amount Available for Additional Borrowing | ||||||||||
Senior Revolving Credit Facility | November 2016 | — | % | $ | — | $ | 178,706 | (2) | ||||||
Senior Dollar Term E-1 Credit Facility | May 2018 | 4.41 | % | (3) | 1,909,354 | — | ||||||||
Senior Euro Term E-1 Credit Facility | May 2018 | 5.08 | % | (3) | 323,468 | — | ||||||||
Senior Term E-2 Credit Facility | November 2016 | 4.03 | % | (3) | 313,217 | — | ||||||||
Total | $ | 2,546,039 | $ | 178,706 |
(1) | Amount outstanding includes the original issue discount. |
(2) | At June 30, 2014, the amount available under the Revolving Credit Facility reflected a reduction of $21.3 million of letters of credit issued by banks which are party to the Senior Secured Credit Facility. In addition, we have $12.1 million of letters of credit issued by a bank not party to the Senior Secured Credit Facility. |
(3) | The effective interest rate includes the effect of the original issue discount. Excluding the original issue discount, our nominal interest rate as of June 30, 2014 was 4.00% on the Senior Dollar Term E-1 Credit Facility, 4.25% on the Senior Euro Term E-1 Credit Facility and 3.50% on the Senior Term E-2 Credit Facility. |
2014 | 2015-2016 | 2017-2018 | Thereafter | Total | |||||||||||||||
Settlement Agreement obligations | $ | 80,000 | $ | 170,000 | $ | 30,000 | $ | — | $ | 280,000 |
A list of all exhibits filed or included as part of this quarterly report on Form 10-Q is as follows: | |
Exhibit Number | Description |
3.1 | Declaration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012). |
3.2 | Certificate of Registration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.4 to our Registration Statement on Form S-4 filed on October 1, 2012). |
3.3 | Amended and Restated Limited Partnership Agreement of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012). |
†10.1 | Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014. |
†31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
†31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
†32.1 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
† Exhibit filed herewith. |
CENTAUR GUERNSEY L.P. INC. | ||
(REGISTRANT) | ||
Date: July 30, 2014 | By: | /s/ Joseph F. Woody |
Joseph F. Woody | ||
Principal Executive Officer | ||
(Duly Authorized Officer) | ||
Date: July 30, 2014 | By: | /s/ Robert P. Hureau |
Robert P. Hureau | ||
Principal Financial Officer | ||
(Duly Authorized Officer) |
Exhibit Number | Description |
3.1 | Declaration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012). |
3.2 | Certificate of Registration of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.4 to our Registration Statement on Form S-4 filed on October 1, 2012). |
3.3 | Amended and Restated Limited Partnership Agreement of Centaur Guernsey L.P. Inc. (filed as Exhibit 3.3 to our Registration Statement on Form S-4 filed on October 1, 2012). |
†10.1 | Settlement and Release Agreement between Kinetic Concepts, Inc. and affiliates and Wake Forest University Health Sciences dated June 30, 2014. |
†31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
†31.2 | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
†32.1 | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated July 30, 2014. |
† Exhibit filed herewith. |
1. | Definitions. As used herein, the following terms have the following meanings: |
a. | “Affiliate,” in relation to any Party, shall mean any corporation, partnership, proprietorship, person or other entity controlled by, controlling, or under common control with such Party, and shall include any corporation, or partnership, proprietorship, person or other entity directly or indirectly owning, owned by or under common ownership with such Party to the extent of fifty percent (50%) or more the equity or voting shares, including shares owned beneficially by such Party. |
b. | “Applicable Law” means with respect to any Person, any federal, state or local law (statutory, common, or otherwise), constitution, treaty, convention, ordinance, code, rule, |
c. | “Governmental Authority” means any transnational, domestic or foreign federal, state, or local, governmental authority, department, court, agency or official, including any political subdivision thereof. |
d. | “License Agreement” means the license agreement entered into between the Parties on October 6, 1993, and all sublicenses, modifications and/or amendments thereto, terminated on or about March 18, 2011. |
e. | “Litigations” means the lawsuits entitled: Kinetic Concepts, Inc.et al. v. Wake Forest University Health Sciences, Civil Action No. 11-CV-00163-XR pending in the United States District Court for the Western District of Texas, San Antonio Division); Wake Forest University Health Sciences vs. Kinetic Concepts,et al., Civil Action No. 11-CV-00713-XR pending in the United States District Court for the Western District of Texas, San Antonio Division, consolidated with 11-CV-00163-XR; the German nullity proceeding between the Parties, in the German Federal Patent Court regarding EP0620720 (DE 692 24 847), case no. 4 Ni 28/13(EP); and any and all lawsuits filed by either of the Parties against the other Party related to the License Agreement, the Products, or the Patents prior to the Effective Date of this Settlement Agreement. |
f. | “Patents” means U.S. patents 5,645,081, 5,636,643, 7,198,046, 7,216,651 and foreign equivalents, including but not limited to European Patent 0620720, including their continuations, continuations-in-part, divisionals, reexaminations, reissues, and any other patent sharing common priority with the aforementioned patents. |
g. | “Products” means all Negative Pressure Wound Therapy and Negative Pressure Technology Platform products and features of such products that were the subject of the License Agreement, or that are the subject of any Litigations, including but not limited to pump sales, pump rentals, canisters, dressing kits, tubing, and any related components for V.A.C. Classic, miniV.A.C., V.A.C.ATS, InfoV.A.C., ActiV.A.C., V.A.C. Simplicity, V.A.C. Instill, V.A.C.Ulta, V.A.C.Via, V.A.C.VeraFlo, AbThera, and Prevena systems, and existing on or before June 19, 2014, including evolutions made to such products in the nature of an insubstantial change in dimension, proportion, components, material, orientation, functionality or materials for component parts, or the general location of existing features or functionalities of such products; provided that such change does not alter the basic operation of such product as provided in such products’ specifications (e.g. applying a negative pressure to the surface of the body in continuous, intermittent, or variable pressure modes). |
2. | Other Definitional and Interpretative Provisions.The words “hereof,” “herein,” and “hereunder” and words of like import used in this Settlement Agreement shall refer to this Settlement Agreement as a whole and not to any particular provision of this Settlement Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Sections are to Sections of this Settlement Agreement unless otherwise specified. Any singular term in this Settlement Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes,” or “including” are used in this Settlement Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written,” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References to any person or entity include the successors and permitted assigns of that person or entity. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any and all Applicable Law. |
3. | Releases of Claims and Liabilities. WFUHS, on behalf of itself and its Affiliates, subsidiaries, licensees to the Patents, named inventors to the Patents, and successors in interest to the Patents and License Agreement, hereby irrevocably releases, acquits, and forever discharges KCI and its Affiliates, subsidiaries, distributors, suppliers, customers, officers, directors, legal representatives, and successors in interest from any and all claims with respect to the Patents, Products, and/or License Agreement, and from any and all claims brought in the Litigations, including any claims, that could have been brought for activities solely occurring before June 19, 2014. KCI, on behalf of itself and its Affiliates and subsidiaries, hereby irrevocably releases, acquits and forever discharges WFUHS and its Affiliates, subsidiaries, officers, directors, legal representatives, and successors, named inventors to the Patents, and successors in interest from any and all claims with respect to the Patents and/or License Agreement, and from any and all claims brought in the Litigations, including any claims that could have been brought for activities solely occurring before June 19, 2014. |
4. | Stipulations of Dismissal of the Litigations. For each of the Litigations, each Party shall, and shall cause its counsel in the applicable jurisdictions within 15 (fifteen) days of the Effective Date of this Settlement Agreement to, withdraw its complaints and demands for judicial relief and cause each of its complaints and demands in the Litigations to be dismissed with prejudice. Each Party shall bear all of its own costs, including attorneys fees, associated with the Litigations. |
5. | Covenant Not to Sue. WFUHS, on behalf of itself and its Affiliates, subsidiaries, and successors in interest to the Patents and License Agreement, further covenants and agrees not to sue or otherwise assert any claim, demand, cause of action, or request for damages or other relief against KCI and its Affiliates, subsidiaries, distributors, suppliers, customers, officers, directors, legal representatives, and successors in interest with respect to the Products or any current uses of the |
6. | Consideration.In addition to the other consideration set forth in this Settlement Agreement, KCI or its designee will pay to WFUHS or its designee $280,000,000 U.S.(Two Hundred Eighty Million Dollars in United States currency) (“the Settlement Payments”) as full and final payment of all amounts owing under this Settlement Agreement and to resolve the disputes referenced herein, to be paid as follows: |
7. | Tax Reporting. The Parties hereby acknowledge, understand and agree that the Settlement Payments due hereunder to WFUHS by, or on behalf of KCI, are payments of retrospective U.S. patent royalties. Accordingly, KCI shall, for Federal and State income tax purposes, report all installments of the Settlement Payments due hereunder in a manner consistent with its prior tax reporting of the royalty payments made to WFUHS pursuant to the License Agreement, the characterization of which was as ordinary and necessary deductions pursuant to Section 162 of the Internal Revenue Code of 1986, as amended. Similarly, WFUHS shall, for Federal and State Income Tax purposes, report all its receipt of each installment of the Settlement Payments in a manner consistent thereof. |
8. | No Admissions. Nothing in this Settlement Agreement or the Binding Term Sheet shall be deemed an admission by either Party. |
9. | Authority. Each Party warrants and represents to the other Party that (a) such warranting and representing Party is a corporation duly organized, validly existing and in good standing under the Applicable Laws of the state of its incorporation and has the requisite power and authority to enter into this Settlement Agreement and to take actions, or refrain or forebear from taking actions, and grant the releases and covenants not to sue as described herein so as to fully perform its obligations under, and implement the provisions and intent of, this Settlement Agreement, (b) the execution, delivery and performance of this Settlement Agreement has been duly authorized by all corporate actions necessary on the part of such Party, and (c) the individual executing this Settlement Agreement on behalf of such Party has the authority to do so. |
10. | Amendments / Non-Waiver. Any provision of this Settlement Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party, or in the case of waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. |
11. | Governing Law. This Settlement Agreement shall be governed by and construed and enforced with the Applicable Law of the State of Delaware, without regard to the conflict of law principles of such state, except that any claims relating to Section 6 of this Agreement (Consideration) shall be brought in a jurisdiction and venue of WFUHS’s choosing, and any claims relating to Section 5 (Covenant Not to Sue) shall be brought in a jurisdiction and venue of KCI’s choosing. |
12. | Remedies. The Parties acknowledge and agree that monetary damages would be an inadequate remedy for violations of this Settlement Agreement and that either Party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance, or injunctive relief, or such other relief as such court may deem just and proper, in order to enforce this Settlement Agreement or prevent any violation of the terms hereof, and to the extent permitted by Applicable Law, each Party waives the posting of a bond and any objection to the imposition of such relief. |
13. | Integration. This Settlement Agreement contains the entire agreement of the Parties with respect to the subject matter of this Settlement Agreement, and supersedes all prior negotiations, agreements, and understandings with respect thereto, including but not limited to the Binding Term Sheet. |
14. | Successors and Assigns. To the extent not otherwise granted in this Settlement Agreement, all provisions of this Settlement Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and assigns. |
15. | Severability. If any term, provision, covenant or restriction of this Settlement Agreement is held by a court of competent jurisdiction or other Governmental Authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Settlement Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. |
16. | Notices. All notices, requests, and other communications to any Party shall be in writing and shall be given, |
17. | Counterparts. This Settlement Agreement may be signed in multiple counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. |
KINETIC CONCEPTS, INC. | WAKE FOREST UNIVERSITY HEALTH SCIENCES | |
By: /s/ John T. Bibb | By: /s/ John D. McConnell | |
Print Name: John T. Bibb | Print Name: John D. McConnell | |
Title: Executive Vice President, General Counsel, and Secretary | Title: Chief Executive Officer | |
Date: June 30, 2014 | Date: June 30, 2014 |
/s/ Joseph F. Woody |
Joseph F. Woody |
Chief Executive Officer |
/s/ Robert P. Hureau |
Robert P. Hureau |
Chief Financial Officer |
/s/ Joseph F. Woody |
Joseph F. Woody |
Chief Executive Officer |
/s/ Robert P. Hureau |
Robert P. Hureau |
Chief Financial Officer |
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