Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2013 | Nov. 06, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Swisher Hygiene Inc. | ' |
Entity Central Index Key | '0001504747 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Non-accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 175,655,215 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $33,490 | $61,419 |
Restricted cash | 5,675 | 5,390 |
Accounts receivable (net of allowance for doubtful accounts of approximately $ 2.0 million at September 30, 2013 and $2.3 million at December 31, 2012) | 21,050 | 21,225 |
Inventory | 16,008 | 15,327 |
Receivable from sale of discontinued operations | ' | 12,500 |
Assets of discontinued operations | 1,388 | 1,995 |
Deferred income tax asset | 8,748 | ' |
Other assets | 3,702 | 4,804 |
Total current assets | 90,061 | 122,660 |
Property and equipment, net | 46,316 | 48,348 |
Goodwill | 101,526 | 106,358 |
Other intangibles, net | 9,052 | 11,051 |
Customer relationships and contracts, net | 30,777 | 36,770 |
Other noncurrent assets | 1,743 | 2,498 |
Total assets | 279,475 | 327,685 |
Current liabilities | ' | ' |
Accounts payable and accrued expenses | 28,762 | 27,993 |
Long-term debt and obligations due within one year | 5,268 | 9,145 |
Total current liabilities | 34,030 | 37,138 |
Long-term debt obligations | 2,649 | 5,284 |
Deferred income tax liabilities | 5,486 | 4,673 |
Other long-term liabilities | 3,478 | 3,447 |
Total noncurrent liabilities | 11,613 | 13,404 |
Commitments and contingencies | ' | ' |
Swisher Hygiene Inc. stockholders' equity | ' | ' |
Preferred stock, par value $0.001, authorized 10,000,000 shares; no shares issued and outstanding at September 30, 2013 and December 31, 2012 | ' | 0 |
Common stock, par value $0.001, authorized 600,000,000 shares; 176,834,852 and 175,157,404 shares issued and outstanding at September 30, 2013 and December 31, 2012 | 177 | 175 |
Additional paid-in capital | 388,199 | 385,452 |
Accumulated deficit | -153,528 | -107,507 |
Accumulated other comprehensive loss | -1,016 | -999 |
Total Swisher Hygiene Inc. stockholders' equity | 233,832 | 277,121 |
Non-controlling interest | ' | 22 |
Total equity | 233,832 | 277,143 |
Total liabilities and equity | $279,475 | $327,685 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Current assets | ' | ' |
Net of allowance for doubtful accounts, accounts receivable | $2,500 | $2,300 |
Swisher Hygiene Inc. stockholders' equity | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 600,000,000 | 600,000,000 |
Common stock, shares issued | 175,644,066 | 175,157,404 |
Common stock, shares outstanding | 175,644,066 | 175,157,404 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Revenue | ' | ' | ' | ' |
Products | $49,864 | $52,391 | $144,897 | $156,409 |
Services | 5,728 | 6,263 | 17,381 | 20,016 |
Franchise and other | 324 | 365 | 1,047 | 928 |
Total revenue | 55,916 | 59,019 | 163,325 | 177,353 |
Costs and expenses | ' | ' | ' | ' |
Cost of sales (exclusive of route expenses and related depreciation and amortization) | 25,234 | 26,045 | 72,199 | 78,124 |
Route expenses | 10,981 | 10,990 | 32,788 | 31,756 |
Selling, general, and administrative | 25,249 | 30,032 | 82,294 | 95,598 |
Acquisition and merger expenses | ' | 59 | ' | 220 |
Depreciation and amortization | 5,538 | 5,656 | 16,690 | 15,820 |
Impairment related to assets held for sale | 1,692 | ' | 3,330 | ' |
Total costs and expenses | 68,694 | 72,782 | 207,301 | 221,518 |
Loss from continuing operations | -12,778 | -13,763 | -43,976 | -44,165 |
Other income (expense), net | 144 | -507 | -15 | -1,306 |
Net loss from continuing operations before income taxes | -12,634 | -14,270 | -43,991 | -45,471 |
Income tax expense | -558 | -22 | -1,325 | -109 |
Net loss from continuing operations | -13,192 | -14,292 | -45,316 | -45,580 |
(Loss) income from discontinued operations, net of tax | -208 | 2,749 | -707 | 1,866 |
Net loss | -13,400 | -11,543 | -46,023 | -43,714 |
Comprehensive loss | ' | ' | ' | ' |
Employee benefit plan adjustment, net of tax | ' | ' | 3 | ' |
Foreign currency translation adjustment | 33 | 23 | -20 | 6 |
Comprehensive loss | ($13,367) | ($11,520) | ($46,040) | ($43,708) |
(Loss) income per share | ' | ' | ' | ' |
Basic and diluted (Continuing operations) | ($0.07) | ($0.08) | ($0.26) | ($0.26) |
Basic and diluted (Discontinued operations) | $0 | $0.02 | $0 | $0.01 |
Weighted-average common shares used in the computation of loss per share | ' | ' | ' | ' |
Basic and diluted | 176,815,431 | 175,759,971 | 175,759,971 | 174,961,822 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Cash used in operating activities | ' | ' |
Net loss | ($46,023) | ($43,714) |
Adjustments to reconcile net loss to cash used in operating activities: | ' | ' |
Loss (income) from discontinued operations, net of tax | 707 | -1,866 |
Depreciation and amortization | 16,690 | 15,820 |
Provision for doubtful accounts | 736 | 2,956 |
Stock based compensation | 2,956 | 2,956 |
Realized and unrealized net gain on fair value of convertible promissory notes and earn-outs | ' | -199 |
Deferred income taxes | 1,419 | -250 |
Impairment related to assets held for sale | 3,330 | ' |
Gain on sale of assets | -203 | ' |
Changes in working capital components: | ' | ' |
Accounts receivable | -504 | 2,464 |
Inventory | -681 | -951 |
Other assets and noncurrent assets | 1,638 | -871 |
Accounts payable, accrued expenses, and other current liabilities | 2,906 | -1,227 |
Net cash used in operating activities of continuing operations | -17,029 | -25,226 |
Net cash (used in) provided by operating activities of discontinued operations | -3,028 | 5,819 |
Cash used in operating activities | -20,057 | -19,407 |
Investing activities | ' | ' |
Proceeds from sale of discontinued operations (including working capital adjustment) | 12,571 | ' |
Purchases of property and equipment | -13,974 | -15,792 |
Cash received for sale of assets held for sale | 349 | ' |
Cash received on sale of property and equipment | 129 | ' |
Acquisitions, net of cash acquired | -151 | -4,310 |
Restricted cash | -285 | ' |
Cash used in investing activities of continuing operations | -1,361 | -20,102 |
Net cash used in investing activities of discontinued operations | ' | -2,741 |
Cash used in investing activities | -1,361 | -22,843 |
Financing activities | ' | ' |
Proceeds from debt issuances | 484 | ' |
Principal payments on debt | -6,996 | -18,671 |
Proceeds from exercise of stock options | 1 | ' |
Net cash used in financing activities of continuing operations | -6,511 | -18,671 |
Net cash provided by financing activities of discontinued operations | ' | 289 |
Cash used in financing activities | -6,511 | -18,382 |
Net decrease in cash and cash equivalents | -27,929 | -60,632 |
Cash and cash equivalents at the beginning of the period | 61,419 | 70,508 |
Cash and cash equivalents at the end of the period | $33,490 | $9,876 |
1_Business_Description
1. Business Description | 9 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
BUSINESS DESCRIPTION | ' |
Principal Operations | |
Swisher Hygiene Inc. and its wholly-owned subsidiaries (the “Company,” “Swisher,” “We,” or “Our”) provide essential hygiene and sanitizing solutions to customers throughout much of North America and internationally through its network of company owned operations, franchises and master licensees. These solutions include essential products and services that are designed to promote superior cleanliness and sanitation in commercial environments, while enhancing the safety, satisfaction and well-being of employees and patrons. These solutions are typically delivered by employees on a regularly scheduled basis and involve providing our customers with: (i) consumable products such as detergents, cleaning chemicals, soap, paper and supplies, together with the rental and servicing of dish machines and other equipment for the dispensing of those products; (ii) the rental of facility service items requiring regular maintenance and cleaning, such as floor mats, mops, bar towels, and linens; and (iii) manual cleaning of their facilities. We serve customers in a wide range of end-markets, with a particular emphasis on the foodservice, hospitality, retail, and healthcare industries. | |
We have company owned operations, one franchise operation located in San Antonio, Texas and Master License Agreements covering the United Kingdom, Portugal, the Netherlands, Singapore, the Philippines, Taiwan, Korea, Hong Kong/Macau/China, and Mexico. |
2_Summary_of_Significant_Accou
2. Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2013 | |
Accounting Policies [Abstract] | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Basis of Presentation | |
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2012 in the Company's Condensed Consolidated Balance Sheet included in this quarterly report was derived from the audited Consolidated Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on May 1, 2013. The Company's 2012 Annual Report on Form 10-K is referred to in this quarterly report as the “2012 Annual Report.” This quarterly report should be read in conjunction with the 2012 Annual Report. | |
Intercompany balances and transactions have been eliminated in consolidation. Tabular information, other than share and per share data, is presented in thousands of dollars. Certain reclassifications have been made to prior year amounts for consistency with the current period presentation. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. | |
The Company's significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in our 2012 Annual Report. There have been no significant changes to those policies. | |
Segment Reporting | |
We operate in one business segment, the manufacturing, distribution and delivery of hygiene and sanitizing solutions and services. We define business segments as components of an organization for which discrete financial information is available and operating results are evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is the Company’s President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination include the similar nature of the products and services we sell, the functional alignment of our organizational structure, and the reports that are regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. Previously we operated in two segments. See Note 3, “Discontinued Operations, Dispositions and Acquisitions.” | |
Restricted cash | |
Restricted cash at September 30, 2013 and December 31, 2012 consists of amounts held in a collateral account to secure certain letters of credit related to workers’ compensation liabilities, a note payable, facility lease agreements and purchase card balances. | |
Recent Accounting Pronouncements | |
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance and disclosure requirements for reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires that an entity provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP. The guidance became effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. This standard was adopted in the first quarter of 2013. | |
3_Discontinued_Operations_and_
3. Discontinued Operations and Acquisitions | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Discontinued Operations and Disposal Groups [Abstract] | ' | ||||
DISCONTINUED OPERATIONS AND ACQUISITIONS | ' | ||||
Discontinued Operations – Waste Segment | |||||
On November 15, 2012, the Company completed a stock sale of Choice Environmental Services, Inc. (“Choice”), and other acquired businesses, including Lawson Sanitation, LLC, Central Carting Disposal, Inc. and FSR Transporting and Crane Services, Inc., that comprised the Waste segment to Waste Services of Florida, Inc. for $123.3 million resulting in a gain of $13.8 million net of tax that was recognized in the fourth quarter of 2012. The stock purchase agreement stipulated customary purchase price adjustments related to closing balance sheet working capital targets and, in addition, that $12.5 million of the purchase price consideration would be reserved and held back in escrow by the purchaser (the “holdback amount”) and paid subject to certain financial adjustments. Management recorded the holdback amount in the calculation of the gain on sale of the Waste segment and the amount was classified on the balance sheet as “Receivable due from sale of discontinued operations” at December 31, 2012. This receivable as well as proceeds from a favorable working capital adjustment were fully collected during the second quarter of 2013. | |||||
During the three months ended September 30, 2013, the Company accrued $0.2 million for the settlement of Choice related litigation. During the nine months ended September 30, 2013, the net loss includes the third quarter litigation accrual and a $0.5 million adjustment to retained workers' compensation liabilities. Net cash used in connection with discontinued operations for the nine months ended September 30, 2013 principally represent the payment of certain liabilities for severance and professional fees, previously accrued as a part of the sale, as well as cash payments related to retained liabilities. | |||||
Revenue for the three months and nine months ended September 30, 2012, related to the Waste segment were $17.0 million and $52.4 million, respectively. Income, net of tax, related to the Waste segment was $2.7 million and $1.9 million, respectively, for the three and nine months ended September 30, 2012. | |||||
Assets Held For Sale | |||||
During the second quarter of 2013, the Company commenced an active program to sell certain linen and dust operations that were determined to be under-performing, non-core businesses or routes. Additionally, one of the Company’s owned chemical manufacturing plants was closed in connection with our plant consolidation effort. In accordance with ASC 360, Property, Plant and Equipment, these assets have been classified as assets held for sale in the Condensed Consolidated Balance Sheet and the assets were adjusted to the lower of historical carrying amount or fair value. | |||||
During the third quarter of 2013, the Company furthered its discussions with interested parties regarding potential sales terms and values related to the assets held for sale. Based on the progression of the individual sales negotiations, the Company identified additional dust control operations and linen routes to be classified as assets held for sale and revised its fair value estimates. The revision of these estimates resulted in a decrease in estimated selling prices for certain operations including one business that had experienced declines in operating performance during the third quarter. These adjustments resulted in the recording of an additional impairment of goodwill of $1.1 million and intangibles of $0.6 million. Additionally, during the quarter, the Company consummated the sale of certain linen customers for $0.3 million in net proceeds. The resulting $0.3 million gain is included in “Other income (expense), net” in the condensed consolidated statement of operations and comprehensive loss. | |||||
None of the disposal groups that could be classified as discontinued operations were material, individually or combined, to the Company’s consolidated financial statements, and thus these results of operations were not separately classified in discontinued operations. | |||||
The Company expects that the individual sales transactions related to the remainder of the assets held for sale will be primarily complete within the next nine months. The major classes of the assets held for sale are as follows: | |||||
September 30, | |||||
2013 | |||||
Property and equipment, net | $ | 5,362 | |||
Goodwill | 2,268 | ||||
Customer relationships, net | 1,103 | ||||
Other | 15 | ||||
Assets held for sale | $ | 8,748 | |||
See Note 15, "Subsequent Events" for a discussion of the Company's plan to divest additional linen and dust operations. | |||||
Acquisitions | |||||
During the three months ended September 30, 2013, the Company acquired its franchise located in Ottawa, Canada for $0.2 million. |
4_Goodwill_And_Other_Intangibl
4. Goodwill And Other Intangible Assets | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Goodwill and Intangible Assets Disclosure [Abstract] | ' | ||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | ||||
Changes in goodwill for the nine months ended September 30, 2013 are as follows: | |||||
Goodwill: | |||||
2013 | |||||
31-Dec-12 | $ | 106,358 | |||
Adjustment to the lower of carrying value or fair market value for Assets Held for Sale (Note 3) | (2,727 | ) | |||
Reclassification to Assets Held for Sale (Note 3) | (2,268 | ) | |||
Additions related to acquisitions (Note 3) | 163 | ||||
30-Sep-13 | $ | 101,526 | |||
The Company’s accounting policy is to perform an annual goodwill impairment test in the fourth quarter or more frequently whenever events or circumstances indicate that goodwill or the carrying value of intangible assets may not be recoverable. As of September 30, 2013, following a qualitative review of the key drivers of fair value, the Company determined that it was necessary to perform Step 1 of the quantitative goodwill impairment test in accordance with ASC 350, Intangibles- Goodwill and Other. A valuation firm was used to perform the testing and determined that no impairment of goodwill was required, other than as described in Note 3-“Discontinued Operations, Dispositions and Acquisitions.” Based on this analysis, fair value exceeded carrying value by 2.0%. The quantitative analysis consisted of the income approach, specifically the discounted cash flow (“DCF”) method to derive the fair value of the Company. The key variables that drive our cash flows are customer growth and attrition and operational efficiencies. The terminal value growth rate assumption, as well as the Weighted Average Cost of Capital (“WACC”) rate applied, are additional key variables in the DCF model. The estimates and assumptions used are subject to uncertainty, including our ability to grow revenue and our profitability levels. Relatively small declines in the future performance and cash flows of the Company or small changes in the key assumptions may result in significant asset impairment charges. For example, keeping all variables constant, an increase in the WACC rate of less than 1% or a decrease in forecasted revenue of 2% would require that we perform the second step of the goodwill impairment test. The estimates used for our future cash flows and discount rates represent management’s best estimates, which we believe to be reasonable, but future declines in business performance may impair the recoverability of our goodwill and intangible assets balances and result in an impairment charge being recorded in future periods. | |||||
Amortization expense on finite lived intangible assets for the nine months ended September 30, 2013 and 2012 was $6.2 million and $6.5 million, respectively. Also during the third quarter of 2013, as discussed in Note 3, “Discontinued Operations, Dispositions and Acquisitions,” the Company recorded $0.6 million of impairment related to its customer relationships and contracts. |
5_Inventory
5. Inventory | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory, Net [Abstract] | ' | ||||||||
INVENTORY | ' | ||||||||
Inventory, net of reserves as of September 30, 2013 and December 31, 2012 consisted of the following: | |||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 13,252 | $ | 11,595 | |||||
Raw materials | 2,226 | 3,202 | |||||||
Work in process | 530 | 530 | |||||||
Total | $ | 16,008 | $ | 15,327 |
6_Equity
6. Equity | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Equity [Abstract] | ' | ||||||||||||
EQUITY | ' | ||||||||||||
Changes in equity for the nine months ended September 30, 2013 consisted of the following: | |||||||||||||
Balance at December 31, 2012 | $ | 277,143 | |||||||||||
Stock based compensation | 2,956 | ||||||||||||
Net effect of shares issued upon exercise of stock options and withheld related to net share settlement of RSUs | (205 | ) | |||||||||||
Foreign currency translation adjustment | (20 | ) | |||||||||||
Employee benefit plan adjustment | 3 | ||||||||||||
Liquidation of minority interest | (22 | ) | |||||||||||
Net loss | (46,023 | ) | |||||||||||
Balance at September 30, 2013 | $ | 233,832 | |||||||||||
Subsequent to the Company’s notification from NASDAQ in June of 2013, that indicated the Company had completed all outstanding filing requirements and had regained compliance with NASDAQ listing rules, the Company was in a position to settle previously vested RSUs. During the nine months ended September 30, 2013, the Company issued a total of 695,422 shares related to previously vested RSUs and in accordance with certain employees’ instructions, the Company withheld 216,924 shares to cover the required statutory withholding tax totaling $0.2 million, which was determined based on the closing price of our common stock on June 5, 2013. These shares are considered retired under the provisions of the Swisher Hygiene Inc. 2010 Stock Incentive Plan. See Note 14, "Commitments and Contingencies" - in the Other Related Matters section. | |||||||||||||
Comprehensive Loss | |||||||||||||
A summary of the changes in the components of accumulated other comprehensive loss for the nine months ended September 30, 2013 is provided below: | |||||||||||||
Foreign | Employee | Accumulated | |||||||||||
Currency Translation Adjustment | Benefit Plan | Other Comprehensive Loss | |||||||||||
Balance at December 31, 2012 | $ | (61 | ) | $ | (938 | ) | $ | (999 | ) | ||||
Current period other comprehensive income (loss) | (20 | ) | 3 | (17 | ) | ||||||||
Balance at September 30, 2013 | $ | (81 | ) | $ | (935 | ) | $ | (1,016 | ) | ||||
7_Long_Term_Debt_and_Obligatio
7. Long Term Debt and Obligations | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Long-term Debt, Unclassified [Abstract] | ' | ||||||||
LONG TERM DEBT AND OBLIGATIONS | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Notes payables | $ | 2,483 | $ | 3,909 | |||||
Convertible promissory notes, 4.0%: maturing at various dates through 2016 | 4,582 | 8,089 | |||||||
Capitalized lease obligations and other financing | 852 | 2,431 | |||||||
Total debt and obligations | 7,917 | 14,429 | |||||||
Long-term debt and obligations due within one year | (5,268 | ) | (9,145 | ) | |||||
Long-term debt and obligations | $ | 2,649 | $ | 5,284 | |||||
Notes payable consist primarily of obligations incurred or assumed related to prior years’ acquisitions. One of the seller notes payable totaling $1.0 million is secured by a letter of credit and the remaining notes are secured by the Company. Interest on these notes range between 2.5% and 4.5% and they mature at various dates through 2019. | |||||||||
At the Company’s election, convertible promissory notes with an aggregate principal balance of $4.3 million may be settled into a maximum of 2,397,227 shares of common stock. The Company may settle, at any time prior to and including the maturity date, any portion of the outstanding principal amount, plus accrued interest in a combination of cash and shares of common stock. To the extent that the Company’s common stock is part of such settlement, the settlement price is the most recent closing price of the Company’s common stock on the trading day prior to the date of settlement. Although none of these notes have been settled to date with shares, if all notes outstanding at September 30, 2013 were to be settled with shares, the Company would issue 2,397,227 shares of common stock. These notes do not require remeasurement to fair value after the business combination dates. | |||||||||
At the holder’s election, one convertible promissory note that matures in December 2013 with an aggregate principal balance of $0.3 million may be converted into shares of the Company’s common stock at any time, but not later than the maturity date at a fixed conversion price of $5.00 per share. In addition, the Company may deliver at any time prior to and including the maturity date any portion of the outstanding principal and accrued interest in shares of common stock. The settlement price at which the principal and accrued interest subject to settlement would be converted to common stock is the lesser of (i) the volume weighted average price for the five trading days on NASDAQ immediately prior to the date of conversion, and (ii) the fixed conversion rate; provided, however, that the closing price per share of common stock as reported on NASDAQ on the trading day immediately preceding the date of conversion is not less than $5.00. The note is convertible by the holder into a maximum of 313,040 shares of the Company’s common stock. If this note was converted at September 30, 2013, the Company would have issued 52,713 shares of the Company’s common stock. The Company records this note at fair value and adjusts its carrying value to fair value at each reporting period. | |||||||||
The Company has entered into capitalized lease obligations with third party finance companies to finance the cost of certain equipment. At September 30, 2013 and December 31, 2012, these obligations bore interest at rates ranging between 3.0% and 9.2%. |
8_Fair_Value_Measurements_and_
8. Fair Value Measurements and Financial Instruments | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Fair Value Disclosures [Abstract] | ' | ||||
8. Fair value measurements and financial instruments | ' | ||||
Recurring Fair Value Measurements | |||||
The Company determines the fair value of certain assets and liabilities based on assumptions that market participants would use in pricing the assets or liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, or the “exit price.” The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value and gives precedence to observable inputs in determining fair value. The following levels were established for each input: | |||||
Level 1: “Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.” | |||||
Level 2: “Include other inputs that are observable for the asset or liability either directly or indirectly in the marketplace.” | |||||
Level 3: “Unobservable inputs for the asset or liability.” | |||||
One of the Company’s convertible promissory notes outstanding at September 30, 2013 is convertible at the holder’s election into a variable number of the Company’s shares at a fixed conversion rate and is considered a Level 3 financial instrument. The fair value of this convertible promissory note is based primarily on a Black-Scholes pricing model. The significant management assumptions and estimates used in determining the fair value include the expected term and volatility of our common stock. The expected volatility is based on an analysis of industry peer's historical stock price over the term of the note, which is estimated at approximately 25.0%. The Company believes that using a peer group stock volatility rate is appropriate given the Company’s relatively short history as a public company, which involved a high growth phase and the audit committee investigation discussed further in Note 14, “Commitments and Contingencies,” both of which occurred in 2011 and 2012, respectively. The subsequent changes in the fair value of this instrument due to changes in underlying data is recorded in other expense, net on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Future movement in the market price of our stock could significantly change the fair value of this instrument and impact our earnings. The Company has no Level 1 or Level 2 financial instruments. | |||||
The following table is a reconciliation of changes in fair value of this note: | |||||
Balance at December 31, 2012 | $ | 886 | |||
Settlement/conversion of convertible promissory notes | (620 | ) | |||
Balance at September 30, 2013 | $ | 266 | |||
The amount of gains (losses) included in earnings attributable to liabilities still held at the end of the period | $ | - | |||
The above balance represents the fair value of the one remaining convertible note that is subject to continual remeasurement and mark to market accounting and is included in the $4.6 million balance of the Company’s total convertible promissory notes at September 30, 2013. | |||||
Non-Recurring Fair Value Measurements: | |||||
Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments when events or circumstances indicate a significant effect on the fair value of the asset. | |||||
Non-recurring fair value adjustment | Level | Valuation Technique/Inputs Used | |||
Impairment of assets held for sale | 3 | Market - Estimated potential net selling price. | |||
During the three months ended September 30, 2013, we revised our estimates of potential net selling prices to reflect the status of sales negotiations and as a result we recognized a net pre-tax impairment of $1.7 million. See Note 3, “Discontinued Operations, Dispositions and Acquisitions” for a complete discussion. | |||||
Financial Instruments | |||||
The Company's financial instruments, which may expose the Company to concentrations of credit risk, include cash and cash equivalents, accounts receivable, accounts payable, and debt. Cash and cash equivalents are maintained at financial institutions. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short maturity of these instruments. The fair value of the Company's debt is estimated based on the current borrowing rates available to the Company for bank loans with similar terms and maturities, and approximates the carrying value of these liabilities. As discussed above, the convertible promissory note that is convertible into a variable number of the Company's common shares at the holder’s election is recorded at fair value at each reporting period date. |
9_Other_Expense
9. Other Expense | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Other Income and Expenses [Abstract] | ' | ||||||||||||||||
OTHER EXPENSE | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Interest income | $ | 10 | $ | - | $ | 35 | $ | - | |||||||||
Interest expense | (196 | ) | (433 | ) | (378 | ) | (1,545 | ) | |||||||||
Realized and unrealized net gain on fair value instruments | - | - | - | 199 | |||||||||||||
Foreign currency | - | 39 | (2 | ) | (1 | ) | |||||||||||
Other | 330 | (113 | ) | 330 | 41 | ||||||||||||
Total other income (expense), net | $ | 144 | $ | (507 | ) | $ | (15 | ) | $ | (1,306 | ) |
10_Supplemental_Cash_Flow_Info
10. Supplemental Cash Flow Information | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||||||
Supplemental Cash Flow Information | ' | ||||||||
Nine Months Ended | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Cash paid for interest | $ | 90 | $ | 1,788 | |||||
Cash received from interest | $ | 34 | $ | - | |||||
Notes payable issued or assumed on acquisitions | $ | - | $ | 1,121 | |||||
Conversion of promissory notes | $ | - | $ | 37 | |||||
11_Loss_Per_Share
11. Loss Per Share | 9 Months Ended | |
Sep. 30, 2013 | ||
Earnings Per Share [Abstract] | ' | |
LOSS PER SHARE | ' | |
Net loss attributable per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. The following were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2013, as their inclusion would be anti-dilutive: | ||
● | 6,012,131 shares of common stock underlying outstanding stock options and unvested restricted stock units. | |
The following were not included in the computation of diluted loss per share for the three months and nine months ended September 30, 2012 as their inclusion would be anti-dilutive. | ||
● | 5,708,687 shares of common stock underlying outstanding stock options and unvested restricted stock units, and 659,363 shares related to vested restricted stock units that were restricted due to the Company's non-compliance with NASDAQ listing rules. |
12_Income_Taxes
12. Income Taxes | 9 Months Ended |
Sep. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' |
INCOME TAXES | ' |
In projecting the Company’s income tax expense for 2013, management has concluded that it is not more likely than not that the Company will realize the benefit of its deferred tax assets and as a result a full valuation allowance will be required as of December 31, 2013. Therefore, the Company has not recognized a tax benefit as it relates to the current loss for the period ended September 30, 2013. | |
For the three months and nine months ended September 30, 2013, the Company has recorded an estimate for income taxes based on the Company’s projected income tax expense for the twelve month period ending December 31, 2013. The Company’s tax provision has an unusual relationship to pretax loss mainly because of the existence of a full deferred tax asset valuation allowance. This circumstance generally results in a zero net tax provision since the income tax expense or benefit that would otherwise be recognized is offset by the change to the valuation allowance. However, tax expense recorded in the third quarter of 2013 included the accrual of income tax expense related to an additional valuation allowance, in connection with the tax amortization of the Company’s indefinite-lived intangible assets, that was not available to offset existing deferred tax assets (termed a “naked credit”). Specifically, the Company does not consider the deferred tax liabilities related to indefinite lived intangibles assets when determining the need for a valuation allowance. |
13_Related_Party_Transactions
13. Related Party Transactions | 9 Months Ended |
Sep. 30, 2013 | |
Related Party Transactions [Abstract] | ' |
RELATED PARTY TRANSACTIONS | ' |
The Company paid fees for training course development and utilization of the delivery platform from a company, the majority of which is owned by a partnership in which a stockholder and another director have a controlling interest. Fees paid during the nine months ended September 30, 2013 and 2012 were less than $0.1 million, respectively. | |
As discussed further below in Note 14, “Commitments and Contingencies,” the Company entered into a Manufacturing and Supply Agreement (the “Cavalier Agreement”) with a plant in connection with its acquisition of Sanolite in July of 2011. Also in connection with the acquisition, two of the owners of both Sanolite and the manufacturing plant became Company employees. Purchases, pursuant to the Cavalier Agreement, for the three months ended September 30, 2013 and 2012 were $1.6 million and $1.8 million, respectively. Purchases, pursuant to the Cavalier Agreement, for the nine months ended September 30, 2013 and 2012 were $5.2 million and $5.6 million, respectively. At September 30, 2013 and December 31, 2012, the Company has $0.4 million and $0.5 million included in accounts payable due to this entity, respectively. As described further below, the transactions pursuant to the Cavalier Agreement are considered to be conducted at the going market prices for such products. | |
The Company is obligated to make lease payments pursuant to certain real property and equipment lease agreements with employees that were former owners of acquired companies. Payments during the three months ended September 30, 2013 and 2012 were $0.3 million and $0.4 million, respectively, and for the nine months ended September 30, 2013 and 2012 were $0.8 million and $1.2 million, respectively. In addition, during the nine months ended September 30, 2013, previously leased equipment was acquired at a fair market value, determined by a third party appraiser, of $0.2 million. |
14_Commitments_And_Contingenci
14. Commitments And Contingencies | 9 Months Ended |
Sep. 30, 2013 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
Guarantees | |
In connection with a distribution agreement entered into in December 2010, the Company provided a guarantee that the distributor's operating cash flows associated with the agreement would not fall below certain agreed-to minimums, subject to certain pre-defined conditions, over the ten year term of the distribution agreement. If the distributor's annual operating cash flow does fall below the agreed-to annual minimums, the Company will reimburse the distributor for any such short fall up to a pre-designated amount. No value was assigned to the fair value of the guarantee at September 30, 2013 and December 31, 2012 based on a probability assessment of the projected cash flows. Management currently does not believe that it is probable that any amounts will be paid under this agreement and thus there is no amount accrued for the guarantee in the Condensed Consolidated Financial Statements. This liability would be considered a Level 3 financial instrument given the unobservable inputs used in the projected cash flow model. See Note 8, “Fair Value Measurements and Financial Instruments,” for the fair value hierarchy. | |
As discussed above in Note 13, “Related Party Transactions,” the Company entered into the Cavalier Agreement. The agreement, which was scheduled to expire on December 31, 2012, was extended for an additional two year period with an automatic 18-month renewal term and a six month termination provision. The agreement provides for pricing adjustments, up or down, on the first of each month based on the vendor's actual average product costs incurred during the prior month. Additional product payments made by the Company due to the vendors pricing adjustment as a result of this agreement have not been significant and have not represented costs materially above the going market price for such product | |
Audit Committee Review and Restatements | |
On March 21, 2012, Swisher's Board of Directors (the “Board”) determined that the Company's previously issued interim financial statements for the quarterly periods ended June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended should no longer be relied upon. Subsequently, on March 27, 2012, the Audit Committee concluded that the Company's previously issued interim financial statements for the quarterly period ended March 31, 2011 should no longer be relied upon. The Board and Audit Committee made these determinations in connection with the Audit Committee's then ongoing review into certain accounting matters. On May 17, 2012, the Company announced that the Audit Committee had substantially completed the investigative portion of its internal review. | |
On February 19, 20, and 21, 2013, respectively, the Company filed amended quarterly reports on Form 10-Q/A for the quarterly periods ended March 31, 2011, June 30, 2011, and September 30, 2011 (the “Affected Periods”), including restated financial statements for the Affected Periods, to reflect adjustments to previously reported financial information. On February 26, 2013, the Company filed its Form 10-K for the year ended December 31, 2011. On March 11, 15 and 18, 2013, respectively, the Company filed quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2012, June 30, 2012, and September 30, 2012. On May 1, 2013, the Company filed its Form 10-K for the year ended December 31, 2012. | |
Legal Matters | |
We may be involved in litigation from time to time in the ordinary course of business. We do not believe that the ultimate resolution of these matters will have a material adverse effect on our business, financial condition or results of operations. However, the results of these matters cannot be predicted with certainty and we cannot assure you that the ultimate resolution of any legal or administrative proceedings or disputes will not have a material adverse effect on our business, financial condition and results of operations. | |
Securities Litigation | |
There have been six stockholder lawsuits filed in federal courts in North Carolina and New York asserting claims relating to the Company's March 28, 2012 announcement regarding the Company's Board conclusion that the Company's previously issued interim financial statements for the quarterly periods ended March 31, 2011, June 30, 2011 and September 30, 2011, and the other financial information in the Company's quarterly reports on Form 10-Q for the periods then ended, should no longer be relied upon and that an internal review by the Company's Audit Committee primarily relating to possible adjustments to the Company's financial statements was ongoing. | |
On March 30, 2012, a purported Company stockholder commenced a putative securities class action on behalf of purchasers of the Company's common stock in the U.S. District Court for the Southern District of New York against the Company, the former President and Chief Executive Officer ("former CEO"), and the former Vice President and Chief Financial Officer ("former CFO"). The plaintiff asserted claims alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") based on alleged false and misleading disclosures in the Company's public filings. In April and May 2012, four more putative securities class actions were filed by purported Company stockholders in the U.S. District Court for the Western District of North Carolina against the same set of defendants. The plaintiffs in these cases have asserted claims alleging violations of Sections 10(b) and 20(a) of the Exchange Act based on alleged false and misleading disclosures in the Company's public filings. In each of the putative securities class actions, the plaintiffs seek damages for losses suffered by the putative class of investors who purchased Swisher common stock. | |
On May 21, 2012, a stockholder derivative action was brought against the Company's former CEO and former CFO and the Company's then directors for alleged breaches of fiduciary duty by another purported Company stockholder in the Southern District of New York. In this derivative action, the plaintiff seeks to recover for the Company damages arising out of the then possible restatement of the Company's financial statements. | |
On May 30, 2012, the Company, and its former CEO and former CFO filed a motion with the United States Judicial Panel on Multidistrict Litigation ("MDL Panel") to centralize all of the cases in the Western District of North Carolina by requesting that the actions filed in the Southern District of New York be transferred to the Western District of North Carolina. | |
In light of the motion to centralize the cases in the Western District of North Carolina, the Company, and its former CEO and former CFO requested from both courts a stay of all proceedings pending the MDL Panel's ruling. On June 4, 2012, the Southern District of New York adjourned all pending dates in the cases in light of the motion to transfer filed before the MDL Panel. On June 13, 2012, the Western District of North Carolina issued a stay of proceedings pending a ruling by the MDL Panel. | |
On August 13, 2012, the MDL Panel granted the motion to centralize, transferring the actions filed in the Southern District of New York to the Western District of North Carolina as part of MDL No. 2384, captioned In re Swisher Hygiene, Inc. Securities and Derivative Litigation. In response, on August 21, 2012, the Western District of North Carolina issued an order governing the practice and procedure in the actions transferred to the Western District of North Carolina as well as the actions originally filed there. | |
On October 18, 2012, the Western District of North Carolina held an Initial Pretrial Conference at which it appointed lead counsel and lead plaintiffs for the securities class actions, and set a schedule for the filing of a consolidated class action complaint and defendants' time to answer or otherwise respond to the consolidated class action complaint. The Western District of North Carolina stayed the derivative action pending the outcome of the securities class actions. | |
On April 24, 2013, lead plaintiffs filed their first amended consolidated class action complaint (the "Class Action Complaint") asserting similar claims as those previously alleged as well as additional allegations stemming from the Company's restated financial statements. The Class Action Complaint also names the Company's former Senior Vice President and Treasurer as an additional defendant. On June 24, 2013, defendants moved to dismiss the Class Action Complaint. Briefing on the motions to dismiss was completed on August 9, 2013. | |
On June 11, 2013, an individual action was filed in the U.S. District Court for the Southern District of Florida captioned Miller, et al. v. Swisher Hygiene, Inc., et al., No. 0:13-CV-61292-JAL, against the Company, its former CEO and former CFO, and a former Company director, bringing state and federal claims founded on the allegations that in deciding to sell their company to the Company, plaintiffs relied on defendants' statements about such things as the Company's accounting and internal controls, which, in light of Swisher's restatement of its financial statements, were false. On July 17, 2013, the Company notified the MDL Panel of this action, and requested that it be transferred and centralized in the Western District of North Carolina with the other actions pending there. On July 23, 2013, the MDL Panel issued a Conditional Transfer Order (the "CTO"), conditionally transferring the case to the Western District of North Carolina. On July 29, 2013, plaintiffs notified the MDL Panel that they would seek to vacate the CTO. In light of the proceedings in the MDL Panel, defendants requested that the Southern District of Florida stay all proceedings pending the MDL Panel's ruling. On August 6, 2013, the Southern District of Florida issued a stay of all proceedings pending a ruling by the MDL Panel. On October 2, 2013, following briefing on the issue of whether the CTO should be vacated, the MDL Panel issued an order transferring the action to the Western District of North Carolina. | |
Derivative Litigation | |
On April 11, 2012 and May 11, 2012, the Company's Board received demand letters (the “Demands”) from two of the Company’s purported stockholders. In general, the Demands ask the Board to undertake an independent investigation into potential violations of Delaware and federal law relating to the Company's March 28, 2012 disclosure that its previously issued financial results should no longer be relied upon, and to initiate claims against responsible parties and/or implement therapeutic changes as needed. By letters delivered on May 17, 2013, the Board informed counsel for the purported stockholders that the Board had considered these Demands and, after consultation with counsel, determined that it is not in the best interests of the Company to pursue the claims outlined in the Demands. | |
On July 11, 2013, one of the purported stockholders filed a derivative action on behalf of the Company in the General Court of Justice, Superior Court Division in the State of North Carolina, Mecklenburg County, captioned Borthwick v. Berrard, et. al., No. 13-CVS-12397. The action asserts claims against the Company as a nominal defendant, its former CEO and former CFO, and certain former and current Company directors for breaches of fiduciary duties, gross mismanagement, abuse of control, waste of corporate assets, and aiding and abetting thereof, in connection with the Company's restatement of its financial statements. Among other things, the action seeks damages on behalf of the Company and an order directing the Company to implement corporate governance reforms. On August 7, 2013, the Company filed a notice to remove the action from the General Court of Justice, Superior Court Division in the State of North Carolina, Mecklenburg County to the Western District of North Carolina. On August 30, 2013, the Company moved to consolidate this action with the actions previously consolidated before the Western District of North Carolina, and to stay the action. On September 25, 2013, the Western District of North Carolina granted the Company's motion. | |
Other Litigation | |
Under the terms of an agreement pursuant to which the Company sold one of its businesses, the Company accepted responsibility for resolving a contractual dispute involving that business. The dispute involves a third party plaintiff that contends it is owed a sales commission or royalty under a purported contract with the Company’s former business. The Company disputes the validity of the purported contract, the amounts claimed, believes that plaintiff’s position is without merit and is vigorously defending the action. The parties have participated in an unsuccessful mediation, and trial on the matter has been set for December 2013. Given the facts and circumstances currently known, the Company is not able to predict the outcome of the pending dispute or provide an estimate of the range of potential loss, if any. | |
Other Matters | |
The Company has been contacted by the staff of the Atlanta Regional Office of the SEC and by the United States Attorney's Office for the Western District of North Carolina (the "U.S. Attorney's Office") after publicly announcing the Audit Committee's internal review and the delays in filing our periodic reports. The Company has been asked to make certain individuals available and to provide certain information about these matters on a voluntary basis to the SEC and the U.S. Attorney's Office. The Company is fully cooperating with the SEC and the U.S. Attorney's Office. Any action by the SEC, the U.S. Attorney's Office or other government agency could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees. | |
On July 17, 2013, the Company received a written notice (the “Notice”) from the Listing Qualifications department of The Nasdaq Stock Market (“Nasdaq") indicating that the Company is not in compliance with the minimum bid price requirement of $1.00 per share set forth in Nasdaq Listing Rule 5450(a)(1) for continued listing on The Nasdaq Global Select Market. The Nasdaq Listing Rules require listed securities to maintain a minimum bid price of $1.00 per share and, based upon the closing bid price for the 30 consecutive business days ended July 16, 2013, the Company did not meet this requirement. The Company will be provided a 180 day period in which to regain compliance. If at any time during this period the closing bid price of the Company’s common stock is at least $1.00 for a minimum of ten consecutive business days, the Company will receive a written confirmation of compliance from Nasdaq and the matter will be closed. In addition, following the initial 180 day period, the Company may be eligible for an additional 180 day period to regain compliance, subject to the Company, at that time, transferring its securities to The Nasdaq Capital Market and confirming that the Company will, if necessary to cure the deficiency, effect a reverse stock split during the second 180 day compliance period. At present, the Company will work to regain compliance during the initial 180 day compliance period and will actively monitor its performance with respect to the listing standards. | |
As previously disclosed, on September 16, 2013, William M. Pierce was appointed the President and Chief Executive Officer of the Company, effective September 10, 2013. As a result of his appointment, Mr. Pierce is no longer considered an "independent" director for purposes of Audit Committee membership, and as such, Mr. Pierce resigned as a member of the Company’s Audit Committee, effective September 10, 2013. On September 20, 2013, the Company received a notification from Nasdaq that, as a result of Mr. Pierce's resignation from the Audit Committee, the Company was no longer in compliance with Nasdaq’s audit committee requirements as set forth in Nasdaq Listing Rule 5605, which requires the Audit Committee be composed of at least three members. In accordance with Nasdaq Listing Rule 5605(c)(4), the Company has until the earlier of the Company's next annual shareholders' meeting or September 10, 2014 to regain compliance with the Audit Committee membership requirement, however, if the next annual shareholders' meeting is held before March 10, 2014, then the Company must evidence compliance no later than March 10, 2014. The Company expects to appoint an additional independent director to serve on the Audit Committee during the cure period. |
15_Subsequent_Events
15. Subsequent Events | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Subsequent Events [Abstract] | ' | ||||
15. Subsequent Events | ' | ||||
On November 8, 2013, the Board of Directors of the Company approved a board resolution to sell other linen and dust operations. During the fourth quarter, in accordance with ASC 360, Property, Plant and Equipment, these assets are classified as assets held for sale and have been adjusted to the lower of historical carrying amount or fair value. The estimated fair value was derived based on the assessment of potential net selling prices and resulted in the write down of goodwill and property, plant and equipment of approximately $2.0 million in the fourth quarter. The major classes of these assets held for sale are as follows: | |||||
September 30, | |||||
2013 | |||||
Property and equipment, net | 430 | ||||
Goodwill | 1,078 | ||||
Customer relationships, net | 812 | ||||
Assets held for sale | $ | 2,320 | |||
See Note 3, "Discontinued Operations, Dispositions and Acquisitions" for a discussion of the Company's assets held for sale at September 30, 2013. |
2_Summary_of_Significant_Accou1
2. Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2013 | |
Summary Of Significant Accounting Policies Policies | ' |
Basis of Presentation | ' |
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The Company's Condensed Consolidated Financial Statements reflect all adjustments that management believes are necessary for the fair presentation of their financial position, results of operations, comprehensive loss and cash flows for the periods presented. The information at December 31, 2012 in the Company's Condensed Consolidated Balance Sheet included in this quarterly report was derived from the audited Consolidated Balance Sheet included in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on May 1, 2013. The Company's 2012 Annual Report on Form 10-K is referred to in this quarterly report as the “2012 Annual Report.” This quarterly report should be read in conjunction with the 2012 Annual Report. | |
Intercompany balances and transactions have been eliminated in consolidation. Tabular information, other than share and per share data, is presented in thousands of dollars. Certain reclassifications have been made to prior year amounts for consistency with the current period presentation. | |
Use of Estimates | ' |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities at the date of the Condensed Consolidated Financial Statements. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods. | |
The Company's significant accounting policies are discussed in Note 2 of the Notes to Consolidated Financial Statements in our 2012 Annual Report. There have been no significant changes to those policies. | |
Segment Reporting | ' |
We operate in one business segment, the manufacturing, distribution and delivery of hygiene and sanitizing solutions and services. We define business segments as components of an organization for which discrete financial information is available and operating results are evaluated on a regular basis by the chief operating decision maker (“CODM”) in order to assess performance and allocate resources. Our CODM is the Company’s President and Chief Executive Officer. Characteristics of our organization which were relied upon in making this determination include the similar nature of the products and services we sell, the functional alignment of our organizational structure, and the reports that are regularly reviewed by the CODM for the purpose of assessing performance and allocating resources. Previously we operated in two segments. See Note 3, “Discontinued Operations, Dispositions and Acquisitions.” | |
Restricted Cash | ' |
Restricted cash at September 30, 2013 and December 31, 2012 consists of amounts held in a collateral account to secure certain letters of credit related to worker’s compensation liabilities, a note payable, facility lease agreements and purchase card balances. | |
Recent Accounting Pronouncements | ' |
In February 2013, the Financial Accounting Standards Board (“FASB”) issued guidance and disclosure requirements for reporting amounts reclassified out of accumulated other comprehensive income. The guidance requires that an entity provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP. The guidance became effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. This standard was adopted in the first quarter of 2013. |
3_Discontinued_Operations_and_1
3. Discontinued Operations and Acquisitions (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Discontinued Operations And Acquisitions Tables | ' | ||||
Schedule of assets held for sale | ' | ||||
September 30, | |||||
2013 | |||||
Property and equipment, net | 5,362 | ||||
Goodwill | 2,268 | ||||
Customer relationships, net | 1,103 | ||||
Other | 15 | ||||
Assets held for sale | $ | 8,748 |
4_Goodwill_And_Other_Intangibl1
4. Goodwill And Other Intangible Assets (Tables) | 9 Months Ended | |||
Sep. 30, 2013 | ||||
Goodwill And Other Intangible Assets Tables | ' | |||
Schedule of goodwill | ' | |||
2013 | ||||
31-Dec-12 | $ | 106,358 | ||
Adjustment to the lower of carrying value or fair market value for Assets Held for Sale (Note 3) | (2,727 | |||
Reclassification to Assets Held for Sale (Note 3) | (2,268 | |||
Additions related to acquisitions (Note 3) | 163 | |||
30-Sep-13 | $ | 101,526 |
5_Inventory_Tables
5. Inventory (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Inventory Tables | ' | ||||||||
Schedule of inventory | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Finished goods | $ | 13,252 | $ | 11,595 | |||||
Raw materials | 2,226 | 3,202 | |||||||
Work in process | 530 | 530 | |||||||
Total | $ | 16,008 | $ | 15,327 |
6_Equity_Tables
6. Equity (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2013 | |||||||||||||
Equity Tables | ' | ||||||||||||
Schedule of changes in stockholders equity | ' | ||||||||||||
Balance at December 31, 2012 | $ | 277,143 | |||||||||||
Stock based compensation | 2,956 | ||||||||||||
Net effect of shares issued upon exercise of stock options and withheld related to net share settlement of RSUs | (205 | ) | |||||||||||
Foreign currency translation adjustment | (20 | ) | |||||||||||
Employee benefit plan adjustment | 3 | ||||||||||||
Liquidation of minority interest | (22 | ) | |||||||||||
Net loss | (46,023 | ) | |||||||||||
Balance at September 30, 2013 | $ | 233,832 | |||||||||||
Changes in each component of accumulated other comprehensive loss | ' | ||||||||||||
Foreign | Employee | Accumulated | |||||||||||
Currency Translation Adjustment | Benefit Plan | Other Comprehensive Loss | |||||||||||
Balance at December 31, 2012 | $ | (61 | ) | $ | (938 | ) | $ | (999 | ) | ||||
Current period other comprehensive income (loss) | (20 | ) | 3 | (17 | ) | ||||||||
Balance at September 30, 2013 | $ | (81 | ) | $ | (935 | ) | $ | (1,016 | ) |
7_Long_Term_Obligations_Tables
7. Long Term Obligations (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Long Term Obligations Tables | ' | ||||||||
Schedule of long term obligations | ' | ||||||||
September 30, | December 31, | ||||||||
2013 | 2012 | ||||||||
Notes payables | $ | 2,483 | $ | 3,909 | |||||
Convertible promissory notes, 4.0%: maturing at various dates through 2016 | 4,582 | 8,089 | |||||||
Capitalized lease obligations and other financing | 852 | 2,431 | |||||||
Total debt and obligations | 7,917 | 14,429 | |||||||
Long-term debt and obligations due within one year | (5,268 | ) | (9,145 | ) | |||||
Long-term debt and obligations | $ | 2,649 | $ | 5,284 |
Recovered_Sheet1
8. Fair value measurements and financial instruments (Tables) | 9 Months Ended | ||||
Sep. 30, 2013 | |||||
Fair Value Disclosures [Abstract] | ' | ||||
Reconciliation of changes in fair value | ' | ||||
Balance at December 31, 2012 | $ | 886 | |||
Settlement/conversion of convertible promissory notes | (620 | ) | |||
Balance at September 30, 2013 | $ | 266 | |||
The amount of gains (losses) included in earnings attributable to liabilities still held at the end of the period | $ | - |
9_Other_Income_Expense_Net_Tab
9. Other Income Expense, Net (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Other Income Expense Net Tables | ' | ||||||||||||||||
Schedule of other expense | ' | ||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||
Interest income | $ | 10 | $ | - | $ | 35 | $ | - | |||||||||
Interest expense | (196 | ) | (433 | ) | (378 | ) | (1,545 | ) | |||||||||
Realized and unrealized net gain on fair value instruments | - | - | - | 199 | |||||||||||||
Foreign currency | - | 39 | (2 | ) | (1 | ) | |||||||||||
Other | 330 | (113 | ) | 330 | 41 | ||||||||||||
Total other income (expense), net | $ | 144 | $ | (507 | ) | $ | (15 | ) | $ | (1,306 | ) |
10_Supplemental_Cash_Flow_Info1
10. Supplemental Cash Flow Information (Tables) | 9 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Supplemental Cash Flow Elements [Abstract] | ' | ||||||||
Supplemental cash flow information | ' | ||||||||
Nine Months Ended | |||||||||
September 30, | |||||||||
2013 | 2012 | ||||||||
Cash paid for interest | $ | 90 | $ | 1,788 | |||||
Cash received from interest | $ | 34 | $ | - | |||||
Notes payable issued or assumed on acquisitions | $ | - | $ | 1,121 | |||||
Conversion of promissory notes | $ | - | $ | 37 | |||||
3_Discontinued_Operations_and_2
3. Discontinued Operations and Assets Held for Sale (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Discontinued Operations And Assets Held For Sale Details | ' |
Property and equipment, net | $5,362 |
Goodwill | 2,268 |
Customer relationships, net | 1,103 |
Other | 15 |
Assets held for sale | $8,748 |
4_Goodwill_And_Other_Intangibl2
4. Goodwill And Other Intangible Assets (Details) (USD $) | Sep. 30, 2013 |
In Thousands, unless otherwise specified | |
Goodwill And Other Intangible Assets Details | ' |
Goodwill, Beginning | $106,358 |
Adjustment to the lower of carrying value or fair market value for Assets Held for Sale (Note 3) | -2,727 |
ReclassificationB B to Assets Held for Sale (Note 3) | -2,268 |
Additions related to acquisitions (Note 3) | 163 |
Goodwill, Ending | $101,526 |
5_Inventory_Details
5. Inventory (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Inventory Details | ' | ' |
Finished goods | $13,252 | $11,595 |
Raw materials | 2,226 | 3,202 |
Work in progress | 530 | 530 |
Inventory, net | $16,008 | $15,327 |
6_Equity_Details
6. Equity (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Equity Details | ' |
Total equity, Beginning | $277,143 |
Stock based compensation | 2,956 |
Net effect of shares issued upon exercise of stock options and withheld related to net share settlement of RSUs | -205 |
Foreign currency translation adjustment | -20 |
Employee benefit plan adjustment | 3 |
Liquidation of minority interest | -22 |
Net loss | -46,023 |
Total equity, Ending | $233,832 |
6_Equity_Details_1
6. Equity (Details 1) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Balance at December 31, 2012 | ' | ' | ($999) | ' |
Current period other comprehensive (loss) | -13,367 | -11,520 | -46,040 | -43,708 |
Balance at September 30, 2013 | -1,016 | ' | -1,016 | ' |
Foreign Exchange | ' | ' | ' | ' |
Balance at December 31, 2012 | ' | ' | -61 | ' |
Current period other comprehensive (loss) | ' | ' | -20 | ' |
Balance at September 30, 2013 | -81 | ' | -81 | ' |
Defined Benefit Plan | ' | ' | ' | ' |
Balance at December 31, 2012 | ' | ' | -938 | ' |
Current period other comprehensive (loss) | ' | ' | ' | ' |
Balance at September 30, 2013 | -935 | ' | -935 | ' |
Accumulated Other Comprehensive Income Loss | ' | ' | ' | ' |
Balance at December 31, 2012 | ' | ' | -999 | ' |
Current period other comprehensive (loss) | ' | ' | -17 | ' |
Balance at September 30, 2013 | ($1,016) | ' | ($1,016) | ' |
7_Long_Term_Debt_and_Obligatio1
7. Long Term Debt and Obligations (Details) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Long Term Debt And Obligations Details | ' | ' |
Notes payables | $2,483 | $3,909 |
Convertible promissory notes, 4.0%: maturing at various dates through 2016 | 4,582 | 8,089 |
Capitalized lease obligations and other financing | 852 | 2,431 |
Total debt and obligations | 7,917 | 14,429 |
Long-term debt and obligations due within one year | -5,268 | -9,145 |
Long-term debt and obligations | $2,649 | $5,284 |
8_Fair_Value_Measurements_and_1
8. Fair Value Measurements and Financial Instruments (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Sep. 30, 2013 |
Fair Value Measurements And Financial Instruments Details | ' |
Balance at beginning of period | $886 |
Issuance of convertible promissory notes | ' |
Settlement/conversion of convertible promissory notes | -620 |
Net gain included in earnings | ' |
Balance at end of period | 266 |
The amount of gains included in earnings attributable to liabilities still held at the end of the period | ' |
9_Other_Expense_Net_Details
9. Other Expense, Net (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 |
Other Expense Net Details | ' | ' | ' | ' |
Interest income | $10 | ' | $35 | ' |
Interest expense | -196 | -433 | -378 | -1,545 |
Realized and unrealized net gain on fair value instruments | ' | ' | ' | 199 |
Foreign currency | ' | 39 | -2 | -1 |
Other | 330 | -113 | 330 | 41 |
Total other expense, net | $144 | ($507) | ($15) | ($1,306) |
10_Supplemental_Cash_Flow_Info2
10. Supplemental Cash Flow Information (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Supplemental Cash Flow Information [Abstract] | ' | ' |
Cash paid for interest | $90 | $1,788 |
Cash received from interest | 34 | ' |
Notes payable issued or assumed on acquisitions | ' | 1,121 |
Conversion of promissory notes | ' | $37 |
3_Discontinued_Operations_and_3
3. Discontinued Operations and Sale of Waste Segment (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2013 |
Discontinued Operations And Sale Of Waste Segment Details Narrative | ' | ' |
Revenue from Discontinued Operations - Waste Segment | $17 | $52.40 |
5_Goodwill_And_Other_Intangibl
5. Goodwill And Other Intangible Assets (Details Narrative) (USD $) | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 |
Goodwill And Other Intangible Assets Details Narrative | ' | ' |
Amortization of intangibles assets | $6.20 | $6.50 |
13_Related_Party_Transactions_
13. Related Party Transactions (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Millions, unless otherwise specified | Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 |
Related Party Transactions Details Narrative | ' | ' | ' | ' | ' |
Purchases from Related Party | $1.60 | $1.80 | ' | ' | ' |
Accounts Payable, Related Party | 0.4 | ' | 0.4 | ' | 0.5 |
Lease payments, Related Party | $0.30 | $0.40 | $0.80 | $1.20 | ' |