UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): March 2, 2012

 

 

 

VWR FUNDING, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   333-124100   56-2445503

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

100 Matsonford Road

P.O. Box 6660

Radnor, PA 19087

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (610) 386-1700

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Section 2—Financial Information

Item 2.02 Results of Operations and Financial Condition

Section 7—Regulation FD

Item 7.01 Regulation FD Disclosure

As previously announced, on Tuesday, March 6, 2012, at 9:00 AM (Eastern Time), members of the senior management of VWR Funding, Inc. (the “Company”) will hold a teleconference to discuss the Company’s financial results for the quarter and year ended December 31, 2011. A copy of the press release issued by the Company on February 28, 2012, which provides information regarding the teleconference, was attached as Exhibit 99.1 to the Company’s Current Report on Form 8-K furnished with the Securities and Exchange Commission on February 28, 2012.

Management’s presentation will contain a discussion of certain financial measures which are not in conformity with generally accepted accounting principles in the United States of America (“GAAP”), as described below.

Adjusted EBITDA

Management’s presentation will include a discussion of earnings before interest, taxes, depreciation and amortization, as adjusted for certain items described below (“Adjusted EBITDA”). Adjusted EBITDA is a non-GAAP financial measure. Accordingly, the table presented below reconciles this non-GAAP measure to net income for the three and twelve months ended December 31, 2011 and 2010. Net income is the most comparable GAAP measure of our operating results presented in the Company’s consolidated financial statements.

Adjusted EBITDA should not be considered as an alternative to net income or any other GAAP measure of performance or liquidity. Our calculation of Adjusted EBITDA eliminates the effect of charges primarily associated with financing decisions, tax regulations and capital investments, and includes certain other adjustments described below. Adjusted EBITDA is a key financial metric used by the Company’s investors and management to evaluate and measure the Company’s operating performance.

Reconciliation of Reported Net Income to Adjusted EBITDA

(in millions)

 

September 30, September 30, September 30, September 30,
       Three Months Ended
December 31,
     Twelve Months Ended
December 31,
 
       2011      2010      2011      2010  

Net income (GAAP)

     $ 38.3      $ 27.8      $ 57.7      $ 21.5  

Income tax provision

       17.6        14.6        30.4        28.0  

Interest expense, net

       49.3        46.4        199.6        202.7  

Depreciation and amortization

       31.1        29.1        120.9        116.5  

Impairments of goodwill and intangible assets

       —           —           3.3        48.1  

Net unrealized translation gains

       (34.0      (17.8      (22.7      (65.1

Share-based compensation expense

       0.3        0.9        2.3        3.4  

Charges associated with cost reduction initiatives

       0.1        0.1        5.9        3.1  

Acquisition related costs

       —           —           1.5        —     
    

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted EBITDA (Non-GAAP)

     $ 102.7      $ 101.1      $ 398.9      $ 358.2  
    

 

 

    

 

 

    

 

 

    

 

 

 

As reflected in the reconciliation above, the Company recorded certain significant income and expenses during the three and twelve months ended December 31, 2011 and 2010:

 

   

During the twelve months ended December 31, 2011 and 2010, we recognized aggregate charges of $3.3 million and $48.1 million related to impairments of goodwill and intangible assets in our Science Education reporting unit. The impairment charges were caused by continuing negative industry-specific factors in the primary and secondary educational markets in the United States, in particular the reduction in spending by schools in response to the prolonged negative economic conditions and the resultant uncertainty of funding by state and local governments.


   

We have a significant amount of foreign-denominated debt on our U.S. dollar-denominated balance sheet. As a result, the Company’s operating results are exposed to foreign currency translation risk with respect to this indebtedness, principally with respect to the Euro. The Company’s results for the three and twelve months ended December 31, 2011 and 2010, include net unrealized translation gains substantially related to the weakening of the Euro against the U.S. dollar.

 

   

During the three and twelve months ended December 31, 2011 and 2010, the Company recorded non-cash charges for share-based compensation and charges associated with implementing organizational changes as well as cost reduction measures.

 

   

During the twelve months ended December 31, 2011, we recorded certain acquisition-related charges relating to the sale of inventories revalued at the date of their acquisition.

Net Debt

Management’s presentation also will include a discussion of net indebtedness (“Net Debt”). Net Debt is a non-GAAP financial measure. The table presented below reconciles this non-GAAP measure to total debt. Total debt is the most comparable GAAP measure presented in the Company’s consolidated financial statements.

Net Debt should not be considered as an alternative to total debt or any other GAAP measure of indebtedness or financial condition. Our calculation of Net Debt reduces our total debt by the amount of cash and cash equivalents on hand as well as by our compensating cash balance. As noted in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, we account for our global cash pooling arrangement on a gross basis. Consequently, our total debt balance as of each period end includes aggregated bank overdraft positions for subsidiaries participating in our global cash pooling arrangement. Net Debt is an important financial metric used by the Company’s creditors, investors and management to evaluate and measure the Company’s financial condition.

Reconciliation of Total Debt to Net Debt

(in millions)

 

September 30, September 30, September 30,
       December 31,
2011
     September 30,
2011
     December 31,
2010
 

Total debt (GAAP)

     $ 2,908.7      $ 2,980.6      $ 2,757.7  

Less:

          

Cash and cash equivalents

       (164.6      (109.3      (142.1

Compensating cash balance

       (185.4      (207.0      (85.4
    

 

 

    

 

 

    

 

 

 

Net Debt (Non-GAAP)

     $ 2,558.7      $ 2,664.3      $ 2,530.2  
    

 

 

    

 

 

    

 

 

 

Net Leverage

Management’s presentation also will include a discussion of the ratio of Net Debt to Adjusted EBITDA for the latest twelve month period, to be referred to as the Company’s “Net Leverage” as of a point in time. This financial ratio is not itself a non-GAAP measurement but it consists of the non-GAAP measures described and reconciled above. The table below provides the calculation of Net Leverage as of the current year end and most recent quarter and comparable year end.

 

September 30, September 30, September 30,
       December 31,
2011
     September 30,
2011
     December 31,
2010
 

Net Debt

     $ 2,558.7       $ 2,664.3       $ 2,530.2   

LTM Adjusted EBITDA

     $ 398.9       $ 397.3       $ 358.2   

Net Leverage

       6.4      6.7      7.1


SIGNATURE

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.

 

    VWR Funding, Inc.

Date: March 2, 2012

    By:   /s/ Theresa A. Balog
     

Name: Theresa A. Balog

     

Title: Vice President and Corporate Controller