Gadsden Properties, Inc. - FORM 8-K - EX-99.1 - PROFORMA STATEMENTS - February 5, 2015

Attached files

file filename
8-K - 8K LCA ACQUISITION - Gadsden Properties, Inc.form_8k.htm
EX-10.3 - TRANSITION SERVICES AGREEMENT, DATED JANUARY 31, 2015 - Gadsden Properties, Inc.ex_10-3.htm
EX-10.2 - XTRAC USAGE AGREEMENT, DATED JANUARY 31, 2015 - Gadsden Properties, Inc.ex_10-2.htm
EX-10.1 - CONTINGENCY ESCROW AGREEMENT, DATED JANUARY 31, 2015 - Gadsden Properties, Inc.ex_10-1.htm
EX-2.1 - STOCK PURCHASE AGREEMENT, DATED JANUARY 31, 2015 - Gadsden Properties, Inc.ex_2-1.htm

Exhibit 99.1
 
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro-forma condensed consolidated financial statements is presented to illustrate the effect of PhotoMedex, Inc.'s ("PhotoMedex" or "the Company") February 2, 2015 sale of its LCA-Vision business ("LCA-Vision") to Vision Acquisition LLC. The LCA-Vision business was the Company's Clinics operating segment of business, which was acquired on May 12, 2014. The consideration consisted of $40.0 million is cash, subject to working capital adjustments and professional fees, the Company will realize net proceeds of approximately $35.3 million.
The following unaudited pro-forma condensed balance sheet as of September 30, 2014 is presented as if the transaction had occurred on September 30, 2014. The following unaudited pro-forma condensed consolidated statements of operations for the year ended December 31, 2013 and the nine months ended September 30, 2014 are presented as if the transaction had occurred on January 1, 2013. In order to derive the pro-forma financial information, the historical results of the Company have been adjusted to eliminate the assets and liabilities of the LCA-Vision business. For the consolidated statements of operations, the historical results of the Company have been adjusted first by adjusting for the acquisition of LCA-Vision as if it had occurred on January 1, 2013 and then by eliminating the results of operations of the LCA-Vision business. Pro-forma adjustments are described in the notes to the unaudited pro-forma consolidated financial statements.
The pro-forma adjustments are based upon available information and certain assumptions that the Company believes are reasonable under the circumstances; however, the actual results could differ. The pro-forma adjustments are directly attributable to the transaction and are expected to have a continuing impact on the results of operations of the Company. Management believes that all adjustments necessary to present fairly the unaudited pro-forma consolidated financial statements have been made. The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not necessarily indicative of the results of operations that would have resulted had the transaction been consummated on the dates indicated, and should not be construed as being representative of the Company's future results of operations or financial position.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes thereto, which are included in the Annual Report on Form 10-K of PhotoMedex for the year ended December 31, 2013 and on Form 10-Q for the quarter and nine months ended September 30, 2014.
 
1

PHOTOMEDEX, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2014
(In thousands)
 
  
PhotoMedex
 Historical
    

LCA Disposition Adjustments
  
   
Pro Forma
  
ASSETS
              
               
Current assets:
              
Cash and cash equivalents
  
$
15,866
    
$ 
(5,588
)
  
(1a
)
  
$
10,285
  
Short-term deposit
    
7
      
-
            
7
  
Accounts receivable, net
    
22,634
      
(2,921
)
  
(1a
)
    
19,713
  
Inventories, net
    
24,857
      
(44
)
  
(1a
)
    
24,813
  
Deferred tax asset
    
14,880
      
(1,789
)
  
(1a
)
    
13,091
  
Prepaid expenses and other current assets
    
14,071
      
(2,701
)
  
(1a
)
    
11,370
  
Total current assets
    
92,315
      
(13,043
)
          
79,272
  
                               
Property and equipment, net
    
28,849
      
(15,427
)
  
(1a
)
    
13,422
  
Deferred tax asset, long-term
    
23,709
      
-
            
23,709
  
Intangible assets, net
    
26,896
      
(8,768
)
  
(1a
)
    
18,128
  
Indefinite-lived intangible asset
    
29,850
      
(29,850
)
  
(1a
)
    
-
  
Goodwill
    
74,282
      
(49,582
)
  
(1a
)
    
24,700
  
Other assets
    
1,569
      
(1,377
)
  
(1a
)
    
192
  
                               
Total assets
  
$
277,470
    
$ 
(118,047
)
        
$
159,423
  
                               
LIABILITIES AND STOCKHOLDERS' EQUITY
                              
                               
Current liabilities:
                              
Current portion of notes payable and long-term debt
  
$
80,310
      
(796
)
  
(1a
)
    
44,220
  
             
(35,294
)
  
(1b
)
        
Other current liabilities
    
38,260
      
(10,875
)
  
(1a
)
    
26,485
  
             
(900
)
  
(1b
)
        
Total current liabilities
    
118,570
      
(47,865
)
          
70,705
  
                               
Long-term liabilities:
                              
Notes payable and long-term debt
    
521
      
(481
)
  
(1a
)
    
40
  
Deferred tax liabilities
    
9,809
      
(9,809
)
  
(1a
)
    
-
  
Other liabilities
    
8,662
      
(7,143
)
  
(1a
)
    
1,519
  
Total liabilities
    
137,562
      
(65,298
)
          
72,264
  
                               
Stockholders' equity
    
139,908
      
(52,749
)
  
(1c
)
    
87,159
  
                               
Total liabilities and stockholders' equity
  
$
277,470
    
$ 
(118,047
)
        
$
159,423
  
2

PHOTOMEDEX, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Nine Months Ended September 30, 2014
(In thousands, except share and per share information)
 
 
 
PhotoMedex Historical
LCA Acquisition
 Adjustments
LCA Disposition Adjustments
Pro Forma
 
Revenues
  
$
155,898
    
$
34,581
  
(2a
)
  
$ 
(65,816
)
(1d
)
  
$
124,663
  
                                         
Cost of revenues
    
50,958
      
24,700
  
(2a
)
    
(47,829
)
(1d
)
    
27,829
  
                                         
Gross Profit
    
104,940
      
9,881
          
(17,987
)
        
96,834
  
                                         
Operating expenses:
                                        
Selling, general and administrative
    
121,603
      
17,795
  
(2a
)
    
(29,042
)
(1d
)
    
110,356
  
Engineering and product development
    
2,339
      
-
          
-
          
2,339
  
     
123,942
      
17,795
          
(29,042
)
        
112,695
  
                                         
Operating profit (loss)
    
(19,002
)
    
(7,914
)
        
11,055
          
(15,861
)
                                         
Other income (loss):
                                        
Interest and other financing income (expense), net
    
(4,145
)
    
326
  
(2a
)
    
(629
)
(1d
)
    
(2,461
)
             
(1,495
)
(2c
)
    
3,482
  
(1e
)
        
                                         
Income (loss) before income taxes
    
(23,147
)
    
(9,083
)
        
13,908
          
(18,322
)
                                         
Income tax benefit (expense)
    
379
      
(11
)
(2a
)
    
333
  
(1d
)
    
300
  
                         
(401
)
(1f
)
        
                                         
Net income (loss)
  
$ 
(22,768
)
  
$ 
(9,094
)
      
$
13,840
        
$ 
(18,022
)
                                         
Net income (loss) per share:
                                        
Basic
  
$ 
(1.22
)
                          
$ 
(0.96
)
Diluted
  
$ 
(1.22
)
                          
$ 
(0.96
)
                                         
Shares used in computing net income (loss) per share:
                                        
Basic
    
18,722,459
                              
18,722,459
  
Diluted
    
18,722,459
                              
18,722,459
  
 
 
 

3

PHOTOMEDEX, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 2013
(In thousands, except share and per share information)
 
 
 
PhotoMedex Historical
LCA-Vision
Historical
LCA Acquisition
Adjustments
LCA Disposition Adjustments
Pro Forma
 
Revenues 
$
224,664
$
92,185
$
-
$
(92,185
 ) (1d )
$
224,664
Cost of revenues
    
45,035
      
60,064
      
3,349
  
(2b
)
    
(63,413
)
  
(1d
)
    
45,035
  
                                                   
Gross Profit
    
179,629
      
32,121
      
(3,349
)
        
(28,772
)
          
179,629
  
                                                   
Operating expenses:
                                                  
Selling, general and administrative
    
154,278
      
34,702
      
1,007
  
(2b
)
    
(35,709
)
  
(1d
)
    
154,278
  
Engineering and product development
    
3,306
      
-
      
-
          
-
            
3,306
  
     
157,584
      
34,702
      
1,007
          
(35,709
)
          
157,584
  
                                                   
Operating profit (loss)
    
22,045
      
(2,581
)
    
(4,356
)
        
6,937
            
22,045
  
                                                   
Other income (loss):
                                                  
Gain on sale of assets
    
-
      
198
      
-
          
(198
)
  
(1d
)
    
-
  
Interest and other financing income (expense), net
    
702
      
890
      
(3,548
)
(2c
)
    
(890
)
  
(1d
)
    
(4,844
)
                                 
(1,998
)
  
(1e
)
        
                                                   
Income (loss) before income taxes
    
22,747
      
(1,493
)
    
(7,904
)
        
3,851
            
17,201
  
                                                   
Income tax benefit (expense)
    
(4,370
)
    
125
      
1,430
  
(2d
)
    
(490
)
  
(1f
)
    
(3,305
)
                                                   
Net income (loss)
  
$
18,377
    
$ 
(1,368
)
  
$ 
(6,474
)
      
$
3,361
          
$
13,896
  
                                                   
Net income (loss) per share:
                                                  
Basic
  
$
0.90
                                      
$
0.68
  
Diluted
  
$
0.89
                                      
$
0.67
  
                                                   
Shares used in computing net income (loss) per share:
                                                  
Basic
    
20,454,970
                                        
20,454,970
  
Diluted
    
20,657,240
                                        
20,657,240
  
 
 
 
 
 

 
4

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1.
Sale of LCA Vision adjustments (in thousands) (unaudited):
(1a)
  
Reflects the elimination of assets and liabilities attributable to the LCA-Vision business.
 
(1b)
  
Reflects the receipt of cash consideration at closing of the transaction of $35,294, net of an estimated working capital adjustment and cash transaction costs of approximately $2,600, including professional fees and costs incurred to satisfy various conditions up to closing. The net proceeds have been applied towards the long term debt.
 
(1c)
  
Reflects the loss of approximately $52,749 arising from the transaction as of September 30, 2014. This estimated loss and costs related to the sale have not been reflected in the pro-forma consolidated statements of operations as it is considered to be non-recurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the Stock Purchase Agreement.
 
(1d)
  
Reflects the elimination of revenues, cost of revenues, selling, general and administrative costs and other financing income/expense.
 
(1e)
  
Reflects an estimate of interest expense that would not have been incurred during the period if the net proceeds from the transaction had been used to repay the interest bearing debt.
 
(1f)
  
Reflects an estimated income tax effect of the pro-forma adjustments. The tax effect of the pro-forma adjustments was calculated using the effective tax rates for the periods presented.
 
 
 2. LCA aquisitions adjustments (in thousands) (unaudited):
 
(2a)
  
Reflects the addition of the LCA-Vision business for the period of January 1 through May 12, 2014 the period before the acquisition of LCA-Vision.
 
(2b)
  
Reflects incremental adjustment to depreciation and amortization for step-up in property, plant and equipment and intangible assets (of which $29,850 relates to trademark/tradename and $9,200 to managed care network). As a result, incremental depreciation of property, plant and equipment is being charged on a straight line basis over the estimated useful lives of the property, plant and equipment based on an average of 3 years and incremental amortization of managed care network is being charged on a straight line basis over the estimated useful lives of the assets based on 10 years. (The trademark/tradename was determined to have indefinite useful life and accordingly was not amortized).
 
(2c)
  
Reflects an increase in interest expense associated with the additional borrowings used to fund the acquisition of LCA-Vision, including amortization of debt issuance costs.
 
(2d)
  
The pro-forma tax adjustment for the period is broken down as follows (in thousands) (unaudited):

   
Year Ended
December 31, 2013
  
     
Decrease to Current Tax Expense
  
$
1,430
  
Incremental Deferred Tax Benefit
    
-
  
         
   
$
1,430
  
 
The decrease to the current tax expense for the year ended December 31, 2013 was the result of the current period LCA-Vision loss offsetting PhotoMedex income from U.S. operations. A tax benefit was not applied to the additional depreciation and amortization expenses applicable to LCA-Vision in the same period. These additional expenses would result in an increase to LCA-Vision's net tax operating losses which are limited under Section 382. A valuation allowance equal to the amount of the additional net operating losses results in no tax benefit for these expenses.
 
5

Gadsden Properties, Inc. Reports