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): November 8, 2013
VWR FUNDING, INC.
(Exact name of registrant as specified in its charter)
Delaware | 333-124100 | 56-2445503 | ||
(State of incorporation) | (Commission File Number) |
(IRS Employer Identification No.) |
100 Matsonford Road P.O. Box 6660 Radnor, PA |
19087 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (610) 386-1700
(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) |
¨ | 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 2 - Financial Information
Item 2.02 Results of Operations and Financial Condition
Section 7 - Regulation FD
Item 7.01 Regulation FD Disclosure
As previously announced, on Monday, November 11, 2013, at 9:00 AM (Eastern Time), members of the senior management of VWR Funding, Inc. (the Company) will hold a teleconference to discuss the Companys financial results for the quarter ended September 30, 2013. A copy of the press release issued by the Company on November 6, 2013, which provides information regarding the teleconference, was attached as Exhibit 99.1 to the Companys Current Report on Form 8-K furnished with the Securities and Exchange Commission on November 6, 2013.
Managements presentation will contain a discussion of certain financial measures which are not in conformity with generally accepted accounting principles in the United States of America (GAAP), as described below.
Adjusted EBITDA
Managements presentation will include a discussion of earnings before interest, taxes, depreciation and amortization, as adjusted for certain items described below (Adjusted EBITDA). Adjusted EBITDA is a non-GAAP financial measure. Accordingly, the table presented below reconciles this non-GAAP measure to net income or loss for the three and nine months ended September 30, 2013 and 2012. Net income or loss is the most comparable GAAP measure of our operating results presented in the Companys condensed consolidated financial statements.
Adjusted EBITDA should not be considered as an alternative to net income or loss or any other GAAP measure of performance or liquidity. Our calculation of Adjusted EBITDA eliminates the effect of charges primarily associated with financing decisions, tax regulations and capital investments, and includes certain other adjustments described below. Adjusted EBITDA is a key financial metric used by the Companys investors and management to evaluate and measure the Companys operating performance.
Reconciliation of Reported Net Income or Loss to Adjusted EBITDA
(in millions)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Net (loss) income (GAAP) |
$ | (13.5 | ) | $ | (8.2 | ) | $ | 5.0 | $ | 24.9 | ||||||
Income tax (benefit) provision |
(2.3 | ) | (4.3 | ) | 16.4 | 19.6 | ||||||||||
Interest expense, net |
47.8 | 55.0 | 142.8 | 152.5 | ||||||||||||
Depreciation and amortization |
32.8 | 32.1 | 96.6 | 92.4 | ||||||||||||
Net unrealized translation loss (gain) |
30.3 | 15.0 | 22.7 | (6.6 | ) | |||||||||||
Restructuring expenses |
11.9 | 1.4 | 11.9 | 1.4 | ||||||||||||
Debt refinancing fees and extinguishments |
| 4.2 | 2.0 | 4.9 | ||||||||||||
Charges associated with executive departures |
| 6.2 | 2.2 | 6.2 | ||||||||||||
Share-based compensation expense |
0.2 | 0.2 | 0.5 | 0.7 | ||||||||||||
Gain from changes in the estimated fair value of contingent consideration |
| (2.0 | ) | | (2.0 | ) | ||||||||||
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Adjusted EBITDA (Non-GAAP) |
$ | 107.2 | $ | 99.6 | $ | 300.1 | $ | 294.0 | ||||||||
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As reflected in the reconciliation above, the Company recorded certain significant income and expenses during the three and nine months ended September 30, 2013 and 2012:
| We have a significant amount of foreign-denominated debt on our U.S. dollar-denominated balance sheet. The translation of foreign-denominated debt obligations on our U.S. dollar-denominated balance sheet is reported in other income (expense), net, as foreign currency exchange gains or losses each period. Such gains or losses are substantially unrealized and related to the weakening or strengthening of the Euro against the U.S. dollar, respectively. As a result, our operating results are exposed to fluctuations in foreign currency exchange rates, principally with respect to the Euro. |
| During the three and nine months ended September 30, 2013, the Company recognized charges of $11.9 million associated with a global restructuring program (the Program), of which $9.9 million was for our Americas segment and $2.0 million was for our Europe segment. During the three and nine months ended September 30, 2012, the Company recognized charges of $1.4 million associated with implementing cost reduction initiatives in our Europe segment. Refer to Note 4 in Item 1 Financial Statements of our Quarterly Report on Form 10-Q for the period ended September 30, 2013, for more information on the Program and other cost reduction initiatives. |
| During the nine months ended September 30, 2013, the Company recognized a $2.0 million loss on the extinguishment of long-term debt relating to the Incremental Amendment to our Senior Secured Credit Facility, such loss representing the write-off of unamortized deferred financing costs associated with the non-extended term loans. During the three and nine months ended September 30, 2012, the Company recognized a $4.2 million loss on the extinguishment of long-term debt relating to a portion of the Companys 10.25% Senior Notes, such loss including $3.1 million in tender premiums paid, $0.9 million for the write-off of unamortized deferred financing costs and $0.2 million of third party fees and fees paid to lenders. During the nine months ended September 30, 2012, the Company recognized $0.7 million in fees paid to lenders and third parties associated with an amendment to our Senior Secured Credit Facility. |
| During the nine months ended September 30, 2013, the Company recognized charges for severance payments associated with executive departures of $2.2 million. During the three and nine months ended September 30, 2012, the Company recognized charges for severance payments associated with executive departures of $6.2 million. |
| During the three and nine months ended September 30, 2013 and 2012, the Company recognized non-cash charges for share-based compensation. |
| During the three and nine months ended September 30, 2012, the Company recognized a net gain of $2.0 million due to favorable changes in the estimated fair value of contingent consideration associated with business combinations. |
Net Debt
Managements presentation also will include a discussion of net indebtedness (Net Debt). Net Debt is a non-GAAP financial measure. The table presented below reconciles this non-GAAP measure to total debt. Total debt is the most comparable GAAP measure presented in the Companys condensed consolidated financial statements.
Net Debt should not be considered as an alternative to total debt or any other GAAP measure of indebtedness or financial condition. Our calculation of Net Debt reduces our total debt by the amount of cash and cash equivalents on hand as well as by our compensating cash balance. As noted in the Companys Annual Report on Form 10-K for the year ended December 31, 2012, we account for our notional global cash pooling arrangement on a gross basis. Consequently, our total debt balance as of each period end includes aggregated bank overdraft positions for subsidiaries participating in our notional global cash pooling arrangement. Net Debt is an important financial metric used by the Companys creditors, investors and management to evaluate and measure the Companys financial condition.
Reconciliation of Total Debt to Net Debt
(in millions)
September 30, | June 30, | December 31, | ||||||||||
2013 | 2013 | 2012 | ||||||||||
Total debt (GAAP) |
$ | 2,901.7 | $ | 2,871.9 | $ | 3,148.6 | ||||||
Less: |
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Cash and cash equivalents |
(152.5 | ) | (148.3 | ) | (139.8 | ) | ||||||
Compensating cash balance |
(29.1 | ) | (23.0 | ) | (246.9 | ) | ||||||
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Net Debt (Non-GAAP) |
$ | 2,720.1 | $ | 2,700.6 | $ | 2,761.9 | ||||||
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Net Leverage
Managements presentation also will include a discussion of the ratio of Net Debt to Adjusted EBITDA for the latest twelve month period, to be referred to as the Companys Net Leverage as of a point in time. This financial ratio is not itself a non-GAAP measurement but it consists of the non-GAAP measures described and reconciled above. The table below provides the calculation of Net Leverage that will be discussed during managements presentation.
September 30, | June 30, | December 31, | ||||||||||
2013 | 2013 | 2012 | ||||||||||
Net Debt |
$ | 2,720.1 | $ | 2,700.6 | $ | 2,761.9 | ||||||
LTM Adjusted EBITDA |
$ | 407.6 | $ | 400.0 | $ | 401.5 | ||||||
Net Leverage |
6.7 | X | 6.8 | X | 6.9 | X |
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, thereunto duly authorized.
VWR FUNDING, INC. | ||
By: | /s/ Douglas J. Pitts | |
Name: | Douglas J. Pitts | |
Title: | Vice President and Corporate Controller (Chief Accounting Officer and Duly Authorized Officer) | |
Date: | November 8, 2013 |