Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - DERMA SCIENCES, INC. | v448408_ex99-1.htm |
| EX-2.1 - EXHIBIT 2.1 - DERMA SCIENCES, INC. | v448408_ex2-1.htm |
| 8-K - 8-K - DERMA SCIENCES, INC. | v448408_8k.htm |
Exhibit 99.2
DERMA SCIENCES, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
On September 1, 2016, Derma Sciences, Inc. (the “Company”) completed the previously announced sale of substantially all of the assets of its First Aid Products division (“FAD”) to Dukal Corporation (“Dukal”) for approximately $9.7 million in cash plus a promissory note in the amount of $2.7 million (the “Sale”).
The Company will recognize a gain as a result of the Sale, which is currently estimated at approximately $3.8 million before income taxes. The estimated gain represents the excess of: i) the proceeds of the Sale over ii) the estimated carrying value of the assets of FAD sold to Dukal at September 1, 2016 and estimated transactions costs.
The Company will classify the historical financial results of FAD and the gain on the Sale as discontinued operations in its consolidated financial statements beginning in the third quarter of 2016.
The unaudited pro forma consolidated financial information of the Company presented below was derived from the Company’s historical consolidated financial statements and is presented to give effect to the Sale. The unaudited pro forma consolidated balance sheet assumes the Sale occurred on June 30, 2016. The unaudited pro forma consolidated statements of operations for the three most recently completed fiscal years and the six months ended June 30, 2016 reflect the presentation of FAD as a discontinued operation.
The unaudited pro forma consolidated financial statements are presented for illustrative and informational purposes only and are not intended to represent or be indicative of the Company’s consolidated results of operations or financial position that would have been reported had the Sale been completed as of the dates presented, and should not be taken as a representation of the Company’s future consolidated results of operations or financial condition. The pro forma adjustments are based upon information available to management and assumptions that management believes are factually supportable and reasonable under the circumstances. The final gain will differ, and may differ materially, from the estimated net gain reported in the unaudited pro forma consolidated balance sheet as of June 30, 2016, as well as noted above. The determination of the final gain will be impacted by finalization of the estimated carrying amount of goodwill associated with FAD, as well as, changes in the carrying value of other FAD assets between June 30, 2016 and September 1, 2016. Additionally, the pro forma adjustments herein may differ from the final adjustments that will be reported as discontinued operations for FAD in the Company’s future filings.
The unaudited pro forma consolidated financial information should be read in conjunction with the historical consolidated financial statements and accompanying notes of the Company included in the Company’s 2015 Annual Report filed on Form 10-K and its Quarterly Report for the quarterly period ended June 30, 2016, filed on Form 10-Q.
DERMA SCIENCES, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
As Reported |
FAD net assets | Remaining net assets reclassified to discontinued operations (b) |
Pro Forma Adjustments (c) |
Pro Forma | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Cash and cash equivalents | $ | 18,998,616 | $ | - | $ | - | $ | 9,570,996 | $ | 28,569,612 | ||||||||||
| Short term investments | 25,000,000 | - | - | - | 25,000,000 | |||||||||||||||
| Accounts receivable | 9,332,223 | - | (2,142,162 | ) | - | 7,190,061 | ||||||||||||||
| Current portion of note receivable | - | - | - | 601,361 | 601,361 | |||||||||||||||
| Inventories | 18,286,773 | (3,583,826 | ) | - | - | 14,702,947 | ||||||||||||||
| Prepaid expenses and other current assets | 1,014,749 | - | (61,306 | ) | - | 953,443 | ||||||||||||||
| Assets of discontinued operations | - | - | 2,252,016 | - | 2,252,016 | |||||||||||||||
| Total current assets | 72,632,361 | (3,583,826 | ) | 48,548 | 10,172,357 | 79,269,440 | ||||||||||||||
| Long-term equity investment | 15,776,448 | - | - | - | 15,776,448 | |||||||||||||||
| Note receivable, less current portion | - | - | - | 2,098,639 | 2,098,639 | |||||||||||||||
| Equipment and improvements, net | 3,951,851 | (67,217 | ) | - | - | 3,884,634 | ||||||||||||||
| Identifiable intangible assets, net | 8,382,866 | (352,557 | ) | - | - | 8,030,309 | ||||||||||||||
| Goodwill | 13,457,693 | (4,679,684 | ) | - | - | 8,778,009 | ||||||||||||||
| Other assets | 150,348 | - | (48,548 | ) | - | 101,800 | ||||||||||||||
| Total assets | $ | 114,351,567 | $ | (8,683,284 | ) | $ | - | $ | 12,270,996 | $ | 117,939,279 | |||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
| Current liabilities | ||||||||||||||||||||
| Accounts payable | $ | 2,285,434 | $ | - | $ | (119,903 | ) | $ | - | $ | 2,165,531 | |||||||||
| Accrued expenses and other current liabilities | 4,951,112 | - | (379,122 | ) | - | 4,571,990 | ||||||||||||||
| Liabilities of discontinued operations | 1,477,511 | - | 499,025 | - | 1,976,536 | |||||||||||||||
| Total current liabilities | 8,714,057 | - | - | - | 8,714,057 | |||||||||||||||
| Long-term liabilities | 684,441 | (13,792 | ) | - | - | 670,649 | ||||||||||||||
| Deferred tax liability | 2,819,509 | - | - | (958,470 | ) | 1,861,039 | ||||||||||||||
| Total liabilities | 12,218,007 | (13,792 | ) | - | (958,470 | ) | 11,245,745 | |||||||||||||
| Stockholders’ Equity | ||||||||||||||||||||
| Convertible preferred stock | 733 | - | - | - | 733 | |||||||||||||||
| Common stock | 259,638 | - | - | - | 259,638 | |||||||||||||||
| Additional paid-in capital | 236,303,495 | - | - | - | 236,303,495 | |||||||||||||||
| Accumulated other comprehensive income | 7,394,757 | - | - | - | 7,394,757 | |||||||||||||||
| Accumulated deficit | (141,825,063 | ) | - | - | 4,559,974 | (137,265,089 | ) | |||||||||||||
| Total stockholders' equity | 102,133,560 | - | - | 4,559,974 | 106,693,534 | |||||||||||||||
| Total liabilities and stockholders' equity | $ | 114,351,567 | $ | (13,792 | ) | $ | - | $ | 3,601,504 | $ | 117,939,279 | |||||||||
| (a) | – Represents the assets and liabilities related to FAD that were sold. |
| (b) | – Represents reclassification of remaining FAD assets and liabilities to a discontinued operation for financial reporting presentation purposes. | |
| (c) | – Represents pro forma adjustments: Receipt of cash proceeds and note receivable from the sale of FAD, net of estimated transaction costs, as well as reflecting the estimated gain and tax impact of the transaction. |
DERMA SCIENCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| Six months ended June 30, 2016 | ||||||||||||
| As Reported | Reclassification of FAD (a) | Pro Forma | ||||||||||
| Net sales | $ | 42,450,618 | $ | (8,646,020 | ) | $ | 33,804,598 | |||||
| Costs of sales | 26,483,249 | (6,778,448 | ) | 19,704,801 | ||||||||
| Gross profit | 15,967,369 | (1,867,572 | ) | 14,099,797 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative | 20,238,000 | (1,175,908 | ) | 19,062,092 | ||||||||
| Total operating expenses | 20,238,000 | (1,175,908 | ) | 19,062,092 | ||||||||
| Operating loss | (4,270,631 | ) | (691,664 | ) | (4,962,295 | ) | ||||||
| Other income, net | 4,803,141 | - | 4,803,141 | |||||||||
| Income (loss) from continuing operations before income taxes | 532,510 | (691,664 | ) | (159,154 | ) | |||||||
| Income tax provision | 307,727 | (74,833 | ) | 232,894 | ||||||||
| Net income (loss) from continuing operations | $ | 224,783 | $ | (616,831 | ) | $ | (392,048 | ) | ||||
| Net income (loss) from continuing operations per common share - basic | $ | 0.01 | $ | (0.02 | ) | |||||||
| Net income (loss) from continuing operations per common share - diluted | $ | 0.01 | $ | (0.02 | ) | |||||||
| Shares used in computing net income (loss) from continuing operations per common share basic | 25,897,179 | 25,897,179 | ||||||||||
| Shares used in computing net income (loss) from continuing operations per common share diluted | 26,036,047 | 25,897,179 | ||||||||||
| (a) | - Represents the reclassification of FAD from a continuing operation to a discontinued operation for financial reporting presentation purposes. |
DERMA SCIENCES, INC
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| Year Ended December 31, 2015 | ||||||||||||
| As Reported |
|
Reclassification |
Pro Forma | |||||||||
| Net sales | $ | 84,474,284 | $ | (16,699,877 | ) | $ | 67,774,407 | |||||
| Costs of sales | 51,740,109 | (12,523,101 | ) | 39,217,008 | ||||||||
| Gross profit | 32,734,175 | (4,176,776 | ) | 28,557,399 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative | 51,430,091 | (2,269,005 | ) | 49,161,086 | ||||||||
| Research and development | 807,128 | - | 807,128 | |||||||||
| Restructuring and other charges | 2,458,555 | - | 2,458,555 | |||||||||
| Total operating expenses | 54,695,774 | (2,269,005 | ) | 52,426,769 | ||||||||
| Operating loss | (21,961,599 | ) | (1,907,771 | ) | (23,869,370 | ) | ||||||
| Other expense, net | (649,779 | ) | - | (649,779 | ) | |||||||
| Loss from continuing operations before income taxes | (22,611,378 | ) | (1,907,771 | ) | (24,519,149 | ) | ||||||
| Income tax benefit | 2,244,715 | 112,250 | 2,356,965 | |||||||||
| Net loss from continuing operations | $ | (20,366,663 | ) | $ | (1,795,521 | ) | $ | (22,162,184 | ) | |||
| Net loss from continuing operations per common share – basic and diluted | $ | (0.79 | ) | $ | (0.86 | ) | ||||||
| Shares used in computing net loss from continuing operations per common share basic and diluted | 25,734,474 | 25,734,474 | ||||||||||
| (a) | - Represents the reclassification of FAD from a continuing operation to a discontinued operation for financial reporting presentation purposes. |
DERMA SCIENCES, INC
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| Year Ended December 31, 2014 | ||||||||||||
| As Reported |
| Reclassification | Pro Forma | |||||||||
| Net sales | $ | 83,745,680 | $ | (16,642,579 | ) | $ | 67,103,101 | |||||
| Costs of sales | 53,635,745 | (12,306,424 | ) | 41,329,321 | ||||||||
| Gross profit | 30,109,935 | (4,336,155 | ) | 25,773,780 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative | 50,846,895 | (2,105,146 | ) | 48,741,749 | ||||||||
| Research and development | 440,246 | - | 440,246 | |||||||||
| Total operating expenses | 51,287,141 | (2,105,146 | ) | 49,181,995 | ||||||||
| Operating loss | (21,177,206 | ) | (2,231,009 | ) | (23,408,215 | ) | ||||||
| Other income, net | 181,543 | - | 181,543 | |||||||||
| Loss from continuing operations before income taxes | (20,995,663 | ) | (2,231,009 | ) | (23,226,672 | ) | ||||||
| Income tax benefit | 151,048 | 112,250 | 263,298 | |||||||||
| Net loss from continuing operations | $ | (20,844,615 | ) | $ | (2,118,759 | ) | $ | (22,963,374 | ) | |||
| Net loss from continuing operations per common share – basic and diluted | $ | (0.85 | ) | $ | (0.93 | ) | ||||||
| Shares used in computing net loss from continuing operations per common share basic and diluted | 24,584,071 | 24,584,071 | ||||||||||
| (a) | - Represents the reclassification of FAD from a continuing operation to a discontinued operation for financial reporting presentation purposes. |
DERMA SCIENCES, INC
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
| Year Ended December 31, 2013 | ||||||||||||
As Reported |
| Reclassification | Pro Forma | |||||||||
| Net sales | $ | 79,710,980 | $ | (16,591,698 | ) | $ | 63,119,282 | |||||
| Costs of sales | 50,320,506 | (12,416,691 | ) | 37,903,815 | ||||||||
| Gross profit | 29,390,474 | (4,175,007 | ) | 25,215,467 | ||||||||
| Operating expenses | ||||||||||||
| Selling, general and administrative | 41,945,599 | (2,040,474 | ) | 39,905,125 | ||||||||
| Total operating expenses | 41,945,599 | (2,040,474 | ) | 39,905,125 | ||||||||
| Operating loss | (12,555,125 | ) | (2,134,533 | ) | (14,689,658 | ) | ||||||
| Other income, net | 185,740 | - | 185,740 | |||||||||
| Loss from continuing operations before income taxes | (12,369,385 | ) | (2,134,533 | ) | (14,503,918 | ) | ||||||
| Income tax provision | 160,111 | (112,250 | ) | 47,861 | ||||||||
| Net loss from continuing operations | $ | (12,529,496 | ) | $ | (2,022,283 | ) | $ | (14,551,779 | ) | |||
| Net loss from continuing operations per common share – basic and diluted | $ | (0.73 | ) | $ | (0.85 | ) | ||||||
| Shares used in computing net loss from continuing operations per common share basic and diluted | 17,056,632 | 17,056,632 | ||||||||||
| (a) | - Represents the reclassification of FAD from a continuing operation to a discontinued operation for financial reporting presentation purposes. |