Kinetic Concepts, Inc. (NYSE: KCI) today reported third
quarter 2011 total revenue of $531.4 million, an increase of 5%
from the third quarter of 2010. Total revenue for the first nine
months of 2011 was $1.55 billion, which represented a 4% increase
from the prior-year period. Foreign currency exchange movements
favorably impacted total revenue by 2% for both the third quarter
and the first nine months of 2011 compared to the corresponding
periods of the prior year.
Net earnings for the third quarter of 2011 were $90.7 million,
an increase of 20% compared to $75.8 million for the same period
one year ago. Net earnings per diluted share, as reported, were
$1.16 for the third quarter, an increase of 9% from the same period
one year ago. Fully diluted, weighted average shares outstanding
were 78.4 million for the third quarter of 2011 and 74.9 million
for the first nine months of 2011, representing increases of 9% and
5%, respectively, from the corresponding periods of the prior year
due primarily to the dilutive effect of our convertible notes and
related warrants. On a non-GAAP basis, excluding the effects of
certain adjustments including acquisition-related expenses related
to our 2008 purchase of LifeCell and expenses recorded in the third
quarter of 2011 associated with our proposed merger transaction,
net earnings per diluted share were $1.35 for the third quarter of
2011 compared to $1.20 from the prior-year period.
“Our third quarter financial performance was very solid, and
once again, demonstrates KCI’s commitment to fiscal discipline
while simultaneously launching new products and enhancing our
global footprint,” said Catherine Burzik, President and Chief
Executive Officer of KCI. “While our capital structure will change
as a result of our pending merger transaction, we will continue to
invest in innovation and geographic expansion in keeping with our
perpetual commitment and promise to improve patient outcomes around
the globe.”
Revenue Recap – Third Quarter and First
Nine Months of 2011
Worldwide revenue from AHS products was $372.1 million for the
third quarter of 2011 and $1.07 billion for the first nine months
of 2011 compared to $358.4 million and $1.04 billion, respectively,
for the corresponding periods of 2010. The growth in third quarter
worldwide AHS revenue was attributable primarily to favorable
foreign currency movements, higher volumes from new markets,
capital sales and recent product introductions, partially offset by
lower rental revenue in established markets. Foreign currency
exchange movements favorably impacted worldwide AHS revenues in
both the third quarter and first nine months of 2011 by 2% compared
to the prior-year periods.
AHS revenue from the Americas region of $281.2 million for the
third quarter of 2011 was up 2% as compared to the prior-year
period and increased 5% from the second quarter of 2011. AHS
Americas revenue for the first nine months of 2011 was $805.9
million, a 2% increase from the prior-year period. The increase in
AHS Americas revenue during both the third quarter and first nine
months of 2011 was attributable to a combination of increased sales
volumes of V.A.C.® Therapy units and increased sales revenue from
the adoption of recently-launched, new negative pressure-based
therapies in the U.S., partially offset by a decrease in rental
volumes and realized pricing on V.A.C. Therapy rental units.
AHS EMEA revenue was $73.9 million and $217.9 million,
respectively, for the third quarter and first nine months of 2011
compared to $71.5 million and $219.0 million, respectively, for the
corresponding periods of the prior year. Foreign currency exchange
rate movements favorably impacted AHS EMEA revenue during the third
quarter and first nine months of 2011 by 8% and 7%, respectively,
compared to the prior-year periods. On a constant currency basis,
AHS EMEA revenue decreased 5% and 7% during the third quarter and
the first nine months of 2011, respectively, compared to the
prior-year periods due to continued pricing pressures on V.A.C.
Therapy rental units and a decline in rental and sales volumes,
partially offset by volume growth on sales of V.A.C.Via™, ABThera™
and V.A.C. Therapy units.
AHS APAC revenue was $17.0 million and $46.7 million,
respectively, for the third quarter and first nine months of 2011
compared to $11.4 million and $28.0 million, respectively, for the
corresponding periods of the prior year. Foreign currency exchange
rate movements favorably impacted AHS APAC revenue during both the
third quarter and first nine months of 2011 by 17% compared to the
prior-year periods. On a constant currency basis, AHS APAC revenue
increased 32% and 49%, respectively, during the third quarter and
the first nine months of 2011 compared to the prior-year periods
due primarily to higher rental and sales volumes in Japan. Total
AHS revenue generated in Japan was $7.6 million for the third
quarter of 2011, an increase of $4.7 million, or 163% from the
third quarter of the prior year. Foreign currency exchange rate
movements favorably impacted AHS Japan revenue by 25% during the
third quarter of 2011, compared to the corresponding period of
2010.
Worldwide LifeCell revenue was $97.4 million and $286.8 million,
respectively, for the third quarter and first nine months of 2011,
up 15% and 16%, respectively, from the corresponding prior-year
periods. LifeCell EMEA sales totaled $2.9 million and $8.8 million,
respectively, for the third quarter and first nine months of 2011,
up from $1.7 million and $4.3 million, respectively, during the
prior-year periods, with revenue growth reported in all geographic
locations where we have launched our LifeCell products. Foreign
currency exchange movements did not have a significant impact on
worldwide LifeCell revenue as compared to the third quarter and
first nine months of the prior year.
Worldwide TSS revenue was $61.8 million for the third quarter
and $195.0 million for the first nine months of 2011 compared to
$63.4 million and $203.5 million, respectively, for the same
periods one year ago. TSS Americas revenue was $37.7 million for
the third quarter and $123.2 million for the first nine months of
2011 compared to $41.8 million and $134.8 million, respectively,
for the same periods in the prior year. The decrease in TSS
Americas revenue was driven by our rental business, which has
experienced increased competitive pressure and modest share loss.
TSS EMEA revenue was $23.9 million for the third quarter and $70.9
million for the first nine months of 2011 compared to $21.1 million
and $67.5 million, respectively, for the same periods in the prior
year. On a constant currency basis, TSS EMEA revenue increased 4%
during the third quarter of 2011 compared to the prior-year period
due primarily to strong capital sales. Foreign currency exchange
rate movements favorably impacted Americas and EMEA TSS revenue by
1% and 10%, respectively, in the third quarter of 2011 and 1% and
7%, respectively, in the first nine months of 2011 compared to the
prior-year periods.
Profit Margins
Gross profit for the third quarter and first nine months of 2011
was $331.7 million and $933.7 million, respectively, representing
increases of 15% and 11%, respectively, from the same periods of
the prior year. Gross profit margin was 62% and 60%, respectively,
for the third quarter and first nine months of 2011, an increase of
approximately 530 basis points and 370 basis points, respectively,
from the prior-year periods. The gross profit margin increase
during the third quarter of 2011 compared to the prior-year period
was due primarily to lower royalty expense associated with our
previous license agreement with Wake Forest University, higher
gross margins associated with our LifeCell business unit, lower
rental fleet depreciation and favorable product mix. The
year-to-date gross profit margin increase was lower than the
current quarter resulting primarily from increased selling expenses
related to additional investment in our AHS sales force during the
second half of 2010 and first nine months of 2011. During the third
quarter of 2010, the Company recorded $23.9 million in royalty
expense associated with our previously-existing licensing agreement
with Wake Forest.
Selling, general and administrative (“SG&A”) expenses for
the third quarter and first nine months of 2011 were $155.9 million
and $452.4 million, respectively, representing increases of 12% and
7%, respectively, from the same periods of the prior year. SG&A
increases during the third quarter of 2011 compared to the
prior-year period included the impact of foreign currency
movements, transaction-related costs associated with our
recently-announced acquisition, higher selling costs associated
with our LifeCell division and higher costs associated with
geographic expansion. The year-to-date percentage increase in
SG&A expenses was lower than the current quarter resulting
primarily from reduced litigation costs and prior-year charges
associated with our TSS portfolio rationalization and our Global
Business Transformation in the second quarter.
Research and development expenses for the third quarter and
first nine months of 2011 were $23.5 million and $68.1 million,
respectively, representing increases of 13% and 1% from the
corresponding periods in the prior year. Research and development
expenses were higher during the third quarter of 2011 compared to
the prior-year period due to increased headcount following the 2010
formation of our Center for Advanced Research and Technology.
During the third quarter of 2011, total research and development
expenses represented 4.4% of revenue compared to 4.1% for the same
period one year ago.
Operating earnings for the third quarter and first nine months
of 2011 were $143.4 million and $386.6 million, respectively,
representing increases of 19% and 20%, respectively, from the
corresponding periods of the prior year. The increase in operating
earnings resulted from a combination of lower royalty expense,
favorable foreign currency movements and prior-year charges
associated with our TSS portfolio rationalization and Global
Business Transformation, partially offset by higher costs
associated with our recently-announced acquisition. During the
third quarter of 2011, the Company recorded $6.0 million in
expenses associated with our recently-announced acquisition.
Other Income/Expense
Third quarter 2011 interest expense decreased to $17.3 million
compared to $21.5 million in the same period of the prior year due
to debt payments made over the last twelve months, as well as lower
interest rates due, in part, to our debt refinancing completed in
the first quarter of 2011. Long-term debt outstanding, on a
debt-instrument basis, as of September 30, 2011 consisted of a
senior secured term loan of $529.4 million due 2016 and $690.0
million of 3.25% senior convertible notes due 2015. Foreign
currency transaction losses were $2.1 million in the third quarter
of 2011 compared to gains of $2.1 million in the prior-year period
due primarily to significant volatility in the foreign currency
markets.
Income Tax Rate
The effective income tax rate for the third quarter and first
nine months of 2011 was 27.0% and 27.1%, respectively, compared to
25.0% and 28.0%, respectively, during the corresponding periods in
2010. The increase in the effective income tax rate for the third
quarter of 2011 as compared to the prior-year period was due
primarily to the favorable resolution of certain tax contingencies
during 2010.
Financial Position
Total cash at quarter-end was $656.8 million, an increase of
$340.2 million from year-end 2010. Operating cash flow less net
capital expenditures for the first nine months of 2011 was $327.1
million, an increase of $147.5 million compared to the prior-year
period due primarily to higher net earnings and lower cash outlays
for royalty payments, inventory purchases, interest and income
taxes, partially offset by higher capital expenditures. Total
long-term debt outstanding at September 30, 2011 was $1.12 billion
on a GAAP-basis and $1.22 billion on an economic, or
debt-instrument, basis.
Other Information
On July 12, 2011, KCI entered into a definitive merger agreement
under which a consortium of funds advised by Apax Partners
(“Apax”), together with controlled affiliates of Canada Pension
Plan Investment Board (“CPPIB”) and the Public Sector Pension
Investment Board (“PSP Investments”), will acquire KCI for $68.50
per share in cash in a transaction currently valued at $6.2
billion, inclusive of KCI’s outstanding debt.
The Board of Directors of KCI has unanimously approved the
merger agreement and recommended that KCI’s shareholders approve
the agreement with the consortium. A special meeting of KCI’s
shareholders will be held on October 28, 2011 to approve the merger
agreement.
The transaction is subject to certain closing conditions,
including the approval of KCI’s shareholders and the satisfaction
of other customary closing conditions, but is not subject to any
closing condition with regard to the financing of the transaction.
The transaction is currently expected to close in November 2011.
Given the pending transaction, KCI will not be holding a conference
call to discuss third quarter results.
Outlook
In connection with KCI’s pending merger with the Apax consortium
and related recapitalization, KCI has suspended its 2011
outlook.
Non-GAAP Financial
Information
Within this document, we have included our results for the third
quarter and nine months ended September 30, 2011 on a non-GAAP
basis to exclude the impact of specified non-cash expenses
associated with our 2008 acquisition of LifeCell and the impact of
other charges, including costs associated with our TSS portfolio
rationalization and our Global Business Transformation incurred in
the second quarter of 2010, debt refinancing costs incurred during
the first quarter of 2011 and acquisition-related costs incurred
during the second and third quarters of 2011 associated with our
proposed merger transaction. In addition, we have presented
supplemental revenue data on a non-GAAP basis to exclude the impact
of foreign currency fluctuations between 2010 and 2011. These
non-GAAP financial measures do not replace the presentation of our
GAAP results. We have provided this supplemental non-GAAP
information because it may provide meaningful information regarding
our results on a basis that better facilitates an understanding of
our expected results of operations which may not be otherwise
apparent under GAAP. Management uses this non-GAAP financial
information, along with GAAP information, for reviewing the
operating results of its business segments and for analyzing
potential future business trends. In addition, we believe some
investors may use this information in a similar fashion. A
reconciliation of our GAAP selected financial information for the
periods presented to the non-GAAP selected financial information
provided is included herein.
About KCI
Kinetic Concepts, Inc. (NYSE:KCI) is a leading global medical
technology company devoted to the discovery, development,
manufacture and marketing of innovative, high-technology therapies
and products for the wound care, tissue regeneration and
therapeutic support system markets. Headquartered in San Antonio,
Texas, KCI's success spans more than three decades and can be
traced to a history deeply rooted in innovation and a passion for
significantly improving the healing and the lives of patients
around the world.
The Company employs approximately 7,100 people and markets its
products in more than 20 countries. For more information about KCI
and how its products are changing the practice of medicine, visit
www.kci1.com.
Additional Information about the Merger
and Where to Find It
This press release may be deemed to be solicitation material in
respect of the proposed acquisition of KCI by investment funds
advised by Apax, together with controlled affiliates of CPPIB and
the PSP Investments. KCI filed a definitive proxy statement with
the SEC on September 26, 2011 related to the merger (the
“Merger”) and the other transactions contemplated by the Agreement
and Plan of Merger, dated as of July 12, 2011, by and among
KCI, Chiron Holdings, Inc. and Chiron Merger Sub, Inc. INVESTORS
AND SECURITY HOLDERS OF KCI ARE ADVISED TO READ THE PROXY STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THOSE DOCUMENTS CONTAIN AND WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED ACQUISITION. The
definitive proxy statement was mailed to shareholders of KCI
beginning on September 27, 2011. Investors and security
holders may obtain a free copy of the proxy statement, and other
documents filed by KCI with the SEC, at the SEC’s web site at
www.sec.gov. Free copies of the proxy statement and KCI’s other
filings with the SEC may also be obtained from KCI by directing a
request to Kinetic Concepts, Inc., Attention: Investor Relations,
8023 Vantage Drive, San Antonio, TX 78230, or by calling
210-255-6157.
Participants in
Solicitation
KCI and its directors, executive officers and other members of
its management and employees may be deemed to be soliciting proxies
from KCI’s shareholders in favor of the proposed Merger.
Information regarding KCI’s directors and executive officers is
available in its 2010 Annual Report on Form 10-K filed with the SEC
on March 1, 2011, and definitive proxy statement relating to
its 2011 Annual Meeting of Shareholders filed with the SEC on
April 15, 2011. Shareholders may obtain additional information
regarding the interests of KCI and its directors and executive
officers in the proposed Merger, which may be different than those
of KCI’s shareholders generally, by reading the proxy statement and
other relevant documents filed with the SEC when they become
available.
Forward-Looking
Statements
This press release contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could
differ materially from those discussed in the forward-looking
statements and are subject to a number of risks and uncertainties
that could cause or contribute to these differences include, but
are not limited to, the possibility that the Merger is not
consummated. All information set forth in this release and its
attachments is as of October 21, 2011. We undertake no duty to
update this information. More information about potential factors
that could cause our results to differ or adversely affect our
business and financial results is included in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2010 and in our
quarterly reports on Form 10-Q for the quarterly periods ended
March 31, 2011 and June 30, 2011, including, among other sections,
under the captions, "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." These
reports are on file with the SEC and available at the SEC's website
at www.sec.gov. Additional information may also be set forth in
those sections in our Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2011, which is expected to be
filed with the SEC in early November 2011.
KINETIC CONCEPTS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Earnings (in
thousands, except per share data) (unaudited)
Three months ended September 30,
Nine months ended September 30, %
% 2011 2010 Change
2011 2010 Change Revenue: Rental $ 279,135 $
288,970 (3.4 )% $ 837,149 $ 852,045 (1.7 )% Sales 252,236
217,738 15.8 715,236
638,240 12.1
Total revenue 531,371
506,708 4.9 1,552,385 1,490,285
4.2 Rental expenses 136,789 155,765 (12.2 ) 433,634
464,606 (6.7 ) Cost of sales 62,925 61,551
2.2 185,062 184,782 0.2
Gross profit 331,657 289,392 14.6
933,689 840,897 11.0 Selling, general
and administrative expenses 155,855 139,512 11.7 452,377 422,103
7.2 Research and development expenses 23,530 20,873 12.7 68,124
67,375 1.1 Acquired intangible asset amortization 8,855
8,855 - 26,567 28,570
(7.0 )
Operating earnings 143,417
120,152 19.4 386,621 322,849
19.8 Interest income and other 297 265 12.1 766 544
40.8 Interest expense (17,314 ) (21,534 ) (19.6 ) (55,311 ) (67,360
) (17.9 ) Foreign currency gain (loss) (2,117 ) 2,148
- (2,142 ) (3,119 ) (31.3 )
Earnings
before income taxes 124,283 101,031 23.0
329,934 252,914 30.5 Income taxes
33,557 25,258 32.9 89,365
70,823 26.2
Net earnings $
90,726 $ 75,773 19.7
% $ 240,569 $ 182,091
32.1 % Net earnings per share:
Basic $ 1.25 $ 1.07
16.8 % $ 3.34 $
2.57 30.0 % Diluted
$ 1.16 $ 1.06 9.4
% $ 3.21 $ 2.54
26.4 % Weighted average shares
outstanding: Basic 72,546
70,994 72,017
70,784 Diluted 78,411
71,695 74,889
71,647 KINETIC CONCEPTS, INC. AND
SUBSIDIARIES Condensed Consolidated Balance Sheets
(in thousands) September 30,
December 31, 2011 2010 (unaudited)
Assets: Current assets: Cash and cash equivalents $
656,793 $ 316,603 Accounts receivable, net 404,004 414,083
Inventories, net 160,833 172,552 Deferred income taxes 28,140
30,112 Prepaid expenses and other 31,651 34,199
Total current assets 1,281,421 967,549 Net property,
plant and equipment 299,037 271,063 Debt issuance costs, net 29,769
22,622 Deferred income taxes 20,643 17,151 Goodwill 1,328,881
1,328,881 Identifiable intangible assets, net 432,388 453,802 Other
non-current assets 15,551 14,931
$
3,407,690 $ 3,075,999 Liabilities
and Shareholders' Equity: Current liabilities: Accounts payable
$ 38,171 $ 60,137 Accrued expenses and other 259,025 225,524
Current installments of long-term debt 27,500 169,500 Income taxes
payable 24,295 - Total current liabilities
348,991 455,161 Long-term debt, net of current installments
and discount 1,096,416 935,290 Non-current tax liabilities 38,007
35,588 Deferred income taxes 137,909 163,386 Other non-current
liabilities 2,185 3,495 Total liabilities
1,623,508 1,592,920 Shareholders' equity: Common stock;
authorized 225,000 at 2011 and 2010, issued and outstanding 73,081
at 2011 and 71,996 at 2010 73 72 Preferred stock; authorized 50,000
at 2011 and 2010; issued and outstanding 0 at 2011 and 2010 - -
Additional paid-in capital 919,190 852,152 Retained earnings
854,003 613,434 Accumulated other comprehensive income, net
10,916 17,421 Shareholders' equity 1,784,182
1,483,079
$ 3,407,690 $
3,075,999
KINETIC CONCEPTS, INC. AND
SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (in
thousands) (unaudited) Nine months
ended September 30, 2011 2010 Cash
flows from operating activities: Net earnings $ 240,569 $
182,091 Adjustments to reconcile net earnings to net cash provided
by operating activities: Amortization of convertible debt discount
17,084 15,818 Depreciation and other amortization 106,333 119,188
Provision for bad debt 8,350 7,024 Write-off of deferred debt
issuance costs 3,218 2,301 Share-based compensation expense 23,738
24,173 Deferred income tax benefit (24,957 ) (48,946 ) Excess tax
benefit from share-based payment arrangements (2,393 ) (1,426 )
Change in assets and liabilities: Decrease in accounts receivable,
net 1,101 14,829 Decrease (increase) in inventories, net 11,659
(53,353 ) Decrease in prepaid expenses and other 2,547 3,927
Increase (decrease) in accounts payable (21,994 ) 5,212 Increase
(decrease) in accrued expenses and other 32,826 (18,117 ) Increase
(decrease) in tax liabilities, net 27,118 (9,227 ) Decrease in
deferred income taxes, net (2,039 ) (10,379 )
Net cash provided by operating activities
423,160 233,115 Cash
flows from investing activities: Additions to property, plant
and equipment (89,029 ) (63,255 ) Decrease (increase) in inventory
to be converted into equipment for short-term rental (7,047 ) 9,771
Dispositions of property, plant and equipment 1,186 1,557 Increase
in identifiable intangible assets and other non-current assets
(19,093 ) (9,632 )
Net cash used by
investing activities (113,983 )
(61,559 ) Cash flows from financing
activities: Repayments of long-term debt, revolving credit
facility and capital lease obligations (20,734 ) (185,059 )
Proceeds from exercise of stock options 42,606 10,383 Proceeds from
the purchase of stock in ESPP and other 4,107 3,452 Excess tax
benefit from share-based payment arrangements 2,393 1,426 Purchase
of immature shares for minimum tax withholdings (3,797 ) (1,134 )
Payment of debt issuance costs related to KCI’s pending merger (827
) - Refinancing of senior credit facility: Proceeds from borrowings
on refinancing of senior credit facility 146,012 - Repayments on
senior credit facility – due 2013 (123,346 ) - Payment of debt
issuance costs (14,676 ) -
Net cash
provided (used) by financing activities 31,738
(170,932 ) Effect of exchange
rate changes on cash and cash equivalents (725 ) (484
)
Net increase in cash and cash equivalents
340,190 140 Cash and cash equivalents, beginning
of period 316,603 263,157
Cash and cash equivalents, end of period
$ 656,793 $ 263,297
KINETIC CONCEPTS, INC. AND
SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP Supplemental Revenue
Data (in thousands) (unaudited)
Three months ended September 30,
2011 GAAP Constant Constant 2010
% Currency % GAAP FX Impact
Currency GAAP Change
Change (1)
Total Revenue: AHS $ 372,108 $ (8,585 )
$ 363,523 $ 358,392 3.8 % 1.4 % LifeCell 97,441 (262 ) 97,179
84,935 14.7 14.4 TSS 61,822 (2,515 ) 59,307
63,381 (2.5 ) (6.4 )
Total Revenue $
531,371 $ (11,362 ) $
520,009 $ 506,708 4.9 %
2.6 % AHS: Americas
revenue Rental $ 189,056 $ (318 ) $ 188,738 $ 196,775 (3.9 ) %
(4.1 ) % Sales 92,171 (354 ) 91,817
78,719 17.1 16.6 Total Americas revenue 281,227 (672 )
280,555 275,494 2.1 1.8
EMEA revenue Rental 29,351
(2,296 ) 27,055 33,111 (11.4 ) (18.3 ) Sales 44,501
(3,670 ) 40,831 38,394 15.9 6.3 Total EMEA
revenue 73,852 (5,966 ) 67,886 71,505 3.3 (5.1 )
APAC
revenue Rental 9,528 (1,093 ) 8,435 5,961 59.8 41.5 Sales
7,501 (854 ) 6,647 5,432 38.1 22.4
Total APAC revenue 17,029 (1,947 ) 15,082 11,393 49.5 32.4
Total rental revenue 227,935 (3,707 ) 224,228 235,847 (3.4 )
(4.9 ) Total sales revenue 144,173 (4,878 )
139,295 122,545 17.6 13.7
Total AHS Revenue
$ 372,108 $ (8,585 ) $
363,523 $ 358,392 3.8 %
1.4 % LifeCell Revenue:
Americas revenue Rental $ 543 $ - $ 543 $ - - % - % Sales
93,964 (30 ) 93,934 83,213 12.9 12.9
Total Americas revenue 94,507 (30 ) 94,477 83,213 13.6 13.5
EMEA revenue Sales 2,934 (232 ) 2,702 1,722 70.4 56.9
Total rental revenue 543 - 543 - - - Total sales revenue
96,898 (262 ) 96,636 84,935 14.1 13.8
Total LifeCell Revenue $ 97,441
$ (262 ) $ 97,179 $
84,935 14.7 % 14.4 %
TSS Revenue: Americas revenue Rental $
31,558 $ (312 ) $ 31,246 $ 35,539 (11.2 ) % (12.1 ) % Sales
6,129 (87 ) 6,042 6,249 (1.9 ) (3.3 )
Total Americas revenue 37,687 (399 ) 37,288 41,788 (9.8 ) (10.8 )
EMEA revenue Rental 19,094 (1,710 ) 17,384 17,553 8.8
(1.0 ) Sales 4,794 (364 ) 4,430 3,503
36.9 26.5 Total EMEA revenue 23,888 (2,074 ) 21,814 21,056
13.4 3.6
APAC revenue Rental 5 (2 ) 3 31 (83.9 )
(90.3 ) Sales 242 (40 ) 202 506 (52.2 )
(60.1 ) Total APAC revenue 247 (42 ) 205 537 (54.0 ) (61.8 )
Total rental revenue 50,657 (2,024 ) 48,633 53,123 (4.6 )
(8.5 ) Total sales revenue 11,165 (491 )
10,674 10,258 8.8 4.1
Total TSS Revenue
$ 61,822 $ (2,515 ) $
59,307 $ 63,381 (2.5 ) %
(6.4 ) % (1) Represents
percentage change between 2011 Non-GAAP Constant Currency revenue
and 2010 GAAP revenue.
KINETIC CONCEPTS, INC. AND
SUBSIDIARIES
Reconciliation from GAAP to Non-GAAP Supplemental Revenue
Data (in thousands) (unaudited)
Nine months ended September 30,
2011 GAAP Constant Constant 2010
% Currency % GAAP FX Impact
Currency GAAP Change
Change (1)
Total Revenue: AHS $ 1,070,618 $ (21,400
) $ 1,049,218 $ 1,039,071 3.0 % 1.0 % LifeCell 286,785 (849 )
285,936 247,693 15.8 15.4 TSS 194,982 (6,024 )
188,958 203,521 (4.2 ) (7.2 )
Total Revenue
$ 1,552,385 $ (28,273 ) $
1,524,112 $ 1,490,285 4.2 %
2.3 % AHS: Americas
revenue Rental $ 555,396 $ (917 ) $ 554,479 $ 564,844 (1.7 ) %
(1.8 ) % Sales 250,550 (991 ) 249,559
227,163 10.3 9.9 Total Americas revenue 805,946 (1,908 )
804,038 792,007 1.8 1.5
EMEA revenue Rental 91,575
(5,740 ) 85,835 101,967 (10.2 ) (15.8 ) Sales 126,372
(8,886 ) 117,486 117,062 8.0 0.4 Total EMEA
revenue 217,947 (14,626 ) 203,321 219,029 (0.5 ) (7.2 )
APAC revenue Rental 26,349 (2,655 ) 23,694 14,242 85.0 66.4
Sales 20,376 (2,211 ) 18,165 13,793
47.7 31.7 Total APAC revenue 46,725 (4,866 ) 41,859 28,035
66.7 49.3 Total rental revenue 673,320 (9,312 ) 664,008
681,053 (1.1 ) (2.5 ) Total sales revenue 397,298
(12,088 ) 385,210 358,018 11.0 7.6
Total
AHS Revenue $ 1,070,618 $ (21,400
) $ 1,049,218 $ 1,039,071
3.0 % 1.0 % LifeCell
Revenue: Americas revenue Rental $ 1,133 $ - $
1,133 $ - - % - % Sales 276,879 (100 ) 276,779
243,375 13.8 13.7 Total Americas revenue 278,012 (100
) 277,912 243,375 14.2 14.2
EMEA revenue Sales 8,773
(749 ) 8,024 4,318 103.2 85.8 Total rental revenue 1,133 -
1,133 - - - Total sales revenue 285,652 (849 )
284,803 247,693 15.3 15.0
Total LifeCell
Revenue $ 286,785 $ (849 )
$ 285,936 $ 247,693 15.8
% 15.4 % TSS
Revenue: Americas revenue Rental $ 103,586 $ (929
) $ 102,657 $ 115,533 (10.3 ) % (11.1 ) % Sales 19,620
(302 ) 19,318 19,218 2.1 0.5 Total
Americas revenue 123,206 (1,231 ) 121,975 134,751 (8.6 ) (9.5 )
EMEA revenue Rental 59,084 (4,005 ) 55,079 55,381 6.7
(0.5 ) Sales 11,865 (671 ) 11,194
12,128 (2.2 ) (7.7 ) Total EMEA revenue 70,949 (4,676 )
66,273 67,509 5.1 (1.8 )
APAC revenue Rental 26 (8 )
18 78 (66.7 ) (76.9 ) Sales 801 (109 ) 692
1,183 (32.3 ) (41.5 ) Total APAC revenue 827 (117 )
710 1,261 (34.4 ) (43.7 ) Total rental revenue 162,696
(4,942 ) 157,754 170,992 (4.9 ) (7.7 ) Total sales revenue
32,286 (1,082 ) 31,204 32,529 (0.7 ) (4.1 )
Total TSS Revenue $ 194,982 $
(6,024 ) $ 188,958 $
203,521 (4.2 ) % (7.2 )
% (1) Represents percentage change between
2011 Non-GAAP Constant Currency revenue and 2010 GAAP revenue.
KINETIC CONCEPTS, INC. AND
SUBSIDIARIESSelected Financial Information - GAAP to
Non-GAAP Reconciliation(in thousands, except per share
data)(unaudited)
Three
months ended September 30,
Interest
Expense - Debt Adoption
of Refinancing Amortization Issuance
Required of Senior Restructuring 2011
of Acquired Cost Accounting Credit
and Other Adjusted Adjusted %
GAAP Intangibles Amortization Standards
Facility Charges 2011 2010
Change Operating earnings $ 143,417 $ 8,855 $ - $ - $
- $ 8,110 $ 160,382 $ 129,007 24.3 % Net earnings (1) $ 90,726 $
5,446 $ 1,076 $ 3,570 $ - $ 4,987 $ 105,805 $ 86,324 22.6 % Diluted
earnings per share $ 1.16 $ 0.07 $ 0.01 $ 0.05 $ - $ 0.06 $ 1.35 $
1.20 12.5 %
Nine months ended September 30,
Interest Expense - Debt Adoption of
Refinancing Amortization Issuance
Required of Senior Restructuring 2011
of Acquired Cost Accounting Credit
and Other Adjusted Adjusted %
GAAP Intangibles Amortization
Standards Facility
Charges 2011 2010
Change Operating earnings $ 386,621 $ 26,567 $ - $ -
$ - $ 9,316 $ 422,504 $ 364,130 16.0 % Net earnings (1) $ 240,569 $
16,339 $ 3,160 $ 10,507 $ 1,979 $ 5,729 $ 278,283 $ 223,449 24.5 %
Diluted earnings per share $ 3.21 $ 0.22 $ 0.04 $ 0.14 $ 0.03 $
0.08 $ 3.72 $ 3.12 19.2 %
Three months ended September 30,
Interest
Expense - Debt Adoption of
Amortization Issuance Required
Restructuring 2010 of Acquired Cost
Accounting and Other Adjusted GAAP
Intangibles Amortization
Standards Charges 2010
Operating earnings $ 120,152 $ 8,855 $ - $ - $ - $ 129,007
Net earnings (1) $ 75,773 $ 5,446 $ 1,800 $ 3,305 $ - $ 86,324
Diluted earnings per share $ 1.06 $ 0.07 $ 0.02 $ 0.05 $ - $ 1.20
Nine months ended September 30, Interest
Expense - Debt Adoption of Amortization
Issuance Required Restructuring 2010
of Acquired Cost Accounting and Other
Adjusted GAAP Intangibles Amortization
Standards Charges 2010 Operating
earnings $ 322,849 $ 28,570 $ - $ - $ 12,711 $ 364,130 Net earnings
(1) $ 182,091 $ 17,571 $ 6,241 $ 9,728 $ 7,818 $ 223,449 Diluted
earnings per share $ 2.54 $ 0.24 $ 0.09 $ 0.14 $ 0.11 $ 3.12
(1)
Adjustments to “Net earnings” are
presented net of tax. The tax effect of each reconciling item is
calculated using the Company’s estimated incremental U.S. combined
federal and state tax rate of 38.5%.
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