ALIGN TECHNOLOGY, INC. (NASDAQ:ALGN) Files An 8-K Costs Associated with Exit or Disposal Activities
Item 2.05 Costs Associate with Exit or Disposal Activities.
This Amendment on Form 8-K/A (the “Amendment”) amends the Current Report on Form 8-K filed on March 5, 2019 (the “Prior Report”) by Align Technology, Inc. (the “Company”) in connection with the outcome of the arbitration claims asserted against it by SDC Financial LLC and SmileDirectClub LLC (collectively, the SDC Entities).The arbitrator ordered Align to close its Invisalign stores by April 3, 2019, and enjoined Align from opening new Invisalign stores or providing certain services in physical retail establishments in connection with the marketing and sale of clear aligners. At the time of the filing of the Prior Report, the Company was unable to estimate the total amount or range of amounts expected to be incurred in connection with the store closures, as well as an estimate of amounts for each major category of costs and an estimate of the amount that will result in future cash expenditures. This Amendment is being filed to report such information.
The Company expects to record total charges in the first quarter of 2019 related to the store closures of approximately $26 million to $31 million, composed of $11 million to $16 million of impairments related to the right of use lease assets, approximately $14 million of leasehold improvements and other fixed assets along with employee severance expenses of approximately $1 million. Of these charges, approximately $12 million to $17 million are expected to result in cash payments during the fiscal year ending December 31, 2019. These amounts represent estimates which are subject to change as management finalizes its assessment. Changes to these estimates may be material.
To the extent required by applicable rules, the Company will amendment the Prior Report for any material changes to the estimated financial impact to the arbitrator’s order. This Current Report on Form 8-K/A contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including those relating to the Company’s expectations regarding costs and charges in connection with the store closures. Such forward-looking statements are inherently uncertain, and stockholders and other potential investors must recognize that actual results may differ materially from the Company’s expectations as a result of a variety of factors, many of which the Company is unable to predict or control. The Company cautions investors that any forward-looking statements made by the Company are not guarantees of future performance. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments, unless required by applicable rules.
About ALIGN TECHNOLOGY, INC. (NASDAQ:ALGN)
Align Technology, Inc. designs, manufactures and markets a system of clear aligner therapy, intra-oral scanners and computer-aided design and computer-aided manufacturing (CAD/CAM) digital services used in dentistry, orthodontics and dental records storage. The Company operates through two segments: Clear Aligner segment and Scanner and Services (Scanner) segment. The Clear Aligner segment consists of its Invisalign System, which includes Invisalign Full, Express/Lite, Teen, Assist and Vivera Retainers, along with its training and ancillary products for treating malocclusion. The Scanner segment consists of intra-oral scanning systems and other services available with the intra-oral scanners that provide digital alternatives to the traditional cast models. The Company’s iTero scanner is used by dental professionals, and labs and services for restorative and orthodontic digital procedures, as well as Invisalign digital impression submission.