SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
---------------------------------
AMENDMENT NO. 1
TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------
Date of Report (Date of earliest event reported): April 15, 1998
-------------------
AETRIUM INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 0-22166 41-1439182
(State of Incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
2350 Helen Street, North St. Paul, Minnesota 55109
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (612) 704-1800
<PAGE>
The undersigned registrant, Aetrium Incorporated ("Aetrium"), hereby amends the
financial statements, exhibits and other portions of its Current Report on Form
8-K, initially filed with the Securities and Exchange Commission (the
"Commission") on April 15, 1998, as set forth herein. The April 15, 1998
original filing of the Form 8-K described Aetrium's acquisition of the
semiconductor equipment division of WEB Technology, Inc. ("WEB").
Item 7 of Aetrium's Current Report on Form 8-K dated April 15, 1998, is hereby
amended to include the financial statements, pro forma financial information and
exhibits indicated in Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Report of Independent Accountants
Balance Sheet as of December 31, 1997
Statement of Operations for the Year Ended December 31, 1997
Statement of Cash Flows for the Year Ended December 31, 1997
Notes to Financial Statements
Balance Sheet (unaudited) as of March 31, 1998
Statement of Income (unaudited) for the Three Months Ended
March 31, 1998
Statement of Cash Flows (unaudited) for the Three Months Ended
March 31, 1998
Notes to Financial Statements
b. PRO FORMA FINANCIAL INFORMATION.
Company's Report Regarding Pro Forma Consolidated Financial
Statements (unaudited)
Pro Forma Consolidated Balance Sheet (unaudited) as of March
31, 1998
Pro Forma Consolidated Statement of Income (unaudited) for the
Year Ended December 31, 1997
<PAGE>
Pro Forma Consolidated Statement of Income (unaudited) for the
Three Months Ended March 31, 1998
Notes to Unaudited Pro Forma Consolidated Financial Statements
c. EXHIBITS.
23.1 Consent of Jonathan Cocks & Associates
27.1 Financial Data Schedule.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of WEB Technology,
Inc.:
We have audited the accompanying balance sheet of the Equipment Division of WEB
Technology, Inc. as of December 31, 1997, and the related statements of
operations and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Equipment Division of WEB
Technology, Inc. as of December 31, 1997, and the results of its operations and
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the accompanying financial statements, the Equipment
Division of WEB Technology, Inc. was sold to a third party in April 1998.
/s/ Jonathan Cocks
Jonathan Cocks & Associates
29 N. Central Expressway, Suite 250
Richardson, Texas 75080
April 17, 1998
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
Current assets:
Accounts receivable (net of allowance for doubtful accounts) $1,713,497
Inventories:
Raw materials 618,866
Work-in-progress 1,191,441 1,810,307
----------
Other current assets 2,701
----------
Total current assets 3,526,505
Equipment and improvements (net of accumulated depreciation
and amortization of $297,669) 173,200
Other assets:
Patent (net of accumulated amortization of $1,884) $ 2,374
Deposit 10,855 13,229
---------- ----------
Total assets $3,712,934
==========
LIABILITIES AND NET ASSETS
Current liabilities:
Accounts payable - trade $ 571,860
Current portion of long-term obligation 6,529
Accrued and other current liabilities 341,215
----------
Total current liabilities 919,604
Long-term obligation
Commitments and contingencies 32,782
Net assets --
Total liabilities and net assets 2,760,548
----------
$3,712,934
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
STATEMENT OF OPERATIONS
for the year ended December 31, 1997
<TABLE>
<S> <C>
Net sales and operating revenues $6,805,756
Cost of goods sold 3,020,599
----------
Gross profit 3,785,157
Operating costs and expenses:
General and administrative 1,672,105
Marketing and selling 1,002,077
Research and development 621,234
Service 117,850
----------
3,413,266
----------
Net income $ 371,891
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
STATEMENT OF CASH FLOWS
for the year ended December 31, 1997
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 371,891
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 82,223
Changes in current assets and liabilities:
Increase in accounts receivable (649,987)
Increase in inventories (725,650)
Increase in accounts payable 297,337
Increase in accrued and other current liabilities 36,167
---------
Total adjustments (959,910)
---------
Net cash used in operating activities (588,019)
Cash flows used in investing activities:
Capital expenditures (114,016)
Cash flows from financing activities:
Bank borrowing 39,924
Net advances from other divisions 662,111
---------
Net cash provided by financing activities $ 702,035
---------
Net change in cash balance $ 0
=========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Business Description:
The Equipment Division of WEB Technology, Inc. (the "Division")
specializes in the design, development, manufacturing and marketing
of a variety of electromechanical equipment used by the
semiconductor industry to handle and test integrated circuits.
Generally, the Division's products are designed and manufactured to
its customers' specific orders and specifications.
2. Basis of Presentation and Other Matters:
WEB Technology, Inc. (the "Company") is a Delaware corporation
consisting of the Equipment, Fluids and Corporate Divisions. In
March 1998 the Company entered into a Purchase and Sale Agreement
(the "Agreement") with Aetrium Incorporated ("Aetrium") regarding
the sale of certain assets to and assumption of various liabilities
by (collectively referred to as the "Net Assets") Aetrium. The
Division is composed of the Net Assets referred to in the Agreement.
The transaction contemplated by the Agreement was finalized and
consummated in April 1998.
The accompanying financial statements include only the Division's
accounts. The Division has allocated certain costs and expenses
directly attributable to the Company's corporate activities and
originally recorded in the Division's accounts back to the Corporate
Division. In addition, the Division has allocated a portion of its
remaining overhead costs and expenses to the Company's Corporate
Division. Management believes the overhead costs and expenses
allocated from the Equipment Division to the Corporate Division
reasonably reflects the corporate costs originally absorbed by the
Equipment Division.
The Division's financial statements include interest costs only for
assets specifically financed for use by the Division. Interest costs
associated with working capital and related financing needs are
included in the Corporate Division.
The preparation of financial statements in accordance with generally
accepted accounting principles requires Division and Company
management to make estimates and assumptions that effect reported
amounts of assets and liabilities and the disclosure of contingent
assets and liabilities as of that date as well as the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from these estimates.
3. Summary of Significant Accounting Policies:
Accounts Receivable and Related Credit Risks
The Division's customers consist primarily of major manufacturers in
the semiconductor and related high technology industries. They are
principally located in Asia, Europe and North America. The Division
performs periodic credit evaluations of its customers and closely
monitors credit extensions. While most of its accounts receivable
are unsecured, the Division does require irrevocable letters of
credit or other acceptable collateral from certain foreign and
smaller domestic customers. The Division has not historically
experienced significant losses on its trade receivables.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS, continued
3. Summary of Significant Accounting Policies (Continued):
Accounts Receivable and Related Credit Risks, continued
The Company has obtained various loans and credit lines from a bank
located in Dallas, Texas. Substantially all of the Company assets,
including those attributed to the Division, have been pledged as
collateral for these obligations.
Inventories
Inventories are valued at the lower of cost or market, with cost
determined on a first-in, first-out basis.
Equipment and Improvements
Equipment and improvements are stated at cost. Depreciation and
amortization are computed for financial and tax reporting purposes
over the assets' estimated remaining service lives using various
accelerated methods. Gains and losses from disposition are included
in operations in the period incurred.
Intangibles
Patents and other intangible costs are stated at cost and are
amortized over the assets' estimated remaining service lives (which
does not exceed seventeen years) using the straight-line method.
Management periodically reviews the carrying values of its
intangible assets in order to determine whether any potential
impairment exists.
Revenue Recognition and Warranty Costs
Revenue is recognized and estimated product warranty costs are
accrued at the time of product shipment.
Research and Development
Expenditures for research and development, including any software
development, are expensed as incurred.
Employee Benefit Plans
The Division's employees participate in various employee benefit
plans provided by the Company. All of these plans are defined
contribution plans. Except for the Company's 401-K Plan, there are
no post-retirement benefit plans.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS, continued
3. Summary of Significant Accounting Policies (Continued):
Income Taxes
The Company and its shareholders have elected to be taxed as a
Subchapter S corporation. The shareholders are subject to income
taxes on their respective shares of the Company's (including the
Division's) income, deductions, etc. Accordingly, the Division's
financial statements do not show any provision for income taxes in
the statement of operations or any related liability in the balance
sheet.
4. Long-Term Obligation:
This obligation is a note payable to a bank. It is payable in sixty
monthly principal and interest (stated rate of 8.75% at December 31,
1997) installments of $826 through December 2002 and is
collateralized by certain equipment. Minimum scheduled principal
payments for each of the years ending December 31, are as follows:
1998 - $6,529; 1999 - $7,337; 2000 - $8,705; 2001 - $8,799; and 2002
- $7,941.
In connection with the purchase and sale transaction to Aetrium
discussed in Note 2, Aetrium assumed responsibility for this
obligation in April 1998.
5. Commitment:
The Company leases office and manufacturing space in Dallas, Texas
under a non-cancelable operating lease. The Division's operations
are located in this space. In connection with the purchase and sale
transaction to Aetrium discussed in Note 2, Aetrium also assumed
responsibility for the Company's lease in April 1998.
6. Related Party Transactions:
The Division purchases various inventory components from entities in
which the Company has either a significant (20% or greater) or
majority (greater than 50%) ownership interest. For the year ended
December 31, 1997 these purchases amounted to approximately
$907,000.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
BALANCE SHEET
MARCH 31, 1998
(in thousands)
(Unaudited)
ASSETS
- ------------------------------------
Current assets:
Accounts receivable, net $ 2,237
Inventories 1,932
---------
Total current assets 4,169
---------
Equipment and improvements (net of
accumulated depreciation of $ 326) 127
---------
Other assets 14
---------
Total assets $ 4,310
=========
LIABILITIES AND NET ASSETS
- ------------------------------------
Current liabilities:
Trade accounts payable $ 619
Accrued liabilities 819
---------
Total current liabilities 1,438
---------
Net assets 2,872
---------
Total liabilities and net assets $ 4,310
=========
See accompanying notes to financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1998
(in thousands)
(Unaudited)
Net sales $ 2,994
Cost of goods sold 1,149
---------
Gross profit 1,845
---------
Operating expenses:
Selling, general, and administrative 956
Research and development 151
---------
Total operating expenses 1,107
---------
Net income $ 738
=========
See accompanying notes to financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998
(in thousands)
(Unaudited)
Cash flows from operating activities:
Net income $ 738
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 46
Changes in current assets and liabilities:
Accounts receivable, net (524)
Inventories (122)
Other current assets 3
Other assets (1)
Trade accounts payable 47
Accrued liabilities 478
---------
Net cash provided by operating activities 665
---------
Cash flows from financing activities:
Reduce long-term debt (39)
Net advances to other divisions (626)
---------
Net cash used in financing activities (665)
---------
---------
Net change in cash balance $ 0
=========
See accompanying notes to financial statements.
<PAGE>
EQUIPMENT DIVISION OF WEB TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Business Description.
The Equipment Division of WEB Technology, Inc. (the "Division")
specializes in the design, development, manufacturing and marketing of
a variety of electromechanical equipment used by the semiconductor
industry to handle and test integrated circuits.
2. Basis of Presentation and Other Matters.
WEB Technology, Inc. (the "Company") is a Delaware corporation
consisting of the Equipment, Fluids and Corporate Divisions. In March
1998 the Company entered into an agreement with Aetrium Incorporated
("Aetrium") whereby Aetrium would purchase substantially all the assets
and assume certain liabilities of the Division. The acquisition
transaction was closed on April 1, 1998.
The accompanying financial statements include only the Division's
accounts. The Division has allocated certain costs and expenses
directly attributable to the Company's corporate activities and
originally recorded in the Division's accounts back to the Corporate
Division. In addition, the Division has allocated a portion of its
remaining overhead costs and expenses to the Company's Corporate
Division. Management believes the overhead costs and expenses allocated
from the Equipment Division to the Corporate Division reasonably
reflects the corporate costs originally absorbed by the Equipment
Division.
The Division's financial statements include interest costs only for
assets specifically financed for use by the Division. Interest costs
associated with working capital and related financing needs are
included in the Corporate Division.
3. Interim Financial Reporting
In the opinion of management, the accompanying unaudited financial
statements include all adjustments necessary to present fairly the
financial position, results of operations, and changes in cash flows
for the interim period presented.
Certain footnote information has been condensed or omitted from these
financial statements. Therefore, these financial statements should be
read in conjunction with the financial statements and accompanying
footnotes included in the audited financial statements for the year
ended December 31, 1997.
4. Inventories.
Inventories as of March 31, 1998 consist of the following:
Raw Materials $ 648,000
Work in Progress 1,284,000
----------
Total $1,932,000
==========
5. Income Taxes.
The Company and its shareholders have elected to be taxed as a
Subchapter S corporation. The shareholders are subject to income taxes
on their respective shares of the Company's (including the Division's)
income, deductions, etc. Accordingly, the Division's financial
statements do not show any provision for income taxes in the statement
of income or any related liability in the balance sheet.
6. Related Party Transactions
The Division purchases various inventory components from entities in
which the Company has either a significant (20% or greater) or majority
(greater than 50%) ownership interest. For the three months ended March
31, 1998 these purchases amounted to approximately $ 322,000.
<PAGE>
AETRIUM INCORPORATED
COMPANY'S REPORT REGARDING PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On April 1, 1998 Aetrium Incorporated ("Aetrium" or the "Company") purchased
substantially all of the assets and assumed certain liabilities of the Equipment
Division of WEB Technology, Inc. ("WEB"), a company which consisted of several
business units in addition to the Equipment Division. The Equipment Division (
or the "Division") specializes in the design, development, manufacturing and
marketing of a variety of electromechanical equipment used by the semiconductor
industry to handle and test integrated circuits. The acquisition was made
pursuant to an Asset Purchase Agreement dated March 20, 1998 by and between the
Company and WEB. The consideration given for the net assets acquired was $
7,835,000 and 900,000 shares of Aetrium common stock valued at $15,412,500. In
addition, $ 320,000 in estimated acquisition-related costs were recorded in
connection with the transaction. Funds used for the acquisition were from the
proceeds of a stock offering completed in 1995 and from cash generated from
operations of the Company.
The accompanying pro forma consolidated balance sheet gives effect to the
acquisition as if the transaction had occurred on March 31, 1998. The pro forma
consolidated statements of income for the year ended December 31, 1997 and the
three months ended March 31, 1998 show combined results of operations as if the
acquisition had occurred on January 1, 1997. Pro forma adjustments include the
following:
1. The pro forma balance sheet includes adjustments reflecting the
payment of the $ 7,835,000 in cash, the issuance of the 900,000 shares
of Aetrium common stock, and the accrual of $ 320,000 of
acquisition-related expenses.
2. The pro forma balance sheet reflects the purchase accounting required
by APB No. 16, including the recording of the assets acquired and
liabilities assumed at their estimated fair values, including
intangibles described below.
3. The pro forma balance sheet reflects the recording of the following
intangible assets at their estimated fair values:
Trained Work Force $ 180,000
Capitalized Technology 7,086,000
Research and development in process 12,000,000
Goodwill 1,430,000
The estimated values of the intangibles above are being determined by
a third party appraisal which is substantially complete as of the date
of this filing and is expected to be finalized by June 30, 1998. The
final appraisal amounts are not expected to be significantly different
than the estimated amounts above.
The pro forma balance sheet assumes that the $ 12,000,000 related to
research and development in process, net of $ 4,080,000 income taxes,
is charged to retained earnings since the underlying projects have not
yet reached technological feasibility and have no future alternative
uses. This nonrecurring charge has not been reflected in the pro forma
consolidated statements of income.
The $ 1,430,000 allocated to goodwill represents the excess of the
total purchase price over the total estimated fair values of the net
assets.
4. The pro forma statements of income include adjustments which reflect
(1) reduced Aetrium interest income due to the pro forma cash outlay
for the acquisition and the use of funds to finance the Equipment
Division's operations, (2) amortization expense related to the
intangibles described above, (3) additional income tax expense
attributed to the Division's income, and (4) the issuance of the
900,000 shares of Aetrium common stock.
<PAGE>
Pro forma adjustments are based upon current estimates, historical information
and certain assumptions that management deems appropriate. The unaudited pro
forma consolidated financial data presented herein are not necessarily
indicative of the results the Company would have obtained had such events
occurred at the dates indicated above or of the future results of the Company.
<PAGE>
AETRIUM INCORPORATED
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
As Historically Reported
------------------------ Pro
Equipment Pro Forma Forma
ASSETS Aetrium Division Adjustments Consolidated
- --------------------------------------- ---------------------- ----------- ------------
(Note 1)
<S> <C> <C> <C> <C>
Current assets:
Cash and temporary investments $ 27,241 $ 0 $ (7,835)(1A) $ 19,406
Accounts receivable, net 15,816 2,237 18,053
Inventories 17,089 1,932 19,021
Deferred tax asset 784 0 272 (1C) 1,056
Other current assets 464 0 0 464
---------------------- ---------- ----------
Total current assets 61,394 4,169 (7,563) 58,000
---------------------- ---------- ----------
Property and equipment, net 3,991 127 0 4,118
Noncurrent deferred tax asset 4,951 0 3,808 (1C) 8,759
Intangible and other assets, net 3,736 14 8,696 (1B) 12,446
---------------------- ---------- ----------
Total assets $ 74,072 $ 4,310 $ 4,941 $ 83,323
====================== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------
Current liabilities:
Trade accounts payable $ 3,784 $ 619 4,403
Accrued liabilities 5,404 819 320 (1A) 6,543
---------------------- ---------- ----------
Total current liabilities 9,188 1,438 320 10,946
---------------------- ---------- ----------
Shareholders' equity:
Common Stock 9 1 (1A) 10
Additional paid-in capital 46,571 15,412 (1A) 61,983
Equipment Division net assets 2,872 (2,872)(1D) 0
Retained earnings 18,304 (7,920)(1D) 10,384
---------------------- ---------- ----------
Total shareholders' equity 64,884 2,872 4,621 72,377
---------------------- ---------- ----------
Total liabilities and shareholders'
equity $ 74,072 $ 4,310 $ 4,941 $ 83,323
====================== ========== ==========
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
AETRIUM INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
As Historically Reported
------------------------ Pro
Equipment Pro Forma Forma
Aetrium Division Adjustments Consolidated
----------------------- ---------- ------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $ 67,575 $ 6,806 $ 74,381
Cost of goods sold 32,917 3,021 35,938
----------------------- ----------
Gross profit 34,658 3,785 38,443
----------------------- ----------
Operating expenses:
Selling, general, and administrative 14,323 2,792 720 (2A) 17,835
Research and development 10,492 621 11,113
Non-recurring acquisition charge 9,460 0 9,460
----------------------- ---------- ----------
Total operating expenses 34,275 3,413 720 38,408
----------------------- ---------- ----------
Income from operations 383 372 (720) 35
Other income (expense), net 1,147 0 (339)(2B) 808
----------------------- ---------- ----------
Income before income taxes 1,530 372 (1,059) 843
Provision for income taxes (301) 0 234 (2C) (67)
----------------------- ---------- ----------
Net income $ 1,229 $ 372 $ (825) $ 776
======================= ========== ==========
Net income per share:
Basic $ .14 $ .08
Diluted $ .14 $ .08
Weighted shares outstanding:
Basic 8,668 9,568
Diluted 8,923 9,823
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
AETRIUM INCORPORATED
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1998
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
As Historically Reported
------------------------- Pro
Equipment Pro Forma Forma
Aetrium Division Adjustments Consolidated
------------------------- ---------- ------------
(Note 2)
<S> <C> <C> <C> <C>
Net sales $ 20,481 $ 2,994 $ 23,475
Cost of goods sold 10,198 1,149 11,347
------------------------- ----------
Gross profit 10,283 1,845 12,128
------------------------- ----------
Operating expenses:
Selling, general, and administrative 4,330 956 180 (2A) 5,466
Research and development 2,949 151 3,100
------------------------- ---------- ----------
Total operating expenses 7,279 1,107 180 8,566
------------------------- ---------- ----------
Income from operations 3,004 738 (180) 3,562
Other income (expense), net 305 0 (85)(2B) 220
------------------------- ---------- ----------
Income before income taxes 3,309 738 (265) 3,782
Provision for income taxes (926) (161)(2C) (1,087)
------------------------- ---------- ----------
Net income $ 2,383 $ 738 $ (426) $ 2,695
========================= ========== ==========
Net income per share:
Basic $ .27 $ .28
Diluted $ .27 $ .27
Weighted shares outstanding:
Basic 8,791 9,691
Diluted 8,955 9,855
</TABLE>
See accompanying notes to pro forma consolidated financial statements.
<PAGE>
AETRIUM INCORPORATED
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
NOTE 1 - UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET ADJUSTMENTS
Adjustments to reflect the purchase accounting required by APB No. 16,
including the $ 7,835 cash paid, the issuance of 900,000 shares of
Aetrium common stock, the $ 320 of other acquisition - related costs,
and the allocation of the purchase price to the net assets acquired
based on their estimated fair values as of April 1, 1998:
(A) Purchase price:
Cash $ 7,835
900,000 shares of Aetrium common stock 15,413
Other acquisition related costs (accrued liabilities) 320
---
Total purchase price $ 23,568
========
(B) Adjustment to reflect the allocation of a portion of the purchase
price to intangible assets:
Intangible assets - trained workforce $ 180
Intangible assets - capitalized technology 7,086
Intangible assets - goodwill 1,430
-----
Total $ 8,696
=======
(C) Adjustment to reflect the allocation of a portion of the purchase
price to research and development in process ("R & D"):
Retained earnings $(12,000)
Deferred income taxes - current 272
Deferred income taxes - noncurrent 3,808
-----
Total $ (7,920)
========
(D) Adjustments to the Equipment Division net assets and
shareholders' equity:
Equipment Division net assets $ (2,872)
Adjustments related to Note 1(A) above 15,413
Adjustments related to Note 1(C) above (7,920)
------
Total $ 4,621
=======
<PAGE>
AETRIUM INCORPORATED
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(Unaudited)
NOTE 2 - UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME ADJUSTMENTS
The pro forma consolidated income statements for the year ended
December 31, 1997 and three months ended March 31, 1998 assume that
the acquisition occurred on January 1, 1997. The pro forma adjustments
assume that Aetrium realized reduced interest income during the
periods presented due to the pro forma cash outlay on January 1, 1997
and the use of funds to finance the Equipment Division operations. In
addition, the pro forma adjustments include amortization expense on
acquisition-related intangible assets and income tax expense related
to the Equipment Division's income and other pro forma adjustments:
<TABLE>
<CAPTION>
Year ended Three months ended
December 31, 1997 March 31, 1998
----------------- --------------
<S> <C> <C>
(A) Adjustments to reflect amortization
expense on acquisition-related
intangible assets $ 720 $ 180
===== =====
(B) Adjustments to other income (expense),
net:
Aetrium reduced interest income
related to the cash outlay for the
acquisition and the use of funds to
conduct the Equipment Division's
operations. $ (339) $ (85)
====== =====
(C) Adjustments to record income taxes
related to the Equipment Division's
income and the pro forma adjustments,
calculated at statutory rates. $ 234 $(161)
===== =====
</TABLE>
Supplementary Information:
(1) The nonrecurring pre-tax charge associated with the purchase of
research and development in process, amounting to approximately $
12,000 has not been reflected in the pro forma consolidated
statements of income. Such charge will be included in the
Company's operating results for the quarter ended June 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AETRIUM INCORPORATED
Dated: June 15, 1998 By /s/ Joseph C. Levesque
----------------------
Joseph C. Levesque
Chief Executive Officer and
President
<PAGE>
INDEX TO EXHIBITS
Item Method of Filing
- ---- ----------------
23.1 Consent of Jonathan Cocks & Associates Filed electronically
herewith.
27.1 Financial Data Schedule Filed electronically
herewith.
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Current Report on
Form 8-K/A of Aetrium Incorporated of our report dated April 17, 1998 appearing
on page 3 of the Current Report.
/s/ Jonathan Cocks
- --------------------------------
JONATHAN COCKS & ASSOCIATES
Richardson, Texas 75080
June 11, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,713,497
<ALLOWANCES> 0
<INVENTORY> 1,810,307
<CURRENT-ASSETS> 3,526,505
<PP&E> 470,869
<DEPRECIATION> 297,669
<TOTAL-ASSETS> 3,712,934
<CURRENT-LIABILITIES> 919,604
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,712,934
<SALES> 6,805,756
<TOTAL-REVENUES> 6,805,756
<CGS> 3,020,599
<TOTAL-COSTS> 3,020,599
<OTHER-EXPENSES> 3,413,266
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 371,891
<INCOME-TAX> 0
<INCOME-CONTINUING> 371,891
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 371,891
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
