-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pqx4+jmzYkyNG8nOU5ka35YSyv3RFk5Qbx2Fiz3yGmGUsT/AbAbTcF+gzwaCOFC4 xjd+eKmczuJQy3Zo9tvL9Q== 0000897069-02-000627.txt : 20020822 0000897069-02-000627.hdr.sgml : 20020822 20020822143518 ACCESSION NUMBER: 0000897069-02-000627 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020822 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020822 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HANGER ORTHOPEDIC GROUP INC CENTRAL INDEX KEY: 0000722723 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SPECIALTY OUTPATIENT FACILITIES, NEC [8093] IRS NUMBER: 840904275 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10670 FILM NUMBER: 02745665 BUSINESS ADDRESS: STREET 1: TWO BETHESDA METRO CENTER STREET 2: SUITE 1300 CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019860701 MAIL ADDRESS: STREET 1: TWO BETHESDA METRO CENTER STREET 2: SUITE 1300 CITY: BETHESDA STATE: MD ZIP: 20814 FORMER COMPANY: FORMER CONFORMED NAME: CELLTECH COMMUNICATIONS INC DATE OF NAME CHANGE: 19860304 FORMER COMPANY: FORMER CONFORMED NAME: SEQUEL CORP DATE OF NAME CHANGE: 19890814 8-K 1 slp360.txt FORM 8-K UNITED STATES 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 of 1934 Date of report (Date of earliest event reported): August 22, 2002 HANGER ORTHOPEDIC GROUP, INC. (Exact Name of Registrant as Specified in Charter) Delaware 1-10670 84-0904275 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) Two Bethesda Metro Center, Suite 1200, Bethesda, Maryland 20814 (Address of Principal Executive Offices and Zip Code) (301) 986-0701 (Registrant's telephone number, including area code) ITEM 5. Events. Hanger Orthopedic Group, Inc. hereby files this Current Report on Form 8-K in order to provide the disclosures required by paragraph 61 of Statement of Financial Accounting Standards No. 142--"Goodwill And Other Intangible Assets" ("SFAS No. 142"). ITEM 7. Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits. Exhibit No. Description 99.1 Selected financial information and effect of SFAS No. 142 2 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. Dated: August 22, 2002 HANGER ORTHOPEDIC GROUP, INC. By: /s/ George E. McHenry -------------------------------------------- Name: George E. McHenry Title: Executive Vice President and Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description 99.1 Selected financial information and effect of SFAS No. 142 EX-99.1 3 slp360a.txt SELECTED FINANCIAL INFORMATION Exhibit 99.1 SELECTED FINANCIAL INFORMATION AND EFFECT OF SFAS NO. 142
Selected Financial Data Statement of Operations Data: (1) Year ended December 31, -------------------------------------------------- (in thousands, except per share data) 1999 2000 2001 -------------- -------------- -------------- Net sales $ 346,826 $ 486,031 $ 508,053 -------------- -------------- -------------- Gross profit 177,750 234,663 267,185 Selling, general and administrative 113,995 177,392 182,972 Depreciation and amortization 6,100 10,303 11,613 Amortization of excess cost over net assets acquired 7,958 13,025 13,073 Unusual charges (2) 6,340 2,364 24,438 -------------- -------------- -------------- Income from operations 43,357 31,579 35,089 Interest expense, net (22,177) (47,072) (43,065) -------------- -------------- -------------- Income (loss) before taxes 21,180 (15,493) (7,976) Provision (benefit) for income taxes 10,194 (1,497) 907 -------------- -------------- -------------- Net income (loss) $ 10,986 $ (13,996) $ (8,883) ============== ============== ============== Net income (loss) applicable to common stock $ 8,831 $ (18,534) $ (13,741) ============== ============== ============== Basic Per Common Share Data Net income (loss) applicable to common stock $ 0.47 $ (0.98) $ (0.73) ============== ============== ============== Shares used to compute basic per common share amounts 18,855 18,910 18,920 ============== ============== ============== Diluted Per Common Share Data (3) -------------- -------------- -------------- Net income (loss) applicable to common stock $ 0.44 $ (0.98) $ (0.73) ============== ============== ============== Shares used to compute diluted per common share amounts 20,005 18,910 18,920 ============== ============== ==============
Balance Sheet Data: December 31, - ------------------- -------------------------------- (in thousands) 1999 2000 2001 -------- -------- -------- Cash and cash equivalents $ 5,735 $ 20,669 $ 10,043 Working capital 118,428 133,690 109,216 Total assets 750,081 761,818 699,907 Long-term debt 426,211 422,838 367,315 Redeemable convertible preferred stock 61,343 65,881 70,739 Shareholders' equity $172,914 $154,380 $145,674 - -------------- (1) A reclassification has been made to the 1999, 2000 and 2001 presentation to conform to the presentation of the amortization of assembled workforce for the six months ended June 30, 2002, as reported in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002. (2) The 1999 and 2000 results include integration and restructuring costs of $6.3 million and $2.4 million, respectively, incurred in connection with the purchase of NovaCare O&P. The 2001 results include impairment, restructuring, and improvement costs of $24.4 million, comprised of: (i) a non-cash charge of approximately $4.8 million related to stock compensation to AlixPartners, LLC for services rendered; (ii) restructuring charges of $3.7 million recorded in the second quarter of 2001 principally related to severance and lease termination expenses; (iii) an asset impairment loss of approximately $8.1 million incurred in connection with the October 9, 2001 sale of substantially all of the manufacturing assets of Seattle Orthopedic Group, Inc.; and (iv) approximately $7.8 million of other charges primarily comprised of fees paid to AlixPartners, LLC in connection with development of the Company's performance improvement plan. (3) Excludes the effect of the conversion of the 7% Redeemable Convertible Preferred Stock into Common Stock as it is considered anti-dilutive. For 2000 and 2001, excludes the effect of all dilutive options and warrants as a result of the Company's net loss for the years ended December 31, 2000 and 2001. Change in Accounting for Goodwill and Certain Other Intangibles Effective July 1, 2001 the Company adopted certain provisions of Statement of Financial Accounting Standards 141, Business Combinations ("SFAS 141") and effective January 1, 2002, the Company adopted the full provisions of SFAS 141 and Statement of Financial Accounting Standards 142, Goodwill and Other Intangible Assets ("SFAS 142"). SFAS 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets apart from goodwill. The Company evaluated its goodwill and intangibles acquired prior to June 30, 2001 using the criteria of SFAS 141, which resulted in other intangibles with an unamortized balance of $4.8 million (comprised entirely of assembled workforce intangibles) being combined into goodwill at January 1, 2002. SFAS 142 requires that purchased goodwill and certain indefinite-lived intangibles no longer be amortized, but instead be tested for impairment at least annually. The Company evaluated its intangible assets, other than goodwill, and determined that all such assets have determinable lives. SFAS 142 prescribes a two-phase process for impairment testing of goodwill. The first phase, required to be completed by June 30, 2002, screens for impairment; while the second phase (if necessary), required to be completed by December 31, 2002, measures the impairment. The Company has completed the transitional impairment test, which did not result in the impairment of recorded goodwill. The Company determined that it had two reporting units, which were the same as its reportable segments: (i) patient-care centers and (ii) distribution. All of the Company's goodwill is attributable to the patient-care centers. In accordance with SFAS 142, the effect of this accounting change is reflected prospectively. Supplemental comparative disclosure as if the change had been retroactively applied to the prior year period is as follows (in thousands, except per share amounts):
Year ended December 31, -------------------------------------- 1999 2000 2001 ---------- ----------- ----------- Net income (loss): Reported net income (loss) $ 10,986 $ (13,996) $ (8,883) Goodwill amortization, net of tax benefit (4) 6,814 11,208 11,029 ---------- ---------- ---------- Adjusted net income (loss) $ 17,800 $ (2,788) $ 2,146 ========== ========== ========== Basic income (loss) per share: Reported income (loss) per share $ 0.47 $ (0.98) $ (0.73) Goodwill amortization, net of tax benefit $ 0.36 $ 0.59 $ 0.59 ---------- ---------- ---------- Adjusted basic income (loss) per share $ 0.83 $ (0.39) $ (0.14) ========== ========== ========== Diluted income (loss) per share: Reported income (loss) per share $ 0.44 $ (0.98) $ (0.73) Goodwill amortization, net of tax benefit $ 0.34 $ 0.59 $ 0.59 ---------- ---------- ---------- Adjusted diluted income (loss) per share $ 0.78 $ (0.39) $ (0.14) ========== ========== ==========
(4) For each of the three years ended December 31, 2001, consists of $8.0 million, $13.0 million and $13.1 million, respectively, in amortization. For each of the three years ended December 31, 2001, these amounts are offset by the related tax benefit of $1.2 million, $1.8 million and $2.1 million, respectively. As of January 1, 2002, the Company had an unamortized balance of $6.7 million of definite-lived intangible assets (comprised of $10.1 million in patents and other intangible assets, offset by $3.4 million in accumulated amortization). Estimated aggregate amortization expense related to such assets for each of the five years ended December 31, 2006 is as follows (in thousands): 2002 $ 963 2003 $ 839 2004 $ 768 2005 $ 762 2006 $ 751 -----END PRIVACY-ENHANCED MESSAGE-----