SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
December 23, 1996
(Date of Report)
BALLARD MEDICAL PRODUCTS
Exact name of registrant
as specified in its charter
1-12318
Commission file number
UTAH
State or other jurisdiction of incorporation
or organization
87-0340144
I.R.S. Employer Identification No.
12050 Lone Peak Parkway, Draper, Utah 84020
Address and Zip Code
of principal executive offices
(801) 572-6800
Registrant's telephone number,
including area code
ITEM 2. ACQUISITION OF ASSETS
On December 10, 1996, Ballard Medical Products ("BMP"),
acting through its wholly-owned Colorado subsidiary, Ballard
Acquisition Corporation ("BAC"), entered into a private
stock purchase transaction for approximately 90.1% of the
outstanding capital stock of Cardiotronics Systems,
Incorporated ("Cardiotronics"), a Colorado corporation, at a
total purchase price of approximately $11,400,000 ($3.75
effective price per share of Common Stock or equivalent).
The shares purchased are as follows:
Common 213,256
Series C Convertible Preferred 2,499,422
Series D Convertible Preferred 2,119,828
Series E Convertible Preferred 6,680,172
Cardiotronics' principal place of business and
principal office is located at 5966 La Place Court,
Carlsbad, California. Cardiotronics' shares of Common and
Series C Preferred Shares are publicly traded on NASDAQ
(small cap).
Cardiotronics develops, manufactures, and markets
medical devices for the acute management of heart rate
disorders. Its disposable stimulation electrodes replace
traditional defibrillator paddles and facilitate external
defibrillation and pacing, and enable hospitals to
standardize using Cardiotronics stimulation electrodes,
regardless of defibrillator manufacturer. Heart rate
disorders are suffered by millions of patients each year who
are experiencing a heart attack or who are undergoing an
interventional heart procedure such as coronary angioplasty,
cardiac arrhythmia ablation, or open heart surgery.
Also effective December 10, 1996, BMP and BAC entered
into a Merger Agreement with Cardiotronics, pursuant to
which BAC is to be merged into Cardiotronics, with
Cardiotronics as the sole surviving corporation under
Section 7-111-104 of the Colorado Business Corporation Act
(the "CBCA"). This section of the CBCA allows a parent
corporation owning at least 90% of a subsidiary to effect
such a merger without seeking the approval of the
shareholders of the subsidiary corporation (here,
Cardiotronics). As part of this merger, each remaining
shareholder of Cardiotronics will be entitled to receive
$3.75 per share of Common Stock or equivalent thereof then
held by such shareholder or to exercise his or her
dissenters' rights under the CBCA.
In addition to the stock purchase, on December 10, 1996
BAC paid the $5,546,847 owed on Cardiotronics' line of
credit with Bank of Boston Connecticut, and $2,663,168 owed
by Cardiotronics on demand loans to Warburg, Pincus
Investors, L.P. and Vertical Fund Associates, L.P. Also as
part of the transaction, certain officers and key employees
of Cardiotronics were paid retention bonuses (totaling
$576,397) and consideration in cancellation of "in the
money" Cardiotronics options (totaling $53,582). Finally, a
payment of $525,000 went to Dillon, Read & Co., Inc., who
acted as financial advisors to Cardiotronics in this
transaction, and a payment of $80,000 went to Cardiotronics'
legal counsel, Luce, Forward, Hamilton & Scripps, L.L.P.
All funds expended by BAC in this transaction were from
a capital contribution received from BMP. BMP funded this
capital contribution from its cash reserves.
BMP also incorporates herein by reference the Schedule
13D filed with the SEC by BAC on or about December 10, 1996.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The
following financial statements of Cardiotronics are
incorporated herein by reference:
Consolidated Statement of Incorporated by reference
Operations for the Year from Cardiotronics' Annual
Ended December 31, 1995 Report on Form 10-KSB for
the year ended December 31,
1995, filed April 1, 1996.
Consolidated Balance Sheet Incorporated by reference
at December 31, 1995 from Cardiotronics' Annual
Report on Form 10-KSB for
the year ended December 31,
1995, filed April 1, 1996.
Consolidated Statement of Incorporated by reference
Cash Flows for the Year from Cardiotronics' Annual
Ended December 31, 1995 Report on Form 10-KSB for
the year ended December 31,
1995, filed April 1, 1996.
Consolidated Statement of Incorporated by reference
Operations (unaudited) for from Cardiotronics'
the Nine Months Ended Quarterly Report on Form 10-
September 30, 1996 QSB for the quarter and nine
months ended September 30,
1996, filed November 8, 1996.
Consolidated Balance Sheet Incorporated by reference
(unaudited) at September 30, from Cardiotronics'
1996 Quarterly Report on Form 10-
QSB for the quarter and nine
months ended September 30,
1996, filed November 8, 1996.
Consolidated Statement of Incorporated by reference
Cash Flows (unaudited) for from Cardiotronics'
the nine months ended Quarterly Report on Form 10-
September 30, 1996 QSB for the quarter and nine
months ended September 30,
1996, filed November 8, 1996.
(b) PRO FORMA FINANCIAL INFORMATION. Set forth below
are pro forma financial statements which reflect a pro forma
consolidation of Cardiotronics with BMP and its
subsidiaries. The Statement of Operations shows what the
combined operations of the companies for the year ended
September 30, 1996 would have been. The Balance Sheet shows
a pro forma combination of the companies' assets and
liabilities as of September 30, 1996. In the pro forma
financial statements, Cardiotronics is abbreviated as
"Cardio."
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Cardio BMP
9/30/96 9/30/96 Eliminations Consolidated
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash $223,173 $14,164,103 ($11,392,918) $2,994,358
Investments 26,662,598 (8,654,983) 18,007,615
Accounts
receivable 901,481 19,944,055 20,845,536
Other
receivables 5,262,176 5,262,176
Inventories 924,145 13,844,860 14,769,005
Deferred
income taxes 1,057,303 1,057,303
Other 176,447 169,431 345,878
Total
current
assets 2,225,246 81,104,526 (20,047,901) 63,281,871
PROPERTY AND EQUIPMENT
Land 3,944,701 3,944,701
Buildings 20,131,728 20,131,728
Equipment 909,983 19,276,562 20,186,545
Total 909,983 43,352,991 44,262,974
Less
accumlated
depreciation (250,454) (8,058,401) (8,308,855)
Property
and
equipment-
net 659,529 35,294,590 35,954,119
Intangible
assets 7,891,912 20,656,808 9,061,935 37,610,655
Other
Assets 248,549 5,409,164 5,657,713
Total
Assets 11,025,236 142,465,088 (10,985,966) 142,504,358
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT
LIABILITIES
Accounts
payable 864,421 2,273,674 3,138,095
Accrued
liabilities 745,416 3,156,810 3,902,226
Notes
payable 8,000,000 (8,000,000) 0
Total
current
liabilities 9,609,837 5,430,484 (8,000,000) 7,040,321
Deferred
taxes 1,110,764 1,110,764
Total
liabilities 9,609,837 6,541,248 (8,000,000) 8,151,085
STOCKHOLDERS' EQUITY
Minority
interest (268,303) (268,303)
Convertible
Preferred C
stock 82,939 (82,939)
Common stock 269,720 2,770,232 (269,720) 2,770,232
Paid in
capital,
Series C
Preferred 10,917,061 (10,917,061) 0
Paid in
capital 5,599,070 38,935,892 5,599,070 38,935,892
Unrealized
losses on
investments (156,564) (156,564)
Retained
earnings (15,453,391) 94,374,280 14,151,127 93,072,016
Total stock
equity 1,415,399 135,923,840 (2,985,966) 134,353,273
Total
liabilities
and
stockholders
equity $11,025,236 $142,465,088 ($10,985,966) $142,504,358
BALLARD MEDICAL PRODUCTS AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1996
Cardio BMP
Year Ending Year Ending Consolidated
9/30/96 9/30/96 Eliminations 9/30/96
Net Sales $9,509,989 $103,525,263 $113,035,252
Cost of
products
sold 4,953,578 35,734,178 40,687,756
Gross margin 4,556,411 67,791,085 72,347,496
Operating
Expenses:
SG&A 4,362,080 28,286,793 32,648,873
R&D 520,418 2,903,805 3,424,223
Patent
litigation 212,271 212,271
Amort. of
intangibles 4,240,863 $647,281 4,888,144
Royalties 1,539,200 1,539,200
9,335,632 32,729,798 647,281 42,712,711
Operating
income/
(loss) (4,779,221) 35,061,287 (647,281) 29,634,785
Other
income/
(expense) (524,997) 5,308,873 (1,031,470) 3,752,406
Net income/
(loss)
before
taxes (5,304,218) 40,370,160 (1,678,751) 33,387,191
Tax expense (1,940,246) 14,767,121 (376,487) 12,450,388
Net income/
(loss) 3,363,972 25,603,039 (1,302,264) 20,936,803
NET INCOME PER SHARE:
Common and common
equivalent share $0.895 $0.732
Common share assuming
full dilution $0.884 $0.723
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Common and common
equivalent share 28,614,136 28,614,136
Common share assuming
full dilution 28,968,855 28,968,855
</TABLE>
(c) EXHIBITS
Exhibit
Number Description Location
23.1 Consent of Deloitte &
Touche LLP (Costa Mesa,
California)
99.1 Stock Purchase Incorporated by
Agreement (with various reference to Exhibit 1
"Sellers" named to Schedule 13D filed
therein) December 11, 1996 by
Ballard Acquisition
Corporation
99.2 Stock Purchase Incorporated by
Agreement (with SO-CAL reference to Exhibit 2
PARTNERS, L.P., as to Schedule 13D filed
"Seller") December 11, 1996 by
Ballard Acquisition
Corporation
99.3 Merger Agreement Incorporated by
reference to Exhibit 3
to Schedule 13D filed
December 11, 1996 by
Ballard Acquisition
Corporation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
BALLARD MEDICAL PRODUCTS
Dated: December 23, 1996 By: Dale H. Ballard, President
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Form 8-K of
Ballard Medical Products of our report dated March 1, 1996,
except for Note 8, for which the date is March 21, 1996,
appearing in the Annual Report on Form 10-KSB of Cardiotronics
Systems, Inc. for the year ended December 31, 1995.
Deloitte & Touche LLP
Costa Mesa, California
December 23, 1996
