SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 21, 1996
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Respironics, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 000-16723 25-1304989
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State or other jurisdiction Commission IRS Employer
of incorporation File Number Identification No.
1001 Murry Ridge Drive, Murrysville, PA 15668
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (412) 733-0200
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Item 1. Changes in Control of Registrant
None
Item 2. Acquisition or Disposition of Assets.
None
Item 3. Bankruptcy or Receivership.
None
Item 4. Changes in Registrant's Certifying Accountant.
None
Item 5. Other Events.
None
Item 6. Resignation of Registrant's Directors.
None
Item 7. Financial Statements and Exhibits.
(a) None
(b) Pro forma financial information required pursuant to Article
11 of Regulation S-X for the acquisition by Respironics, Inc. of
LIFECARE International, Inc. on October 21, 1996 (included as
Attachment 1 hereto)
(c) None
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
January 3, 1997 RESPIRONICS, INC.
/s/ James C. Woll
_____________________
James C. Woll
Treasurer
ATTACHMENT 1
Respironics, Inc. and Subsidiaries and LIFECARE International, Inc.
Pro Forma Combined Condensed Financial Statements (Unaudited)
The following combined condensed financial statements present, on a pro forma
basis, the effect of the acquisition (the "Acquisition") by Respironics, Inc.
("Respironics") of LIFECARE International, Inc. ("LIFECARE") on October 21,
1996. The pro forma data assume that the Acquisition will be accounted for as a
purchase and, as such, the assets acquired and the liabilities assumed will be
recorded at their fair values at the time of Acquisition. Detail analyses
including, as necessary, studies and appraisals of properties and identifiable
intangible assets will be made to determine the fair values of net assets
acquired; however such analyses are not expected to be completed for several
months and may result in adjustments to the estimates set forth herein. The
actual allocation of the purchase price to the net assets acquired will only be
made upon final determination of the fair values of assets acquired and
liabilities assumed.
The Pro Forma Combined Condensed Financial Statements do not necessarily reflect
the operations of Respironics and LIFECARE as they would have been had the two
companies existed as a single entity for the periods shown and the operating
results should not be deemed to be indicative of the future operations of the
combined companies.
The Pro Forma Combined Condensed Financial Statements should be read in
conjunction with the historical financial statements and notes thereto of
Respironics and LIFECARE.
PRO FORMA COMBINED CONDENSED BALANCE SHEETS (UNAUDITED)
The following Pro Forma Combined Condensed Balance Sheet combines the financial
position of Respironics and LIFECARE at September 30, 1996, on the assumption
that the Acquisition had been consummated on September 30, 1996 on the bases
indicated in the Notes to Pro Forma Combined Condensed Financial Statements.
September 30, 1996
Historical Pro Forma
----------------------------------------------- ---------------------------------
Respironics LIFECARE Adjustments Combined
---------------------- ---------- -------------- ----------
ASSETS (In thousands)
CURRENT ASSETS
Cash and short-term investments $ 71,008 $ 668 $ (50,638) (a) $ 15,038
(6,000) (d)
Trade accounts receivable 25,604 6,561 (200) (b) 31,965
Inventories 20,320 6,360 26,680
Other current assets 4,766 1,898 6,664
------------- ---------- ----------
TOTAL CURRENT ASSETS 121,698 15,487 80,347
PROPERTY, PLANT AND EQUIPMENT
(NET) 23,264 9,714 (1,250) (b) 31,728
OTHER ASSETS 3,096 320 3,416
COST IN EXCESS OF NET ASSETS OF
BUSINESS ACQUIRED 1,651 615 (615) (b) 45,842
44,191 (b)
------------- ---------- -------------- ----------
$ 149,709 $ 26,136 $ (14,512) $ 161,333
============= ========== ============== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued
expenses $ 13,120 $ 3,504 928 (b) 17,852
300 (b)
Income taxes 4,464 1,220 5,684
Current portion of long-term
obligations 549 1,831 (1,671) (d) 709
------------- ---------- ----------
18,133 6,555 24,245
LONG-TERM OBLIGATIONS 4,891 9,841 (4,329) (d) 10,403
MINORITY INTEREST 641 -0- 641
SHAREHOLDERS' EQUITY 126,044 9,740 (9,740) (c) 126,044
------------- ---------- -------------- ----------
$ 149,709 $ 26,136 $ (14,512) $ 161,333
============= ========== ============== ==========
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
The following Pro Forma Combined Condensed Statements of Income combine (i) the
results of operations of Respironics for the year ended June 30, 1996 with
results of operations of LIFECARE for the year ended June 30, 1996, and (ii)
the results of operations of Respironics for the three months ended September
30, 1996 with the results of operations of LIFECARE for the three months ended
September 30, 1996, on the assumption that the Acquisition had been consummated
on July 1, 1995 on the bases indicated in the Notes to Pro Forma Combined
Condensed Financial Statements.
In order to develop LIFECARE's results of operations for the twelve months ended
June 30, 1996, its results of operations for its fiscal year ended March 31,
1996 were used as the base, with results of operations from April 1, 1995 to
June 30, 1995 subtracted therefrom and results of operations from April 1, 1996
to June 30, 1996 added thereto. Results of operations for these two three month
periods are disclosed in Item 7(a).
Twelve months ended June 30, 1996
Historical Pro Forma
--------------------------------------- ---------------------------------
Respironics LIFECARE Adjustments Combined
------------- ---------- -------------- ----------
(In thousands)
Net sales $ 125,766 $ 34,217 $ $ 159,983
Cost of goods sold 55,249 15,358 (207) (e) 70,400
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70,517 18,859 89,583
Selling, general and 37,447 13,194 2,234 (e) 52,844
administrative expenses
(31) (e)
Research and development 9,328 2,111 11,439
expense
Interest expense 200 968 3,000 (e) 3,628
(540) (e)
Other income (1,616) (12) 625 (e) (703)
300 (e)
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45,359 16,261 67,208
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INCOME BEFORE INCOME TAXES 25,158 2,598 22,375
Income taxes 9,819 1,010 (1,259) (e) 9,570
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NET INCOME $ 15,339 $ 1,588 $ (4,122) $ 12,805
============= ========== ============== ==========
Earnings per share $ 0.84 $ 0.70
============= ==========
Weighted Average Number of Shares
Used in Computing Earnings Per Share 18,325 18,325
============= ==========
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three months ended September 30, 1996
Historical Pro Forma
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Respironics LIFECARE Adjustments Combined
------------- ---------- -------------- ----------
(In thousands)
Net sales $ 34,112 $ 8,457 $ $ 42,569
Cost of goods sold 15,043 3,407 (52) (e) 18,398
------------- ---------- ----------
19,069 5,050 24,171
Selling, general and 10,196 3,567 558 (e) 14,313
administrative expenses
(8) (e)
Research and development 2,492 500 2,992
expense
Interest expense 47 231 (135) (e) 143
Other income (967) (4) 625 (e) (271)
75 (e)
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11,768 4,294 17,178
------------- ---------- ----------
INCOME BEFORE 7,301 756 6,993
INCOME TAXES
Income taxes 2,847 271 (202) (e) 2,916
------------- ---------- -------------- ----------
NET INCOME $ 4,454 $ 485 $ (862) $ 4,077
============= ========== ============== ==========
Earnings per share $ 0.22 $ 0.20
============= ==========
Weighted Average Number of Shares
Used in Computing Earnings Per Share 20,163 20,163
============= ==========
Respironics, Inc. and Subsidiaries and LIFECARE International, Inc.
Notes to Pro Forma Combined Condensed Financial Statements (Unaudited)
(a) The Pro Forma Combined Condensed Financial Statements reflect the purchase
by Respironics of LIFECARE stock for $50,000,000 in cash. In addition,
Respironics expects to incur approximately $638,000 in investment banking,
legal, and accounting fees relating to the Acquisition.
The Acquisition was financed primarily with the proceeds from a public
offering completed by Respironics in April 1996. For the purpose of
preparing these Pro Forma Combined Condensed Financial Statements, it has
been assumed that the Acquisition purchase price ($50,000,000) was
borrowed from a commercial bank on July 1, 1995. This borrowing was
assumed to be outstanding until March 31, 1996. The assumed interest rate
on this borrowing was 8%. In addition, it has been assumed that from
April 1, 1996 through September 30, 1996, cash and short term investment
balances were reduced by $50,000,000. The assumed interest rate on this
cash and short term investment balance was 5%.
(b) In connection with the preparation of the Pro Forma Combined Condensed
Balance Sheets, the book values of certain assets and liabilities of
LIFECARE were adjusted to estimated fair values as follows:
As of
September 30, 1996
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(In thousands)
To decrease trade accounts receivable to estimated
fair value $ (200)
To decrease property, plant and equipment to estimated
fair value (1,250)
To adjust goodwill from previous acquisitions to
estimated fair value (615)
To record the estimated liability for nonrecurring acquisition
related expenses to be incurred (928)
To increase accrued expenses to estimated fair value (300)
To record the estimated excess of purchase price over
acquired net assets at estimated fair values (goodwill) 44,191
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$40,898
=======
These adjustments reflect estimates for the purpose of preparing Pro Forma
Combined Condensed Financial Statements. The final determination of fair
value adjustments to be made to LIFECARE's assets and liabilities will be
based on detail analyses expected to be completed over the next several
months which may result in changes to the estimates shown.
(c) The following adjustments have been made to eliminate the September 30,
1996 shareholders' equity accounts of LIFECARE:
(In thousands)
Common stock $ 28
Additional paid in capital 429
Retained Earnings 9,283
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$ 9,740
=======
(d) For the purposes of preparing the Pro Forma Combined Condensed Financial
Statements, it was assumed that $6,000,000 of LIFECARE's long term
obligations were liquidated on July 1, 1995. Funds to liquidate this debt
were assumed to come from Respironics accumulated cash and short term
investment balances. The remaining LIFECARE long term obligations carry
interest rates significantly below the prime interest rate and were assumed
to remain outstanding.
(e) The following adjustments have been made in preparing the Pro Forma
Combined Condensed Statements of Income to reflect, on a pro forma basis,
the estimated income and expense adjustments and related income tax effects
associated with the assumed borrowing, the assumed reduction in cash and
short term investment balances, and the estimated adjustments to LIFECARE's
assets and liabilities summarized elsewhere herein:
Twelve months ended Three months ended
June 30, 1996 September 30, 1996
------------------- ------------------
(In thousands)
Decrease in depreciation expense to reflect fair value
adjustment and establishment of new lives $ (207) $ (52)
Decrease in amortization expense to reflect the
elimination of goodwill from prior acquisitions (31) (8)
Increase in interest expense to reflect assumed borrowing
of $50,000,000 from July 1, 1995 through March 31, 1996
at an assumed interest rate of 8% 3,000 0
Decrease in interest income to reflect the assumed use
of $50,000,000 in cash and short term investments from
April 1, 1996 through June 30, 1996 and from July 1, 1996
through September 30, 1996 at an assumed interest rate of 5% (625) (625)
Decrease in interest expense to reflect the liquidation of
$6,000,000 of long term obligations on July 1, 1995 at an
assumed interest rate of 9% (540) (135)
Decrease in interest income to reflect the assumed use
of $6,000,000 in cash and short term investments from
July 1, 1995 through September 30, 1996 at an assumed
interest rate of 5% (300) (75)
Decrease in income tax expense resulting from the
above adjustments (1,259) (202)
Amortization of goodwill relating to the Acquisition 2,234 558
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$(4,122) $(862)
======= =====
The assumed amortization period for the goodwill relating to the
Acquisition is 20 years.
(f) The pro forma adjustments shown above do not reflect the positive impact
of cost reductions expected to be realized through the elimination of
duplicate functions in certain corporate and administrative areas.