Ohio | 001-15103 | 95-2680965 |
(State or other Jurisdiction of Incorporation or Organization) | (Commission File Number) | (I.R.S. Employer Identification Number) |
Exhibit Number | Description of Exhibit |
99.1 | Unaudited pro forma condensed combined financial information. |
INVACARE CORPORATION | ||
(Registrant) | ||
Date: October 6, 2016 | By: | /s/ Robert K. Gudbranson |
Robert K. Gudbranson | ||
Senior Vice President and Chief Financial Officer |
Exhibit Number | Description of Exhibit |
99.1 | Unaudited pro forma condensed combined financial information. |
(In thousands) | Invacare as Reported (1) | Divested Subsidiaries Historical (2) | Pro Forma Adjust-ments (3) | Pro Forma Divested Subsidiaries | Pro Forma Eliminations (4) | Pro Forma Invacare (5) | ||||||||||||||
Assets | ||||||||||||||||||||
Current Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 125,305 | $ | 111 | $ | — | $ | 111 | $ | — | $ | 125,194 | ||||||||
Trade receivables, net | 148,196 | 5,182 | — | 5,182 | — | 143,014 | ||||||||||||||
Installment receivables, net | 1,433 | — | — | — | — | 1,433 | ||||||||||||||
Inventories, net | 147,515 | 5,091 | — | 5,091 | — | 142,424 | ||||||||||||||
Other current assets | 34,671 | 61 | — | 61 | — | 34,610 | ||||||||||||||
Total Current Assets | 457,120 | 10,445 | — | 10,445 | — | 446,675 | ||||||||||||||
Other Assets | 27,371 | — | — | — | — | 27,371 | ||||||||||||||
Other Intangibles | 31,528 | — | — | — | — | 31,528 | ||||||||||||||
Property and Equipment, net | 77,301 | 159 | — | 159 | — | 77,142 | ||||||||||||||
Goodwill | 379,222 | — | — | — | — | 379,222 | ||||||||||||||
Total Assets | $ | 972,542 | $ | 10,604 | $ | — | $ | 10,604 | $ | — | $ | 961,938 | ||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Current Liabilities | ||||||||||||||||||||
Accounts payable | $ | 104,161 | $ | 2,067 | $ | — | $ | 2,067 | $ | — | $ | 102,094 | ||||||||
Accrued expenses | 121,139 | 2,106 | — | 2,106 | — | 119,033 | ||||||||||||||
Current taxes payable | 5,871 | — | 315 | (A) | 315 | 315 | (D) | 5,871 | ||||||||||||
Short-term debt and current maturities of long-term obligations | 1,991 | — | — | — | — | 1,991 | ||||||||||||||
Total Current Liabilities | 233,162 | 4,173 | 315 | 4,488 | 315 | 228,989 | ||||||||||||||
Long-Term Debt | 156,485 | — | — | — | (12,925 | ) | (E) | 143,560 | ||||||||||||
Other Long-Term Obligations | 110,369 | — | — | — | — | 110,369 | ||||||||||||||
Shareholders’ Equity | ||||||||||||||||||||
Preferred Shares (Authorized 300 shares; none outstanding) | — | — | — | — | — | — | ||||||||||||||
Common Shares (Authorized 100,000 shares; 35,353 issued and outstanding)—no par | 8,967 | — | — | — | — | 8,967 | ||||||||||||||
Class B Common Shares (Authorized 12,000 shares; 729 issued and outstanding)—no par | 183 | — | — | — | — | 183 | ||||||||||||||
Additional paid-in-capital | 263,288 | (12,512 | ) | 377 | (B) | (12,135 | ) | (12,135 | ) | (F) | 263,288 | |||||||||
Retained earnings | 289,597 | 18,943 | (692 | ) | (C) | 18,251 | 24,745 | (F) | 296,091 | |||||||||||
Accumulated other comprehensive earnings | 10,188 | — | — | — | — | 10,188 | ||||||||||||||
Treasury shares (3,613 shares) | (99,697 | ) | — | — | — | — | (99,697 | ) | ||||||||||||
Total Shareholders’ Equity | 472,526 | 6,431 | (315 | ) | 6,116 | 12,610 | 479,020 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 972,542 | $ | 10,604 | $ | — | $ | 10,604 | $ | — | $ | 961,938 |
Invacare as Reported (1) | Divested Subsidiaries Historical (2) | Pro Forma Adjust-ments (3) | Pro Forma Divested Subsidiaries | Pro Forma Eliminations (4) | Pro Forma Invacare (6) | ||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Net sales | $ | 532,589 | $ | 23,741 | $ | (5,519 | ) | (G) | $ | 18,222 | $ | — | $ | 514,367 | |||||||
Cost of products sold | 391,134 | 19,800 | (5,145 | ) | (G) | 14,655 | — | 376,479 | |||||||||||||
Gross Profit | 141,455 | 3,941 | (374 | ) | (G) | 3,567 | — | 137,888 | |||||||||||||
Selling, general and administrative expenses | 151,556 | 2,409 | (61 | ) | (H) | 2,348 | — | 149,208 | |||||||||||||
Charges related to restructuring activities | 791 | — | — | — | — | 791 | |||||||||||||||
Operating Earnings (Loss) | (10,892 | ) | 1,532 | (313 | ) | 1,219 | — | (12,111 | ) | ||||||||||||
Net gain on derivatives | (1,090 | ) | — | — | — | — | (1,090 | ) | |||||||||||||
Interest expense | 6,747 | 254 | 64 | (I) | 318 | — | 6,429 | ||||||||||||||
Interest income | (128 | ) | — | — | — | — | (128 | ) | |||||||||||||
Earnings (Loss) from Before Income Taxes | (16,421 | ) | 1,278 | (377 | ) | 901 | — | (17,322 | ) | ||||||||||||
Income taxes (benefit) | 3,775 | — | 315 | (A) | 315 | (315 | ) | (D) | 3,775 | ||||||||||||
Net Earnings (Loss) | $ | (20,196 | ) | $ | 1,278 | $ | (692 | ) | (C) | $ | 586 | $ | 315 | $ | (21,097 | ) | |||||
Net Earnings (Loss) per Share—Basic | |||||||||||||||||||||
Net Earnings (Loss) | $ | (0.63 | ) | $ | 0.04 | $ | (0.02 | ) | $ | 0.02 | $ | 0.01 | $ | (0.65 | ) | ||||||
Weighted Average Shares Outstanding—Basic | 32,274 | 32,274 | 32,274 | 32,274 | 32,274 | 32,274 | |||||||||||||||
Net Earnings (Loss) per Share—Assuming Dilution | |||||||||||||||||||||
Net Loss | $ | (0.63 | ) | $ | 0.04 | $ | (0.02 | ) | $ | 0.02 | $ | 0.01 | $ | (0.65 | ) | ||||||
Weighted Average Shares Outstanding—Assuming Dilution | 32,572 | 32,572 | 32,572 | 32,572 | 32,572 | 32,572 | |||||||||||||||
Net Earnings (Loss) | $ | (20,196 | ) | $ | 1,278 | $ | (692 | ) | $ | 586 | $ | 315 | $ | (21,097 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||||
Foreign currency translation adjustments | 21,076 | — | — | — | — | 21,076 | |||||||||||||||
Defined Benefit Plans: | |||||||||||||||||||||
Amortization of prior service costs and unrecognized gains | (196 | ) | — | — | — | — | (196 | ) | |||||||||||||
Deferred tax adjustment resulting from defined benefit plan activity | (27 | ) | — | — | — | — | (27 | ) | |||||||||||||
Valuation reserve associated with defined benefit plan activity | 27 | — | — | — | — | 27 | |||||||||||||||
Current period unrealized loss on cash flow hedges | (1,394 | ) | — | — | — | — | (1,394 | ) | |||||||||||||
Deferred tax benefit related to unrealized loss on cash flow hedges | 89 | — | — | — | — | 89 | |||||||||||||||
Other Comprehensive Income | 19,575 | — | — | — | — | 19,575 | |||||||||||||||
Comprehensive Income (Loss) | $ | (621 | ) | $ | 1,278 | $ | (692 | ) | $ | 586 | $ | 315 | $ | (1,522 | ) |
Invacare as Reported (1) | Divested Subsidiaries Historical (2) | Pro Forma Adjust-ments (3) | Pro Forma Divested Subsidiaries | Pro Forma Eliminations (4) | Pro Forma Invacare (6) | ||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Net sales | $ | 1,142,338 | $ | 47,373 | $ | (12,554 | ) | (G) | $ | 34,819 | $ | — | $ | 1,107,519 | |||||||
Cost of products sold | 829,514 | 39,713 | (11,645 | ) | (G) | 28,068 | — | 801,446 | |||||||||||||
Gross Profit | 312,824 | 7,660 | (909 | ) | (G) | 6,751 | — | 306,073 | |||||||||||||
Selling, general and administrative expenses | 318,621 | 5,140 | (121 | ) | (H) | 5,019 | — | 313,602 | |||||||||||||
Charges related to restructuring activities | 1,971 | — | — | — | — | 1,971 | |||||||||||||||
Operating Earnings (Loss) | (7,768 | ) | 2,520 | (788 | ) | 1,732 | — | (9,500 | ) | ||||||||||||
Interest expense | 4,137 | 611 | (118 | ) | (I) | 493 | — | 3,644 | |||||||||||||
Interest income | (165 | ) | — | — | — | — | (165 | ) | |||||||||||||
Earnings (Loss) from Continuing Operations Before Income Taxes | (11,740 | ) | 1,909 | (670 | ) | 1,239 | — | (12,979 | ) | ||||||||||||
Income taxes (benefit) | 14,710 | — | 434 | (A) | 434 | (434 | ) | (D) | 14,710 | ||||||||||||
Net Earnings (Loss) from Continuing Operations | $ | (26,450 | ) | $ | 1,909 | $ | (1,104 | ) | (C) | $ | 805 | $ | 434 | $ | (27,689 | ) | |||||
Gain on Sale of Discontinued Operations (net of tax of $140) | 260 | — | — | — | — | 260 | |||||||||||||||
Total Net Earnings from Discontinued Operations | 260 | — | — | — | — | 260 | |||||||||||||||
Net Earnings (Loss) | $ | (26,190 | ) | $ | 1,909 | $ | (1,104 | ) | $ | 805 | $ | 434 | $ | (27,429 | ) | ||||||
Net Earnings (Loss) per Share—Basic: | |||||||||||||||||||||
Net Earnings (Loss) from Continuing Operations | $ | (0.82 | ) | $ | 0.06 | $ | (0.03 | ) | $ | 0.03 | $ | 0.01 | $ | (0.86 | ) | ||||||
Net Earnings from Discontinued Operations | $ | 0.01 | $ | — | $ | — | $ | — | $ | — | $ | 0.01 | |||||||||
Net Earnings (Loss) per Share—Basic | $ | (0.81 | ) | $ | 0.06 | $ | (0.03 | ) | $ | 0.03 | $ | 0.01 | $ | (0.85 | ) | ||||||
Weighted Average Shares Outstanding—Basic | 32,171 | 32,171 | 32,171 | 32,171 | 32,171 | 32,171 | |||||||||||||||
Net Earnings (Loss) per Share—Assuming Dilution: | |||||||||||||||||||||
Net Earnings (Loss) from Continuing Operations | $ | (0.82 | ) | $ | 0.06 | $ | (0.03 | ) | $ | 0.02 | $ | 0.01 | $ | (0.86 | ) | ||||||
Net Earnings from Discontinued Operations | $ | 0.01 | $ | — | $ | — | $ | — | $ | — | $ | 0.01 | |||||||||
Net Earnings (Loss) per Share—Assuming Dilution | $ | (0.81 | ) | $ | 0.06 | $ | (0.03 | ) | $ | 0.02 | $ | 0.01 | $ | (0.85 | ) | ||||||
Weighted Average Shares Outstanding—Assuming Dilution | 32,683 | 32,683 | 32,683 | 32,683 | 32,683 | 32,683 | |||||||||||||||
Net Earnings (Loss) | $ | (26,190 | ) | $ | 1,909 | $ | (1,104 | ) | $ | 805 | $ | 434 | $ | (27,429 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||||
Foreign currency translation adjustments | (81,404 | ) | — | — | — | — | (81,404 | ) | |||||||||||||
Defined Benefit Plans: | |||||||||||||||||||||
Amortization of prior service costs and unrecognized loss | (1,375 | ) | — | — | — | — | (1,375 | ) | |||||||||||||
Amounts arising during the year, primarily addition of new participants | (784 | ) | (784 | ) | |||||||||||||||||
Deferred tax adjustment resulting from defined benefit plan activity | (44 | ) | — | — | — | — | (44 | ) | |||||||||||||
Valuation reserve (reversal) associated with defined benefit plan activity | 47 | — | — | — | — | 47 | |||||||||||||||
Current period unrealized gain on cash flow hedges | 2,731 | — | — | — | — | 2,731 | |||||||||||||||
Deferred tax loss related to unrealized gain on cash flow hedges | (177 | ) | — | — | — | — | (177 | ) | |||||||||||||
Other Comprehensive Loss | (81,006 | ) | — | — | — | — | (81,006 | ) | |||||||||||||
Comprehensive Income (Loss) | $ | (107,196 | ) | $ | 1,909 | $ | (1,104 | ) | $ | 805 | $ | 434 | $ | (108,435 | ) |
Net cash purchase price per the Purchase Agreement | $ | 13,750 | |
Estimated transaction costs | (825 | ) | |
Estimated net proceeds on sale | $ | 12,925 |
Estimated Net Proceeds on Sale | $ | 12,925 | |
Total Assets | 10,604 | ||
Less Current Liabilities | 4,488 | ||
Less: Estimated Net Assets | $ | 6,116 | |
Estimated Gain on Disposition | $ | 6,809 |
1) | Represents the Company's historical financial statements as reported in the Company's Form 10-Q filing for the six months ended June 30, 2016 and Form 10-K filing for the twelve months ended December 31, 2015, respectively. However, the financial information for the twelve months ended December 31, 2015 in column (1) reflects a reclassification of debt fee amortization of $1,226,000 from Selling, General and Administrative expense to interest expense, as explained in the Company's Accounting Policies Reclassifications Note in its Form 10-Q filing for the six months ended June 30, 2016. |
2) | Represents GCM historical financial results as consolidated in the Company's Form 10-Q filing for the six months ended June 30, 2016 and the Company's Form 10-K filing for the twelve months ended December 31, 2015, respectively. |
3) | Represents pro forma adjustments to GCM results determined in accordance with Regulation S-X and preliminary disposition adjustments. |
4) | Represents pro forma eliminations, considering historical elimination of investments and paid in capital. |
5) | Represents "Invacare as Reported" less "Pro Forma GCM" plus "Pro Forma Eliminations". |
6) | Represents "Invacare as Reported" less "Pro Forma GCM" less "Pro Forma Eliminations". |
(A) | Adjustment to record the federal tax effect of historical and pro forma adjustments at the U.S. statutory tax rate of 35%. Federal tax expense of $315,000 is calculated based on GCM pro forma earnings before income tax of $901,000 for the six months ended June 30, 2016. The pro forma earnings before income taxes for the six months ended June 30, 2016 include the GCM historical income before income taxes of $1,278,000 and the loss before income taxes of Adjustments (G) through (I) as defined below. The 2015 federal tax expense of $434,000 is calculated based on GCM pro forma earnings before income tax of $1,239,000 for the twelve months ended December 31, 2015. The pro forma earnings before income taxes for the twelve months ended December 31, 2015 include GCM historical earnings before income taxes of $1,909,000 and the loss before income taxes of Adjustments (G) through (I) as defined below. |
(B) | Represents the offset of the elimination of intercompany receivables and payables, which have effectively been reclassified to equity as a return of capital on the pro forma condensed balance sheet. |
(C) | Represents the net earnings impact of Adjustments (G), (H), (I) and (A) as reflected in Column 3 on the Pro Forma Condensed Combined Statement of Comprehensive Income (Loss) for the six months ended June 30, 2016 and the twelve months ended December 31, 2015. |
(D) | Represents an elimination entry to record the impact of income tax valuation reserves for the Company related to Adjustment (A) for federal income taxes for GCM since the Company is in a cumulative loss position and, as such, current tax expense is offset by income tax valuation reserves. |
(E) | Adjustment to reflect anticipated pay down of debt with the net proceeds from the disposition of GCM ($12,925,000 as described in Note 1). |
(F) | Adjustment to eliminate equity and intercompany accounts at disposition. In addition, the Company's pro forma retained earnings reflects the gain on disposition (as noted in Note 2) of $6,809,000. |
(G) | Elimination of intercompany revenues, intercompany cost of sales and intercompany profit on sale of ProBasics™ product from GCM to Invacare and its other subsidiaries. |
(H) | Elimination of SG&A allocated from Invacare to GCM. |
(I) | Adjustment to reflect allocation of interest expense to GCM as proceeds from the Transaction are required to be utilized to pay down debt. Interest allocated based on the net proceeds assumed to pay down debt applying the company's average interest rates for the periods presented (a negative adjustment of $64,000 for the six months ended June 30, 2016 and a positive adjustment of $118,000 for the twelve months ended December 31, 2015). |