EX-99.1 3 an53830394-99_1.htm PRO FORMA FINANCIAL INFORMATION

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.