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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
SEPTEMBER 15, 2000 (AUGUST 31, 2000)
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Date of Report (Date of earliest event reported)
ALARIS MEDICAL, INC.
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(Exact name of registrant as specified in charter)
DELAWARE
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(State or other jurisdiction of incorporation)
33-26398
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(Commission File Number)
13-3492624
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(IRS Employer Identification No.)
10221 WATERIDGE CIRCLE
SAN DIEGO, CA 92121
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(Address of principal executive offices)
(858) 458-7000
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(Registrant's telephone number, including area code)
Exhibit index is on page 11
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 31, 2000, pursuant to an Asset Purchase Agreement dated as of August
17, 2000, by and among the Registrant, ALARIS Medical Systems, Inc., a
wholly-owned subsidiary of Registrant ("AMS"), Card Guard Scientific Survival
Ltd. ("Buyer Parent") and Card Guard Technologies, Inc., a subsidiary of Buyer
Parent ("Buyer"), AMS sold the assets and certain liabilities of its Instromedix
division ("Instromedix") to Buyer for $30 million in cash ("the Sale").
Approximately $18 million of the net cash proceeds of the transaction (after
taxes and other estimated costs) were used to repay indebtedness under AMS
credit facility.
The Asset Purchase Agreement and the other agreements executed in connection
with the sale provide that AMS will assist Buyer in setting up a fully
independent headquarters and manufacturing facility in San Diego, California.
Pursuant to these agreements, $5 million of the $30 million purchase price was
placed in escrow. AMS will receive such escrowed amounts upon completion of its
obligations under the agreements. During this transition period, AMS will
continue to manufacture Instromedix products for Buyer.
The foregoing description of the Asset Purchase Agreement is qualified in its
entirety by reference to such Agreement, a copy which is attached hereto as
Exhibit 2(a). Registrant agrees to furnish supplementally to the Commission upon
request a copy of all omitted schedules and exhibits to the Asset Purchase
Agreement.
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
(b) Pro Forma Financial Information.
Pursuant to Securities and Exchange Commission regulations, the following
unaudited pro forma consolidated financial information of ALARIS Medical,
Inc. (the "Company") has been prepared to reflect the Sale as if it had been
consummated on earlier dates.
The unaudited pro forma consolidated balance sheet has been prepared to reflect
the Sale, the receipt of all proceeds and payment of all related costs as having
occurred on June 30, 2000 and (i) excludes Instromedix assets and liabilities
that were purchased by Card Guard Technologies, Inc.; (ii) includes an $18.3
million debt reduction from the proceeds; (iii) excludes Instromedix intangible
assets and related deferred tax liabilities; and (iv) reflects the payment of
transaction costs and expenses, including income taxes of approximately $8
million, associated with the Sale.
The unaudited pro forma consolidated statements of operations and related per
share data are based on the Company's historical results and have been
adjusted to (i) exclude the Instromedix operating results for the period
presented; (ii) reflect the impact on interest expense of the repayment of
$18.3 million of debt; and (iii) adjust the income tax provision for such
changes. The unaudited pro forma statements of operations are presented for
the six months ended June 30, 2000 and 1999 and the years ended December 31,
1999 and 1998. The year ended December 31, 1997 has not been presented, as
the purchase of Instromedix did not occur until 1998. The unaudited pro forma
consolidated statement of operations for the year ended December 31, 1998
reflects the debt repayment as of July 17, 1998 (the acquisition date of
Instromedix). All other unaudited pro forma statements of operations
presented reflect the debt repayment as if it had taken place at the
beginning of the period.
The unaudited pro forma consolidated financial information is not necessarily
indicative of the Company's consolidated financial position or consolidated
results of operations that might have been achieved had the transaction actually
been consummated on the assumed dates, nor is it necessarily indicative of the
Company's consolidated financial position or consolidated results of operations
which may occur in the future.
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ALARIS MEDICAL, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
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(DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
JUNE 30, 2000 (UNAUDITED)
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HISTORICAL ADJUSTMENT PRO FORMA
---------- ---------- ---------
<S> <C> <C> <C>
Current assets:
Cash............................................................. $ 22,509 $ 30,000 (A) $ 22,336
(18,273)(B)
(11,900)(C)
Receivables, net................................................. 78,421 (1,551)(D) 76,870
Inventories...................................................... 74,247 (2,127)(E) 72,120
Prepaid expenses and other current assets........................ 24,888 - 24,888
----------- ----------- -----------
Total current assets......................................... 200,065 (3,851) 196,214
----------- ----------- -----------
Net investment in sales-type leases, less current portion............ 24,412 - 24,412
Property, plant and equipment, net................................... 65,106 (907) (F) 64,199
Other non-current assets............................................. 30,102 30,102
Intangible assets, net............................................... 268,793 (13,429) (G) 255,364
----------- ----------- -----------
$ 588,478 $ (18,187) $ 570,291
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt................................ $ 18,147 $ (1,762) (B) $ 16,385
Accounts payable................................................. 20,335 - 20,335
Accrued expenses and other current liabilities................... 40,270 (100) (H) 40,170
----------- ----------- -----------
Total current liabilities..................................... 78,752 (1,862) 76,890
----------- ----------- -----------
Long-term debt....................................................... 523,041 (16,478) (B) 506,563
Other non-current liabilities........................................ 15,816 (5,451) (I) 10,365
----------- ----------- -----------
Total non-current liabilities................................. 538,857 (21,929) 516,928
----------- ----------- -----------
Contingent liabilities and commitments
Stockholders' equity:
Common stock, authorized 75,000 shares at $.01 par value;
issued 59,296 shares at June 30, 2000......................... 593 - 593
Capital in excess of par value................................... 148,992 - 148,992
Accumulated deficit.............................................. (170,363) 5,604 (J) (164,759)
Treasury stock................................................... (2,027) - (2,027)
Accumulated other comprehensive loss............................. (6,326) - (6,326)
----------- ----------- -----------
Total stockholders' equity.................................... (29,131) 5,604 (23,527)
----------- ----------- -----------
$ 588,478 $ (18,187) $ 570,291
=========== =========== ===========
</TABLE>
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NOTES TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
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(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) Reflects receipt of gross proceeds from the Sale.
(B) Represents repayment of $18,063 of debt under the AMS credit facility and
$210 under capital lease obligations.
(C) Reflects payment of estimated income taxes and expenses associated with the
Sale, including estimated cost to provide support services to Instromedix
and costs to set up a fully independent headquarters and manufacturing
facility for the Buyer.
(D) Accounts receivable purchased by Buyer.
(E) Inventory purchased by Buyer.
(F) Property and equipment purchased by Buyer.
(G) Represents Instromedix intangible assets.
(H) Product warranty liability assumed by Buyer.
(I) Represents a deferred tax liability related to the Instromedix intangible
assets ($5,372) and deferred service revenue assumed by Buyer ($79).
(J) Represents net gain on sale of Instromedix, a portion of which will be
recognized in the third quarter of 2000, and the balance of which will be
recognized once the Company completes its obligation under the Asset
Purchase Agreement.
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ALARIS MEDICAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
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(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
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HISTORICAL ADJUSTMENT(A) PRO FORMA
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<S> <C> <C> <C>
Sales ..................................................................... $ 189,019 $ 6,618 $ 182,401
Cost of sales................................................................ 102,183 4,149 98,034
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Gross margin............................................................. 86,836 2,469 84,367
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Selling and marketing expenses............................................... 37,717 2,115 35,602
General and administrative expenses.......................................... 20,229 626 19,603
Research and development expenses............................................ 12,008 1,021 10,987
Restructuring charges........................................................ 535 - 535
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Total operating expenses................................................. 70,489 3,762 66,727
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Lease interest income........................................................ 2,453 - 2,453
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Income (loss) from operations............................................ 18,800 (1,293) 20,093
Other income (expenses):
Interest income............................................................ 489 - 489
Interest expense........................................................... (28,599) (891) (B) (27,708)
Other, net................................................................. 1,142 - 1,142
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Total other expense...................................................... (26,968) (891) (26,077)
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Loss before income taxes..................................................... (8,168) (2,184) (5,984)
Benefit from income taxes.................................................... (2,000) (800) (C) (1,200)
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Net loss .................................................................... (6,168) (1,384) (4,784)
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Net loss attributable to common stock........................................ $ (6,168) $ (1,384) $ (4,784)
=========== ========== ==========
Loss per common share assuming no dilution:
Net loss per common share assuming no dilution....................... $ (.11) $ (.08)
=========== ==========
Loss per common share assuming dilution:
Net loss per common share assuming dilution.......................... $ (.11) $ (.08)
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Weighted average common shares outstanding assuming no dilution.............. 58,845 58,845
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Weighted average common shares outstanding assuming dilution................. 58,845 58,845
=========== ==========
</TABLE>
SEE NOTES TO THE PRO FORMA STATEMENTS OF OPERATIONS
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ALARIS MEDICAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
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(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
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HISTORICAL ADJUSTMENT(A) PRO FORMA
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<S> <C> <C> <C>
Sales ..................................................................... $ 193,051 $ 7,773 $ 185,278
Cost of sales................................................................ 100,597 4,675 95,922
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Gross margin............................................................. 92,454 3,098 89,356
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Selling and marketing expenses............................................... 39,085 2,350 36,735
General and administrative expenses.......................................... 22,902 1,996 20,906
Research and development expenses............................................ 12,598 971 11,627
Restructuring, integration and other non-recurring charges................... 3,438 3,389 49
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Total operating expenses................................................. 78,023 8,706 69,317
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Lease interest income........................................................ 2,080 - 2,080
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Income (loss) from operations............................................ 16,511 (5,608) 22,119
Other income (expenses):
Interest income............................................................ 763 - 763
Interest expense........................................................... (27,248) (713) (B) (26,535)
Other, net................................................................. (873) 17 (890)
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Total other expense...................................................... (27,358) (696) (26,662)
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Loss before income taxes..................................................... (10,847) (6,304) (4,543)
Benefit from income taxes.................................................... (2,700) (2,100) (C) (600)
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Net loss .................................................................... (8,147) (4,204) (3,943)
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Net loss attributable to common stock........................................ $ (8,147) $ (4,204) $ (3,943)
=========== ========== ==========
Loss per common share assuming no dilution:
Net loss per common share assuming no dilution....................... $ (.14) $ (.07)
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Loss per common share assuming dilution:
Net loss per common share assuming dilution.......................... $ (.14) $ (.07)
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Weighted average common shares outstanding assuming no dilution.............. 58,789 58,789
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Weighted average common shares outstanding assuming dilution................. 58,789 58,789
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</TABLE>
SEE NOTES TO THE PRO FORMA STATEMENTS OF OPERATIONS
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ALARIS MEDICAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
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(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
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HISTORICAL ADJUSTMENT(A) PRO FORMA
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(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Sales ..................................................................... $ 401,978 $ 14,386 $ 387,592
Cost of sales................................................................ 208,739 8,817 199,922
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Gross margin............................................................. 193,239 5,569 187,670
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Selling and marketing expenses............................................... 77,510 4,097 73,413
General and administrative expenses.......................................... 46,228 3,934 42,294
Research and development expenses............................................ 23,769 1,635 22,134
Restructuring, integration and other non-recurring charges................... 26,589 23,701 2,888
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Total operating expenses................................................. 174,096 33,367 140,729
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Lease interest income........................................................ 4,425 - 4,425
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Income (loss) from operations............................................ 23,568 (27,798) 51,366
Other income (expenses):
Interest income............................................................ 1,377 - 1,377
Interest expense........................................................... (54,922) (1,476) (B) (53,446)
Other, net................................................................. (1,649) 16 (1,665)
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Total other expense...................................................... (55,194) (1,460) (53,734)
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Loss before income taxes..................................................... (31,626) (29,258) (2,368)
(Benefit from) provision for income taxes.................................... (3,200) (5,500) (C) 2,300
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Net loss .................................................................... (28,426) (23,758) (4,668)
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Net loss attributable to common stock........................................ $ (28,426) $ (23,758) $ (4,668)
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Loss per common share assuming no dilution:
Net loss per common share assuming no dilution....................... $ (.48) $ (.08)
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Loss per common share assuming dilution:
Net loss per common share assuming dilution.......................... $ (.48) $ (.08)
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Weighted average common shares outstanding assuming no dilution.............. 58,815 58,815
=========== ==========
Weighted average common shares outstanding assuming dilution................. 58,815 58,815
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</TABLE>
SEE NOTES TO THE PRO FORMA STATEMENTS OF OPERATIONS
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ALARIS MEDICAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
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(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
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HISTORICAL ADJUSTMENT(A) PRO FORMA
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(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Sales ..................................................................... $ 380,068 $ 8,430 $ 371,638
Cost of sales................................................................ 191,232 5,155 186,077
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Gross margin............................................................. 188,836 3,275 185,561
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Selling and marketing expenses............................................... 72,202 2,213 69,989
General and administrative expenses.......................................... 42,654 1,830 40,824
Research and development expenses............................................ 20,059 824 19,235
Purchased in-process research and development................................ 28,334 22,800 5,534
Integration charges.......................................................... 1,901 1,763 138
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Total operating expenses................................................. 165,150 29,430 135,720
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Lease interest income........................................................ 4,599 - 4,599
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Income (loss) from operations............................................ 28,285 (26,155) 54,440
Other income (expenses):
Interest income............................................................ 1,134 8 1,126
Interest expense........................................................... (48,658) (704) (B) (47,954)
Other, net................................................................. (1,100) 16 (1,116)
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Total other expense...................................................... (48,624) (680) (47,944)
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(Loss) income before income taxes............................................ (20,339) (26,835) 6,496
Provision for (benefit from) income taxes.................................... 4,100 (900) (C) 5,000
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Net (loss) income ........................................................... (24,439) (25,935) 1,496
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Net (loss) income attributable to common stock............................... $ (24,439) $ (25,935) $ 1,496
=========== ========== ==========
(Loss) earnings per common share assuming no dilution:
Net (loss) earnings per common share assuming no dilution............ $ (.42) $ .03
=========== ==========
(Loss) earnings per common share assuming dilution:
Net (loss) earnings per common share assuming dilution............... $ (.42) $ .02
=========== ==========
Weighted average common shares outstanding assuming no dilution.............. 58,710 58,710
=========== ==========
Weighted average common shares outstanding assuming dilution................. 58,710 60,217
=========== ==========
</TABLE>
SEE NOTES TO THE PRO FORMA STATEMENTS OF OPERATIONS
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<PAGE>
NOTES TO THE PRO FORMA STATEMENT OF OPERATIONS
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(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) Represents operating activity of Instromedix. Excludes an estimated
non-recurring gain from the sale of Instromedix of $5,604, a portion
of which will be recognized in the third quarter of 2000, and the
balance of which will be recognized once the Company completes its
obligation under the Asset Purchase Agreement.
(B) Decrease in interest expense resulting from the reduction of debt based on
actual rates in effect during the period.
(C) Tax provision adjustment resulting from elimination of Instromedix
operating results and the reduction in interest expense.
(c) Exhibits.
Exhibit 2(a) Asset Purchase Agreement by and among
ALARIS Medical, Inc., ALARIS Medical
Systems, Inc., Card Guard Scientific
Survival Ltd. and Card Guard Technologies,
Inc. (Registrant agrees to furnish
supplementally to the Commission upon
request a copy of all omitted schedules
and exhibits to the Asset Purchase
Agreement.)
Exhibit 99(a) News Release issued by ALARIS Medical,
Inc. dated August 21, 2000.
Exhibit 99(b) News Release issued by ALARIS Medical,
Inc. dated August 31, 2000.
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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, thereunto duly authorized.
ALARIS MEDICAL, INC.
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(REGISTRANT)
Date: September 15, 2000 By: /S/ WILLIAM C. BOPP
---------------------------------
Name: William C. Bopp
Title: Senior Vice President and
Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
NO.
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2(a) Asset Purchase Agreement by and among ALARIS Medical, Inc., ALARIS
Medical Systems, Inc., Card Guard Scientific Survival Ltd. and Card
Guard Technologies, Inc. (Registrant agrees to furnish
supplementally to the Commission upon request a copy of all omitted
schedules and exhibits to the Asset Purchase Agreement.)
99(a) News Release issued by ALARIS Medical, Inc. dated August 21, 2000.
99(b) News Release issued by ALARIS Medical, Inc. dated August 31, 2000.
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