Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - MEDICAL ACTION INDUSTRIES INC | f8k_060314.htm |
| EX-10.1 - EXHIBIT 10.1 - MEDICAL ACTION INDUSTRIES INC | exh_101.htm |
| EX-99.1 - EXHIBIT 99.1 - MEDICAL ACTION INDUSTRIES INC | exh_991.htm |
Exhibit 99.2
MEDICAL ACTION INDUSTRIES INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Introduction
On June 2, 2014 (the “Closing Date”), Medical Action Industries Inc. (the “Company”), completed a purchase agreement (the “Agreement”) entered into with Medira, Inc., a Delaware corporation and subsidiary of Inteplast Group, Ltd., for approximately $78.6 million, subject to customary post-closing adjustments.
The unaudited pro forma condensed consolidated financial statements presented below are based on the historical condensed consolidated financial statements of the Company give effect to the sale as contemplated by the Agreement. It is assumed that the agreement gives effect to the condensed consolidated statement of operations as of April 1, 2012 and gives effect to the condensed consolidated balance sheet as of December 31, 2013. The pro forma adjustments below are (i) considered directly attributable to the Agreement, (ii) factually supportable and (iii) with respect to the condensed consolidated statement of operations, expected to have a continuing impact on the consolidated results.
The unaudited pro forma condensed consolidated financial statements have been prepared for illustrative purposes only and are not necessarily indicative of the consolidated financial position or results of operations in future periods or the results that actually would have been realized had the Agreement closed during the specified periods. The unaudited pro forma condensed consolidated financial statements, including the notes thereto, have been derived and should be read in connection with, the historical consolidated financial statements of the Company, which are incorporated in this document by reference, included in its Annual Report on Form 10-K for the fiscal year ended March 31, 2013 and its unaudited condensed consolidated financial statements included in its Form 10-Q for the three, six and nine month periods ending June 30, 2013, September 30, 2013 and December 31, 2013, respectively.
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Medical Action Industries Inc.
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Condensed Consolidated Balance Sheet (Unaudited)
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(In thousands, except per share data)
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December 31, 2013
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As
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Pro Forma
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Reported
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Adjustments
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Pro Forma
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ASSETS
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Current Assets
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Cash and cash equivalents
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$ | 102 | $ | 37,170 |
(a)
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$ | 37,272 | ||||||
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Accounts receivable, net
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33,129 | - | 33,129 | ||||||||||
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Inventories, net
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52,941 | (18,973 | ) |
(b)
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33,968 | ||||||||
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Prepaid expenses
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1,430 | - | 1,430 | ||||||||||
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Deferred income taxes
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1,513 | (282 | ) |
(c)
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1,231 | ||||||||
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Prepaid income taxes
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99 | (99 | ) |
(f)
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- | ||||||||
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Other current assets
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2,047 | - | 2,047 | ||||||||||
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Total Current Assets
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91,261 | 17,816 | 109,077 | ||||||||||
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Property, plant and equipment, net
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42,623 | (17,289 | ) |
(b)
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25,334 | ||||||||
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Goodwill
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30,021 | (10,877 | ) |
(d)
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19,144 | ||||||||
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Other intangible assets, net
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34,619 | (10,433 | ) |
(e)
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24,186 | ||||||||
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Other assets, net
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7,256 | - | 7,256 | ||||||||||
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Total Assets
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$ | 205,780 | $ | (20,783 | ) | $ | 184,997 | ||||||
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LIABILITIES & STOCKHOLDERS' EQUITY
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Current Liabilities
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Accounts payable
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$ | 20,220 | $ | - | $ | 20,220 | |||||||
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Accrued expenses
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20,158 | - | 20,158 | ||||||||||
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Income tax payable
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- | 4,034 |
(f)
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4,034 | |||||||||
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Current portion of capital lease obligation
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213 | - | 213 | ||||||||||
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Current portion of long-term debt
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1,644 | (1,644 | ) |
(a)
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- | ||||||||
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Total Current Liabilities
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42,235 | 2,390 | 44,625 | ||||||||||
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Other long-term liabilities
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4,966 | - | 4,966 | ||||||||||
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Deferred income taxes
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6,415 | 187 |
(c)
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6,602 | |||||||||
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Capital lease obligations, less current portion
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13,305 | - | 13,305 | ||||||||||
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Long-term debt, less current portion
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39,814 | (39,814 | ) |
(a)
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- | ||||||||
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Total Liabilities
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106,735 | (37,237 | ) | 69,498 | |||||||||
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Stockholders’ Equity
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Common stock 40,000 shares authorized, $.001 par value; issued and outstanding 16,391 shares
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16 | - | 16 | ||||||||||
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Additional paid-in capital, net
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36,340 | - | 36,340 | ||||||||||
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Accumulated other comprehensive loss
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(773 | ) | - | (773 | ) | ||||||||
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Retained earnings
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63,462 | 16,454 |
(g)
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79,916 | |||||||||
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Total Stockholders’ Equity
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99,045 | 16,454 | 115,499 | ||||||||||
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Total Liabilities and Stockholders’ Equity
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$ | 205,780 | $ | (20,783 | ) | $ | 184,997 | ||||||
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Medical Action Industries Inc.
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Condensed Consolidated Statement of Operations (Unaudited)
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(In thousands, except per share data)
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For the Nine Months Ended December 31, 2013
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As
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Pro Forma
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Reported
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Adjustments
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Pro Forma
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Net sales
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$ | 325,471 | $ | 110,104 |
(b)
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$ | 215,367 | ||||||
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Cost of sales
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268,902 | 94,085 |
(b)
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174,817 | |||||||||
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Gross profit
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56,569 | 16,018 | 40,551 | ||||||||||
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Selling, general and administrative expenses
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48,052 | 11,819 |
(h)
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36,233 | |||||||||
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Operating income
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8,517 | 4,199 | 4,318 | ||||||||||
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Interest expense, net
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3,312 | 2,307 |
(i)
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1,006 | |||||||||
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Income before income taxes
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5,205 | 1,893 | 3,312 | ||||||||||
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Income tax expense
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1,917 | 681 |
(j)
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1,236 | |||||||||
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Net income
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$ | 3,288 | $ | 1,211 | $ | 2,077 | |||||||
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Basic earnings per share:
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Net Income
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$ | 0.20 | $ | 0.07 | $ | 0.13 | |||||||
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Weighted-average common shares outstanding (basic)
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16,391 | 16,391 | 16,391 | ||||||||||
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Diluted earnings per share:
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Net Income
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$ | 0.20 | $ | 0.07 | $ | 0.13 | |||||||
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Weighted-average common shares outstanding (diluted)
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16,464 | 16,464 | 16,464 | ||||||||||
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Medical Action Industries Inc.
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Condensed Consolidated Statement of Operations (Unaudited)
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(In thousands, except per share data)
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For the Twelve Months Ended March 31, 2013
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As
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Pro Forma
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Reported
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Adjustments
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Pro Forma
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Net sales
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$ | 441,593 | $ | 156,830 |
(b)
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$ | 284,763 | ||||||
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Cost of sales
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369,224 | 135,358 |
(b)
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233,866 | |||||||||
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Gross profit
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72,369 | 21,472 | 50,897 | ||||||||||
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Goodwill impairment charge
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77,780 | - | 77,780 | ||||||||||
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Selling, general and administrative expenses
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64,277 | 16,122 |
(h)
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48,155 | |||||||||
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Operating income (loss)
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(69,688 | ) | 5,351 | (75,038 | ) | ||||||||
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Interest expense, net
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4,767 | 3,413 |
(i)
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1,354 | |||||||||
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Income (loss) before income taxes
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(74,455 | ) | 1,938 | (76,392 | ) | ||||||||
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Income tax expense (benefit)
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(19,599 | ) | 698 |
(j)
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(20,297 | ) | |||||||
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Net income (loss)
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$ | (54,856 | ) | $ | 1,240 | $ | (56,096 | ) | |||||
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Basic earnings (loss) per share:
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Net income (loss)
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$ | (3.35 | ) | $ | 0.08 | $ | (3.42 | ) | |||||
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Weighted-average common shares outstanding (basic)
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16,391 | 16,391 | 16,391 | ||||||||||
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Diluted earnings (loss) per share:
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Net income (loss)
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$ | (3.35 | ) | $ | 0.08 | $ | (3.42 | ) | |||||
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Weighted-average common shares outstanding (diluted)
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16,391 | 16,391 | 16,391 | ||||||||||
MEDICAL ACTION INDUSTRIES INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2013 and statement of operations for the nine months ended December 31, 2013 and for the twelve months ended March 31, 2013 gives effect to the following adjustments, which are presented in thousands:
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(a)
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The cash proceeds as of the Closing Date, net of the balances outstanding on the Company’s credit agreement are summarized in the following table:
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Cash consideration received
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$ | 78,628 | ||||
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Current portion of long-term debt
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1,644 | |||||
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Long-term debt, net of current portion
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39,814 | |||||
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Increase to cash and cash equivalents
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$ | 37,170 |
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(b)
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Reflects the elimination of assets related to the disposal as well as the results from operations for the periods presented in accordance with the terms of the Agreement.
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(c)
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Reflects the estimated deferred tax assets and liabilities related to the disposal as of the Closing Date.
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(d)
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Represents the preliminary allocation of goodwill as of the Closing Date of the represented fair value of the divested business.
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(e)
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The other intangible assets related to the disposal as of December 31, 2013 are summarized in the following table:
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December 31, 2013
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Gross Carrying
Value
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Accumulated
Amortization
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Total Net Book
Value
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Trademarks/Tradenames not subject to amortization
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$ | 697 | $ | - | $ | 697 | ||||||
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Customer relationships (20 years)
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17,900 | 8,164 | 9,736 | |||||||||
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Intellectual property (7 years)
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400 | 400 | - | |||||||||
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Total other intangible assets, net
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$ | 18,997 | $ | 8,564 | $ | 10,433 | ||||||
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(f)
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Represents the estimated income taxes payable resulting from the gain related to the divestiture.
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(g)
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Represents the estimated gain related to the divestiture, net of income taxes.
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(h)
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Reflects the elimination of selling, general and administrative costs directly associated with the divested business.
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(i)
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To eliminate the interest expense associated with the Company’s credit agreement.
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(j)
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To record the tax effects of the divestiture as calculated based upon the statutory rate in effect during the period in which the pro forma statement of operations is presented.
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