Hanger, Austin, Texas, filed Form 8-K with the U.S. Securities and Exchange Commission (SEC) on November 17. The filing states the company has not filed financial statements since the third quarter of 2014, and despite delays arising from the ongoing reconstruction, reconciliation, and correction of historical financial and accounting data and records, believes it will commence making its filings with the SEC in the first quarter (1Q) of 2017. Hanger said its first filing will be its Annual Report on Form 10-K for the year ended December 31, 2014, which will include financial statements for 2014 and restated financial statements for 2012 and 2013. Thereafter, the preparation and audit of its 2015 and 2016 financial statements will commence.
As disclosed by Hanger in prior Form 8-K filings, the company’s audit committee of the board of directors had retained counsel to investigate the circumstances surrounding the accounting misstatements that led to the restatement. The investigation concluded and the results of the investigation were reported by the company in its Form 8-K filed on June 7. Based on the results of the investigation, management decided to perform additional reviews, reperform procedures, and validate historical source accounting data and journal entries for 2014 and prior periods. This work is ongoing.
In addition Hanger said it is expeditiously working on other accounting, financial statement preparation, and audit support related activities relating to prior reported periods. However, their successful completion is subject to certain testing and confirmation, the results of which could require further time to complete the company’s financial statements and filings. These activities involve the identification, collection, and technical evaluation of detailed transaction-level information and support relating to the years 2009 through 2014. Third-party professional firms have been retained to assist in the preparation, review, and audit of its accounting information.
Hanger said it currently believes that cash generated from operations, together with other available sources of liquidity, including borrowings available under its credit agreement and the Term B credit agreement, will be sufficient for at least the next 12 months to fund anticipated capital expenditures, make required routine payments of principal and interest on debt, and pay the additional third-party expenses that it continues to incur due to the ongoing work relating to the filing of its financial statements.
As of September 30, the company had $104.1 million in liquidity as defined in its credit agreement, comprised of $13.6 million in cash and cash equivalents and $90.5 million of available borrowing capacity under its revolving credit line. As of September 30, cash and cash equivalents for financial statement purposes were $2.1 million, which reflected $13.6 million in bank cash balances after reduction for outstanding uncleared checks and related items. As of September 30, the company’s aggregate revolving commitment under its credit agreement was $118.3 million. Of this amount, the company had $13.9 million in limitations on its revolving availability under the credit agreement, had borrowed $8 million, and had used $5.9 million for letters of credit, resulting in $90.5 million of available borrowing capacity.
