<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Filed pursuant to Section 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
February 5, 1997 (November 26, 1996)
Date of Report (Date of earliest event reported)
IVAC MEDICAL SYSTEMS, INC.
--------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware
--------------------------------------------------
(State or other jurisdiction of incorporation)
33-96928
--------------------------------------------------
(Commission File Number)
95-3177311
--------------------------------------------------
(IRS Employer Identification No.)
10221 Wateridge Circle
San Diego, CA 92121-2733
--------------------------------------------------
(Address of principal executive officers)
(619) 458-7000
(Registrant's telephone number, including area code)
<PAGE>
This report on Form 8-K/A-1 supplements the report on Form 8-K (the "Form
8-K") filed by IVAC Medical Systems, Inc., a Delaware corporation, with the
Securities and Exchange Commission on December 11, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The required financial statements were previously filed in the Form
8-K.
(b) Pro Forma Financial Information.
Filed herewith.
(c) Exhibits.
The required exhibits were previously filed in the Form 8-K.
<PAGE>
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 thereunto duly authorized.
IVAC HOLDINGS, INC., as successor to
IVAC MEDICAL SYSTEMS, INC.
Date: February 5, 1997 By: /s/ William J. Mercer
-------------------------------
William J. Mercer
Chief Executive Officer,
and President
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following Pro Forma Condensed Consolidated Balance Sheet at September
30, 1996 reflects the historical consolidated balance sheets of IMED and IVAC
Holdings, adjusted to give effect to the Transactions (including the purchase of
all Existing Senior Notes pursuant to the Debt Tender Offer and Consent
Solicitation), as if the Transactions had occurred at September 30, 1996. The
IVAC Holdings historical balance sheet at September 30, 1996 includes
adjustments required to record the River Divestiture, including the write-down
of River's assets to their estimated fair value and the accrual of
discontinuation costs of $6.2 million.
On the Merger Closing, the Company will account for the Merger as a purchase
and all required purchase accounting adjustments to record assets and
liabilities at their estimated fair values will be made based on the actual
purchase price and actual levels of the IVAC Holdings assets acquired and
liabilities assumed. The Merger Consideration is subject to adjustment based on
certain factors such as the total IVAC Holdings cash and debt balances at the
Merger Closing. Any adjustment to the purchase price will affect the amount
allocated to intangible assets and will affect the amortization of intangibles
in subsequent periods.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER DATA
The following Pro Forma Condensed Consolidated Statements of Operations and
Other Data for the year ended December 31, 1995 and nine months ended September
30, 1995 are based on the respective historical consolidated statements of
operations of IMED and IVAC Holdings, adjusted to give effect to the
Transactions and the River Divestiture, as if such transactions had occurred on
January 1, 1995.
The following Pro Forma Condensed Consolidated Statement of Operations and
Other Data for the nine months ended September 30, 1996 is based on the
historical unaudited results of operations of IMED and IVAC Holdings, adjusted
to give effect to the Transactions and the River Divestiture, as if such
transactions had occurred on January 1, 1996.
The Pro Forma Condensed Consolidated Statements of Operations and Other Data
reflect certain cost savings that management has identified related to
elimination of duplicative costs for functional areas and facilities. However,
the Pro Forma Condensed Consolidated Statements of Operations and Other Data do
not reflect certain additional cost savings and synergies that management has
identified related to areas such as vendor consolidation and research and
development costs (other than in connection with facilities consolidations).
The unaudited pro forma financial statements are based on assumptions the
Company believes are reasonable, including those related to cost savings arising
from the Company's integration plans, and which the Company believes are both
factually supportable and directly attributable to the Merger. Such unaudited
pro forma financial data should be read in conjunction with the Consolidated
Financial Statements of IMED and IVAC Holdings and the respective accompanying
notes thereto included elsewhere in this Prospectus.
The following pro forma financial data are not necessarily indicative of the
Company's results of operations that might have occurred had such transactions
been completed at the beginning of the periods specified, and do not purport to
represent what the Company's consolidated results of operations might be for any
future period.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1996
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
IVAC TRANSACTIONS COMPANY
IMED HOLDINGS COMBINED ADJUSTMENTS PRO FORMA
ASSETS
Current Assets:
Cash and cash equivalents........................................... $ 851 $ 10,447 $11,298 $ 195,750(A) $ 101
192,000(B)
(230,250)(C)
(180,697)(D)
20,000(E)
(8,000)(F)
Receivables, net.................................................... 24,714 52,469 77,183 77,183
Inventory........................................................... 20,339 39,646 59,985 10,000(C) 69,985
Prepaid expenses and other current assets........................... 3,246 2,490 5,736 8,000(C) 16,436
2,700(G)
-------- -------- -------- ---------
Total current assets.............................................. 49,150 105,052 154,202 163,705
Net investment in sales type and direct financing leases and long-term
contract receivables................................................ 13,559 18,232 31,791 31,791
Property, plant and equipment, net.................................... 14,212 44,966 59,178 59,178
Other non-current assets.............................................. 5,072 1,626 6,698 6,250(A) 40,251
8,000(B)
20,000(C)
(697)(D)
Intangible assets..................................................... 48,344 21,105 69,449 244,091(C) 313,540
-------- -------- -------- ---------
Total assets...................................................... $130,337 $190,981 $321,318 $608,465
-------- -------- -------- ---------
-------- -------- -------- ---------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable.................................................... $ 8,255 $ 13,703 $21,958 $ 21,958
Accrued expenses and other liabilities.............................. 13,043 49,643 62,686 $ (11,000)(C) 68,097
3,589(D)
8,000(F)
(6,000)(H)
Short-term debt and current portion of long-term debt............... 149 17,534 17,683 (1,250)(A) 3,933
15,000(D)
-------- -------- -------- ---------
Total current liabilities......................................... 21,447 80,880 102,327 93,988
Long-term debt........................................................ 19,865 142,955 162,820 (200,750)(A) 406,712
(200,000)(B)
(5,250)(C)
162,108(D)
Other non-current liabilities......................................... 1,532 2,737 4,269 4,269
-------- -------- -------- ---------
Total liabilities................................................. 42,844 226,572 269,416 504,969
Common stock and capital in excess of par............................. 77,058 33,855 110,913 33,855(C) 97,058
(20,000)(E)
Retained earnings/(accumulated deficit)............................... 10,226 (70,166) (59,940 ) (70,166)(C) 6,229
697(D)
(2,700)(G)
6,000(H)
Cumulative translation adjustment and other........................... 209 720 929 720(C) 209
-------- -------- -------- ---------
Total stockholder's equity (deficit).............................. 87,493 (35,591) 51,902 103,496
-------- -------- -------- ---------
Total liabilities and stockholder's equity........................ $130,337 $190,981 $321,318 $608,465
-------- -------- -------- ---------
-------- -------- -------- ---------
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet.
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) Reflects receipt of gross proceeds of $202,000 from the initial borrowing
under the New Credit Facility, net of issuance costs of $6,250 which have
been included in other non-current assets.
New Credit Facility consists of the following:
<TABLE>
<S> <C>
Term loan facilities.............................................. $ 200,000
Revolving credit facility(1)...................................... 2,000
---------
Total New Credit Facility..................................... 202,000
Current portion................................................... 1,250
---------
Long-term......................................................... $ 200,750
---------
---------
</TABLE>
- ------------------------
(1) The actual amount borrowed under the revolving credit facility at the Merger
Closing related to the Transactions was $4,200.
(B) Reflects receipt of gross proceeds of $200,000 from the issuance of the
Notes, net of $6,000 of selling commissions and $2,000 of offering expenses
which have been reflected as debt issuance costs and included in other
non-current assets.
(C) Reflects the allocation of the total Merger cost:
<TABLE>
<S> <C>
Cash Merger Consideration......................................... $ 224,500
Estimated transaction fees in addition to debt issuance costs..... 5,750
---------
Total cash payments in connection with Merger................... 230,250
---------
Elimination of book value of net assets acquired:
Common stock and capital in excess of par......................... (33,855)
Accumulated deficit............................................... 70,166
Cumulative translation adjustment and other....................... (720)
---------
Net stockholders' deficit....................................... 35,591
---------
Excess of cost over book value................................ $ 265,841
---------
---------
Allocation of excess cost over book value:
Amount assigned to inventory...................................... $ 10,000
Deferred tax assets--current...................................... 8,000
Deferred tax assets--non-current.................................. 20,000
Severance, bonus and restructuring related to IVAC personnel and
facilities (see Note (H) below for IMED restructuring
charges)........................................................ (11,000)
Premium payable in connection with the Debt Tender Offer
and Consent Solicitation........................................ (5,250)
Amount assigned to intangible assets.............................. 244,091
---------
Total......................................................... $ 265,841
---------
---------
</TABLE>
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(D) Reflects the retirement of the following long-term and current debt
obligations and related accrued interest:
<TABLE>
<CAPTION>
ACCRUED
DEBT INTEREST TOTAL
<S> <C> <C> <C>
Current debt:
IVAC existing credit facility............................... $ 15,000 $ 165 $ 15,165
---------- --------- ----------
Long term debt:
Existing Senior Notes (including redemption premium and
consent fees of $5,250)................................... 105,250 3,248 108,498
Junior Subordinated Notes of IVAC Holdings.................. 37,324 -- 37,324
IMED Existing Credit Facility (1)........................... 19,534 176 19,710
---------- --------- ----------
Total long-term debt.................................... 162,108 3,424 165,532
---------- --------- ----------
Total current and long-term debt........................ $ 177,108 $ 3,589 $ 180,697
---------- --------- ----------
---------- --------- ----------
</TABLE>
- ------------------------
(1) The Pro Forma Condensed Consolidated Balance Sheet also includes the
write-off of related unamortized debt issuance costs of $697.
(E) Reflects the Capital Contribution from Advanced Medical.
(F) Reflects $8,000 payment to Eli Lilly and Company ("Lilly") which is
anticipated to be made by IVAC Holdings prior to the consummation of the
Merger and will be paid from existing cash balances and/or with borrowings
under IVAC's existing credit facility.
(G) Reflects tax benefit at an estimated statutory rate of 40% related to IMED
restructuring costs of $6,000 and $697 write-off of unamortized debt
issuance costs related to IMED's Existing Credit Facility.
(H) Reflects $6,000 non-recurring restructuring charge related to the closure of
certain IMED facilities and severance payments.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RIVER
IVAC DIVESTITURE TRANSACTIONS COMPANY
IMED HOLDINGS COMBINED ADJUSTMENTS (A) ADJUSTMENTS PRO FORMA
Net sales.................................... $112,551 $240,971 $353,522 $ (794) $352,728
Cost of sales................................ 63,270 157,869 221,139 (5,357) $(6,600)(B) 209,182
-------- --------- --------- ---------
Gross margin................................. 49,281 83,102 132,383 143,546
-------- --------- --------- ---------
Selling and marketing........................ 16,567 43,994 60,561 (3,006) (2,850)(B) 54,705
General and administrative................... 8,893 28,381 37,274 (3,478) 8,136(C) 41,032
(900)(B)
Research and development..................... 7,386 12,083 19,469 (790) (250)(B) 18,429
Purchased research and development........... -- 22,883 22,883 (12,755) 10,128
Restructuring................................ -- 5,944 5,944 (103) 5,841
Other operating expense, net................. -- 1,497 1,497 1,497
-------- --------- --------- ---------
Total operating expenses................... 32,846 114,782 147,628 131,632
-------- --------- --------- ---------
Income (loss) from operations.............. 16,435 (31,680) (15,245) 11,914
-------- --------- --------- ---------
Other income (expense):
Interest income (D)........................ 2,361 3,506 5,867 5,867
Interest expense........................... (2,052) (27,969) (30,021) 163 (37,784)(E) (44,633)
23,009(F)
Other, net................................. (379) -- (379) (379)
-------- --------- --------- ---------
(70) (24,463) (24,533) (39,145)
-------- --------- --------- ---------
Income (loss) before income taxes............ 16,365 (56,143) (39,778) (27,231)
Provision for (benefit from) income taxes.... 8,099 (378) 7,721 3,831 (7,952)(G) 3,600
-------- --------- --------- --------------- ------------ ---------
Net income (loss)............................ $ 8,266 $ (55,765) $ (47,499) $ 21,027 $(4,359) $(30,831)
-------- --------- --------- --------------- ------------ ---------
-------- --------- --------- --------------- ------------ ---------
OTHER DATA:
Income (loss) from operations.............. $ 16,435 $ (31,680) $ (15,245) $ 24,695 $ 2,464 $ 11,914
Depreciation and amortization.............. 6,542 20,950 27,492 (1,199) 7,336 33,629
Technology license fee to Advanced Medical
(H)...................................... -- -- -- 1,100 1,100
Inventory purchase accounting adjustment... -- 14,774 14,774 14,774
Restructuring.............................. -- 5,944 5,944 (103) 5,841
Purchased research and development......... -- 22,883 22,883 (12,755) 10,128
Lease/contract interest income............. 2,361 3,013 5,374 5,374
-------- --------- --------- --------------- ------------ ---------
Adjusted EBITDA............................ $ 25,338 $ 35,884 $ 61,222 $ 10,638 $10,900 $ 82,760
-------- --------- --------- --------------- ------------ ---------
-------- --------- --------- --------------- ------------ ---------
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RIVER
IVAC DIVESTITURE TRANSACTIONS COMPANY
IMED HOLDINGS COMBINED ADJUSTMENTS(A) ADJUSTMENTS PRO FORMA
Net sales................................ $ 83,012 $ 174,663 $ 257,675 $ (555) $ 257,120
Cost of sales............................ 46,633 118,255 164,888 (3,404) $ (4,950)(B) 156,534
--------- --------- --------- -------------
Gross margin............................. 36,379 56,408 92,787 100,586
--------- --------- --------- -------------
Selling and marketing.................... 12,965 32,470 45,435 (2,235) (2,137)(B) 41,063
General and administrative............... 6,502 18,529 25,031 (2,254) 6,102(C) 28,204
(675)(B)
Research and development................. 5,603 10,111 15,714 (642) (188)(B) 14,884
Purchased research and development....... -- 19,883 19,883 (9,755) 10,128
Restructuring............................ -- 4,460 4,460 (103) 4,357
--------- --------- --------- -------------
Total operating expenses............... 25,070 85,453 110,523 98,636
--------- --------- --------- -------------
Income (loss) from operations.......... 11,309 (29,045) (17,736) 1,950
--------- --------- --------- -------------
Other income (expense):
Interest income (D).................... 1,766 2,491 4,257 4,257
Interest expense....................... (1,647) (20,047) (21,694) 98 (28,338)(E) (32,945)
16,989(F)
Other, net............................. (307) -- (307) (307)
--------- --------- --------- -------------
(188) (17,556) (17,744) (28,995)
--------- --------- --------- -------------
Income (loss) before income taxes........ 11,121 (46,601) (35,480) (27,045)
Provision for (benefit from) income
taxes.................................. 5,076 (3,270) 1,806 3,831 (2,937)(G) 2,700
--------- --------- --------- --------------- ------------- -------------
Net income (loss)........................ $ 6,045 $ (43,331) $ (37,286) $ 14,105 $ (6,564) $ (29,745)
--------- --------- --------- --------------- ------------- -------------
--------- --------- --------- --------------- ------------- -------------
OTHER DATA:
Income (loss) from operations.......... $ 11,309 $ (29,045) $ (17,736) $ 17,838 $ 1,848 $ 1,950
Depreciation and amortization.......... 4,889 15,094 19,983 (867) 5,502 24,618
Technology license fee to Advanced -- -- -- 825 825
Medical(H)...........................
Inventory purchase accounting -- 14,774 14,774 14,774
adjustment...........................
Purchased research and development..... -- 19,883 19,883 (9,755) 10,128
Restructuring.......................... -- 4,460 4,460 (103) 4,357
Lease/contract interest income......... 1,766 2,130 3,896 3,896
--------- --------- --------- --------------- ------------- -------------
Adjusted EBITDA........................ $ 17,964 $ 27,296 $ 45,260 $ 7,113 $ 8,175 $ 60,548
--------- --------- --------- --------------- ------------- -------------
--------- --------- --------- --------------- ------------- -------------
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RIVER
IVAC DIVESTITURE TRANSACTIONS COMPANY
IMED HOLDINGS COMBINED ADJUSTMENTS(A) ADJUSTMENTS PRO FORMA
Net sales................................ $ 81,770 $ 170,155 $ 251,925 $ (373) $ 251,552
Cost of sales............................ 44,757 98,836 143,593 (2,787) $ (4,950)(B) 135,856
--------- --------- --------- --------------
Gross margin............................. 37,013 71,319 108,332 115,696
--------- --------- --------- --------------
Selling and marketing.................... 13,167 28,872 42,039 (819) (2,137)(B) 39,083
General and administrative............... 7,050 17,479 24,529 (719) 6,102(C) 29,237
(675)(B)
Research and development................. 5,773 7,663 13,436 (199) (188)(B) 13,049
Restructuring............................ -- 17,396 17,396 (17,396) --
--------- --------- --------- --------------
Total operating expenses............. 25,990 71,410 97,400 81,369
--------- --------- --------- --------------
Income (loss) from operations........ 11,023 (91) 10,932 34,327
--------- --------- --------- --------------
Other income (expense):
Interest income(D)..................... 1,921 2,146 4,067 4,067
Interest expense....................... (1,119) (13,730) (14,849) 121 (28,417)(E) (30,074)
13,071(F)
Other, net............................. (49) -- (49) (49)
--------- --------- --------- --------------
753 (11,584) (10,831) (26,056)
--------- --------- --------- --------------
Income (loss) before income taxes........ 11,776 (11,675) 101 8,271
Provision for (benefit from) income
taxes.................................. 5,573 2,434 8,007 2,782 (8,589)(G) 2,200
--------- --------- --------- ------- ------------- --------------
Net income (loss)........................ $ 6,203 $ (14,109) $ (7,906) $ 18,886 $(4,909) $ 6,071
--------- --------- --------- ------- ------------- --------------
--------- --------- --------- ------- ------------- --------------
OTHER DATA:
Income (loss) from operations.......... $ 11,023 $ (91) $ 10,932 $ 21,547 $ 1,848 $ 34,327
Depreciation and amortization.......... 5,508 15,279 20,787 (748) 5,502 25,541
Technology license fee to Advanced
Medical(H)........................... -- -- -- 550 550
Restructuring.......................... -- 17,396 17,396 (17,396) --
Lease/contract interest income......... 1,921 1,812 3,733 3,733
--------- --------- --------- ------- ------------- --------------
Adjusted EBITDA........................ $ 18,452 $ 34,396 $ 52,848 $ 3,403 $7,900 $ 64,151
--------- --------- --------- ------- ------------- --------------
--------- --------- --------- ------- ------------- --------------
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) In June 1996, IVAC decided to discontinue River's operations and to divest
River's assets. River's primary assets include patents, technologies, trade
secrets, inventories and manufacturing equipment. As a result of the River
Divestiture, pro forma adjustments have been made to eliminate the
historical operating results of River and the related income tax impact to
IVAC Holdings.
(B) In connection with the Merger, management has performed a review of
operating activities of IVAC and IMED and identified duplicative costs that
will be eliminated in connection with the Merger. The most significant of
these eliminations will be achieved through head count reductions and
closure of redundant manufacturing and headquarters facilities.
Total cost savings resulting from head count reductions, assuming such
reductions had occurred at the beginning of each pro forma period, would
have been $3,000 for the year ended December 31, 1995 and $2,250 for the
nine months ended September 30, 1995 and 1996, and have been allocated to
operating expenses as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DEC. 31, 1995 SEPTEMBER 30, 1995 AND 1996
<S> <C> <C>
Selling and marketing.......................................... $ 2,600 $ 1,950
General and administrative..................................... 400 300
------ ------
$ 3,000 $ 2,250
------ ------
------ ------
</TABLE>
Due to excess capacity at the manufacturing facilities of both IMED and
IVAC, management has decided to consolidate IMED's existing San Diego
manufacturing operations at IVAC's San Diego facility. Total cost savings
resulting from this facility consolidation, assuming such consolidation had
occurred at the beginning of each pro forma period, would have been $6,600
for the year ended December 31, 1995 and $4,950 for the nine months ended
September 30, 1995 and 1996.
In addition, as a result of the head count reductions described above,
management has decided to consolidate the headquarters of IMED with IVAC's
existing San Diego headquarters. Total cost savings resulting from this
consolidation, assuming such consolidation had occurred at the beginning of
each pro forma period, would have been $1,000 for the year ended December
31, 1995 and $750 for the nine months ended September 30, 1995 and 1996 and
have been allocated to operating expenses as follows:
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DEC. 31, 1995 SEPTEMBER 30, 1995 AND 1996
<S> <C> <C>
Selling and marketing.......................................... $ 250 $ 187
General and administrative..................................... 500 375
Research and development....................................... 250 188
------ ------
$ 1,000 $ 750
------ ------
------ ------
</TABLE>
Management has identified additional costs savings related to volume
discounts expected to be received in connection with the consolidation of
suppliers and vendors, as well as planned cost savings related to the
consolidation of research and development programs. Estimated cost savings
related to these items are not deemed to qualify for pro forma adjustments
under Regulation S-X and, accordingly, have been excluded from such
adjustments.
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND OTHER DATA (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(C) Reflects amortization of increased intangible assets (primarily goodwill)
using an estimated useful life of 30 years. No adjustment to cost of sales
has been made in the Pro Forma Condensed Consolidated Statements of
Operations and Other Data related to the purchase accounting adjustment made
to inventory as it will result in a non-recurring increase to cost of sales
when such inventory is sold.
(D) Interest income consists of lease/contract interest income and interest
income on actual cash balances.
(E) Reflects interest expense related to the borrowings under the New Credit
Facility and the Notes:
<TABLE>
<CAPTION>
YEAR ENDED
DEC. 31, NINE MONTHS ENDED NINE MONTHS ENDED
1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
<S> <C> <C> <C>
New Credit Facility (at an assumed weighted average
interest rate of 8.7%)(1)........................ $ 16,547 $ 12,410 $ 12,489
Amortization of issuance costs..................... 937 703 703
Notes (at an interest rate of 9.75%)............... 19,500 14,625 14,625
Amortization of issuance costs..................... 800 600 600
------------ ------- -------
$ 37,784 $ 28,338 $ 28,417
------------ ------- -------
------------ ------- -------
</TABLE>
----------------------------
(1) For the year ended December 31, 1995, the nine months ended September
30, 1995 and eight months of the nine months ended September 30, 1996,
excludes interest expense related to $11,000 of borrowings under the New
Credit Facility used to repay borrowings under the Existing Credit
Facility incurred in connection with the repurchase of certain European
distribution rights on August 30, 1996.
(F) Reflects elimination of interest expense, including amortization of debt
issuance costs in connection with the Refinancing, the Debt Tender Offer and
Consent Solicitation, and the Junior Notes Repayment:
<TABLE>
<CAPTION>
YEAR ENDED
DEC. 31, NINE MONTHS ENDED NINE MONTHS ENDED
1995 SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
<S> <C> <C> <C>
IMED Existing Credit Facility......................... $ 1,166 $ 884 $ 1,055
IVAC existing credit facility (1)..................... 3,286 2,231 1,188
Existing Senior Notes................................. 1,465 -- 7,465
Junior subordinated notes of IVAC Holdings............ 3,961 2,971 3,363
Bridge notes of IVAC Medical Systems (2).............. 13,131 10,903 --
------------ ------- -------
$ 23,009 $ 16,989 $ 13,071
------------ ------- -------
------------ ------- -------
</TABLE>
----------------------------
(1) In addition to interest on the $15,000 of indebtedness outstanding at
September 30, 1996 under IVAC's existing credit facility that will be
repaid in the Refinancing, the elimination of interest expense related to
IVAC includes interest on $14,000 of bank debt which was repaid with the
proceeds received from the issuance of the Existing Senior Notes by IVAC
Medical Systems during November 1995.
(2) Bridge notes of IVAC Medical Systems were repaid in full with the
proceeds from the issuance of the Existing Senior Notes in November 1995.
Accordingly, all interest expense and write-off and amortization of debt
issuance costs related to the bridge notes have been eliminated in the
Pro Forma Condensed Consolidated Statements of Operations and Other Data
for the year ended December 31, 1995 and the nine months ended September
30, 1995.
Pro forma interest expense does not reflect interest savings attributable to
the repayment of approximately $25,000 principal amount of IVAC debt in
November 1995 with the proceeds of the sale of IVAC's San Diego
manufacturing and office facility. Assuming the sale had occured at January
1, 1995, interest expense would have been reduced by $3,159 and $1,923 for
the year ended December 31, 1995 and nine months ended September 30, 1995,
respectively.
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND OTHER DATA (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(G) Reflects adjustment to income tax expense related to the Transactions. The
pro forma income tax expense represents the expected taxes on the pro forma
pretax income (loss) which is primarily foreign taxes.
(H) Prior to June 30, 1996, Advanced Medical licensed to IMED certain technology
rights for $1,100 per year. Because this license fee could not be paid to
Advanced Medical as a result of restrictions in the Existing Credit
Facility, IMED accrued a liability in respect of such license fee. Effective
June 30, 1996 Advanced Medical contributed the underlying technology to
IMED. This non-cash charge has been added to income from operations in
computing Adjusted EBITDA.
