Surmodics (SRDX) 8-K/A Financial Statements and Exhibits

Exhibit 99.4

SURMODICS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

     The following unaudited pro forma combined condensed financial statements relate to the acquisition (the “Acquisition”) by SurModics, Inc. (“SurModics”) of all of the issued and outstanding shares of capital stock of Brookwood Pharmaceuticals, Inc. (“Brookwood”) for approximately $40 million in cash at closing (subject to adjustment based on Brookwood’s working capital as of closing), with the potential for up to an additional $22 million in future cash payments subject to the achievement by Brookwood of certain revenue and project milestones.

     The following unaudited pro forma combined condensed balance sheet gives effect to the Acquisition as if it was completed on June 30, 2007 and combines the SurModics June 30, 2007 unaudited consolidated balance sheet with the Brookwood June 30, 2007 unaudited consolidated balance sheet. The following unaudited pro forma combined condensed income statement for the year ended September 30, 2006 gives effect to the Acquisition as if it was completed on October 1, 2005. The following unaudited pro forma combined condensed income statement for the nine months ended June 30, 2007 gives effect to the Acquisition as if it was completed on October 1, 2006.

     SurModics and Brookwood have different fiscal year ends. The unaudited pro forma combined condensed income statement for the year ended September 30, 2006 combines SurModics’ historical consolidated income statement for the year ended September 30, 2006 with Brookwood’s historical consolidated income statement for the year ended December 31, 2006. The unaudited pro forma combined condensed income statement for the nine months ended June 30, 2007 combines SurModics’ historical consolidated income statement for the nine months ended June 30, 2007 with Brookwood’s historical consolidated income statement for the six months ended June 30, 2007 and with Brookwood’s historical consolidated income statement for the three months ended December 31, 2006.

     As a result, Brookwood’s historical results of operations for the three months ended December 31, 2006 are included in the unaudited pro forma combined condensed income statements for both the year ended September 30, 2006 and the nine months ended June 30, 2007. Brookwood’s historical financial results for the three months ended December 31, 2006, which are included in both of these periods, are as follows (in thousands):

Revenues	$	3,182
Net loss	$	(8	)

     The unaudited pro forma combined condensed financial statements are presented for informational purposes only and do not purport to represent what SurModics’ financial position or results of operations would have been had the Acquisition occurred as of the dates indicated, nor is it indicative of SurModics’ future financial position or results of operations for any period.

     For periods subsequent to the closing of the Acquisition, SurModics will account for the Acquistion under the purchase method of accounting. A final determination of the allocation of purchase price to the assets acquired and liabilities assumed based on their respective fair values has not yet been completed. Accordingly, the purchase accounting adjustments made in connection with the development of the pro forma combined condensed financial information are preliminary and have been made solely for purposes of developing such pro forma combined condensed financial statements. The actual financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein.

     The unaudited pro forma combined condensed financial statements should be read in conjunction with the accompanying notes and assumptions and the audited consolidated financial statements and related notes thereto included in SurModics’ Annual Report on Form 10-K for the year ended September 30, 2006 and the unaudited consolidated financial statements in SurModics’ Quarterly Report on Form 10-Q for the nine months ended June 30, 2007.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF JUNE 30, 2007
(IN THOUSANDS, EXCEPT SHARE DATA)

	SurModics		Brookwood		Pro Forma					Combined
	Historical		Historical		Adjustments			Notes		Pro Forma
ASSETS
Current Assets
Cash and cash equivalents	$	3,960	$	4,421						$	8,381
Short-term investments		42,343				(42,266	)		(a)		77
Accounts receivable, net		30,460		3,458							33,918
Inventories		1,259		446							1,705
Deferred tax asset		496									496
Income tax receivable		483									483
Prepaids and other		1,754		214							1,968
Total current assets		80,755		8,539		(42,266	)				47,028
Property and equipment, net		11,447		5,427		1,969			(c)		18,843
Long-term investments		47,785									47,785
Deferred tax asset		3,268				(3,268	)		(a)		—
Goodwill		—		—		10,381			(a)		10,381
Other assets, net		21,603		1,273		8,029			(a)		30,905
Total Assets	$	164,858	$	15,239	$	(25,155	)			$	154,942
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	1,013	$	722						$	1,735
Accrued liabilities		1,470		280							1,750
Deferred revenue		3,654		2,770							6,424
Other current liabilities		1,000		297							1,297
Total current liabilities		7,137		4,069		—					11,206
Deferred revenue, less current portion		20,175									20,175
Other long-term liabilities		—		247		968			(a)(c)		1,215
Total Liabilities		27,312		4,316		968					32,596
Stockholders’ Equity
Preferred stock- $.01 par value		—		10		(10	)		(b)		—
Common stock- $.05 par value		899									899
Additional paid-in capital		68,728		8,990		(8,990	)		(b)		68,728
Accumulated other comprehensive income		2,393									2,393
Retained earnings		65,526		1,923		(17,123	)		(a) (b)		50,326
Total Stockholders’ Equity		137,546		10,923		(26,123	)				122,346
Total Liabilities and Stockholders’ Equity	$	164,858	$	15,239	$	(25,155	)			$	154,942

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
YEAR ENDED SEPTEMBER 30, 2006
(IN THOUSANDS, EXCEPT PER SHARE DATA)

	SurModics			Brookwood			Pro Forma					Combined
	Historical			Historical			Adjustments			Notes		Pro Forma
Revenue
Royalties and license fees	$	53,008		$	49		$					$	53,057
Product sales		11,172			2,031								13,203
Research and development		5,704			10,641								16,345
Total revenue		69,884			12,721			—					82,605
Operating costs and expenses
Product		3,399			711								4,110
Research and development		20,391			7,608			1,258			(d) (e) (g)		29,257
Sales and marketing		1,424			524								1,948
General and administrative		8,507			2,422			293			(e) (g)		11,222
Total operating costs and expenses		33,721			11,265			1,551					46,537
Income from operations		36,163			1,456			(1,551	)				36,068
Other income
Investment income		4,210			81			(1,881	)		(f)		2,410
Impairment loss		(4,651	)										(4,651	)
Other loss		(157	)										(157	)
Other income (loss)		(598	)		81			(1,881	)				(2,398	)
Income before income taxes		35,565			1,537			(3,432	)				33,670
Income tax (provision) benefit		(15,231	)		(511	)		2,863			(h)		(12,879	)
Net income	$	20,334		$	1,026		$	(569	)			$	20,791
Basic net income per share	$	1.10										$	1.12
Diluted net income per share	$	1.09										$	1.11
Weighted average shares outstanding
Basic		18,527											18,527
Dilutive effect of outstanding stock options		192						58			(g)		250
Diluted		18,719											18,777

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
NINE MONTHS ENDED JUNE 30, 2007
(IN THOUSANDS, EXCEPT PER SHARE DATA)

	SurModics			Brookwood			Pro Forma					Combined
	Historical			Historical			Adjustments			Notes		Pro Forma
Revenue
Royalties and license fees	$	39,664		$	26		$					$	39,690
Product sales		9,054			2,060								11,114
Research and development		3,147			9,585								12,732
Total revenue		51,865			11,671			—					63,536
Operating costs and expenses
Product		3,396			485								3,881
Research and development		17,124			6,760			943			(d) (e) (g)		24,827
Sales and marketing		989			399								1,388
General and administrative		6,644			2,356			220			(e) (g)		9,220
Total operating costs and expenses		28,153			10,000			1,163					39,316
Income from operations		23,712			1,671			(1,163	)				24,220
Other income
Investment income		3,731			122			(1,411	)		(f)		2,442
Impairment loss		—											—
Other loss		(29	)										(29	)
Other income (loss)		3,702			122			(1,411	)				2,413
Income before income taxes		27,414			1,793			(2,574	)				26,633
Income tax (provision) benefit		(10,161	)		(750	)		1,041			(h)		(9,870	)
Net income	$	17,253		$	1,533		$	(1,533	)			$	16,763
Basic net income per share	$	0.95										$	0.93
Diluted net income per share	$	0.95										$	0.92
Weighted average shares outstanding
Basic		18,116											18,116
Dilutive effect of outstanding stock options		133						58			(g)		191
Diluted		18,249											18,307

NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION

(a)	The total cost of $42.3 million is expected to consist of $40.0 million in consideration and $2.3 million in transaction costs.
	SurModics performed a preliminary appraisal of the tangible and intangible assets acquired in the acquisition of Brookwood Pharmaceuticals, Inc. The following values have been allocated to the intangible assets based upon their preliminary fair values as determined by the appraisal: $6.4 million to technology and $2.9 to customer relationships. These are expected to be amortized on a straight-line basis over periods ranging from 11 to 18 years. In addition, $15.2 million was identified as in-process research and development costs which are expensed on the acquisition date. This has been reflected within the pro forma adjustment as a reduction in retained earnings. The fair value of property plant and equipment exceeded the historical book value by $2.0 million. Deferred tax liabilities of $4.3 million have been recorded to reflect the basis differences between book and tax in connection with the purchase price allocation.
	Pre-existing deferred tax assets of $3.3 million have been reclassified to now be included as a component of the net deferred tax liability. The excess of the total purchase price over the preliminary fair values of all identifiable assets acquired, net of liabilities, amounted to approximately $10.4 million.
(b)	To eliminate the historical equity of Brookwood Pharmaceuticals, Inc.
(c)	Adjustments represent the elimination of pre-existing intangible assets of $1.3 million and related deferred tax assets thereon of $74,000 for which no value was assigned in the purchase price allocation.
(d)	To record amortization of acquired intangibles associated with the acquisition. The definite lived intangible assets of approximately $9.3 million are expected to be amortized on a straight-line basis over periods ranging from 11 to 18 years.
(e)	To record incremental depreciation resulting from the increase in fair value of the property acquired.
(f)	Adjustment represents interest income assumed to be foregone at a weighted-average of 4.45% due to the cash being paid from short term investments.
(g)	As part of consideration for the acquisition of Brookwood Pharmaceuticals, Inc., SurModics awarded employees of Brookwood 58,027 shares of restricted stock. Compensation expense related to the issuance of these restricted shares is reflected as a pro forma adjustment for year ended September 30, 2006 and nine months ended June 30, 2007. Total compensation expense was calculated utilizing an assumed forfeiture rate and the July 31, 2007 closing stock price.
(h)	Adjustments to income tax provision relating to adjustments (d), (e), (f) and (g) assuming a blended U.S. Federal and state income tax rate of 38% for the year ended September 30, 2006 and 37% for nine months ended June 30, 2007.