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): September 21, 2011

Kinetic Concepts, Inc.

(Exact name of registrant as specified in its charter)

Texas	001-09913	74-1891727
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
8023 Vantage Drive San Antonio, Texas	78230	(210) 524-9000
(Address of principal executive offices)	(Zip Code)	(Registrant’s telephone number, including area code)
	N/A
	(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

x Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 8—Other Events

Item 8.01 Other Events.

As previously reported, Kinetic Concepts, Inc. (the “Company”) has entered into an Agreement and Plan of Merger, dated as of July 12, 2011 (the “Merger Agreement”), by and among the Company, Chiron Holdings, Inc. (“Parent”) and Chiron Holdings Merger Sub, Inc., a wholly owned subsidiary of Chiron Holdings, Inc. (“Sub”) pursuant to which (and subject to the conditions set forth therein) Sub would merge with and into the Company, with the Company as the surviving corporation and a wholly owned subsidiary of Parent (the “Merger”).

In connection with the evaluation by prospective debt financing sources of the debt financing contemplated by the Merger Agreement, the Company will provide such prospective debt financing sources with an information memorandum containing certain unaudited EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA information which has not been previously reported by the Company. The Company is providing this information to assist such prospective debt financing sources in evaluating the Company’s EBITDA after the completion of the transactions contemplated by the Merger Agreement. Such information is contained in Exhibit 99.1 to this report and is incorporated herein by reference.

Additional Information and Where to Find It

This filing may be deemed to be solicitation material in respect of the proposed acquisition of the Company by investment funds advised by Apax Partners, together with controlled affiliates of Canada Pension Plan Investment Board and the Public Sector Pension Investment Board. The Company filed a preliminary proxy statement with the SEC related to the Merger on August 8, 2011 and plans to file a definitive proxy statement related to the Merger. INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE ADVISED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The definitive proxy statement will be mailed to shareholders of the Company. Investors and security holders may obtain a free copy of the proxy statement when it becomes available, and other documents filed by the Company with the SEC, at the SEC’s web site at http://www.sec.gov. Free copies of the proxy statement, when it becomes available, and the Company’s other filings with the SEC may also be obtained from the Company by directing a request to Kinetic Concepts, Inc., Attention: Investor Relations, 8023 Vantage Drive, San Antonio, TX 78230, or by calling 210-255-6157.

Participants in Solicitation

The Company and its directors, executive officers and other members of its management and employees may be deemed to be soliciting proxies from the Company’s shareholders in favor of the proposed Merger. Information regarding the Company’s directors and executive officers is available in its 2010 Annual Report on Form 10-K filed with the SEC on March 1, 2011 and definitive proxy statement relating to its 2011 Annual Meeting of Shareholders filed with the SEC on April 15, 2011. Shareholders may obtain additional information regarding the

interests of the Company and its directors and executive officers in the proposed acquisition, which may be different than those of the Company’s shareholders generally, by reading the proxy statement related to the Merger and other relevant documents filed with the SEC when they become available.

Cautionary Statement Regarding Forward-Looking Statements

This filing contains forward-looking statements, which may be identified by words such as “believes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “should,” “seeks,” “future,” “continue,” or the negative of such terms, or other comparable terminology. Forward-looking statements are subject to risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors that could cause actual results to differ materially include, but are not limited to: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; (2) the outcome of any legal proceedings that may be instituted against the Company and others following announcement of the Merger Agreement; (3) the inability to complete the Merger due to the failure to satisfy the conditions to the Merger, including obtaining the approval of at least two-thirds of the Company’s shareholders and the receipt of required regulatory approvals; (4) risks that the proposed transaction disrupts current plans and operations and potential difficulties in employee retention as a result of the Merger; (5) the ability to recognize the benefits of the Merger; (6) legislative, regulatory and economic developments; (7) risks related to achieving cost savings under the Global Business Transformation program or other restructuring programs and (8) other factors described in the Company’s filings with the SEC. Many of the factors that will determine the outcome of the subject matter of this filing are beyond the Company’s and the Apax consortium’s ability to control or predict. The Company can give no assurance that the conditions to the Merger will be satisfied. Except as required by law, the Company undertakes no obligation to revise or update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. The Company is not responsible for updating the information contained in this filing beyond the published date, or for changes made to this filing by wire services or Internet service providers.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Description
Exhibit 99.1	Information for Prospective Debt Financing Sources

SIGNATURE

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.

	KINETIC CONCEPTS, INC. (Registrant)
Date: September 21, 2011	By:	/s/ Martin J. Landon
		Name:	Martin J. Landon
		Title:	Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
Exhibit 99.1	Information for Prospective Debt Financing Sources

EX-99.1

Exhibit 99.1

Information for Prospective Debt Financing Sources

Non-GAAP Financial Measures

The Company has included certain non-GAAP financial measures in this report, including (a) EBITDA, which we define for purposes of this report as net income excluding the impact of interest income and expense, income tax expense, depreciation and amortization, share based compensation, bad debt expense, unrealized transactional gains and losses from foreign currency fluctuations, and also includes adjustments for certain unusual items that we do not expect to continue at the same level in the future, including certain restructuring charges, (b) Adjusted EBITDA, which is defined as EBITDA plus certain royalty expenses related to Wake Forest intellectual property matters, pre-acquisition LifeCell results and expenses related to the pending Merger, certain Global Business Transformation expenses and (c) Pro Forma Adjusted EBITDA, which is defined as Adjusted EBITDA as further adjusted for the estimated remaining benefit associated with cost saving initiatives expected to be realized by the end of 2012 undertaken by the Company during the stated period as if those initiatives had been fully implemented at the beginning of the period. We believe that the presentation of EBITDA enhances an investor’s understanding of our financial performance and is a useful financial metric to assess our operating performance from period to period by excluding certain items that we believe are not representative of our core business. We use EBITDA for business planning purposes and in measuring our performance relative to that of our competitors.

Adjusted EBITDA and Pro Forma Adjusted EBITDA presented in this report are supplemental measures that are not required by, or presented in accordance with GAAP. The Company believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA and Pro Forma Adjusted EBITDA is appropriate to provide additional information to potential lenders or investors in the Company’s debt and other interested parties who may consider Adjusted EBITDA and Pro Forma Adjusted EBITDA useful in measuring the Company’s ability to meet its debt service obligations post-Merger. These non-GAAP measures are not a measurement of the Company’s financial performance under GAAP and should not be considered as alternatives to net income, income from continuing operations, operating income or any other performance measures derived in accordance with GAAP, or as alternatives to cash flow from operating activities as a measure of the Company’s liquidity. In addition, the Company’s measurement of these non-GAAP measures may not be comparable to that of other companies.

These non-GAAP measures do not reflect changes in, or cash requirements for, the Company’s working capital needs; the Company’s interest expense, or the requirements necessary to service interest or principal payments on debt; the Company’s income tax expenses or the cash requirements to pay taxes or historical cash expenditures or future requirements for capital expenditures or contractual commitments. Although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future. These non-GAAP measures do not reflect any cash requirements for such replacements.

The following table presents a reconciliation of net income, a GAAP measure, to EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA for the periods presented:

($ in millions) (unaudited), Fiscal Year Ended 12/31,	2008			2009			2010			Twelve months ended June  30, 2011			Pro Forma Adjustment		Pro  Forma twelve months ended June 30, 2011
Net Income	$	166.4		$	228.7		$	256.1		$	299.6		$	—	$	299.6
Interest Expense, Net		74.7			104.1			86.2			78.2			—		78.2
Income Tax Expense		108.7			105.7			99.6			109.8			—		109.8
Depreciation and Amortization		133.6			155.9			156.5			147.6			—		147.6
Share Based Compensation		26.3			32.5			32.8			33.2			—		33.2
Bad Debt Expense		10.6			10.2			10.6			11.8			—		11.8
Restructuring Charges Including Global Business Transformation		9.3			9.4			5.3			—			—		—
TSS Product Portfolio Rationalization		—			—			7.4			—			—		—
Other Adjustments(1)		(9.5	)		(12.6	)		(3.6	)		(8.9	)		—		(8.9	)
In-Process LifeCell Research and Development		61.6			—			—			—			—		—
Expense from LifeCell inventory Step-Up		15.0			—			—			—			—		—
EBITDA	$	596.7		$	633.9		$	650.9		$	671.3			—	$	671.3
Wake Forest Royalty Expense(2)		94.2			86.7			92.1			63.2			—		63.2
LifeCell Pre-Acquisition Results		27.5			—			—			—			—		—
Merger-related Expenses(3)		—			—			—			1.2			—		1.2
GBT Implementation Expense(4)		—			7.5			9.5			7.3			—		7.3
Adjusted EBITDA	$	718.4		$	728.1		$	752.5		$	743.0			—	$	743.0
Remaining GBT Cost Savings(5)		—			—			—			—			48.0		48.0
Pro Forma Adjusted EBITDA	$	718.4		$	728.1		$	752.5		$	743.0		$	48.0	$	791.0

(1) Other Adjustments include the following:

($ in millions), Fiscal Year Ended 12/31,	2008			2009			2010			LTM 6/30/2011
Amortization of Loan Issuance Costs Included in Interest Expense and D&A	$	(7.0	)	$	(12.1	)	$	(10.3	)	$(8.4)
Unrealized Foreign Currency Transactional (Gain) Loss		(4.1	)		(1.3	)		5.8		(0.6)
Other Miscellaneous		1.6			0.8			0.9		0.1
Total Other Adjustments	$	(9.5	)	$	(12.6	)	$	(3.6	)	$(8.9)

(2) The Company ceased accruing royalty expense related to our previously-existing license agreement with Wake Forest on February 28, 2011.

(3) Represents expenses incurred through June 30, 2011 related to the Merger.

(4) Represents labor, travel, training, consulting and other costs associated exclusively with the implementation of our GBT program.

(5) Estimated remaining Global Business Transformation (“GBT”) cost savings on an annualized run rate basis. Amount is comprised of savings from indirect procurement and field service initiatives and reductions in general and administrative labor costs expected to be realized by the end of 2012.