<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 21, 1998
ARTERIAL VASCULAR ENGINEERING
(Exact name of registrant as specified in its charter)
0-27802
-------------
(Commission File Number)
DELAWARE 94-3144218
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
3576 Unocal Place, Santa Rosa, CA 95403
(Address of principal executive offices)
(zip code)
(707) 525-0111
(Registrant's telephone number, including area code)
Item 5. Other Items
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants,
and convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. The Company adopted
Statement 128 for its fiscal quarter ended December 31, 1997, and all earnings
per share amounts for all included periods were presented, and where necessary,
restated to conform to the Statement 128 requirements in its Form 10-Q for such
fiscal quarter.
In connection with the Company's adoption of FAS 128, the Company is
restating certain earnings per share information previously presented in the
Company's Securities Exchange Act filings. This Form 8-K restates all
previously reported earnings per share amounts in the Company's fiscal 1997 Form
10-K and its Form 10-Q filings for the quarter ended September 30, 1997.
The following table of contents cross references the attached sub-items to
the respective 10-K and 10-Q filings:
<TABLE>
<CAPTION>
Sub-item Description Reference to 10-K
- -------- ----------- -----------------
<S> <C> <C>
1. Selected Financial Data Form 10-K, Item 6
2. Summary of Significant Accounting Form 10-K, Note 2 to Consolidated
Policies - Earnings (loss) per Share Financial Statements and E
3. Pro Forma Disclosures (SFAS No. 123) Form 10-K, Note 10 to Consolidated
Financial Statements
4. Quarterly Financial Data Form 10-K, Note 15 to Consolidated
Financial Statements unaudited disclosure
5. Earnings Per Share - Quarterly Replaces Exhibit 11 for quarter ended
September 30, 1997
</TABLE>
<PAGE> 2
1. Selected Financial Data
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales .......................................... $79,420 $55,228 $17,141 $ 2,897 $ 15
Cost of sales ...................................... 16,217 10,565 4,515 1,631 5
------- ------- ------- ------- -------
Gross profit ....................................... 63,203 44,663 12,626 1,266 10
Operating expenses:
Research and development ......................... 11,422 6,480 987 594 398
Selling, general and administrative .............. 22,510 8,437 1,807 870 973
Settlement costs ................................. -- -- 425 358 --
------- ------- ------- ------- -------
Operating income (loss) ............................ 29,271 29,746 9,407 (556) (1,361)
Interest and other income .......................... 4,190 1,460 237 21 549
------- ------- ------- ------- -------
Income (loss) before provision for income taxes .... 33,461 31,206 9,644 (535) (812)
Provision for income taxes ......................... 11,711 10,766 3,004 3 2
------- ------- ------- ------- -------
Net income (loss) .................................. $21,750 $20,440 $ 6,640 $ (538) $ (814)
======= ======= ======= ======= =======
Net income (loss) per share - basic ................ $ 0.37 $ 0.44 $ 0.18 $ (0.02) $ (0.02)
Net income (loss) per share - diluted .............. $ 0.34 $ 0.36 $ 0.13 $ (0.02) $ (0.02)
Shares used in per share calculation - basic ....... 58,447 46,926 36,081 35,317 32,827
Shares used in per share calculation - diluted ..... 63,289 56,617 49,300 35,317 32,827
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents .......................... $ 25,036 $ 59,238 $ 2,533 $ 1,882 $ 82
Working capital .................................... 114,486 106,925 4,413 415 161
Total assets ....................................... 147,979 122,157 13,089 3,086 706
Retained earnings (accumulated deficit) ............ 46,902 25,152 4,712 (1,928) (1,390)
Total stockholders' equity ......................... 138,200 116,571 8,129 1,004 607
</TABLE>
<PAGE> 3
3
2. Summary of Significant Accounting Policies
Net income (Loss) Per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share. Statement 128
replaced the previously reported primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants,
and convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts for all included periods have been presented, and where necessary,
restated to conform to the Statement 128 requirements.
The following table sets forth the computation of basic and diluted
earnings per share for the fiscal years ended June 30, 1997, 1996 and 1995 (in
thousands except per share amounts):
<TABLE>
<CAPTION>
Fiscal Year Ended June 30,
--------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net income................................ $21,750 $ 20,440 $ 6,640
======= ======== =======
Weighted average common shares
outstanding............................. 58,447 46,926 36,081
Effect of dilutive securities:
Employee stock options.................. 1,395 4,582 11,304
Other dilutive securities............... 3,447 5,109 1,915
------- -------- -------
Denominator for diluted net income per share
Weighted average common shares and
dilutive securities outstanding......... 63,289 56,617 49,300
======= ======== =======
Net income per share - basic............ $ 0.37 $ 0.44 $ 0.18
======= ======== =======
Net income per share - diluted.......... $ 0.34 $ 0.36 $ 0.13
======= ======== =======
</TABLE>
<PAGE> 4
3. Pro Forma Disclosures (SFAS No. 123)
The Company has elected to continue to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees (APB 25)" and related
interpretations in accounting for its employee stock options because the
alternative fair value accounting prescribed under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation (SFAS
123)" requires the use of option valuation models that were not developed for
use in valuing employee stock options. Under APB 25, no compensation expense is
recognized because the exercise price of the Company's employee stock options
equals the market price of the underlying stock on the date of grant.
Pro forma information regarding net income and net income per share has
been determined as if the Company had accounted for its employee stock options
granted subsequent to June 30, 1995 under the fair value method prescribed by
SFAS 123. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted average
assumptions for 1997 and 1996: Expected dividend yield of 0%, expected stock
price volatility of 55% (0% in the period prior to the Company's initial public
offering), risk free interest rates ranging from 3.50 percent to 7.75 percent,
and the expected life of options of 4 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no investing
restrictions and are fully transferable. In addition, option valuation models
require the input of highly subjective assumptions including the expected stock
price volatility. Because the Company's employee stock options have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's opinion the existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
-------------------
1997 1996
------- -------
<S> <C> <C>
Net income--as reported ............................ $21,750 $20,440
Net income--pro forma .............................. $20,698 $20,424
Net income per share--as reported (Basic) .......... $ 0.37 $ 0.44
Net income per share--as reported (Diluted) ........ $ 0.34 $ 0.36
Net income per share--pro forma (Basic) ............ $ 0.35 $ 0.44
Net income per share--pro forma (Diluted) .......... $ 0.33 $ 0.36
</TABLE>
The weighted average fair value of options granted in the year ended
June 30, 1997 and 1996 was $5.48 and $3.55 per share respectively.
The pro forma effect on net income for 1997 is not representative of the
pro forma effect on net income in future years because it does not take into
consideration pro forma compensation expense related to grants made prior to
1996 and the compensation expense that will be recognized in future years as
the graded vesting periods become exercisable.
<PAGE> 5
4. Quarterly Financial Data (unaudited, in thousands except per share data)
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter Fiscal Year
------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C>
Net sales
1997................. $18,568 $18,228 $20,402 $22,222 $79,420
1996................. 10,572 11,142 15,589 17,926 55,228
Gross profit
1997................. 15,657 14,495 15,806 17,245 63,203
1996................. 8,081 8,715 12,693 15,174 44,663
Net income
1997................. 7,765 4,606 4,633 4,746 21,750
1996................. 4,756 4,871 3,101 7,712 20,440
Net income per share
1997--Basic.......... 0.13 0.08 0.08 0.08 0.37
--Diluted........ 0.12 0.07 0.07 0.07 0.34
1996--Basic.......... 0.13 0.11 0.06 0.14 0.44
--Diluted........ 0.09 0.09 0.06 0.12 0.36
</TABLE>
<PAGE> 6
5. Net income per Share - Quarterly
The following tables set forth the computation of basic and diluted net
income per share under SFAS 128 for the quarters ended September 30, 1997 and
1996 (in thousands except per share data):
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------
1997 1996
---- ----
<S> <C> <C>
Numerator:
Net income............................................... $ 5,710 $ 7,764
======= =======
Denominator:
Denominator for basic net income per share -
Weighted average common shares outstanding............... 59,626 57,711
Effect of dilutive securities:
Employee stock options................................. 2,345 1,540
Other dilutive securities.............................. 2,503 4,013
------- -------
Denominator for diluted net income per share -
Weighted average common shares and
dilutive securities outstanding........................ 64,474 63,264
======= =======
Net income per share - basic............................... $ 0.10 $ 0.13
======= =======
Net income per share - diluted............................. $ 0.09 $ 0.12
======= =======
</TABLE>
<PAGE> 7
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Arterial Vascular Engineering Inc.
(Registrant)
Dated: May 20, 1998 By: /s/ JOHN D. MILLER
---------------- ------------------------------------
John D. Miller
Chief Financial Officer, Treasurer and
Director
<PAGE> 8
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
27.1 Restated Financial Data Schedule for Year ended
June 30, 1996
27.2 Restated Financial Data Schedule for Quarter ended
September 30, 1996
27.3 Restated Financial Data Schedule for Quarter ended
December 31, 1996
27.4 Restated Financial Data Schedule for Quarter ended
March 31, 1997
27.5 Restated Financial Data Schedule for Year ended
June 30, 1997
27.6 Restated Financial Data Schedule for Quarter ended
September 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMRY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30, 1996
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
</LEGEND>
<RESTATED>
<CIK> 0001007047
<NAME> ARTERIAL VASCULAR ENGINEERING, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 59,238
<SECURITIES> 32,354
<RECEIVABLES> 13,503
<ALLOWANCES> 290
<INVENTORY> 3,352
<CURRENT-ASSETS> 112,511
<PP&E> 10,027
<DEPRECIATION> 1,053
<TOTAL-ASSETS> 122,157
<CURRENT-LIABILITIES> 5,586
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 116,540
<TOTAL-LIABILITY-AND-EQUITY> 122,157
<SALES> 55,228
<TOTAL-REVENUES> 55,228
<CGS> 10,565
<TOTAL-COSTS> 10,565
<OTHER-EXPENSES> 14,917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,206
<INCOME-TAX> 10,766
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,440
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.36
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,907
<SECURITIES> 80,833
<RECEIVABLES> 15,560
<ALLOWANCES> 312
<INVENTORY> 4,569
<CURRENT-ASSETS> 121,212
<PP&E> 13,015
<DEPRECIATION> 1,324
<TOTAL-ASSETS> 133,537
<CURRENT-LIABILITIES> 9,239
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 124,267
<TOTAL-LIABILITY-AND-EQUITY> 133,537
<SALES> 18,568
<TOTAL-REVENUES> 18,568
<CGS> 2,911
<TOTAL-COSTS> 2,911
<OTHER-EXPENSES> 4,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 11,945
<INCOME-TAX> 4,180
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,765
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 21,319
<SECURITIES> 63,091
<RECEIVABLES> 19,085
<ALLOWANCES> 404
<INVENTORY> 6,029
<CURRENT-ASSETS> 117,956
<PP&E> 17,776
<DEPRECIATION> 1,704
<TOTAL-ASSETS> 134,622
<CURRENT-LIABILITIES> 5,290
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 129,301
<TOTAL-LIABILITY-AND-EQUITY> 134,622
<SALES> 36,796
<TOTAL-REVENUES> 36,796
<CGS> 6,644
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 13,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,032
<INCOME-TAX> 6,661
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,371
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.19
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 21,624
<SECURITIES> 61,689
<RECEIVABLES> 22,907
<ALLOWANCES> 707
<INVENTORY> 6,297
<CURRENT-ASSETS> 122,555
<PP&E> 20,657
<DEPRECIATION> 2,053
<TOTAL-ASSETS> 141,721
<CURRENT-LIABILITIES> 8,636
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 133,054
<TOTAL-LIABILITY-AND-EQUITY> 141,721
<SALES> 57,197
<TOTAL-REVENUES> 57,197
<CGS> 11,240
<TOTAL-COSTS> 11,240
<OTHER-EXPENSES> 22,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 26,159
<INCOME-TAX> 9,155
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,004
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
</LEGEND>
<RESTATED>
<CIK> 0001007047
<NAME> ARTERIAL VASCULAR ENGINEERING, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 25,036
<SECURITIES> 62,192
<RECEIVABLES> 23,930
<ALLOWANCES> 1,080
<INVENTORY> 7,302
<CURRENT-ASSETS> 124,265
<PP&E> 24,334
<DEPRECIATION> 2,575
<TOTAL-ASSETS> 147,979
<CURRENT-LIABILITIES> 9,779
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 138,169
<TOTAL-LIABILITY-AND-EQUITY> 147,979
<SALES> 79,420
<TOTAL-REVENUES> 79,420
<CGS> 16,217
<TOTAL-COSTS> 16,217
<OTHER-EXPENSES> 33,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 33,461
<INCOME-TAX> 11,711
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,750
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.34
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 27,666
<SECURITIES> 57,596
<RECEIVABLES> 27,925
<ALLOWANCES> 1,320
<INVENTORY> 10,754
<CURRENT-ASSETS> 132,941
<PP&E> 34,275
<DEPRECIATION> 3,205
<TOTAL-ASSETS> 165,934
<CURRENT-LIABILITIES> 20,489
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 145,414
<TOTAL-LIABILITY-AND-EQUITY> 165,934
<SALES> 26,263
<TOTAL-REVENUES> 26,263
<CGS> 5,489
<TOTAL-COSTS> 5,489
<OTHER-EXPENSES> 12,995
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 8,785
<INCOME-TAX> 3,075
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,710
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.09
</TABLE>
