<PAGE>
Washington, D.C. 20549
Form 8-K/A
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported) July 22, 1999
-------------------------------
River Holding Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 333-56135 95-4674065
- --------------------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
</TABLE>
599 Lexington Avenue, 18th Floor, New York, NY 10022
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 958-2555
----------------------------
Not applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 7. Financial Statements and Exhibits.
The following financial statements are being filed in connection with the
acquisition by the Registrant, through its indirect, wholly-owned subsidiary
Steamer Holding AB, a company organized under the laws of Sweden, of
a majority of the outstanding capital stock of Louis Gibeck AB, a company
organized under the laws of Sweden, which acquisition was originally
reported on Form 8-K dated July 22, 1988 (date of earliest event reported).
Page
----
(a) Financial statements of businesses acquired - Audited
Report of Independent Public Accountants 3
Audited Louis Gibeck AB Balance Sheets -
August 31, 1998 and 1997 4
Audited Louis Gibeck AB Statements of Income For the Years Ended
August 31, 1998 and 1997 6
Audited Louis Gibeck AB Statements of Changes in Financial
Position For the Years Ended August 31, 1998 and 1997 7
Louis Gibeck AB Notes to the Financial Statements 9
(b) Financial statements of businesses acquired - Unaudited
Unaudited Louis Gibeck AB Balance Sheet February 28, 1999 15
Unaudited Louis Gibeck AB Statements of Income For the
Six Months Ended February 28, 1999 and 1998 16
Unaudited Louis Gibeck AB Cash Flow Analysis
For the Six Months Ended February 28, 1999 and 1998 17
Louis Gibeck AB Notes to the Unaudited Financial Statements 18
1
<PAGE>
(c) Unaudited Pro Forma Consolidated Financial Statements Giving
Effect to the Acquisition of Louis Gibeck AB by the Registrant
Page
----
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Financial Statements -
Introduction 19
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Balance Sheet -
March 26, 1999 20
Notes to Unaudited Pro Forma Consolidated Balance
Sheet - March 26, 1999 21
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 25, 1998 22
Notes to Unaudited Pro Forma Consolidated Statement
of Operations For the Year Ended December 25, 1998 23
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Statement of Operations
For the Three Months Ended March 26, 1999 24
Notes to Unaudited Pro Forma Consolidated Statement of
Operations For the Three Months Ended March 26, 1999 25
2
<PAGE>
[LETTERHEAD OF DELOITTE & TOUCHE]
To the Annual General Meeting of Louis Gibeck AB (publ) Organization number
556070-9668
We have examined the Annual Report and the financial statements, and the
administration by the Board of Directors and the President of Louis Gibeck AB
(publ) for the financial year ending August 31, 1998. These financial
statements and the administration are the responsibility of the Board of
Directors and the President.
Our responsibility is to express an opinion in the Annual Report and the
administration based on our audit.
The audit was conducted in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Annual Report and the consolidated
financial statements are free of material misstatements. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures
contained in the financial statements. An audit also includes assessing the
accounting principles and the Board of Directors' application thereof, as well
as evaluating the overall financial statement presentation. We have examined
significant decisions, measures and circumstances in the Company in order to
evaluate whether or not any Director or the President is liable for damages to
the Company, or in any other way has acted in breach of the Companies. Act, the
Swedish Annual Accounts Act, or the Corporate By-Laws. We believe that our audit
provides a reasonable basis for our opinion. The Annual Report has been prepared
in accordance with the Annual Accounts Act and we therefore recommend that the
Statement of Income and the Balance Sheet be adopted, and that the loss be
allocated in accordance with the proposal contained in the Board of Director's
Report.
The Directors and the President have not taken any measure or committed any
violation which in our opinion could entail liability for damages to the
Company.
We therefore recommend that the Board of Directors and the President be granted
discharge from liability for the financial year.
Stockholm December 3, 1998 (October 5, 1999 as to Note 26 and Note 27)
Deloitte & Touche Stockholm AB
/s/ Bo Magnusson
Bo Magnusson
Authorized Public Accountant
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
GROUP PARENT COMPANY
SEK thousand Note 1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Fixed assets
Intangible fixed assets
Patents and similar rights 12 827 4,965 827 1,324
Goodwill 13 96,293 102,773 0 0
- ------------------------------------------------------------------------------------------------------------------------
97,120 107,738 827 1,324
Tangible fixed assets
Buildings and land 14 5,495 5,710 0 0
Machinery and technical facilities 15 11,285 17,667 3,053 7,086
Equipment tools, and installations 16 1,812 7,602 1,371 4,372
Construction in progress 17 348 2,884 340 1,773
- ------------------------------------------------------------------------------------------------------------------------
18,940 33,863 4,764 13,231
Financial fixed assets
Shares in subsidiaries 18 0 0 126,122 126,122
Due from Group companies 0 0 4,700 0
Shares in associated companies 0 0 0 5,000
Deposits 0 307 25 25
Other long-term receivables 5,032 4,850 5,007 0
- ------------------------------------------------------------------------------------------------------------------------
5,032 5,157 135,854 131,147
- ------------------------------------------------------------------------------------------------------------------------
Total fixed assets 121,092 146,758 141,445 145,702
- ------------------------------------------------------------------------------------------------------------------------
Current assets
Inventories, etc.
Raw materials and supplies 5,241 14,783 1,781 3,051
Work in progress 2,284 0 780 2,483
Finished products and goods for resale 21,711 13,721 9,422 3,994
- ------------------------------------------------------------------------------------------------------------------------
29,236 28,504 11,983 9,528
Short-term receivables
Accounts receivable 38,431 30,451 16,150 13,785
Due from group companies 0 0 46,612 18,371
Other receivables 7,010 793 5,083 302
Prepaid expenses and accrued income 19 20,335 1,721 1,638 1,034
- ------------------------------------------------------------------------------------------------------------------------
65,776 32,965 69,483 33,492
Cash and bank deposits 19,179 15,678 6,168 7,340
- ------------------------------------------------------------------------------------------------------------------------
Total current assets 114,191 77,147 87,634 50,360
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 235,283 223,905 229,079 196,062
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GROUP PARENT COMPANY
SEK thousand Note 1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity 20
Restricted equity
Share capital, 3,723,050 shares,
each with nominal value of SEK 2 7,446 5,138 7,446 5,138
Additional paid-in-capital 69,086 0 69,086 0
Statutory reserve 11,482 16,242 6,426 6,426
Translation difference -1,384 0 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total restricted equity 86,630 21,380 82,958 11,564
Unrestricted equity
Retained earnings 0 0 17,599 18,841
Unrestricted reserves 36,195 28,824 0 0
Net result for the year -7,010 5,491 15,021 942
- --------------------------------------------------------------------------------------------------------------------------------
Total unrestricted equity 29,185 34,315 32,620 19,783
- --------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 115,815 55,695 115,578 31,347
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Untaxed reserves 21 0 0 7,022 13,551
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Provisions 22 8,078 8,619 255 0
- --------------------------------------------------------------------------------------------------------------------------------
Long-term liabilities
Liabilities to credit institutions 23 42,884 74,173 38,000 59,690
- --------------------------------------------------------------------------------------------------------------------------------
Total long-term liabilities 42,884 74,173 38,000 59,690
- --------------------------------------------------------------------------------------------------------------------------------
Current liabilities
Liabilities to credit institutions 28,000 0 28,000 0
Advance payments from customers 47 0 47 0
Accounts payable 14,136 12,953 7,531 8,008
Due to Group companies 0 0 14,511 20,472
Tax liabilities 0 605 0 1,483
Other liabilities 2,070 61,312 2,005 55,388
Accrued expenses and prepaid income 24 24,253 10,548 16,129 6,123
- --------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 68,506 85,418 68,223 91,474
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 235,283 223,905 229,078 196,062
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
GROUP PARENT COMPANY
MEMORANDUM ITEMS Note 1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pledged assets
Net assets/Shares in subsidiaries 73,584 103,943 106,983 106,983
Corporate mortgages 53,100 31,200 22,000 25,700
Real estate mortgages 5,495 5,617 0 0
Escrow funds 0 25 0 25
- --------------------------------------------------------------------------------------------------------------------------------
132,179 140,785 128,983 132,708
Contingent liabilities 25
Guaranty for subsidiary liabilities 0 0 0 5
Performance bond 333 756 333 0
- --------------------------------------------------------------------------------------------------------------------------------
333 756 333 5
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
GROUP PARENT COMPANY
SEK thousands Note 1997/98 1996/97 1997/98 1996/97
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating revenue, etc.
Net sales 2,3 240,348 222,686 125,636 118,935
Cost of goods sold -132,734 -122,929 -72,728 -71,245
- ----------------------------------------------------------------------------------------------------------------------
Gross result 107,614 99,757 52,908 47,690
Operating expense
Selling expenses -58,340 -47,688 -25,457 -23,688
Administrative expenses -24,064 -22,270 -15,235 -11,126
Research and development expenses -12,172 -11,535 -6,876 -3,694
Items affecting comparability 4 -11,418 0 -18,185 0
- ----------------------------------------------------------------------------------------------------------------------
Operating result 5,6 1,620 18,264 -12,845 9,182
- ----------------------------------------------------------------------------------------------------------------------
Result of financial investments
Results from participations in Group companies 7 0 0 13,358 0
Result from other securities and receivables
accounted for as fixed assets 8 0 0 248 208
Other interest income and similar profit/loss items 9 494 430 499 325
Interest expense and similar profit/loss items -6,429 -8,665 -6,259 -7,904
- ----------------------------------------------------------------------------------------------------------------------
Result after financial items -4,315 10,029 -4,999 1,811
- ----------------------------------------------------------------------------------------------------------------------
Year-end appropriations 10 0 0 20,829 -418
Taxes on result for the year 11 -2,695 -4,538 -809 -451
- ----------------------------------------------------------------------------------------------------------------------
NET RESULT FOR THE YEAR -7,010 5,491 15,021 942
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
STATEMENTS OF CHANGES IN FINANCIAL POSITION
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
GROUP PARENT COMPANY
SEK thousand 1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Funds provided
Funds generated internally by the year's operations 26,721 28,266 7,691 10,912
Sales of fixed assets 226 847 602 847
Decrease in long-term receivables 125 0 0 16
Equity offering 71,394 0 71,394 0
Increase in long-term liabilities 0 58,001 0 46,625
Group contribution received 14,247 262
- ------------------------------------------------------------------------------------------------------------------
Total funds provided 98,466 87,114 93,934 58,662
- ------------------------------------------------------------------------------------------------------------------
Funds applied
Investments in fixed assets -8,643 -16,866 -4,829 -9,116
Equity investments 0 -5,000 0 -5,100
Increase in long-term receivables 0 -266 -4,707 0
Decrease in long-term liabilities -36,495 0 -21,690 0
Dividend to shareholders -2,184 -2,184 -2,184 -2,184
- ------------------------------------------------------------------------------------------------------------------
Total funds applied -47,322 -24,316 -33,410 -16,400
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Change in working capital 51,144 62,798 60,524 42,262
- ------------------------------------------------------------------------------------------------------------------
Change in components of working capital
Increase (+)/decrease (-) in inventories 879 5,308 2,455 3,212
Increase (+)/decrease (-) in short-term receivables 28,971 711 35,991 21,449
Increase (-)/decrease (+) in current liabilities 17,793 72,524 23,250 30,112
Increase (+)/decrease (-) in liquid funds 3,501 -15,745 -1,172 -12,511
- ------------------------------------------------------------------------------------------------------------------
Change in working capital 51,144 62,798 60,524 42,262
- ------------------------------------------------------------------------------------------------------------------
Funds generated internally
Result before year-end appropriations and taxes -4,315 10,029 -4,999 1,811
Depreciation and amortization 24,570 14,654 10,632 3,405
Write-down/disposal of fixed assets 11,241 6,307 2,867 6,147
Translation differences -2,080 1,814 0 0
Taxes -2,695 -4,538 -809 -451
- ------------------------------------------------------------------------------------------------------------------
Total funds generated internally 26,721 28,266 7,691 10,912
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
ACCOUNTING PRINCIPLES
Accounting principles
The accounting principles applied conform to the Swedish Annual Accounts Act and
recommendations and opinions by the Accounting Standards Board of Sweden, The
Swedish Financial Accounting Standards Council, and the Swedish Institute of
Authorized Public Accountants (FAR).
For the first time the Company is applying the new Annual Account Act with
accompanying recommendations. Comparative data for prior years have been
recalculated to reflect the new principles.
The following valuation and translation principles have been applied to the
Annual Report:
Consolidated accounting
The consolidated statements of income and balance sheets include all companies
in which the Parent Company, directly or indirectly, owns more than half of the
voting rights, and in companies in which the Group otherwise has a controlling
influence and a substantial proportion of the profit of their business.
Purchase method
The consolidated financial statements have been prepared in accordance with
recommendation RR 1:96 of the Financial Accounting Standards Council. All
corporate acquisitions have been accounted for according to the purchase method
of accounting.
Untaxed reserves reported in individual Group companies are divided into on
equity portion and one tax portion in the consolidated Balance Sheet. The
equity portion is carried to statutory reserves. The tax portion is reported as
a provision.
Translation of foreign subsidiary income statements and balance sheets
The so-called current rate method has been used for translating the income
statements and balance sheets of foreign subsidiaries into Swedish kronor (SEK).
All assets and liabilities in subsidiary balance sheets have been converted
using the financial year-end rate of exchange, and all income statement items
have been converted at the average rate of exchange for the year. Any
translation differences thus arising have been carried directly to shareholders'
equity. Exchange rate differences on loans in foreign currency in the Parent
Company, attributable to the acquisition of shares in subsidiaries, have been
reported net against dividends from subsidiary Gibeck, Inc. In the Group, these
foreign exchange losses and gains are offset against shareholders' equity.
Fixed Assets
Fixed assets are carried at cost less depreciation according to plan based on
the estimated economic life of the relative assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Schedule of depreciation and amortization
according to plan 97/98 96/97
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Computer equipment 3 years 4 years
Production equipment 5 years 5 years
Office machines 5 years 5 years
Office equipment 5 years 8 years
Production machines 5 years 8 years
Patents, etc. 5 years 8 years
Leasehold improvements -- Rental period
Buildings 30 years 30 years
Goodwill 10-20 years 30 years
- --------------------------------------------------------------------------------------------
</TABLE>
The difference between depreciation according to plan and depreciation for tax
purposes is reported as a year-end appropriation in 1996/97.
Inventories and work in progress
Inventories are valued at the lower of cost and market. The FIFO method is used
for determining cost. By market value is meant estimated selling value less
estimated selling costs.
Receivables
Receivables are valued at the amount expected to be collected.
Receivables and liabilities in foreign currency
Receivables and liabilities in foreign currency have been converted to Swedish
kronor at the rate of exchange prevailing at financial year-end. The difference
between cost and value at financial year-end is carried to the income statement.
Effects of forward contracts maturing after financial year-end and which do not
correspond to receivables and liabilities as of financial year-end are not
accounted for.
Hedged receivables and liabilities are valued at the relevant forward rate
of exchange.
8
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
NOTE 2
Net sales by business segment and geographic
market
- --------------------------------------------------------------------------------
Net sales are
attributable to business Group Parent Company
segments as follows 1997/98 1996/97 1997/98 1996/97
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Humidification/Filtration
own brands 107.3 100.9 95.8 89.8
Humidification/Filtration
private label 46.0 37.2 0.0 0.0
Circuit business 57.2 55.5 0.0 0.0
Agency business in Sweden 29.8 29.1 29.8 29.1
- --------------------------------------------------------------------------------
Total 240.3 222.7 125.6 118.9
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net sales are attributable
to geographic markets Group Parent Company
as follows 1997/98 1996/97 1997/98 1996/97
- -------------------------------------------------------------------------------
USA 103.9 91.3 19.7 19.9
Sweden 35.2 40.0 31.2 31.4
Germany 24.5 22.3 12.5 11.6
Japan 10.8 13.4 10.8 13.6
France 9.7 9.0 6.3 5.2
Other markets 56.2 46.7 45.1 37.2
- -------------------------------------------------------------------------------
Total 240.3 222.7 125.6 118.9
- -------------------------------------------------------------------------------
NOTE 3
Intra-Group transactions
- -------------------------------------------------------------------------------
Parent Company
Inkop pch forsaljning mellan Kconcernforetag 1998 1997
- -------------------------------------------------------------------------------
Purchases 16.6% 17.8%
Sales 22.0% 19.3%
- -------------------------------------------------------------------------------
NOTE 4
Items affecting comparability
- -------------------------------------------------------------------------------
Group Parent Company
1997/98 1996/97 1997/98 1996/97
- -------------------------------------------------------------------------------
Restructuring in
connection with move of
production to Malaysia -20,058 0 -18,185 0
Net effect of sale of Gibeck,
Inc.'s circuit business and
other restructuring
in the U.S. 3,503 0 0 0
Net effect of sale of
business in LaryCare 5,137 0 0 0
- -------------------------------------------------------------------------------
Total -11,418 0 -18,185 0
- -------------------------------------------------------------------------------
Whereof disposals and write-down amounts to 13.161 in the Group and 11,621 in
the Parent Company.
NOTE 5
Average number of employees, wages, salaries, other
compensation and social benefits
- -------------------------------------------------------------------------------
1997/98 1996/97
Average number Number of Of whom Number of Of whom
employees employees men employees men
- -------------------------------------------------------------------------------
Parent Company
Sweden 87 37% 100 36%
- -------------------------------------------------------------------------------
Parent Company total 87 37% 100 36%
Subsidiaries
Sweden 12 58% 14 71%
USA 57 37% 74 38%
Malaysia 120 20% 67 12%
Subsidiary total 189 28% 155 30%
- -------------------------------------------------------------------------------
Group total 276 30% 255 32%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1997/98 1996/97
Wages, salaries Wages, Social benefits Wages, Social benefits
other compensation, salaries (of which salaries (of which
etc. pensions) pensions)
- -------------------------------------------------------------------------------
Parent Company 27,562 11,872 24,743 10,940
(2,005) (1,484)
Subsidiaries 29,825 5,770 27,881 3,577
(1,481) (362)
- -------------------------------------------------------------------------------
Group total 57,387 17,642 52,624 14,517
(3,486) (1,846)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Wages, salaries, and
other compensation 1997/98 1996/97
presidents allocated Directors Other Directors Other
to directors, etc. and and president employees and presidents employees
other employees (of which bonuses) (of which bonuses)
- -------------------------------------------------------------------------------
Parent Company
Sweden 2,350 25,207 1,583 23,160
(155) (75)
- -------------------------------------------------------------------------------
Parent Company total 2,350 25,207 1,583 23,160
(155) (75)
Subsidiaries in Sweden 815 3,523 1,450 3,891
(71) (0)
Subsidiaries outside Sweden
USA 973 20,009 1,626 18,689
(0) (0)
Malaysia 615 3,276 494 1,731
(51) (0)
- -------------------------------------------------------------------------------
Subsidiary total 2,403 26,808 3,570 24,311
- -------------------------------------------------------------------------------
(122) (0)
Group total 4,753 52,015 5,153 47,471
(277) (75)
- -------------------------------------------------------------------------------
</TABLE>
579 (617) of the Parent Company's pension costs referred to the group
directors and presidents.
1,078 (979) of the Group's pension costs referred to the group direc-
tors and presidents.
The president has an agreement for severance pay of 18 monthly salaries.
9
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6
Depreciation, amortization, etc. according to plan of tangible and intangible
fixed assets
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Group Parent Company
1997/98 1996/97 1997/98 1996/97
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cost of goods sold 7,301 6,575 2,240 2,176
Selling expenses 4,250 3,861 215 49
Administrative expenses 1,687 1,631 1,008 939
Research and development expenses 2,748 2,587 207 241
Restructuring expenses 8,584 0 6,962 0
Other operating expenses 0 0 0 0
- ------------------------------------------------------------------------------
Total 24,570 14,654 10,632 3,405
- ------------------------------------------------------------------------------
NOTE 7
Result from shares in Group companies
- -------------------------------------------------------------------------------
Group Parent Company
1997/98 1996/97 1997/98 1996/97
- -------------------------------------------------------------------------------
Anticipated dividend subsidiary,
Gibeck, Inc. USA 0 0 16,180 0
Hedging loss 0 0 -2,822 0
- -------------------------------------------------------------------------------
Total 0 0 13,358 0
- -------------------------------------------------------------------------------
NOTE 8
Result from other securities and receivables in the form of fixed assets
- --------------------------------------------------------------------------------
Parent Company
1997/98 1996/97
- --------------------------------------------------------------------------------
Interest (Group companies 248 208
- --------------------------------------------------------------------------------
Total 248 208
- --------------------------------------------------------------------------------
NOTE 9
Other interest income and similar profit/loss items
- -------------------------------------------------------------------------------
Group Parent Company
1997/98 1996/97 1997/98 1996/97
- --------------------------------------------------------------------------------
Interest 494 430 364 325
Interest - Group companies 0 0 135 0
- --------------------------------------------------------------------------------
Total 494 430 499 325
- --------------------------------------------------------------------------------
NOTE 10
Year-end appropriations
- -------------------------------------------------------------------------------
Parent Company
1997/98 1996/97
- -------------------------------------------------------------------------------
Change in timing difference reserve 2,649 -403
Reversal of tax equalization reserve 409 137
Accelerated depreciation and amortization 3,524 -414
Group contributions 14,247 262
- -------------------------------------------------------------------------------
Total year-end appropriations 20,829 -418
- -------------------------------------------------------------------------------
NOTE 11
Taxes on the year's result
There are no taxes payable by the Parent Company for the 1997/98 financial year
(451). The Parent Company reports U.S. withholding tax of 809 for anticipated
dividend.
The Group reports deferred taxes of -1,012 (-1,724) as a tax expense in the
consolidated income statement and the total outstanding deferred tax liability
as a provision in the consolidated balance sheet. Deferred taxes have declined
by 2,191 (-264) due to reversal of untaxed reserves.
NOTE 12
Patents and similar rights
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
Opening cost 9,474 7,623 2,291 1,810
Purchases 819 1,644 803 481
Sales/disposals -7,789 0 -871 0
- --------------------------------------------------------------------------------
Closing accumulated cost 2,504 9,267 2,223 2,291
Opening amortization
according to plan -4,417 -3,670 -967 -726
Sales/disposals 4,579 0 545 0
Year's amortization
according to plan -1,839 -632 -974 -241
- --------------------------------------------------------------------------------
Closing accumulated
amortization according
to plan -1,677 -4,302 -1,396 -967
Closing residual value 827 4,965 827 1,324
- --------------------------------------------------------------------------------
Translation difference: The year's opening balances have been affected by 92.
NOTE 13
Goodwill
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
Opening cost 116,103 116,103 0 0
Purchases 0 0 0 0
- --------------------------------------------------------------------------------
Closing accumulated cost 116,103 116,103 0 0
Opening amortization
according to plan -13,330 -7,067 0 0
Year's amortization
according to plan -6,480 -6,263 0 0
- --------------------------------------------------------------------------------
Closing accumulated
amortization
according to plan -19,810 -13,330 0 0
- --------------------------------------------------------------------------------
Closing residual value
according to plan 96,293 102,773 0 0
- --------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
NOTE 14
Buildings and land
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening cost 9,864 9,454 0 0
Purchases 0 80 0 0
- --------------------------------------------------------------------------------
Closing accumulated 9,864 9,534 0 0
cost
Opening depreciation -3,957 -3,418 0 0
according to plan
Year's depreciation -412 -406 0 0
according to plan
- --------------------------------------------------------------------------------
Closing accumulated -4,369 -3,824 0 0
depreciation
according to plan
- --------------------------------------------------------------------------------
Closing residual value 5,495 5,710 0 0
according to plan
- --------------------------------------------------------------------------------
</TABLE>
Translation difference: The year's opening balances have been affected by 195.
NOTE 15
Machinery and other technical facilities
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening cost 48,639 44,764 15,442 14,629
Purchases 7,120 9,805 3,390 4,176
Sales/disposals -32,495 -5,816 -7,277 -3,363
Reclassification 2,134 0 1,578 0
- --------------------------------------------------------------------------------
Closing accumulated 25,398 48,753 13,133 15,442
cost
Opening depreciation -31,309 -30,653 -8,356 -8,594
according to plan
Sales/disposals 29,337 3,535 6,220 1,882
Reclassification 1,714 0 1,714 0
Year's depreciation
according to plan -13,855 -3,968 -9,658 -1,644
- --------------------------------------------------------------------------------
Closing accumulated
depreciation according
to plan -14,113 -31,086 -10,080 -8,356
- --------------------------------------------------------------------------------
Closing residual value
according to plan 11,285 17,667 3,053 7,086
- --------------------------------------------------------------------------------
</TABLE>
Translation difference: The year's opening balances have been affected by -188.
NOTE 16
Equipment and tools
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening cost 18,576 17,028 8,122 7,536
Purchases 997 3,360 636 2,318
Sales/disposals -9,096 -1,994 -149 -1,732
Reclassification -1,578 0 -1,578 0
- --------------------------------------------------------------------------------
Closing accumulated 8,899 18,394 7,031 8,122
cost
Opening depreciation -10,963 -9,719 -3,750 -4,427
according to plan
Accumulated depreciation 0 0 -295 0
on Group purchases
Sales/disposals 7,979 1,675 99 1,524
Reclassification -1,714 0 -1,714 0
Year's depreciation -2,389 -2,748 0 -847
according to plan
- --------------------------------------------------------------------------------
Closing accumulated -7,087 -10,792 -5,660 -3,750
depreciation
according to plan
- --------------------------------------------------------------------------------
Closing residual value 1,812 7,602 1,371 4,372
according to plan
- --------------------------------------------------------------------------------
</TABLE>
Translation difference: The year's opening balances have been affected by 11.
NOTE 17
Construction in progress
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening cost 2,743 6,721 1,772 5,610
Purchases 8 2,141 0 2,141
Sales/disposals -2,403 -5,978 -1,432 -5,978
Reclassification 0 0 0 0
- --------------------------------------------------------------------------------
Closing accumulated 348 2,884 340 1,773
cost
Opening depreciation 0 0 0 0
according to plan
Sales/disposals 0 0 0 0
Year's depreciation 0 0 0 0
according to plan
Closing accumulated 0 0 0 0
depreciation
according to plan
- --------------------------------------------------------------------------------
Closing residual value 348 2,884 340 1,773
according to plan
- --------------------------------------------------------------------------------
</TABLE>
Translation difference: The year's opening balances have been affected by -141.
NOTE 18
Shares in subsidiaries
(Group and Parent Company)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Company name Org.no Domicile Equity Result
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ICOR Holding AB 556316-4309 Taby 859 0
ICOR AB 556261-2621 Upplands Vasby 28,762 -83
Kiewclass SDN.BDH Kuala Lumpur, Malaysia 5,242 -642
Gibeck Inc. Indianapolis, USA 33,252 3,990
Other Upplands Vasby 6,374 -23
- --------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
Note 18 continued
Shares in subsidiaries
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Size of Value of
holding holding
Number of Percentage Book
Company name Shares of capital Value
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ICOR Holding AB 5,000 100.0% 106,983
ICOR AB 0 100.0% 0
Kiewclass SDN.BHD. 0 100.0% 0
Gibeck, Inc. 1,000 100.0% 15,999
Other 100.0% 3,140
- ------------------------------------------------------------------------------------------------------------------
126,122
- ------------------------------------------------------------------------------------------------------------------
NOTE 19
Prepaid expenses and accrued income
- ------------------------------------------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
Prepaid rent 495 301 439 252
Accrued rental income 263 108 168 42
Other items 19,577 1,312 1,031 740
- ------------------------------------------------------------------------------------------------------------------
Total 20,335 1,721 1,638 1,034
- ------------------------------------------------------------------------------------------------------------------
Of which 17,454 in the Group refers to sale of assets in the U.S. operations.
NOTE 20
Change in equity
- ------------------------------------------------------------------------------------------------------------------
Share Statutory Unrestricted Net result
Group Capital reserves reserves for the year
- ------------------------------------------------------------------------------------------------------------------
Opening balance 5,138 16,242 28,824 5,491
Equity offering 2,308 69,086
Transfer between restricted
and unrestricted equity -4,760 4,760
Translation difference -1,384 -696
Profit allocation pursuant to
Annual General Meeting
resolution 0 5,491 -5,491
Dividend 0 -2,184
Net result for the year -7,010
- ------------------------------------------------------------------------------------------------------------------
Closing balance 7,446 79,184 36,195 -7,010
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
Share Statutory Unrestricted Net result
Parent Company Capital reserves reserves for the year
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening balance 5,138 6,426 18,841 942
Equity offering 2,308 69,086
Profit allocation pursuant to
Annual General Meeting
resolution 0 942 -942
Dividend 0 -2,184
Net result for the year 15,021
- ------------------------------------------------------------------------------------------------------------------
Closing balance 7,446 75,512 17,599 15,021
- ------------------------------------------------------------------------------------------------------------------
NOTE 21
Untaxed reserves
- ------------------------------------------------------------------------------------------------------------------
Parent Company
1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
Timing difference reserve 1994 0 2,143
Timing difference reserve 1995 3,351 3,857
Timing difference reserve 1996 3,268 3,268
Timing difference reserve 1997 403 403
Tax equalization reserve 0 409
Accelerated depreciation
and amortization 0 3,471
- ------------------------------------------------------------------------------------------------------------------
Total 7,022 13,551
- ------------------------------------------------------------------------------------------------------------------
NOTE 22
Provisions
- ------------------------------------------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
Provisions for pensions and
similar undertakings 306 0 255 0
Deferred taxes 6,225 0 0 0
Ovriga avsattningar 1,547 8,619 0 0
- ------------------------------------------------------------------------------------------------------------------
Total 8,078 8,619 255 0
- ------------------------------------------------------------------------------------------------------------------
NOTE 23
Skuld till kreditinstitut
- ------------------------------------------------------------------------------------------------------------------
Liabilities to credit institutions
Long-term liabilities due for
repayment more than one year
after financial year-end
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
Liabilities to
credit institutions 42,884 74,173 38,000 59,690
- ------------------------------------------------------------------------------------------------------------------
Total 42,884 74,173 38,000 59,690
- ------------------------------------------------------------------------------------------------------------------
NOTE 24
Accrued expenses and prepaid income
- ------------------------------------------------------------------------------------------------------------------
Group Parent Company
1998-08-31 1997-08-31 1998-08-31 1997-08-31
- ------------------------------------------------------------------------------------------------------------------
Accrued vacation pay 2,841 3,253 2,693 2,731
Accrued social benefits 3,492 1,072 3,333 854
Other items 17,920 6,223 10,103 2,538
- ------------------------------------------------------------------------------------------------------------------
24,253 10,548 16,129 6,123
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS
NOTE 25
Foreign exchange forward contracts outstanding
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount in local Amount Average Spot
Currency ('000,000) MSEK forward rate rate
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
August 31, 1998
USD 2,6 20,3 7,84 8,06
DEM 2,6 11,5 4,41 4,44
JPY 125,8 7,8 0,062 0,0579
MYR 10,9 19,9 1,83 1,96
- --------------------------------------------------------------------------------
59,5
- --------------------------------------------------------------------------------
Amount in local Amount Average Spot
Currency ('000,000) MSEK forward rate rate
- --------------------------------------------------------------------------------
August 31, 1997
USD 2,3 17,8 7,65 7,73
DEM 2,6 11,7 4,68 4,48
JPY 183,3 12,0 0,0636 0,0618
MYR 6,5 18,6 2,86 2,9
- --------------------------------------------------------------------------------
60,1
- --------------------------------------------------------------------------------
Amount in local Amount Average Spot
Currency ('000,000) MSEK forward rate rate
- --------------------------------------------------------------------------------
August 31, 1996
USD 2,6 17,6 6,84 6,63
DEM 1,9 9,0 4,69 4,49
JPY 115,5 7,8 0,0677 0,06072
- --------------------------------------------------------------------------------
34,4
</TABLE>
13
<PAGE>
Note 26 Reconciliation of Swedish GAAP to US GAAP
<TABLE>
<CAPTION>
FISCAL YEAR
ENDED
----------------------------
<S> <C> <C> <C>
Note 8/31/98 8/31/97
----- ---------- ----------
Reported net (loss) earnings (7,010) 5,491
- ----------------------------
Disposal of Gibeck Inc. A (4,096) 0
Valuation of forward exchange contracts to
spot rate B 388 (491)
Fair value write up of ICOR inventory acquired C 0 (5,197)
Goodwill Amortization C,D 605 605
Restructuring Reserve FY 96 D (1,242) (4,662)
----------------------------
Total change in accordance with US GAAP (4,345) (9,745)
----------------------------
Estimated net earnings in accordance
----------------------------
With US GAAP (11,355) (4,254)
----------------------------
Earnings per share (3.05) (1.66)
----------------------------
Number of shares (Basic and diluted) 3,723,050 2,569,250
AS OF
----------------------------
8/31/98 8/31/97
---------- ----------
Reported Stockholders' equity 115,815 55,695
- -----------------------------
Disposal of Gibeck Inc. A (4,096) 0
Valuation of forward exchange contracts to
spot rate B 983 595
Fair value write up of ICOR inventory acquired C (5,197) (5,197)
Goodwill Amortization C,D 1,210 605
Restructuring Reserve D (5,904) (4,662)
----------------------------
Total change in accordance with US GAAP (13,004) (8,659)
Estimated stockholders' equity in accordance
----------------------------
With US GAAP 102,811 47,036
----------------------------
</TABLE>
A. For Swedish GAAP purposes the company recognized the sale of its US
operations, Gibeck Inc., in the fiscal year ended August 31, 1998. For US
GAAP purposes the transaction would be recognized in the fiscal year ended
August 31, 1999 because certain significant provisions of the related asset
sales agreement were not executed before fiscal year end 1998.
B. Changes in the market value of forward contracts are not recognized under
Swedish GAAP. Under US GAAP unrecognized gains and losses are reflected in
earnings for the year in which they arise.
C. The Company acquired ICOR Holding AB in 1996. For US GAAP purposes the
inventory acquired is adjusted to fair value at the acquisition date. The
inventory adjustment was then charged against earnings in the subsequent
accounting period. Under Swedish GAAP no fair value adjustment is recorded.
D. Certain costs to restructure a subsidiary of the Company were recorded as
adjustments to goodwill under Swedish GAAP. For US GAAP purposes these costs
are charged against income in the year that they are recorded.
Note 27 Subsequent events
In July 1999, all outstanding shares of the Company were purchased by Hudson
RCI. The Company is from that date a wholly owned subsidiary of Hudson RCI and
no longer subject to the reporting requirements of the Stockholm Stock Exchange.
Management, after analyzing sales forecasts, determined that certain intangible
assets associated with the colibri product line had no future value and took a
charge against earnings in the residual value of 31.7 MSEK in fiscal year
1998/99.
Based on information received in August 1999 management determined that certain
receivables accounted for in the financial statements as at August 31, 1998 has
no future value and took a charge against earnings of 5,0 MSEK in fiscal year
98/99.
14
<PAGE>
Louis Gibeck AB
Balance Sheet (Unaudited)
February 28, 1999
(in millions SEK)
<TABLE>
<CAPTION>
- -------------------------------------------------------
ASSETS
- -------------------------------------------------------
Fixed Assets
- -------------------------------------------------------
<S> <C>
Goodwill 93.1
Other intangible
Fixed assets 1.0
Tangible fixed assets 14.3
Financial fixed assets 5.0
- -------------------------------------------------------
Total fixed assets 113.4
- -------------------------------------------------------
Current assets
Inventories 14.7
Short-term receivables 37.4
Liquid funds 46.8
- -------------------------------------------------------
Total current assets 98.9
- -------------------------------------------------------
TOTAL ASSETS 212.3
- -------------------------------------------------------
- -------------------------------------------------------
SHAREHOLDERS' EQUITY
AND LIABILITIES
- -------------------------------------------------------
Equity 133.1
Provisions 7.8
Long-term liabilities (2) 32.0
Current liabilities (2) 39.4
- -------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY
AND LIABILITIES 212.3
- -------------------------------------------------------
</TABLE>
15
<PAGE>
Louis Gibeck AB
Statements of Income (Unaudited)
For the Six Months Ended February 28, 1999 and 1998
(in millions SEK)
<TABLE>
<CAPTION>
1999 1998
- -----------------------------------------------------------
<S> <C> <C>
Net Sales 94.2 111.6
Cost of goods sold -39.5 -60.2
- ----------------------------------------------- --------
Gross Profit 54.7 51.4
Research and
Development expenses -6.3 -5.2
Other operating expenses -27.8 -40.4
- ----------------------------------------------- --------
Operating Profit 1) 20.6 5.8
- ----------------------------------------------- --------
Financial Income 0.3 0.3
Financial Expense -1.2 -4.0
- ----------------------------------------------- --------
Profit after
financial items 19.7 2.1
Taxes on profit
for the year -6.3 -1.5
- ----------------------------------------------- --------
NET PROFIT FOR
THE PERIOD 13.4 0.6
- ----------------------------------------------- --------
1) Whereof amortization
of goodwill -2.7 -3.1
</TABLE>
16
<PAGE>
Louis Gibeck AB
Cash Flow Analysis
For the Six Months Ended February 28, 1999 and 1998
(in thousands SEK)
1999 1,998
---------- ----------
Result after financials 19,700 2,056
Items not included in the cash flow 6,900 6,106
---------- ----------
26,600 8,162
Paid tax (400) (1,124)
Cash flow from ongoing business
before changes from operation 26,200 7,038
Cashflow from changes in operation
Decrese (Increase) in inventory 14,500 (1,890)
Decrease (Increase) in current receivables 31,200 (5,336)
(Decrease) Increase in Accounts payable (10,500) 2,040
Decrease of other current liabilities (5,000) (1,630)
Cashflow from ongoing business 56,400 222
INVESTMENTS
Investments, net (1,900) (4,535)
---------- ----------
Cashflow from investments (1,900) (4,535)
Financial operations
New share issue - 71,400
Amortization of debt - (59,459)
Dividend - (2,184)
Repayment of Loans (26,900) -
---------- ----------
Cashflow from financial operations (26,900) 9,757
This year cashflow 27,600 5,444
Cash at year opening 19,200 15,678
Cash at year end 46,800 21,122
17
<PAGE>
Louis Gibeck AB
Notes to Unaudited Financial Statements
Note 1 Financial Statements.
The financial statements included herein have been prepared by the Company,
without audit, and include all adjustments which are, in the opinion of
management, necessary for a fair presentation of the financial position at
February 28, 1999 and the results of operations and statements of financial
position for the six month periods ended February 28, 1999 and 1998. All such
adjustments are of a normal recurring nature. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles in Sweden have been condensed or
omitted. Although the Company believes that the disclosures in such financial
statements are adequate to make the information presented not misleading, the
accompanying unaudited financial statements should be read in conjunction with
the Company's 1998 audited financial statements and the notes thereto included
in its Annual Report. The results of operations for the six month periods ended
February 28, 1999 and February 28, 1998 are not necessarily indicative of the
results to be achieved for a full year.
Note 2 Unaudited Reconciliation of Swedish GAAP to US GAAP
<TABLE>
<CAPTION>
SIX MONTHS ENDED
----------------------------
<S> <C> <C> <C>
2/28/99 2/28/98
----------------------------
Reported net earnings 13,475 600
Disposal of Gibeck Inc. A 4,096 0
Valuation of forward exchange contracts to
spot rate B 0 194
Goodwill Amortization C 302 302
Restructuring Reserve E (996) (621)
----------------------------
Total change in accordance with U.S. GAAP 3,402 (125)
----------------------------
Estimated net earnings in accordance
----------------------------
with U.S.GAAP 16,877 475
----------------------------
Earnings per share 4.53 0.18
----------------------------
Number of shares (Basic and diluted) 3,723,050 2,569,250
AS OF
Financial year 2/28/99
-----------
Reported Stockholders'equity 133,100
Valuation of forward exchange contracts to
spot rate B 983
Fair value write up of ICOR net assets acquired C (5,197)
Goodwill Amortization D 1,512
Restructuring Reserve E (6,900)
-----------
Total change in accordance with US GAAP (9,602)
Estimated stockholders'equity in accordance
-----------
with US GAAP 123,498
-----------
</TABLE>
A. To reflect the gain on sale of certain assets to Hudson Respiratory Care,
Inc. in the appropriate period in accordance with US GAAP
B. To reflect the change in value of forward currency contracts in excess of
local currency accounts receivable (SFAS 52)
C. To reflect the sale of purchased inventory, net of selling costs, which would
have been recorded in accordance with APB 16
D. To reflect reduced goodwill amortization as a result of C and E
E. To reflect restructuring charges not capitalizable in accordance with US
GAAP.
18
<PAGE>
HUDSON RESPIRATORY CARE INC. AND LOUIS GIBECK AB
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The accompanying pro forma consolidated financial statements have been prepared
to show the effects of the July 22, 1999 acquisition of the majority of the
outstanding capital stock of Louis Gibeck AB ("LGAB"), a company organized under
the laws of Sweden by Hudson Respiratory Care, Inc. ("the Company") through its
indirect, wholly-owned subsidiary, Steamer Holding. This acquisition is
accounted for as a purchase business combination.
The following unaudited pro forma balance sheet presents the pro forma
consolidated financial position of the Company at March 26, 1999 as if the
acquisition occurred on such date. Included are adjustments to record the value
of consideration paid by the Company and the assets and liabilities acquired by
the Company. The purchase price was approximately $53.7 million including
approximately $3 million of transaction expenses, resulting in goodwill of
approximately $37.5 million, which is expected to be amortized over an estimated
useful life of 20 years. The unaudited consolidated statement of financial
position has been converted to US GAAP and from Swedish Krona to US Dollars
using the average interbank rate as of the statement date (.1224 SEK to US $).
The financial statements of Louis Gibeck AB have been derived from its
historical financial statements to (i) reflect US generally accepted accounting
principles and (ii) present the results of Louis Gibeck on reporting periods
more comparable to those of the Company. Accordingly, the balance sheet of Louis
Gibeck is as of February 28, 1999 and the results are for the year and quarter
then ended.
The unaudited pro forma statements of operations for the year ended December 25,
1998 and the quarter ended March 26, 1999 reflect the combined results of the
Company and Louis Gibeck AB as if the acquisition had occurred on December 26,
1997. Unaudited pro forma statements of operations for the year ended December
25, 1998 and the quarter ended March 26, 1999 have been converted to US GAAP and
from Swedish Krona to US Dollars using the average interbank rate for the period
presented (.12614 and .12566 SEK to US $, respectively).
The unaudited pro forma consolidated statements of operations do not necessarily
represent actual results that would have been achieved had the companies been
together as of December 26, 1997, nor may they be indicative of future
operations. These unaudited pro forma consolidated financial statements should
be read in conjunction with the historical financial statements and notes
thereto of the Company and Louis Gibeck AB.
19
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Balance Sheet
March 26, 1999
(in thousands)
<TABLE>
<CAPTION>
Hudson
Respiratory
Care Inc. Louis Gibeck Pro
26-Mar-99 28-Feb-99 Adjustments Forma
------------ ------------- --------------- ------------
<S> <C> <C> <C> <C>
Assets:
Current Assets:
Cash and short term investments $ 710 $ 5,728 $ 2,828 (a) $ 9,266
Accounts receivable, net 23,153 4,578 27,731
Inventories 19,091 1,799 1,800 (b) 22,690
Other current assets 769 - 769
---------- ----------- ------------ ----------
Total current assets 43,723 12,105 4,628 60,456
---------- ----------- ------------ ----------
Property, plant & equipment, net 32,996 1,750 34,746
Intangibles and other assets 4,568 10,100 37,001 (c) 51,669
Deferred tax asset 70,217 - (720) (c) 69,497
Deferred financing costs 11,672 - 11,672
Other assets 445 856 - 1,301
---------- ----------- ------------ ----------
Total assets $163,621 $ 24,811 $40,909 $229,341
========= =========== ============ =========
Liabilities and Shareholder's Equity:
Current Liabilities:
Notes payable to bank $ 4,000 $ - $ 4,000
Accounts payable 2,343 - 2,343
Accrued liabilities 9,620 4,823 14,443
---------- ----------- ------------ ----------
Total current liabilities 15,963 4,823 - 20,786
---------- ----------- ------------ ----------
Non-current Liabilities: -
Senior subordinated notes payable 115,000 - 115,000
Notes payable to banks, net of current portion 39,000 3,917 5,917 (a) 48,834
Affiliate note payable - 22,000 (a) 22,000
Other 955 955
---------- ----------- ------------ ----------
Total liabilities 169,963 9,695 27,917 207,575
---------- ----------- ------------ ----------
Mandatorily redeemable preferred stock 30,802 - 30,802
Accrued Preferred Stock Dividend, PIK 1,636 - 1,636
---------- ----------- ------------ ----------
32,438 - - 32,438
Shareholder's equity (deficit) (38,780) 15,116 12,992 (d) (10,672)
------------ ----------- ------------ ----------
Total liabilities and shareholder's equity (deficit) $163,621 $ 24,811 $40,909 $229,341
========= =========== ============ =========
</TABLE>
20
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB
Notes to Unaudited Pro Forma Consolidated Balance Sheet
March 26, 1999
The following unaudited pro-forma adjustments are included in the accompanying
pro forma balance sheet at March 26, 1999 (in thousands):
(a) Sources and uses of cash for the purchase of Louis Gibeck AB are as follows:
<TABLE>
<CAPTION>
Sources:
<S> <C>
Proceeds from affiliate note payable $22,000
Proceeds from sale of common stock to majority stockholder 22,000
Proceeds from bank loan 5,917
-------
49,917
-------
Uses:
Purchase of shares of Louis Gibeck AB 44,089
Payment of transaction expenses 3,000
-------
47,089
-------
Net Change in Cash $ 2,828
=======
</TABLE>
(b) Represents the estimated portion of the purchase price to be allocated to
purchased inventory at fair value, less costs to sell.
(c) The purchase price has been allocated on a preliminary basis based on
available information. Management expects that the purchase price allocation
will be revised when additional information becomes available.
<TABLE>
<CAPTION>
Purchase price:
<S> <C>
Contribution of Louis Gibeck AB shares by Hudson RCI stockholder $ 6,623
Cash paid for shares 44,089
Expenses of the transaction 3,000
-------
$53,712
=======
Preliminary allocation of purchase price (e):
Goodwill $37,516
Inventory step-up to fair value, net of deferred tax liability of $720 1,080
Historical cost basis of net assets 15,116
-------
Total purchase price $53,712
=======
</TABLE>
The net change in goodwill in the pro forma balance sheet includes goodwill
related to the acquisition of Louis Gibeck AB and the elimination of $515 of
goodwill recorded by the Company in connection with a 1998 acquisition of
certain assets of Louis Gibeck AB. This amount relates to Louis Gibeck AB's
gain on the sale of those assets.
(d) The change in equity reflects the $22 million net cash proceeds and $6.6
million in Louis Gibeck AB stock received from Hudson RCI's majority
stockholder for approximately 2.2 million shares of common stock, offset by
the elimination of Louis Gibeck AB's historical equity and the elimination
of $515 of gain described at (c) above.
(e) The Company is evaluating the status of certain in process research and
development projects that were acquired with the purchase of Louis Gibeck
AB. Accordingly, a portion of the purchase price may be allocated to
purchased in process research and development when the Company has completed
its analysis.
21
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 25, 1998
(in thousands)
<TABLE>
<CAPTION>
Hudson RCI Louis Gibeck
Year ended Year ended Pro
25-Dec-98 28-Feb-99 Adjustments Forma
============ ==========================================
<S> <C> <C> <C> <C> <C>
Net Sales $100,498 $ 28,115 $ (5,794) (a) $122,819
Cost of Sales 53,520 14,128 (5,794) (a) 61,854
-------- -------- -------- --------
Gross Profit 46,978 13,987 0 60,965
Selling 10,350 7,357 17,707
Distribution 5,714 0 5,714
General & Administrative 10,284 2,989 1,850 (b) 15,123
Research & Development 1,880 1,674 3,554
-------- -------- -------- --------
Total SG&A 28,228 12,020 1,850 42,098
Provision for EPP (63,939) 0 (63,939)
Provision for Retention Bonuses (4,754) 0 (4,754)
-------- -------- -------- --------
Income (Loss) from Operations (49,943) 1,967 (1,850) (49,826)
Interest Expense (10,692) (395) (2,936) (c) (14,023)
Other, Net (1,041) 0 (1,041)
-------- -------- -------- --------
Total Other (11,733) (395) (2,936) (15,064)
-------- -------- -------- --------
Income (Loss) Before Taxes (61,676) 1,572 (4,786) (64,890)
Provision (Benefit) for Income Taxes 1,390 945 (881) (d) 1,454
-------- -------- -------- --------
Income (Loss) Before Extraordinary Item (63,066) 627 (3,905) (66,344)
Extraordinary Item/Loss on Extinguishment 104 0 0 104
Net Income (Loss) (63,170) 627 (3,905) (66,448)
-------- -------- -------- --------
Preferred Stock Dividends 2,512 0 0 2,512
-------- -------- -------- --------
Net Income (Loss) Available to Shareholder $(65,682) $ 627 $(3,905) $(68,960)
======== ======== ======== ========
</TABLE>
22
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB Notes to
Unaudited Pro Forma Consolidated Statement of Operations
Year Ended December 25, 1998
The following unaudited pro forma adjustments are included in the accompanying
unaudited pro forma consolidated statement of operations for the year ended
December 25, 1998 (in thousands):
(a) Reflects the the elimination of intercompany sales. Gross profit in ending
inventory is not material to the proforma consolidated statement of
operations.
(b) This amount represents amortization of goodwill arising from the
transaction, net of goodwill eliminated, over an estimated useful life of
20 years.
(c) Reflects interest on additional bank borrowings and borrowings from an
affiliate at 5 percent and 12 percent annual interest rates, respectively.
(d) Reflects the tax benefit associated with additional interest expense on new
borrowings in Sweden. The effective tax rate is estimated at 30 percent.
23
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB
Unaudited Pro Forma Consolidated Statement of Operations
Quarter Ended March 26, 1999
(in thousands)
<TABLE>
<CAPTION>
Hudson RCI Louis Gibeck
Quarter Endd Quarter Ended Pro
26-Mar-99 28-Feb-99 Adjustments Forma
==============================================================
<S> <C> <C> <C> <C>
Net Sales $ 27,169 5,617 $ (1,449) (a) $ 31,337
Cost of Sales 14,875 2,344 (1,449) (a) 15,770
------------ -------------- ------------- ------------
Gross Profit 12,294 3,273 0 15,567
Selling 2,436 829 3,265
Distribution 1,709 0 1,709
General & Administrative 3,328 266 463 (b) 4,057
Research & Development 510 534 1,044
------------ -------------- ------------- ------------
Total SG&A 7,983 1,629 463 10,075
------------ -------------- ------------- ------------
Income (Loss) from Operations 4,311 1,644 (463) 5,492
Interest Expense (3,873) (45) (734)(c) (4,652)
Other, Net 30 0 0 30
------------ -------------- ------------- ------------
(3,843) (45) (734) (4,622)
------------ -------------- ------------- ------------
Income (Loss) Before Taxes 468 1,599 (1,197) 870
Provision for Income Taxes 187 474 (220)(d) 441
------------ -------------- ------------- ------------
Net Income 281 1,125 (977) 429
------------ -------------- ------------- ------------
Preferred Stock Dividends 925 0 0 925
Net Income (Loss) Available to Shareholders $ (644) 1,125 $ (977) $ (496)
=========== ============= ============= ===========
</TABLE>
24
<PAGE>
Hudson Respiratory Care Inc. and Louis Gibeck AB
Notes to Unaudited Pro Forma Consolidated Statement of Operations
Quarter Ended March 26, 1999
The following unaudited pro forma adjustments are included in the accompanying
unaudited pro forma consolidated statement of operations for the year ended
December 25, 1998 (in thousands):
(a) Reflects the elimination of intercompany sales. Gross profit in ending
inventory is not material to the pro forma consolidated statement of
operations.
(b) This amount represents amortization of goodwill arising from the
transaction, net of goodwill eliminated, over an estimated useful life of
20 years.
(c) Reflects interest on additional bank borrowings and borrowings from an
affiliate at 5 percent and 12 percent annual interest rates, respectively.
(d) Reflects the tax benefit associated with additional interest expense on new
borrowings in Sweden. The effective tax rate is estimated at 30 percent.
25
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: October 5, 1999
River Holding Corp.
By: /s/ Jay R. Ogram
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Jay R. Ogram
Chief Financial Officer
26
