-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DEw+x3B70qHflgru+E9LI2LRZXM8DyZIrBynAV5XNw/ed4gJ1jD27+g/7/qesGcM NbMhNdiosAP07quz4ObCYA== 0000914190-99-000063.txt : 19990215 0000914190-99-000063.hdr.sgml : 19990215 ACCESSION NUMBER: 0000914190-99-000063 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990128 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDTRONIC INC CENTRAL INDEX KEY: 0000064670 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 410793183 STATE OF INCORPORATION: MN FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07707 FILM NUMBER: 99534550 BUSINESS ADDRESS: STREET 1: 7000 CENTRAL AVE NE STREET 2: MS 316 CITY: MINNEAPOLIS STATE: MN ZIP: 55432 BUSINESS PHONE: 6125744000 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) January 28, 1999 Medtronic, Inc. (Exact Name of Registrant as Specified in Its Charter) Minnesota (State of Other Jurisdiction of Incorporation) 1-7707 41-0793183 (Commission File Number) (I.R.S. Employer Identification No.) 7000 Central Avenue Northeast Minneapolis, Minnesota 55432 (Address of Principal Executive Offices) (Zip Code) (612) 514-4000 (Registrant's Telephone Number, Including Area Code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) Item 2. Acquisition or Disposition of Assets On January 28, 1999, Medtronic, Inc. (the "Registrant") acquired all of the outstanding stock of Arterial Vascular Engineering, Inc. ("AVE") through a merger of a newly-created subsidiary of the Registrant into AVE. Pursuant to the merger (which is being accounted for as a pooling of interests), the shareholders of AVE receive 0.76726 of a share of the Registrant's Common Stock in exchange for each of the approximately 65.9 million shares of AVE Common Stock outstanding at the time of the merger. In addition, holders of options outstanding at the time of the merger to purchase an aggregate of approximately 4.8 million shares of AVE Common Stock will receive, upon exercise of such options, the same fraction of a share of the Registrant's Common Stock. A copy of the press release announcing the closing of the merger transaction is filed as Exhibit 99 to this Form 8-K. AVE designs and manufactures minimally invasive solutions for the treatment of coronary artery and peripheral vascular disease and is the global technology leader in coronary stents. Its product offerings include coronary stents, balloon catheters, guidewires and guiding catheters. Item 7. Financial Statements and Exhibits (a) Financial Statements of Businesses Acquired: The required financial statements of AVE have been previously filed by the Registrant in the Registrant's Registration Statement on Form S-4 relating to the merger transaction (File No. 333-68677), by incorporation thereof by reference to the following AVE reports filed pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (File No. 0-27802): (i) The unaudited condensed consolidated balance sheet of AVE as of September 30, 1998, and the related unaudited condensed consolidated statements of operations, stockholders' equity and cash flows for the three months ended September 30, 1998 and September 30, 1997, together with the accompanying notes, as included in AVE's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998. (ii) The consolidated balance sheets of AVE as of June 30, 1998 and 1997, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three years ended June 30, 1998, together with the accompanying notes and the report of independent auditors with respect to those financial statements, as included in AVE's Annual Report on Form 10-K for the fiscal year ended June 30, 1998. (b) Pro Forma Financial Information: The following pro forma financial information is filed as part of this report beginning on the page following signatures: (i) The unaudited pro forma condensed combined statement of operations of the Registrant for the years ended April 30, 1998, 1997 and 1996, giving effect to the merger transaction under the pooling of interests method of accounting, and the accompanying description and explanatory notes. (ii) The unaudited pro forma condensed combined balance sheet of the Registrant as of October 30, 1998 and the unaudited pro forma condensed combined statement of operations of the Registrant for the six month periods ended October 31, 1998 and 1997, giving effect to the merger transaction under the pooling of interest method of accounting, and the accompanying description and explanatory notes. (c) Exhibits: See Exhibit Index on page following pro forma financial information. 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. MEDTRONIC, INC. Date: January 28, 1999 By /s/ Robert L. Ryan Robert L. Ryan, Senior Vice President and Chief Financial Officer UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma financial statements give effect to the mergers of Medtronic, Inc. (Medtronic) with each of Arterial Vascular Engineering, Inc. (AVE) and Sofamor Danek Group, Inc. (Sofamor Danek), each of which will be accounted for as a pooling of interests. The unaudited pro forma condensed combined balance sheets give effect to these transactions as if they had occurred on October 30, 1998. The unaudited pro forma condensed combined statements of operations give effect to these transactions as if they had occurred as of May 1, 1995, the beginning of the earliest period presented. The operating results for AVE have been converted as described below from its fiscal year end (June 30) to Medtronic's fiscal year end (April 30). The operating results for Sofamor Danek have been converted as described below from its fiscal year end (December 31) to Medtronic's fiscal year end (April 30). For pro forma purposes, (i) Medtronic's unaudited consolidated balance sheet as of October 30, 1998 has been combined with AVE's and Sofamor Danek's unaudited consolidated balance sheets as of September 30, 1998, and (ii) Medtronic's unaudited consolidated statements of operations for the six months ended October 30, 1998 and October 31, 1997 and audited statements of operations for the fiscal years ended April 30, 1998, 1997 and 1996 have been combined with AVE's and Sofamor Danek's unaudited consolidated statements of operations for the six months ended September 30, 1998 and 1997 and 12 months ended March 31, 1998, 1997 and 1996, respectively, on a pooling of interests basis. These pro forma financial statements are presented for illustrative purposes only and therefore are not necessarily indicative of the operating results or financial position that might have been achieved had the transactions occurred as of an earlier date, nor are they necessarily indicative of operating results or financial position that may occur in the future. These pro forma financial statements should be read in conjunction with the historical consolidated financial statements and notes thereto of Medtronic and AVE incorporated by reference herein. AVE's recent purchases of the catheter lab business of C.R. Bard, Inc. (the "Bard Cath Lab business") and World Medical Manufacturing Corporation have not been included in the unaudited pro forma condensed combined financial statements because they do not constitute significant business combinations and disclosure is not deemed to be material. Information on the impact of these transactions is included in AVE's Current Report on Form 8-K/A that was filed with the SEC on December 14, 1998. Additional information on AVE and Sofamor Danek may be obtained through review of each company's public filings with the SEC. As indicated in the footnotes to these pro forma financial statements, certain pro forma adjustments have been made using a conversion ratio of 0.76726 of a share of Medtronic stock for each share of AVE stock outstanding at the effective time of the AVE merger, and a conversion ratio of 1.65159 shares of Medtronic stock for each share of Sofamor Danek stock outstanding at the effective time of the Sofamor Danek merger (in each case, the final conversion ratio calculated pursuant to the terms of each of the merger agreements). UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEETS October 30, 1998 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents 572,341 70,132 642,473 135,555 707,896 778,028 Short-term investments 244,044 9,535 253,579 96,729 340,773 350,308 Accounts receivable, net 706,531 108,027 814,558 90,456 796,987 905,014 Inventories: - Finished goods 205,722 41,417 247,139 5,486 211,208 252,625 Work in process 88,273 4,771 93,044 2,786 91,059 95,830 Raw materials 130,596 2,704 133,300 3,272 133,868 136,572 -------------------------------------------------------------------------------------------- Total inventories 424,591 48,892 473,483 11,544 436,135 485,027 Prepaid expenses and other current assets 324,031 67,967 391,998 23,729 347,760 415,727 -------------------------------------------------------------------------------------------- Total current assets 2,271,538 304,553 2,576,091 358,013 2,629,551 2,934,104 - Property, plant, and equipment, net 565,107 56,449 621,556 78,573 643,680 700,129 Goodwill and other intangible assets, net 673,357 103,803 777,160 - 673,357 777,160 Long-term investments 210,801 1,397 212,198 - 210,801 212,198 Other assets 113,772 66,014 179,786 1,341 115,113 181,127 -------------------------------------------------------------------------------------------- Total assets 3,834,575 532,216 - 4,366,791 437,927 - 4,272,502 4,804,718 ============================================================================================ - LIABILITIES AND SHAREHOLDERS' EQUITY - Current liabilities: - Short-term borrowings 201,320 18,085 219,405 - 201,320 219,405 Accounts payable 96,179 8,909 105,088 11,718 107,897 116,806 Accrued liabilities 476,594 85,605 562,199 87,227 563,821 649,426 -------------------------------------------------------------------------------------------- Total current liabilities 774,093 112,599 886,692 98,945 873,038 985,637 - Long-term debt 19,534 18,067 37,601 - 19,534 37,601 Deferred tax liabilities 509 - 509 - 509 509 Other long-term liabilities 130,293 20,317 150,610 - 130,293 150,610 -------------------------------------------------------------------------------------------- Total liabilities 924,429 150,983 1,075,412 98,945 1,023,374 1,174,357 - Shareholders' equity: - Common stock 48,934 182,977 (178,532) (a) 53,379 64 4,876 (b) 53,874 58,319 Retained earnings 2,963,360 199,682 178,532 (a) 3,341,574 339,909 (4,876) (b) 3,298,393 3,676,607 Accumulated other non-owner changes in equity (75,998) (1,426) (77,424) (991) (76,989) (78,415) Receivable from Employee Stock Ownership Plan (26,150) - (26,150) - (26,150) (26,150) -------------------------------------------------------------------------------------------- Total shareholders' equity 2,910,146 381,233 - 3,291,379 338,982 - 3,249,128 3,630,361 -------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity 3,834,575 532,216 - 4,366,791 437,927 - 4,272,502 4,804,718 ============================================================================================
(a) Reflects 26,914,000 Sofamor Danek no par common shares outstanding at September 30, 1998 exchanged for 44,450,893 Medtronic $.10 par common shares using the 1.65159 exchange ratio. (b) Reflects 64,386,000 AVE $.001 par common shares outstanding at September 30, 1998 exchanged for 49,400,802 Medtronic $.01 par common shares using the 0.76726 exchange ratio. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Six Months Ended October 30, 1998 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- Net sales $ 1,434,060 $ 195,230 $ 1,629,290 $ 343,145 $ 1,777,205 $1,972,435 Costs and expenses: Cost of products sold 402,085 35,883 437,968 56,573 458,658 494,541 Research and development expense 160,048 14,850 174,898 27,535 187,583 202,433 Selling, general, and administrative expense 413,196 89,157 502,353 78,281 491,477 580,634 Non-recurring charges 21,101 8,000 29,101 - 21,101 29,101 Interest expense 5,222 1,345 6,567 - 5,222 6,567 Interest income (17,163) - (17,163) (5,274) (22,437) (22,437) ------------------------------------------------------------------------------------------ Total costs and expenses 984,489 149,235 1,133,724 157,115 1,141,604 1,290,839 ------------------------------------------------------------------------------------------ Earnings before income taxes 449,571 45,995 495,566 186,030 635,601 681,596 Provision for income taxes 150,136 14,371 164,507 73,438 223,574 237,945 ------------------------------------------------------------------------------------------ Net earnings $ 299,435 $ 31,624 $ 331,059 $ 112,592 $ 412,027 $ 443,651 ========================================================================================== Weighted average shares outstanding 479,553 26,669 17,377(c) 523,599 62,853 (14,628)(d) 527,778 571,824 Basic Earnings per share $ 0.62 $ 1.19 $ 0.63 $ 1.79 $ 0.78 $ 0.78 Earnings per share assuming dilution $ 0.61 $ 1.08 $ 0.62 $ 1.71 $ 0.77 $ 0.76 Weighted average shares outstanding assuming dilution 486,909 29,194 19,022(c) 535,125 65,964 (15,352) (d) 537,521 585,737
(c) Represents 26,669,000 weighted average shares outstanding and 29,194,000 weighted average shared outstanding assuming dilution of Sofamor Danek common stock converted to 44,046,000 weighted average shares outstanding and 48,216,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 1.65159 exchange ratio. (d) Represents 62,853,000 weighted average shares outstanding and 65,964,000 weighted average shared outstanding assuming dilution of AVE common stock converted to 48,225,000 weighted average shares outstanding and 50,612,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 0.76726 exchange ratio. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Six Months Ended October 31, 1997 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- Net sales $ 1,377,508 $ 151,619 $ 1,529,127 $ 48,485 $ 1,425,993 $ 1,577,612 Costs and expenses: Cost of products sold 364,127 27,291 391,418 10,466 374,593 401,884 Research and development expense 151,820 9,589 161,409 9,600 161,420 171,009 Selling, general, and administrative expense 417,777 71,161 488,938 14,328 432,105 503,266 Non-recurring charges - - - - - - Interest expense 4,661 3,045 7,706 - 4,661 7,706 Interest income (10,331) - (10,331) (1,996) (12,327) (12,327) ------------------------------------------------------------------------------------------- Total costs and expenses 928,054 111,086 1,039,140 32,398 960,452 1,071,538 ------------------------------------------------------------------------------------------- Earnings before income taxes 449,454 40,533 489,987 16,087 465,541 506,074 Provision for income taxes 155,095 12,476 167,571 5,631 160,726 173,202 ------------------------------------------------------------------------------------------- Net earnings $ 294,359 $ 28,057 $ 322,416 $ 10,456 $ 304,815 $ 332,872 =========================================================================================== Weighted average shares outstanding 476,872 24,786 16,150 (e) 517,808 59,366 (13,817) (f) 522,421 563,357 Basic Earnings per share $ 0.62 $ 1.13 $ 0.62 $ 0.18 $ 0.58 $ 0.59 Earnings per share assuming dilution $ 0.61 $ 1.05 $ 0.61 $ 0.16 $ 0.57 $ 0.58 Weighted average shares outstanding assuming dilution 484,847 26,696 17,394 (e) 528,937 64,005 (14,897) (f) 533,955 578,045
(e) Represents 24,786,000 weighted average shares outstanding and 26,696,000 weighted average shared outstanding assuming dilution of Sofamor Danek common stock converted to 40,936,000 weighted average shares outstanding and 44,090,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 1.65159 exchange ratio. (f) Represents 59,366,000 weighted average shares outstanding and 64,005,000 weighted average shared outstanding assuming dilution of AVE common stock converted to 45,549,000 weighted average shares outstanding and 49,108,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 0.76726 exchange ratio. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Fiscal Year Ended April 30, 1998 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- Net sales $ 2,783,371 $ 331,596 $ 3,114,967 $ 227,991 $3,011,362 $3,342,958 Costs and expenses: Cost of products sold 760,016 61,446 821,462 45,668 805,684 867,130 Research and development expense 317,957 21,251 339,208 28,732 346,689 367,940 Selling, general, and administrative expense 809,546 155,939 965,485 61,881 871,427 1,027,366 Non-recurring charges 192,400 - 192,400 - 192,400 192,400 Interest expense 9,756 5,498 15,254 - 9,756 15,254 Interest income (22,927) - (22,927) (4,438) (27,365) (27,365) ------------------------------------------------------------------------------------------- Total costs and expenses 2,066,748 244,134 2,310,882 131,843 2,198,591 2,442,725 ------------------------------------------------------------------------------------------- Earnings before income taxes 716,623 87,462 804,085 96,148 812,771 900,233 Provision for income taxes 249,746 26,957 276,703 35,696 285,442 312,399 ------------------------------------------------------------------------------------------- Net earnings $ 466,877 $ 60,505 $ 527,382 $ 60,452 $ 527,329 $ 587,834 =========================================================================================== Weighted average shares outstanding 477,243 25,039 16,314 (g) 518,596 61,136 (14,229)(h) 524,150 565,503 Basic Earnings per share $ 0.98 $ 2.42 $ 1.02 $ 0.99 $ 1.01 $ 1.04 Earnings per share assuming dilution $ 0.96 $ 2.22 $ 1.00 $ 0.93 $ 0.99 $ 1.02 Weighted average shares outstanding assuming dilution 484,126 27,197 17,721 (g) 529,044 64,675 (15,052)(h) 533,749 578,667
(g) Represents 25,039,000 weighted average shares outstanding and 27,197,000 weighted average shared outstanding assuming dilution of Sofamor Danek common stock converted to 41,353,000 weighted average shares outstanding and 44,918,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 1.65159 exchange ratio. (h) Represents 61,136,000 weighted average shares outstanding and 64,675,000 weighted average shared outstanding assuming dilution of AVE common stock converted to 46,907,000 weighted average shares outstanding and 49,623,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 0.76726 exchange ratio. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Fiscal Year Ended April 30, 1997 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- Net sales $2,609,361 $ 260,066 $2,869,427 $ 75,123 $2,684,484 $2,944,550 Costs and expenses: Cost of products sold 692,964 46,759 739,723 13,991 706,955 753,714 Research and development expense 299,662 17,018 316,680 8,792 308,454 325,472 Selling, general, and administrative expense 807,852 125,109 932,961 18,593 826,445 951,554 Non-recurring charges - 50,000 50,000 - - 50,000 Interest expense 11,254 4,143 15,397 - 11,254 15,397 Interest income (34,047) - (34,047) (4,255) (38,302) (38,302) ------------------------------------------------------------------------------------------- Total costs and expenses 1,777,685 243,029 2,020,714 37,121 1,814,806 2,057,835 ------------------------------------------------------------------------------------------- Earnings before income taxes 831,676 17,037 848,713 38,002 869,678 886,715 Provision for income taxes 287,092 3,181 290,273 13,286 300,378 303,559 ------------------------------------------------------------------------------------------- Net earnings $ 544,584 $ 13,856 $ 558,440 $ 24,716 $ 569,300 $ 583,156 =========================================================================================== Weighted average shares outstanding 485,506 24,384 15,888 (i) 525,778 57,647 (13,417) (j) 529,736 570,008 Basic Earnings per share $ 1.12 $ 0.57 $ 1.06 $ 0.43 $ 1.07 $ 1.02 Earnings per share assuming dilution $ 1.10 $ 0.53 $ 1.04 $ 0.39 $ 1.05 $ 1.00 Weighted average shares outstanding assuming dilution 494,019 26,137 17,031 (i) 537,187 62,905 (14,641) (j) 542,283 585,451
(i) Represents 24,384,000 weighted average shares outstanding and 26,137,000 weighted average shared outstanding assuming dilution of Sofamor Danek common stock converted to 40,272,000 weighted average shares outstanding and 43,168,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 1.65159 exchange ratio. (j) Represents 57,647,000 weighted average shares outstanding and 62,905,000 weighted average shared outstanding assuming dilution of AVE common stock converted to 44,230,000 weighted average shares outstanding and 48,264,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 0.76726 exchange ratio. UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS For the Fiscal Year Ended April 30, 1996 (in thousands)
Pro Forma Pro Forma Pro Forma Medtronic, Medtronic and Medtronic Sofamor Sofamor Pro Forma Sofamor Danek Pro Forma and AVE Danek and AVE Medtronic Danek Adjustments Combined AVE Adjustments Combined Combined -------------------------------------------------------------------------------------------- Net sales $ 2,326,836 $ 199,077 $2,525,913 $ 44,128 $2,370,964 $2,570,041 Costs and expenses: Cost of products sold 664,531 40,906 705,437 9,726 674,257 715,163 Research and development expense 263,933 14,264 278,197 5,379 269,312 283,576 Selling, general, and administrative expense 747,245 93,166 840,411 6,545 753,790 846,956 Non-recurring charges - - - - - - Interest expense 10,531 3,400 13,931 - 10,531 13,931 Interest income (31,124) - (31,124) (502) (31,626) (31,626) ----------------------------------------------------------------------------------------- Total costs and expenses 1,655,116 151,736 1,806,852 21,148 1,676,264 1,828,000 ----------------------------------------------------------------------------------------- Earnings before income taxes 671,720 47,341 719,061 22,980 694,700 742,041 Provision for income taxes 235,582 10,677 246,259 7,762 243,344 254,021 ----------------------------------------------------------------------------------------- Net earnings $ 436,138 $ 36,664 $ 472,802 $ 15,218 $ 451,356 $ 488,020 ========================================================================================= Weighted average shares outstanding 482,923 23,934 15,595 (k) 522,452 42,184 (9,818) (l) 515,289 554,818 Basic Earnings per share $ 0.90 $ 1.53 $ 0.90 $ 0.36 $ 0.88 $ 0.88 Earnings per share assuming dilution $ 0.89 $ 1.44 $ 0.88 $ 0.28 $ 0.84 $ 0.85 Weighted average shares outstanding assuming dilution 492,209 25,533 16,637 (k) 534,379 54,773 (12,748) (l) 534,234 576,404
(k) Represents 23,934,000 weighted average shares outstanding and 25,533,000 weighted average shared outstanding assuming dilution of Sofamor Danek common stock converted to 39,529,000 weighted average shares outstanding and 42,170,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 1.65159 exchange ratio. (l) Represents 42,184,000 weighted average shares outstanding and 54,773,000 weighted average shared outstanding assuming dilution of AVE common stock converted to 32,366,000 weighted average shares outstanding and 42,025,000 weighted average shares outstanding assuming dilution of Medtronic common stock using the 0.76726 exchange ratio. NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS NOTE 1 The unaudited pro forma financial statements give effect to the mergers of Medtronic with each of AVE and Sofamor Danek Group, Inc. (Sofamor Danek) using the pooling of interests method of accounting. The unaudited pro forma condensed combined balance sheets give effect to these transactions as if they had occurred on October 30, 1998. The unaudited pro forma condensed combined statements of operations give effect to these transactions as if they had occurred as of May 1, 1995, the beginning of the earliest period presented. The pro forma financial statements are presented for illustrative purposes only and therefore are not necessarily indicative of the operating results or financial position that might have been achieved had the transactions occurred as of an earlier date, nor are they necessarily indicative of operating results or financial position that may occur in the future. These pro forma financial statements should be read in conjunction with the historical consolidated financial statements and notes thereto of Medtronic and AVE incorporated by reference herein. Additional information on Sofamor Danek may be obtained through review of Sofamor Danek's public filings with the Securities and Exchange Commission. NOTE 2 The unaudited pro forma condensed combined balance sheets reflect Medtronic's unaudited consolidated balance sheet as of October 30, 1998 combined with AVE's and Sofamor Danek's unaudited consolidated balance sheets as of September 30, 1998. NOTE 3 The unaudited pro forma condensed combined statements of operations reflect Medtronic's unaudited consolidated statements of operations for the six months ended October 30, 1998 and October 31, 1997 and audited statements of operations for the fiscal years ended years ended April 30, 1998, 1997 and 1996 combined with AVE's and Sofamor Danek's unaudited consolidated statements of operations for the six months ended September 30, 1998 and 1997 and 12 months ended March 31, 1998, 1997 and 1996, respectively, on a pooling of interests basis. NOTE 4 The unaudited pro forma condensed combined financial statements do not give effect to AVE's acquisition of the Bard Cath Lab business which was consummated on October 1, 1998. The Bard Cath Lab acquisition has not been included in the unaudited pro forma condensed combined financial statements because it does not constitute a significant business combination and disclosure is not deemed to be material. The Bard Cath Lab business includes a broad range of catheter-based technologies including PTCA balloon catheters, guidewires, guide catheters, coronary diagnostic catheters and guidewires, introducers and vessel closure devices, coronary stents, and various other components and accessories. AVE's acquisition of the Bard Cath Lab business was accounted for as a purchase business combination. The purchase price of $550 million (which is subject to adjustment) was allocated to tangible net assets of $54 million, in process research and development of $95 million, intangible assets of $73 million and goodwill of $328 million. The in-process research and development charge of $95 million was recorded by AVE in October 1998. On December 14, 1998, AVE acquired World Medical Manufacturing Corporation (World Medical), a manufacturer of medical devices for the treatment of abdominal aortic aneurysms, for approximately $71 million in AVE common stock. The World Medical acquisition has not been included in the unaudited pro forma condensed combined financial statements because it does not constitute a significant business combination and disclosure is not deemed to be material. In connection with the purchase business combination, AVE recorded an in-process research and development charge of approximately $46 million. NOTE 5 In addition to professional fees and change-in-control payments in connection with the AVE transaction, Medtronic expects that there will be additional costs incurred related to closing duplicate facilities and eliminating duplicate administrative functions. NOTE 6 The accounting policies of the separate companies are currently being studied from a conformity perspective. The impact of conforming accounting principles, if any, is not expected to be material. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 EXHIBIT INDEX to FORM 8-K MEDTRONIC, INC. Exhibit Number Exhibit Description 2 Agreement and Plan of Merger dated November 29, 1998, by and among Medtronic, Inc., AVE Group, Inc. and MAV Merger Corp.--incorporated by reference to Exhibit 2 to the Registrant's Registration Statement on Form S-4, Reg. No. 333-69271. 99 Press release dated January 28, 1999. EX-99 2 PRESS RELEASE Contacts: Medtronic Dale Beumer Investor Relations 612/514-3038 Jessica Stoltenberg Public Relations 612/514-3333 F O R I M M E D I A T E R E L E A S E MEDTRONIC AND ARTERIAL VASCULAR ENGINEERING (AVE) COMPLETE MERGER MINNEAPOLIS, MN, and SANTA ROSA, CA, January 28, 1999 -- Medtronic, Inc. (NYSE: MDT), and Arterial Vascular Engineering, Inc. (AVE), (Nasdaq National Market: AVEI), announced today that shareholders of AVE have approved the merger of the two companies and that the transaction closed today. Under terms of the agreement, shareholders of AVE receive 0.76726 shares of Medtronic stock for each outstanding share of AVE common stock in a pooling of interests transaction. "Today marks the establishment of a powerful new organization known as Medtronic Vascular and dedicated to providing `best-in-class' products for physicians worldwide," said William W. George, Medtronic chairman and chief executive officer. "We have merged three strong product lines (AVE, Medtronic Vascular and the former USCI Division of C.R. Bard) into one, with market leading products in every category. The combined salesforces will immediately offer one of the broadest and most technologically advanced lines of stents, catheters and related products in the world." "We fully expect the result of these efforts to be a leadership position in the interventional vascular arena. A strong vascular organization, joined with Medtronic's established market leading positions in Cardiac Rhythm Management and Cardiac Surgery, will make Medtronic's cardiovascular products and services the clear choice for our customers." George announced that Scott Solano, formerly chair and chief executive of AVE, will become president of the new organization. Solano will report to Art Collins, Medtronic president and chief operating officer. AVE designs and manufactures minimally invasive solutions for the treatment of coronary artery and peripheral vascular disease and is the global technology leader in coronary stents. Its product offerings include coronary stents, balloon catheters, guidewires and guiding catheters. As previously noted, Medtronic will take one-time transaction-related and restructuring charges in its current quarter, which ends January 29, 1999. Medtronic, Inc., headquartered in Minneapolis, is the world's leading medical technology company specializing in implantable and interventional therapies. Its Internet address is www.medtronic.com. - 0 - Any statements made about the company's anticipated financial results and regulatory approvals are forward-looking statements subject to risks and uncertainties such as those described in the company's Annual Report on Form 10-K for the year ended April 30, 1998. Actual results may differ materially from anticipated results. -----END PRIVACY-ENHANCED MESSAGE-----