Exhibit 99.1
AngioDynamics, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended February 28, 2019
(in thousands of dollars, except per share data)
As Reported (a) | Pro Forma Adjustments | Notes | As Adjusted | |||||||||
Net sales | $ | 263,184 | $ | (63,695 | ) | (b) | $ | 199,489 | ||||
Cost of sales (exclusive of intangible amortization) | 122,917 | (38,115 | ) | (b) | 84,802 | |||||||
Gross profit | 140,267 | (25,580 | ) | 114,687 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 22,235 | (891 | ) | (b) | 21,344 | |||||||
Sales and marketing | 59,115 | (3,306 | ) | (b) | 55,809 | |||||||
General and administrative | 26,612 | (196 | ) | (b) | 26,416 | |||||||
Amortization of intangibles | 14,646 | (2,046 | ) | (b) | 12,600 | |||||||
Change in fair value of contingent consideration | 865 | - | 865 | |||||||||
Acquisition, restructuring and other items, net | 9,700 | - | 9,700 | |||||||||
Total operating expenses | 133,173 | (6,439 | ) | 126,734 | ||||||||
Operating income (loss) | 7,094 | (19,141 | ) | (12,047 | ) | |||||||
Other (expenses) income: | ||||||||||||
Interest expense, net | (3,689 | ) | - | (3,689 | ) | |||||||
Other expense, net | (72 | ) | - | (72 | ) | |||||||
Total other expenses, net | (3,761 | ) | - | (3,761 | ) | |||||||
Income before income tax expense | 3,333 | (19,141 | ) | (15,808 | ) | |||||||
Income tax expense (benefit) | 866 | (3,057 | ) | (c) | (2,191 | ) | ||||||
Net income (loss) | $ | 2,467 | $ | (16,084 | ) | $ | (13,617 | ) | ||||
Earnings per share | ||||||||||||
Basic | $ | 0.07 | $ | (0.36 | ) | |||||||
Diluted | $ | 0.06 | $ | (0.36 | ) | |||||||
Weighted average shares outstanding | ||||||||||||
Basic | 37,446 | 37,446 | ||||||||||
Diluted | 38,350 | 37,446 |
AngioDynamics, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Year Ended May 31, 2018
(in thousands of dollars, except per share data)
As Reported (a) | Pro Forma Adjustments | Notes | As Adjusted | |||||||||
Net sales | $ | 344,285 | $ | (82,630 | ) | (b) | $ | 261,655 | ||||
Cost of sales (exclusive of intangible amortization) | 167,410 | (49,611 | ) | (b) | 117,799 | |||||||
Gross profit | 176,875 | (33,019 | ) | 143,856 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 25,459 | (1,121 | ) | (b) | 24,338 | |||||||
Sales and marketing | 77,276 | (4,167 | ) | (b) | 73,109 | |||||||
General and administrative | 31,265 | (274 | ) | (b) | 30,991 | |||||||
Amortization of intangibles | 16,635 | (2,729 | ) | (b) | 13,906 | |||||||
Change in fair value of contingent consideration | 250 | - | 250 | |||||||||
Acquisition, restructuring and other items, net | 15,432 | - | 15,432 | |||||||||
Total operating expenses | 166,317 | (8,291 | ) | 158,026 | ||||||||
Operating income (loss) | 10,558 | (24,728 | ) | (14,170 | ) | |||||||
Other (expenses) income: | ||||||||||||
Interest expense, net | (3,062 | ) | - | (3,062 | ) | |||||||
Other expense, net | (31 | ) | - | (31 | ) | |||||||
Total other expenses, net | (3,093 | ) | - | (3,093 | ) | |||||||
Income before income tax expense | 7,465 | (24,728 | ) | (17,263 | ) | |||||||
Income tax benefit | (8,870 | ) | (2,166 | ) | (c) | (11,036 | ) | |||||
Net income (loss) | $ | 16,335 | $ | (22,562 | ) | $ | (6,227 | ) | ||||
Earnings per share | ||||||||||||
Basic | $ | 0.44 | $ | (0.17 | ) | |||||||
Diluted | $ | 0.44 | $ | (0.17 | ) | |||||||
Weighted average shares outstanding | ||||||||||||
Basic | 37,075 | 37,075 | ||||||||||
Diluted | 37,539 | 37,075 |
AngioDynamics, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Year Ended May 31, 2017
(in thousands of dollars, except per share data)
As Reported (a) | Pro Forma Adjustments | Notes | As Adjusted | |||||||||
Net sales | $ | 349,643 | $ | (79,855 | ) | (b) | $ | 269,788 | ||||
Cost of sales (exclusive of intangible amortization) | 173,474 | (47,635 | ) | (b) | 125,839 | |||||||
Gross profit | 176,169 | (32,219 | ) | 143,950 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 25,269 | (1,121 | ) | (b) | 24,148 | |||||||
Sales and marketing | 78,819 | (3,954 | ) | (b) | 74,865 | |||||||
General and administrative | 31,406 | (273 | ) | (b) | 31,133 | |||||||
Amortization of intangibles | 17,296 | (2,729 | ) | (b) | 14,567 | |||||||
Change in fair value of contingent consideration | (15,261 | ) | - | (15,261 | ) | |||||||
Acquisition, restructuring and other items, net | 27,510 | - | 27,510 | |||||||||
Medical device excise tax | (1,837 | ) | (1,837 | ) | ||||||||
Total operating expenses | 163,202 | (8,077 | ) | 155,125 | ||||||||
Operating income (loss) | 12,967 | (24,142 | ) | (11,175 | ) | |||||||
Other (expenses) income: | ||||||||||||
Interest expense, net | (2,839 | ) | - | (2,839 | ) | |||||||
Other expense, net | (281 | ) | - | (281 | ) | |||||||
Total other expenses, net | (3,120 | ) | - | (3,120 | ) | |||||||
Income before income tax expense | 9,847 | (24,142 | ) | (14,295 | ) | |||||||
Income tax expense (benefit) | 4,839 | (12,082 | ) | (c) | (7,243 | ) | ||||||
Net income (loss) | $ | 5,008 | $ | (12,060 | ) | $ | (7,052 | ) | ||||
Earnings per share | ||||||||||||
Basic | $ | 0.14 | $ | (0.19 | ) | |||||||
Diluted | $ | 0.14 | $ | (0.19 | ) | |||||||
Weighted average shares outstanding | ||||||||||||
Basic | 36,617 | 36,617 | ||||||||||
Diluted | 36,959 | 36,617 |
AngioDynamics, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
Year Ended May 31, 2016
(in thousands of dollars, except per share data)
As Reported (a) | Pro Forma Adjustments | Notes | As Adjusted | |||||||||
Net sales | $ | 353,890 | $ | (82,876 | ) | (b) | $ | 271,014 | ||||
Cost of sales (exclusive of intangible amortization) | 179,574 | (50,280 | ) | (b) | 129,294 | |||||||
Gross profit | 174,316 | (32,597 | ) | 141,719 | ||||||||
Operating expenses: | ||||||||||||
Research and development | 25,053 | (1,121 | ) | (b) | 23,932 | |||||||
Sales and marketing | 83,743 | (3,954 | ) | (b) | 79,789 | |||||||
General and administrative | 30,583 | (269 | ) | (b) | 30,314 | |||||||
Amortization of intangibles | 17,964 | (2,729 | ) | (b) | 15,235 | |||||||
Change in fair value of contingent consideration | 948 | - | 948 | |||||||||
Acquisition, restructuring and other items, net | 12,591 | - | 12,591 | |||||||||
Medical device excise tax | 2,416 | 2,416 | ||||||||||
Total operating expenses | 173,298 | (8,073 | ) | 165,225 | ||||||||
Operating income (loss) | 1,018 | (24,524 | ) | (23,506 | ) | |||||||
Other (expenses) income: | ||||||||||||
Interest expense, net | (3,385 | ) | - | (3,385 | ) | |||||||
Other expense, net | (886 | ) | - | (886 | ) | |||||||
Total other expenses, net | (4,271 | ) | - | (4,271 | ) | |||||||
Income before income tax expense | (3,253 | ) | (24,524 | ) | (27,777 | ) | ||||||
Income tax expense | 40,337 | (12,219 | ) | (c) | 28,118 | |||||||
Net loss | $ | (43,590 | ) | $ | (12,305 | ) | $ | (55,895 | ) | |||
Earnings per share | ||||||||||||
Basic | $ | (1.21 | ) | $ | (1.55 | ) | ||||||
Diluted | $ | (1.21 | ) | $ | (1.55 | ) | ||||||
Weighted average shares outstanding | ||||||||||||
Basic | 36,161 | 36,161 | ||||||||||
Diluted | 36,161 | 36,161 |
AngioDynamics, Inc. and Subsidiaries
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
As of February 28, 2019
(in thousands of dollars, except per share data)
As Reported (a) | Pro Forma Adjustments | Notes | As Adjusted | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 41,704 | $ | 165,314 | (d) | $ | 207,018 | |||||
Accounts receivable, net of allowances of $2,128 | 44,208 | - | 44,208 | |||||||||
Inventories | 52,388 | (11,705 | ) | (e) | 40,683 | |||||||
Prepaid expenses and other | 4,440 | - | 4,440 | |||||||||
Total current assets | 142,740 | 153,609 | 296,349 | |||||||||
Property, plant and equipment, net | 41,207 | (16,719 | ) | (e) | 24,488 | |||||||
Other assets | 3,610 | - | 3,610 | |||||||||
Intangible assets, net | 166,564 | (15,716 | ) | (e) | 150,848 | |||||||
Goodwill | 423,674 | (75,308 | ) | (e) | 348,366 | |||||||
Total assets | $ | 777,795 | $ | 45,866 | $ | 823,661 | ||||||
Liabilities and stockholders' equity | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 18,443 | $ | - | $ | 18,443 | ||||||
Accrued liabilities | 21,929 | 600 | (f) | 22,529 | ||||||||
Current portion of long-term debt | 6,250 | - | 6,250 | |||||||||
Current portion of contingent consideration | 6,673 | - | 6,673 | |||||||||
Total current liabilities | 53,295 | 600 | 53,895 | |||||||||
Long-term debt, net of current portion | 126,837 | - | 126,837 | |||||||||
Contingent consideration, net of current portion | 20,454 | - | 20,454 | |||||||||
Deferred income taxes | 17,834 | (9,300 | ) | (f) | 8,534 | |||||||
Other long-term liabilities | 5,296 | - | 5,296 | |||||||||
Total liabilities | 223,716 | (8,700 | ) | 215,016 | ||||||||
Stockholders' equity | ||||||||||||
Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares issued and outstanding | - | - | - | |||||||||
Common stock, par value $.01 per share, 75,000,000 shares authorized; 37,955,894 shares issued and 37,585,894 shares outstanding | 372 | - | 372 | |||||||||
Additional paid-in capital | 552,902 | - | 552,902 | |||||||||
Retained earnings | 7,596 | 54,566 | (g) | 62,162 | ||||||||
Treasury stock, 370,000 shares | (5,714 | ) | - | (5,714 | ) | |||||||
Accumulated other comprehensive loss | (1,077 | ) | - | (1,077 | ) | |||||||
Total Stockholders’ Equity | 554,079 | 54,566 | 608,645 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 777,795 | $ | 45,866 | $ | 823,661 |
Note 1. Basis of Presentation
The Company’s historical consolidated financial statements have been adjusted in the unaudited consolidated pro forma financial statements to present events that are (i) directly attributable to the Transaction, (ii) factually supportable and (iii) are expected to have a continuing impact on the Company’s consolidated results following the Transaction. The allocation of corporate support, general, management and administrative and other liabilities and expenses included may differ from expenses that would have been included on a stand-alone basis. The pro forma consolidated statements of net income do not reflect the estimated gain on the Transaction.
Note 2. Pro Forma Adjustments
The following adjustments have been reflected in the unaudited pro forma financial statements:
(a) Reflects the Company’s historical US GAAP consolidated statements of net income, as reported, before pro forma adjustments related to the Transaction for the nine month period ended February 28, 2019 and the years ended May 31, 2018, 2017 and 2016 and the consolidated balance sheet, as reported, before pro forma adjustments related to the Transaction as of February 28, 2019.
(b) Reflects the elimination of revenues and expenses representing the historical operating results of the fluid management business.
(c) The pro forma adjustment for income tax expense was calculated as the difference between the income tax expense as reported, and pro forma income tax expense as calculated by using the statutory rate for the Company excluding the fluid management business and adjusting for the impact of permanent items, tax amortization of intangibles that have an indefinite reversal period for book purposes that cannot be considered as a source of income to recover the deferred tax asset, changes in tax law and valuation allowance considerations.
(d) Reflects estimated net cash proceeds from the Transaction of $165.3 million, representing the gross sale price of $169.2 million less estimated transaction costs.
(e) Represents the assets conveyed to Medline in the Transaction.
(f) Represents adjustments for the estimated taxes payable of $0.6 million caused by the gain associated with the Transaction. The taxes on the gain were calculated using various state statutory tax rates and are partially offset by the utilization of historical state net operating losses. There are no current federal taxes on the gain due to utilization of historical net operating losses which had a corresponding valuation allowance. The pro forma adjustments also reflect the reversal of an estimated $9.3 million deferred tax liability related to tax amortization of intangibles, that have an indefinite reversal period for book purposes that cannot be considered as a source of income to recover the deferred tax asset, associated with the fluid management business.
(g) Represents the estimated after-tax gain on the Transaction of $54.6 million, which was calculated as follows:
(in thousands) | |
Estimated proceeds, net of transaction costs | $ 165,314 |
Assets of fluid management | (119,448) |
Pre-tax gain on sale of fluid management | 45,866 |
Tax benefit on sale of fluid management | (8,700) |
After-tax gain on sale of fluid management | $ 54,566 |
Note 3. Transition Services Agreement
Pursuant to a transition services agreement entered into and effective on the closing of the Transaction, the Company will supply certain services to Medline. Medline will receive certain legal, human resource, tax, accounting and information technology services from the Company for a period generally not to exceed 24 months. No pro forma adjustments have been made associated with this agreement as services to be provided with a defined monetary value are not considered material, will not have a continuous impact and the variable elements are not estimable at this time.