SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
ST. JUDE MEDICAL, INC.
(Exact name of registrant as specified in charter)
Minnesota 0-8672 41-1276891
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
One Lillehei Plaza, St. Paul, Minnesota 55117
(Address of principal executive offices)
(612) 483-2000
Registrant's telephone number including area code
Registrant hereby amends the following items of its Form 8-K Report filed
December 16, 1996 as set forth below.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of business acquired.
Financial statements required to be filed pursuant to Item 7 of Form
8-K for Telectronics Group. The financial statements for Telectronics
Group present the assets, liabilities and parent investment and
revenues and direct operating expenses and changes in parent investment
of Telectronics Group and are not intended to be a complete
presentation of Telectronics Group financial position and results of
operations.
(b) Pro forma financial information.
Pro forma financial information required to be filed pursuant to Item 7
of Form 8-K reflecting the acquisition of Telectronics Group.
(c) Exhibits
23 Consent of KPMG
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.
St. Jude Medical, Inc.
/s/ Stephen L. Wilson
----------------------------------------
Dated: February 4, 1997 By: Stephen L. Wilson
Vice President - Finance and Chief
Financial Officer
TELECTRONICS GROUP
COMBINED FINANCIAL STATEMENTS
Table of Contents
Page
Independent Auditors' Report 4
Combined Statements of Assets, Liabilities and Parent Investment as of 5
June 30, 1996 and 1995
Combined Statements of Revenues and Direct 6
Operating Expenses for the
years ended June 30, 1996 and 1995
Combined Statement of Changes in Parent 7
Investment for the years ended June 30, 1996 and 1995
Notes to Combined Financial Statements 8
Combined Statement of Assets, Liabilities and Parent Investment as of 16
September 30, 1996 (Unaudited)
Combined Statements of Revenues and Direct 17
Operating Expenses for the three months
ended September 30, 1996 and 1995 (Unaudited)
Note to Combined Financial Statements 18
INDEPENDENT AUDITORS' REPORT
THE BOARD OF DIRECTORS
ACCUFIX RESEARCH INSTITUTE INC.
(A SUBSIDIARY OF PACIFIC DUNLOP LIMITED)
We have audited the accompanying combined statements of assets, liabilities and
parent investment of the Telectronics Group of Pacific Dunlop Limited (the
acquired business, as discussed in Note 1) at June 30, 1996 and 1995 and the
related combined statements of revenues and direct operating expenses and
changes in parent investment for the years then ended set out on pages 5-15, all
expressed in United States dollars. These financial statements are the
responsibility of the management of the Telectronics Group. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with Australian generally accepted
auditing standards which are consistent in all material respects with auditing
standards generally accepted in the United States. 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.
The accompanying combined statements of the acquired business were prepared
pursuant to the agreement with St. Jude Medical, Inc. described in Note 1, and
are not intended to be a complete presentation of the financial position or
results of operations of the business as operated within the Pacific Dunlop
Limited Group.
The management of the Telectronics Group has not presented combined statements
of cash flows for the years ended June 30, 1995 and 1996. Presentation of such
statements summarizing the acquired business' operating, investing and financing
activities, is required by generally accepted accounting principles in the
United States.
In our opinion, except that the omission of combined statements of cash flows
results in an incomplete presentation as explained in the preceding paragraph,
the combined financial statements referred to above present fairly, in all
material respects, the assets, liabilities and parent investment of the
Telectronics Group of Pacific Dunlop Limited as acquired by St. Jude Medical,
Inc., as of June 30, 1996 and 1995, and the related revenues and direct
operating expenses and changes in parent investment for the years then ended in
conformity with United States generally accepted accounting principles.
/s/KPMG
Melbourne, Australia
September 13, 1996, except for the matters discussed in Note 1, as to which the
date is November 29, 1996
<TABLE>
<CAPTION>
TELECTRONICS GROUP
COMBINED STATEMENTS OF ASSETS, LIABILITIES AND PARENT INVESTMENT
(NOTE 1)
JUNE 30, 1996 AND 1995
(U.S. DOLLARS IN THOUSANDS)
Note June 30, 1996 June 30, 1995
------------------ ------------------
<S> <C> <C> <C>
CURRENT ASSETS
Accounts receivable 8 $25,708 $39,094
Inventories 3 39,162 40,874
Prepayments 1,933 1,627
------------------ ------------------
TOTAL CURRENT ASSETS 66,803 81,595
NON-CURRENT ASSETS
Accounts receivable 142 588
Property, plant and equipment 9 35,504 42,114
Intangible assets 234 -
------------------ ------------------
TOTAL NON-CURRENT ASSETS 35,880 42,702
------------------ ------------------
TOTAL ASSETS $102,683 $124,297
================== ==================
CURRENT LIABILITIES
Creditors and borrowings 10 $25,264 $32,191
Provisions 11 4,611 4,439
Other 29 794
------------------ ------------------
TOTAL CURRENT LIABILITIES 29,904 37,424
NON-CURRENT LIABILITIES
Creditors and borrowings 10 1,100 2,131
Provisions 11 307 361
Other 114 557
------------------ ------------------
TOTAL NON-CURRENT LIABILITIES 1,521 3,049
------------------ ------------------
TOTAL LIABILITIES 31,425 40,473
PARENT INVESTMENT 71,258 83,824
------------------ ------------------
TOTAL LIABILITIES AND PARENT INVESTMENT $102,683 $124,297
================== ==================
This statement is to be read in conjunction with the notes to and forming part
of the combined financial statements.
</TABLE>
<TABLE>
<CAPTION>
TELECTRONICS GROUP
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
(NOTE 1)
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
(U.S. DOLLARS IN THOUSANDS)
1996 1995
--------------- ----------------
<S> <C> <C>
Revenues $ 117,297 $213,739
Direct Operating Expenses:
Cost of sales 73,243 79,945
Depreciation and amortization 9,195 11,182
Selling, general, and administrative 92,323 84,574
Research and development 49,988 47,029
Income tax in respect of acquired entities (Note 1) 915 752
--------------- ----------------
Total direct operating expenses 225,664 223,482
--------------- ----------------
Excess Of Direct Operating Expenses Over Revenues $(108,367) $(9,743)
=============== ================
This statement is to be read in conjunction with the notes to and forming part
of the combined financial statements.
</TABLE>
<TABLE>
<CAPTION>
TELECTRONICS GROUP
COMBINED STATEMENTS OF CHANGES IN PARENT INVESTMENT
(NOTE 1)
FOR THE YEARS ENDED JUNE 30, 1996 AND 1995
(U.S. DOLLARS IN THOUSANDS)
June 30, 1996 June 30, 1995
------------------ ------------------
<S> <C> <C>
Parent investment at beginning of period $83,824 $101,023
Excess (deficit) of revenues
over direct operating expenses (108,367) (9,743)
Net result of other transactions with
Parent and affiliates 95,801 (7,456)
------------------ ------------------
Parent investment at end of period $71,258 $83,824
================== ==================
This statement is to be read in conjunction with the notes to and forming
part of the combined financial statements.
</TABLE>
TELECTRONICS GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 AND 1995
(U.S. DOLLARS IN THOUSANDS)
NOTE 1. THE TELECTRONICS GROUP
The Telectronics Group as presented in these combined financial statements
represents the assets and liabilities and revenues and direct operating expenses
of those entities or operations which have been acquired by St. Jude Medical,
Inc. under agreements completed as at November 29, 1996 (the "acquired
business").
The Telectronics Group has previously operated as a unit of the Pacific Dunlop
Limited consolidated structure, in the form of separate legal entities in a
number of countries, with manufacturing operations being located in the United
States and Australia.
Under the terms of the acquisition, the manufacturing operations in Australia
were excluded from the sale because these operations had been discontinued by
Pacific Dunlop prior to November 29, 1996. Corporate entities in Austria,
Belgium, Brazil, Denmark, Hong Kong, Netherlands, Netherlands Antilles and New
Zealand were acquired, together with operations and substantially all of the
operations and assets and certain liabilities in Australia, Canada, France,
Germany, the United States and the United Kingdom. To the extent that
transactions occurred between the entities included in the purchase agreements,
the principles of combination have been applied whereby intra group balances and
gains and losses have been eliminated. Stockholders equity, in respect of those
legal entities which are included in the acquisition, together with the balance
of the remaining net assets of the acquired business at June 30, 1996 and 1995
is presented as parent investment.
The entities which operated in 1996 and 1995 and whose stock (shares) are not
encompassed by the acquisition, are generally named defendants in pending
litigation. The obligations of these defendants have not been assumed by St.
Jude Medical, Inc., and accordingly various accruals of legal and warranty
costs, and provisions in respect of ongoing patient care and monitoring of
product conditions - relevant to the outstanding litigation issues are excluded
from the statements of assets, liabilities, and parent investment presented
herein.
Additionally, the expenses recorded in the 1996 and 1995 financial years which
relate directly to the outstanding legal and product and patient monitoring
issues, which are retained by continuing subsidiaries of the Pacific Dunlop
Group, are not reflected in the direct operating expenses of the acquired
business. Unrelated to the outstanding litigation referred to above which does
not form part of the acquisition, the major manufacturing facility in the United
States which was acquired by St. Jude Medical, Inc. was unable to manufacture
product for sale in the United States due to entering into a consent decree with
the Food and Drug Administration (FDA). This consent decree operated from June
1995 until June 20, 1996. Consequently, management considers that the revenues
and direct operating expenses of the acquired business for the year ended June
30, 1996 are not indicative of the normal operations had the plant facility been
able to manufacture product for sale in the United States.
In addition to the exclusion of litigation related charges and accruals which do
not constitute a part of the acquired business, the accompanying combined
financial statements do not include intercompany interest expense or income
taxes, except where related to a legal entity, in accordance with the agreements
of sale referred to above. The combined financial statements present the
financial position and revenues and direct operating expenses of the following
entities which have been acquired by St. Jude Medical, Inc.:
COMPANY PLACE OF INCORPORATION
A. Telectronics Scandinavia Aps Denmark
Telectronics Gesellschaft mbH Austria
Telectronics B.V. Netherlands
Telectronics S.A. Belgium
Telectronics Medica Ltda Brazil
Glory Telectronics Ltd Hong Kong
Glory EME Ltd Hong Kong
Glory EME China Ltd Peoples Republic of China
Telectronics N.V. Netherlands Antilles
Medical Telectronics Ltd New Zealand
and substantially all the net assets and revenues and direct operating
expenses which have been acquired by St. Jude Medical, Inc. from:
COMPANY PLACE OF INCORPORATION
B. Telectronics Ltd United Kingdom
Telectronics Pty (Canada) Ltd Canada
Societe de Management Financier France
Telectronics S.A. France
Telectronics GmbH Germany
Telectronics Pacing Systems Inc USA
TPLC Inc. USA
Medical Telectronics Pty Ltd Australia
The preparation of financial statements in accordance 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
reported amounts of revenues and direct operating expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
i) REPORTING CURRENCY AND FOREIGN CURRENCY TRANSLATION
The combined financial statements are presented in United States dollars,
the reporting currency adopted by the acquired business. Foreign currency
financial statements of non-United States entities included in the
combination comprising the acquired business are translated into United
States dollars at the year-end rate for assets and liabilities and the
weighted average rate for the year for revenues and direct operating
expenses. Translation adjustments resulting therefrom are included as a
component of parent investment.
ii) INVENTORIES
Inventories are stated at the lower of standard cost (which approximates
actual cost on a first-in, first-out (FIFO) basis), and net realizable
value (market). Standard costs include appropriate amounts of
manufacturing overhead.
iii) DEPRECIATION AND AMORTIZATION
Property, plant and equipment are stated at cost. Depreciation and
amortization are provided, principally on a straight line basis, over the
following estimated useful lives.
Years
Buildings 10-40
Manufacturing plant 5-10
Technical facilities, furniture,
fixtures and office equipment 3-10
iv) PENSIONS AND POST RETIREMENT BENEFITS
Employees in varying jurisdictions are parties to certain defined
contribution pension plans. Contributions made by the acquired business
are charged to expense in accordance with the plan obligations, which are
generally on a monthly or annual basis. Post retirement benefits are not
offered to employees and no liability exists. Statutory employee
entitlements which exist in certain jurisdictions in which the acquired
business operates are accrued and charged to expense on a regular basis,
and accrued entitlements are fully recorded at each balance date in
respect of obligations attaching to past employment.
v) INCOME TAXES
The entities acquired, as set out in Note 1, are taxpayers in their
respective jurisdictions. Income taxes attributable to those entities are
reflected in these financial statements. The other acquired operations,
as set out in Note 1, have predominantly been included in the income tax
structures of other subsidiaries of the Pacific Dunlop Limited Group.
Accordingly, no income taxes in respect of these operations have been
reflected in the accompanying combined financial statements.
vi) FUNDING
The acquired business, with the exception of minor banking facilities for
day to day operations, has principally obtained all of its funding
requirements from subsidiaries of the Pacific Dunlop Limited Group. These
funding requirements have been extensive, particularly during the 1996
fiscal year when manufacturing and selling activities in the United
States were curtailed by the consent decree referred to in Note 1. All
intercompany funding outstanding at June 30, 1996 and 1995 is reflected
as a component of parent investment, and, as disclosed in Note 1, any
intercompany interest paid or incurred in the years ended on those dates
has been excluded from direct operating expenses.
vii) INTANGIBLE ASSETS
Patents are stated at cost and amortized over the useful life of the
patents.
viii) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Expenditures for
repairs and maintenance are expensed as incurred.
ix) RESEARCH AND DEVELOPMENT EXPENDITURES
Research and development costs are expensed as incurred.
NOTE 3. INVENTORIES
As of June 30, 1996 and 1995, inventories consisted of:
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Raw materials and stores $16,894 $14,785
Work in progress 2,007 4,438
Finished goods, at cost or net realizable value 18,620 14,203
Other 1,641 7,448
------------- -------------
$39,162 $40,874
============= =============
</TABLE>
NOTE 4. COMMITMENTS AND CONTINGENCIES
A. Legal Matters
Telectronics Group is involved in various legal actions and claims
against products both in the ordinary course of its business, and in
respect of additional litigation issues associated with the implantation
of certain pacemaker leads between 1987 and 1994. The defense of, and
responsibility for, all matters emanating out of products completed prior
to November 29, 1996, is retained by the sellers under the terms of the
purchase agreements referred to in Note 1. Consequently, certain costs
incurred and accruals made in respect of legal claims defense and patient
monitoring are not included in these combined financial statements.
B. Operating Leases
The acquired business is a party to a number of operating leases,
principally in foreign jurisdictions, in respect of office premises.
Lease expense in the years ended June 30, 1996 and 1995 was approximately
$2,040 and $1,700, respectively. Future minimum operating lease payments
subsequent to June 30, 1996 are: 1997 -- $1,569, 1998 -- $1,308, 1999 -
2001 -- $1,213, and later than 2001 -- $206.
C. Workers Compensation and Environmental Issues
The acquired business does not operate in a field which is subject to any
specific compensation or environmental matters. Workers compensation
insurance expense is incurred in the jurisdictions in which the acquired
business operates, as required by respective legislation. No significant
expense has been incurred by the acquired business in respect of such
matters.
NOTE 5. PARENT INVESTMENT
Parent investment at June 30, 1996 and 1995 is comprised of the relevant
Pacific Dunlop Limited and affiliates equity, loan and trade account
balances relative to the entities and other net assets forming part of
the sale/purchase transaction referred to in Note 1.
NOTE 6. GEOGRAPHIC DATA
As set out in Note 1, the acquired business, subject to regulatory
approvals, manufactures product only in the United States. Export sales
are derived through sales offices maintained in the countries detailed in
Note 1.
The export sales derived in the years ended June 30, 1996 and 1995 were
$102,304 and $133,789, respectively.
The acquired business operates solely in the field of implantable medical
devices. The acquired business had no individual customer which purchased
greater than 10% of total revenues during the years ended June 30, 1996
and 1995. The acquired business sells product to a diverse range of
hospitals, medical practitioners and institutions throughout the world.
NOTE 7. RELATED PARTY TRANSACTION
The Telectronics Group has operated as a unit of the Pacific Dunlop
Limited Group. The acquired business' transactions with Pacific Dunlop
Limited or its affiliates have been primarily related to the derivation
of funding as discussed in Note 2.
NOTE 8. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
JUNE 30
-----------------------------------------
1996 1995
------------------- ------------------
<S> <C> <C>
Trade accounts $23,833 $37,089
less: Provision for doubtful trade accounts (1,496) (895)
------------------- ------------------
22,337 36,194
Other amounts receivable 3,371 2,900
------------------- ------------------
Total $25,708 $39,094
=================== ==================
</TABLE>
NOTE 9. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
JUNE 30
-----------------------------------------
1996 1995
------------------- ------------------
<S> <C> <C>
Freehold land and buildings at cost $13,890 $17,460
Provision for depreciation of buildings (5,988) (5,027)
------------------- ------------------
7,902 12,433
------------------- ------------------
Plant and equipment at cost 83,852 78,393
Provision for depreciation (59,077) (52,742)
------------------- ------------------
24,775 25,651
------------------- ------------------
Leased plant and equipment at cost 4,306 5,853
Provision for amortization (1,479) (1,823)
------------------- ------------------
2,827 4,030
------------------- ------------------
Total property, plant and equipment $35,504 $42,114
=================== ==================
</TABLE>
NOTE 10. CREDITORS AND BORROWINGS
<TABLE>
<CAPTION>
JUNE 30
-----------------------------------------
1996 1995
------------------- ------------------
<S> <C> <C>
Trade creditors $18,030 $14,973
Lease liabilities 1,390 1,379
Bills payable 8 25
Other creditors 5,836 15,814
------------------- ------------------
Total Current $25,264 $32,191
=================== ==================
Trade creditors $ 114 $ 10
Lease liabilities 986 2,121
------------------- ------------------
Total Non-Current $ 1,100 $ 2,131
=================== ==================
</TABLE>
NOTE 11. PROVISIONS
<TABLE>
<CAPTION>
JUNE 30
-----------------------------------------
1996 1995
------------------- ------------------
<S> <C> <C>
Taxation $ 369 $ 433
Employee benefits 3,565 3,748
Other 677 258
------------------- ------------------
Total Current $4,611 $4,439
=================== ==================
Employee benefits $ 148 $ 153
Other 159 208
------------------- ------------------
Total Non-Current $ 307 $ 361
=================== ==================
</TABLE>
TELECTRONICS GROUP
COMBINED STATEMENTS OF ASSETS, LIABILITIES AND PARENT INVESTMENT
SEPTEMBER 30, 1996
(U.S. DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, 1996
------------------------------------
CURRENT ASSETS
<S> <C>
Cash $ 1,089
Accounts receivable 28,107
Inventories 40,826
Prepayments 1,248
---------------
TOTAL CURRENT ASSETS 71,270
NON-CURRENT ASSETS
Property, plant and equipment 34,674
Other 354
---------------
TOTAL NON-CURRENT ASSETS 35,028
---------------
TOTAL ASSETS $106,298
===============
CURRENT LIABILITIES
Creditors and borrowings $ 20,908
Provisions 8,069
Other 988
---------------
TOTAL CURRENT LIABILITIES 29,965
NON-CURRENT LIABILITIES
Creditors and borrowings 9
Provisions 400
Other 322
---------------
TOTAL NON-CURRENT LIABILITIES 731
---------------
TOTAL LIABILITIES 30,696
PARENT INVESTMENT 75,602
---------------
LIABILITIES AND PARENT INVESTMENT $106,298
===============
This statement is to be read in conjunction with the accompanying note to the
combined financial statements.
</TABLE>
TELECTRONICS GROUP
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(U.S. DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
--------------- ----------------
<S> <C> <C>
Revenues $23,928 $34,560
Direct Operating Expenses:
Cost of sales 17,477 18,624
Selling, general, and administrative 22,289 23,178
Research and development 8,795 12,116
--------------- ----------------
Total direct operating expenses 48,561 53,918
--------------- ----------------
Excess Of Direct Operating Expenses Over Revenues $(24,633) $(19,358)
=============== ================
This statement is to be read in conjunction with the accompanying note to the
combined financial statements.
</TABLE>
TELECTRONICS GROUP
NOTE TO COMBINED FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
1. In the opinion of management, the accompanying unaudited combined financial
statements of Telectronics Group contain all adjustments necessary to present
fairly the assets, liabilities and parent investment as of September 30, 1996,
and the revenues and direct operating expenses for the three months ended
September 30, 1996 and 1995. Such adjustments are of a normal recurring nature.
The results of revenues and direct operating expenses for the three months ended
September 30, 1996 and 1995, are not necessarily indicative of the results to be
expected for the full year. These combined financial statements should be read
in conjunction with the audited combined financial statements for the years
ended June 30, 1996 and 1995 included herein.
ST. JUDE MEDICAL, INC.
Pro Forma Condensed Consolidated Financial Statements
The following unaudited pro forma condensed consolidated financial statements
give effect to the acquisition by St. Jude Medical, Inc. (the "Company") of
Telectronics Group using the purchase method of accounting, and are based on
estimates and assumptions set forth below and in the notes to such statements,
which include pro forma adjustments. These pro forma financial statements are
based upon the historical financial statements of St. Jude Medical, Inc.,
adjusted to give effect to the acquisition of Telectronics Group which was
consummated November 29, 1996. The St. Jude Medical, Inc. financial statements
have been restated for all periods presented to reflect the merger with Daig
Corporation which was consummated on May 31, 1996 and accounted for as a
pooling-of-interests. The aggregate purchase price of Telectronics Group was
$135 million, subject to adjustment based on the closing net asset value. The
Company has agreed to make additional payments, to a maximum of $25 million on a
net present value basis, based upon a percentage of certain sales through the
year 2002.
The pro forma condensed consolidated statements of income for the year ended
December 31, 1995 and the nine months ended September 30, 1996, give effect to
the acquisition as if it had occurred at the beginning of 1995. Such statements
are based on historical statements of revenues and direct operating expenses of
Telectronics Group for the fiscal years ended June 30, 1996 and 1995.
Telectronics unaudited results for the calendar year ended December 31, 1995 and
nine months ended September 30, 1996 have been used to conform with St. Jude
Medical's fiscal year. The operating results of Telectronics Group are included
in the Company's financial statements from the date of acquisition, November 29,
1996.
The proforma condensed consolidated balance sheet at September 30, 1996 combines
the respective St. Jude Medical, Inc. and Telectronics Group balance sheets at
September 30, 1996.
The pro forma adjustments are based upon estimates, available information and
certain assumptions that management deemed appropriate. Final purchase
accounting adjustments may differ from the pro forma adjustments presented
herein. In connection with the acquisition, $32.2 million of purchased research
and development was charged against earnings in the fourth quarter 1996 in
accordance with generally accepted accounting principles. The unaudited pro
forma consolidated financial information does not profess to represent the
Company's results of operations had the above transaction, in fact, occurred on
these dates, or to project the Company's combined results of operations for any
date or period. The pro forma consolidated financial information should be read
in conjunction with the Company's and Telectronics Group's historical financial
statements and notes thereto.
ST. JUDE MEDICAL, INC.
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1996
---------------------------------------------------------------------------
St. Jude Telectronics Pro forma Pro Forma
Medical Group (a) Adjustments Consolidated
--------------- ----------------- ----------------- ----------------
ASSETS
<S> <C> <C> <C>
Cash and cash equivalents $ 22,442 $ 1,089 $ $ 23,531
Marketable securities 143,480 - (30,000)(e) 113,480
Accounts receivable, net 179,286 28,107 207,393
Inventories 160,232 40,826 (7,200)(f) 193,858
Prepaid expenses 35,210 1,248 36,458
Property, plant and equipment, net 200,555 34,674 (11,249)(f) 223,980
Other assets 318,060 354 68,767(g) 387,181
--------------- ----------------- ----------------- ----------------
Total assets $1,059,265 $106,298 $ 20,318 $1,185,881
=============== ================= ================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $191,977 $ 30,696 $ 23,120(i) $ 245,793
Long-term debt - 105,000(e) 105,000
--------------- ----------------- ----------------- ----------------
Total liabilities 191,977 30,696 128,120 350,793
Preferred stock
Common stock 8,098 8,098
Additional paid-in capital 61,888 61,888
Retained earnings 791,372 75,602 (75,602) 759,172
(32,200)(h)
Cumulative translation adjustment 4,758 4,758
Unrealized gain on available for-sale securities 1,612 1,612
Amount receivable for shares issued (440) (440)
--------------- ----------------- ----------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 867,288 75,602 (107,802) 835,088
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,059,265 $106,298 $ 20,318 $1,185,881
=============== ================= ================= ================
The accompanying notes are an integral part of the unaudited pro forma condensed
combined balance sheet.
</TABLE>
<TABLE>
<CAPTION>
ST. JUDE MEDICAL, INC.
Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 1995
(In thousands, except per share amounts)
(Unaudited)
St. Jude Telectronics Pro forma Pro forma
Medical, Inc. Group (a) Adjustments Consolidated
---------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $761,835 $160,085 $ $921,920
Cost of sales 234,830 74,804 309,634
---------------- --------------- ---------------- -----------------
Gross profit 527,005 85,281 612,286
Selling, general and
administrative 247,389 99,244 3,329 (b) 349,962
Research and development 72,305 48,236 120,541
---------------- --------------- ---------------- -----------------
Operating profit (loss) 207,311 (62,199) (3,329) 141,783
Other income (expense) (5,790) (8,313) (c) (14,103)
---------------- --------------- ---------------- -----------------
Income (loss) before taxes 201,521 (62,199) (11,642) 127,680
Income tax provision (benefit) 62,673 (28,355) (d) 34,318
---------------- --------------- ---------------- -----------------
Net income (loss) $138,848 $(62,199) $16,713 $93,362
================ =============== ================ =================
Earnings per share $1.71 $1.15
================ =================
Weighted average shares outstanding 80,988 80,988
================ =================
</TABLE>
ST. JUDE MEDICAL, INC.
Pro Forma Condensed Consolidated Statement of Income
For the Nine Months Ended September 30, 1996
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
St. Jude Telectronics Pro forma Pro forma
Medical, Inc. Group (a) Adjustments Consolidated
---------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net sales $596,091 $77,369 $ $673,460
Cost of sales 182,931 54,562 237,493
---------------- --------------- ---------------- -----------------
Gross profit 413,160 22,807 435,967
Selling, general and
administrative 195,740 74,095 2,497 (b) 272,332
Research and development 53,507 33,427 86,934
Purchased research and
development 5,000 - - 5,000
---------------- --------------- ---------------- -----------------
Operating profit (loss) 158,913 (84,715) (2,497) 71,701
Other income (expense) 12,367 (6,386) (c) 5,981
---------------- --------------- ---------------- -----------------
Income (loss) before taxes 171,280 (84,715) (8,883) 77,682
Income tax provision (benefit) 59,948 (35,942) (d) 24,006
---------------- --------------- ---------------- -----------------
Net income (loss) $111,332 $(84,715) $27,059 $53,676
================ =============== ================ =================
Earnings per share $1.36 $.66
================ =================
Weighted average shares outstanding 81,754 81,754
================ =================
</TABLE>
ST. JUDE MEDICAL, INC.
Notes to Pro Forma Condensed Consolidated Financial Statements
Year Ended December 31, 1995 and Nine Months Ended September 30, 1996
(Unaudited)
Pro Forma Adjustments
(a) The combined financial statements for Telectronics Group represent the net
assets acquired and revenues and direct operating expenses of Telectronics
Group, and are not intended to be a complete representation of
Telectronics Group's financial position and results of operations.
(b) Reflects the amortization of goodwill in connection with the Telectronics
Group acquisition over a twenty year amortization period.
(c) Reflects additional interest expense and reduction in interest income
resulting from the $135 million purchase price for the Telectronics Group.
(d) Reflects income tax benefits at the statutory rate based on the
Telectronics Group loss before taxes.
(e) Reflects the $135 million purchase price for Telectronics Group ($30
million cash and $105 million borrowed under the Company's credit
facility).
(f) Reflects the estimated net realizable value of Telectronics' fixed assets
and inventories.
(g) Reflects the excess of allocated purchase price, based on appraised
values, over net assets acquired, as adjusted for purchased research and
development charges and Telectronics restructuring and transaction charges
which must be reflected as additional goodwill under generally accepted
accounting principles. Final purchase accounting adjustments may differ
from the pro forma adjustments presented herein.
(h) Reflect purchased research and development charge in connection with the
Telectronics acquisition recorded in the fourth quarter 1996.
(i) Reflects estimated restructuring and transaction charges in connection
with the Telectronics acquisition.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS
ACCUFIX RESEARCH INSTITUTE INC.
We consent to the incorporation by reference of our report dated September 13,
1996, except for Note 1, for which the date is November 29, 1996, with respect
to the combined statements of assets, liabilities and parent investment of the
Telectronics Group of Pacific Dunlop Limited as of June 30, 1996 and 1995 and
the related statements of revenues and direct operating expenses and changes in
parent investment for the years then ended included in this Report on Form 8-K/A
dated as of February 4, 1997 in Registration Statement Nos. 33-9262; 33-29085;
33-41459; No. 33-48502 and 33-54435 of St. Jude Medical, Inc. filed on Form S-8.
Our report contains explanatory paragraphs stating that the (i) combined
financial statements presented are pursuant to an agreement with St. Jude
Medical, Inc. and are not intended to be a complete presentation of an existing
entity's financial position or results of operations, and (ii) management of the
Telectronics Group has not presented combined statements of cash flows, which
results in an incomplete presentation.
/s/KPMG
Melbourne Australia
February 4, 1997
