Exhibit 99.9
INVERNESS MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL INFORMATION
TABLE OF CONTENTS
PAGE
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Notes to unaudited pro forma combined condensed financial statements 3
Unaudited pro forma combined condensed statement of operations for the year
ended December 31, 2001 4
Notes to unaudited pro forma combined condensed statement of operations for
the year ended December 31, 2001 5
Unaudited pro forma combined condensed balance sheet as of December 31, 2001 6
Notes to unaudited pro forma combined condensed balance sheet as of
December 31, 2001 7
2
INVERNESS MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
On December 20, 2001, Inverness Medical Innovations, Inc. ("Innovations")
acquired the Unipath Division of Unilever Plc ("Unipath"). The aggregate
purchase price of Unipath was approximately $158,135,000, which consisted of
$149,807,000 in cash, $1,289,000 in costs to exit certain activities of Unipath,
primarily severance costs, $3,685,000 representing the assumption of the portion
of Unilever Plc's unfunded pension liability for the benefit of Unipath
employees and $3,354,000 in direct acquisition costs. On March 19, 2002,
Innovations acquired IVC Industries, Inc. ("IVC"). The aggregate purchase price
of IVC was approximately $27,254,000, which consisted of $5,619,000 in cash,
fully-vested options to purchase an aggregate of 115,744 shares of Innovations'
common stock with an aggregate fair value of $1,299,000, approximately
$1,613,000 in estimated costs to exit certain activities of IVC, primarily
severance costs, $17,359,000 in assumed debt and approximately $1,364,000 in
estimated direct acquisition costs. The acquisitions are accounted for as
purchases. Accordingly, the operating results of Unipath and IVC are included in
Innovations' financial results from the respective date of acquisitions. The
allocation of the Unipath purchase price to the fair value of the assets
acquired was based upon the results of an independent appraisal of the fair
value of the assets of Unipath. The allocation of the IVC purchase price to the
fair value of the assets acquired was based upon the tentative results of an
independent appraisal of the fair value of the assets of IVC. The unaudited pro
forma combined condensed financial statements combine (i) the historical
consolidated balance sheet of Innovations, which includes the balance sheet of
Unipath, and IVC as of December 31, 2001 as if the IVC acquisition was
consummated on December 31, 2001 and (ii) the historical statements of
operations for the year ended December 31, 2001 as if the acquisitions were
consummated on January 1, 2001. The pro forma information is not necessarily
indicative of either the results which would have actually been reported if the
acquisitions of Unipath and IVC occurred on January 1, 2001 or results which may
be reported in the future.
3
INVERNESS MEDICAL INNOVATIONS, INC AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
HISTORICAL PRO FORMA HISTORICAL PRO FORMA
------------------------- ----------------------------- ------------ -----------------------------
UNIPATH IVC COMBINED
INNOVATIONS(1) UNIPATH(1) ADJUSTMENTS SUBTOTAL IVC ADJUSTMENTS COMPANY
-------------- ------------ ------------ ------------- ------------- --------------- ------------
Net product sales $ 49,384,795 $ 90,900,728 $ - $140,285,523 $ 61,605,173(8) $ - $201,890,696
License revenue - 10,928,180 - 10,928,180 - - 10,928,180
------------ ------------ ----------- ------------- ------------ ----------- ------------
Net revenue 49,384,795 101,828,908 - 151,213,703 61,605,173 - 212,818,876
Cost of sales 25,821,331 31,378,453 - 57,199,784 54,698,709 - 111,898,493
------------ ------------ ----------- ------------- ------------ ----------- ------------
Gross profit 23,563,464 70,450,455 - 94,013,919 6,906,464 - 100,920,383
Operating
expenses:
Purchased
in-process
research and
development 6,980,221 - (6,980,221)(2) - - - -
Research and
development 1,809,508 10,255,464 - 12,064,972 - - 12,064,972
Selling and
marketing 10,975,572 35,602,155 - 46,577,727 8,018,880 - 54,596,607
General and
administrative 11,814,342 16,641,246 2,815,884 (3) 31,784,657 4,966,648 - 36,751,305
211,000 (4)
302,185 (5)
Stock-based
compensation 10,440,588 - - 10,440,588 - - 10,440,588
------------ ------------ ----------- ------------ ------------ ----------- ------------
Total
operating
expenses 42,020,231 62,498,865 (3,651,152) 100,867,944 12,985,528 - 113,853,472
Operating (loss)
income (18,456,767) 7,951,590 3,651,152 (6,854,025) (6,079,064) - (12,933,089)
Interest expense,
including
amortization of
original issue
discount and
beneficial
conversion feature (1,855,353) (120,689) (7,003,903)(6) (8,979,945) (2,498,217) 233,708(9) (11,244,454)
Interest income and
other (expense)
income, net (2,015,723) 247,275 - (1,768,448) 4,523,093 - 2,754,645
------------ ------------ ----------- ------------ ------------ ----------- ------------
(Loss) income
from
continuing
operations
before income
taxes (22,327,843) 8,078,176 (3,352,751) (17,602,418) (4,054,188) 233,708 (21,422,898)
Income tax
provision
(benefit) 2,134,359 4,898,373 - 7,032,732 (1,331,564) - 5,701,168
------------ ------------ ----------- ------------ ------------ ----------- ------------
(Loss) income
from continuing
operations (24,462,202) 3,179,803 (3,352,751) (24,635,150) (2,722,624) 233,708 (27,124,066)
Income from
discontinued
operations, net
of taxes 57,895 - - 57,895 - - 57,895
------------ ------------ ----------- ------------ ------------ ----------- ------------
(Loss) income before
extraordinary
item (24,404,307) 3,179,803 (3,352,751) (24,577,255) (2,722,624) 233,708 (27,066,171)
Extraordinary loss
on early
extinguishment
of debt (326,580) - - (326,580) - - (326,580)
------------ ------------ ----------- ------------ ------------ ----------- ------------
Net (loss) income $(24,730,887) $ 3,179,803 $(3,352,751) $(24,903,835) $ (2,722,624) $ 233,708 $ (27,392,751)
============= ============ ============ ============ ============ =========== =============
Loss per common
share - basic
and diluted:
(Loss) income
from continuting
operations $ (3.84) $ 10.49 $ (3.87) $ (1.27) $ (4.26)
============ ============ =========== ============ =============
Net loss $ (3.88) $ 10.49 $ (3.91) $ (1.27) $ (4.30)
============ ============ =========== ============ =============
Weighted average
shares - basic
and diluted 6,368,000 303,000 (303,000)(7) 6,368,000 2,137,000 (2,137,000)(7) 6,368,000
============= ============ ============ ============ ============ =========== =============
4
INVERNESS MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
The accompanying unaudited pro forma condensed statement of operations has been
prepared by combining the historical results of Innovations, Unipath and IVC for
the year ended December 31, 2001 and reflects the following pro forma
adjustments:
(1) The historical statement of operations of Innovations includes Unipath's
operating results since the acquisition date of December 20, 2001. The
historical statement of operations of Unipath represents Unipath's
operating results for the period from January 1, 2001 through December 19,
2001.
(2) Represents the reversal of the nonrecurring charge to operations for the
fair value of an in-process research and development project in accordance
with Securities and Exchange Commission regulations.
(3) Reflects the amortization expense on acquired intangible assets based on
their estimated useful lives ranging from 7 to 13 years. No amortization
was recorded on acquired goodwill and other intangible assets with
indefinite lives in accordance with Statement of Financial Accounting
Standards No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS.
(4) Represents additional rent expense recorded, on a straight-line basis, due
to remeasurement of the acquired lease in accordance with Financial
Accounting Standards Board Interpretation No. 21, ACCOUNTING FOR LEASES IN
A BUSINESS COMBINATION.
(5) Represents amortization of deferred financing costs associated with the
financing obtained for the acquisition.
(6) Represents interest expense, associated with the financing of the
acquisition, including amortization of original issue discount and
beneficial conversion feature.
(7) Represents the elimination of the common shares of the acquired entities.
(8) IVC's historical net product sales of $61.6 million for 2001 includes a
reclassification of certain sales incentive expenditure in the amount of
approximately $7.8 million from selling and marketing expenses to net
product sales to conform to Innovations' early adoption of Emerging
Issues Task Force Issue No. 01-09, ACCOUNTING FOR CONSIDERATION GIVEN BY
A VENDOR TO A CUSTOMER (INCLUDING A RESELLER OF THE VENDOR'S PRODUCT).
(9) Represents adjustment to interest expense as a result of an amendment to
the IVC credit facility and a prepayment of $1.5 million upon the
acquisition.
5
INVERNESS MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 2001
(UNAUDITED)
HISTORICAL PRO FORMA
----------------------------- ----------------------------------
IVC COMBINED
INNOVATIONS(1) IVC ADJUSTMENTS COMPANY
---------------- ----------- ---------------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 52,023,531 $ 790,960 $ (5,619,493)(2) $ 45,694,998
(1,500,000)(3)
Accounts receivable 21,661,185 10,198,375 - 31,859,560
Inventories 14,781,990 12,844,927 - 27,626,917
Deferred income taxes 1,466,786 3,831,825 (3,831,825)(4) 1,466,786
Prepaid expenses and other current assets 4,938,373 1,365,032 - 6,303,405
------------ ----------- ------------ ------------
Total current assets 94,871,865 29,031,119 (10,951,318) 112,951,666
PROPERTY, PLANT AND EQUIPMENT, NET 20,526,228 17,004,556 1,843,061 (5) 39,373,845
GOODWILL, TRADEMARKS AND OTHER INTANGIBLE
ASSETS, NET 160,765,613 64,617 - 160,830,230
DEFERRED FINANCING COSTS AND OTHER ASSETS, NET 2,407,134 1,024,671 (77,767)(6) 3,354,038
------------ ----------- ------------ ------------
$278,570,840 $47,124,963 $ (9,186,024) $316,509,779
============ =========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 20,819,383 $ 2,345,589 $ (1,500,000)(3) $ 21,664,972
Accounts payable 10,264,023 8,815,249 - 19,079,272
Accrued expenses and other current liabilities 42,766,464 4,100,732 3,152,170 (7) 50,019,366
Current portion of capital lease obligation - 294,006 - 294,006
Current portion of deferred gain on building
sale - 119,112 (119,112)(8) -
------------ ----------- ------------ ------------
Total current liabilities 73,849,870 15,674,688 1,533,058 91,057,616
LONG-TERM LIABILITIES:
Deferred tax liability 2,044,019 - - 2,044,019
Other long-term liabilities 3,863,550 - - 3,863,550
Capital lease obligation, net of current portion - 2,497,387 - 2,497,387
Deferred gain on building sale, net of current
portion - 724,611 (724,611)(8) -
Long-term debt, net of current portion 57,304,834 16,935,132 - 74,239,966
------------ ----------- ------------ ------------
Total long-term liabilities 63,212,403 20,157,130 (724,611) 82,644,922
------------ ----------- ------------ ------------
REDEEMABLE CONVERTIBLE PREFERRED STOCK 51,894,435 - - 51,894,435
------------ ----------- ------------ ------------
STOCKHOLDERS' EQUITY:
Common stock 8,682 179,819 (179,819)(9) 8,682
Additional paid-in capital 147,410,812 11,699,262 (11,699,262)(9) 148,709,486
1,298,674 (10)
Notes receivable from stockholders (14,691,097) - - (14,691,097)
Deferred compensation (10,144,937) - - (10,144,937)
Accumulated deficit (34,636,572) (189,977) 189,977 (9) (34,636,572)
Accumulated other comprehensive income (loss) 1,667,244 (395,959) 395,959 (9) 1,667,244
------------ ----------- ------------ ------------
Total stockholders' equity 89,614,132 11,293,145 (9,994,471) 90,912,806
------------ ----------- ------------ ------------
Total liabilities and stockholders' equity $278,570,840 $47,124,963 $ (9,186,024) $316,509,779
============ =========== ============ ============
6
INVERNESS MEDICAL INNOVATIONS, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 2001
(UNAUDITED)
The accompanying unaudited pro forma condensed balance sheet has been prepared
by combining the historical balance sheet of Innovations, which includes
Unipath, and IVC as of December 31, 2001 and reflects the following pro forma
adjustments:
(1) The historical balance sheet of Innovations as of December 31, 2001
includes the balance sheet of Unipath.
(2) Represents cash paid to IVC stockholders at $2.50 per IVC common share.
(3) Represents a prepayment of a portion of IVC's debt required as part of the
acquisition.
(4) Represents the write-off of the deferred tax assets of IVC that are deemed
to have no future benefits to the combined company as a result of the
acquisition.
(5) Represents the write-up of property and plant to fair market value in
accordance with purchase accounting.
(6) Represents deferred financing costs (approximately $175,000) associated
with an amendment to IVC's financing arrangement as a result of the
acquisition, less a write-off of IVC's existing unamortized deferred
financing costs (approximately $253,000) in connection with such amendment.
(7) Represents accruals for the deferred financing costs (approximately
$175,000), as discussed above, estimated costs (approximately $1,613,000)
to exit certain of IVC's activities, primarily severance costs, and direct
acquisition costs (approximately $1,364,000).
(8) Represents the write-off of IVC's deferred gain on sale of building in a
sale-leaseback transaction as a result of purchase accounting.
(9) Represents the elimination of the IVC equity accounts.
(10) Represents the fair value of fully-vested stock options issued and assumed
in connection with the acquisition of IVC.
7