England and Wales (State or Other Jurisdiction of Incorporation) | 001-37599 (Commission File Number) | 98-1268150 (IRS Employer Identification No.) |
Emerging growth company | o |
o |
Exhibit | Description | |
99.1 | Press Release issued by LivaNova PLC dated February 28, 2018 |
LivaNova PLC | |
Date: February 28, 2018 | By:/s/ Catherine Moroz |
Name: Catherine Moroz | |
Title: Company Secretary | |
Exhibit No. | Description | |
99.1 |
$ in millions | Three months ended December 31, | % Change | Constant Currency % Change | |||||||
Business Franchise / Product Line: | 2017 | 2016 | ||||||||
Cardiopulmonary | $142.3 | $124.7 | 14.1 | % | 9.2 | % | ||||
Heart Valves | 35.6 | 34.0 | 4.7 | % | 0.2 | % | ||||
Cardiac Surgery | 177.9 | 158.7 | 12.1 | % | 7.3 | % | ||||
Neuromodulation | 99.8 | 90.5 | 10.3 | % | 9.4 | % | ||||
Other | 0.7 | 0.4 | — | % | — | % | ||||
Total Net Sales | $278.4 | $249.6 | 11.5 | % | 8.1 | % |
• | Note: Numbers may not add up precisely due to rounding. Constant currency % change is considered a non-GAAP metric. |
$ in millions | Twelve months ended December 31, | % Change | Constant Currency % Change | |||||||
Business Franchise / Product Line: | 2017 | 2016 | ||||||||
Cardiopulmonary | $497.3 | $474.4 | 4.8 | % | 3.5 | % | ||||
Heart Valves | 138.2 | 137.3 | 0.7 | % | (0.4 | %) | ||||
Cardiac Surgery | 635.5 | 611.7 | 3.9 | % | 2.7 | % | ||||
Neuromodulation | 375.0 | 351.4 | 6.7 | % | 6.7 | % | ||||
Other | 1.8 | 1.7 | — | % | — | % | ||||
Total Net Sales | $1,012.3 | $964.9 | 4.9 | % | 4.1 | % |
• | Note: Numbers may not add up precisely due to rounding. Constant currency % change is considered a non-GAAP metric. |
Earnings Per Share | |||
Estimated merger and integration charges | $0.23 | - | $0.28 |
Estimated charges for restructuring | $0.25 | - | $0.30 |
Amortization of intangible assets related to purchase price accounting | $0.67 | ||
Estimated charges related to equity compensation | $0.36 | - | $0.40 |
For more information, please visit www.livanova.com, or contact: Investor Relations and Media Karen King Vice President, Investor Relations & Corporate Communications Phone: +1 (281) 228-7262 Fax: +1 (281) 218-9332 e-mail: Corporate.Communications@LivaNova.com |
LIVANOVA PLC | ||||||||||||
QUARTERLY SALES | ||||||||||||
(U.S. dollars in millions) | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2017 | 2016 | % Change at Actual Currency Rates | % Change at Constant Currency Rates(1) | |||||||||
Cardiopulmonary | ||||||||||||
US | 42.6 | 41.3 | 2.9 | % | 2.9 | % | ||||||
Europe | 38.5 | 33.8 | 13.8 | % | 4.1 | % | ||||||
Rest of World | 61.3 | 49.5 | 23.6 | % | 18.0 | % | ||||||
Total | 142.3 | 124.7 | 14.1 | % | 9.2 | % | ||||||
Heart Valves | ||||||||||||
US | 6.1 | 6.8 | (9.9 | %) | (9.9 | %) | ||||||
Europe | 11.2 | 10.7 | 4.2 | % | (4.4 | %) | ||||||
Rest of World | 18.3 | 16.5 | 11.0 | % | 7.3 | % | ||||||
Total | 35.6 | 34.0 | 4.7 | % | 0.2 | % | ||||||
Cardiac Surgery | ||||||||||||
US | 48.6 | 48.1 | 1.1 | % | 1.1 | % | ||||||
Europe | 49.7 | 44.5 | 11.5 | % | 2.0 | % | ||||||
Rest of World | 79.6 | 66.1 | 20.5 | % | 15.3 | % | ||||||
Total | 177.9 | 158.7 | 12.1 | % | 7.3 | % | ||||||
Neuromodulation | ||||||||||||
US | 85.6 | 77.6 | 10.3 | % | 10.3 | % | ||||||
Europe | 9.3 | 7.7 | 19.8 | % | 10.8 | % | ||||||
Rest of World | 5.0 | 5.2 | (4.9 | %) | (6.4 | %) | ||||||
Total | 99.8 | 90.5 | 10.3 | % | 9.4 | % | ||||||
Other | ||||||||||||
US | — | — | N/A | N/A | ||||||||
Europe | — | — | N/A | N/A | ||||||||
Rest of World | 0.7 | 0.4 | N/A | N/A | ||||||||
Total | 0.7 | 0.4 | N/A | N/A | ||||||||
Total | ||||||||||||
US | 134.2 | 125.7 | 6.8 | % | 6.8 | % | ||||||
Europe | 58.9 | 52.3 | 12.8 | % | 3.4 | % | ||||||
Rest of World | 85.2 | 71.7 | 18.8 | % | 13.9 | % | ||||||
Total | $278.4 | $249.6 | 11.5 | % | 8.1 | % | ||||||
* The sales results presented are unaudited. Numbers may not add up precisely due to rounding. | ||||||||||||
(1) Constant currency is a non-GAAP measure. |
LIVANOVA PLC | ||||||||||||
TWELVE MONTH SALES | ||||||||||||
(U.S. dollars in millions) | ||||||||||||
Twelve Months Ended December 31, | ||||||||||||
2017 | 2016 | % Change at Actual Currency Rates | % Change at Constant Currency Rates(1) | |||||||||
Cardiopulmonary | ||||||||||||
US | 152.8 | 154.4 | (1.0 | %) | (1.0 | %) | ||||||
Europe | 133.6 | 128.5 | 4.0 | % | 2.3 | % | ||||||
Rest of World | 210.9 | 191.5 | 10.1 | % | 8.1 | % | ||||||
Total | 497.3 | 474.4 | 4.8 | % | 3.5 | % | ||||||
Heart Valves | ||||||||||||
US | 25.0 | 27.7 | (9.8 | %) | (9.8 | %) | ||||||
Europe | 42.1 | 44.3 | (4.9 | %) | (6.2 | %) | ||||||
Rest of World | 71.1 | 65.3 | 8.9 | % | 7.4 | % | ||||||
Total | 138.2 | 137.3 | 0.7 | % | (0.4 | %) | ||||||
Cardiac Surgery | ||||||||||||
US | 177.8 | 182.1 | (2.4 | %) | (2.4 | %) | ||||||
Europe | 175.7 | 172.8 | 1.7 | % | 0.1 | % | ||||||
Rest of World | 282.0 | 256.8 | 9.8 | % | 7.9 | % | ||||||
Total | 635.5 | 611.7 | 3.9 | % | 2.7 | % | ||||||
Neuromodulation | ||||||||||||
US | 316.9 | 298.5 | 6.2 | % | 6.2 | % | ||||||
Europe | 34.8 | 31.9 | 8.8 | % | 9.0 | % | ||||||
Rest of World | 23.3 | 21.0 | 10.9 | % | 10.1 | % | ||||||
Total | 375.0 | 351.4 | 6.7 | % | 6.7 | % | ||||||
Other | ||||||||||||
US | — | — | N/A | N/A | ||||||||
Europe | — | 0.1 | N/A | N/A | ||||||||
Rest of World | 1.8 | 1.6 | N/A | N/A | ||||||||
Total | 1.8 | 1.7 | N/A | N/A | ||||||||
Total | ||||||||||||
US | 494.7 | 480.6 | 2.9 | % | 2.9 | % | ||||||
Europe | 210.5 | 204.8 | 2.7 | % | 1.5 | % | ||||||
Rest of World | 307.1 | 279.5 | 9.9 | % | 8.1 | % | ||||||
Total | $1,012.3 | $964.9 | 4.9 | % | 4.1 | % | ||||||
* The sales results presented are unaudited. Numbers may not add up precisely due to rounding. | ||||||||||||
(1) Constant currency is a non-GAAP measure. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF INCOME (LOSS) - UNAUDITED | ||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||
Three Months Ended December 31, | ||||||||||||
2017 | 2016 | % Change(1) | ||||||||||
Net sales | $278.4 | $249.6 | ||||||||||
Cost of sales | 101.6 | 88.9 | ||||||||||
Product remediation | 4.7 | 35.3 | ||||||||||
Gross profit | 172.1 | 125.4 | 37.2 | % | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 101.6 | 95.7 | ||||||||||
Research and development | 32.5 | 20.0 | ||||||||||
Merger and integration expenses | 7.8 | — | ||||||||||
Restructuring expenses | 3.2 | 16.8 | ||||||||||
Amortization of intangibles | 8.5 | 7.9 | ||||||||||
Total operating expenses | 153.7 | 140.3 | 9.6 | % | ||||||||
Operating income (loss) from continuing operations | 18.3 | (14.9 | ) | (222.8 | %) | |||||||
Interest expense, net | (1.9 | ) | (3.4 | ) | ||||||||
Impairment of cost-method investments | (8.6 | ) | — | |||||||||
Foreign exchange and other gains | — | 3.6 | ||||||||||
Income (loss) from continuing operations before tax | 7.9 | (14.6 | ) | (154.1 | %) | |||||||
Losses from equity method investments | (0.2 | ) | (2.2 | ) | ||||||||
Income tax expense (benefit) | 39.1 | (10.5 | ) | |||||||||
Net loss from continuing operations | (31.5 | ) | (6.3 | ) | 400.0 | % | ||||||
Discontinued Operations: | ||||||||||||
Loss from discontinued operations, net of tax | (1.9 | ) | (23.5 | ) | ||||||||
Impairment of discontinued operations, net of tax | (78.3 | ) | — | |||||||||
Net loss from discontinued operations | (80.2 | ) | (23.5 | ) | ||||||||
Net loss | ($111.7 | ) | ($29.8 | ) | 274.8 | % | ||||||
Basic loss per common share: | ||||||||||||
Continuing operations | ($0.65 | ) | ($0.13 | ) | ||||||||
Discontinued operations | ($1.67 | ) | ($0.48 | ) | ||||||||
($2.32 | ) | ($0.61 | ) | |||||||||
Diluted loss per common share: | ||||||||||||
Continuing operations | ($0.65 | ) | ($0.13 | ) | ||||||||
Discontinued operations | ($1.67 | ) | ($0.48 | ) | ||||||||
($2.32 | ) | ($0.61 | ) | |||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 48.2 | 48.5 | ||||||||||
Diluted | 48.2 | 48.5 | ||||||||||
Adjusted gross profit (1) | $178.8 | $161.3 | 10.8 | % | ||||||||
Adjusted SG&A (1) | 92.6 | 87.4 | 5.9 | % | ||||||||
Adjusted R&D (1) | 31.1 | 19.7 | 57.9 | % | ||||||||
Adjusted operating income from continuing operations (1) | 55.2 | 54.2 | 1.8 | % | ||||||||
Adjusted income from continuing operations, net of tax (1) | 43.1 | 40.6 | 6.2 | % | ||||||||
Adjusted diluted earnings per share from continuing operations (1) | $0.88 | $0.83 | 6.0 | % |
Statistics (as a % of net sales, except for income tax rate) | |||||||||||||
GAAP Three Months Ended December 31, | Adjusted (1) Three Months Ended December 31, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Gross profit | 61.8 | % | 50.2 | % | 64.3 | % | 64.6 | % | |||||
SG&A | 36.5 | % | 38.3 | % | 33.3 | % | 35.0 | % | |||||
R&D | 11.7 | % | 8.0 | % | 11.2 | % | 7.9 | % | |||||
Operating income from continuing operations | 6.6 | % | (6.0 | %) | 19.8 | % | 21.7 | % | |||||
Income from continuing operations, net of tax | (11.3 | %) | (2.5 | %) | 15.5 | % | 16.2 | % | |||||
Income tax rate | 495.8 | % | 71.7 | % | 20.3 | % | 20.7 | % | |||||
(1) | Adjusted financial measures are Non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the press release. | ||||||||||||
* | Numbers may not add up precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF INCOME (LOSS) | ||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||
Twelve Months Ended December 31, | ||||||||||||
2017 | 2016 | % Change(1) | ||||||||||
Net sales | $1,012.3 | $964.9 | ||||||||||
Cost of sales | 353.4 | 367.8 | ||||||||||
Product remediation | 7.3 | 37.5 | ||||||||||
Gross profit | 651.6 | 559.5 | 16.5 | % | ||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative | 380.6 | 356.8 | ||||||||||
Research and development | 109.7 | 82.5 | ||||||||||
Merger and integration expenses | 15.5 | 20.4 | ||||||||||
Restructuring expenses | 17.1 | 37.4 | ||||||||||
Amortization of intangibles | 33.1 | 31.0 | ||||||||||
Total operating expenses | 556.0 | 528.1 | 5.3 | % | ||||||||
Operating income from continuing operations | 95.7 | 31.4 | 204.8 | % | ||||||||
Interest expense, net | (6.5 | ) | (8.9 | ) | ||||||||
Gain on acquisition of Caisson Interventional, LLC | 39.4 | — | ||||||||||
Impairment of cost-method investments | (8.6 | ) | — | |||||||||
Foreign exchange and other gains | 1.1 | 3.1 | ||||||||||
Income from continuing operations before tax | 121.1 | 25.7 | 371.2 | % | ||||||||
Losses from equity method investments | (16.7 | ) | (18.7 | ) | ||||||||
Income tax expense | 50.0 | 5.1 | ||||||||||
Income from continuing operations | 54.5 | 1.9 | 2,768.4 | % | ||||||||
Discontinued Operations: | ||||||||||||
Loss from discontinued operations, net of tax | (1.3 | ) | (64.7 | ) | ||||||||
Impairment of discontinued operations, net of tax | (78.3 | ) | — | |||||||||
Net loss from discontinued operations | (79.6 | ) | (64.7 | ) | ||||||||
Net loss | ($25.1 | ) | ($62.8 | ) | 60.0 | % | ||||||
Basic income (loss) per common share: | ||||||||||||
Continuing operations | $1.13 | $0.04 | ||||||||||
Discontinued operations | ($1.65 | ) | ($1.33 | ) | ||||||||
($0.52 | ) | ($1.29 | ) | |||||||||
Diluted income (loss) per common share: | ||||||||||||
Continuing operations | $1.12 | $0.04 | ||||||||||
Discontinued operations | ($1.64 | ) | ($1.32 | ) | ||||||||
($0.52 | ) | ($1.28 | ) | |||||||||
Weighted average common shares outstanding | ||||||||||||
Basic | 48.2 | 48.9 | ||||||||||
Diluted | 48.5 | 49.0 | ||||||||||
Adjusted gross profit (1) | $664.8 | $628.0 | 5.9 | % | ||||||||
Adjusted SG&A (1) | 350.9 | 335.2 | 4.7 | % | ||||||||
Adjusted R&D (1) | 95.2 | 80.9 | 17.7 | % | ||||||||
Adjusted operating income from continuing operations (1) | 218.7 | 211.9 | 3.2 | % | ||||||||
Adjusted income from continuing operations, net of tax (1) | 160.5 | 148.5 | 8.1 | % | ||||||||
Adjusted diluted earnings per share from continuing operations (1) | $3.31 | $3.03 | 9.2 | % |
Statistics (as a % of net sales, except for income tax rate) | |||||||||||||
GAAP Twelve Months Ended December 31, | Adjusted (1) Twelve Months Ended December 31, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
Gross profit | 64.4 | % | 58.0 | % | 65.7 | % | 65.1 | % | |||||
SG&A | 37.6 | % | 37.0 | % | 34.7 | % | 34.7 | % | |||||
R&D | 10.8 | % | 8.5 | % | 9.4 | % | 8.4 | % | |||||
Operating income from continuing operations | 9.5 | % | 3.3 | % | 21.6 | % | 22.0 | % | |||||
Income from continuing operations, net of tax | 5.4 | % | 0.2 | % | 15.9 | % | 15.4 | % | |||||
Income tax rate | 41.2 | % | 19.9 | % | 22.8 | % | 24.7 | % | |||||
(1) | Adjusted financial measures are Non-GAAP measures and exclude specified items as described and reconciled in the "Reconciliation of GAAP to non-GAAP Financial Measures" contained in the press release. | ||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||||||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||
Three Months Ended December 31, 2017 | Sales | Gross profit | Operating income from continuing operations | Income (loss) from continuing operations | Income (loss) from discontinued operations | Net income (loss) | Diluted EPS from continuing operations | Diluted EPS from discontinued operations | Diluted EPS | |||||||||||||||||||
GAAP Financial Measures | $278.4 | $172.1 | $18.3 | ($31.5 | ) | ($80.2 | ) | ($111.7 | ) | ($0.65 | ) | ($1.67 | ) | ($2.32 | ) | |||||||||||||
Specified items | ||||||||||||||||||||||||||||
Merger and integration expenses (A) | 7.8 | 5.9 | 5.9 | 0.12 | — | 0.12 | ||||||||||||||||||||||
Restructuring expenses (B) | 3.2 | 3.1 | 0.1 | 3.2 | 0.06 | — | 0.06 | |||||||||||||||||||||
Depreciation and amortization (C) | 1.1 | 10.0 | 4.9 | 1.4 | 6.4 | 0.10 | 0.03 | 0.13 | ||||||||||||||||||||
Product remediation (D) | 4.7 | 4.7 | 3.1 | 3.1 | 0.06 | — | 0.06 | |||||||||||||||||||||
Other income/(expenses) & litigations (E) | 3.2 | 3.2 | 3.2 | 0.07 | — | 0.07 | ||||||||||||||||||||||
Equity compensation (F) | 0.2 | 4.0 | 3.5 | 0.7 | 4.3 | 0.07 | 0.02 | 0.09 | ||||||||||||||||||||
CRM business franchise divestiture (G) | 82.7 | 82.7 | — | 1.69 | 1.69 | |||||||||||||||||||||||
Other Impairments (H) | 0.7 | 1.0 | 7.9 | 7.9 | 0.17 | — | 0.17 | |||||||||||||||||||||
Acquisition costs (I) | 2.9 | 0.4 | 0.4 | 0.01 | — | 0.01 | ||||||||||||||||||||||
Certain interest adjustments (J) | 0.7 | 0.7 | 0.02 | — | 0.02 | |||||||||||||||||||||||
Certain tax adjustments (K) | 41.7 | (4.1 | ) | 37.6 | 0.85 | (0.07 | ) | 0.78 | ||||||||||||||||||||
Adjusted financial measures | $278.4 | $178.8 | $55.2 | $43.1 | $0.7 | $43.8 | $0.88 | $0.01 | $0.89 | |||||||||||||||||||
GAAP results for the three months ended December 31, 2017 include: | ||||||||||||||||||||||||||||
(A) | Merger and integration expenses related to our legacy companies | |||||||||||||||||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||||||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||||||||||||||||
(D) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||
(E) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||||||||||||||||
(F) | Continuing operations includes $0.2m related to COGS, $3.5m related to SG&A and $0.3m for R&D. | |||||||||||||||||||||||||||
(G) | Includes CRM business franchise impairment of $93.6m and $6.3m of expenses associated with divestiture | |||||||||||||||||||||||||||
(H) | Includes $8.6m of impairments to cost-method investments and $1.0m of tangible asset impairments | |||||||||||||||||||||||||||
(I) | Costs associated with the acquisitions of ImThera, TandemLife and Caisson | |||||||||||||||||||||||||||
(J) | Primarily related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||||||||||||||||
(K) | Primarily relates to discrete tax items and the tax impact of intercompany transactions, of which $27.5m related to a net, non-cash charge incurred as a result of the U.S. enacted Tax Cuts and Jobs Act on December 22, 2017. | |||||||||||||||||||||||||||
* | Numbers may not add up precisely due to rounding. | |||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||||||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||
Three Months Ended December 31, 2016 | Sales | Gross profit | Operating (loss) income from continuing operations | Income (loss) from continuing operations | Income (loss) from discontinued operations | Net income (loss) | Diluted EPS from continuing operations | Diluted EPS from discontinued operations | Diluted EPS | |||||||||||||||||||
GAAP Financial Measures | $249.6 | $125.4 | ($14.9 | ) | ($6.3 | ) | ($23.5 | ) | ($29.8 | ) | ($0.13 | ) | ($0.48 | ) | ($0.61 | ) | ||||||||||||
Specified Items | ||||||||||||||||||||||||||||
Restructuring expenses (A) | 16.8 | 10.2 | 1.9 | 12.1 | 0.21 | 0.04 | 0.25 | |||||||||||||||||||||
Depreciation, Amortization & Inventory Step-Up (B) | 0.7 | 9.0 | 9.5 | 3.9 | 13.4 | 0.19 | 0.08 | 0.27 | ||||||||||||||||||||
Impairment of goodwill (C) | 18.3 | 18.3 | — | 0.38 | 0.38 | |||||||||||||||||||||||
Product remediation (D) | 35.3 | 35.3 | 23.8 | 23.8 | 0.49 | — | 0.49 | |||||||||||||||||||||
Other income/(expenses) & litigations (E) | 4.3 | 3.6 | 3.6 | 0.07 | — | 0.07 | ||||||||||||||||||||||
Equity compensation (F) | (0.1 | ) | 3.8 | 1.5 | 0.2 | 1.7 | 0.03 | — | 0.03 | |||||||||||||||||||
Certain interest adjustments (G) | (0.9 | ) | (0.9 | ) | (0.02 | ) | — | (0.02 | ) | |||||||||||||||||||
Certain tax adjustments (H) | (0.7 | ) | (0.7 | ) | (0.01 | ) | — | (0.01 | ) | |||||||||||||||||||
Adjusted financial measures | $249.6 | $161.3 | $54.2 | $40.6 | $0.9 | $41.5 | $0.83 | $0.02 | $0.85 | |||||||||||||||||||
GAAP results for the three months ended December 31, 2016 include: | ||||||||||||||||||||||||||||
(A) | Restructuring expenses related to organizational changes | |||||||||||||||||||||||||||
(B) | Includes depreciation and amortization associated with final purchase price accounting | |||||||||||||||||||||||||||
(C) | Impairment of CRM segment goodwill | |||||||||||||||||||||||||||
(D) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||
(E) | Cost of $2.6m related to the reassessment of earn-out provisions for two legacy distributor acquisitions; $0.7m related to a provision for previous years under audit in a foreign jurisdiction | |||||||||||||||||||||||||||
(F) | Continuing operations includes $3.8m related to SG&A, $0.1m related to R&D and ($0.1m) related to COGS | |||||||||||||||||||||||||||
(G) | Primarily interest related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||||||||||||||||
(H) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||||||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||||||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||
Year Ended December 31, 2017 | Sales | Gross profit | Operating income from continuing operations | Income from continuing operations | Income (loss) from discontinued operations | Net income (loss) | Diluted EPS from continuing operations | Diluted EPS from discontinued operations | Diluted EPS | |||||||||||||||||||
GAAP Financial Measures | $1,012.3 | $651.6 | $95.7 | $54.5 | ($79.6 | ) | ($25.1 | ) | $1.12 | ($1.64 | ) | ($0.52 | ) | |||||||||||||||
Specified Items | ||||||||||||||||||||||||||||
Merger and integration expenses (A) | 14.8 | 11.6 | 11.6 | 0.24 | — | 0.24 | ||||||||||||||||||||||
Restructuring expenses (B) | 17.1 | 14.7 | (1.7 | ) | 13.0 | 0.30 | (0.03 | ) | 0.27 | |||||||||||||||||||
Depreciation and Amortization (C) | 4.4 | 38.7 | 26.7 | 10.5 | 37.2 | 0.55 | 0.22 | 0.77 | ||||||||||||||||||||
Product remediation (D) | 7.3 | 7.3 | 4.8 | 4.8 | 0.10 | — | 0.10 | |||||||||||||||||||||
Other income/(expenses) & litigations (E) | 0.1 | 10.1 | 3.7 | 3.7 | 0.08 | — | 0.08 | |||||||||||||||||||||
Equity compensation (F) | 0.4 | 17.7 | 13.6 | 1.2 | 14.8 | 0.28 | 0.03 | 0.31 | ||||||||||||||||||||
CRM business franchise divestiture (G) | 83.7 | 83.7 | — | 1.73 | 1.73 | |||||||||||||||||||||||
Other impairments (H) | 0.7 | 1.0 | 20.9 | 20.9 | 0.43 | — | 0.43 | |||||||||||||||||||||
Acquisition costs (I) | 0.2 | 16.5 | (28.7 | ) | (28.7 | ) | (0.59 | ) | — | (0.59 | ) | |||||||||||||||||
Certain interest adjustments (J) | 1.5 | 1.5 | 0.03 | — | 0.03 | |||||||||||||||||||||||
Certain tax adjustments (K) | 37.2 | (2.9 | ) | 34.3 | 0.77 | (0.06 | ) | 0.71 | ||||||||||||||||||||
Adjusted financial measures | $1,012.3 | $664.8 | $218.7 | $160.5 | $11.3 | $171.8 | $3.31 | $0.23 | $3.54 | |||||||||||||||||||
GAAP results for the year ended December 31, 2017 include: | ||||||||||||||||||||||||||||
(A) | Merger and integration expenses related to our legacy companies | |||||||||||||||||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||||||||||||||||
(C) | Includes depreciation and amortization associated with purchase price accounting | |||||||||||||||||||||||||||
(D) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||
(E) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters | |||||||||||||||||||||||||||
(F) | Continuing operations includes $0.5m related to COGS, $16.1m related to SG&A and $1.1m for R&D. | |||||||||||||||||||||||||||
(G) | Includes CRM business franchise impairment of $93.6m and $7.3m of expenses associated with divestiture | |||||||||||||||||||||||||||
(H) | Includes $13.0m of impairments to an equity method investment, $8.6m of impairments to cost-method investments and $1.0m of tangible asset impairments | |||||||||||||||||||||||||||
(I) | Costs associated with acquisitions. Includes $16.5m in acquisitions costs associated with the acquisitions of ImThera, TandemLife and Caisson and a $39.4m gain upon acquisition of Caisson. | |||||||||||||||||||||||||||
(J) | Primarily related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||||||||||||||||
(K) | Primarily relates to discrete tax items and the tax impact of intercompany transactions, of which $27.5m related to a net, non-cash charge incurred as a result of the U.S. enacted Tax Cuts and Jobs Act on December 22, 2017. | |||||||||||||||||||||||||||
* | Numbers may not add up precisely due to rounding. | |||||||||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||||||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||||||||||
Year Ended December 31, 2016 | Sales | Gross profit | Operating income from continuing operations | Income from continuing operations | Income (loss) from discontinued operations | Net income (loss) | Diluted EPS from continuing operations | Diluted EPS from discontinued operations | Diluted EPS | |||||||||||||||||||
GAAP Financial Measures | $964.9 | $559.5 | $31.4 | $1.9 | ($64.7 | ) | ($62.8 | ) | $0.04 | ($1.32 | ) | ($1.28 | ) | |||||||||||||||
Specified Items | ||||||||||||||||||||||||||||
Merger and integration expenses (A) | 20.4 | 14.5 | 0.1 | 14.6 | 0.30 | — | 0.30 | |||||||||||||||||||||
Restructuring expenses (B) | 37.4 | 27.2 | 18.3 | 45.5 | 0.56 | 0.37 | 0.93 | |||||||||||||||||||||
Depreciation, Amortization & Inventory Step-Up (C) | 30.3 | 61.1 | 42.2 | 26.6 | 68.8 | 0.86 | 0.54 | 1.40 | ||||||||||||||||||||
Impairment of goodwill (D) | 18.3 | 18.3 | — | 0.37 | 0.37 | |||||||||||||||||||||||
Product remediation (E) | 37.5 | 37.5 | 24.8 | 24.8 | 0.51 | — | 0.51 | |||||||||||||||||||||
Other income/(expenses) & litigations (F) | 6.9 | 4.7 | 4.7 | 0.10 | — | 0.10 | ||||||||||||||||||||||
Write-off of investment in minorities (G) | 9.2 | 9.2 | 0.19 | — | 0.19 | |||||||||||||||||||||||
Equity compensation (H) | 0.7 | 17.2 | 12.4 | 2.1 | 14.5 | 0.25 | 0.04 | 0.30 | ||||||||||||||||||||
Certain interest adjustments (I) | 1.2 | 1.2 | 0.03 | — | 0.03 | |||||||||||||||||||||||
Certain tax adjustments (J) | 10.2 | 10.2 | 0.21 | — | 0.21 | |||||||||||||||||||||||
Adjusted financial measures | $964.9 | $628.0 | $211.9 | $148.5 | $0.8 | $149.3 | $3.03 | $0.02 | $3.05 | |||||||||||||||||||
GAAP results for the year ended December 31, 2016 include: | ||||||||||||||||||||||||||||
(A) | Merger and integration expenses related to our legacy companies | |||||||||||||||||||||||||||
(B) | Restructuring expenses related to organizational changes | |||||||||||||||||||||||||||
(C) | Includes depreciation and amortization associated with final purchase price accounting | |||||||||||||||||||||||||||
(D) | Impairment of CRM segment goodwill | |||||||||||||||||||||||||||
(E) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||||||||
(F) | Includes a gain recognized for the reimbursement of $4.7m of earthquake damages incurred in Mirandola (Italy) in 2012; $5.0m for the reserve of certain receivables from a Greece distributor; $2.6m related to the reassessment of earn-out provisions for two legacy distributor acquisitions; $0.8m related litigation settlements with two independent sales agent; $0.7m related to accruals for tax penalties related to previous years; $2.5m related to other litigation | |||||||||||||||||||||||||||
(G) | $9.2m related to the impairment of a purchase option for Respicardia | |||||||||||||||||||||||||||
(H) | Continuing operations includes $15.6m related to SG&A, $0.9m related to R&D, and $0.7m related to COGS | |||||||||||||||||||||||||||
(I) | Primarily interest related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||||||||||||||||
(J) | Primarily relates to discrete tax items and the tax impact of intercompany transactions | |||||||||||||||||||||||||||
* | Numbers may not add up precisely due to rounding. |
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||||||||||
SUPPORTING SCHEDULE TO COMBINE CONTINUING OPERATIONS AND DISCONTINUED OPERATIONS | ||||||||||||||||||||||
(U.S. dollars in millions, except per share amounts) | ||||||||||||||||||||||
Year Ended December 31, 2017 | Sales | Gross profit | Operating income from continuing operations | Income from continuing operations | Loss from discontinued operations | Net income (loss) | Diluted EPS | |||||||||||||||
GAAP Financial Measures | $1,012.3 | $651.6 | $95.7 | $54.5 | ($79.6 | ) | ($25.1 | ) | ($0.52 | ) | ||||||||||||
Add: Discontinued Operations (A) | 245.2 | 152.6 | (95.9 | ) | (79.6 | ) | 79.6 | — | — | |||||||||||||
1,257.4 | 804.2 | (0.3 | ) | (25.1 | ) | — | (25.1 | ) | (0.52 | ) | ||||||||||||
Specified Items | ||||||||||||||||||||||
Merger and integration expenses (B) | 14.8 | 11.6 | 11.6 | 0.24 | ||||||||||||||||||
Restructuring expenses (C) | 15.4 | 13.0 | 13.0 | 0.27 | ||||||||||||||||||
Depreciation and Amortization (D) | 5.4 | 52.4 | 37.2 | 37.2 | 0.77 | |||||||||||||||||
Product remediation (E) | 7.3 | 7.3 | 4.8 | 4.8 | 0.10 | |||||||||||||||||
Other income/(expenses) & litigations (F) | 0.1 | 10.1 | 3.7 | 3.7 | 0.08 | |||||||||||||||||
Equity compensation (G) | 0.6 | 19.1 | 14.8 | 14.8 | 0.31 | |||||||||||||||||
CRM business franchise divestiture (H) | 0.1 | 100.9 | 83.7 | 83.7 | 1.73 | |||||||||||||||||
Other impairments (I) | 0.7 | 1.0 | 20.9 | 20.9 | 0.43 | |||||||||||||||||
Acquisition costs (J) | 0.2 | 16.5 | (28.7 | ) | (28.7 | ) | (0.59 | ) | ||||||||||||||
Certain interest adjustments (K) | 1.5 | 1.5 | 0.03 | |||||||||||||||||||
Certain tax adjustments (L) | 34.3 | 34.3 | 0.71 | |||||||||||||||||||
Adjusted financial measures | $1,257.4 | $818.6 | $237.2 | $171.8 | $— | $171.8 | $3.54 | |||||||||||||||
GAAP results for the year ended December 31, 2017 include: | ||||||||||||||||||||||
(A) | Adjustment to combine the results of the CRM Business Franchise with continuing operations | |||||||||||||||||||||
(B) | Merger and integration expenses related to our legacy companies | |||||||||||||||||||||
(C) | Restructuring expenses related to organizational changes | |||||||||||||||||||||
(D) | Includes depreciation and amortization associated with purchase price accounting ($5.4m COGS, $0.7m SG&A, $0.4m R&D and $45.9m amortization of intangible assets) | |||||||||||||||||||||
(E) | Costs related to the 3T Heater-Cooler remediation plan | |||||||||||||||||||||
(F) | Contingent consideration related to acquisitions and legal expenses primarily related to 3T Heater-Cooler defense and other matters ($0.1m COGS, $10.5m SG&A, ($0.3m) R&D, ($0.2m) M&I and $3.2m interest expense) | |||||||||||||||||||||
(G) | Includes $0.6m related to COGS, $16.9m related to SG&A and $1.6m for R&D | |||||||||||||||||||||
(H) | Includes CRM business franchise impairment of $93.6m and $7.3m of expenses associated with divestiture ($0.1m COGS, $7.0m SG&A, $93.6m Impairment of CRM and $0.2m R&D) | |||||||||||||||||||||
(I) | Includes $13.0m of impairments to an equity method investment, $8.6m of impairments to cost-method investments and $1.0m of tangible asset impairments | |||||||||||||||||||||
(J) | Costs associated with the acquisitions of ImThera, TandemLife and Caisson. Includes $16.5m in acquisitions costs ($0.2m COGS, $2.3m SG&A, $13.0m R&D and $1.0m M&I) and a $39.4m gain upon acquisition of Caisson. | |||||||||||||||||||||
(K) | Primarily related to intellectual property migration and other non-recurring impacts to interest expense | |||||||||||||||||||||
(L) | Primarily relates to discrete tax items and the tax impact of intercompany transactions, of which $27.5m related to a net, non-cash charge incurred as a result of the U.S. enacted Tax Cuts and Jobs Act on December 22, 2017. | |||||||||||||||||||||
* | Numbers may not add up precisely due to rounding. | |||||||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES - UNAUDITED | ||||||||||||||
SUPPORTING SCHEDULE TO COMBINE NET SALES OF CONTINUING OPERATIONS AND DISCONTINUED OPERATIONS | ||||||||||||||
(U.S. dollars in millions) | ||||||||||||||
Twelve Months Ended December 31, | ||||||||||||||
2017 | 2016 | % Change at Actual Currency Rates | % Change at Constant Currency Rates | |||||||||||
US GAAP net sales | $1,012.3 | $964.9 | 4.9 | % | 4.1 | % | ||||||||
Add: Net sales of discontinued operations | 245.2 | 249.1 | (1.6 | %) | (2.5 | %) | ||||||||
$1,257.4 | $1,213.9 | 3.6 | % | 2.8 | % | |||||||||
* The sales results presented are unaudited. Numbers may not add up precisely due to rounding. |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(U.S. dollars in millions) | ||||||||
December 31, 2017 | December 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $93.6 | $39.8 | ||||||
Accounts receivable, net | 282.1 | 213.3 | ||||||
Inventories | 144.5 | 133.0 | ||||||
Prepaid and refundable taxes | 46.3 | 50.6 | ||||||
Assets held for sale | 13.6 | 4.5 | ||||||
Assets of discontinued operations | 250.7 | 319.9 | ||||||
Prepaid expenses and other current assets | 39.0 | 51.7 | ||||||
Total Current Assets | 869.9 | 812.7 | ||||||
Property, plant and equipment, net | 192.4 | 203.7 | ||||||
Goodwill | 784.2 | 691.7 | ||||||
Intangible assets, net | 535.4 | 441.6 | ||||||
Investments | 34.5 | 56.2 | ||||||
Deferred tax assets, net | 11.6 | 6.0 | ||||||
Other assets | 76.0 | 130.7 | ||||||
Total Assets | $2,503.9 | $2,342.6 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
Current debt obligations | $84.0 | $47.7 | ||||||
Accounts payable | 85.9 | 71.9 | ||||||
Accrued liabilities and other | 78.9 | 71.0 | ||||||
Taxes payable | 12.8 | 18.4 | ||||||
Accrued employee compensation and related benefits | 66.2 | 57.6 | ||||||
Liabilities of discontinued operations | 78.1 | 83.2 | ||||||
Total Current Liabilities | 406.0 | 349.9 | ||||||
Long-term debt obligations | 62.0 | 75.2 | ||||||
Deferred income taxes liability | 123.3 | 152.5 | ||||||
Long-term employee compensation and related benefits | 28.2 | 23.0 | ||||||
Other long-term liabilities | 69.1 | 35.1 | ||||||
Total Liabilities | 688.6 | 635.7 | ||||||
Total Stockholders’ Equity | 1,815.3 | 1,706.9 | ||||||
Total Liabilities and Stockholders’ Equity | $2,503.9 | $2,342.6 |
LIVANOVA PLC AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW | ||||||||
(U.S. dollars in millions) | ||||||||
Twelve Months Ended December 31, | ||||||||
Operating Activities: | 2017 | 2016 | ||||||
Net loss | ($25.1 | ) | ($62.8 | ) | ||||
Non-cash items included in net loss: | ||||||||
Depreciation | 37.1 | 39.9 | ||||||
Amortization | 45.9 | 45.5 | ||||||
Stock-based compensation | 19.1 | 19.6 | ||||||
Deferred income tax benefit | (9.3 | ) | (26.7 | ) | ||||
Losses from equity method investments | 21.6 | 22.6 | ||||||
Gain on acquisition of Caisson Interventional, LLC | (39.4 | ) | — | |||||
Impairment of discontinued operations | 93.6 | 18.3 | ||||||
Impairment of cost-method investments | 8.6 | — | ||||||
Impairment of property, plant and equipment | 6.0 | 6.0 | ||||||
Amortization of income taxes from inter-company transfers of property | 31.8 | 26.0 | ||||||
Other | 5.2 | 10.2 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (48.9 | ) | (16.4 | ) | ||||
Inventories | 7.2 | 26.7 | ||||||
Other current and non-current assets | (6.2 | ) | (32.7 | ) | ||||
Restructuring reserve | (14.6 | ) | 12.4 | |||||
Accounts payable and accrued current and non-current liabilities | (41.1 | ) | 1.6 | |||||
Net cash provided by operating activities | 91.3 | 90.2 | ||||||
Investing Activities: | ||||||||
Purchases of property, plant, equipment and other | (34.1 | ) | (38.4 | ) | ||||
Acquisition of Caisson Interventional, LLC, net of cash acquired | (14.2 | ) | — | |||||
Proceeds from sale of cost-method investment | 3.2 | — | ||||||
Proceeds from asset sales | 5.9 | 1.1 | ||||||
Purchases of cost and equity method investments | (6.3 | ) | (8.0 | ) | ||||
Loans to cost and equity method investees | (7.4 | ) | (6.3 | ) | ||||
Purchases of short-term investments | — | (7.1 | ) | |||||
Maturities of short-term investments | — | 14.1 | ||||||
Net cash used in investing activities | (52.9 | ) | (44.5 | ) | ||||
Financing Activities: | ||||||||
Change in short-term borrowing, net | 12.4 | (33.7 | ) | |||||
Proceeds from short-term borrowing (maturities greater than 90 days) | 20.0 | — | ||||||
Proceeds from long-term debt obligations | 2.0 | 7.2 | ||||||
Repayment of long-term debt obligations | (22.8 | ) | (21.1 | ) | ||||
Proceeds from exercise of stock options | 5.0 | 8.3 | ||||||
Repayment of trade receivable advances | — | (23.8 | ) | |||||
Share repurchases | — | (54.5 | ) | |||||
Other | (5.4 | ) | (0.5 | ) | ||||
Net cash provided by (used) in financing activities | 11.3 | (118.0 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 4.0 | (0.4 | ) | |||||
Net increase (decrease) in cash and cash equivalents | 53.8 | (72.8 | ) | |||||
Cash and cash equivalents at beginning of period | 39.8 | 112.6 | ||||||
Cash and cash equivalents at end of period | $93.6 | $39.8 | ||||||
* | Numbers may not add up precisely due to rounding. |