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EXHIBIT 99.2
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ITEM 7(b)
UNAUDITED PRO FORMA CONDENSED COMBINED SELECTED FINANCIAL INFORMATION
The unaudited pro forma condensed combined financial information is
provided for informational purposes only and does not purport to be indicative
of the future results or financial position of Radiance Medical Systems, Inc.
(formerly Cardiovascular Dynamics, Inc.) or what the results of operation or
financial position would have been had the acquisition been effected on the date
indicated. The information should be read in conjunction with the audited
financial statements of the Registrant and CVD/RMS Acquisition Corp. ("RMS
Acquisition") (formerly Radiance Medical Systems, Inc.) incorporated by
reference in this document.
The unaudited pro forma condensed combined financial information of
Registrant, RMS Acquisition and Clinitec GmbH ("Clinitec") set forth below gives
effect to the acquisitions of the former Radiance (now RMS Acquisition) and
Clinitec under the purchase accounting method, as if the acquisition had
occurred as of August 15, 1997 and January 1, 1998 for the (former) Radiance and
as of January 1, 1997 for Clinitec for the pro forma condensed combined
statements of operations for the periods ended December 31, 1997 and September
30, 1998, respectively, and as of September 30, 1998, for the pro forma
condensed combined balance sheet.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
RMS
REGISTRANT(a) ACQUISITION CLINITEC PRO FORMA
ACTUAL(b) ACTUAL(c) ACTUAL(d) ADJUSTMENTS PRO FORMA
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(In thousands)
CONSOLIDATED STATEMENT OF OPERATIONS
DATE:
Revenue:
Sales............................... $ 11,332 $ -- $ 301 $ -- $ 11,633
Costs and expenses:...................
Cost of sales....................... 6,418 -- 560 -- 6,978
Research and development............ 7,041 132 -- 316 (1) 7,489
Marketing and sales................. 6,691 -- 442 -- 7,133
General and administrative.......... 2,179 18 -- -- 2,197
-------- -------- -------- -------- --------
Total operating costs and expenses.... 22,329 150 1,002 316 23,797
-------- -------- -------- -------- --------
Loss from operations.................. (10,997) (150) (701) (316) (12,164)
Other income.......................... 2,225 19 -- (23)(2) 2,221
-------- -------- -------- -------- --------
Net loss.............................. $ (8,772) $ (131) $ (701) $ (339) $ (9,943)
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Basic and diluted net loss per share(3) $ (0.96) $ (1.00)
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Shares used in computing basic and
diluted net loss per share(3)....... 9,118 9,957
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(a) Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.).
(b) Although not reflected in this pro forma statement, at the date of the
merger, $3,842 will be expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc., a development stage company, which
began operations in August of 1997.
(d) On July 29, 1997, Registrant acquired all of the Common Stock of its
independent distributor in Germany, Clinitec. In order to present pro forma
operating results as if Clinitec and Registrant's operations were combined
at the beginning of the year ended December 31, 1997, the operating results
for the seven months before the acquisition date are included.
(1) To reflect amortization of developed technology and identified intangible
assets using lives of 3 to 7 years.
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(2) To reflect reduction of interest income from cash portion of acquisition
consideration of $692 and acquisition costs of $400 at an average rate of
5.5% per annum.
(3) To reflect an increase in the weighted average shares outstanding as 91% of
acquisition consideration will be paid using Registrant common stock at
$3.33 and $3.43 per share based upon the election of the former
(pre-acquisition) Radiance stockholders to convert their shares at either
the average signing price or average closing price of Registrant common
stock:
9,118 Registrant shares used in computing basic and diluted net loss per share.
839 Shares to former (pre-acquisition) RMS shareholders, assuming an August, 1997 acquisition date.
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9,957 Pro forma shares used in computing pro forma basic and diluted net loss per share.
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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
RMS
REGISTRANT(a) ACQUISITION PRO FORMA
ACTUAL(b) ACTUAL(c) ADJUSTMENTS PRO FORMA
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(In thousands)
CONSOLIDATED STATEMENT OF OPERATIONS
DATE:
Revenue:
Sales............................. $ 7,031 $ -- $ -- $ 7,031
License fee and other............. 1,605 -- -- 1,605
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Total revenue....................... 8,636 -- -- 8,636
Costs and expenses:
Cost of sales..................... 4,339 -- -- 4,339
Research and development.......... 5,038 1,025 491 (1)(2) 6,554
Marketing and sales............... 3,801 -- -- 3,801
General and administrative........ 1,855 45 -- 1,900
Minority interest................. (68) -- 68 (2) --
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Total operating costs and expenses.. 14,965 1,070 559 16,594
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Loss from operations................ (6,329) (1,070) (559) (7,958)
Other income........................ 1,136 44 (45)(3) 1,135
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Net loss............................ $ (5,193) $ (1,026) $ (604) $(6,823)
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Basic and diluted net loss per
share(4).......................... $ (0.59) $ (0.62)
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Shares used in computing basic and
diluted net loss per share(4)..... 8,857 11,075
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(a) Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.).
(b) Although not reflected in this pro forma statement, at the date of the
merger, $3,842 will be expensed for in-process research and development.
(c) Formerly Radiance Medical Systems, Inc., a development stage company, which
began operations in August of 1997.
(1) To reflect amortization of developed technology and identified intangible
assets using lives of 3 to 7 years.
(2) To reverse entries to record to Registrant's share of RMS Acquisition
(former Radiance) operating results at September 10, 1998, which consisted
of $136 of research and development expenses and $68 in minority interests
share of losses.
(3) To reflect reduction of interest income from cash portion of acquisition
consideration of $692 and acquisition costs of $400 at an average rate of
5.5% per annum.
(4) To reflect an increase in the weighted average shares outstanding as 91% of
acquisition consideration will be paid using Registrant common stock at
$3.33 and $3.43 per share based upon the election of the former
(pre-acquisition) Radiance stockholders to convert their shares at either
the average signing price or average closing price, respectively, of
Registrant common stock:
8,857 Registrant shares used in computing basic and diluted net loss per share.
2,218 Shares to former (pre-acquisition) RMS shareholders, assuming an August, 1997 acquisition date.
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11,075 Pro forma shares used in computing pro forma basic and diluted net loss per share.
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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
REGISTRANT(a) PRO FORMA
ACTUAL(b) ADJUSTMENTS(1) PRO FORMA
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ASSETS:
Cash and cash equivalents....................... $ 3,627 $ -- $ 3,627
Marketable securities available-for-sale........ 23,301 (1,092)(1) 22,209
Other current assets............................ 5,161 -- 5,161
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Total current assets............................... 32,089 (1,092) 30,997
Property and equipment, net........................ 1,537 -- 1,537
Goodwill and other acquired intangibles, net....... 2,288 3,771 (1) 6,059
Other assets....................................... 378 -- 378
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Total assets............................... $ 36,292 $ 2,679 $ 38,971
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities................................ $ 3,532 $ -- $ 3,532
Minority interest.................................. 910 (910)(1) --
Stockholders' equity
Common stock.................................... 10 2 (1) 12
Additional paid-in capital...................... 60,679 7,429 (1) 68,108
Accumulated deficit............................. (25,014) (3,842)(1) (28,856)
Other stockholders' equity...................... (3,825) -- (3,825)
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Total stockholder's equity................. 31,850 3,589 35,439
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Total liabilities and stockholder's equity. $ 36,292 $ 2,679 $ 38,971
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(a) Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.).
(b) The accounts of RMS Acquisition (formerly Radiance) are included in the
consolidated balance sheet of Registrant at September 30, 1998.
(1) To reflect the total purchase price of $8,523 which will be paid 9% in cash,
or $692, and 91% by the issuance of 2,218,000 shares of Registrant Common
Stock valued at $7,431. Included in these amounts are shares of Registrant
Common Stock issuable for outstanding options for former (pre-acquisition)
Radiance Common Stock, which under the Merger Agreement fully vested upon
the closing of the transaction and were converted into options for
Registrant Common Stock. Lastly, Registrant expects to incur approximately
$400 of direct transaction costs that are also treated as part of the
purchase price.
The estimated total purchase price has been allocated as follows:
Book value of minority interest in the former (pre-acquisition) Radiance..... $ 910
Estimated fair value of developed technology and related intangible assets... 3,072
Estimated fair value of acquired in-process research and development......... 3,842
Covenant not to compete...................................................... 1,192
Reclassify amounts assigned to goodwill for previous purchases of
Former (pre-acquisition) Radiance Preferred Stock............................ (493)
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Estimated total purchase price............................................... $ 8,523
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