As filed with the Securities and Exchange Commission on May 10, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
ST. JUDE MEDICAL, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1276891
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Lillehei Plaza
St. Paul, Minnesota 55117
(612) 483-2000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
--------------------
Kevin T. O'Malley
Vice President and General Counsel
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, Minnesota 55117
(612) 483-2000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
COPIES TO:
Martin R. Rosenbaum
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Approximate date of commencement of proposed sale to public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earliest effective registration
statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Share Offering Price Fee
--------------------------- ---------- --------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value.............. 149,153 shares $36.57(1) $5,454,525(1) $1,881
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
based on the average of the high and low sale prices of the Company's
Common Stock on The Nasdaq National Market on May 3, 1996 pursuant to
Rule 457(c).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
SUBJECT TO COMPLETION, DATED MAY 10, 1996
PROSPECTUS
ST. JUDE MEDICAL, INC.
149,153 SHARES OF
COMMON STOCK
This Prospectus relates to the offering of up to 149,153 shares (the
"Shares") of Common Stock, $.10 par value, of St. Jude Medical, Inc. (the
"Company") which may be offered from time to time by the shareholders named
herein (the "Selling Shareholders"). The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Shareholders. See "Use of
Proceeds."
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale of
the Shares by the Selling Shareholders. The Company's Common Stock is quoted on
The Nasdaq National Market under the symbol "STJM." On May 7, 1996, the last
reported sale price of the Company's Common Stock on The Nasdaq National Market
was $37.125.
FOR INFORMATION CONCERNING RISK FACTORS WHICH SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY, SEE "RISK FACTORS"
BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
The Selling Shareholders have advised the Company that they intend to
sell the Shares from time to time in transactions on The Nasdaq National Market
at prices prevailing at the time of the sale or otherwise as set forth below.
The Selling Shareholders have also advised the Company that, as of the date
hereof, they have made no arrangement with any brokerage firm for the sale of
the Shares. The Selling Shareholders may be deemed to be "underwriters" within
the meaning of the Act, in which case any commissions received by a broker or
dealer may be deemed to be underwriting commissions or discounts under the Act.
See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO PROCEEDS TO SELLING
PRICE TO PUBLIC COMMISSIONS COMPANY SHAREHOLDERS
<S> <C> <C> <C> <C>
Per Share...................... $_____(1) (2) None $_____(1)
Total.......................... $________(1) (2) None $_______(1)
</TABLE>
(1) Estimated based on a per share price of $_____, equal to the closing
sale price of the Company's Common Stock as of _______, 1996 and
assumes the sale of all Shares by the Selling Shareholders, with no
adjustment for commissions, discounts, brokerage and other fees that
may be paid by the Selling Shareholders, or expenses of the offering to
be paid by the Company.
(2) Commissions, discounts and brokerage fees will be payable by the
Selling Shareholders in such amounts as the Selling Shareholders may
agree to from time to time.
------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS _________, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). The reports, proxy
and information statements and other information can be inspected and copied at
the public facilities maintained by the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and are also available at
the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048, and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is quoted
on The Nasdaq National Market ("Nasdaq"), and certain of the Company's reports,
proxy materials and other information may be available for inspection at the
offices of Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement
under the Securities Act of 1933, as amended, with respect to the shares offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits thereto, certain parts of which were
omitted as permitted by the rules and regulations of the Commission. Such
additional information may be obtained from the Commission's principal office in
Washington, D.C. Statements contained in this Prospectus or in any document
incorporated in this Prospectus by reference as to the content of any contract
or other document referred to herein or therein are not necessarily complete,
and in each instance reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement or each other
document, each such statement being qualified in all respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed with the Commission by the Company (File
No. 0-8672) are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, as amended by
amendments on Form 10-K/A filed on April 1, 1996 and April 26, 1996; (ii) the
Company's Current Report on Form 8-K dated January 29, 1996; and (iii) the
description of the Company's Common Stock as set forth in the Company's
Registration Statement on Form S-8 filed with the Securities and Exchange
Commission on June 28, 1991 (Reg. No. 33-41459), including any amendments or
reports filed for the purpose of updating such information.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15 of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of securities contemplated hereby shall also be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents or reports. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. Such documents (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
to such documents) are available, without charge, to any person, including any
beneficial owner, to whom this Prospectus is delivered, on written or oral
request, to St. Jude Medical, Inc., One Lillehei Plaza, St. Paul, Minnesota
55117, Attention: Investor Relations, or by telephone at (612) 481-7555.
--------------------
This Prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Actual results could differ significantly from those projected or
contemplated in the forwardlooking statements as a result, in part, of the risk
factors set forth elsewhere in this Prospectus. In connection with the
forward-looking statements which appear in these disclosures, prospective
purchasers of the Company's Common Stock offered hereby should carefully review
all of such risk factors.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus and
in documents incorporated herein by reference.
THE COMPANY
The Company designs, manufactures and markets medical devices and
services for the cardiovascular segment of the medical device market. The
Company's products are distributed in more than 70 countries worldwide through a
combination of direct sales personnel, independent manufacturers'
representatives and distribution organizations. The Company's principal products
are valve disease management products, including mechanical and tissue heart
valves and annuloplasty ring products, and pacemaker products, including
bradycardia pulse generators, leads and programmers. The main markets for the
Company's products are the United States, Western Europe and Japan.
Prior to the acquisition of substantially all the worldwide assets of
the cardiac rhythm management operations of Siemens AG ("Pacesetter") in
September 1994, the Company derived the substantial majority of its revenues
from heart valve products. Pacesetter significantly expanded the Company's
product offerings and provided a platform for potential further diversification
of its business. In 1995 almost 63% of the Company's net sales were derived from
pacemaker products, approximately 36% from heart valve products and the balance
from cardiac assist products. The Company sold its cardiac assist division
assets in January 1996.
Pacesetter pulse generators and leads treat patients with heart beats
that are too slow or irregular, a condition known as bradycardia. Various models
of bradycardia pulse generators and leads are produced by Pacesetter. Pulse
generators can sense and produce impulses in both the upper and lower chambers
of the heart, adapt to changes in heart rate, and can be non-invasively
programmed by the physician to adjust sensing, electrical pulse intensity,
duration, rate, and other characteristics. The pulse generator, generally
referred to as a pacemaker, contains a lithium battery power source and
electronic circuitry. It generates pacing pulses and monitors the heart's
activity to sense abnormalities requiring correction. It is most often implanted
pectorally just below the collarbone. The leads are insulated wires that carry
the pulses to the heart and information from the heart back to the pacemaker. A
pacemaker uses electrical currents equivalent to those in a healthy heart.
Heart valves facilitate the one-way flow of blood in the heart and
prevent significant backflow of blood into the heart and between the heart's
chambers. Heart valve replacement or repair may be necessary because the natural
heart valve has deteriorated due to congenital defects or disease. The Company
offers both mechanical and tissue heart valves. The St. Jude Medical(R)
mechanical heart valve is the most widely implanted valve in the world with over
670,000 valves implanted to-date. Annuloplasty rings are prosthetic devices used
to repair diseased or damaged mitral heart valves. Also, in 1996, the Company
executed an agreement to provide services relating to homografts.
The Company has two pending merger transactions, involving the
acquisitions of Daig Corporation and Cyberonics, Inc., respectively. See "Recent
Developments."
The Company was incorporated in 1976 under the laws of the State of
Minnesota. Its principal executive offices are located at One Lillehei Plaza,
St. Paul, Minnesota 55117 and its telephone number is (612) 483-2000.
THE OFFERING
Common Stock offered by Selling Shareholders................. 149,153
Common Stock outstanding after offering (1).................. 70,796,712
Nasdaq Symbol................................................ STJM
- ------------------------
(1) Excludes up to 7,930,660 shares of Common Stock issuable under the
Company's stock option plans, of which options covering 3,338,065
shares were outstanding as of May 3, 1996.
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Shares by
the Selling Shareholders. See "Use of Proceeds."
RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should
consider carefully all the information contained in this Prospectus and, in
particular, the following risk factors.
RAPID TECHNOLOGICAL CHANGE AND INTENSE COMPETITION
The medical device market is highly competitive. The Company competes
with many companies, some of which have access to greater financial and other
resources than the Company. Furthermore, the medical device market is
characterized by intensive development efforts and rapidly advancing technology.
The Company's present and future products could be rendered obsolete or
uneconomical by technological advances by one or more of the Company's current
or future competitors or by alternative therapies, including drug therapies. The
future success of the Company will depend, in large part, on its ability to
anticipate technology advances and keep pace with other developers of medical
devices and therapies. Competitive market forces may also adversely affect the
prices at which the Company sells its products. In particular, there has been
significant consolidation in the medical device industry in recent years, partly
in response to the increasing emphasis on cost containment in the industry, the
emergence of large managed-care buying groups and hospital consolidations and
the potential for increased federal regulation. Given these factors, there can
be no assurance that the Company will have the size or ability to compete
successfully in the industry.
COSTS OF AND RISKS ASSOCIATED WITH FDA AND OTHER GOVERNMENTAL REGULATION
The medical devices manufactured and marketed by the Company are
subject to rigorous regulation by the U.S. Food and Drug Administration ("FDA")
and numerous other federal, state and foreign governmental authorities. The
process of obtaining regulatory approvals to market a medical device,
particularly from the FDA, can be costly and time-consuming, and there can be no
assurance that such approvals will be granted for future products on a timely
basis, if at all. Delays in receipt of, or failure to obtain, approvals for
future products could result in delays in realizing product revenues or in
substantial additional costs or have other material adverse effects on the
Company's business or results of operations. In addition, there can be no
assurance that the Company will be or will continue to be in compliance with
applicable FDA and other material regulatory requirements. If the FDA were to
conclude that the Company was not in compliance with applicable laws or
regulations, it could institute proceedings to detain or seize the Company's
products, issue a recall, impose operating restrictions, enjoin future
violations and assess civil penalties against the Company, its officers or its
employees and could recommend criminal prosecution to the Department of Justice.
Furthermore, the FDA could proceed to ban, or request recall, repair,
replacement or refund of the cost of, any device manufactured or distributed by
the Company. Moreover, foreign governmental regulations have become increasingly
stringent, and the Company may be subject to more rigorous regulation by foreign
governmental authorities in the future. The Company cannot predict whether any
U.S. or foreign governmental regulation may be imposed in the future that may
have a material adverse effect on the Company.
For a description of a consent decree applicable to the Company's
Pacesetter, Inc. subsidiary, see "Recent Developments - Litigation and Other
Proceedings."
RISK OF PRODUCT LIABILITY LOSSES AND INADEQUATE OR UNAVAILABLE INSURANCE
COVERAGE
The medical device industry is subject to significant product liability
claims and litigation, and the Company will face an inherent risk of exposure to
product liability claims alleging that the use of its products (or of products
previously manufactured by the Company) has resulted in adverse effects to a
patient or patients. Such claims could be asserted in the future against the
Company for past or future events not currently known to management of the
Company. Any such claim could have an adverse effect on the Company. As part of
its risk management policies, the Company has obtained third party product
liability insurance coverage. Daig Corporation has elected to self-insure with
respect to product liability risks. There can be no assurance that the Company
(including the operations of Daig after its proposed acquisition by the Company)
will continue to be able to obtain product liability insurance on commercially
reasonable terms, if at all. Furthermore, there can be no assurance that product
liability claims against the Company will not exceed the coverage limits of any
insurance policies or cause the Company to record a self-insured loss. A product
liability claim in an amount in excess of applicable insurance could have a
material adverse effect on the Company.
For a description of certain litigation involving the Company related
to product liability claims and insurance coverage, see "Recent Developments -
Litigation and Other Proceedings."
POSSIBLE CHALLENGES TO PATENTS AND PROPRIETARY RIGHTS
The Company is and will be dependent upon proprietary intellectual
property. The Company relies on a combination of patents, trade secrets and
nondisclosure agreements to protect its proprietary intellectual property, and
will continue to do so. There can be no assurance that pending patent
applications owned by the Company will result in patents issuing to the Company,
that patents issued to or licensed by the Company in the past or in the future
will not be challenged or circumvented by competitors or that such patents will
be found to be valid or sufficiently broad to protect the Company's technology
or to provide the Company with any competitive advantage. Third parties could
also obtain patents that may require the Company to negotiate licenses to
conduct its business, but there can be no assurance that the required licenses
would be available on reasonable terms or at all. The Company will also rely on
confidentiality agreements with certain employees, consultants and other parties
to protect, in part, trade secrets and other proprietary technology. There can
be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any breach, that others will not independently
develop substantially equivalent proprietary information or that third parties
will not otherwise gain access to the Company's trade secrets or proprietary
knowledge.
There has been substantial litigation regarding patent and other
intellectual property rights in the medical device industry generally. In the
future, the Company may be forced to defend itself against claims and legal
actions alleging infringement of the intellectual property rights of others.
Additionally, the Company may find it necessary to initiate litigation in order
to enforce its patent rights, to protect its trade secrets or know-how and to
determine the scope and validity of the proprietary rights of others.
Intellectual property litigation can be costly and time-consuming, and there can
be no assurance that the Company's intellectual property litigation expenses
will not be significant in the future or that the outcome of such litigation
will be favorable to the Company. Adverse determinations in any such litigation
could subject the Company to significant liabilities to third parties, could
require the Company to seek licenses from third parties and could, if such
licenses are not available, prevent the Company from manufacturing, selling or
using certain of its products, any of which could have a material adverse effect
on the Company.
POSSIBLE DENIAL OF THIRD-PARTY REIMBURSEMENT
The Company sells its products, and will sell its products, to
hospitals, doctors and other health care providers who receive reimbursement for
the health care services provided to their patients from third-party payors,
such as governmental programs (i.e., Medicare and Medicaid), private insurance
plans and managed care programs. These third-party payors may deny reimbursement
if they determine that a device used in a procedure was not used in accordance
with cost-effective treatment methods, as determined by such third-party payor,
or was used for an unapproved indication. Also, third-party payors are
increasingly challenging the prices charged for medical products and services.
There can be no assurance that the Company's products will be considered
cost-effective by third-party payors, that reimbursement will be available or,
if available, that the third-party payors' reimbursement policies will not
adversely affect the Company's ability to sell its products profitably.
GOVERNMENT INVESTIGATIONS
INVESTIGATION BY OFFICE OF THE INSPECTOR GENERAL OF REIMBURSEMENT
CLAIMS MADE BY CERTAIN CUSTOMERS. The Office of the Inspector General (the
"OIG") of the United States Department of Health and Human Services ("HHS") is
currently conducting an investigation regarding the possible submission of
improper claims to the Medicare/Medicaid programs for reimbursement for
procedures using cardiovascular medical devices that were not approved for
marketing by the FDA at the time of use. Beginning in June 1994, approximately
130 hospitals received subpoenas from HHS seeking information with respect to
reimbursement for procedures using cardiovascular medical devices (including
certain products manufactured by the Company, as well as numerous other
manufacturers) that were subject to investigational exemptions or may not have
been approved for marketing by the FDA at the time of use. The subpoenas also
sought information regarding various types of remuneration, including payments,
gifts, stock and stock options, received by the hospitals or their employees
from manufacturers of medical devices. The OIG's investigation and any related
change in Medicare/Medicaid reimbursement practices may discourage hospitals
from participating in clinical trials or from including Medicare and Medicaid
patients in clinical trials, which could lead to increased costs in the
development of new products. In addition, civil and criminal sanctions may be
imposed against any person found to have participated in an improper claim for
reimbursement under Medicare/Medicaid, including possibly the Company. The
Company believes that it is too early to predict the possible outcome of this
matter or when it will be resolved. In April 1996, a Federal District Court in
California declared the Health Care Financing Administration's governmental
guidelines, denying reimbursement for investigational devices, to be invalid.
The government has the right to appeal this decision, and the impact on the OIG
investigation is uncertain. There can be no assurance that the OIG's
investigation or any resulting or related changes in third-party payors'
reimbursement practices will not materially adversely affect the medical device
industry in general or the Company in particular.
GERMAN GOVERNMENT INVESTIGATION. In 1994 a state prosecutor in Germany
began an investigation of allegations of corruption in connection with the sale
of heart valves. As part of that investigation, the prosecutor seized documents
from the Company's offices in Germany as well as documents from certain
competitors' offices. In December 1995, the state prosecutor announced that the
investigation was continuing and had been broadened to include other medical
devices. Subsequently, the United States Securities and Exchange Commission
issued a formal order of private investigation covering the Company involving
sales practices of the Company and other manufacturers in Germany.
POSSIBLE ADVERSE IMPACT OF HEALTH CARE REFORM PROPOSALS
From time to time health care reform proposals have been introduced in
the United States Congress that generally attempt to expand health care coverage
and reduce total health care expenditures. Different proposals use various
techniques to achieve these goals. Proposals often include such features as
universal health care coverage, mandatory employer health insurance premiums,
global expenditure limits, procedures for the review of new technologies,
portability of insurance coverage and the creation of large buying groups
intended to have considerable purchase power. Currently, legislative attention
is focused particularly on certain proposed Medicare and Medicaid reforms. The
ultimate scope of these reforms, if any, cannot yet be ascertained. Certain
states have already made significant changes to their Medicaid programs and have
adopted other health care reforms. Other states have reform proposals under
consideration. In addition, such health care reform initiatives may accelerate
the growing trend toward involvement by hospital administrators, purchasing
managers and buying groups in purchasing decisions. This trend is expected to
lead to increased emphasis on the costeffectiveness of any treatment regimen.
Regardless of whether any additional reform proposals are ultimately adopted,
the trend toward cost controls and the requirement of more efficient utilization
of medical therapies and procedures is expected to continue. Health care reform
and the trend toward managed care may adversely affect the prices for, or the
levels at which reimbursement is provided for, the Company's products and the
volume of products sold. In addition, certain health care reform initiatives, if
enacted, may cause the Company to incur increased expenses or reduced revenue in
connection with bringing new products to market, which may adversely affect the
Company's business and results of operations. Similar initiatives to limit the
growth of health care costs, including price regulation, are also underway in
several other countries in which the Company currently does, or is expected to
do, business. The Company is unable to predict at this time whether any such
U.S. or foreign health care reform initiatives will be enacted or, if enacted,
the final form such reforms would take or when such reforms would be
implemented. Similarly, the Company is unable to predict what effect, if any,
the enactment of any current or future U.S. or foreign health care reform
initiatives might have on the Company's business and results of operations.
POTENTIAL FOR SUPPLY INTERRUPTIONS
The Company purchases raw materials and other items from numerous
suppliers for use in its products. The Company maintains sizeable inventories of
up to three years of its projected requirements for certain materials, some of
which are available only from a single vendor. The Company has been advised from
time to time that certain of these vendors may terminate sales of products to
customers that manufacture implantable medical devices in an effort to reduce
their potential products liability exposure. Some of these vendors have modified
their positions and have indicated a willingness to either temporarily continue
to provide product until such time as an alternative vendor or product can be
qualified or to reconsider the supply relationship. While the Company believes
that alternative sources of raw materials are available and that there is
sufficient lead time in which to qualify such other sources, any supply
interruption could have a material adverse effect on the Company's ability to
manufacture its products.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success will depend in large part on its
ability to attract and retain highly qualified scientific, management, marketing
and sales personnel. The competition for skilled personnel in the Company's
industry is intense. There is an inherent risk in transactions like the pending
merger of the Company with Daig Corporation that the combination process could
result in the departure of key employees. There can be no assurance that the
announcement of the proposed merger will not adversely affect the Company's
ability to attract and retain personnel. The loss of a significant group of
skilled personnel could adversely affect the Company. See "Recent Developments -
Merger Agreement With Daig Corporation."
PROPOSAL TO INCREASE AUTHORIZED SHARES OF COMPANY COMMON STOCK; OTHER
ANTITAKEOVER CONSIDERATIONS
At the Company's Annual Meeting of Shareholders scheduled to be held on
May 9, 1996, holders of Company Common Stock will be asked to consider and vote
upon a proposal to approve and adopt a proposed amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of Company
Common Stock from 100,000,000 to 250,000,000 (the "Amendment"). The Amendment is
being sought because, following the consummation of the merger with Daig
Corporation and absent the Amendment, there would remain only approximately 11.4
million shares of authorized, unissued and unreserved shares of Company Common
Stock. The Amendment, if adopted, will make available to the Company additional
authorized, unissued and unreserved shares of Company Common Stock without the
delay and cost of calling a special shareholders' meeting. The additional
authorized Company Common Stock could also be issued to make any attempt to
acquire control of the Company more difficult and costly and thereby discourage
attempts to acquire the Company or deprive holders of Company Common Stock of
the opportunity to sell their shares at a premium above market price. If an
issuance of additional shares of Company Common Stock is made on other than a
pro rata basis to all shareholders, dilution of ownership interest and voting
power of existing shareholders may occur and, depending on the consideration for
which the shares were issued, could dilute earnings per share. There are at
present no plans or arrangements concerning the issuance of additional shares of
Company Common Stock, except for the shares currently reserved for issuance
under the existing stock purchase and option plans and shares to be issued in
connection with the merger with Daig Corporation. If any plans or arrangements
are made concerning the issuance of any such shares, holders of the then
outstanding shares of Company Common Stock may or may not be given the
opportunity to vote thereon, depending upon the nature of any such transaction,
the law applicable thereto, the policy of any stock exchange upon which the
Company Common Stock may be listed at such time and the judgment of the
Company's Board.
The Company is, and will continue to be, subject to a shareholders'
rights plan which could in certain circumstances serve as a deterrent against a
possible change of control not approved by the Company's Board. In addition, the
Company is, and will be, subject to certain provisions of the Minnesota Business
Corporation Act that limit the voting rights of shares acquired in "control
share acquisitions" and restrict certain "business combinations." These
provisions and the rights plan could, in themselves or in connection with the
foregoing factors, have the effect of discouraging certain attempts to acquire
the Company that could deprive the Company's shareholders of opportunities to
sell their shares of Company Common Stock at prices higher than prevailing
market prices.
RECENT DEVELOPMENTS
MERGER AGREEMENT WITH DAIG CORPORATION. In January 1996, the Company
entered into an Agreement and Plan of Merger with respect to the proposed
acquisition of Daig Corporation ("Daig") by the Company. Daig designs,
manufactures and markets specialized disposable cardiovascular devices for the
electrophysiology and interventional cardiology markets, including percutaneous
catheter introducers, diagnostic guidewires, electrophysiology catheters and
bipolar temporary pacing catheters (used with external pacemakers).
Under the terms of the merger agreement, upon the completion of the
merger, each outstanding share of Daig common stock (other than shares as to
which dissenters' rights have been perfected under the Minnesota Business
Corporation Act) will be converted into the right to receive .651733 of a share
of Company Common Stock together with cash in lieu of any fractional share of
Company Common Stock to which a holder of Daig common stock would otherwise be
entitled. Daig currently has outstanding 15,236,144 shares of common stock and
an option to purchase 128,000 shares of Daig common stock. Daig may terminate
the merger agreement if the average closing sale price of a share of Company
Common Stock on Nasdaq for the 20 trading days immediately prior to the closing
date of the merger is less than $34.00. The merger is subject to the approval by
the shareholders of Daig and certain other regulatory reviews and is expected to
be completed in the second quarter of 1996.
MERGER AGREEMENT WITH CYBERONICS, INC. In April 1996, the Company
entered into a Merger Agreement with respect to the possible acquisition of
Cyberonics, Inc. ("Cyberonics") by the Company. Cyberonics designs, develops and
markets medical devices for the treatment of epilepsy and other debilitating
neurological disorders through vagus nerve stimulation. Under the terms of the
merger agreement, if the Company elects to proceed with the merger, the Company
would pay approximately $72 million in cash (approximately $7 per share) for the
currently outstanding shares of Cyberonics. The merger agreement gives the
Company the unilateral option to terminate the merger prior to closing
(currently anticipated to occur in October 1996). The merger is subject to
approval by a majority of the shareholders of Cyberonics and certain regulatory
reviews. The Company has agreed that, upon approval of the merger by the
shareholders of Cyberonics and regardless of whether it elects to proceed with
the merger, it will purchase from Cyberonics $12 million in newly issued
Cyberonics common stock at a price of $5.50 per share.
Cyberonics' approach to the treatment of epilepsy utilizes
"neuropacing" or the use of a pacemaker-like device to stimulate the vagus nerve
intermittently and reduce the incidence of seizures. The Cyberonics device
consists of an implantable pulse signal generator and a nerve stimulation lead.
This system has been implanted in over 700 patients worldwide and has been
approved for use in 23 countries, including the countries in the European Union.
Cyberonics filed a pre-market approval ("PMA") application with the FDA in June
1993, which was amended in January 1995 following a request from the FDA for a
second double-blind placebocontrolled study. Cyberonics has completed the
enrollment phase of this confirmatory trial. The treatment phase of this trial
is expected to be completed in mid-1996, and the submission of the final PMA to
the FDA is expected before the end of 1996.
LITIGATION AND OTHER PROCEEDINGS. On February 28, 1994, the predecessor
organization to the Company's Pacesetter Systems, Inc. subsidiary entered into a
consent decree in settlement of a lawsuit brought by the United States in U.S.
District Court for the District of New Jersey. The consent decree, which remains
in effect indefinitely, requires that Pacesetter's operations comply with the
FDA's Good Manufacturing Practice regulations, including certain specific
provisions of such regulations identified in the consent decree. The consent
decree provides for FDA inspections and for the payment by the inspected
facility of certain costs of the inspections.
From 1987 to 1991, Siemens AG ("Siemens"), through its Pacesetter
division and other affiliates, manufactured and sold approximately 32,000 model
1016T and 1026T pacemaker leads of which approximately 25,000 were sold in the
United States. In 1991, Siemens ceased selling these products and issued a
safety alert to physicians explaining that these pacemaker leads had a higher
than expected failure rate due to an inner insulation problem. The safety alert
recommended monitoring steps to minimize any risk posed by the devices. The FDA
treated this notice as a Class I recall. In March 1993, Siemens was sued in
federal district court in Cincinnati, Ohio (the "Wilson case"). The suit alleged
that the model 1016T leads were negligently designed and manufactured. The suit
sought class action status for patients whose 1016T leads had malfunctioned up
to that time. The class status was granted by the court in September 1993. When
the Company acquired Pacesetter from Siemens as of September 30, 1994, the
purchase agreement specifically provided that Siemens retain all liability for
the Wilson case as well as all other litigation that was pending or threatened
before October 1, 1994. The purchase agreement also provided that the Company
would assume liability for other product liability claims which arose after
September 30, 1994.
Siemens and the Company were named defendants in a class action suit
filed in March 1995 in federal district court in Houston, Texas for alleged
defects in models 1016T and 1026T pacing leads (the "Hann case"). The suit
sought class action status for patients who had inner insulation failures of
these leads after March 22, 1993 and who were not members of the Wilson class.
Siemens and the Company settled the Wilson and Hann cases in November 1995. The
Company's anticipated financial responsibility for the settlement is
approximately $7 million. The precise number of class members, and the
corresponding financial liability, could increase or decrease as the process for
filing claims is completed. The settlement agreement has an "opt out" provision
for class members. Apart from this class action settlement, additional claims
could be made or lawsuits brought by patients with these leads whose leads fail
at a later date or whose leads fail for reasons outside the class definition.
The Company's product liability insurance carrier, Steadfast, a wholly
owned subsidiary of Zurich Insurance Company ("Zurich"), has denied coverage for
these cases and has filed suit against the Company in federal district court in
Minneapolis seeking rescission of the policy covering Pacesetter business
retroactive to the date the Company acquired Pacesetter. Zurich alleges that the
Company made material negligent misrepresentations to Zurich, including failure
to disclose the Wilson case in order to procure the insurance policy. The
Company has filed an answer denying Zurich's claim and has alleged that Zurich
specifically had knowledge of the Wilson case. The terms of the product
liability insurance policy which Zurich is seeking to rescind provide that the
Company would be entitled to $10 million in coverage for the 1016T and 1026T
pacemaker lead claims after payment by the Company of a self insured retention.
The Company is investigating whether it may have claims against any entities, in
addition to Zurich, arising from this situation.
USE OF PROCEEDS
The Shares will be offered solely by the Selling Shareholders and none
of the proceeds of sale thereof will be received by the Company.
SELLING SHAREHOLDERS
The Selling Shareholders, who are the shareholders of Hancock Jaffe
Laboratories ("HJL"), acquired the Shares from the Company in a private
transaction on January 5, 1996 pursuant to an Asset Purchase Agreement among
HJL, Warren D. Hancock, Norman R. Jaffe, and the shareholders of HJL. The
following table sets forth certain information with respect to the beneficial
ownership of the Company's Common Stock by the Selling Shareholders as of May 8,
1996, and as adjusted to reflect the sale of the Shares.
<TABLE>
<CAPTION>
Shares to be
Beneficially
Number of Maximum Owned After
Shares Beneficially Number of The Offering
Owned Prior Shares to -----------------------
Name to Offering be Sold Number(1) Percent
---- ----------- ------- --------- -------
<S> <C> <C> <C> <C>
Warren Hancock...................... 93,211 93,211 0 0
Norman Jaffe........................ 31,511 31,511 0 0
HJL LLC............................. 9,948 9,948 0 0
Sue Montoya......................... 6,705 6,705 0 0
William Borner...................... 3,355 3,355 0 0
Raymond Mew......................... 1,260 1,260 0 0
Ronald McDevitt and
Virginia McDevitt
Family Trust...................... 1,257 1,257 0 0
Lawrence and Roberta
Cohn.............................. 649 649 0 0
Shirley Ann Gugenheim,
Daniel Morton Gugenheim
and Northern Trust of California,
California, N.A.,
as Trustees...................... 419 419 0 0
William J. Livingston............... 419 419 0 0
Olivia Levi Malamuth
and Leo Levi...................... 419 419 0 0
------- ------- ------- -------
Total....................... 149,153 149,153 0 0
======= ======= ======= =======
</TABLE>
- ------------------------
(1) Assumes the sale of all the Shares offered hereunder.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders may sell the
Shares from time to time in one or more transactions (which may include block
transactions) on Nasdaq at market prices prevailing at the time of the sale or
at prices otherwise negotiated.
The Shares may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Shareholders have made no arrangement with any broker for the sale of the
Shares. Underwriters, brokers or dealers may participate in such transactions as
agents and may, in such capacity, receive brokerage commissions from the Selling
Shareholders or purchasers of such securities. Such underwriters, brokers or
dealers may also purchase Shares and resell such Shares for their own account in
the manner described above. The Selling Shareholders and such underwriters,
brokers or dealers may be considered "underwriters" as that term is defined by
the Securities Act of 1933, although the Selling Shareholders disclaim such
status. Any commissions, discounts or profits received by such underwriters,
brokers or dealers in connection with the foregoing transactions may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements of St. Jude Medical, Inc. at
December 31, 1995 and 1994, and for each of the three years in the period ended
December 31, 1995, incorporated by reference in this Prospectus have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
reports incorporated herein by reference. Such consolidated financial statements
are, and audited financial statements to be included in subsequently filed
documents will be, incorporated by reference herein in reliance upon the reports
of Ernst & Young LLP pertaining to such financial statements (to the extent
covered by consents filed with the Securities and Exchange Commission) given
upon the authority of such firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee ..................... $ 1,881
Accounting fees and expenses ............. 2,000
Legal fees and expenses .................. 10,000
Miscellaneous ............................ 1,119
-------
Total ............................... $15,000
=======
Except for the SEC fee, all of the foregoing expenses have been
estimated.
ITEM 15: INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws require indemnification of its directors and
officers to the fullest extent permitted by Minnesota law. The Bylaws provide
that the Company shall indemnify any person made or threatened to be made a
party to any threatened, pending or completed civil, criminal administrative,
arbitration or investigative proceeding, including a proceeding by or in the
right of the corporation, by reason of the former or present official capacity
of the person, provided the person seeking indemnification meets five criteria
set forth in Section 302A.521 of the Minnesota Business Corporation Act.
The Company's Bylaws also authorize the Board of Directors, to the
extent permitted by applicable law, to indemnify any person or entity not
described in the Bylaws pursuant to, and to the extent described in, an
agreement between the Company and such person, or as otherwise determined by the
Board of Directors in its discretion.
The Company has entered into indemnification agreements with each of
its directors and officers, which agreements provide for indemnification against
certain costs incurred by each director and officer made or threatened to be
made a party to a proceeding because of his or her official capacity as a
director or officer. The indemnification agreements provide for indemnification
to the full extent permitted by Minnesota law.
Section 302A.521 of the Minnesota Business Corporation Act provides
that a corporation shall indemnify any person who was or is made or is
threatened to be made a party to any proceeding by reason of the former or
present official capacity of such person against judgments, penalties, fines
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorneys' fees and disbursements, incurred by such person in
connection with the proceeding if, with respect to the acts or omissions or such
person complained of in the proceeding, such person (i) has not been indemnified
by another organization or employee benefit plan for the same expenses with
respect to the same acts or omissions; (ii) acted in good faith; (iii) received
no improper personal benefit and Section 302A.255 (regarding conflicts of
interest), if applicable, has been satisfied; (iv) in the case of a criminal
proceeding, has no reasonable cause to believe the conduct was unlawful; and (v)
in the case of acts or omissions by person in their official capacity for the
corporation, reasonably believed that the conduct was in the best interests of
the corporation, or in the case of acts or omissions by persons in their
capacity for other organizations, reasonably believed that the conduct was not
opposed to the best interests of the corporation.
ITEM 16. EXHIBITS
Exhibit No. Description
4.1 Amended and Restated Rights Agreement dated as of June 26, 1990,
between the Registrant and Norwest Bank Minneapolis, N.A., as
Rights Agent, including the Certificate of Designation,
Preferences and Rights of Series A Junior Participating
Preferred Stock (incorporated by reference to Exhibit 1 of the
Registrant's Form 8-A (File No. 0-8672) filed June 10, 1987, as
amended by filing on August 9, 1989 and subsequently amended by
filing on July 13, 1990).
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to
the Company
23.1 Consent of Ernst & Young LLP
23.2 Consent of Lindquist & Vennum P.L.L.P. (see Exhibit 5.1 above)
24 Powers of Attorney (included on signature page hereof)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that, in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing a Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of St. Paul, State of Minnesota, on the 9th day of May,
1996.
ST. JUDE MEDICAL, INC.
By /s/ Ronald A. Matricaria
Ronald A. Matricaria
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
The undersigned officers and directors of St. Jude Medical, Inc. hereby
constitute and appoint Ronald A. Matricaria, Stephen L. Wilson and Kevin T.
O'Malley, or any of them, our true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution for us and in our stead, in any
and all capacities, to sign any or all amendments to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as such person, hereby
ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on May 9, 1996
in the capacities indicated.
Signature Title
/s/ Ronald A. Matricaria Chairman, President and Chief Executive Officer
Ronald A. Matricaria (principal executive officer)
/s/ Stephen L. Wilson Vice President, Finance and Chief Financial Officer
Stephen L. Wilson (principal financial and accounting officer)
/s/ Paul J. Chiapparone Director
Paul J. Chiapparone
/s/ Kenneth G. Langone Director
Kenneth G. Langone
/s/ William R. Miller Director
William R. Miller
/s/ Charles V. Owens, Jr. Director
Charles V. Owens, Jr.
/s/ Walter L. Sembrowich Director
Walter L. Sembrowich
/s/ Roger G. Stoll Director
Roger G. Stoll
/s/ Gail R. Wilensky Director
Gail R. Wilensky
MARTIN R. ROSENBAUM
(612) 371-3278
May 9, 1996
Exhibit 5.1
St. Jude Medical, Inc.
One Lillehei Plaza
St. Paul, MN 55117
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 filed by St. Jude
Medical, Inc. (the "Company") with the Securities and Exchange Commission on May
9, 1996 relating to a public offering of 149,153 shares of Common Stock, $.01
par value, to be offered by the Selling Shareholders, please be advised that as
counsel to the Company, upon examination of such corporate documents and records
as we have deemed necessary or advisable for the purposes of this opinion, it is
our opinion that:
1. The Company is a validly existing corporation in good standing under
the laws of the State of Minnesota.
2. The shares of Common Stock offered by the Selling Shareholders have
been validly issued and are fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus comprising a part of the Registration Statement.
Very truly yours,
/s/ LINDQUIST & VENNUM
LINDQUIST & VENNUM
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of St. Jude Medical,
Inc. for the registration of 149,153 shares of its common stock and to the
incorporation by reference therein of our report dated February 5, 1996, with
respect to the consolidated financial statements of St. Jude Medical, Inc.
incorporated by reference in its Annual Report (Form 10-K/A) for the year ended
December 31, 1995 and the related financial statement schedule included therein,
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Minneapolis, Minnesota
May 9, 1996
