<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT ON FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 8, 1998
Nitinol Medical Technologies, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-21001 95-4090463
- ------------------------- ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
27 Wormwood Street, Boston, MA 02210
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617) 737-0930
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned Registrant hereby amends Item 7 of its Current Report on
Form 8-K dated July 8, 1998, and filed with the Securities and Exchange
Commission on July 23, 1998, to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired: Elekta
Neurosurgical Instruments
Report of Independent Public Accountants F-1
Combined Balance Sheets as of April 30, 1998 and 1997 F-2
Combined Statements of Operations and Parent Company
Equity for the Years Ended April 30, 1998, 1997 and 1996 F-3
Combined Statements of Cash Flows for the Years Ended April
30, 1998, 1997 and 1996 F-4
Notes to Combined Financial Statements F-5
(b) Pro Forma Financial Information: Nitinol Medical
Technologies, Inc. and Subsidiaries
Overview F-13
Unaudited Pro Forma Condensed Combined Statement of
Operations for the Year Ended December 31, 1997 F-15
Notes to Unaudited Pro Forma Condensed Combined Statement
of Operations for the Year Ended December 31, 1997 F-16
Unaudited Pro Forma Condensed Combined Statement of
Operations for the Six Months ended June 30, 1998 F-17
Notes to Unaudited Pro Forma Condensed Combined Statement
of Operations for the Six Months ended June 30, 1998 F-18
-2-
<PAGE>
Unaudited Pro Forma Condensed Combined Balance Sheet as
of June 30, 1998 F-19
Notes to Unaudited Pro Forma Condensed Combined Balance
Sheet as of June 30, 1998 F-20
(c) Exhibits:
Exhibit Number Description
- -------------- -----------
*2.1 Purchase Agreement, dated as of May 8, 1998, between
the Registrant and Elekta AB (PUBL), as amended by
Amendment No. 1 dated as of July 8, 1998.
*10.1 Assignment and Assumption Agreement, dated July 8,
1998, by and among Elekta AB (PUBL) and the Registrant.
*10.2 Tax Covenant, dated as of July 8, 1998, between
Elekta AB (PUBL) and the Registrant.
*10.3 Subordinated Note and Common Stock Purchase
Agreement by and among the Registrant, Whitney
Subordinated Debt Fund, L.P. and, for certain purposes,
J.H. Whitney & Co., dated as of July 8, 1998.
*10.4 Subordinated Promissory Note of the Registrant
dated July 8, 1998.
*10.5 Guarantee and Collateral Agreement made by the
Registrant and certain of its Subsidiaries in favor of
J.H. Whitney & Co., as Agent, dated as of July 8, 1998.
*10.6 Agreement and Deed of Pledge of Shares in Yellow
Tape B.V. and Nitinol Medical Technologies
International B.V. between NMT NeuroSciences
(International), Inc., Yellow Tape B.V., the
Registrant, Nitinol Medical Technologies International
B.V. and J.H. Whitney & Co., as trustee, dated as of
July 8, 1998.
-3-
<PAGE>
*10.7 Registration Rights Agreement among the Registrant,
Whitney Subordinated Debt Fund, L.P. and J.H.
Whitney & Co., dated as of July 8, 1998.
23.1 Consent of Independent Public Accountants.
27.1 Financial Data Schedule
*99.1 Press Release dated July 8, 1998.
_______________
* Incorporated by reference from the Registrant's Current Report on Form 8-K
dated July 8, 1998 and filed with the Securities and Exchange Commission on July
23, 1998.
-4-
<PAGE>
SIGNATURES
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 hereunto duly authorized.
NITINOL MEDICAL TECHNOLOGIES, INC.
Dated: September 18, 1998 By: /s/ Theodore I. Pincus
----------------------
Name: Theodore I. Pincus
Title: Executive Vice President,
Chief Financial Officer
-5-
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Elekta Neurosurgical Instruments:
We have audited the accompanying combined balance sheets of Elekta Neurosurgical
Instruments, a business area within Elekta AB (PUBL) (See Note 1), a Swedish
Corporation, as of April 30, 1998 and 1997, and the related combined statements
of operations and parent company equity and cash flows for each of the three
years in the period ended April 30, 1998. These combined financial statements
are the responsibility of the management of Elekta AB (PUBL). Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Elekta Neurosurgical
Instruments as of April 30, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended April 30, 1998,
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 11, 1998
F-1
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
COMBINED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
-------- APRIL 30, --------
1998 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,332 $ 688
Accounts receivable, net of allowance for doubtful accounts
of $616 and $41, respectively 9,496 5,525
Inventories 7,296 9,386
Prepaid expenses and other current assets 284 1,295
------- -------
Total current assets 19,408 16,894
------- -------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and buildings 8,234 9,265
Machinery and equipment 4,625 4,853
Demonstration equipment 1,684 1,448
------- -------
14,543 15,566
Less--Accumulated depreciation (3,869) (2,429)
------- -------
10,674 13,137
OTHER ASSETS, net of accumulated amortization 1,164 1,494
------- -------
$31,246 $31,525
======= =======
LIABILITIES AND PARENT COMPANY EQUITY
CURRENT LIABILITIES:
Current portion of note payable $ 184 $ 184
Bank overdraft - 376
Accounts payable 2,140 3,155
Accrued expenses 3,308 8,000
------- -------
Total current liabilities 5,632 11,715
------- -------
NOTE PAYABLE, net of current portion 348 513
------- -------
COMMITMENTS (NOTE 6)
PARENT COMPANY EQUITY (NOTE 7) 25,266 19,297
------- -------
$31,246 $31,525
======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-2
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
COMBINED STATEMENTS OF OPERATIONS AND PARENT COMPANY EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------- APRIL 30, ------------------
1998 1997 1996
<S> <C> <C> <C>
Sales $37,112 $13,388 $12,348
Cost of Sales 20,693 6,274 6,066
------- ------- -------
Gross profit 16,419 7,114 6,282
------- ------- -------
Operating Expenses:
Selling, general and administrative 17,235 9,327 8,832
Research and development 2,640 1,136 1,576
------- ------- -------
Total operating expenses 19,875 10,463 10,408
------- ------- -------
Loss from operations (3,456) (3,349) (4,126)
Interest and Other Expense, net 43 17 30
------- ------- -------
Net loss $(3,499) $(3,366) $(4,156)
======= ======= =======
Parent Company Equity, beginning of period $19,297 $12,229 $12,531
Net loss (3,499) (3,366) (4,156)
Net transactions with parent 9,468 10,434 3,854
------- ------- -------
Parent Company Equity, end of period $25,266 $19,297 $12,229
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-3
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------- APRIL 30, ------------------
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,499) $ (3,366) $(4,156)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 1,589 1,312 837
Changes in assets and liabilities:
Accounts receivable (3,970) (2,077) 453
Inventories 2,090 (1,542) (1,075)
Prepaid expenses and other current assets 1,011 (1,016) 529
Accounts payable (1,015) 1,455 (765)
Accrued expenses (3,692) 1,797 (67)
------- -------- -------
Net cash provided by (used in) operating activities (7,486) (3,437) (4,244)
------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (23) (273) 1,559
Decrease (increase) in other assets 226 (276) (944)
Acquisition of Cordis Innovasive Systems - (6,748) -
------- -------- -------
Net cash provided by (used in) investing activities 203 (7,297) 615
------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft (376) 376 (217)
Net borrowings (repayments) under bank loan (165) (114) 704
Net transactions with Parent 9,468 10,434 3,854
------- -------- -------
Net cash provided by financing activities 8,927 10,696 4,341
------- -------- -------
NET INCREASE (DECREASE) IN CASH 1,644 (38) 712
------- -------- -------
CASH, BEGINNING OF PERIOD 688 726 14
------- -------- -------
CASH, END OF PERIOD $ 2,332 $ 688 $ 726
======= ======== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for
interest $ 43 $ 17 $ 30
======= ======== =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements.
F-4
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(1) Basis of Presentation and Operations
On July 8, 1998, Nitinol Medical Technologies, Inc. (the "Company")
completed its acquisition of the neurosurgical instruments business
("ENI") of Elekta AB (PUBL), a Swedish corporation ("Elekta"), comprised of
(i) certain assets and liabilities of ENI and (ii) all of the outstanding
capital stock of certain Elekta AB affiliates, including Elekta Instruments
Ltd., a U.K. corporation, Elekta Implants S.A., a French corporation,
Elekta Holdings S.A., a French corporation, Elekta Instruments SARL, a
French corporation, Elekta Instruments N.V./S.A., a Belgian corporation,
Elekta Instruments S.A., a Spanish corporation, Elekta Instruments B.V., a
Netherlands corporation, Cordis Innovasive Systems, Inc., a Florida
corporation, Spembly Medical Ltd., a U.K. corporation, Swedemed AB, a
Swedish corporation and Spembly Cryosurgery Limited, a U.K. corporation,
for approximately $33 million in cash pursuant to a Purchase Agreement
dated as of May 8, 1998 between the Company and Elekta, plus cash
acquisition costs of approximately $2.0 million and 113,793 shares of
common stock issued to J.H. Whitney & Co., a significant shareholder of the
Company, as a finder's fee. These shares were recorded at their fair value
as of the closing date.
The combined financial statements reflect a carve out of ENI from the
consolidated financial statements of Elekta. Prior to the acquisition by
the Company, ENI was operated as a division of Elekta and derived its sales
from a broad range of specialty medical products, including implants and
instruments for neurosurgery. The statements of operations for all periods
presented reflect allocations of the cost of shared facilities and certain
administrative costs. Such costs and expenses have been allocated to ENI
based on actual usage or other methods that approximate actual usage.
Management believes that the allocation methods are reasonable. The
financial information included herein may not necessarily reflect the
financial position, results of operations and cash flows of ENI in the
future or what the financial position, results of operations and cash flows
would have been had it been a separate, stand-alone company throughout the
periods covered.
(2) Significant Accounting Policies
(a) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. In addition, as discussed
above, estimates were used to determine the allocation of the cost of
shared facilities and certain administrative costs. Actual results
could differ from those estimates.
F-5
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(b) Principles of Combination
The accompanying combined financial statements include the balance sheets
and results of operations of ENI, as defined in Note 1. All material
intercompany balances and transactions have been eliminated in combination.
In addition, all transactions between ENI, Elekta and other entities
affiliated with Elekta have been eliminated in combination. Outstanding
payables, receivables and debt that were not eliminated within the ENI
group were reclassified to parent company equity. The accompanying
statements of operations do not include interest expense on any parent
company loans to the extent they may have been interest bearing, as the
loans have been included in parent company investment and will not be
repaid.
(c) Revenue Recognition
Product revenue is recognized when products are shipped to customers, at
which time title is transferred.
(d) Research and Development
ENI charges research and development expenses to operations as incurred.
(e) Depreciation
ENI provides for depreciation by charges to operations on a straight-line
basis in amounts estimated to allocate the cost of the assets over their
estimated useful lives as follows:
ESTIMATED
ASSET CLASSIFICATION USEFUL LIFE
Building 10-33 years
Machinery and equipment 3-10 years
Demonstration equipment 3-10 years
F-6
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(f) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market. Work-in-process and finished goods inventories include materials,
labor and overhead. Inventories consist of the following components at:
<TABLE>
<CAPTION>
APRIL 30,
1998 1997
<S> <C> <C>
Raw materials $1,903 $1,643
Work-in-process 919 1,257
Finished goods 4,474 6,486
------ ------
$7,296 $9,386
====== ======
</TABLE>
(g) Other Assets
The costs associated with acquiring intellectual property are capitalized.
Amortization for these assets are charged to operations on a straight-line
basis over an estimated life of ten years. Other assets consist of the
following components at:
<TABLE>
<CAPTION>
APRIL 30,
1998 1997
<S> <C> <C>
Intellectual property $1,417 $1,389
Goodwill 296 288
Prepaid pension costs 300 490
Accumulated amortization (849) (673)
------ ------
$1,164 $1,494
====== ======
</TABLE>
In accordance with the provisions of SFAS No. 121, Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed
Of, ENI evaluates the realizability of its long-lived assets at each
reporting period. ENI has determined that no material adjustment was
required to the carrying value of its long-lived assets.
F-7
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(h) Postretirement Benefits
ENI does not have any obligations for postretirement or postemployment
benefits, as defined by SFAS No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, as it does not currently offer
such benefits.
(i) Foreign Currency Translation
The accounts of ENI are translated in accordance with SFAS No. 52, Foreign
Currency Translation. Accordingly, assets and liabilities of ENI's foreign
subsidiaries are translated into U.S. dollars using the exchange rate at
each balance sheet date. Income and expense accounts are translated using
an average rate of exchange during the period. Foreign currency translation
adjustments are accumulated as a component of parent company equity.
(j) Concentration of Credit Risk
SFAS No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial Instruments with Concentrations of
Credit Risk, requires disclosure of any significant off-balance sheet and
credit risk concentrations. ENI has no significant off-balance sheet
concentration of credit risk such as foreign exchange contracts, option
contracts or other foreign hedging arrangements. ENI maintains the majority
of its cash balances and its overnight time deposits with financial
institutions. ENI does not have any concentrations of credit risk relating
to accounts receivable. ENI has recorded an allowance for estimated
doubtful accounts.
(k) Derivative Financial Instruments and Fair Value of Financial Instruments
ENI does not have any derivative or other financial instruments as defined
by SFAS No. 119, Disclosure About Derivative Financial Instruments.
SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires disclosure of an estimate of the fair value of certain financial
instruments. ENI's financial instruments consist of cash, accounts
receivable, accounts payable and debt. The estimated fair value of these
financial instruments approximates their carrying value at April 30, 1998
and 1997.
F-8
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(3) NOTES PAYABLE
(a) Loan Agreement
ENI has a loan agreement (the "Loan") with a financial institution.
The Loan is payable in eleven equal quarterly installments of $46 with
one final installment of $26. The Loan bears interest at LIBOR (three
month rate at April 30, 1998 is 5.71875%) plus 1.25%. The Loan is
secured by the property of ENI. There are no financial covenants
associated with the loan agreement. As of April 30, 1998, there was
$532 outstanding under the Loan.
(b) Overdraft Facility
ENI had a $418 overdraft facility (the "Facility") with a financial
institution that expired in August 1998. As of April 30, 1997, there
was $376 outstanding under the Facility. The facility is secured by a
$585 guarantee from an affiliate of ENI, substantially all property of
ENI and a cross guarantee between ENI and its affiliate. There are no
financial covenants associated with the Facility.
(4) ACQUISITION OF CORDIS INNOVASIVE SYSTEMS
In April 1997, ENI completed its acquisition of Cordis Innovasive Systems
from Johnson & Johnson. This acquisition was accounted for as a purchase in
accordance with Accounting Principles Board (APB) Opinion No. 16, Business
Combinations. The purchase price was approximately $6,748. In addition, ENI
recorded $5,377 of liabilities for employee severance and other exit costs
for activities which it planned to exit subsequent to the acquisition.
The purchase price was allocated as follows:
<TABLE>
<S> <C>
Purchase price $ 6,748
Accrued exit costs 5,377
-------
$12,125
=======
Net assets transferred 5,589
Machinery 542
Land and buildings 5,994
-------
$12,125
=======
</TABLE>
Included in accrued liabilities as of April 30, 1998 and 1997 are
approximately $190 and $4,991, respectively, related to the acquisition.
Approximately $3,801 was charged against the accrued exit costs during
the year ended April 30, 1998. In addition, approximately $1,000 of the
original exit costs were in excess of the actual required exit costs. The
purchase price allocation of land and buildings was revised to reflect
this adjustment.
F-9
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(5) INCOME TAXES
ENI accounts for income taxes in accordance with SFAS No. 109, Accounting
for Income Taxes. Under the liability method specified by SFAS No. 109, a
deferred tax asset or liability is determined based on the difference
between the financial statement and tax bases of assets and liabilities, as
measured by the enacted tax rates assumed to be in effect when these
differences reverse.
At April 30, 1998, ENI had foreign net operating loss carryforwards
available to offset future taxable income, if any, of approximately $5,450.
These carryforwards expire through 2003 and are subject to review and
possible adjustment by French and United Kingdom taxing authorities. A
valuation allowance has been recorded in the accompanying financial
statements to offset the benefit of these carryforwards because of the
uncertainty surrounding the realizability of these benefits.
(6) COMMITMENTS
ENI has operating lease commitments for certain facilities and equipment,
which expire through 2124. ENI has a long-term facility lease for its
operations in the United Kingdom that expires in 2124, with annual lease
payments of approximately $6. As of April 30, 1998, the total minimum
future rental payments under these arrangements amount to $206. Total rent
expense included in the statements of operations for the years ended April
30, 1998, 1997 and 1996 was $580, $203 and $166, respectively.
(7) PARENT COMPANY EQUITY
The combined financial statements of ENI have been derived from the
consolidated financial statements of Elekta. Parent company equity
represents the net assets of ENI, which is Elekta's investment in ENI. The
combined statement of operations do not reflect a charge for intercompany
interest for Elekta's investment in ENI.
(8) EMPLOYEE BENEFIT PLANS
(a) Pension Plan
ENI has a defined benefit pension plan covering substantially all of
its U.K. employees. ENI contributions to the pension plan were
approximately $195, $241 and $223 for 1998, 1997 and 1996,
respectively. Included in other assets are prepaid pension costs of
approximately $300 and $490 as of April 30, 1998 and 1997,
respectively. These prepayments represent the excess of the fair
market value of the plan's assets over the present value of the
accumulated pension benefits. Pension costs included in the
accompanying Statements of Operations are $190,000, $185,000 and
$195,000 for the years ended April 30, 1998, 1997 and 1996
respectively.
F-10
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
(b) 401(k) Plan
During 1997, ENI adopted a qualified defined contribution plan, the
Elekta Neurosurgical Instruments 401(k) Plan (the "Plan"),
pursuant to which U.S. employees may defer up to 15% of their salary,
subject to certain limitations. The Plan allows for a discretionary
match and/or profit sharing contributions, subject to approval by the
Board of Directors. No such contributions were made for the year ended
April 30, 1998.
(9) ACCRUED EXPENSES
Accrued expenses consist of the following:
<TABLE>
<CAPTION>
APRIL 30,
1998 1997
<S> <C> <C>
Payroll and related costs $1,517 $1,327
Royalties 31 -
Taxes 491 509
Accrued payables 437 450
Accrued exit costs 190 4,991
Other accrued expenses 642 723
------ ------
$3,308 $8,000
====== ======
</TABLE>
(10) GEOGRAPHIC INFORMATION
Revenues by geographic location as a percentage of total revenues are as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
North America 54% 67% 72%
Europe 30 20 20
Asia 10 9 8
South America 5 3 -
Africa 1 1 -
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
F-11
<PAGE>
ELEKTA NEUROSURGICAL INSTRUMENTS
NOTES TO COMBINED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS)
(Continued)
Identifiable assets by geographic location are as follows:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
United States $ 7,074 $ 8,397
United Kingdom 7,141 6,809
France 15,781 16,319
Other 1,250 -
------- -------
$31,246 $31,525
======= =======
</TABLE>
(11) ALLOWANCE FOR DOUBTFUL ACCOUNTS
A summary of the allowance for doubtful accounts is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Balance, beginning of period $ 41 $ 15 $ 3
Provision for doubtful accounts 586 30 15
Write-offs (11) (4) (3)
----- ----- -----
Balance, end of period $ 616 $ 41 $ 15
===== ===== =====
</TABLE>
F-12
<PAGE>
NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
OVERVIEW
On July 8, 1998, Nitinol Medical Technologies, Inc. (the "Company")
completed its acquisition of the neurosurgical instruments business("ENI") of
Elekta AB (PUBL), a Swedish corporation ("Elekta"), comprised of (i) certain
assets and liabilities of ENI (ii) all of the outstanding capital stock of
certain Elekta affiliates, including Elekta Instruments Ltd., a U.K.
corporation, Elekta Implants S.A., a French corporation, Elekta Holdings S.A., a
French corporation, Elekta Instruments SARL, a French corporation, Elekta
Instruments N.V./S.A., a Belgian corporation, Elekta Instruments S.A., a Spanish
corporation, Elekta Instruments B.V., a Netherlands corporation, Cordis
Innovasive Systems, Inc., a Florida corporation, Spembly Medical Ltd., a U.K.
corporation, Swedemed AB, a Swedish corporation and Spembly Cryosurgery Limited,
a U.K. corporation, for approximately USD$33.0 million in cash pursuant to a
Purchase Agreement dated as of May 8, 1998 between the Company and Elekta, plus
cash acquisition costs of approximately $2.0 million and 113,793 shares of
common stock issued to J.H. Whitney & Co., a significant shareholder of the
Company, as a finder's fee. These shares were recorded at their fair value as of
the closing date. Prior to the acquisition, ENI was operated as a division of
the Swedish medical technology group of Elekta and derived sales from a broad
range of specialty implants and instruments for neurosurgery.
The acquisition (including expenses) was financed with $15.6 million of the
Company's cash and $20 million of subordinated debt from an affiliate of
J.H. Whitney & Co. The subordinated debt is secured by substantially all of the
assets of the Company and is due September 30, 2003, with interest payable
quarterly at 10.101% per annum. A total of 561,207 shares of the Company's
common stock were issued to an affiliate of J.H. Whitney & Co. in connection
with the subordinated debt financing. The shares of common stock were recorded
at their fair value as of the closing date. In addition, the Company paid an
affiliate of J.H. Whitney & Co. a debt placement fee of $600,000 and incurred
cash debt issuance costs of $253,000.
The Pro Forma Condensed Combined Statements of Operations for the year
ended December 31, 1997 and the six months ended June 30, 1998 assume that the
acquisition occurred on January 1, 1997 and include the actual results of
operations of the Company and ENI for the year ended December 31, 1997 and the
six months ended June 30, 1998.
F-13
<PAGE>
The Combined Financial Statements of ENI reflect a carve out of ENI from
the consolidated financial statements of Elekta. Prior to the acquisition by the
Company, ENI was operated as a division of Elekta and derived its sales from a
broad range of specialty medical products, including implants and instruments
for neurosurgery. The Statements of Operations of ENI for all periods presented
reflect allocations of the cost of shared facilities and certain administrative
costs. Such costs and expenses have been allocated to ENI based on actual usage
or other methods that approximate actual usage. Management believes that the
allocation methods are reasonable. The financial information included herein may
not necessarily reflect the financial position, results of operations and cash
flows of ENI in the future or what the financial position, results of operations
and cash flows would have been had it been a separate, stand-alone company
throughout the periods covered.
Operating results of ENI for the year ended December 31, 1997 as shown in
the Pro Forma Combined Statements of Operations include approximately $1.3
million of charges related primarily to asset write-downs and $2.5 million of
expenses which will be eliminated after the acquisition of ENI due to the
restructuring of certain operations by Elekta prior to the acquisition by the
Company. Operating results of ENI for the six months ended June 30, 1998 as
shown in the Pro Forma Combined Statements of Operations include
approximately $637,000 of charges related primarily to asset write-downs and
$254,000 of expenses which will be eliminated after the acquisition of ENI due
to the restructuring of certain operations by Elekta prior to the acquisition by
the Company.
Audited operating results of ENI for the year ended April 30, 1998,
included elsewhere in this Form 8-K/A, include charges of $1.9 million related
primarily to asset write-downs and $2.3 million of expenses which will be
eliminated after the acquisition of ENI due to the restructuring of certain
operations by Elekta prior to the acquisition by the Company.
The Pro Forma Condensed Combined Balance Sheet as of June 30, 1998 gives
effect to the acquisition as if it occurred on June 30, 1998, and reflects the
Company's and ENI's balance sheets as of June 30, 1998. The allocation of the
purchase price shown in the following Pro Forma Condensed Combined Financial
Statements represents the fair value of the assets acquired and liabilities
assumed as determined by independent appraisals. The Pro Forma Condensed
Combined Statements of Operations are not necessarily indicative of the actual
results that would have been achieved had the acquisition occurred at the
beginning of the respective periods, nor do they purport to indicate the results
of future operations of the Company.
The accompanying Pro Forma Condensed Combined Financial Statements
should be read in conjunction with the accompanying notes and the Company's and
ENI's historical financial statements and related notes thereto.
F-14
<PAGE>
NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
------------------------------------------
Nitinol Medical Elekta Neurosurgical Pro Forma Pro Forma
Technologies, Inc. Instruments Adjustments Combined (1)
------------------ --------------------- ----------- ------------
<S> <C> <C> <C> <C>
Sales $10,126 $31,557 $ - $ 41,683
Cost of sales 3,765 16,670 - 20,435
------- ------- -------- --------
Gross profit 6,361 14,887 - 21,248
------- ------- -------- --------
Research and development expenses 2,974 1,605 - 4,579
In-process research and development
and restructuring costs 2,643 - - 2,643
Selling, general and administrative
expenses 3,898 17,586 378 (2) 22,119
257 (6)
------- ------- -------- --------
9,515 19,191 635 29,341
------- ------- -------- --------
Loss from operations (3,154) (4,304) (635) (8,093)
Interest income (expense), net 1,546 (45) (770) (3) (2,071)
(2,020) (4)
(782) (5)
------- ------- -------- --------
Loss before provision for income taxes (1,608) (4,349) (4,207) (10,164)
Provision for income taxes 230 - (102) (8) 128
------- ------- -------- --------
Net loss $(1,838) $(4,349) $ (4,105) $(10,292)
======= ======= ======== ========
Basic and diluted net loss per common share $ (0.19) $ (1.00)
======= ========
Weighted average common shares outstanding 9,596 675 (7) 10,271
======= ======== ========
</TABLE>
F-15
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 1997:
(1) For purposes of the Pro Forma Condensed Combined Statement of Operations,
acquired in-process research and development of approximately $4.7 million
related to the acquisition of ENI was assumed to have been written off
prior to the periods presented herein. Accordingly, the Pro Forma Condensed
Combined Statement of Operations does not include such charge.
(2) Gives effect to amortization expense of $378,000 (including $102,000 tax
gross-up) for acquired intangible assets totaling approximately $8.9
million (including $4.1 million tax gross-up) over a range of estimated
lives from seven to twenty years.
(3) Gives effect to a reduction in interest income of $770,000 as a result of
utilizing cash for the ENI acquisition.
(4) Gives effect to interest expense of $2.0 million related to $20 million of
subordinated debt, at a 10.101% interest rate, used to finance the
acquisition.
(5) Gives effect to amortization expense of $782,000 of original issue discount
and deferred financing costs totaling approximately $4.1 million on a
straight line basis over the 5.25 year life of the subordinated debt.
(6) Gives effect to depreciation and amortization expense of $227,000 related
to the allocation of purchase price, in excess of book value, to acquired
land and buildings totaling approximately $10.2 million over a 40 year
life, and rent expense of $30,000 related to the allocation of purchase
price to a favorable leasehold valued at $1.2 million to be amortized over
a 40 year life.
(7) Gives effect to the increase of 675,000 shares in weighted average and
diluted weighted average common shares outstanding as a result of the
acquisition and financing.
(8) Gives effect to an adjustment in the tax provision as a result of the
acquisition and Pro Forma adjustments.
F-16
<PAGE>
NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical
------------------------------------------ (1)
Nitinol Medical Elektra Neurosurgical Pro Forma Pro Forma
Technologies, Inc. Instruments Adjustments Combined
------------------ ---------------------- ----------- ------------
<S> <C> <C> <C> <C>
Sales $ 6,753 $16,819 $ - $ 23,572
Cost of sales 2,114 9,569 11,683
------- ------- -------- --------
Gross profit 4,639 7,250 - 11,889
------- ------- -------- --------
Research and development expenses 1,672 1,708 - 3,380
Selling, general and administrative
expenses 2,109 6,341 189 (2) 8,767
128 (6)
------- ------- -------- --------
3,781 8,049 317 12,147
------- ------- -------- --------
Income (loss) from operations 858 (799) (317) (258)
Equity in loss of affiliate (93) - - (93)
Interest income (expense), net 761 (20) (385) (3) (1,045)
(1,010) (4)
(391) (5)
------- ------- -------- --------
Income (loss) before provision
for income taxes 1,526 (819) (2,103) (1,396)
Provision for income taxes 551 - (51) (8) 500
------- ------- -------- --------
Net income (loss) $ 975 $ (819) $(2,052) $ (1,896)
======= ======= ======== ========
Basic net income (loss) per
common share $ 0.10 $ (0.18)
======= ========
Weighted average common shares
outstanding 9,826 675 (7) 10,501
======= ======== ========
Diluted net income (loss) per
common share $ 0.09 $ (0.16)
======= ========
Diluted weighted average common
shares outstanding 10,904 675 (7) 11,579
======= ======== ========
</TABLE>
F-17
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1998:
(1) For purposes of the Pro Forma Condensed Combined Statement of Operations,
acquired in-process research and development of approximately $4.7 million
related to the acquisition of ENI was assumed to have been written off
prior to the periods presented herein, so that the Pro Forma Condensed
Combined Statement of Operations does not include such charge.
(2) Gives effect to amortization expense of $189,000 (including $51,000 tax
gross-up) for acquired intangible assets totaling approximately
$8.9 million (including $4.1 million tax gross-up) over a range of lives
from seven to twenty years.
(3) Gives effect to a reduction in interest income of $385,000 as a result of
utilizing cash for the ENI acquisition.
(4) Gives effect to interest expense of $1.0 million related to $20 million of
subordinated debt, at a 10.101% interest rate, used to finance the
acquisition.
(5) Gives effect to amortization expense of $391,000 of original issue discount
and deferred financing costs of approximately $4.1 million on a straight
line basis over the 5.25 year life of the subordinated debt.
(6) Gives effect to depreciation and amortization expense of $113,000 related
to the allocation of purchase price, in excess of book value, to acquired
land and buildings totaling approximately $10.2 million over a 40 year
life, and rent expense of $15,000 related to the allocation of purchase
price to a favorable leasehold valued at $1.2 million to be amortized over
a 40 year life.
(7) Gives effect to the increase of 675,000 shares in weighted average and
diluted weighted average common shares outstanding as a result of the
acquisition.
(8) Gives effect to an adjustment in the tax provision as a result of the
acquisition and Pro Forma adjustments.
F-18
<PAGE>
NITINOL MEDICAL TECHNOLOGIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------
Nitinol Elekta
Medical Neurosurgical Pro Forma Pro Forma
Technologies, Inc. Instruments Adjustments Combined
------------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $18,130 $ 2,193 $(34,289) (1) $ 3,705
17,671 (2)
Marketable securities 7,177 - - 7,177
Accounts receivable, net of allowances 3,300 5,815 - 9,115
for doubtful accounts
Inventories 1,316 7,160 - 8,476
Prepaid expenses and other current assets 788 2,047 1,476 (2) 4,311
-------- ------- ------- -------
Total current assets 30,711 17,215 (15,142) 32,784
-------- ------- ------- -------
Property and equipment, net 2,315 11,026 4,450 (1) 17,791
Investments in long-term marketable securities 1,915 - - 1,915
Investment in affiliate 354 - - 354
Investment in Elekta Neurosurgical Instruments 35,379 (1)(2) -
(35,379) (1)(3)
Acquired intangible assets - 821 3,987 (1) 8,904
4,096 (1)
Other assets 651 - 1,170 (1) 2,244
(430) (1)
853 (2)
------- ------- ------- -------
$35,946 $29,062 $(1,016) $63,992
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,444 $ 7,058 - 8,502
Current portion of capital leases 172 - - 172
Senior debt - 184 - 184
Other current liabilities - 155 - 155
------- ------- ------- -------
Total current liabilities 1,616 7,397 - 9,013
------- ------- ------- -------
Subordinated debt - - 20,000 (2) 16,745
(3,255) (2)
Capital lease obligation and note payable, net of
current portion 539 339 - 878
Deferred tax liability - 264 4,096 (1) 4,360
Stockholders' Equity
Common stock, $.001 par value-
Authorized-30,000 shares
Issued and outstanding-9,828 shares 10 - 1 (1)(2) 11
at June 30, 1998
Additional paid-in capital 36,655 - 3,914 (1)(2) 40,569
Accumulated deficit (2,874) - (4,710) (1) (7,584)
------- ------- ------- -------
33,791 - (795) 32,996
Net assets of Elekta Neurosurgical Instruments - 21,062 (21,062) (3) -
------- ------- ------- -------
$35,946 $29,062 $(1,016) $63,992
======= ======= ======= =======
</TABLE>
F-19
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30,
1998:
(1) Gives effect to the purchase of ENI including cash acquisition costs of
approximately $2.0 million and the issuance of 113,793 shares of the
Company's Common Stock to J.H. Whitney & Co. as a finders fee for the
acquisition. Reflects the purchase price allocation to the assets acquired
and liabilities assumed based upon independent appraisals including the
allocation of purchase price in excess of book value of (a) $4.7 million to
in-process research and development which has been charged to accumulated
deficit in the Pro Forma Condensed Combined Balance Sheet, (b) $10.1
million to land and buildings, (c) $1.2 million to a favorable building
lease in the United Kingdom and (d) $8.9 million to goodwill and other
intangibles. The allocation to goodwill and other intangibles includes $4.1
million of a gross-up for deferred income taxes in accordance with
Statement of Financial Accounting Standards No. 109.
(2) Gives effect to subordinated debt incurred in connection with the
acquisition, and the issuance of 561,207 shares of the Company's Common
Stock to an affiliate of J.H. Whitney & Co., $853,000 of deferred financing
costs and $1.5 million interest-bearing prepaid interest on the
subordinated debt.
(3) Gives effect to the elimination of ENI's equity of $21.1 million as a
result of the acquisition.
F-20
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
* 2.1 Purchase Agreement, dated as of May 8, 1998, between
the Registrant and Elekta AB (PUBL), as amended by
Amendment No. 1 dated as of July 8, 1998.
*10.1 Assignment and Assumption Agreement, dated July 8,
1998, by and among Elekta AB (PUBL) and the Registrant.
*10.2 Tax Covenant, dated as of July 8, 1998, between Elekta
AB (PUBL) and the Registrant.
*10.3 Subordinated Note and Common Stock Purchase
Agreement by and among the Registrant, Whitney
Subordinated Debt Fund, L.P. and, for certain purposes,
J.H. Whitney & Co., dated as of July 8, 1998.
*10.4 Subordinated Promissory Note of the Registrant
dated July 8, 1998.
*10.5 Guarantee and Collateral Agreement made by the
Registrant and certain of its Subsidiaries in favor of
J.H. Whitney & Co., as Agent, dated as of July 8, 1998.
*10.6 Agreement and Deed of Pledge of Shares in Yellow
Tape B.V. and Nitinol Medical Technologies
International B.V. between NMT NeuroSciences
(International), Inc., Yellow Tape B.V., the
Registrant, Nitinol Medical Technologies International
B.V. and J.H. Whitney & Co., as trustee, dated as of
July 8, 1998.
*10.7 Registration Rights Agreement among the Registrant,
Whitney Subordinated Debt Fund, L.P. and J.H. Whitney &
Co., dated as of July 8, 1998.
23.1 Consent of Independent Public Accountants.
<PAGE>
27.1 Financial Data Schedule of Registrant.
*99.1 Press Release dated July 8, 1998.
__________________
* Incorporated by reference from the Registrant's Current Report on Form 8-K
dated July 8, 1998 and filed with the Securities and Exchange Commission on July
23, 1998.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 8-K/A, into the Company's previously filed
Registration Statement File No. 333-31751.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
September 17, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 1998 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> APR-30-1998
<CASH> 2,332
<SECURITIES> 0
<RECEIVABLES> 9,496
<ALLOWANCES> 616
<INVENTORY> 7,296
<CURRENT-ASSETS> 19,408
<PP&E> 10,674
<DEPRECIATION> (3,869)
<TOTAL-ASSETS> 31,246
<CURRENT-LIABILITIES> 5,632
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,266
<TOTAL-LIABILITY-AND-EQUITY> 31,246
<SALES> 37,112
<TOTAL-REVENUES> 37,112
<CGS> 20,693
<TOTAL-COSTS> 20,693
<OTHER-EXPENSES> 19,875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (43)
<INCOME-PRETAX> (3,499)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,499)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,499)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
