Harvard Bioscience (HBIO) 8-K/A Unaudited Pro Forma Condensed Consolidated Financial Statements

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Statements

On November 1, 2013, the previously announced spin-off of Harvard Apparatus Regenerative Technology, Inc., or HART, from Harvard Bioscience, Inc. (“us”, “we”, or “the Company”) was completed.  On that date, HART became an independent company that operates the regenerative medicine business, previously owned by us. The spin-off was completed through the distribution to our stockholders of record of all the shares of common stock of HART (the “Distribution”).  In the Distribution, we distributed to our stockholders one share of HART common stock for every four shares of our common stock outstanding as of the close of business on October 21, 2013, the record date for the Distribution. Fractional shares of HART common stock were not included in the distribution. Instead, the Registrar & Transfer Company aggregated fractional shares into whole shares, and sold the whole shares in the open market and distributed the aggregate net cash proceeds pro rata to each holder who otherwise would have been entitled to receive a fractional share in the Distribution.

Effective with the spin-off, we contributed $15.0 million in cash to HART to fund its operations. 

The unaudited pro forma condensed consolidated financial statements were derived from Harvard Bioscience’s historical consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America and give effect to the distribution of HART.  The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 and for the year ended December 31, 2012 assume that the distribution of HART occurred on January 1, 2012.  The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 assumes that the distribution occurred on that date.

The unaudited pro forma condensed consolidated financial statements are presented based on currently available information and are intended for informational purposes only.  These unaudited pro forma condensed consolidated financial statements are not necessarily indicative of what Harvard Bioscience’s results of operations or financial condition would have been had the distribution been completed on the dates assumed.  In addition, they are not necessarily indicative of Harvard Bioscience’s future results of operations or financial condition.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with (i) the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Harvard Bioscience’s Form 10-K for the year ended December 31, 2012 and (ii) the unaudited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Harvard Bioscience’s Form 10-Q for the six months ended June 30, 2013.

HARVARD BIOSCIENCE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
	At June 30, 2013
	Historical			Spin-off of HART				Pro Forma for the Spin-off
Assets
Current assets:
Cash and cash equivalents	$	34,098		$	10,000		A	$	24,098
Accounts receivable, net of allowance for doubtful accounts of $194 and $302, respectively		13,826			-				13,826
Inventories		18,259			-				18,259
Deferred income tax assets—current		1,547			-				1,547
Other receivables and other assets		5,046			-				5,046
Total current assets		72,776			10,000				62,776
Property, plant and equipment, net		4,365			406		B		3,959
Deferred income tax assets—non-current		12,002			-				12,002
Amortizable intangible assets, net		19,710			-				19,710
Goodwill		35,554			-				35,554
Other indefinite lived intangible assets		1,270			-				1,270
Other assets		371			-				371
Total assets	$	146,048		$	10,406			$	135,642
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,877		$	120		B	$	4,757
Deferred revenue		740			-				740
Accrued income taxes		212			-				212
Accrued expenses		3,827			(445	)	B		4,272
Current portion of long-term debt		3,000			-				3,000
Other liabilities—current		640			-				640
Total current liabilities		13,296			(325	)			13,621
Long-term debt		21,250			(5,000	)	C		26,250
Deferred income tax liabilities—non-current		289			-				289
Other long term liabilities		5,838			-				5,838
Total liabilities		40,673			(5,325	)			45,998
Commitments and contingencies
Stockholders’ equity:
Common stock, par value $0.01 per share		375			-				375
Additional paid-in-capital		199,773			15,096		D		184,677
Accumulated deficit		(77,352	)		635		E		(77,987	)
Accumulated other comprehensive loss		(6,753	)		-				(6,753	)
Treasury stock at cost		(10,668	)		-				(10,668	)
Total stockholders’ equity		105,375			15,731				89,644
Total liabilities and stockholders’ equity	$	146,048		$	10,406			$	135,642

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

HARVARD BIOSCIENCE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
	Year Ended December 31, 2012
	Historical			Spin-off of HART				Pro Forma for the Spin-off
Revenues	$	111,171		$	-			$	111,171
Cost of product revenues		58,753			-				58,753
Gross profit		52,418			-				52,418
Sales and marketing expenses		19,169			116		F		19,053
General and administrative expenses		19,700			2,150		F, G		17,550
Research and development expenses		7,321			3,664		F		3,657
Restructuring charges		310			-				310
Amortization of intangible assets		2,752			-				2,752
Total operating expenses		49,252			5,930				43,322
Operating income		3,166			(5,930	)			9,096
Other (expense) income:
Foreign exchange		(113	)		-				(113	)
Interest expense		(584	)		485		H		(1,069	)
Interest income		46			-				46
Other expense, net		(287	)		-				(287	)
Other (expense) income, net		(938	)		485				(1,423	)
Income from continuing operations before income taxes		2,228			(5,445	)			7,673
Income tax expense (benefit)		696			(2,124	)	I		2,820
Income from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	1,532		$	(3,321	)		$	4,853
Income per share:
Basic earnings per common share from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	0.05						$	0.17
Diluted earnings per common share from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	0.05						$	0.16
Weighted average common shares:
Basic		28,799							28,799
Diluted		29,424							29,424

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

HARVARD BIOSCIENCE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
	Six Months Ended June 30, 2013
	Historical			Spin-off of HART				Pro Forma for the Spin-off
Revenues	$	52,181		$	-			$	52,181
Cost of product revenues		27,819			-				27,819
Gross profit		24,362			-				24,362
Sales and marketing expenses		9,376			54		J		9,322
General and administrative expenses		10,682			2,392		J, G		8,290
Research and development expenses		3,923			2,367		J		1,556
Restructuring charges		(45	)		-				(45	)
Amortization of intangible assets		1,355			-				1,355
Total operating expenses		25,291			4,813				20,478
Operating income		(929	)		(4,813	)			3,884
Other (expense) income:
Foreign exchange		9			-				9
Interest expense		(374	)		160		H		(534	)
Interest income		19			-				19
Other expense, net		(81	)		-				(81	)
Other (expense) income, net		(427	)		160				(587	)
(Loss) income from continuing operations before income taxes		(1,356	)		(4,653	)			3,297
Income tax expense (benefit)		(977	)		(1,815	)	I		838
(Loss) income from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	(379	)	$	(2,838	)		$	2,459
(Loss) income per share:
Basic (loss) earnings per common share from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	(0.01	)					$	0.08
Diluted (loss) earnings per common share from continuing operations before nonrecurring charges or credits directly attributable to the transaction	$	(0.01	)					$	0.08
Weighted average common shares:
Basic		29,941							29,941
Diluted		29,941							31,508

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

HARVARD BIOSCIENCE, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated financial statements as of June 30, 2013 and for the six months ended June 30, 2013 and the latest fiscal year ended December 31, 2012 include the following spin-off related adjustments:

A.   Represents the net cash impact of funding HART's operations on the Distribution Date.  The Company's historical cash balance includes $10.0 million in cash received from a credit facility draw on April 1, 2013.  Refer to note C below for details on the adjustment to the Company's debt balance.

B.   Represents the assets and liabilities transferred to HART as part of the spin-off, adjusted for allocations to HART that relate to corporate activities.  Additionally, includes approximately $0.6 million in accrued transaction costs related to the spin-off expected to be incurred by December 31, 2013.

C.   Represents the net debt impact of funding HART's operations on the Distribution Date.  The Company's historical long term debt balance includes $10.0 million in proceeds drawn on the credit facility on April 1, 2013.

D.   Represents the total cumulative investment in HART, including a distribution of $15.0 million in cash to fund HART's operations on the Distribution Date.

E.   Represents the impact of adjustments for allocations to HART that relate to corporate activities and accrued transaction costs related to the spin-off.

F.   Represents the operating results of the HART operating segment for the year ended December 31, 2012, adjusted for certain corporate cost allocations, including compensation expenses, in the historical financial statements. Net adjustments to operating results of HART related to corporate cost allocations were approximately $0.1 million and $0.3 million for general and administrative expenses and research and development expenses, respectively.

G.   Includes a pro forma adjustment of approximately $0.7 million and $1.5 million for the year ended December 31, 2012 and the six months ended June 30, 2013, respectively, for the removal of transaction costs incurred by Harvard Bioscience, Inc. relating to the spin-off.

H.   Represents interest expense incurred as a result of drawing on the Company's credit facility to contribute $15.0 million in cash to HART, on the Distribution Date, to fund its operations.

I.   The tax effects of pro forma adjustments using a blended statutory rate of 39%.

J.   Represents the operating results of the HART operating segment for the six months ended June 30, 2013, adjusted for certain corporate cost allocations, including compensation expenses, in the historical financial statements. Net adjustments to operating results of HART related to corporate cost allocations were approximately $0.1 million and $24,000 for general and administrative expenses and research and development expenses, respectively.