Healthtronics (HTRN) 8-K Entry into a Material Definitive Agreement

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)
July 31, 2006

HEALTHTRONICS, INC.

(Exact name of registrant as specified in its charter)

Georgia	000-30406	58-2210668
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1301 Capital of Texas Highway, Suite 200B
Austin, Texas 78746
(Address of principal executive office including Zip Code)

(512) 328-2892

(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)

[  ] 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))

Item 1.01 Entry into a Material Definitive Agreement.

On July 31, 2006, HealthTronics, Inc. (the “Company”) completed the previously-announced sale of its specialty vehicles division to AK Acquisition Corp., a wholly-owned subsidiary of Oshkosh Truck Corporation (“Oshkosh”), for $140 million in cash. The Company used approximately $124 million of the net proceeds from the sale to repay in full the Term Loans B under its senior credit facility. In connection with the closing of the sale, the Company paid bonuses to certain officers of the specialty vehicles division, including payment of a $100,000 bonus to James Whittenburg, the president of the specialty vehicles division. The press release announcing the completion of the transaction is attached to this Form 8-K as Exhibit 99.1.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As discussed under Item 1.01 above, the Company completed the previously-announced sale of its specialty vehicles division to Oshkosh for $140 million in cash.

Item 9.01 Financial Statements and Exhibits.

(b) Pro Forma Financial Information.

HEALTHTRONICS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED PROFORMA BALANCE SHEET
MARCH 31, 2006
(Unaudited)

($ in thousands)	As Reported			Sale of Specialty Vehicle Manufacturing			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	18,857		$	(1,958	) (A)	$	27,646
					10,747	(B)
Accounts receivable, less allowance for doubtful accounts		35,852			(8,961	) (A)		26,891
Other receivables		3,652			(674	) (A)		2,978
Deferred income taxes		22,318			(50	) (A)		3,357
					(18,911	) (B)
Prepaid expenses and other current assets		4,985			(672	) (A)		4,313
Inventory		35,955			(26,629	) (A)		9,326
Total current assets		121,619			(47,108	)		74,511
Property and equipment:
Equipment, furniture and fixtures		52,219			(4,944	) (A)		47,275
Building and leasehold improvements		18,225			(5,503	) (A)		12,722
		70,444			(10,447	)		59,997
Less accumulated depreciation and
amortization		(28,220	)		3,962	(A)		(24,258	)
Property and equipment, net		42,224			(6,485	)		35,739
Other investments		1,307			--			1,307
Goodwill, at cost		306,315			(52,867	) (A)		253,448
Intangible assets		6,811			--			6,811
Other noncurrent assets		3,758			(204	) (A)		3,554
	$	482,034		$	(106,664	)	$	375,370
LIABILITIES
Current liabilities:
Current portion of long-term debt	$	10,979		$	(24	) (A)	$	9,705
					(1,250	) (B)
Accounts payable		13,149			(6,956	) (A)		6,193
Accrued distributions to minority interests		5,773			--			5,773
Accrued expenses		13,055			(5,101	)(A)		7,954
Customer deposits		5,890			(5,607	) (A)		283
Total current liabilities		48,846			(18,938	)		29,908
Deferred compensation liability		135			(133	) (A)		2
Long-term debt, net of current portion		128,871			(122,500	) (B)		6,371
Other long term obligations		483			(450	) (A)		33
Deferred income taxes		28,916			(81	) (A)		30,590
					1,755	(B)
Total liabilities		207,251			(140,347	)		66,904
Minority interest		31,248			319			31,567
STOCKHOLDERS' EQUITY
Common stock		196,295			--			196,295
Retained earnings		48,063			33,364	(B)		81,427
Treasury stock, at cost		(823	)		--			(823	)
Total stockholders' equity		243,535			33,364			276,899
	$	482,034		$	(106,664	)	$	375,370

HEALTHTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 2006

($ in thousands, except per share data)	As Reported			Sale of Specialty Vehicle Manufacturing			Pro Forma
Revenue:
Urology	$	32,688					$	32,688
Medical Device Sales and Service		5,934						5,934
Specialty Vehicle Manufacturing		25,679		$	(25,679	)(C)		--
Other		152						152
Total revenue		64,453			(25,679	)		38,774
Cost of services and general and administrative expenses:
Urology		16,859						16,859
Medical Device Sales and Service		5,658						5,658
Specialty Vehicle Manufacturing		22,442			(22,442	)(C)		--
Corporate		1,756						1,756
Depreciation and amortization		3,207			(332	)(C)		2,875
		49,922			(22,774	)		27,148
Operating income		14,531			(2,905	)		11,626
Other income (expenses):
Interest and dividends		133			(1	)(C)		132
Interest expense		(2,253	)		1,927	(C)		(326	)
		(2,120	)		1,926			(194	)
Income from continuing operations before provision
for income taxes and minority interest		12,411			(979	)		11,432
Minority interest in consolidated income		10,370						10,370
Provision for income taxes		768			(377	)(C)		391
Net income	$	1,273		$	(602	)	$	671
Basic earnings per share:
Net income	$	0.04					$	0.02
Weighted average shares outstanding		34,906						34,906
Net income	$	0.04					$	0.02
Weighted average shares outstanding		35,251						35,251

HEALTHTRONICS, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 2005

($ in thousands, except per share data)	As Reported			Sale of Specialty Vehicle Manufacturing			Pro Forma
Revenue:
Urology	$	139,340					$	139,340
Medical Device Sales and Service		18,202						18,202
Specialty Vehicle Manufacturing		109,447		$	(109,447	) (C)		--
Other		705						705
Total revenue		267,694			(109,447	)		158,247
Cost of services and general and administrative expenses:
Urology		61,756						61,756
Medical Device Sales and Service		12,247						12,247
Specialty Vehicle Manufacturing		98,170			(98,170	) (C)		--
Corporate		5,826						5,826
Depreciation and amortization		13,304			(1,215	) (C)		12,089
		191,303			(99,385	)		91,918
Operating income		76,391			(10,062	)		66,329
Other income (expenses):
Interest and dividends		459			(11	) (C)		448
Interest expense		(9,080	)		7,926	(C)		(1,154	)
Loan fees and bond call premium		(2,842	)		2,842	(C)		--
		(11,463	)		10,757			(706	)
Income from continuing operations before provision
for income taxes and minority interest		64,928			695			65,623
Minority interest in consolidated income		48,030						48,030
Provision for income taxes		6,153			268	(C)		6,421
Income from continuing operations		10,745			427			11,172
Loss from discontinued operations, net of tax		(1,557	)					(1,557	)
Net income	$	9,188		$	427		$	9,615
Basic earnings per share:
Income from continuing operations	$	0.32					$	0.33
Discontinued operations	$	(0.05	)				$	(0.05	)
Net income	$	0.27					$	0.28
Weighted average shares outstanding		34,311						34,311
Diluted earnings per share:
Income from continuing operations	$	0.31					$	0.32
Discontinued operations	$	(0.05	)				$	(0.05	)
Net income	$	0.26					$	0.27
Weighted average shares outstanding		35,182						35,182

NOTE TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS

1. Pro Forma Adjustments.

The accompanying pro forma consolidated statements of income for the year ended December 31, 2005 and for the three months ended March 31, 2006 reflect the sale of our specialty vehicle manufacturing segment as of the beginning of such periods. The pro forma consolidated balance sheet as of March 31, 2006 gives pro forma effect of the sale as if it occurred on March 31, 2006. Actual reported results may vary from those contained in the pro forma disclosure. These pro forma financial statements include the following pro forma adjustments:

(A)	Removal of assets and liabilities of the specialty vehicle manufacturing segment as a result of the sale
(B)	Receipt of proceeds, payment of debt, recording of gain on sale of the specialty manufacturing segment.

Proceeds from sale	$	140,000
Repayment of Debt		(123,750	)
Fees and Expenses		(5,503	)
Net Cash Received	$	10,747

(C) Removal of the revenues and expenses of the specialty vehicle manufacturing segment as a result of the sale and the removal of interest expense on the debt which was repaid.

(d) Exhibits.

Exhibit Number	Description of Exhibit
99.1	Press release, issued on July 31, 2006.

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.

	HEALTHTRONICS, INC. (Registrant)
Date: August 04, 2006	By:	/s/ James S.B. Whittenburg
	Name: Title:	James S.B. Whittenburg President – Urology, President –
		Manufacturing, Senior Vice President –
		Development and General Counsel

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
99.1	Press release, issued on July 31, 2006.