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8-K - FORM 8-K - RTI SURGICAL, INC.d872838d8k.htm

Exhibit 99.1

 

FOR DISTRIBUTION ON    For more information, contact:
THURSDAY, FEBRUARY 12, 2015    Robert Jordheim
   Chief Financial Officer
   rjordheim@rtix.com
   Wendy Crites Wacker, APR
   Vice President, Global Communications
   wwacker@rtix.com
   Phone (386) 418-8888

RTI SURGICAL™ ANNOUNCES 2014 FOURTH QUARTER, FULL YEAR RESULTS,

2015 FINANCIAL GUIDANCE

– Company achieves record quarterly and annual revenues –

– Company Will Hold Conference Call at 8:30 a.m. ET –

ALACHUA, Fla. (Feb. 12, 2015) – RTI Surgical Inc. (RTI) (Nasdaq: RTIX), a global surgical implant company, reported operating results for the fourth quarter and full year of 2014 as follows:

Quarterly Highlights:

 

    Achieved quarterly revenues of $70.9 million, a 17 percent increase over the fourth quarter of 2013, and exceeding revenue guidance of $68 to $69 million.

 

    Achieved adjusted net income per fully diluted share of $0.05, exceeding guidance of $0.04.

 

    Achieved revenues of $21.8 million in the spine business, an 18 percent increase over the fourth quarter of 2013.

 

    Achieved revenues of $12.6 million in the sports medicine business, a 15 percent increase over the fourth quarter of 2013.

 

    Achieved revenues of $11.3 million in the orthofixation business, a 44 percent increase over the fourth quarter of 2013.

 

    Achieved revenues of $10.3 million in the BGS and general orthopedic business, a 17 percent increase over the fourth quarter of 2013.

 

    Announced that Shirley A. Weis, president of Weis Associates, LLC and emerita Vice President and Chief Administrative Officer at Mayo Clinic, joined the company’s board of directors.

 

    Announced online publication of a study highlighting nanOss® Advanced Bone Graft Substitutes.


2014 Full Year Highlights:

 

    Achieved full year revenues of $262.8 million, exceeding revenue guidance of $260 to $261 million.

 

    Achieved above market growth in the spine, sports medicine, BGS and general orthopedic, and orthofixation businesses.

 

    Received approval to CE mark Fortiva™ Porcine Dermis and began distribution throughout Europe in March 2014.

 

    Announced the first human implantation of the map3® Cellular Allogeneic Bone Graft Strips Allograft in June 2014.

 

    Launched more than twenty new products, implants and line extensions.

Fourth Quarter 2014

Worldwide revenues were $70.9 million for the fourth quarter of 2014 compared to revenues of $60.5 million for the fourth quarter of 2013. Domestic revenues were $65.4 million for the fourth quarter of 2014 compared to revenues of $54.4 million for the fourth quarter of 2013. International revenues were $5.4 million for the fourth quarter of 2014 compared to revenues of $6.1 million for the fourth quarter of 2013. On a constant currency basis, international revenues for the fourth quarter of 2013 decreased 4 percent compared to the fourth quarter of 2013.

“Revenues for the quarter exceeded our expectations and we were very pleased to see growth in almost every area of our business,” said Brian K. Hutchison, president and chief executive officer. “Throughout 2014 we indicated that our goals were to see growth in our sports and spine businesses, gain traction in our direct surgical specialties business and expand distribution of our map3 cellular allogeneic bone graft. I’m pleased to report that we achieved each of these goals.”

For the fourth quarter of 2014, the company reported a net loss applicable to common shares of $136 thousand and a net loss per fully diluted common share of $0.00, based on 56.9 million fully diluted shares outstanding, compared to a net loss applicable to common shares of $8.5 million and a net loss per fully diluted common share of $0.15 for the fourth quarter of 2013, based on 56.4 million fully diluted shares outstanding. The fourth quarter of 2014 included a pre-tax severance charge of $4.3 million and a pre-tax litigation settlement charge of $185 thousand. For the fourth quarter of 2014, on a non-GAAP basis, excluding the severance charge and litigation settlement charge, the company reported adjusted net income applicable to common shares of $2.7 million and adjusted net income per fully diluted common share of $0.05.


The company’s fourth quarter of 2014 adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), as detailed in the reconciliation provided later in this release, was $10.2 million (14 percent of revenues) compared to $5.8 million (10 percent of revenues) for the fourth quarter of 2013.

Full Year 2014

Worldwide revenues were $262.8 million for the full year of 2014 compared to revenues of $198 million for the full year 2013. Domestic revenues were $238.9 million for the full year of 2014 compared to revenues of $177.2 million for the full year 2013. International revenues were $23.9 million for the full year of 2014 compared to $20.8 million for the full year 2013. On a constant currency basis, international revenues for the full year 2014 increased 15 percent compared to the full year 2013. Our prior year worldwide revenues for the full year 2013 include $36 million from the Pioneer acquisition for the period of July 16, 2013 to December 31, 2013, whereas our current year period includes a full year of Pioneer-related revenues. If the acquisition were effective January 1 for both 2013 and 2014, worldwide revenues would have increased by 8 percent.

For the full year 2014, the company reported a net loss applicable to common shares of $417 thousand and net loss per fully diluted common share of $0.01, based on 56.7 million fully diluted shares outstanding, compared to a net loss applicable to common shares of $19.2 million and net loss per fully diluted common share of $0.34, based on 56.3 million fully diluted shares outstanding for the full year 2013. For the full year of 2014, on a non-GAAP basis, excluding severance charges, the litigation settlement charge, and the inventory purchase accounting adjustment taken in the first quarter, the company reported adjusted net income applicable to common shares of $6.2 million and adjusted net income per fully diluted common share of $0.11.

The company’s full year 2014 adjusted EBITDA, as detailed in the reconciliation provided later in this release, was $34.0 million (13 percent of revenues) compared to $15.1 million (8 percent of revenues) for the full year 2013.

Fiscal 2015 and First Quarter Outlook

The company expects full year revenues for 2015 to be between $279 million and $285 million. Full year net income per fully diluted common share is expected to be in the range of $0.17 to $0.22, based on 58 million fully diluted common shares outstanding.


For the first quarter of 2015, the company expects revenues to be between $66 million and $67 million, and net income per fully diluted common share to be approximately $0.03, based on 57.5 million fully diluted shares outstanding.

“Due to timing of orders in the commercial businesses we anticipate that first quarter revenue will be slightly down sequentially, but will then increase sequentially on a quarterly basis throughout the year,” said Hutchison. “In 2015, we will target several key initiatives including driving growth in our focused products of nanOss 3D Advanced Bone Graft Substitute, Fortiva Porcine Dermis and map3 Cellular Allogeneic Bone Graft, capturing market share in spine hardware, growing international revenue and controlling spending to continue to improve margins.”

Conference Call

RTI will host a conference call and simultaneous audio webcast to discuss the fourth quarter and full year results at 8:30 a.m. ET today. The conference call can be accessed by dialing (877) 383-7419. The webcast can be accessed through the investor section of RTI’s website at www.rtix.com. A replay of the conference call will be available on the RTI website following the call.

About RTI Surgical Inc.

RTI Surgical is a leading global surgical implant company providing surgeons with safe biologic, metal and synthetic implants. Committed to advancing science, safety and innovation, RTI’s implants are used in sports medicine, general surgery, spine, orthopedic, trauma and cardiothoracic procedures and are distributed in nearly 50 countries. RTI is headquartered in Alachua, Fla., and has four manufacturing facilities throughout the U.S. and Europe. RTI is accredited in the U.S. by the American Association of Tissue Banks and is a member of Advamed. For more information, please visit www.rtix.com.

Forward Looking Statement

This communication contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to


identify such forward-looking statements. In addition, except for historical information, any statements made in this communication about anticipated financial results, growth rates, new product introductions, future operational improvements and results or regulatory actions or approvals or changes to agreements with distributors also are forward-looking statements. These statements are not guarantees of future performance and are subject to risks and uncertainties, including the risks described in public filings with the U.S. Securities and Exchange Commission (SEC). Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Copies of the company’s SEC filings may be obtained by contacting the company or the SEC or by visiting RTI’s website at www.rtix.com or the SEC’s website at www.sec.gov.


RTI SURGICAL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share data)

 

     Three months ended
December 31,
    Twelve months ended
December 31,
 
     2014     2013     2014     2013  

Revenues

   $ 70,873      $ 60,506      $ 262,810      $ 197,979   

Costs of processing and distribution

     33,021        39,152        129,013        117,874   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     37,852        21,354        133,797        80,105   
  

 

 

   

 

 

   

 

 

   

 

 

 

Expenses:

        

Marketing, general and administrative

     28,091        26,080        107,653        81,635   

Research and development

     4,138        4,051        15,536        15,241   

Litigation settlement

     185        —          185        3,000   

Restructuring charges

     —          2,881        —          2,881   

Acquisition expenses

     —          167        —          6,004   

Severance charges

     4,341        —          4,798        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     36,755        33,179        128,172        108,761   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     1,097        (11,825     5,625        (28,656
  

 

 

   

 

 

   

 

 

   

 

 

 

Other (expense) income:

        

Interest expense

     (302     (280     (1,357     (542

Interest income

     1        —          9        23   

Foreign exchange gain (loss)

     1        5        (88     251   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other (expense) income - net

     (300     (275     (1,436     (268
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax benefit (provision)

     797        (12,100     4,189        (28,924

Income tax benefit (provision)

     (138     4,323        (1,493     11,110   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     659        (7,777     2,696        (17,814
  

 

 

   

 

 

   

 

 

   

 

 

 

Convertible preferred dividend

     (795     (750     (3,113     (1,375
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss applicable to common shares

   $ (136   $ (8,527   $ (417   $ (19,189
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share - basic

   $ (0.00   $ (0.15   $ (0.01   $ (0.34
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share - diluted

   $ (0.00   $ (0.15   $ (0.01   $ (0.34
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - basic

     56,910,377        56,387,396        56,735,924        56,258,624   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding - diluted

     56,910,377        56,387,396        56,735,924        56,258,624   
  

 

 

   

 

 

   

 

 

   

 

 

 


RTI SURGICAL, INC. AND SUBSIDIARIES

Reconciliation of Net Loss Applicable to Commons Shares to Adjusted EBITDA

(Unaudited, in thousands)

 

     Three Months
Ended December 31,
    Twelve Months
Ended December 31,
 
     2014     2013     2014     2013  

Net loss

   $ (136   $ (8,527   $ (417   $ (19,189

Interest expense, net

     301        280        1,348        519   

Provision (benefit) for income taxes

     138        (4,323     1,493        (11,110

Depreciation

     2,906        2,551        11,010        8,267   

Amortization of intangible assets

     1,076        1,437        4,385        3,935   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     4,285        (8,582     17,819        (17,578

Reconciling items impacting EBITDA

        

Preferred dividend

     795        750        3,113        1,375   

Non-cash stock based compensation

     552        567        2,247        2,220   

FX gain (loss)

     (1     (5     88        (251

Other reconciling items (1)

        

Inventory purchase accounting adjustment

     —          9,504        5,708        16,379   

Severance charges

     4,341        —          4,798        —     

Restructuring charges

     —          2,881        —          2,881   

Acquisition expenses

     —          167        —          6,004   

Integration expenses

     —          468        —          1,105   

Litigation settlement charge

     185        —          185        3,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 10,157      $ 5,750      $ 33,958      $ 15,135   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA as a percent of revenues

     14     10     13     8
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) See explanations in Use of Non-GAAP Financial Measures section later in this release


RTI SURGICAL, INC. AND SUBSIDIARIES

Reconciliation of Net Income (Loss) Applicable to Common Shares and Net Income (Loss) Per Diluted Share to

Adjusted Net Income (Loss) Applicable to Common Shares and Adjusted Net Income (Loss) Per Diluted Share

(Unaudited, in thousands except per share data)

 

     Three Months Ended  
     December 31, 2014     December 31, 2013  
     Net
Income
Applicable to
Common Shares
    Amount
per Diluted
Share
    Net
Loss
Applicable to
Common Shares
    Amount
per Diluted
Share
 

As reported

   $ (136   $ (0.00   $ (8,527   $ (0.15

Inventory purchase accounting adjustment, net of tax effect (1)

     —          —          5,773        0.10   

Restructuring charges, net of tax effect (2)

     —          —          1,750        0.03   

Acquisition expenses, net of tax effect (3)

     —          —          152        0.00   

Integration expenses, net of tax effect (4)

     —          —          284        0.01   

Litigation settlement charge, net of tax effect (7)

     133        0.00        —          —     

Severance charges, net of tax effect (5)

     2,710        0.05        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

   $ 2,707      $ 0.05      $ (568   $ (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 
     Twelve Months Ended  
     December 31, 2014     December 31, 2013  
     Net
Income
Applicable to
Common Shares
    Amount
per Diluted
Share
    Net
Loss
Applicable to
Common Shares
    Amount
per Diluted
Share
 

As reported

   $ (417   $ (0.01   $ (19,189   $ (0.34

Inventory purchase accounting adjustment, net of tax effect (6)

     3,467        0.06        9,949        0.18   

Litigation settlement charge, net of tax effect (7)

     133        0.00        1,822        0.03   

Restructuring charges, net of tax effect (8)

     —          —          1,750        0.03   

Acquisition expenses, net of tax effect (9)

     —          —          4,923        0.09   

Integration expenses, net of tax effect (10)

     —          —          671        0.01   

Severance charges, net of tax effect (11)

     3,007        0.05        —          —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted

   $ 6,190      $ 0.11      $ (74   $ (0.00
  

 

 

   

 

 

   

 

 

   

 

 

 

Note: Amounts may not foot due to rounding.


Footnotes:

   2014     2013  

(1)    Inventory purchase accounting adjustment, net of tax effect, as follows:

    

         Inventory purchase accounting adjustment

     $ 9,504   

         Tax effect on inventory purchase accounting adjustment

       (3,731
    

 

 

 

         Inventory purchase accounting adjustment, net of tax effect

     $ 5,773   
    

 

 

 

(2)    Restructuring charges, net of tax effect, as follows:

    

         Restructuring Charges

     $ 2,881   

         Tax effect on restructuring changes

       (1,131
    

 

 

 

         Restructuring charges, net of tax effect

     $ 1,750   
    

 

 

 

(3)    Acquisition expenses, net of tax effect, as follows:

    

         Acquisition expenses

     $ 167   

         Tax effect on acquisition expenses

       (15
    

 

 

 

         Acquisition expenses, net of tax effect

     $ 152   
    

 

 

 

(4)    Integration expenses, net of tax effect, as follows:

    

         Integration expenses

     $ 468   

         Tax effect on integration expenses

       (184
    

 

 

 

         Integration expenses, net of tax effect

     $ 284   
    

 

 

 

(5)    Severance charges, net of tax effect, as follows:

    

         Severance charges

   $ 4,341     

         Tax effect on severance charges

     (1,631  
  

 

 

   

         Severance charges, net of tax effect

   $ 2,710     
  

 

 

   

(6)    Inventory purchase accounting adjustment, net of tax effect, as follows:

    

         Inventory purchase accounting adjustment

   $ 5,708      $ 16,379   

         Tax effect on inventory purchase accounting adjustment

     (2,241     (6,430
  

 

 

   

 

 

 

         Inventory purchase accounting adjustment, net of tax effect

   $ 3,467      $ 9,949   
  

 

 

   

 

 

 

(7)    Litigation settlement charge, net of tax effect, as follows:

    

         Litigation settlement charge

   $ 185      $ 3,000   

         Tax effect on litigation settlement charge

     (52     (1,178
  

 

 

   

 

 

 

         Litigation settlement charge, net of tax effect

   $ 133      $ 1,822   
  

 

 

   

 

 

 

(8)    Restructuring charges, net of tax effect, as follows:

    

         Restructuring Charges

     $ 2,881   

         Tax effect on restructuring changes

       (1,131
    

 

 

 

         Restructuring charges, net of tax effect

     $ 1,750   
    

 

 

 

(9)    Acquisition expenses, net of tax effect, as follows:

    

         Acquisition expenses

     $ 6,004   

         Tax effect on acquisition expenses

       (1,081
    

 

 

 

         Acquisition expenses, net of tax effect

     $ 4,923   
    

 

 

 

(10)  Integration expenses, net of tax effect, as follows:

    

         Integration expenses

     $ 1,105   

         Tax effect on integration expenses

       (434
    

 

 

 

         Integration expenses, net of tax effect

     $ 671   
    

 

 

 

(11)  Severance charges, net of tax effect, as follows:

    

         Severance charges

   $ 4,798     

         Tax effect on severance charges

     (1,791  
  

 

 

   

         Severance charges, net of tax effect

   $ 3,007     
  

 

 

   


Use of Non-GAAP Financial Measures

To supplement RTI Surgical’s condensed consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP financial measures that exclude certain amounts, including adjusted net income (loss) applicable to common shares, adjusted net income (loss) per fully diluted share and adjusted EBITDA. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measures are included in the reconciliation above.

The following are explanations of the adjustments that management excluded as part of adjusted measures for the three and twelve month period ended December 31, 2014 and 2013 as well as the reasons for excluding the individual item:

2014 and 2013 Inventory purchase accounting adjustment – This adjustment represents the purchase price effects on the sale of acquired Pioneer inventory, which have been included in costs of processing and distribution. Management removes the amount of these nonrecurring costs from the Company’s operating results to assist in assessing its operating performance in the periods affected and to supplement a comparison to the Company’s past operating performance.

2014 Severance Charges – This adjustment represents a charge and relates to certain expenses associated with the severance costs associated with former employees. Management removes the amount of these severance costs from the Company’s operating results to assist in assessing its operating performance in the periods affected and to supplement a comparison to the Company’s past operating performance.

2013 Restructuring charges – This adjustment represents a charge and relates to the severance of certain employees and an office closure as a result of the integration activities following the acquisition of Pioneer. Management removes the amount of these one-time fees from the Company’s operating results to assist in assessing its operating performance in the periods affected and to supplement a comparison to the Company’s past operating performance.

2013 Acquisition expenses – This adjustment represents a charge and relates to certain fees associated with the acquisition of Pioneer. Management removes the amount of these one-time fees from the Company’s operating results to assist in assessing its operating performance in the periods affected and to supplement a comparison to the Company’s past operating performance.

2013 Integration expenses – This adjustment represents a charge and relates to certain expenses associated with the integration of Pioneer. Management removes the amount of these one-time fees from the Company’s operating results to assist in assessing its operating performance in the periods affected and to supplement a comparison to the Company’s past operating performance.

2014 and 2013 Litigation settlement charge – This adjustment represents a charge and relates to a litigation settlement of an international distributor dispute in 2014 and certain BTS related lawsuits in 2013. Management removes the amount of the litigation settlement charge from the Company’s operating results to assist in assessing its operating performance in the period affected and to supplement a comparison to the Company’s past operating performance.

Material Limitations Associated with the Use of Non-GAAP Financial Measures

Adjusted net income (loss) applicable to common shares, adjusted net income (loss) per fully diluted share, and adjusted EBITDA should not be considered in isolation, or as a replacement for GAAP measures.

Usefulness of Non-GAAP Financial Measures to Investors

The Company believes that presenting adjusted net income (loss) applicable to common shares, adjusted net income (loss) per fully diluted share, and adjusted EBITDA in addition to the related GAAP measures provide investors greater transparency to the information used by management in its financial decision-making which excludes the inventory purchase accounting adjustment, acquisition expenses, integration expenses, severance costs, and, the litigation settlement charge. The Company further believes that providing this information better enables RTI Surgical’s investors to understand the Company’s overall core performance and to evaluate the methodology used by management to assess and measure such performance.


RTI SURGICAL, INC. AND SUBSIDIARIES

Condensed Consolidated Revenues

(Unaudited, in thousands)

 

     Three Months Ended
December 31,
     Twelve months ended
December 31,
 
     2014      2013      2014      2013  

Revenues:

           

Spine

   $ 21,768       $ 18,414       $ 82,663       $ 57,334   

Sports medicine

     12,582         10,894         46,758         42,594   

Bone graft substitutes and general orthopedic

     10,275         8,771         36,747         27,864   

Ortho fixation

     11,296         7,821         37,133         14,525   

Surgical specialties

     5,792         7,107         26,999         27,666   

Dental

     6,003         5,637         20,810         19,779   

Other revenues

     3,157         1,862         11,700         8,217   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 70,873       $ 60,506       $ 262,810       $ 197,979   
  

 

 

    

 

 

    

 

 

    

 

 

 

Domestic revenues

     65,438         54,385         238,936         177,207   

International revenues

     5,435         6,121         23,874         20,772   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

   $ 70,873       $ 60,506       $ 262,810       $ 197,979   
  

 

 

    

 

 

    

 

 

    

 

 

 


RTI SURGICAL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)

 

     December 31,
2014
    December 31,
2013
 
Assets     

Cash and cash equivalents

   $ 15,703      $ 18,721   

Accounts receivable - net

     38,833        31,752   

Inventories - net

     113,314        106,126   

Prepaid and other assets

     29,496        30,060   
  

 

 

   

 

 

 

Total current assets

     197,346        186,659   

Property, plant and equipment - net

     77,028        74,738   

Goodwill

     54,887        54,887   

Other assets - net

     48,724        53,570   
  

 

 

   

 

 

 

Total assets

   $ 377,985      $ 369,854   
  

 

 

   

 

 

 
Liabilities and Stockholders’ Equity     

Accounts payable

   $ 26,834      $ 23,231   

Accrued expenses and other current liabilities

     29,523        27,782   

Current portion of long-term obligations

     6,479        1,344   
  

 

 

   

 

 

 

Total current liabilities

     62,836        52,357   

Deferred revenue

     13,460        18,755   

Long-term liabilities

     81,020        81,152   
  

 

 

   

 

 

 

Total liabilities

     157,316        152,264   

Preferred stock

     52,834        49,537   

Stockholders’ equity:

    

Common stock and additional paid-in capital

     415,570        415,415   

Accumulated other comprehensive loss

     (3,881     (812

Accumulated deficit

     (243,854     (246,550
  

 

 

   

 

 

 

Total stockholders’ equity

     167,835        168,053   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 377,985      $ 369,854   
  

 

 

   

 

 

 


RTI SURGICAL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

 

     Three Months
Ended December 31,
    Twelve Months
Ended December 31,
 
     2014     2013     2014     2013  

Cash flows from operating activities:

        

Net income (loss)

   $ 659      $ (7,777   $ 2,696      $ (17,814

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

        

Depreciation and amortization expense

     3,982        3,988        15,395        12,202   

Stock-based compensation

     1,337        567        3,032        2,220   

Amortization of deferred revenue

     (1,207     (1,222     (5,420     (6,451

Other items to reconcile to net cash provided by (used in) operating activities

     659        11,860        (8,809     5,389   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     5,430        7,416        6,894        (4,454
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

        

Purchases of property, plant and equipment

     (4,305     (3,857     (15,577     (15,011

Patent and acquired intangible asset costs

     (331     (339     (737     (915

Acquisition of Pioneer Surgical Technology

     —          —          —          (126,307
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (4,636     (4,196     (16,314     (142,233
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

        

Proceeds from long-term obligations

     2,000        —          7,000        68,250   

Net (payments) proceeds from short-term obligations

     (493     638        658        638   

Payment of debt issuance costs

     —          (117     —          (699

Proceeds from preferred stock issuance

     —          —          —          50,000   

Payment of preferred stock issuance costs

     —          —          —          (1,290

Payment of preferred stock dividend

     —          (625     —          (625

Payments on long-term obligations

     (12     (21     (682     (142

Other financing activities

     210        (301     894        (509
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     1,705        (426     7,870        115,623   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     (726     (208     (1,468     89   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     1,773        2,586        (3,018     (30,975

Cash and cash equivalents, beginning of period

     13,930        16,135        18,721        49,696   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 15,703      $ 18,721      $ 15,703      $ 18,721