1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE RELATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
ENDOSONICS CORPORATION
AT
$11.00 NET PER SHARE
BY
JOMED ACQUISITION CORP.,
A WHOLLY OWNED SUBSIDIARY OF
JOMED N.V.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:01 A.M., NEW YORK
CITY TIME, ON TUESDAY, SEPTEMBER 19, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH THE AGREEMENT AND PLAN OF
MERGER, DATED AS OF AUGUST 5, 2000 (THE "MERGER AGREEMENT"), AMONG JOMED N.V.
("JOMED"), A CORPORATION ORGANIZED UNDER THE LAWS OF THE NETHERLANDS, JOMED
ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF JOMED (THE "PURCHASER"), AND
ENDOSONICS CORPORATION ("ENDOSONICS" OR THE "COMPANY"), AND IS CONDITIONED UPON,
AMONG OTHER THINGS, (1) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN
PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR
VALUE $0.001 PER SHARE OF THE COMPANY INCLUDING THE RELATED RIGHTS TO PURCHASE
PREFERRED STOCK (COLLECTIVELY, THE "SHARES") THAT, TOGETHER WITH THE SHARES OF
COMMON STOCK THEN OWNED BY JOMED AND/OR PURCHASER, REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OF COMMON STOCK OUTSTANDING ON A FULLY-DILUTED BASIS (2)
ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF
1976, AS AMENDED, AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN
TERMINATED, AND ALL CONSENTS AND APPROVALS FROM GOVERNMENTAL AUTHORITIES
PURSUANT TO NATIONAL ANTITRUST OR COMPETITION LAWS, WHICH ARE REQUIRED TO
COMPLETE THE TRANSACTION, HAVING BEEN OBTAINED, AND (3) THE SATISFACTION OF
CERTAIN OTHER CONDITIONS, INCLUDING, BUT NOT LIMITED TO, THE CLOSING PRICE OF
THE JOMED ORDINARY SHARES ON THE SWX SWISS EXCHANGE NOT BEING LESS THAN (I) 42
SWISS FRANCS OR (II) ONE-HALF OF THE CLOSING PRICE OF THE JOMED ORDINARY SHARES
ON THE SWX SWISS EXCHANGE ON THE FIRST TRADING DAY
(Continued on next page)
The Dealer Manager for the Offer is:
[CREDIT SUISSE/FIRST BOSTON LOGO]
August 21, 2000
2
(Continued from front cover)
FOLLOWING THE ANNOUNCEMENT OF THE OFFER AND THE MERGER (THE CLOSING PRICE OF THE
JOMED ORDINARY SHARES ON AUGUST 7, 2000, THE FIRST TRADING DAY AFTER THE
ANNOUNCEMENT OF THE OFFER AND THE MERGER, WAS 90 SWISS FRANCS PER SHARE) ON
EITHER OF (I) THE DATE OF THE EXECUTION OF THE PURCHASE AGREEMENT FOR THE JOMED
EQUITY OFFERING OR (II) ON THE FIRST TRADING DAY IMMEDIATELY PRIOR TO THE
CLOSING DATE OF THE PURCHASE AGREEMENT, AS SUCH DATE IS DEFINED IN THE PURCHASE
AGREEMENT. SEE SECTIONS 11 AND 15.
THE COMPANY'S BOARD OF DIRECTORS, AT A SPECIAL MEETING HELD ON AUGUST 5,
2000, UNANIMOUSLY (1) DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS;
(2) APPROVED AND DECLARED ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER; AND (3) RECOMMENDED
THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
THEREUNDER. ACCORDINGLY, THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU
ACCEPT THE OFFER AND TENDER ALL OF YOUR SHARES OF COMMON STOCK PURSUANT TO THE
OFFER.
IMPORTANT
Any stockholder of the Company wishing to tender Shares in the Offer must
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver the Letter of Transmittal and all other required documents to the
Depositary (as defined herein) together with certificates representing the
Shares tendered or follow the procedure for book-entry transfer set forth in
Section 3 or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder. A
stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person if such
stockholder wishes to tender such Shares.
Any stockholder of the Company who wishes to tender Shares and cannot
deliver certificates representing such Shares and all other required documents
to the Depositary on or prior to the Expiration Date (as defined herein) or who
cannot comply with the procedures for book-entry transfer on a timely basis may
tender such Shares pursuant to the guaranteed delivery procedure set forth in
Section 3.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery
and other related materials may be obtained from the Information Agent or the
Dealer Manager. Stockholders may also contact their broker, dealer, commercial
bank, trust company or other nominee for copies of these documents.
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TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET.......................................... 1
INTRODUCTION................................................ 5
THE TENDER OFFER............................................ 7
1. Terms of the Offer.................................... 7
2. Acceptance for Payment and Payment for Shares......... 8
3. Procedures for Accepting the Offer and Tendering
Shares................................................ 9
4. Withdrawal Rights..................................... 12
5. Certain United States Federal Income Tax
Consequences.......................................... 12
6. Price Range of Shares; Dividends...................... 13
7. Certain Information Concerning the Company............ 14
8. Certain Information Concerning JOMED and the
Purchaser............................................. 15
9. Source and Amount of Funds............................ 17
10. Background of the Offer; Past Contacts or Negotiations
with the Company...................................... 19
11. The Merger Agreement.................................. 24
12. Purpose of the Offer; Plans for the Company........... 37
13. Certain Effects of the Offer.......................... 38
14. Dividends and Distributions........................... 38
15. Certain Conditions of the Offer....................... 38
16. Certain Legal Matters; Regulatory Approvals........... 40
17. Fees and Expenses..................................... 42
18. Miscellaneous......................................... 42
SCHEDULE I -- Information Concerning Directors and Executive
Officers of JOMED and the Purchaser....................... I-1
ANNEX A -- Financial Statements of JOMED N.V................ F-1
ANNEX B -- Summary of Significant Differences Between
International Accounting Standards and U.S. Generally
Accepted Accounting Principles............................ B-1
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SUMMARY TERM SHEET
JOMED Acquisition Corp. is offering to purchase all of the outstanding
common stock of EndoSonics Corporation for $11.00 per share in cash. The
following are some of the questions you, as a stockholder of EndoSonics, may
have and answers to those questions. We urge you to read carefully the remainder
of this Offer to Purchase and the Letter of Transmittal because the information
in this summary term sheet is not complete. Additional important information is
contained in the remainder of this Offer to Purchase and the Letter of
Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is JOMED Acquisition Corp. We are a Delaware corporation formed
for the purpose of making a tender offer for all of the common stock of
EndoSonics and have carried on no activities other than in connection with the
merger agreement among JOMED N.V., EndoSonics and ourselves. We are a wholly
owned subsidiary of JOMED N.V., a corporation organized under the laws of The
Netherlands. See the "Introduction" and Section 1.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the issued and outstanding shares of
common stock of EndoSonics, including the related rights to purchase preferred
stock. See the "Introduction" and Section 1.
HOW MUCH ARE YOU OFFERING TO PAY? WHAT IS THE FORM OF PAYMENT? WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $11.00 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See "Introduction."
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
JOMED N.V., our parent company, will provide us with sufficient funds to
purchase all shares validly tendered and not withdrawn in the Offer and to
provide funding for the merger which is expected to follow the successful
completion of the tender offer. JOMED will use funds received from an offering
of JOMED's ordinary shares plus its existing resources and internally generated
funds, including short-term borrowing in the ordinary course of business to
finance the purchase. The tender offer is conditioned upon satisfaction of
certain conditions that are also conditions to JOMED's equity offering. See
Section 9.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender in the offer because the form of consideration consists solely
of cash. JOMED has arranged for $150,000,000 of our funding to come from the
equity offering with the remainder to come from JOMED's existing resources and
internally generated funds, including short-term borrowing in the ordinary
course of business. JOMED's ability to complete JOMED's equity offering is
subject to certain conditions. See Section 9.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:01 a.m., New York City time, on Tuesday,
September 19, 2000, to tender your shares in the offer, unless the offer is
extended. Further, if you cannot deliver everything that is required in order to
make a valid tender by that time, you may be able to use a guaranteed delivery
procedure, which is described later in this offer to purchase. See Sections 1
and 3.
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CAN THE TENDER OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
We have agreed in the merger agreement that, without the consent of
EndoSonics, we will have the right to extend the expiration date of the tender
offer (which will initially be 20 business days from the commencement date of
the tender offer):
- for up to five additional business days;
- from time to time thereafter if, at the scheduled or extended expiration
date of the tender offer, any of the conditions to the tender offer will
not have been satisfied or waived, until such conditions are satisfied or
waived;
- for any period required by any rule, regulation, interpretation or
position of the SEC or the staff thereof applicable to the tender offer
or any period required by applicable law; or
- for up to 10 additional business days, if, immediately prior to the
scheduled or extended expiration date of the tender offer, the shares of
EndoSonics common stock tendered and not withdrawn pursuant to the tender
offer constitute more than 80% and less than 90% of the outstanding
shares of EndoSonics common stock, notwithstanding that all conditions to
the tender offer are satisfied as of the expiration date of the tender
offer.
If any of the conditions to the tender offer is not satisfied or waived on
any scheduled or extended expiration date of the tender offer, we will extend
the tender offer, if the condition or conditions could reasonably be expected to
be satisfied, from time to time until such conditions are satisfied or waived,
provided that we will not be required to extend the tender offer beyond November
15, 2000.
See Section 1 of this offer to purchase for more details on our ability to
extend the tender offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the tender offer, we will inform ChaseMellon Shareholder
Services, L.L.C. (the depositary for the offer) of that fact and will make a
public announcement of the extension not later than 9:00 a.m., New York City
time, on the same day as the tender offer was scheduled to expire. See Section
1.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE TENDER OFFER?
- We are not obligated to purchase any shares that are validly tendered
unless the number of shares validly tendered and not properly withdrawn
before the expiration date of the tender offer represents at least a
number of shares of common stock, par value $0.001 per share of
EndoSonics, that, together with the shares of common stock of EndoSonics
then owned by JOMED and/or Purchaser, represents at least a majority of
the shares of common stock of EndoSonics outstanding on a fully-diluted
basis. We call this condition the "minimum condition." For purposes of
the tender offer, "on a fully diluted basis" means, as of any time, on a
basis that includes the number of shares of EndoSonics common stock that
are actually issued and outstanding plus the maximum number of such
shares that EndoSonics may be required to issue under stock options,
warrants and other rights or securities convertible into shares of
EndoSonics common stock, whether or not currently exercisable. See
Section 11.
- We are not obligated to purchase shares that are validly tendered if,
among other things, there is a material adverse change in the business,
assets, liabilities, financial condition, capitalization, operations or
results of operations of EndoSonics.
- We are not obligated to purchase shares that are validly tendered if,
among other things, the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act has not expired or been
terminated or if we have not obtained all consents and approvals from
governmental authorities pursuant to national antitrust or competition
laws that are required to complete the transaction.
- Many (but not all) of the conditions to the consummation of JOMED's
equity offering are also conditions of the tender offer. These conditions
are listed in Section 15 and are collectively called the
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"financing condition." One of those conditions is that we are not
obligated to purchase shares that are validly tendered if, among other
things, the closing price of JOMED's ordinary shares on the SWX Swiss
Exchange is less than (i) 42 Swiss Francs or (ii) one-half of the closing
price of JOMED's ordinary shares on the SWX Swiss Exchange on the first
trading day following the announcement of the tender offer and the merger
(the closing price of JOMED's ordinary shares on August 7, 2000, the
first trading day after the announcement of the tender offer and the
merger, was 90 Swiss Francs per share) on either of (i) the date of the
execution of the purchase agreement for the JOMED's follow-on equity
offering or (ii) on the first trading day immediately prior to the
closing date of such purchase agreement, as such date is defined in the
purchase agreement.
The offer is also subject to a number of other conditions. We can waive
some of the conditions to the offer without EndoSonics's prior written consent;
however, we cannot waive the minimum condition. See Section 15.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed letter of transmittal and any other documents
required by the letter of transmittal, to ChaseMellon Shareholder Services,
L.L.C., the depositary for the offer, not later than the time the tender offer
expires. If your shares are held in street name, the shares can be tendered by
your nominee through ChaseMellon Shareholder Services, L.L.C. If you are unable
to deliver any required document or instrument to the depositary by the
expiration of the tender offer, you may gain some extra time by having a broker,
a bank or other fiduciary that is an eligible institution guarantee that the
missing items will be received by the depositary within three Nasdaq National
Market trading days. For the tender to be valid, however, the depositary must
receive the missing items within that three trading day period. See Section 3.
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the tender offer has expired and,
if we have not accepted your shares for payment by October 19, 2000, you may
withdraw them at any time after that date until we accept shares for payment.
See Section 4.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 4.
WHAT DOES THE ENDOSONICS BOARD OF DIRECTORS RECOMMEND REGARDING THE OFFER?
We are making the offer pursuant to a merger agreement, which has been
unanimously approved by the EndoSonics board of directors. EndoSonics' board of
directors, at a special meeting held on August 5, 2000, unanimously (1)
determined that the Merger Agreement and the transactions contemplated thereby,
including the tender offer and the merger, are fair to and in the best interests
of the EndoSonics stockholders; (2) approved and declared advisable the merger
agreement and the transactions contemplated thereby, including the tender offer
and the merger; and (3) recommended that the EndoSonics stockholders accept the
tender offer and tender their shares thereunder. Accordingly, EndoSonics' board
of directors recommends that you accept the offer and tender all of your shares
of common stock pursuant to the offer. See the "Introduction."
IF THE NUMBER OF THE SHARES THAT ARE TENDERED AND ACCEPTED FOR PAYMENT PLUS THE
NUMBER OF SHARES ALREADY OWNED BY JOMED CONSTITUTE A MAJORITY, WILL ENDOSONICS
CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer we expect to consummate
the merger. If the merger takes place, EndoSonics will no longer be publicly
owned. Even if for some reason the merger does not take
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place, if we purchase all of the tendered shares, there may be so few remaining
stockholders and publicly held shares that EndoSonics common stock will no
longer be eligible to be traded through the Nasdaq National Market; there may
not be a public trading market for EndoSonics common stock; and EndoSonics may
cease making filings with the Securities and Exchange Commission or otherwise
cease being required to comply with the SEC rules relating to publicly held
companies. See Section 13.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE SHARES ARE NOT
TENDERED IN THE OFFER?
Yes. If the number of shares of EndoSonics tendered together with the
shares of EndoSonics common stock then owned by JOMED and/or Purchaser represent
at least a majority of the shares of EndoSonics on a fully diluted basis, we
will be merged with and into EndoSonics. If that merger takes place, JOMED will
own all of the shares of EndoSonics, and all remaining stockholders of
EndoSonics (other than us, JOMED and stockholders properly exercising
dissenters' rights) will receive $11.00 per share in cash (or any higher price
per share that is paid in the offer). See the "Introduction."
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in
the tender offer will receive the same amount of cash per share that they would
have received had they tendered their shares in the tender offer, subject to any
dissenters' rights properly exercised under Delaware law. Therefore, if the
merger takes place and you do not exercise dissenters' rights, the only
difference to you between tendering your shares and not tendering your shares is
that you will be paid earlier if you tender your shares. If the merger does not
take place, however, the number of stockholders and the number of shares of
EndoSonics that are still in the hands of the public may be so small that there
no longer will be an active public trading market (or, possibly, there may not
be any public trading market) for the EndoSonics common stock. Also, as
described above, EndoSonics may cease making filings with the SEC or otherwise
may not be required to comply with the SEC rules relating to publicly held
companies. See the "Introduction" and Sections 12 and 13.
WHAT WAS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On August 4, 2000, the last trading day before we announced the
acquisition, the last sale price of EndoSonics common stock reported on the
Nasdaq National Market was $7 3/16 per share. On August 18, 2000, the last
trading day before we commenced the tender offer, the last sale price of
EndoSonics common stock reported on the Nasdaq National Market was $10 5/8. We
encourage you to obtain a recent quotation for shares of EndoSonics common stock
in deciding whether to tender your shares. See Section 6.
GENERALLY, WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF
TENDERING SHARES?
The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. See Section
5.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call MacKenzie Partners, Inc. collect at (212) 929-5500 or toll
free at (800) 322-2885 or Credit Suisse First Boston Corporation ("Credit Suisse
First Boston" or "CSFB") at (800) 881-8320 (toll free). MacKenzie Partners, Inc.
is acting as the information agent and CSFB is acting as the dealer manager for
our tender offer. See the back cover of this offer to purchase.
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To the Holders of Shares of Common Stock
of EndoSonics Corporation:
INTRODUCTION
JOMED Acquisition Corp. (the "Purchaser"), a Delaware corporation and a
wholly owned subsidiary of JOMED N.V., a corporation organized under the laws of
The Netherlands ("JOMED"), hereby offers to purchase all of the issued and
outstanding shares of common stock, par value $0.001 per share (the "Company
Common Stock"), of EndoSonics Corporation (the "Company" or "EndoSonics"),
including the related rights to purchase preferred stock (the "Rights") issued
pursuant to the Preferred Shares Rights Agreement, dated October 20, 1998,
between the Company and ChaseMellon Shareholders Services, L.L.C. (the Company
Common Stock and the related Rights are herein together referred to as the
"Shares"), at a purchase price of $11.00 per Share (the "Offer Price"), net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements hereto or
thereto, collectively constitute the "Offer").
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of August 5, 2000 (the "Merger Agreement") among JOMED, the Purchaser, and
the Company. The Merger Agreement provides that following the Offer, the
Purchaser will be merged with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation (the "Surviving Corporation").
The Company will be a wholly owned subsidiary of JOMED. Pursuant to the Merger,
at the effective time of the Merger (the "Effective Time") each Share
outstanding immediately prior to the Effective Time (other than Shares owned by
JOMED, the Purchaser or the Company or any of their respective subsidiaries, all
of which will be cancelled, and other than Shares that are held by stockholders,
if any, who properly exercise their dissenters' rights under the Delaware
General Corporation Law (the "DGCL")) will be converted into the right to
receive $11.00 in cash, without interest (the "Merger Consideration"). The
Merger Agreement is more fully described in Section 11.
Tendering stockholders who are record owners of their Shares and tender
directly to the Depositary (as defined below) will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in Instruction 6
of the Letter of Transmittal, stock transfer taxes with respect to the purchase
of Shares by the Purchaser pursuant to the Offer. Stockholders who hold their
Shares through a broker or bank should consult such institution as to whether it
charges any service fees. JOMED or the Purchaser will pay all charges and
expenses of CSFB, as dealer manager (in such capacity, "CSFB" or the "Dealer
Manager"), ChaseMellon Shareholder Services, L.L.C., as depositary (the
"Depositary"), and MacKenzie Partners, Inc., as information agent (the
"Information Agent"), incurred in connection with the Offer. See Section 17.
THE COMPANY'S BOARD OF DIRECTORS, AT A SPECIAL MEETING HELD ON AUGUST 5,
2000, UNANIMOUSLY (1) DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE
BEST INTERESTS OF THE COMPANY'S STOCKHOLDERS; (2) APPROVED AND DECLARED
ADVISABLE THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER; AND (3) RECOMMENDED THAT THE COMPANY'S
STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES THEREUNDER. ACCORDINGLY,
THE COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU ACCEPT THE OFFER AND TENDER
ALL OF YOUR SHARES OF COMMON STOCK PURSUANT TO THE OFFER.
U.S. Bancorp Piper Jaffray ("U.S. Bancorp Piper Jaffray"), the financial
advisor to the EndoSonics Board of Directors, has delivered its written opinion,
dated August 5, 2000, to the effect that, as of the date of the opinion, the
consideration to be received by the Company's stockholders (other than JOMED and
its affiliates) is fair, from a financial point of view, to such stockholders.
The full text of U.S. Bancorp Piper Jaffray's written opinion, which describes
the assumptions made, procedures followed, matters considered and limitations on
the review undertaken, is included as an annex to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which is being mailed to stockholders concurrently herewith. STOCKHOLDERS ARE
URGED TO READ THE FULL TEXT OF SUCH OPINION CAREFULLY IN ITS ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES THAT, TOGETHER WITH THE NUMBER OF SHARES ALREADY OWNED BY JOMED
AND/OR THE PURCHASER, REPRESENTS AT LEAST A MAJORITY OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"), (2) ANY WAITING
PERIOD UNDER THE
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HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR
ACT"), AND THE REGULATIONS THEREUNDER HAVING EXPIRED OR BEEN TERMINATED, AND ALL
CONSENTS AND APPROVALS FROM GOVERNMENTAL AUTHORITIES PURSUANT TO NATIONAL
ANTITRUST OR COMPETITION LAWS, WHICH ARE REQUIRED TO COMPLETE THE TRANSACTION,
HAVE BEEN OBTAINED AND (3) THE SATISFACTION OF CERTAIN OTHER CONDITIONS,
INCLUDING, BUT NOT LIMITED TO, THE CLOSING PRICE OF THE JOMED ORDINARY SHARES ON
THE SWX SWISS EXCHANGE NOT BEING LESS THAN (i) 42 SWISS FRANCS OR (ii) ONE-HALF
OF THE CLOSING PRICE OF THE JOMED ORDINARY SHARES ON THE SWX SWISS EXCHANGE ON
THE FIRST TRADING DAY FOLLOWING THE ANNOUNCEMENT OF THE OFFER AND THE MERGER
(THE CLOSING PRICE OF THE JOMED ORDINARY SHARES ON AUGUST 7, 2000, THE FIRST
TRADING DAY AFTER THE ANNOUNCEMENT OF THE OFFER AND THE MERGER, WAS 90 SWISS
FRANCS PER SHARE) ON EITHER OF (i) THE DATE OF THE EXECUTION OF THE PURCHASE
AGREEMENT FOR THE JOMED EQUITY OFFERING (THE "PURCHASE AGREEMENT") OR (ii) ON
THE FIRST TRADING DAY IMMEDIATELY PRIOR TO THE CLOSING DATE OF THE PURCHASE
AGREEMENT, AS SUCH DATE IS DEFINED IN THE PURCHASE AGREEMENT. SEE SECTIONS 11
AND 15.
For purposes of the Offer, "on a fully diluted basis" means, as of any
time, on a basis that includes the number of Shares that are actually issued and
outstanding plus the maximum number of Shares that the Company may be required
to issue pursuant to obligations under stock options, warrants and other rights
including restricted stock grants or securities convertible into shares of
Company Common Stock, whether or not currently exercisable.
The Company has represented to JOMED that, as of August 18, 2000,
17,844,098 shares were issued and outstanding (excluding shares held by
EndoSonics in treasury), 3,341,748 shares were issuable upon options outstanding
under the Company's stock option plans and other arrangements, no shares of the
Company's preferred stock were issued and outstanding, and 1,131,594 shares were
issued and held in the treasury of the Company. Accordingly, the Minimum
Condition will be satisfied if 10,324,824 shares are tendered in the Offer and
not properly withdrawn, which when added to the 268,100 shares held by JOMED
and/or the Purchaser, would represent at least a majority of the shares
outstanding on a fully-diluted basis. See Section 11.
The Merger Agreement provides that promptly upon the purchase of and
payment for not less than a majority of the outstanding Shares by JOMED or any
of its subsidiaries pursuant to the Offer, JOMED shall be entitled to designate
for appointment or election to the Company's Board of Directors, upon written
notice to the Company, such number of directors, rounded up to the next whole
number, on the Board of Directors such that the percentage of its designees on
the Board shall equal the percentage of the Shares beneficially owned by JOMED
and its affiliates. In furtherance thereof, the Company shall, upon request of
the Purchaser, use its best efforts promptly to cause JOMED's designees to be so
elected to the Company's Board of Directors, and in furtherance thereof, to the
extent necessary, increase the size of the Board of Directors or use its best
efforts to obtain the resignation of such number of its current directors as is
necessary to give effect to the foregoing provision. At such time, the Company
shall also, upon the request of the Purchaser, use its best efforts to cause
Persons designated by JOMED to constitute at least the same percentage (rounded
up to the next whole number) as is on the Company's Board of Directors of (i)
each committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each subsidiary of the Company and (iii) each committee (or
similar body) of each such board. The Merger Agreement provides that, until the
Effective Time, the Board of Directors of the Company will have at least three
directors who are directors of the Company on the date of the Merger Agreement.
See Section 11.
The Merger is subject to the satisfaction or waiver of certain conditions,
including, if required, the approval and adoption of the Merger Agreement by the
affirmative vote of the holders of a majority of the outstanding Shares. If the
Minimum Condition is satisfied, the Purchaser would have sufficient voting power
to approve the Merger without the affirmative vote of any other stockholder of
the Company. The Company has agreed, if required, to cause a meeting of its
stockholders to be held as promptly as practicable following consummation of the
Offer for the purposes of considering and taking action upon the approval and
adoption of the Merger Agreement. JOMED and the Purchaser have agreed to vote
their Shares in favor of the approval and adoption of the Merger Agreement. See
Section 11.
This Offer to Purchase and the related Letter of Transmittal contain
important information that should be read carefully before any decision is made
with respect to the Offer.
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THE TENDER OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not properly withdrawn as
permitted under Section 4. The term "Expiration Date" means 12:01 a.m., New York
City time, on Tuesday, September 19, 2000, unless the Purchaser, in accordance
with the Merger Agreement, extends the period during which the Offer is open, in
which event the term "Expiration Date" means the latest time and date on which
the Offer, as so extended, expires.
The Offer is conditioned upon the satisfaction of the Minimum Condition and
the other conditions set forth in Section 15. Subject to the provisions of the
Merger Agreement, the Purchaser may waive any or all of the conditions to its
obligation to purchase Shares pursuant to the Offer (other than the Minimum
Condition). If by the initial Expiration Date or any subsequent Expiration Date
any or all of the conditions to the Offer have not been satisfied or waived,
subject to the provisions of the Merger Agreement, the Purchaser may elect to
(i) terminate the Offer and return all tendered Shares to tendering
stockholders, (ii) waive all of the unsatisfied conditions (other than the
Minimum Condition) and, subject to any required extension, purchase all Shares
validly tendered by the Expiration Date and not properly withdrawn or (iii)
extend the Offer and, subject to the right of stockholders to withdraw Shares
until the new Expiration Date, retain the Shares that have been tendered until
the expiration of the Offer as extended.
Under the terms of the Merger Agreement, the Purchaser may not, without the
prior written consent of the Company: (i) waive the Minimum Condition and (ii)
change the form of consideration to be paid, decrease the Offer Price, decrease
the number of shares of Company Common Stock sought in the Offer, add to or
modify, in a manner adverse to the stockholders of the Company, the conditions
to the Offer set forth in Section 15 hereof, or (except as provided in the next
paragraph) change the expiration date of the Offer.
Subject to the terms of the Merger Agreement, the Purchaser may, without
the consent of the Company, extend the expiration date of the Offer: (i) for up
to five additional business days; (ii) from time to time after the time period
in clause (i) if, at the scheduled or extended expiration date of the Offer, any
of the conditions to the Offer will not have been satisfied or waived, until
such conditions are satisfied or waived; (iii) for any period required by any
rule, regulation, interpretation or position of the U.S. Securities and Exchange
Commission ("SEC") or the staff thereof applicable to the Offer or any period
required by applicable law; or (iv) for up to 10 additional business days, if,
immediately prior to the scheduled or extended expiration date of the Offer, the
Shares tendered and not withdrawn pursuant to the Offer constitute more than 80%
and less than 90% of the outstanding Shares, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer. If any of
the conditions to the Offer is not satisfied or waived on any scheduled or
extended expiration date of the Offer, the Purchaser will extend the Offer, if
the condition or conditions could reasonably be expected to be satisfied, from
time to time until such conditions are satisfied or waived, provided that the
Purchaser will not be required to extend the Offer beyond November 15, 2000. Any
extension under the circumstances described in (ii), (iii) or (iv) above will
not exceed that number of days that the Purchaser reasonably believe is
necessary to cause the conditions of the offer to be satisfied.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15. Any extension, delay,
termination, waiver or amendment will be followed as promptly as practicable by
public announcement thereof, such announcement in the case of an extension to be
made no later than 9:00 a.m., New York City time, on the same day as the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14e-1(d) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(d) and 14d-6(c) under the Exchange Act, which require
that material changes be promptly disseminated to stockholders in a manner
reasonably designed to inform them of such changes) and without limiting the
manner in which the Purchaser may choose to make any public announcement, the
Purchaser shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a press release
to the Dow Jones News Service.
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If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares or it is unable to pay for
Shares pursuant to the Offer for any reason, then, without prejudice to the
Purchaser's rights under the Offer, the Depositary may retain tendered Shares on
behalf of the Purchaser, and such Shares may not be withdrawn except to the
extent tendering stockholders are entitled to withdrawal rights as described
herein under Section 4. However, the ability of the Purchaser to delay the
payment for Shares that the Purchaser has accepted for payment is limited by (i)
Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the
consideration offered or return the securities deposited by or on behalf of
stockholders promptly after the termination or withdrawal of such bidder's offer
and (ii) the terms of the Merger Agreement, which require that the Purchaser pay
for Shares that are tendered pursuant to the Offer as soon as permitted after
the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Purchaser will disseminate additional tender offer materials and
extend the Offer to the extent required by Rules 14d-4(d), 14d-6(c) and 14e-1
under the Exchange Act. The minimum period during which an offer must remain
open following material changes in the terms of the Offer, other than a change
in price, percentage of securities sought or inclusion of or changes to a
dealer's soliciting fee, will depend upon the facts and circumstances, including
the materiality, of the changes. In the SEC's view, an offer should remain open
for a minimum of five (5) business days from the date the material change is
first published, sent or given to stockholders and, if material changes are made
with respect to information that approaches the significance of price and share
levels, a minimum of ten (10) business days may be required to allow for
adequate dissemination to stockholders. Accordingly, if, prior to the Expiration
Date, the Purchaser decreases the number of Shares being sought or increases or
decreases the consideration offered pursuant to the Offer, and if the Offer is
scheduled to expire at any time earlier than the tenth business day from the
date that notice of such increase or decrease is first published, sent or given
to stockholders, the Offer will be extended at least until the expiration of
such tenth business day. For purposes of the Offer, a "business day" means any
day other than a Saturday, Sunday or a federal holiday and consists of the time
period from 12:01 a.m. through 12:00 midnight, New York City time.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed to record holders of Shares whose names
appear on the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and the satisfaction or earlier waiver of all the conditions to
the Offer set forth in Section 15, the Purchaser will accept for payment and
will pay for all Shares validly tendered on or prior to the Expiration Date and
not properly withdrawn pursuant to the Offer as soon as it is permitted to do so
under applicable law. Subject to the Merger Agreement and compliance with Rule
14e-1(c) under the Exchange Act, the Purchaser expressly reserves the right to
delay payment for Shares in order to comply in whole or in part with any
applicable law. See Section 16.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) the certificates
evidencing such Shares (the "Share Certificates") or confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3, (2) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature guarantees or, in the case of a book-entry transfer, an
Agent's Message (as defined below) in lieu of the Letter of Transmittal and (3)
any other documents required by the Letter of Transmittal.
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For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the Offer Price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. If, for any reason whatsoever, acceptance for payment of
any Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable
to accept for payment Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights under Section 1 hereof, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn, except to the extent that the tendering
stockholders are entitled to withdrawal rights as described in Section 4 and as
otherwise required by Rule 14e-1(c) under the Exchange Act.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE OFFER PRICE FOR SHARES BE PAID,
REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedure set forth in Section 3, such Shares will be credited to an account
maintained at the Book-Entry Transfer Facility), as promptly as practicable
following the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tenders. In order for a stockholder validly to tender Shares
pursuant to the Offer, either (1) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, together with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message in lieu of the Letter of Transmittal) and any other documents required
by the Letter of Transmittal must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either the
Share Certificates evidencing tendered Shares must be received by the Depositary
at such address or such Shares must be tendered pursuant to the procedure for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(2) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, that states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that the Purchaser may enforce such
agreement against such participant.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-
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entry transfer at the Book-Entry Transfer Facility, either the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in lieu
of the Letter of Transmittal, and any other required documents, must, in any
case, be received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase prior to the Expiration Date, or the
tendering stockholder must comply with the guaranteed delivery procedure
described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered holder
of the Shares tendered therewith, unless such holder has completed either the
box entitled "Special Delivery Instructions" or the box entitled "Special
Payment Instructions" on the Letter of Transmittal or (2) if the Shares are
tendered for the account of a firm that is participating in the Security
Transfer Agents Medallion Program, the Nasdaq National Market Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each an
"Eligible Institution" and collectively "Eligible Institutions"). In all other
cases, all signatures on a Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction 1 of the Letter of Transmittal. If a Share
Certificate is registered in the name of a person or persons other than the
signer of the Letter of Transmittal, or if payment is to be made to, or a Share
Certificate not accepted for payment or not tendered is to be issued, in the
name of, a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate duly executed stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the Share Certificate, with the signature(s) on such Share Certificate
or stock powers guaranteed by an Eligible Institution as provided in the Letter
of Transmittal. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and the Share Certificates evidencing such stockholder's Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered; provided that all of the following conditions are satisfied:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(3) the Share Certificates (or a Book-Entry Confirmation) evidencing all
tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any
other documents required by the Letter of Transmittal are received by
the Depositary within three Nasdaq National Market trading days after
the date of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by facsimile transmission or mailed to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in the form of Notice
of Guaranteed Delivery made available by the Purchaser.
In all cases, Shares will not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) is
received by the Depositary.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, RECEIPT OF A BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
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Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects and irregularities have been cured or waived to
the satisfaction of the Purchaser. None of JOMED, the Purchaser, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification. The Purchaser's
interpretation of the terms and conditions of the Offer (including the Letter of
Transmittal and the instructions thereto) will be final and binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of the Purchaser
as such stockholder's proxies, each with full power of substitution, in the
manner set forth in the Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser (including, with respect to any and all
other Shares or other securities issued or issuable in respect of such Shares on
or after the date of this Offer to Purchase). All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior proxies given by
such stockholder with respect to such Shares (and such other Shares and
securities) will be revoked without further action, and no subsequent proxies
may be given nor any subsequent written consent executed by such stockholder
(and, if given or executed, will not be deemed to be effective) with respect
thereto. The designees of the Purchaser will, with respect to the Shares and
other securities for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares.
The tender of Shares pursuant to any one of the procedures described above
will constitute the tendering stockholder's acceptance of the Offer, as well as
the tendering stockholder's representation and warranty that such stockholder
has the full power and authority to tender and assign the Shares tendered, as
specified in the Letter of Transmittal. The Purchaser's acceptance for payment
of Shares tendered pursuant to the Offer will constitute a binding agreement
between the tendering stockholder and the Purchaser upon the terms and subject
to the conditions of the Offer.
Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31% of
the amount of any payments pursuant to the Offer. In order to prevent backup
federal income tax withholding with respect to payments to certain stockholders
of the Offer Price for Shares purchased pursuant to the Offer, each such
stockholder must provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") and certify that such stockholder is not subject
to backup withholding by completing the Substitute Form W-9 in the Letter of
Transmittal. Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
If a stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service may impose a
penalty on the stockholder and payment of cash to the stockholder pursuant to
the Offer may be subject to backup withholding. All stockholders surrendering
Shares pursuant to the Offer should complete and sign the Substitute Form W-9
included in the Letter of Transmittal to provide the information necessary to
avoid backup withholding. Non-corporate foreign stockholders should complete and
sign a Form W-8, Certificate of Foreign Status (a copy of which may be obtained
from the Depositary) in order to avoid backup withholding. See Instruction 8 of
the Letter of Transmittal.
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4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
such Shares tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after October
19, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name, address and taxpayer
identification number of the person who tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of such
Shares, if different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3 hereof, any notice of withdrawal must also specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares.
If the Purchaser extends the Offer, is delayed in its acceptance for
payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent that
tendering stockholders are entitled to withdrawal rights as described herein.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of JOMED, the
Purchaser, the Dealer Manager, the Depositary, the Information Agent or any
other person will be under duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3
hereof.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following is a summary of certain United States federal income tax
consequences of the Offer and the Merger to stockholders of the Company whose
Shares are tendered and accepted for payment pursuant to the Offer or whose
Shares are converted into the right to receive cash in the Merger. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that might be relevant to
stockholders of the Company. The discussion is based on current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), existing, proposed
and temporary regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with a
retroactive effect. The discussion applies only to stockholders of the Company
in whose hands Shares are capital assets within the meaning of Section 1221 of
the Code and who do not own directly or through attribution 50% or more of the
stock of the Company. This discussion does not apply to Shares received pursuant
to the exercise of employee stock options or otherwise as compensation, or to
certain types of stockholders (such as insurance companies, tax-exempt
organizations, financial institutions and broker-dealers) who may be subject to
special rules. This discussion does not discuss the United States federal income
tax consequences to any stockholder of the Company who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
corporation, a foreign partnership or a foreign estate or trust, nor does it
consider the effect of any foreign, state or local tax laws.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE APPLICABILITY OF THE RULES
DISCUSSED BELOW AND THE PARTICULAR TAX EFFECTS OF THE OFFER AND THE
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MERGER, ON A BENEFICIAL HOLDER OF SHARES, INCLUDING THE APPLICATION AND EFFECT
OF THE ALTERNATIVE MINIMUM TAX, AND ANY STATE, LOCAL AND FOREIGN TAX LAWS AND OF
CHANGES IN SUCH LAWS.
The exchange of Shares for cash pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and possibly
for state, local and foreign income tax purposes as well. In general, a
stockholder who sells Shares pursuant to the Offer or receives cash in exchange
for Shares pursuant to the Merger will recognize gain or loss for United States
federal income tax purposes equal to the difference, if any, between the amount
of cash received and the stockholder's adjusted tax basis in the Shares sold
pursuant to the Offer or exchanged for cash pursuant to the Merger. Gain or loss
will be determined separately for each block of Shares (i.e., Shares acquired at
the same cost in a single transaction) tendered pursuant to the Offer or
exchanged for cash pursuant to the Merger. Such gain or loss will be long-term
capital gain or loss provided that a stockholder's holding period for such
Shares is more than one year at the time of consummation of the Offer or the
Merger, as the case may be. Capital gains recognized by an individual upon a
disposition of a Share that has been held for more than one year generally will
be subject to a maximum United States federal income tax rate of 20% or, in the
case of a Share that has been held for one year or less, will be subject to tax
at ordinary income tax rates. Certain limitations apply to the use of a
stockholder's capital losses.
A stockholder whose Shares are purchased in the Offer may be subject to 31%
backup withholding unless certain information is provided to the Depositary or
an exemption applies. See Section 3.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares trade on the Nasdaq National Market ("Nasdaq") under the symbol
"ESON." The following table sets forth, for the periods indicated, the high and
low sale prices per Share as well as the dividends paid to stockholders for the
periods indicated. Share prices are as reported on the Nasdaq based on published
financial sources.
COMMON STOCK
----------------------------
HIGH LOW DIVIDENDS
---- --- ---------
Fiscal Year 1998:
First Quarter............................................. $10 3/4 $7 15/16 --
Second Quarter............................................ 10 1/2 5 --
Third Quarter............................................. 9 7/8 4 --
Fourth Quarter............................................ 10 4 --
Fiscal Year 1999:
First Quarter............................................. $12 11/16 $6 --
Second Quarter............................................ 8 3/4 4 1/4 --
Third Quarter............................................. 9 3/8 6 15/16 --
Fourth Quarter............................................ 8 3/4 3 --
Fiscal Year 2000:
First Quarter............................................. $ 7 7/8 $4 1/8 --
Second Quarter............................................ 6 3/8 3 3/4 --
Third Quarter (through August 18, 2000)................... 10 3/4 5 1/4 --
On August 4, 2000, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the last reported sale
price of the Shares on the Nasdaq was $7 3/16 per Share. On August 18, 2000, the
last full day of trading before the commencement of the Offer, the last reported
sale price of the Shares on the Nasdaq was 10 5/8 per Share. Stockholders are
urged to obtain a current market quotation for the Shares.
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7. CERTAIN INFORMATION CONCERNING THE COMPANY.
General. EndoSonics is a Delaware corporation with its principal offices
located at 2870 Kilgore Road, Rancho Cordova, California 95670. The telephone
number of the Company is (916) 638-8008. According to the Company's Form 10-K
for the fiscal year ended December 31, 1999 (the "1999 10-K"), the Company has
been engaged primarily in the research and development, marketing and selling of
devices for the diagnosis and treatment of cardiovascular disease. Since 1991, a
majority of the Company's net revenue has been derived from sales of its IVUS
coronary imaging systems and catheters. In July 1997, the Company acquired
Cardiometrics Corporation, adding a product portfolio of cardiovascular
functional measurement devices. In August 1998, Company acquired Navius
Corporation, which added a line of therapeutic angioplasty balloon catheters and
other therapeutic products under development.
Certain Projected Financial Data of the Company. Prior to entering into
the Merger Agreement, representatives of JOMED conducted a due diligence review
of the Company and in connection with such review received certain projections
of the Company's future operating performance. The Company does not in the
ordinary course publicly disclose projections and these projections were based
on numerous assumptions made by the Company's management, including, among
others, unit sales, engineering costs, capital expenditures, depreciation and
amortization and cost savings as well as industry performance and general
business, economic, market and financial conditions, all of which are difficult
to predict and many of which are beyond the Company's control. Accordingly,
there can be no assurance that the assumptions made in preparing the projections
will prove to be accurate. These projections do not give effect to the Offer or
the potential combined operations of JOMED and the Company or any changes that
may be made to the Company's operations or strategy after the consummation of
the Offer. The information set forth below is presented for the limited purpose
of giving the EndoSonics stockholders access to the material financial
projections prepared by the Company's management that were made available to
JOMED in connection with its due diligence investigation.
IT IS THE UNDERSTANDING OF JOMED AND THE PURCHASER THAT THE PROJECTIONS SET
FORTH BELOW WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE OR COMPLIANCE
WITH PUBLISHED GUIDELINES OF THE SEC OR THE GUIDELINES ESTABLISHED BY THE
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR
FORECASTS AND ARE INCLUDED HEREIN ONLY BECAUSE SUCH INFORMATION WAS PROVIDED TO
JOMED IN CONNECTION WITH ITS EVALUATION OF A BUSINESS TRANSACTION WITH THE
COMPANY. THE PROJECTIONS DO NOT PURPORT TO PRESENT OPERATIONS IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND THE COMPANY'S INDEPENDENT AUDITORS
HAVE NOT EXAMINED OR COMPILED THE PROJECTIONS PRESENTED HEREIN AND ACCORDINGLY
ASSUME NO RESPONSIBILITY FOR THEM. THESE PROJECTIONS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THE PROJECTIONS. THE INCLUSION OF THE PROJECTIONS HEREIN SHOULD NOT BE
REGARDED AS AN INDICATION THAT ANY OF JOMED, THE PURCHASER, THE COMPANY OR THEIR
RESPECTIVE AFFILIATES OR REPRESENTATIVES CONSIDERED OR CONSIDER THE PROJECTIONS
TO BE A RELIABLE PREDICTION OF FUTURE EVENTS, AND THE PROJECTIONS SHOULD NOT BE
RELIED UPON AS SUCH. NONE OF JOMED, THE PURCHASER, THE COMPANY OR ANY OF THEIR
RESPECTIVE AFFILIATES OR REPRESENTATIVES HAS MADE OR MAKES ANY REPRESENTATION TO
ANY PERSON REGARDING THE ACTUAL PERFORMANCE OF THE COMPANY COMPARED TO THE
INFORMATION CONTAINED IN THE PROJECTIONS, AND NONE OF THEM INTENDS TO UPDATE OR
OTHERWISE REVISE THE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THE PROJECTIONS ARE SHOWN TO BE IN
ERROR.
ENDOSONICS CORPORATION
($ IN MILLIONS)
PROJECTED FYE DECEMBER 31,
--------------------------------------------------------
2000 2001 2002 2003 2004
-------- -------- -------- -------- --------
Net Sales........................... 57.9 75.1 96.7 131.2 163.7
Gross Profit........................ 29.4 41.3 57.0 81.3 103.1
EBIT................................ (1.9) 3.5 11.3 21.9 32.8
Net Income.......................... (1.3) 4.0 12.0 23.1 25.4
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The Company's financial projections are based upon the number of
interventional procedures, reimbursement rates, competitive factors and the
Company's historical performance in four market places: United States, Europe,
Japan and rest of the world. In addition to the considerations above, forecasted
net sales also consider the prevailing average selling prices and distribution
organizations in each marketplace. Gross profit reflects the revenue mix in each
period and assumes average selling prices deteriorate over time mitigated by
cost reductions achieved through efficiencies and increased production volumes.
EBIT includes selling, general and administrative expenses ("SG&A"), research
and development ("R&D") and amortization of intangible assets. SG&A is projected
to increase in absolute dollars but decline as a percentage of net sales from
36.0% in calendar year 2000 to 32.0% in calendar year 2004. R&D is also
forecasted to increase in absolute dollars but decline as a percentage of sales
from 14.6% in calendar year 2000 to 10.0% in calendar year 2004. Net income
reflects the benefits of the Company's $52 million net operating loss
carryforward.
Available Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational reporting requirements
of the Exchange Act and, in accordance therewith, is required to file periodic
reports, proxy statements and other information with the SEC relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the SEC. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the SEC's regional offices located at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Information regarding the
public reference facilities may be obtained from the SEC by telephoning
1-800-SEC-0330. The Company's filings are also available to the public on the
SEC's Internet site (http://www.sec.gov). Copies of such materials may also be
obtained by mail from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates.
8. CERTAIN INFORMATION CONCERNING JOMED AND THE PURCHASER.
General. JOMED is a corporation organized under the laws of The
Netherlands with its principal offices located at Drottninggatan 94, S-25 21
Helsingborg, Sweden. The telephone number of JOMED is +46-42-490-6000. JOMED
designs, develops, manufactures and markets medical devices for minimally
invasive therapy, including interventional cardiology and interventional
radiology and other minimally invasive cardiovascularsurgical procedures.
JOMED's products are aimed at providing alternatives to drug therapy and highly
invasive surgical treatments of vascular diseases. Its product offerings include
a range of coronary and peripheral stents, stent grafts, angioplasty balloons
and catheters. JOMED markets its products in over 60 countries through a direct
sales force and a network of distributors. In addition, JOMED is developing new
products for cardiac assist and minimally invasive cardiovascular surgery.
The Purchaser is a Delaware corporation with its principal offices located
at Drottninggatan 94, S-252 21 Helsingborg, Sweden. The telephone number of the
Purchaser is +46-42-490-6000. The Purchaser is a wholly owned subsidiary of
JOMED. The Purchaser has not carried on any activities other than in connection
with the Merger Agreement.
The name, citizenship, principal business address, business phone number,
principal occupation or employment and five-year employment history for each of
the directors and executive officers of JOMED and the Purchaser and certain
other information are set forth in Schedule I hereto.
As of August 18, 2000, JOMED owned 268,100 Shares which represent
approximately 1.5% of all issued and outstanding Shares.
Except as described above, (1) none of JOMED, the Purchaser nor, to the
best knowledge of JOMED and the Purchaser, any of the persons listed in Schedule
I hereto or any associate or majority-owned subsidiary of JOMED or the Purchaser
or any of the persons so listed beneficially owns or has any right to acquire,
directly or indirectly, any Shares, and (2) none of JOMED, the Purchaser nor, to
the best knowledge of
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19
JOMED and the Purchaser, any of the persons or entities referred to above nor
any director, executive officer or subsidiary of any of the foregoing has
effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement, none of JOMED, the Purchaser
nor, to the best knowledge of JOMED and the Purchaser, any of the persons listed
in Schedule I hereto, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or voting of such securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss, guarantees of profits, division of profits or
loss or the giving or withholding of proxies.
In December 1998, the Company and JOMED entered into an agreement for
exclusive distribution of certain EndoSonics products into specified European
and Middle Eastern countries (the "1998 Distribution Agreement"). Also in
December 1998, the Company and JOMED entered into an IVUS guided stent delivery
system agreement that called for the development of a JOMED balloon and stent
incorporated into a modular EndoSonics IVUS catheter (the "Stent Delivery System
Agreement"). Under the terms of the Stent Delivery System Agreement, the Company
was required to supply subassemblies to JOMED which would complete the
manufacturing process and distribute the resulting product in the territory
which was defined as certain European and Middle Eastern countries. In certain
countries within the territory, the Company could distribute exclusively or
jointly with JOMED. On August 27, 1999, the Company informed JOMED in writing of
breaches of certain operational obligations by JOMED under the terms of both the
1998 Distribution Agreement and the Stent Delivery System Agreement. Following
JOMED's failure to cure the breaches under the 1998 Distribution Agreement noted
in the August 27, 1999 written notice, the 1998 Distribution Agreement was
terminated on October 1, 1999. Following JOMED's failure to cure the breaches
under the Stent Delivery System Agreement noted in the August 27, 1999 written
notice, the Stent Delivery System Agreement was terminated on November 5, 1999.
During the fourth quarter of 1999, the Company and JOMED agreed on a payment
schedule for JOMED to pay its outstanding invoices as well as on a financial
arrangement with regard to the mutual losses incurred in connection with the
terminated Stent Delivery System Agreement. Subsequently, in December 1999, a
new distribution agreement was restructured between JOMED and the Company to
provide more specific metrics regarding performance and was implemented in
December 1999 (the "Master Distribution Agreement"). Also in December 1999,
JOMED satisfied its outstanding payment obligations to the Company.
Except as set forth above, none of JOMED, the Purchaser nor, to the best
knowledge of JOMED and the Purchaser, any of the persons listed on Schedule I
hereto, has had any business relationship or transaction with the Company or any
of its executive officers, directors or affiliates that is required to be
reported under the rules and regulations of the SEC applicable to the Offer.
Except as set forth in this Offer to Purchase, there have been no material
contacts, negotiations or transactions between JOMED or any of its subsidiaries
or, to the best knowledge of JOMED, any of the persons listed in Schedule I
hereto, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
None of the persons listed in Schedule I hereto has, during the past five
years, been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors). None of the persons listed in Schedule I hereto has,
during the past five years, been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws.
Financial Information. Set forth below are certain selected summary
information of JOMED. Unless otherwise stated, all financial data of JOMED for
the years ended 1998 and 1999 herein are based on the audited consolidated
financial statements of JOMED, and the financial data of JOMED for the six
months ended June 30, 1999 and 2000 are based on the unaudited consolidated
financial statements of JOMED, all of which are prepared in accordance with
International Accounting Standards (IAS). The financial data for the
16
20
years ended 1996 and 1997 are based on the unaudited pro forma consolidated
financial statements for those years which were prepared in accordance with IAS,
subject to certain exceptions discussed below.
The following table presents selected historical consolidated financial
information for JOMED. JOMED in its present form came into existence with the
acquisition by the group's holding company, JOMED N.V., of the shares of the
group's subsidiaries on April 2, 1998 for in-kind contributions. The unaudited
pro forma consolidated statements have been prepared for comparison purposes
only for the period from January 1, 1996 to December 31, 1997 as if JOMED had
already existed at the start of the periods. In the balance sheet of JOMED N.V.,
in-kind acquisitions of the shareholdings in the subsidiaries have been
reflected retroactively as at January 1, 1996 at their book value on April 2,
1998. Consolidation has been achieved by offsetting investments in subsidiaries
against the fair market value of the underlying net assets of the subsidiaries
at the date of acquisition. The resulting difference has been recognized as
goodwill and been amortized over an estimated useful life of 20 years. This is
not in accordance with international accounting standards which would not permit
recognition of goodwill prior to the date on which control of the subsidiaries
passed to the parent company. With this exception and with the exception of the
non-presentation of a pro forma statement of changes in stockholders' equity and
of changes in cash flows, the unaudited pro forma financial statements have been
prepared in accordance with IAS. In the opinion of management, these departures
from IAS are necessary to ensure the comparability of the pro forma financial
statements with those presented in the audited financial statements. All amounts
are in Euros.
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------
1997 1996
2000 1999 1999 1998 PRO FORMA PRO FORMA
(UNAUDITED) (UNAUDITED) (AUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- --------- --------- ----------- -----------
(E '000) (E '000)
INCOME STATEMENT
Net sales........................ 29,859 19,823 43,723 25,502 15,216 6,284
Cost of goods sold............... (4,081) (5,021) (7,623) (3,078) (1,866) (1,131)
------- ------- ------- ------- ------- ------
GROSS PROFIT..................... 25,778 14,802 36,100 22,424 13,350 5,153
Operating costs and expenses..... (21,393) (12,727) (31,793) (16,436) (11,548) (4,349)
------- ------- ------- ------- ------- ------
OPERATING INCOME................. 4,385 2,075 4,307 5,988 1,802 804
Other expenses, net.............. (382) (549) (1,193) (329) (90) (48)
------- ------- ------- ------- ------- ------
INCOME BEFORE INCOME TAXES....... 4,003 1,526 3,114 5,659 1,712 756
------- ------- ------- ------- ------- ------
NET INCOME....................... 2,612 940 2,134 2,983 861 441
======= ======= ======= ======= ======= ======
AS OF JUNE 30, AS OF DECEMBER 31,
------------------------- -------------------------------------------------
1997 1996
2000 1999 1999 1998 PRO FORMA PRO FORMA
(UNAUDITED) (UNAUDITED) (AUDITED) (AUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- --------- --------- ----------- -----------
(E '000) (E '000)
BALANCE SHEET DATA
Total current assets............. 139,031 26,411 37,992 13,533 6,063 2,959
Total long-term assets........... 66,850 23,114 27,836 16,338 12,507 11,865
Total current liabilities........ (27,043) (16,214) (28,997) (13,414) (6,588) (3,415)
Total long-term liabilities...... (19,119) (17,767) (1,366) (636) (140) 0
------- ------- ------- ------- ------ ------
TOTAL SHAREHOLDERS' EQUITY....... 159,719 15,544 35,465 15,821 11,842 11,409
======= ======= ======= ======= ====== ======
TOTAL ASSETS..................... 205,881 49,525 65,828 29,871 18,570 14,824
======= ======= ======= ======= ====== ======
9. SOURCE AND AMOUNT OF FUNDS.
The total amount of funds required by the Purchaser to purchase Shares
pursuant to the Offer and the Merger is estimated to be approximately
$208,000,000 plus any related transaction fees and expenses. The Purchaser will
obtain such funds from JOMED. On August 4, 2000, JOMED and Credit Suisse First
Boston (Europe) Limited ("CSFB Europe") signed a commitment letter pursuant to
which CSFB Europe agreed,
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subject to the satisfaction of certain conditions, to, among other things,
provide $150,000,000 through an offering of JOMED's ordinary shares (the "JOMED
Equity Offering"). JOMED expects to fund $150,000,000 of its cash contribution
from the JOMED Equity Offering, with the remainder expected to come from JOMED's
existing resources and internally generated funds, including short-term
borrowing in the ordinary course of business. JOMED expects to close the JOMED
Equity Offering on September 19, 2000.
JOMED expects the consummation of the JOMED Equity Offering to be subject
to a number of conditions including, but not limited to, that:
- all of the conditions for the closing of the Offer shall have been
satisfied in the reasonable judgment of CSFB Europe (in such capacity,
the "Global Coordinator" for the JOMED Equity Offering);
- the Global Coordinator shall have received on or by the closing for the
JOMED Equity Offering the opinions of counsel and letters from
accountants specified in the purchase agreement for the JOMED Equity
Offering (the "Purchase Agreement");
- the SWX Swiss Exchange shall have approved the JOMED Ordinary Shares to
be issued in the JOMED Equity Offering for listing on the SWX New Market
of the SWX Swiss Exchange or, prior to the date of the Purchase
Agreement, no order suspending the public offering of the shares shall
have been issued and no proceedings for any such purpose shall have been
instituted or contemplated by the SWX Swiss Exchange or any other
governmental or self-regulatory agency or body;
- the Purchase Agreement for the JOMED Equity Offering shall not have been
terminated by the Global Coordinator as a result of (a) the closing price
of the JOMED Ordinary Shares on the SWX Swiss Exchange being less than
(i) 42 Swiss Francs or (ii) one-half of the closing price of the JOMED
Ordinary Shares on the SWX Swiss Exchange on the first trading day
following the announcement of the Offer and the Merger (the closing price
of the JOMED Ordinary Shares on August 7, 2000, the first trading day
after the announcement of the Offer and the Merger, was 90 Swiss Francs
per share) on either of (i) the date of the execution of the Purchase
Agreement or (ii) on the first trading day immediately prior to the
closing date of the Purchase Agreement, as such date is defined in the
Purchase Agreement, (b) trading generally shall have been suspended or
materially limited on or by, as the case may be, the SWX Swiss Exchange
(whether on the SWX New Market segment or otherwise), (c) a general
moratorium on commercial banking activities shall have been declared by
authorities in either Switzerland or The Netherlands, (d) there shall
have occurred a general crisis in international exchange markets or (e)
there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis, whether or not
foreseeable, that, in the judgment of the Global Coordinator, is material
and adverse and, in the case of any of the foregoing events, such event,
singly or together with any other such event, makes it, in the judgment
of the Global Coordinator after consultation with the JOMED,
impracticable to market the JOMED Ordinary Shares as contemplated through
the JOMED Equity Offering; and
- the Merger Agreement shall not have been terminated in accordance with
its terms;
as well as other customary equity offering conditions.
No alternative financing plans or arrangements have been made in the event
JOMED is unable to consummate the JOMED Equity Offering in connection with the
Offer and the Merger. The Purchaser will not be obligated to accept Shares for
payment pursuant to the Offer if the Financing Condition has not been satisfied.
In connection with the JOMED Equity Offering, JOMED expects that it will
agree to customary indemnification of the Global Coordinator, including
indemnifying and holding harmless the Global Coordinator from and against any
and all claims, actions, suits, liabilities, losses damages and expenses arising
out of the JOMED Equity Offering and the transactions contemplated thereby.
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10. BACKGROUND OF THE OFFER; PAST CONTACTS OR NEGOTIATIONS WITH THE COMPANY.
In the fall of 1997, the Company's senior management and the Board of
Directors began to examine the Company's strategic position in the
interventional cardiology market in light of, among other things, the upcoming
expiration of some of the Company's key distribution agreements, the ongoing
healthcare reform and the continued emergence of managed care organizations in
the United States, the increasing pressure on healthcare providers and other
participants in the healthcare industry to reduce costs and, in light of this
general market environment, the Company's prospects for continued growth as a
manufacturer of stand-alone diagnostic products. Senior management and the Board
of Directors determined that the Company should take action to explore strategic
alternatives that would enable the Company to integrate its diagnostic
technology with therapeutic modalities in a single product platform that would
increase demand for the Company's core diagnostic technology.
At a regularly scheduled Board of Directors meeting on November 3, 1997,
Reinhard Warnking, the Company's President and Chief Executive Officer, raised
the possibility of pursuing strategic partnerships and other alternative
business ventures and combinations designed to enable the Company to integrate
its diagnostic technology with therapeutic modalities in a single product
platform. Representatives from U.S. Bancorp Piper Jaffray, the Company's
financial advisor, were also in attendance at the meeting. At the conclusion of
the meeting, the Board of Directors authorized Mr. Warnking to explore strategic
alternatives and to engage U.S. Bancorp Piper Jaffray to assist in this process.
Following the November 3, 1997 Board of Directors meeting, between November
3, 1997 and the end of April, 1998, the Company's senior management made
preliminary contacts with several leading interventional cardiology companies to
explore strategic options for the Company. Of the companies contacted by the
Company, several received information about the Company prepared by management.
After significant due diligence by several parties, none of the companies
contacted by management expressed an interest in entering into a business
combination with the Company at that time.
In April 1998, the Company terminated its exclusive distribution agreement
with Cordis Corporation, a unit of Johnson & Johnson, due to a decline in orders
of the Company's products from Cordis in the United States, Europe and certain
other territories and the anticipated inability of Cordis to meet the minimum
agreed-upon sales performance milestones for these territories. Subsequently,
the Company established a direct sales force in the United States and Germany
and, in December 1998, entered into the 1998 Distribution Agreement with JOMED
that granted JOMED exclusive distribution rights with respect to certain of the
Company's products in specified European and Middle Eastern countries. Also in
December 1998, the Company and JOMED entered into the Stent Delivery System
Agreement that called for the development of a JOMED balloon and stent
incorporated into a modular EndoSonics IVUS catheter.
In June 1999, Mr. Peters contacted Mr. Warnking and requested a meeting to
discuss JOMED's potential acquisition of the Company. On June 29, 1999, Mr.
Warnking and representatives from U.S. Bancorp Piper Jaffray met with Mr. Peters
and representatives from CSFB, JOMED's financial advisor in New York, New York.
At this meeting, the parties discussed several proposed alternative transaction
structures.
After the June 29, 1999 meeting in New York, Messrs. Warnking and Peters
and representatives from U.S. Bancorp Piper Jaffray and CSFB continued to
discuss a potential business combination between the Company and JOMED. In late
September 1999, Mr. Peters called Mr. Warnking and told him he was not
interested in pursuing a business combination at that time.
On October 4, 1999, the Company announced its operating results for the
quarter ended September 30, 1999. The Company reported revenue of $10.5 million
for the quarter, compared to $14.0 million for the prior quarter, a decrease of
24.8%. The Company stated that revenue for the quarter was lower than
anticipated primarily as a result of a substantial decline in orders from the
prior quarter from JOMED, which at the time was the Company's principal
distributor in Europe, and that as a result of JOMED's failure to honor its
payment obligations, the Company had terminated the 1998 Distribution Agreement.
The Stent Delivery System Agreement was terminated on November 5, 1999.
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23
In December 1999, a new distribution agreement was restructured between
JOMED and the Company to provide more specific metrics regarding performance and
was implemented in December 1999 (the "Master Distribution Agreement"). Also in
December 1999, JOMED satisfied its outstanding payment obligations to the
Company.
JOMED's ordinary shares commenced trading on the SWX Swiss Exchange on
April 19, 2000 and the related initial public offering was completed on April
26.
On May 25, Messrs. Warnking and Peters met at the European Transcatheter
Conference in Paris, France. Dr. Hans P. de Weerd, Senior Advisor to the
Company, and Antti Ristinmaa, Vice President, Finance and Chief Financial
Officer of JOMED, were also in attendance. Messrs. Warnking and Peters
reinitiated their discussions concerning a potential business combination
between the Company and JOMED.
On May 29, Messrs. Warnking and de Weerd met with Mr. Peters and other
senior management of JOMED in Rangendingen, Germany and Beringen, Switzerland.
Mr. Peters proposed a business combination pursuant to which the Company would
be acquired by and merged with and into JOMED, and discussion ensued.
On May 31, Mr. Peters contacted Mr. Warnking by telephone to continue these
discussions. After speaking with Mr. Peters, Mr. Warnking contacted U.S. Bancorp
Piper Jaffray, and representatives from U.S. Bancorp Piper Jaffray contacted
representatives from CSFB later that day and continued these merger discussions.
Between May 31 and June 15, Messrs. Warnking and Peters and representatives
from U.S. Bancorp Piper Jaffray and CSFB continued these discussions
telephonically. Preliminary discussions concerning the appropriate valuation of
the Company also ensued.
On June 16, the Company's Board of Directors held a special telephonic
meeting, at which all members of the Board of Directors except Thomas J. Cable
were present, as well as U.S. Bancorp Piper Jaffray and representatives from
Latham & Watkins, legal counsel to the Company ("Latham"). At this meeting, Mr.
Warnking updated the Board of Directors on the status of his discussions with
Mr. Peters, and discussion ensued regarding the history of the Company's
relationship with JOMED, the strategic reasons for the combination of the
Company with JOMED and the appropriate valuation of the Company in the proposed
transaction. The Board of Directors authorized Mr. Warnking and U.S. Bancorp
Piper Jaffray to continue their discussions with Mr. Peters and CSFB, to
commence due diligence with JOMED and to negotiate and enter into a
confidentiality agreement.
On or about June 19, the financial advisors for a public medical device
company ("Company A") contacted Mr. Warnking and requested a meeting. On June
23, Mr. Warnking and Jeffrey Elder, Senior Vice President and Chief Financial
Officer of the Company, met with representatives from Company A and Company A's
financial advisors at the Company's headquarters in Rancho Cordova, California
and commenced discussions concerning a potential business combination between
the Company and Company A.
On June 26, Mr. Peters and other members of JOMED's senior management met
with Mr. Warnking and other members of the Company's senior management at the
Company's headquarters in Rancho Cordova, California to commence due diligence,
and the Company and JOMED executed the Confidentiality Agreement. The
Confidentiality Agreement included, among other provisions, two-year standstill
and employee non-solicitation agreements by JOMED in favor of the Company. On
June 27, two members of JOMED's senior management met with the general manager
of the Company's manufacturing facilities in San Diego, California and Mr. de
Weerd to conduct further operational and business due diligence.
On June 29, Messrs. Warnking and de Weerd traveled to Company A's
headquarters and met with Company A's Chairman and Chief Executive Officer and
other members of Company A's senior management. On June 30, Messrs. Warnking and
de Weerd and a representative from U.S. Bancorp Piper Jaffray met with Company
A's Chairman and Chief Executive Officer and other members of Company A's senior
management at Company A's headquarters to continue discussions concerning a
potential business combination between the Company and Company A. Preliminary
discussions concerning the appropriate valuation of
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the Company also ensued, and Company A's representatives orally proposed to
acquire the Company in a stock-for-stock merger transaction that would be
accounted for as a pooling of interests.
On July 3, the Company's Board of Directors held a special telephonic
meeting, at which all members of the Board of Directors were present, as well as
representatives from U.S. Bancorp Piper Jaffray and Latham. At this meeting, Mr.
Warnking updated the Board of Directors on the status of his discussions with
both JOMED and Company A, and discussion ensued regarding the relative merits of
a transaction with JOMED versus a transaction with Company A, strategic
considerations weighing in favor of each alternative transaction and the
appropriate valuation of the Company in the proposed transactions. At the
conclusion of the meeting, the Board of Directors authorized Mr. Warnking and
U.S. Bancorp Piper Jaffray to continue discussions with both parties.
On July 5, representatives from Company A again traveled to the Company's
headquarters in Rancho Cordova, California and continued financial, operational
and legal due diligence. On July 6, representatives from Company A performed
additional operational due diligence at the Company's manufacturing facilities
in San Diego, California.
On July 7, Mr. Warnking again met with Company A's management at Company
A's headquarters to continue negotiations and discussions with Company A.
On July 7, Mr. Warnking received a letter from Mr. Peters containing an
offer to purchase all of the outstanding shares of the Company's common stock
for a price of $10.50 per share in cash. The letter indicated that the
transaction would be structured as a cash tender offer for all of the shares of
the Company's common stock followed by a merger of the Company with and into a
wholly owned subsidiary of JOMED, with the Company surviving the merger as a
wholly owned subsidiary of JOMED. The purchase offer was subject to JOMED's
completion of additional due diligence, approval of the Company's Board of
Directors and JOMED's board of directors, execution of a definitive agreement
and the receipt of certain standard governmental, regulatory and third-party
approvals. The offer letter also stated that the transaction would be financed
from JOMED's current resources and a follow-on equity offering, but that in any
event, any offer made by JOMED would not be contingent upon JOMED obtaining
third-party financing.
On July 9, representatives from Company A's financial advisors informed
U.S. Bancorp Piper Jaffray that Company A was not in a position to propose a
transaction that would be superior to the JOMED proposal.
On July 10, the Company's Board of Directors held a special telephonic
meeting, at which all members of the Board of Directors were present, as well as
representatives from U.S. Bancorp Piper Jaffray and Latham. At this meeting, Mr.
Warnking presented JOMED's proposal to the Board of Directors, and discussion
ensued as to the merits of JOMED's proposal. The Board of Directors noted that
JOMED's proposal was at a price that was in excess of the range of prices that
had been discussed with Company A, that JOMED's offer was for cash rather than
stock and that JOMED's offer was not contingent on JOMED's receipt of
third-party financing, and the Board of Directors authorized management to
pursue negotiations with JOMED on an expedited basis. After the meeting, Mr.
Warnking sent a letter to Mr. Peters in response to JOMED's offer letter,
responding to certain due diligence questions and other issues related to
JOMED's proposal. In addition, representatives from U.S. Bancorp Piper Jaffray
held several telephonic conversations with CSFB to discuss the valuation cited
in JOMED's proposal.
On July 12, Mr. Warnking received another letter from Mr. Peters containing
an offer to purchase all of the outstanding shares of the Company's common stock
for a price of $11.00 per share in cash. The offer letter indicated that the
transaction would be structured as a cash tender offer for all of the shares of
the Company's common stock followed by a merger of the Company with and into a
wholly owned subsidiary of JOMED, with the Company surviving the merger as a
wholly owned subsidiary of JOMED. The purchase offer was subject to JOMED's
completion of additional confirmatory due diligence, approval of the Company's
Board of Directors and JOMED's board of directors and execution of a definitive
agreement, subject to customary closing conditions. The offer letter again
stated that the transaction would be financed from JOMED's current resources and
a follow-on equity offering, but that in any event, any offer made by JOMED
would not be contingent upon JOMED obtaining third-party financing.
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On July 14, the Company's Board of Directors held another telephonic
special meeting, at which all directors were present. Representatives from U.S.
Bancorp Piper Jaffray and Latham were also in attendance, and U.S. Bancorp Piper
Jaffray presented the Board of Directors with an analysis that evaluated the
valuation cited in JOMED's proposal. Discussion ensued, and the members of the
Board of Directors were given an opportunity to ask additional questions about
U.S. Bancorp Piper Jaffray's analysis and the methodology on which it was
predicated.
On July 20 and July 21, representatives from Skadden, Arps, Slate, Meagher
& Flom LLP, JOMED's legal counsel ("Skadden"), performed legal due diligence
near the Company's headquarters in Rancho Cordova, California.
On the evening of July 20, Skadden delivered to Latham a proposed draft of
a merger agreement, which proposed a cash tender offer followed by a merger. The
draft merger agreement also proposed a lock-up option to purchase up to 19.9% of
the Company's common stock in the event the Company ultimately decided to enter
into an alternative transaction with a third party other than JOMED and gave
JOMED the ability to terminate the agreement in the event that JOMED's stock
price fell below a certain amount or in the event of a material adverse change
in the Company's business between the signing and the closing of the agreement.
On the afternoon of July 21, Messrs. Warnking and de Weerd and
representatives of U.S. Bancorp Piper Jaffray and Latham held a telephonic
conference call to discuss the proposed draft of the merger agreement and the
legal and business issues presented thereby and proposed revisions thereto. Also
on the afternoon of July 21, Skadden delivered to Latham a draft of the
commitment letter from CSFB to JOMED with respect to JOMED's proposed equity
offering.
On the morning of July 24, the Company's Board of Directors held a regular
meeting at the Company's headquarters in Rancho Cordova, California. All members
of the Board of Directors attended the meeting either in person or by telephone,
and representatives from U.S. Bancorp Piper Jaffray and Latham were also in
attendance. Latham presented a summary of the proposed draft of the merger
agreement and the comments that were proposed to be delivered to JOMED's counsel
in response thereto. Particular emphasis was given to the inclusion of language
in the proposed draft that gave JOMED the ability to terminate the merger
agreement in the event that JOMED's stock price fell below a certain amount. The
Board of Directors received a presentation by Latham concerning the Board's
fiduciary obligations in considering such a transaction, and the Board of
Directors authorized Mr. Warnking, U.S. Bancorp Piper Jaffray and Latham to
negotiate a definitive merger agreement with JOMED, CSFB and Skadden.
On the afternoon of July 24, Latham delivered comments on the proposed
draft of the merger agreement to JOMED's counsel. Comments on the proposed draft
of the merger agreement included, among other things, deletion of the proposed
language that gave JOMED the ability to terminate the merger agreement in the
event that JOMED's stock price fell below a certain amount, deletion of the
proposed lock-up option to purchase up to 19.9% of the Company's common stock in
the event the Company ultimately decided to enter into an alternative
transaction with a third party other than JOMED, and revisions to the
termination provisions, conditions to the Offer, the non-solicitation covenant
and fees and expenses payable upon termination of the merger agreement.
A due diligence meeting was held on July 26, 2000 involving JOMED's senior
management and JOMED's financial advisors.
On July 26, Messrs. Warnking, de Weerd, Elder and Peters and
representatives from U.S. Bancorp Piper Jaffray, CSFB, Latham and Skadden met at
Skadden's offices in New York, New York to discuss and negotiate the proposed
draft merger agreement. At the meeting, much of the discussion focused on the
inclusion of the proposed language that gave JOMED the ability to terminate the
merger agreement in the event that JOMED's stock price fell below a certain
amount, as well as additional conditions to the Offer many of which (but not
all) were also conditions to the JOMED Equity Offering, that were proposed by
JOMED at this meeting. Following the negotiations, on the evening of July 26,
the Company's Board of Directors held another telephonic special meeting
relating to JOMED's financing of the Offer. Representatives from U.S. Bancorp
Piper Jaffray and Latham were also in attendance and updated the Board of
Directors
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on the status of the merger agreement negotiations. The Board of Directors
authorized Mr. Warnking, U.S. Bancorp Piper Jaffray and Latham to continue to
negotiate a definitive merger agreement with JOMED, CSFB and Skadden. The Board
of Directors also instructed Mr. Warnking to contact Company A to determine
whether the status of Company A's interest had changed. A representative of the
Company contacted Company A and was informed that Company A's interest had not
changed.
On July 27, Skadden distributed a revised draft of the merger agreement to
Latham. The revised draft omitted the 19.9% lock-up option, but still contained
reference to the additional conditions to the Offer that were raised in the July
26 meeting in New York. The revised draft also proposed a termination fee of $8
million plus JOMED's expenses, with respect to which the revised draft proposed
a cap of $3 million. After conferring with the Company and U.S. Bancorp Piper
Jaffray, Latham transmitted additional comments on the revised draft of the
merger agreement to Skadden on July 28.
On July 31, U.S. Bancorp Piper Jaffray contacted CSFB to discuss the
status, timing and likelihood of success of JOMED's proposed equity offering.
Throughout the week of July 31, U.S. Bancorp Piper Jaffray continued to perform
financial and operational due diligence on JOMED.
On July 31, Mr. de Weerd met with Mr. Ristinmaa near JOMED's administration
headquarters in Sweden to discuss the extent of JOMED's proposed financing
contingency in the draft of the merger agreement and various ways to resolve the
outstanding issues in connection therewith.
On July 31 and August 1, a representative from JOMED's independent public
accountants performed financial and accounting due diligence on the Company at
the Company's headquarters in Rancho Cordova, California.
On July 31 and August 1, a representative from the Company's independent
auditors interviewed JOMED's independent public accountants near JOMED's
administration headquarters in Sweden. On August 1, the representative met with
Mr. Ristinmaa near JOMED's administration headquarters in Sweden.
On August 2, representatives of the Company, JOMED, Latham and Skadden held
a number of telephonic conference calls during the course of which outstanding
issues on the draft merger agreement were discussed. In particular, outstanding
issues regarding financing conditions were resolved and the termination fee was
reduced from $8 million plus $3 million of expenses to $7 million including
expenses, which remained capped at $3 million.
On August 3, 2000, JOMED's board of directors held a special meeting to
consider the terms of the proposed acquisition of EndoSonics. Members of JOMED's
management and JOMED's financial representatives briefed the directors on the
status of negotiations concerning the Merger Agreement. Management was directed
to continue negotiations, with the understanding that definitive terms of the
transaction would be presented to the directors at a subsequent meeting for
final consideration and approval.
In a telephone conversation on August 3, 2000, Mr. Peters informed Mr.
Warnking that he believed that he was prepared to submit the transaction to
JOMED's board of directors for their final consideration and approval. After
further discussions, Mr. Warnking agreed to submit the proposed transaction at
$11.00 per share to EndoSonics' Board of Directors for their consideration and
approval.
On August 4, JOMED's board of directors held a regular meeting in
Amsterdam, The Netherlands. All members of JOMED's board of directors attended
in person, Mr. Ristinmaa attended by telephone, and representatives from CSFB
were also in attendance. CSFB presented a summary of the transaction rationale
and financial projections of the Company and discussed the timing of a cash
tender offer and financing. The JOMED board of directors approved the terms of
the Merger Agreement and the financing.
On August 4, U.S. Bancorp Piper Jaffray held a telephonic conference call
with Mr. Ristinmaa to discuss JOMED's results of operations for the quarter
ended June 30, JOMED's estimated results of operations for the quarter ending on
September 30 and to conduct further financial and operational due diligence on
JOMED.
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On August 5, the Company's Board of Directors held a telephonic special
meeting at which all directors except Dr. Gregg Stone were present. At this
meeting, the Board of Directors considered the final terms of the Offer, the
Merger and the Merger Agreement. The terms of the proposed transaction were
reviewed with the Company's management and representatives of both Latham and
U.S. Bancorp Piper Jaffray. The Board of Directors received and participated in
a presentation by Latham with respect to the terms of the proposed transaction
and a summary of the Board's fiduciary obligations in considering such a
transaction. The Board of Directors also received and participated in a
presentation by U.S. Bancorp Piper Jaffray with respect to the financial terms
of the proposed transaction.
At the conclusion of its presentation, representatives of U.S. Bancorp
Piper Jaffray delivered the oral opinion of U.S. Bancorp Piper Jaffray to the
Board (which was subsequently confirmed in writing) that, as of such date, the
offer price of $11.00 per share in cash proposed to be received in the Offer and
the Merger by the stockholders of the Company (other than JOMED, Purchaser and
its affiliates) pursuant to the Merger Agreement is fair, from a financial point
of view, to such stockholders.
The Company's Board of Directors, at the August 5 special telephonic
meeting, (1) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, are fair to and in the
best interests of the Company's stockholders; (2) approved and declared
advisable the Merger Agreement and the transactions contemplated thereby,
including the Offer and the Merger; and (3) recommended that the Company's
stockholders accept the Offer and tender their Shares thereunder. The entire
Board of Directors, including Dr. Gregg Stone, who was not present at the August
5 Board of Directors meeting, reaffirmed the above actions by unanimous written
consent dated August 5, 2000.
Following the approval by the Company's Board of Directors on August 5, Mr.
Warnking executed the Merger Agreement and delivered it to JOMED, and Mr. Peters
simultaneously delivered an executed copy of the Merger Agreement to the
Company.
On August 6, 2000, JOMED and EndoSonics jointly issued a press release
announcing the execution of the Merger Agreement.
On August 21, 2000, in accordance with the Merger Agreement, the Purchaser
commenced the Offer.
11. THE MERGER AGREEMENT.
General. The following is a summary of the material provisions of the
Merger Agreement, a copy of which is filed as an exhibit to the Tender Offer
Statement on Schedule TO filed by JOMED and the Purchaser pursuant to Rule 14d-3
of the General Rules and Regulations under the Exchange Act with the SEC in
connection with the Offer (the "Schedule TO"). The summary is qualified in its
entirety by reference to the Merger Agreement, which is deemed to be
incorporated by reference herein. Capitalized terms used herein and not
otherwise defined have the meanings ascribed to them in the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer. The
obligation of the Purchaser to accept for payment and pay for Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 15.
Directors. The Merger Agreement provides that promptly upon the purchase
of and payment for not less than a majority of the outstanding Shares by JOMED
or any of its subsidiaries pursuant to the Offer, JOMED shall be entitled to
designate for appointment or election to the Company's Board of Directors, upon
written notice to the Company, such number of directors, rounded up to the next
whole number, on the Board of Directors such that the percentage of its
designees on the Board shall equal the percentage of the Shares beneficially
owned by JOMED and its affiliates. In furtherance thereof, the Company shall,
upon request of the Purchaser, use its best efforts promptly to cause JOMED's
designees to be so elected to the Company's Board of Directors, and in
furtherance thereof, to the extent necessary, increase the size of the Board of
Directors or use its best efforts to obtain the resignation of such number of
its current directors as is necessary to give effect to the foregoing provision.
At such time, the Company shall also, upon the request of Purchaser, use its
best efforts to cause Persons designated by JOMED to constitute at least the
same percentage (rounded up to the next whole number) as is on the Company's
Board of Directors of (i) each committee of
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the Company's Board of Directors, (ii) each board of directors (or similar body)
of each subsidiary of the Company and (iii) each committee (or similar body) of
each such board. The Merger Agreement provides that, until the Effective Time,
the Board of Directors of the Company will have at least three directors who are
directors of the Company on the date of the Merger Agreement (the "Continuing
Directors").
The Merger. The Merger Agreement provides that upon the terms and subject
to the conditions set forth therein, at the Effective Time the Purchaser will be
merged with and into the Company with the Company being the Surviving
Corporation in the Merger. Following the Merger, the separate corporate
existence of the Purchaser will cease, and the Company will continue as the
Surviving Corporation and become a wholly owned subsidiary of JOMED.
If required by the DGCL, the Company will call and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") promptly following
consummation of the Offer for the purpose of voting upon the approval of the
Merger Agreement. At any such meeting all Shares then owned by JOMED or the
Purchaser or any subsidiary of JOMED will be voted in favor of adoption the
Merger Agreement.
Pursuant to the Merger Agreement, each Share outstanding at the Effective
Time (other than Shares owned by JOMED or the Company or any of their respective
subsidiaries, all of which will be cancelled, and other than Shares that are
held by stockholders, if any, who properly exercise their dissenters' rights
under the DGCL) will be converted into the right to receive the Merger
Consideration. Stockholders who perfect their dissenters' rights under the DGCL
will be entitled to the amounts determined pursuant to such proceedings. See
Section 17.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to JOMED and the
Purchaser, including representations relating to the Company's due organization,
good standing and corporate power, authorization and validity of the Merger
Agreement, the Company's capitalization, necessary consents and approvals, no
violations, the Company's reports and financial statements, information to be
supplied, the absence of certain events with respect to the Company, litigation,
the Company's title to properties and encumbrances on the Company's property,
compliance with laws, Company employee benefit plans, taxes, intellectual
property, broker's or finder's fees, environmental matters, state takeover
statutes, voting requirements and approval by the Company's board of directors,
the opinion of the Company's financial advisor, contracts, and products
liability.
Certain representations and warranties in the Merger Agreement made by the
Company and JOMED are qualified as to "materiality" or "Material Adverse
Effect." For purposes of the Merger Agreement and this Offer to Purchase, the
term "Material Adverse Effect" means any event, change, occurrence, effect, fact
or circumstance that is materially adverse to (i) the ability of the Company to
perform its obligations under the Merger Agreement or to consummate the
transactions contemplated thereby or (ii) the business, assets, liabilities,
results of operations or financial condition of the Company and its
subsidiaries, taken as a whole, provided however, that none of the following
shall be deemed in themselves, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Material Adverse Effect:
(a) any change in the market price or trading volume of the Company's stock
after the date of the Merger Agreement;
(b) any failure by the Company to meet internal projections or forecasts or
published revenue or earnings predictions for any period ending (or for
which revenues or earnings are released) on or after the date of the
Merger Agreement;
(c) any adverse change, effect, event, occurrence, state of facts or
development to the extent attributable to the announcement or pendency
of the Offer or the Merger (including any cancellations of or delays in
customer orders, any reduction in sales, any disruption in supplier,
distributor, partner or similar relationships or any loss of
employees);
(d) any adverse change, effect, event, occurrence, state of facts or
development related to any action or inaction by JOMED or the Purchaser
(including any cancellations of or delays in customer orders,
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any reduction in sales, any disruption in supplier, distributor,
partner or similar relationships or any loss of employees);
(e) any adverse change, effect, event, occurrence, state of facts or
development attributable to conditions affecting the industries in
which the Company participates, the U.S. economy as a whole or foreign
economies in any locations where the Company or any of its subsidiaries
has material operations or sales;
(f) any adverse change, effect, event, occurrence, state of facts or
development attributable or relating to (i) out-of-pocket fees and
expenses (including legal, accounting, investment banking and other
fees and expenses) incurred in connection with the transactions
contemplated by the Merger Agreement, or (ii) as a result of the
Company's entry into, and as permitted by, the Merger Agreement, the
payment of any amounts due to, or the provision of any other benefits
(including benefits relating to acceleration of stock options) to, any
officers or employees under employment contracts, non-competition
agreements, employee benefit plans, severance arrangements or other
arrangements in existence as of the date of the Merger Agreement; or
(g) any adverse change, effect, event, occurrence, state of facts or
development resulting from or relating to compliance with the terms of,
or the taking of any action required by, or the failure to take any
action prohibited by, the Merger Agreement.
Pursuant to the Merger Agreement, JOMED and the Purchaser have made
customary representations and warranties to the Company, including
representations relating to their due organization, good standing and corporate
power, authorization and validity of the Merger Agreement, their obtaining
consents and approvals, no violations, information to be supplied by them,
broker's or finder's fees, their ownership of capital stock, their activities
prior to the signing of the Merger Agreement and financing.
Covenants. The Merger Agreement contains various covenants of the parties
thereto. A description of certain of these covenants follows:
Company Conduct of Business Covenants. The Merger Agreement provides that,
prior to the Effective Time and except as may be agreed in writing by JOMED,
which will not be unreasonably withheld or delayed, or as expressly permitted by
the Merger Agreement:
(a) the Company and its subsidiaries will conduct their respective
operations in all material respects only according to their ordinary
and usual course of business consistent with past practice and shall
use their reasonable best efforts to preserve intact their respective
business organizations, keep available the services of their officers
and employees and maintain satisfactory relationships with licensors,
suppliers, distributors, clients, joint venture partners and others
having significant business relationships with them;
(b) except as disclosed in or expressly contemplated by the Merger
Agreement, neither the Company nor any of its subsidiaries will:
(1) make any change in or amendment to the Company's Certificate of
Incorporation or its By-Laws;
(2) issue or sell, or authorize to issue or sell, any shares of its
capital stock or any other securities, or issue or sell, or
authorize to issue or sell, any securities convertible into, or
options, warrants or rights to purchase or subscribe for, or enter
into any arrangement or contract with respect to the issuance or
sale of, any shares of its capital stock or any other securities,
or make any other changes in its capital structure, other than (i)
the issuance of Shares upon the exercise of stock options
outstanding on the date hereof, in accordance with their present
terms, or (iii) issuances by a wholly owned subsidiary of the
Company of capital stock to such subsidiary's parent, the Company
or another wholly owned subsidiary of the Company;
(3) declare, pay or set aside any dividend or other distribution or
payment with respect to, or split, combine, redeem or reclassify,
or purchase or otherwise acquire, any shares of its capital stock
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or its other securities, other than dividends payable by a wholly
owned subsidiary of the Company to the Company or another wholly
owned subsidiary of the Company;
(4) incur any capital expenditures or any obligations or liabilities in
respect thereof, except for those (A) contemplated by the capital
expenditure budget for the Company and its subsidiaries made
available to JOMED, (B) incurred in the ordinary course of business
of the Company and its subsidiaries and disclosed in the Merger
Agreement (the "Capital Budget") or (C) not otherwise described in
clauses (A) and (B) which, in the aggregate, do not exceed U.S.$1.0
million;
(5) acquire or agree to acquire (A) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint
venture, association or other business organization of division
thereof (including any of the Company's subsidiaries) or (B) any
assets, including real estate, except (x) purchases of inventory,
equipment, other non-material assets in the ordinary course of
business consistent with past practice or (y) expenditures
consistent with the Company's Capital Budget;
(6) except in the ordinary course of business consistent with past
practice and except to the extent required under existing employee
and director benefit plans, agreements or arrangements as in effect
on the date of the Merger Agreement, increase the compensation or
fringe benefits of any of its directors, officers or employees or
grant any severance or termination pay not currently required to be
paid under existing severance plans or enter into any employment,
consulting or severance agreement or arrangement with any present
or former director, officer or other employee of the Company or any
of its subsidiaries, or hire or agree to hire, or enter into any
employment agreement with, any new or additional key employee or
officer having an annual salary of U.S.$150,000 or more;
(7) except as required to comply with applicable law or expressly
provided in the Merger Agreement, (A) adopt, enter into, terminate
or amend any Company Benefit Plan (as defined herein) or other
arrangement for the current or future benefit or welfare of any
director, officer or current or former employee, except to the
extent necessary to coordinate any such Company Benefit Plans with
the terms of the Merger Agreement, (B) pay any benefit not provided
for under any Company Benefit Plan, accelerate the payment, right
of payment or vesting of any bonus, severance, profit sharing,
retirement, deferred compensation, stock option, insurance or other
compensation or benefits, (C) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or
Company Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards,
performance units or restricted stock, or the removal of existing
restrictions in any Company Benefit Plans or agreements or awards
made thereunder) or (D) except as required by the current terms
thereof take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Company Benefit Plan;
(8) transfer, lease, license, guarantee, sell, mortgage, pledge,
dispose of, encumber or subject to any lien, any material assets,
other than in the ordinary course of business;
(9) except as required by applicable law or GAAP, make any change in
its methods of accounting;
(10) adopt or enter into a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization
or other reorganization of the Company or any of its subsidiaries
(other than the Merger) or any agreement relating to a Takeover
Proposal, except as contemplated by the Merger Agreement (see
"-- No Solicitation")
(11) (i) incur or assume any long-term debt, or except in the ordinary
course of business, incur or assume any short-term indebtedness in
amounts not consistent with past practice; (ii) incur or modify any
material indebtedness or other liability; (iii) assume, guarantee,
endorse or
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otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person,
except in the ordinary course of business and consistent with past
practice; (iv) make any loans, advances or capital contributions
to, or investments in, any other person (other than to wholly owned
subsidiaries of the Company, or by such subsidiaries to the
Company, or customary loans or advances to employees in accordance
with past practice); (v) settle any claims in excess of U.S.$1
million other than in the ordinary course of business, in
accordance with past practice, and without admission of liability;
or (vi) enter into any material commitment or transaction in excess
of U.S.$1 million except in the ordinary course of business;
(12) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of
any such claims, liabilities or obligations, in the ordinary course
of business and consistent with past practice, or of claims,
liabilities or obligations reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its consolidated subsidiaries;
(13) enter into any agreement, understanding or commitment that
materially restrains, limits or impedes the Company's or any of its
subsidiaries' ability to compete with or conduct any business or
line of business, including, but not limited to, geographic
limitations on the Company's or any of its subsidiaries'
activities;
(14) plan, announce, implement or effect any material reduction in labor
force, lay-off, early retirement program, severance program or
other program or effort concerning the termination of employment of
employees of the Company or its subsidiaries. However, routine
employee terminations for cause shall not be considered subject to
this provision;
(15) take any action including, without limitation, the adoption of any
shareholder rights plan or amendments to its certificate of
incorporation or by-laws (or comparable governing documents), which
would, directly or indirectly, restrict or impair the ability of
JOMED to vote, or otherwise to exercise the rights and receive the
benefits of a shareholder with respect to, securities of the
Company acquired or controlled by JOMED or the Purchaser or permit
any shareholder to acquire securities of the Company on a basis not
available to JOMED or the Purchaser in the event that JOMED or the
Purchaser were to acquire any additional Shares (subject to the
Company's right to take action specifically permitted by the Merger
Agreement);
(16) materially modify, amend or terminate any material contract to
which it is a party or waive or assign any of its material rights
or claims except in the ordinary course of business consistent with
past practice;
(17) other than in the ordinary course of business consistent with past
practice, make any tax election or enter into any settlement or
compromise of any tax liability that in either case is material to
the business of the Company and its subsidiaries as a whole; or
(18) agree, in writing or otherwise, to take any of the foregoing
actions.
(c) The Company shall not, and shall not permit any of its subsidiaries to,
take any voluntary action that would result in (i) any of its
representations and warranties set forth in the Merger Agreement that
are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming
untrue in any material manner having a Material Adverse Effect or (iii)
any of the conditions to the Offer set forth in subsections (a), (c),
(d) and (e) of Annex I of the Merger Agreement (and listed in Section
15 hereof) not being satisfied (subject to the Company's right to take
action specifically permitted by the Merger Agreement).
Confidentiality. The Merger Agreement provides that, prior to the
Effective Time and after any termination of the Merger Agreement, each of JOMED
and the Company will hold, and shall use its best
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efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors, lenders and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other party furnished to it or its affiliates in connection with the
transactions contemplated by the Merger Agreement, except to the extent that
such information can be shown to have been previously known on a nonconfidential
basis by such party, in the public domain through no fault of such party or
later lawfully acquired by such party from sources other than the other party.
However, JOMED and the Company may disclose such information to its officers,
directors, employees, accountants, counsel, consultants, advisors, lenders and
agents in connection with the transactions contemplated by the Merger Agreement
so long as such party informs such persons of the confidential nature of such
information and directs them to treat it confidentially. JOMED and the Company
shall satisfy its obligation to hold any such information in confidence if it
exercises the same care with respect to such information as it would take to
preserve the confidentiality of its own similar information. If the Merger
Agreement is terminated, JOMED and the Company shall, and shall use its best
efforts to cause its officers, directors, employees, accountants, counsel,
consultants, advisors, lenders and agents to, destroy or deliver to the other
party, upon request, all documents and other materials, and all copies thereof,
that it or its affiliates obtained, or that were obtained on their behalf, from
the other party in connection with the Merger Agreement and that are subject to
such confidence. The confidentiality agreement dated June 26, 2000 between the
JOMED and the Company shall remain in full force and effect.
Special Meeting; Proxy Statement. Following the purchase of Shares
pursuant to the Offer, if required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, will, in accordance
with applicable law:
(i) call, give notice of, convene and hold a special meeting of its
stockholders (the "Special Meeting") for the purposes of
considering and taking action upon the approval of the Merger and
adoption of the Merger Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and the Merger Agreement (the
"Proxy Statement") and obtain and furnish the information required
to be included by the SEC in the Proxy Statement and, after
consultation with JOMED, respond promptly to any comments made by
the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement,
to be mailed to its stockholders at the earliest practicable date,
provided that no amendments or supplements to the Proxy Statement
will be made by the Company without consultation with JOMED and
its counsel;
(iii) take all action necessary to solicit from its stockholders proxies,
and take all other action necessary and advisable, to secure the vote
of stockholders required by applicable law and the Company's
Certificate of Incorporation or By-Laws to obtain the approval for
the Merger Agreement and the Merger; and
(iv) unless the Board of Directors of the Company otherwise determines
(based on a majority vote of the Board of Directors in its good faith
judgment that such other action is necessary to comply with its
fiduciary duty to stockholders under applicable law after consulting
with outside legal counsel) prior to the Company Shareholder
Approval, (x) recommend approval and adoption by its stockholders of
the Merger Agreement (the "Company Recommendation"), (y) not amend,
modify, withdraw, condition or qualify the Company Recommendation in
a manner adverse to JOMED or take any action or make any statement
inconsistent with the Company Recommendation and (z) take all lawful
action to solicit the Company Shareholder Approval whether or not the
Company Recommendation remains in effect.
JOMED will vote, or cause to be voted, all of the Shares acquired in the
Offer or otherwise then owned by it, the Purchaser or any of JOMED's other
subsidiaries in favor of the approval and adoption of the Merger Agreement.
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In the event that JOMED, the Purchaser and any other subsidiaries of JOMED
acquires in the aggregate at least 90% of the outstanding shares of each class
of capital stock of the Company pursuant to the Offer or otherwise, the parties
hereto will, subject to the conditions to the Merger set forth in the Merger
Agreement, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
Reasonable Best Efforts. The Merger Agreement provides that JOMED, the
Purchaser and the Company will use all reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer and the Merger, and the other transactions contemplated
by the Merger Agreement, including:
(i) the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from any court, tribunal, arbitrator,
authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign
state, county, city or other political subdivision ("Governmental
Authority") and the making of all necessary registrations and filings
(including filings with any Governmental Authority, if any) and the
taking of all reasonable steps as may be necessary to obtain an
approval or waiver from, or to avoid an action or proceeding by, any
Governmental Authority;
(ii) the obtaining of all necessary consents, approvals or waivers from
third parties;
(iii) the defending of any lawsuits or other legal proceedings, whether
judicial or administrative, challenging the Merger Agreement or the
consummation of any of the transactions contemplated by the Merger
Agreement, including seeking to have any stay or temporary
restraining order entered by any court or other Governmental
Authority vacated or reversed;
(iv) the obtaining of the financing contemplated by the JOMED Equity
Offering, including the Company's providing financial statements and
financial and other business information required to be disclosed by
JOMED in connection therewith; and
(v) the execution and delivery of any additional instruments necessary to
consummate the transactions contemplated by, and to fully carry out
the purposes of, the Merger Agreement; provided, however, that no loan
agreement or contract for borrowed money entered into by the Company
or any of its subsidiaries shall be repaid except as currently
required by its terms, in whole or in part, and no contract shall be
amended to increase the amount payable thereunder or otherwise to be
more burdensome to the Company or any of its subsidiaries in order to
obtain any such consent, approval or authorization without first
obtaining the written approval of JOMED.
The Merger Agreement provides that the Company shall give prompt notice to
JOMED of (i) any representation or warranty made by it contained in the Merger
Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect (including in the case of representations or warranties by the
Company, the Company receiving knowledge of any fact, event or circumstance
which may cause any representation qualified as to the knowledge of the Company
to be or become untrue or inaccurate in any respect) or (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under the Merger Agreement.
However, no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under the Merger Agreement. The Company acknowledges that if after
the date of the Merger Agreement the Company receives knowledge of any fact,
event or circumstance that would cause any representation or warranty that is
conditioned as to the knowledge of the Company to be or become untrue or
inaccurate in any respect, the receipt of such knowledge shall constitute a
breach of the representation or warranty that is so conditioned as of the date
of such receipt.
The Merger Agreement provides that JOMED will, at its expense, engage a
nationally-recognized agent to provide information to stockholders of the
Company with respect to the Offer and to encourage stockholders to deliver their
shares to the designated depositary for the Offer.
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Employee Stock Options and Other Employee Benefits. The Merger Agreement
provides that the Company, the Company's Board of Directors and each relevant
committee of the Company's Board of Directors shall, effective as of the
consummation of the Offer, cause each share of restricted Company Common Stock,
including those subject to mandatory resale provisions under Dutch law
(collectively, "Restricted Shares"), and each employee, consultant or director
option to purchase Shares (collectively, the "Stock Options") which is
outstanding immediately prior to the consummation of the Offer under the
Company's Restated 1988 Stock Option Plan, the Company's 1998 Stock Option Plan,
and the Company's 1999 Nonstatutory Stock Option Plan (including, without
limitation, any option originally granted under the Microsound Corporation 1997
Stock Plan), each as amended, all other plans and all individual grants of the
Company or its subsidiaries (the "Stock Option Plans") to vest all Restricted
Shares and to have all restrictions and mandatory resale provisions lapse (in
the case of the Restricted Shares), and (in the case of the Stock Options),
whether or not then exercisable or vested, to become fully exercisable and
vested. The Company shall use its reasonable best efforts to cause each Stock
Option that is outstanding immediately prior to the consummation of the Offer to
be cancelled in exchange for an amount in cash, payable at the consummation of
this Offer to Purchase, equal to the product of (i) the number of Shares subject
to such Stock Option and (ii) the excess, if any, of the Offer Price over the
per share exercise price of such Stock Option. The Company, the Company's Board
of Directors and each relevant committee of the Company's Board of Directors
shall use their reasonable best efforts to obtain the written consent of the
holder of each Stock Option, effective upon the consummation of the Offer, to
such cancellation. Subject to having obtained any necessary consents from the
holders of Stock Options, the Company shall cause the Company's Board of
Directors or each relevant committee of the Company's Board of Directors to make
any amendments to the Stock Option Plans or stock option agreements thereunder
which may be needed or desirable to implement such cancellation.
Further, concurrent with the execution of the Merger Agreement, the
Company, the Company's Board of Directors and each relevant committee thereof
shall take any and all action required with respect to the Company's 1998
Employee Stock Purchase Plan (the "Stock Purchase Plan") to set a New Purchase
Date (as defined in the Stock Purchase Plan) with respect to the Offering Period
(as defined in the Stock Purchase Plan) commencing August 1, 2000, which New
Purchase Date shall be no later than fifteen (15) days after the date of the
Merger Agreement. The Company, the Company's Board of Directors and each
relevant committee thereof shall provide any written notice required under
Section 18(b) of the Stock Purchase Plan with respect to the foregoing.
The Merger Agreement also provides that the Company will cause all of its
Stock Option Plans, its 1998 Employee Stock Purchase Plan and its 1984
Restricted Stock Purchase Plan (together, the "Company Stock Plans") to
terminate as of the Effective Time and the provisions in any other of the
Company's benefit plans or any other plan providing for the issuance, transfer
or grant of any capital stock of the Company or any interest in respect of any
capital stock of the Company shall be deleted as of the Effective Time, and the
Company shall use its reasonable best efforts to ensure that following the
Effective Time no holder of a stock option or any participant in any Company
Stock Plan or Company benefit plan or any other plan shall have any right
thereunder to acquire any capital stock of the Company, JOMED or the Surviving
Corporation.
No Solicitation. The Merger Agreement provides that the Company shall, and
shall use its reasonable best efforts to cause its affiliates, officers,
directors, employees, financial advisors, attorneys and other advisors,
representatives and agents to, immediately cease any discussions or negotiations
with third parties with respect to any Takeover Proposal (as defined below). The
Company shall not, nor shall it authorize or permit any of its affiliates to,
nor shall it authorize or permit any officer, director or employee of or any
financial advisor, attorney or other advisor, representative or agent of it or
any of its affiliates, to (i) directly or indirectly solicit, facilitate,
initiate or encourage the making or submission of, any Takeover Proposal
(including, without limitation, the taking of any action which would make
Section 203 of the DGCL inapplicable to a Takeover Proposal), (ii) enter into
any agreement, arrangement or understanding with respect to any Takeover
Proposal or enter into any agreement, arrangement or understanding requiring it
to abandon, terminate or fail to consummate the Merger or any other transaction
contemplated by the Merger Agreement, (iii) initiate or participate in any way
in any discussions or negotiations regarding, or furnish or disclose to any
person (other
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than a party to the Merger Agreement) any information with respect to, or take
any other action to facilitate or in furtherance of any inquiries or the making
of any proposal that constitutes, or could reasonably be expected to lead to,
any Takeover Proposal, or (iv) grant any waiver or release under any standstill
or similar agreement with respect to any class of the Company's equity
securities (other than to permit the Company to receive an unsolicitated
Takeover Proposal that did not result from a breach of this provision); provided
that prior to the acceptance for payment of shares of the Shares pursuant to the
Offer, in response to an unsolicited Takeover Proposal that did not result from
the breach of this provision and following delivery to JOMED of notice of the
Takeover Proposal in compliance with its obligations under this provision, the
Company may participate in discussions or negotiations with or furnish
information (pursuant to a confidentiality/standstill agreement with customary
terms) to any third party which makes a bona fide written Takeover Proposal if
(A) a majority of the Company's Board of Directors reasonably determines in good
faith (after consultation with its financial advisor) that taking such action
would be reasonably likely to lead to the delivery to the Company of a Superior
Proposal and (B) a majority of the Company's Board of Directors determines in
good faith (after consultation with outside legal counsel) that it is necessary
to take such actions in order to comply with its fiduciary duties under
applicable law. Without limiting the foregoing, the Company agrees that any
violation of the restrictions set forth in this provision by any of its, or any
of its subsidiaries', officers, employees, affiliates or directors or any
advisor, representative, consultant or agent retained by the Company or any of
its subsidiaries or affiliates in connection with the transactions contemplated
in the Merger Agreement, whether or not such Person is purporting to act on
behalf of the Company or any of its subsidiaries, shall constitute a breach of
this provision by the Company.
For purposes of the Merger Agreement, "Takeover Proposal" means any
inquiry, proposal or offer from any person or group relating to (i) any direct
or indirect acquisition or purchase of 20% or more of the assets of the Company
or any of its subsidiaries or 20% or more of any class of equity securities of
the Company or any of its subsidiaries, (ii) any tender offer or exchange offer
that, if consummated, would result in any Person beneficially owning 20% or more
of any class of equity securities of the Company or any of its subsidiaries or
(iii) any merger, consolidation, business combination, sale of all or any
substantial portion of the assets, recapitalization, liquidation or a
dissolution of, or similar transaction of the Company or any of its subsidiaries
other than the Offer or the Merger; and "Superior Proposal" means a bona fide
written Takeover Proposal made by a third party to purchase at least a majority
of the outstanding equity securities of the Company pursuant to a tender offer,
exchange offer, merger or other business combination (x) on terms which a
majority of the Company's Board of Directors determines in good faith (after
consultation with its financial advisor) to be superior to the Company and its
stockholders (in their capacity as stockholders) from a financial point of view
(taking into account, among other things, all legal, financial, regulatory and
other aspects of the proposal and identity of the offeror) as compared to the
transactions contemplated in the Merger Agreement and any alternative proposed
by JOMED or the Purchaser in accordance with the Merger Agreement and (y) which
is reasonably capable of being consummated.
In the Merger Agreement, the Company agrees that, except in connection with
the acceptance of a Superior Proposal, neither its Board of Directors nor any
committee thereof shall (i) approve or recommend, or, in the case of a
committee, propose to the Board of Directors to approve or recommend any
Takeover Proposal or (ii) approve, recommend or cause it to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement (each, an "Acquisition Agreement") related to any Takeover Proposal.
Prior to the acceptance for payment of shares of the Shares pursuant to the
Offer, the Company and/or its Board of Directors may take the actions otherwise
prohibited by the Merger Agreement if (i) a third party makes a Superior
Proposal, (ii) the Company complies with its obligations under the Merger
Agreement to inform JOMED of the Superior Proposal, (iii) all of the conditions
to the Company's right to terminate the Merger Agreement have been satisfied and
(iv) simultaneously therewith, the Merger Agreement is terminated due to the
Company's acceptance of a Superior Proposal.
The Merger Agreement also provides that the Company will promptly notify
JOMED in writing of any Takeover Proposal or any inquiry regarding the making of
any Takeover Proposal.
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Nothing contained in the Merger Agreement prohibits the Company or the
Company's Board of Directors from at any time taking and disclosing to its
stockholders a position contemplated by Rule 14e-2 promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders
required by applicable law.
Public Announcements. JOMED and the Company agree they will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by the Merger Agreement
and shall not issue any such press release or make any such public statement
prior to such consultation and review by the other party of such release or
statement, except as may be required by law, court process or by obligations
pursuant to any listing agreement with a national securities exchange.
Indemnification; Insurance. In the Merger Agreement, JOMED, the Purchaser
and the Surviving Corporation agree that all rights to indemnification existing
in favor of the present or former directors, officers, employees, fiduciaries
and agents of the Company or any of its subsidiaries (collectively, the
"Indemnified Parties") as provided in the Company's Certificate of Incorporation
or By-Laws or the certificate or articles of incorporation, by-laws or similar
organizational documents of any of the subsidiaries as in effect as of the
Effective Time shall survive the Merger and shall continue in full force and
effect for six years after the Effective Time (without modification or
amendment, except as required by applicable law) in accordance with their terms,
to the fullest extent permitted by law, and shall be enforceable by the
Indemnified Parties against the Surviving Corporation.
JOMED will cause to be maintained in effect for not less than six years
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company (provided that the Purchaser may
substitute therefor polices of at least equivalent coverage containing terms and
conditions which are no less advantageous) with respect to matters occurring
prior to the Effective Time, provided that in no event will the Purchaser or the
Surviving Corporation be required to expend to maintain or procure insurance
coverage pursuant to this provision any amount per annum in excess of
U.S.$400,000. In the event the payment of such amount for any year is
insufficient to maintain such insurance or equivalent coverage cannot otherwise
be obtained, the Surviving Corporation shall purchase as much insurance as may
be purchased for the amount indicated. The provisions of this provision shall
survive the consummation of the Merger and expressly are intended to benefit
each of the Indemnified Parties.
Employee Benefits. For a period of one year following the Effective Time,
the Purchaser will, or will cause the Surviving Corporation to, provide all of
the employees of the Surviving Corporation and its subsidiaries with employee
benefit plans, programs, policies or arrangements (the "Purchaser Benefit
Plans") as are substantially equivalent, in the aggregate, to those currently
provided by the current benefit plans of the Company. Except to the extent that
benefits may be duplicated, each Purchaser Benefit Plan shall give full credit
for each employee's period of service with the Company and its subsidiaries
prior to the Effective Time for all purposes for which such service was
recognized under the Company benefit plans prior to the Effective Time,
including, but not limited to, recognition of service for vesting, amount of
benefits, eligibility to participate, and eligibility for disability and early
retirement benefits (including subsidies relating to such benefits) and full
credit for deductibles satisfied under the benefit plans toward any deductibles
for the same period following the Effective Time, and shall waive any
pre-existing condition limitation for any Company employee covered under any
Company benefit plan immediately prior to the Effective Time.
Option to Acquire Additional Shares. The Merger Agreement provides that
the Company shall grant to the Purchaser an irrevocable option (the "Option") to
purchase up to that number of newly issued Shares (the "Option Shares") equal to
the number of Shares that, when added to the number Shares owned by JOMED, the
Purchaser and its affiliates immediately following consummation of the Offer,
shall constitute one share more than 90% of the shares of Common Company Stock
then outstanding on a fully diluted basis (after giving effect to the issuance
of the Option Shares) for a consideration per Option Share equal to the Offer
Price. Such Option shall be exercisable only after the purchase of and payment
for Shares pursuant to the Offer by JOMED or the Purchaser as a result of which
JOMED and its affiliates own beneficially at least 85% of the outstanding Shares
on a fully diluted basis. Such Option shall not be exercisable if (i) the number
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of Shares subject thereto exceeds the number of authorized Shares available for
issuance, or (ii) the exercise of the Option would violate the applicable rules
of the Nasdaq National Market applicable to the Company.
In the event the Purchaser wishes to exercise the Option, the Purchaser
shall give the Company a one-day prior written notice of its exercise of the
Option specifying the number of Shares that are or will be owned by JOMED, the
Purchaser and its affiliates immediately following consummation of the Offer and
a place and a time (which may be concurrent with the consummation of the Offer)
for the closing of such purchase. The Company shall, as soon as practicable
following receipt of the notice, deliver written notice to the Purchaser
specifying the number of Option Shares. At the closing of the purchase of the
Option Shares, the portion of the purchase price owing upon exercise of such
Option which equals the product of (x) the number of Shares purchased pursuant
to such Option multiplied by (y) the Offer Price shall be paid to the Company in
cash by wire transfer or cashier's check.
Conditions to the Merger. The Merger Agreement provides that the
obligations of JOMED, the Purchaser and the Company to consummate the Merger are
subject to the satisfaction of the following conditions at or prior to the
Effective Time:
- the Merger Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company, if required by
applicable law, in order to consummate the Merger;
- no provision of any applicable law or regulation and no judgment,
injunction, order or decree of any Governmental Authority of competent
jurisdiction shall prohibit the consummation of the Merger; and
- the Purchaser shall have purchased Shares pursuant to the Offer;
provided, however, that neither JOMED nor the Purchaser shall be entitled
to rely on this clause if either of them shall have failed to purchase
Shares pursuant to the Offer in breach of their obligations under the
Merger Agreement.
Pursuant to the Merger Agreement, the obligations of JOMED and the
Purchaser to consummate the Merger are subject to the Company having performed
in all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time. Conversely, the obligations
of the Company to consummate the Merger are subject to the JOMED and the
Purchaser having performed in all material respects all of their obligations
hereunder required to be performed by either of them at or prior to the
Effective Time.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, whether before or after adoption of the Merger Agreement by
stockholders:
(a) by mutual written consent of JOMED and the Company; or
(b) by JOMED:
(1) provided that neither JOMED nor the Purchaser is in material breach
of its obligations under the Merger Agreement, if at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the
Company has breached in any material respect any representation,
warranty, covenant or other agreement contained in the Merger
Agreement, which (i) would give rise to the failure of a condition
set forth in paragraph (d) of Section 15 of this Offer to Purchase,
(ii) cannot be or has not been cured prior to the Termination Date
and (iii) has not been waived by JOMED pursuant to the provisions of
the Merger Agreement;
(2) if at any time prior to the acceptance for payment of Shares
pursuant to the Offer, (A) the Company, or its Board of Directors,
as the case may be, shall have (w) entered into any agreement with
respect to any Takeover Proposal other than the Offer or the Merger
or a confidentiality/standstill agreement permitted under the Merger
Agreement, (x) amended, conditioned, qualified, withdrawn or
modified, or, in the case of a committee, proposed to the Board of
Directors, or resolved to do so, in a manner adverse to JOMED or the
Purchaser, its approval and recommendation of the Offer, the Merger
and the Merger Agreement, or (y) approved or recommended, or, in the
case of a committee, proposed to the Board of Directors, to approve
or recommend, any Takeover Proposal other than the Offer or the
Merger,
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or (B) the Company or the Company's Board of Directors or any
committee thereof shall have resolved to do any of the foregoing; or
(3) if the Company breaches in any material respect its obligations
under the sections of the Merger Agreement relating to Takeover
Proposals;
(c) by the Company, if at any time prior to the acceptance for payment of
Shares pursuant to the Offer a Superior Proposal is received by the
Company and the Board of Directors of the Company reasonably determines
in good faith (after consultation with outside legal counsel) that it
is necessary to terminate the Merger Agreement and enter into an
agreement to effect the Superior Proposal in order to comply with its
fiduciary duties under applicable law; provided that the Company may
not terminate the Merger Agreement pursuant to this provision unless
and until (i) three (3) business days have elapsed following delivery
to JOMED of a written notice of such determination by the Board of
Directors of the Company and during such three (3) business day period
the Company has fully cooperated with JOMED, including, without
limitation, informing JOMED of the terms and conditions of such
Superior Proposal, and the identity of the person making such Superior
Proposal, with the intent of enabling both parties to agree to a
modification of the terms and conditions of the Merger Agreement so
that the transactions contemplated in the Merger Agreement may be
effected; (ii) at the end of such three (3) business day period the
Takeover Proposal continues to constitute a Superior Proposal and the
Board of Directors of the Company confirms its determination (after
consultation with outside legal counsel) that it is necessary to
terminate the Merger Agreement and enter into an agreement to effect
the Superior Proposal to comply with its fiduciary duties under
applicable law; and (iii) (x) at or prior to such termination, JOMED
has received all fees and expenses as set forth in the Merger Agreement
by wire transfer in immediately available funds and (y) immediately
following such termination the Company enters into a definitive
acquisition, merger or similar agreement to effect the Superior
Proposal; or
(d) by either JOMED or the Company:
(1) if the Offer has not been consummated on or before November 15, 2000
(the "Termination Date"); provided that the right to terminate the
Merger Agreement pursuant to this clause shall not be available to
any party whose failure to fulfill any material obligation of the
Merger Agreement or other material breach of the Merger Agreement
has been the cause of, or resulted in, the failure of the Offer to
have been consummated on or prior to the aforesaid date; or
(2) if any court of competent jurisdiction or any Governmental Authority
shall have issued an order, decree or ruling or taken any other
action permanently restricting, enjoining, restraining or otherwise
prohibiting acceptance for payment of, and payment for, Shares
pursuant to the Offer or consummation of the Merger and such order,
decree, ruling or other action shall have become final and
nonappealable;
(e) by the Company, provided the Company is not in material breach of its
obligations under the Merger Agreement, if JOMED or the Purchaser shall
have (x) failed to commence the Offer by August 21, 2000 after the
public announcement by JOMED and the Company of the Merger Agreement,
(y) failed to pay for Shares pursuant to the Offer in accordance with
the Merger Agreement, or (z) breached in any material respect any of
their respective representations, warranties, covenants or other
agreements contained in the Merger Agreement.
Payment of Certain Fees and Expenses. If the Merger Agreement is
terminated by JOMED as set forth in paragraphs (b)(1), (b)(2)(A)(w),
(b)(2)(A)(y), (b)(2)(B) (unless related to a resolution to take any of the
actions set forth in paragraph (b)(2)(A)(x), in which case the provisions set
forth below shall apply) or (b)(3) above, or by the Company as set forth in
paragraph (c) above, then the Company shall (A) reimburse JOMED for all of its
Expenses and (B) pay to JOMED in immediately available funds a
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termination fee in an amount equal to U.S.$7 million less Expenses paid or
payable by the Company (the "Termination Fee").
If the Merger Agreement is terminated by JOMED or the Company as set forth
in paragraph (d)(1) above due to a reason other than the conditions listed in
paragraphs (a), (b), (f), (g), (h), (i) or (j) of Section 15 of this Offer, and
(x) a Takeover Proposal has been made and publicly announced or communicated to
the Company's stockholders after the date of the Merger Agreement and prior to
the Termination Date and (y) concurrently with or within twelve (12) months of
the date of such termination a Third Party Acquisition Event occurs, then the
Company shall within one business day of the occurrence of such a Third Party
Acquisition Event (including any revisions or amendments thereto), if any, pay
to JOMED the Termination Fee and reimburse JOMED for all of its Expenses.
"Third Party Acquisition Event" shall mean (i) the consummation of a
Takeover Proposal involving the purchase of a majority of either the equity
securities of the Company or of the consolidated assets of the Company and its
subsidiaries, taken as a whole, or any such transaction that, if it had been
proposed prior to the termination of the Merger Agreement would have constituted
a Takeover Proposal or (ii) the entering into by the Company or any of its
subsidiaries of a definitive agreement with respect to any such transaction.
"Expenses" shall mean documented and reasonable out-of-pocket fees and
expenses up to a maximum aggregate amount of U.S.$3 million incurred or paid in
connection with the Merger or the consummation of any of the transactions
contemplated by the Merger Agreement, including, but not limited to, all filing
fees, printing fees and reasonable fees and expenses of law firms, commercial
banks, investment banking firms, accountants, experts and consultants.
If the Merger Agreement is terminated by JOMED pursuant to paragraph
(b)(2)(A)(x) above, then (i) the Company shall (A) pay to JOMED 50% of the
Termination Fee and (B) reimburse JOMED for all of its Expenses and (ii) if
concurrently with or within 12 months after such termination a Third Party
Acquisition Event occurs, then the Company shall pay to JOMED 50% of the
Termination Fee within one business day of the occurrence of such a Third Party
Acquisition Event (including any revisions or amendments thereto).
Effect of Termination. In the event of termination of the Merger Agreement
by JOMED or the Company, the Merger Agreement shall forthwith become void and
there shall be no liability hereunder on the part of the Company, JOMED or the
Purchaser or their respective officers or directors (except for the provisions
described in "Confidentiality," "Effect of Termination," "Payment of Certain
Fees and Expenses" and "Assignment" of this Section 11 of the Offer, and certain
other provisions of the Merger Agreement relating to notices, entire agreement,
enforcement, applicable law, waiver of jury trial and JOMED guarantee, which
shall survive the termination). However, no provision described in "Effect of
Termination" and "Payment of Certain Fees and Expenses" shall relieve any party
hereto from any liability for any breach of the Merger Agreement.
Assignment. Neither the Merger Agreement nor any of the rights, interests
or obligations under the Merger Agreement may be assigned by any of the parties
to the Merger Agreement (JOMED, the Purchaser and the Company) without the prior
written consent of the other parties, except that the Purchaser may assign and
transfer its right and obligations hereunder to any of its affiliates.
Amendment or Supplement. Subject to applicable law, the Merger Agreement
may be amended, modified and supplemented in writing by JOMED, the Purchaser and
the Company in any and all respects before the Effective Time (notwithstanding
the Company Shareholder Approval contemplated by the Merger Agreement), by
action taken by the respective Boards of Directors of JOMED, the Purchaser and
the Company (or, if required by the Merger Agreement, the Continuing Directors)
or by the respective officers authorized by such Boards of Directors or the
Continuing Directors, as the case may be. However, that after the Company
Shareholder Approval, no amendment shall be made which by law requires further
approval by the stockholders of the Company without such further approval.
Guarantee. JOMED has guaranteed the performance of any and all obligations
and liabilities of the Purchaser under or arising out of the Merger Agreement
and the transactions contemplated thereby.
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12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY.
Purpose of the Offer. The purpose of the Offer is to acquire control of,
and the entire equity interest in, the Company. The purpose of the Merger is to
acquire all outstanding Shares not tendered and purchased pursuant to the Offer.
If the Offer is successful, the Purchaser intends to consummate the Merger as
promptly as practicable.
The Company's Board of Directors has approved the Merger and the Merger
Agreement. Depending upon the number of Shares purchased by the Purchaser
pursuant to the Offer, the Company's Board of Directors may be required to
submit the Merger Agreement to the Company's stockholders for approval and
adoption at a stockholder's meeting convened for that purpose in accordance with
the DGCL. If stockholder approval is required, the Merger Agreement must be
approved by a majority of all votes entitled to be cast at such meeting. If the
Minimum Condition is satisfied, the Purchaser will have sufficient voting power
to approve the Merger Agreement at the stockholders' meeting without the
affirmative vote of any other stockholder.
If the Purchaser acquires at least 90% of the then outstanding Shares
pursuant to the Offer, the Merger may be consummated without a stockholder
meeting and without the approval of the Company's stockholders. The Merger
Agreement provides that the Purchaser will be merged into the Company and that
the certificate of incorporation and bylaws of the Purchaser will be the
certificate of incorporation and bylaws of the Surviving Corporation following
the Merger; provided that, at the Effective Time, such certificate of
incorporation shall be amended to provide that the name of the corporation shall
be "EndoSonics Corporation."
Appraisal Rights. Under the DGCL, holders of Shares do not have
dissenters' rights in connection with the Offer. In connection with the Merger,
however, stockholders of the Company may have the right to dissent and demand
appraisal of their Shares under the DGCL. Dissenting stockholders who comply
with the applicable statutory procedures under the DGCL will be entitled to
receive a judicial determination of the fair value of their Shares (exclusive of
any element of value arising from the accomplishment or expectation of the
Merger) and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of the Shares could be based upon considerations
other than or in addition to the price per Share paid in the Merger and the
market value of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme
Court stated, among other things, that "proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered in an appraisal proceeding.
Stockholders should recognize that the value so determined could be higher or
lower than the price per Share paid pursuant to the Offer or the consideration
per Share to be paid in the Merger. Moreover, the Purchaser may argue in an
appraisal proceeding that, for purposes of such a proceeding, the fair value of
the Shares is less than the price paid in the Offer or the Merger.
Plans for the Company. Pursuant to the terms of the Merger Agreement,
promptly upon the purchase of and payment for any Shares by the Purchaser
pursuant to the Offer, JOMED currently intends to seek maximum representation on
the Company's Board of Directors, subject to the requirement in the Merger
Agreement that if Shares are purchased pursuant to the Offer, there shall be
until the Effective Time at least three members of the Company's Board of
Directors who were directors as of the date of the Merger Agreement.
Except as otherwise set forth in this Offer to Purchase, it is expected
that, initially following the Merger, the business and operations of the Company
will be continued substantially as they are currently being conducted. JOMED
will continue to evaluate the business and operations of the Company during the
pendency of the Offer. In addition, after the consummation of the Offer and the
Merger JOMED intends to conduct a comprehensive review of the Company's
business, operations, capitalization, corporate structure and management with a
view to optimizing development of the Company's potential in conjunction with
JOMED'S businesses. After such review JOMED will determine what actions or
changes, if any, would be desirable in light of the circumstances which then
exist.
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Except as described above or elsewhere in this Offer to Purchase, the
Purchaser and JOMED have no present plans or proposals that would relate to or
result in (i) any extraordinary corporate transaction involving the Company or
any of its subsidiaries (such as a merger, reorganization, liquidation,
relocation of any operations or sale or other transfer of a material amount of
assets), (ii) any sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, (iii) any material change in the Company's
capitalization or dividend policy or (iv) any other material change in the
Company's corporate structure or business.
13. CERTAIN EFFECTS OF THE OFFER.
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly, which could adversely affect the liquidity and market
value of the remaining Shares held by stockholders other than the Purchaser. The
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether such reduction
would cause future market prices to be greater or less than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the SEC if the Shares are neither listed on a national securities
exchange nor held by 300 or more holders of record. Termination of registration
of the Shares under the Exchange Act would substantially reduce the information
required to be furnished by the Company to its stockholders and to the SEC and
would make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b) of
the Exchange Act, the requirement of furnishing a proxy statement pursuant to
Section 14(a) of the Exchange Act in connection with stockholders' meetings and
the related requirement of furnishing an annual report to stockholders and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as
amended, may be impaired or eliminated. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be "margin securities"
or be eligible for trading on the Nasdaq. JOMED and the Purchaser currently
intend to seek to cause the Company to terminate the registration of the Shares
under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
14. DIVIDENDS AND DISTRIBUTIONS.
As discussed in Section 11, the Merger Agreement provides that from the
date of the Merger Agreement to the Effective Time, without the prior written
approval of JOMED, the Company will not and will not permit any of its
subsidiaries to authorize or pay any dividends on or make any distribution with
respect to its outstanding shares of capital stock (other than dividends or
distributions by wholly owned subsidiaries of the Company).
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, but subject to compliance
with the provisions of the Merger Agreement which require JOMED to extend the
expiration date of the Offer if the conditions to the Offer could reasonably be
expected to be satisfied, the Purchaser shall not be required to accept for
payment or pay for any Shares tendered pursuant to the Offer, and may terminate
or amend the Offer in accordance with the Merger Agreement, if prior to the
expiration date of the Offer, (i) the Minimum Condition shall not have been
satisfied, or (ii) the applicable waiting period under the HSR Act or any of the
European antitrust laws shall not have expired or been terminated or (iii) at
any time on or after the date of the Merger Agreement and prior to the
expiration date of the Offer, any of the following conditions exists:
(a) there shall have been any action threatened or taken, or any
statute, rule, regulation, judgment, order or injunction promulgated,
entered, enforced, enacted, issued or deemed applicable to the Offer or
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the Merger by any domestic or foreign Federal or state governmental
regulatory or administrative agency or authority or court or legislative
body or commission which directly or indirectly (l) prohibits, or imposes
any material limitations, other than limitations generally affecting the
industries in which the Company and JOMED conduct their business, on,
JOMED's or the Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of the
Company's businesses or assets as a whole, or compels JOMED or the
Purchaser or their respective subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company
or JOMED in each case taken as a whole, (2) prohibits, or makes illegal,
the acceptance for payment, payment for or purchase of shares of Shares or
the consummation of the Offer, the Merger or the other transactions
contemplated by the Merger Agreement, (3) results in the material delay in
the ability of the Purchaser, or renders the Purchaser unable, to accept
for payment, pay for or purchase a material amount of the shares of Shares,
or (4) imposes material limitations on the ability of the Purchaser or
JOMED effectively to exercise full rights of ownership of the shares of the
Shares including, without limitation, the right to vote the shares of the
Shares purchased by it on all matters properly presented to the Company's
stockholders; or
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities in the Nasdaq National Market
System (excluding any coordinated trading halt triggered solely as a result
of a specified decrease in a market index) or a general suspension or
material limitation on trading on or by, as the case may be, the SWX Swiss
Exchange (whether on the SWX New Market segment or otherwise) for a minimum
of three consecutive trading days, (2) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, The Netherlands, Switzerland or Sweden (whether or not mandatory),
(3) a commencement or escalation of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States, The Netherlands, Switzerland or Sweden which materially
adversely affects or delays the Offer, (4) any limitation (whether or not
mandatory) by any Governmental Authority on the extension of credit by
banks or other financial institutions in a manner which prohibits the
extension of funds to JOMED or the Purchaser or (5) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a
material acceleration or worsening thereof; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a prospective
change) in the business, assets, liabilities, financial condition,
capitalization, operations or results of operations of the Company or any
of its subsidiaries that is or is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect; or
(d) (1) the Company shall have breached or failed to perform in all
material respects any of its obligations under the Merger Agreement, (2)
any of the representations and warranties of the Company contained in the
Merger Agreement that are qualified by reference to a Material Adverse
Effect shall not be true when made or at any time prior to the consummation
of the Offer as if made at and as of such time (except for representations
and warranties which speak as of a particular date, shall not be true as of
such particular date), or (3) any of the representations and warranties of
the Company contained in the Merger Agreement that are not so qualified
shall not be true when made or at any time prior to the consummation of the
Offer as if made at and as of such time (except for representations and
warranties which speak as of a particular date, shall not be true as of
such particular date), except, in the case of clause (3) only, for such
inaccuracies as are not reasonably likely to, individually or in the
aggregate, result in a Material Adverse Effect; or
(e) the Company's Board of Directors shall have withdrawn, or modified
or changed in a manner adverse to JOMED or the Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the
Merger Agreement, or the Merger, or recommended another proposal or offer,
or shall have resolved to do any of the foregoing; or
(f) if on either of (i) the date of the execution of the Purchase
Agreement or (ii) on the first trading day immediately prior to the closing
date of the Purchase Agreement, as such date is defined in the Purchase
Agreement, the closing price of the JOMED Ordinary Shares on the SWX Swiss
Exchange
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shall be less than (i) 42 Swiss Francs or (ii) one-half of the closing
price of the JOMED Ordinary Shares on the SWX Swiss Exchange on the first
trading day following the announcement of the Offer and the Merger; or
(g) all of the conditions for the closing of the Offer shall not have
been satisfied in the reasonable judgment of Credit Suisse First Boston
(Europe) Limited (the "Global Coordinator") for the JOMED Equity Offering;
or
(h) the Global Coordinator shall not have received on or by the
closing for the JOMED Equity Offering the opinions of counsel and letters
from accountants specified in the Purchase Agreement; or
(i) the SWX Swiss Exchange shall not have approved the JOMED Ordinary
Shares to be issued in the JOMED Equity Offering for listing on the SWX New
Market of the SWX Swiss Exchange or, prior to the date of the Purchase
Agreement, an order suspending the public offering of the shares shall have
been issued or proceedings for any such purpose shall have been instituted
or contemplated by the SWX Swiss Exchange or any other governmental or
self-regulatory agency or body; or
(j) the Purchase Agreement for the JOMED Equity Offering shall have
been terminated by the Global Coordinator as a result of (i) the occurrence
of condition (f) as set forth above, (ii) trading generally shall have been
suspended or materially limited on or by, as the case may be, the SWX Swiss
Exchange (whether on the SWX New Market segment or otherwise), (iii) a
general moratorium on commercial banking activities shall have been
declared by authorities in either Switzerland or The Netherlands, (iv)
there shall have occurred a general crisis in international exchange
markets or (v) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis,
whether or not foreseeable, that, in the judgment of the Global
Coordinator, is material and adverse and, in the case of any of the
foregoing events, such event, singly or together with any other such event,
makes it, in the judgment of the Global Coordinator after consultation with
the JOMED, impracticable to market the JOMED Ordinary Shares as
contemplated through the JOMED Equity Offering; or
(k) the Merger Agreement shall have been terminated in accordance with
its terms; ((g) through (k) above, collectively, the "Financing Condition")
which in the reasonable judgment of JOMED or the Purchaser but subject to the
provisions of the Merger Agreement, in any such case, and regardless of the
circumstances (including any action or inaction by JOMED or the Purchaser)
giving rise to such conditions makes it inadvisable to proceed with the Offer
and/or with such acceptance for payment of or payments for shares of Shares.
Subject to the provisions of the Merger Agreement, the foregoing conditions
are for the sole benefit of JOMED and the Purchaser and may be asserted by the
Purchaser or, subject to the terms of the Merger Agreement may be waived by
JOMED or the Purchaser, in whole or in part at any time and from time to time in
the sole discretion of JOMED or the Purchaser. The failure by JOMED or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
General. The Purchaser is not aware of any pending legal proceeding
relating to the Offer. Except as described in this Section 16, based on its
examination of publicly available information filed by the Company with the SEC
and other publicly available information concerning the Company, the Purchaser
is not aware of any governmental license or regulatory permit that appears to be
material to the Company's business that might be adversely affected by the
Purchaser's acquisition of Shares as contemplated herein or of any approval or
other action by any governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the acquisition or
ownership of Shares by the Purchaser or JOMED as contemplated herein. Should any
such approval or other action be required, the Purchaser currently contemplates
that, except as described below under "State Takeover Statutes," such approval
or other action will be sought. While the Purchaser does not currently intend to
delay acceptance for payment of Shares
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tendered pursuant to the Offer pending the outcome of any such matter, there can
be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that if such
approvals were not obtained or such other actions were not taken, adverse
consequences might not result to the Company's business, or certain parts of the
Company's business might not have to be disposed of, any of which could cause
the Purchaser to elect to terminate the Offer without the purchase of Shares
thereunder under certain conditions. See Section 15.
State Takeover Statutes. A number of states have adopted laws that
purport, to varying degrees, to apply to attempts to acquire corporations that
are incorporated in, or that have substantial assets, stockholders, principal
executive offices or principal places of business or whose business operations
otherwise have substantial economic effects in, such states. The Company,
directly or through subsidiaries, conducts business in a number of states
throughout the United States, some of which have enacted such laws.
In Edgar v. MITE Corp., the Supreme Court of the United States invalidated
on constitutional grounds the Illinois Business Takeover Statute which, as a
matter of state securities law, made takeovers of corporations meeting certain
requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of
America, the Supreme Court held that the State of Indiana could, as a matter of
corporate law, constitutionally disqualify a potential acquirer from voting
shares of a target corporation without the prior approval of the remaining
stockholders where, among other things, the corporation is incorporated in, and
has a substantial number of stockholders in, the state. Subsequently, in TLX
Acquisition Corp. v. Telex Corp., a Federal District Court in Oklahoma ruled
that the Oklahoma statutes were unconstitutional insofar as they apply to
corporations incorporated outside Oklahoma in that they would subject such
corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v.
McReynolds, a Federal District Court in Tennessee ruled that four Tennessee
takeover statutes were unconstitutional as applied to corporations incorporated
outside Tennessee. This decision was affirmed by the United States Court of
Appeals for the Sixth Circuit.
The Company is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL ("Section 203") prevents an "interested
stockholder" (including a person who has the right to acquire 15% or more of the
corporation's outstanding voting stock) from engaging in a "business
combination" (defined to include mergers and certain other actions) with a
Delaware corporation for a period of three years following the date such person
became an interested stockholder. The Company's Board of Directors approved for
purposes of Section 203 the entering into by the Purchaser, JOMED and the
Company of the Merger Agreement and the consummation of the transactions
contemplated thereby and has taken all appropriate action so that Section 203,
with respect to the Company, will not be applicable to JOMED and the Purchaser
by virtue of such actions.
If any government official or third party should seek to apply any state
takeover law to the Offer or the Merger or other business combination between
the Purchaser or any of its affiliates and the Company, the Purchaser will take
such action as then appears desirable, which action may include challenging the
applicability or validity of such statute in appropriate court proceedings. In
the event it is asserted that one or more state takeover statutes is applicable
to the Offer or the Merger and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities or holders of Shares, and the Purchaser
might be unable to accept for payment or pay for Shares tendered pursuant to the
Offer, or be delayed in continuing or consummating the Offer or the Merger. In
such case, the Purchaser may not be obligated to accept for payment or pay for
any tendered Shares. See Section 15.
United States Antitrust Compliance. Under the HSR Act and the rules that
have been promulgated thereunder by the Federal Trade Commission (the "FTC"),
certain acquisition transactions may not be consummated unless certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the FTC and certain waiting period
requirements have been satisfied. The purchase of Shares pursuant to the Offer
is subject to such requirements.
Pursuant to the requirements of the HSR Act, the Purchaser expects to file
a Notification and Report Form with respect to the Offer and Merger with the
Antitrust Division and the FTC on or about August 21, 2000. The initial waiting
period applicable to the purchase of Shares pursuant to the Offer would expire
at
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11:59 p.m., New York City time, 15 days after such filing. However, prior to
such time, the Antitrust Division or the FTC may extend the waiting period by
requesting additional information or documentary material relevant to the Offer
from the Purchaser. If such a request is made, the waiting period will be
extended until 11:59 p.m., New York City time, on the tenth day after
substantial compliance by the Purchaser with such request. Only one extension of
the waiting period pursuant to a request for additional information or
documentary material is authorized by the rules promulgated under the HSR Act.
Thereafter, such waiting period can be extended only by court order or by
consent of the Purchaser.
The Antitrust Division and the FTC scrutinize the legality under the
antitrust laws of transactions such as the acquisition of Shares by the
Purchaser pursuant to the Offer. At any time before or after the consummation of
any such transactions, the Antitrust Division or the FTC could take such action
under the antitrust laws of the United States as it deems necessary or desirable
in the public interest, including seeking to enjoin the purchase of Shares
pursuant to the Offer or seeking divestiture of the Shares so acquired or
divestiture of substantial assets of JOMED or the Company. Private parties
(including individual States) may also bring legal actions under the antitrust
laws of the United States. The Purchaser does not believe that the consummation
of the Offer would violate any applicable antitrust laws. However, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be
made, or if such a challenge is made, what the result will be. See Section 15,
including conditions with respect to litigation and certain governmental actions
and Section 11 for certain termination rights.
Other Filings. JOMED and the Company each conduct operations in a number
of foreign countries, and filings may have to be made with foreign governments
under their pre-merger notification statutes. The filing requirements of various
nations are being analyzed by the parties and, where necessary, such filings
will be made.
17. FEES AND EXPENSES.
CSFB is acting as the Dealer Manager in connection with the Offer and
JOMED's proposed acquisition of the Company. CSFB will receive reasonable and
customary compensation for its services relating to the Offer and will be
reimbursed for certain out-of-pocket expenses. JOMED and the Purchaser will
indemnify CSFB and certain related persons against certain liabilities and
expenses in connection with its engagement, including certain liabilities under
the federal securities laws.
JOMED and the Purchaser have retained MacKenzie Partners, Inc. to be the
Information Agent and ChaseMellon Shareholder Services, L.L.C. to be the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telecopy, telegraph and personal interview
and may request banks, brokers, dealers and other nominees to forward materials
relating to the Offer to beneficial owners of Shares.
The Information Agent and the Depositary each will receive reasonable and
customary compensation for their respective services in connection with the
Offer, will be reimbursed for reasonable out-of-pocket expenses and will be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under federal securities laws.
Neither JOMED nor the Purchaser will pay any fees or commissions to any
broker or dealer or to any other person (other than to the Dealer Manager and
the Depositary) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will, upon request, be reimbursed by the Purchaser for customary mailing and
handling expenses incurred by them in forwarding offering materials to their
customers.
18. MISCELLANEOUS.
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, the Purchaser may, in its discretion, take such action as
it may deem necessary to make the Offer in any such jurisdiction and extend the
Offer to holders of Shares in such jurisdiction.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF JOMED OR THE PURCHASER NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and JOMED have filed with the SEC a Tender Offer Statement on
Schedule TO pursuant to Rule 14d-3 of the General Rules and Regulations under
the Exchange Act, together with exhibits furnishing certain additional
information with respect to the Offer, and may file amendments thereto. In
addition, the Company has filed with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9, together with exhibits, pursuant to Rule 14d-9
under the Exchange Act, setting forth the recommendation of the Company's Board
of Directors with respect to the Offer and the reasons for such recommendation
and furnishing certain additional related information. A copy of such documents,
and any amendments thereto, may be examined at, and copies may be obtained from,
the SEC (but not the regional offices of the SEC) in the manner set forth under
Section 7 above.
JOMED ACQUISITION CORP.
August 21, 2000
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SCHEDULE I
INFORMATION CONCERNING
DIRECTORS AND EXECUTIVE OFFICERS
OF JOMED AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF JOMED.
The following tables set forth the name, present principal occupation or
employment and material occupations, positions, offices or employments for the
past five years for each member of the Management Board and executive officer,
of JOMED N.V. Unless indicated otherwise, each person is a citizen of Sweden
with a principal business address at Drottninggatan 94, S-252 21 Helsingborg,
Sweden.
JOMED Management Board
PRINCIPAL OCCUPATION OR
NAME (AND CITIZENSHIP) TITLE EMPLOYMENT
- ---------------------- ----- -----------------------
Tor Peters (Sweden)......... President and Chief Executive Officer JOMED
Antti Ristinmaa (Sweden).... Vice President of Finance JOMED
Dr. Peter Klemm (Germany)... Vice President Operations JOMED
Rudi Ott (Switzerland)...... Vice President Clinical and Regulatory Affairs JOMED
Dr. Randolf von Oepen
(Germany)................. Vice President, Research and Development JOMED
- Tor Peters has served as President and Chief Executive Officer of JOMED
since 1998 and Chief Executive Officer of JOMED i Helsingborg
International AB from 1996 to 1999. From 1993 through 1995, Mr. Peters
was Marketing Manager for Cardiology at SciMed Life Systems Inc. From
1988 to 1993, he was Sales Manager for Novo Pharma.
- Antti Ristinmaa has been JOMED's Vice President of Finance since 1998.
From 1994 to 1998, Mr. Ristinmaa served as the Vice President of Business
Control and Treasurer for Perstorp. From 1990 to 1994, he was Vice
President of Finance at Huhtamaki.
- Dr. Peter Klemm is Vice President Operations and is also responsible for
JOMED's cardiac assist products since 1999. From 1996 to 1999, he was
Head of Research for Grunenthal GmbH. From 1993 to 1996, Dr. Klemm was a
senior scientist at Hoechst Marion Rousel. He received his doctorate in
pharmacology from the University of Mainz and has completed post-doctoral
research at the William Harvey Research Institute in London.
- Rudi Ott is Vice President Clinical and Regulatory Affairs. Prior to
joining the Company in 1999, he was Vice President Clinical and
Regulatory for Schneider from 1994 to 1999 after having spent 10 years
with Ciba-Geigy. He graduated in 1978 from medical school in Germany.
- Dr. Randolf von Oepen joined JOMED in 1994 and became Vice President,
Research and Development, in 1998. Dr. von Oepen holds a doctorate in
mechanical engineering from the RWTH Institute in Aachen, Germany.
The members of the Management Board may be contacted at JOMED's executive
offices in Helsingborg, Sweden.
I-1
48
JOMED Supervisory Board
The table below sets forth the names and addresses of the current members
of the Supervisory Board of the Company and their principal occupation or
employment history:
PRINCIPAL OCCUPATION OR
NAME PRINCIPAL BUSINESS ADDRESS DATE OF APPOINTMENT EMPLOYMENT
- ---- -------------------------- ------------------- ------------------------------
Jan-Eric Osterlund.... 23 Tedworth Square, February 2, 1998 Chairman of JOMED and Chairman
Chelsea, London or director of several
SW3 4DR investment and healthcare
United Kingdom companies.
Ahmet Aykac........... Rue Albert Einstein December 15, 1999 Professor and Director of the
BP 169 Theseus Institute, Sophia
06903 Sophia Antipolis Antipolis, France.
Cedex
France
Siegfried Einhellig... Schweidnitzer Strasse 33 February 2, 1998 Consultant to JOMED and
80997 Munich director of Prva Obrtnicka
Germany Stedionica.
Lars Sunnanvader...... Silberburgstrasse 6 February 2, 1998 Chairman of the Supervisory
72379 Hechinge Board of JOSTRA Medizintechnik
Germany AG, a medical device company.
Rene Garo............. Waldeggstrasse 2 March 24, 2000 Medical Technology Advisor.
St. Niklaus
4532 Feldbrunnen
Switzerland
- Mr. Jan-Eric Osterlund is a partner of QueQuoin Holdings, an investment
group specializing in medical venture capital since 1992. He is also
chairman of Phairson Medical Ltd (a UK biotechnology group), Egalet A/S
(a Danish drug-delivery company) and Epiport Ltd (a drug-delivery
company). Mr. Osterlund also serves as a director of Vasogen Inc., a
public Canadian medical device company. He has also been a director of
several Swedish public companies, having served as Chairman of Investment
AB Skrinet and as a director of Independent Leasing AB.
- Dr. Ahmet Aykac is the Director General of the Theseus Institute and
Professor of Economics and Organizations since 1995. He is also a
consultant to the boards of several national and international agencies
and private organizations. Dr. Aykac is a fellow of the New York Academy
of Sciences.
- Mr. Siegried Einhellig is a consultant to JOMED and a director of Prva
Obrtnicka Stedionica d.d., a Croatian bank, assisting with its
international expansion plans. From 1997 to 1999, Mr. Einhellig was Vice
President of Sales for the JOMED Group and Executive Director of JOMED
Deutschland GmbH. Prior to joining the Company, he was Vice President
Europe for Boston Scientific GmbH's SciMed Division.
- Mr. Lars Sunnanvader is the founder of JOMED. He served as the Chief
Executive Officer of JOMED Implantate GmbH from 1990 to 1999. Mr.
Sunnanvader also founded Jostra Medizintechnik AG and is a member of its
Supervisory Board.
- Mr. Rene Garo is a member of the boards of Swisslog Holding AG (listed on
the SWX Swiss Exchange), Illbruck GmbH, Digital-Logic AG and Confida
Consulting AG. He is also an investment advisor to MicroValue AG. From
1996 to 1999, he was Chief Executive Officer of Haag-Streit Holding AG, a
producer of ophthalmic diagnostic instruments. Mr. Garo served as Chief
Executive Officer of MattisMedical AG from 1992 to 1996.
I-2
49
ANNEX A
FINANCIAL STATEMENTS
INDEX TO THE FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS OF JOMED N.V
Report of Independent Public Accountant................... F-2
JOMED Group Consolidated Income Statement for the years
ended December 31, 1999, 1998, and for the period from
January 1, 1996 through December 31, 1997.............. F-3
JOMED Group Consolidated Balance Sheet as of December 31,
1996, 1997, 1998 and 1999.............................. F-4
JOMED Group Consolidated Cash Flow Statement for the years
ended December 31, 1999 and 1998....................... F-5
JOMED N.V. Parent Company Consolidated Cash Flow
Statement.............................................. F-6
JOMED N.V. Parent Company Balance Sheet for the years
ended December 31, 1999, 1998 and 1997................. F-7
JOMED N.V. Parent Company Cash Flow Statement for the
years ended December 31, 1999, 1998 and 1997........... F-8
Statement of Changes in Stockholder's equity,
consolidated........................................... F-9
Statement of Changes in Stockholder's equity, parent
company................................................ F-10
Notes to the Financial Statements......................... F-11
FINANCIAL STATEMENTS OF JOMED FOR THE FIRST SIX MONTHS OF
2000...................................................... F-30
F-1
50
REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
To the Board of JOMED N.V.
Financial Statements for the years ended December 31, 1999 and 1998.
We have audited the accompanying balance sheets of JOMED N.V. and the
consolidated balance sheets of JOMED N.V. and its subsidiaries as at December
31, 1999 and 1998 and the related income statements and consolidated income
statements together with the cash flow statements and consolidated cash flow
statements for the years then ended, prepared in accordance with International
Accounting Standards (IAS). These financial statements and consolidated
financial statements are the responsibility of JOMED's management. Our
responsibility is to express an opinion on these financial statements and
consolidated financial statements based on our audit.
We conducted our audit in accordance with International Standards on
Auditing. These standards require that we plan and perform an audit to obtain
reasonable assurance as to 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 and the consolidated financial
statements present fairly, in all material respects, the financial position and
the consolidated financial position of the company as at December 31, 1999 and
1998 and the results of operations and consolidated results of operations
together with the cash flows and the consolidated cash flows for the years then
ended in conformity with IAS.
Malmo, March 28, 2000
ARTHUR ANDERSEN AB
/s/ Mats Fredricson
Mats Fredricson
Authorized Public Accountant
F-2
51
JOMED GROUP
CONSOLIDATED INCOME STATEMENT
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
NOTE 1999 1998 1997 1996
---- ------- ------ --------- ---------
(E '000)
NET SALES.................................. 1 43,723 25,502 15,216 6,284
Cost of goods sold......................... (7,623) (3,078) (1,866) (1,131)
------- ------ ------ ------
GROSS PROFIT............................... 36,100 22,424 13,350 5,153
Manufacturing overheads.................... (4,196) (2,521) (1,644) (675)
Sales & Marketing.......................... (18,994) (9,175) (6,486) (1,807)
General & Administration................... (5,547) (2,401) (1,400) (1,257)
Research & Development..................... (3,255) (2,419) (2,194) (655)
Other operating income..................... 199 80 176 45
------- ------ ------ ------
OPERATING RESULT........................... 2 4,307 5,988 1,802 804
------- ------ ------ ------
Result from financial investments:
Interest income............................ 85 35 34 6
Interest expenses.......................... (1,200) (260) (112) (54)
Result from associated companies........... (78) (104) (12) --
------- ------ ------ ------
NON-OPERATING RESULT....................... (1,193) (329) (90) (48)
------- ------ ------ ------
INCOME BEFORE INCOME TAXES................. 3 3,114 5,659 1,712 756
Income taxes............................... (1,143) (2,676) (851) (315)
------- ------ ------ ------
INCOME AFTER TAXES......................... 1,971 2,983 861 441
Minority interest.......................... 163 -- -- --
------- ------ ------ ------
NET INCOME................................. 4 2,134 2,983 861 441
======= ====== ====== ======
EARNINGS PER SHARE......................... E212 E298 E86 E44
F-3
52
JOMED GROUP
CONSOLIDATED BALANCE SHEET
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
NOTE 1999 1998 1997 1996
---- ------------ ------------ ------------ ------------
(E '000)
ASSETS................................ 1
Non-current assets:
Intangible assets..................... 6 14,442 11,983 10,304 10,904
Equipment and equipment under
construction........................ 7 9,161 3,889 1,455 961
Investments in associates............. 8 342 357 402 --
Other financial assets................ 9 1,962 -- -- --
Deferred tax.......................... 3 1,929 109 346 --
------ ------ ------ ------
27,836 16,338 12,507 11,865
------ ------ ------ ------
Current assets:
Inventories........................... 10 7,408 3,176 1,068 513
Receivables and other assets.......... 11
Trade accounts receivable............. 23,502 8,045 3,768 1,214
Other receivables and other assets.... 2,926 1,213 857 365
Other current assets.................. 990 -- -- --
Cash and cash equivalents............. 12 3,166 1,099 370 867
------ ------ ------ ------
37,992 13,533 6,063 2,959
------ ------ ------ ------
TOTAL ASSETS.......................... 65,828 29,871 18,570 14,824
====== ====== ====== ======
EQUITY AND LIABILITIES
Equity: 13
Issued capital........................ 182 163 161 167
Share premium......................... 29,887 12,906 12,757 13,197
Other reserves........................ 3,262 (231) (1,937) (2,396)
Net income............................ 2,134 2,983 861 441
------ ------ ------ ------
35,465 15,821 11,842 11,409
------ ------ ------ ------
Non-current liabilities:
Interest bearing liabilities.......... 14 926 354 97 --
Deferred tax.......................... 3 440 282 43 --
------ ------ ------ ------
1,366 636 140 --
------ ------ ------ ------
Current liabilities:
Trade accounts payable................ 6,662 2,471 2,081 1,123
Interest bearing liabilities.......... 16 11,242 4,561 1,556 939
Other current liabilities............. 17 11,093 6,382 2,951 1,353
------ ------ ------ ------
28,997 13,414 6,588 3,415
------ ------ ------ ------
TOTAL EQUITY AND LIABILITIES.......... 65,828 29,871 18,570 14,824
====== ====== ====== ======
CONTINGENT LIABILITIES................ -- -- -- --
PLEDGED ASSETS........................ 18 10,767 6,410 2,114 --
F-4
53
JOMED GROUP
CONSOLIDATED CASH FLOW STATEMENT
NOTE 1999 1998
---- ------- ------
(E '000)
Operating activities:
Operating result............................................ 4,307 5,988
Adjustments for items not included in cash flow:
Depreciation and amortization............................... 2,558 1,156
------- ------
Cash flow from operating activities, before working capital
changes................................................... 6,865 7,144
Increase in inventories..................................... (4,232) (2,680)
Increase in current receivables............................. (18,160) (4,305)
Increase in current liabilities............................. 7,544 2,718
------- ------
Cash flow from operating activities......................... (7,983) 2,877
Income taxes paid........................................... (2,330) (1,034)
------- ------
NET CASH FROM OPERATING ACTIVITIES.......................... (10,313) 1,843
------- ------
Investing activities:
Acquisition of intangible assets............................ (2,252) (250)
Acquisition of equipment.................................... (7,006) (2,715)
Acquisition of subsidiaries................................. 19 15 (51)
Interest received........................................... 85 35
Investing in financial assets and associated companies...... (1,955) (402)
------- ------
CASH FLOW FROM INVESTING ACTIVITIES......................... (11,113) (3,383)
------- ------
Financing activities:
Share issue................................................. 17,000 --
Interest paid............................................... (1,200) (260)
------- ------
Increase in interest bearing liabilities.................... 7,205 2,885
------- ------
CASH FLOW FROM FINANCING ACTIVITIES......................... 23,005 2,625
------- ------
CHANGE IN CASH AND CASH EQUIVALENTS......................... 1,579 1,085
======= ======
Cash and cash equivalents -- opening balance................ 1,099 26
Cash and cash equivalents -- closing balance................ 3,166 1,099
Translation difference...................................... (488) 12
F-5
54
JOMED N.V. PARENT COMPANY
INCOME STATEMENT
1999 1998 1997
---- ---- ----
(E '000)
NET SALES................................................... -- -- --
Cost of goods sold.......................................... -- -- --
---- ---- --
GROSS PROFIT
Manufacturing (overheads)................................... -- -- --
Sales and Marketing......................................... -- -- --
General and Administration.................................. (189) (142) --
Research and Development.................................... -- -- --
OPERATING RESULT............................................ -- -- --
---- ---- --
Result from financial investments: (189) (142) --
Interest income............................................. 7 -- 18
INCOME BEFORE INCOME TAXES.................................. (182) (142) 18
Income taxes................................................ -- -- --
---- ---- --
NET INCOME.................................................. (182) (142) 18
==== ==== ==
F-6
55
JOMED N.V. PARENT COMPANY
BALANCE SHEET
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------ ------------ ------------
(E '000)
ASSETS
Non-current assets.................................... -- -- --
Shares in subsidiary companies........................ 15,651 13,929 --
------ ------ ---
15,651 13,929 --
------ ------ ---
Current assets
Receivables, inter-company............................ 17,019 -- --
Other receivables..................................... 4 -- --
Cash and cash equivalents............................. 37 28 26
------ ------ ---
17,060 28 26
------ ------ ---
TOTAL ASSETS.......................................... 32,711 13,957 26
====== ====== ===
EQUITY AND LIABILITIES
Equity
Issued capital........................................ 182 163 18
Share premium......................................... 29,887 12,906 --
Other reserves........................................ (135) 7 (11)
Net income............................................ (182) (142) 18
------ ------ ---
29,752 12,934 25
------ ------ ---
Current liabilities
Accounts payable, inter-company....................... 1,750 578 --
Other current liabilities............................. 1,209 445 1
------ ------ ---
2,959 1,023 1
------ ------ ---
TOTAL EQUITY AND LIABILITIES.......................... 32,711 13,957 26
====== ====== ===
F-7
56
JOMED N.V. PARENT COMPANY
CASH FLOW STATEMENT
NOTE 1999 1998 1997
-------- ------- ---- ----
(E '000)
Operating activities:
Operating result........................................ (189) (142) --
Adjustments for items not included in cash flow:
Depreciation and amortization........................... -- -- --
------- ---- --
Cash flow from operating activities, before working
capital changes....................................... (189) (142) --
Increase in inventories................................. -- -- --
Increase in current receivables......................... (17,023) -- --
Increase in current liabilities......................... 1,936 1,022 --
------- ---- --
Cash flow from operating activities..................... (15,276) 880 --
------- ---- --
Income taxes paid....................................... -- -- --
------- ---- --
NET CASH FROM OPERATING ACTIVITIES...................... (15,276) 880 --
Investing activities:
Acquisition of intangible assets........................ -- -- --
Acquisition of equipment................................ -- -- --
Acquisition of subsidiaries............................. (1,722) (879) --
Interest received....................................... 7 -- 18
Investing in financial assets and associated
companies............................................. -- -- --
------- ---- --
CASH FLOW FROM INVESTING ACTIVITIES..................... (1,715) (879) 18
------- ---- --
Financing activities:
Share issue............................................. 17,000 -- --
Interest paid........................................... -- -- --
Increase in interest bearing liabilities................ -- -- --
------- ---- --
CASH FLOW FROM FINANCING ACTIVITIES..................... 17,000 -- --
======= ==== ==
CHANGE IN CASH AND CASH EQUIVALENTS..................... 9 1 18
======= ==== ==
Cash and cash equivalents -- opening balance............ 28 26 8
Cash and cash equivalents -- closing balance............ 37 28 26
Translation difference.................................. -- (1) --
F-8
57
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY,
CONSOLIDATED (E'000)
ACCUMULATED
ISSUED CAPITAL SHARE PREMIUM PROFIT TOTAL EQUITY
-------------- ------------- ----------- ------------
Balance January 1, 1998................. 18 -- 7 25
Issue of shares......................... 145 12,906 -- 13,051
Net profit.............................. -- -- 2,983 2,983
Translation differences................. -- -- (238) (238)
Balance December 31, 1998............... 163 12,906 2,752 15,821
Issue of shares......................... 19 16,981 -- 17,000
Net profit.............................. -- -- 2,134 2,134
Translation differences................. -- -- 510 510
--- ------ ----- ------
Balance December 31, 1999............... 182 29,887 5,396 35,465
=== ====== ===== ======
F-9
58
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY,
PARENT COMPANY (E'000)
ACCUMULATED
ISSUED CAPITAL SHARE PREMIUM PROFIT TOTAL EQUITY
-------------- ------------- ----------- ------------
Balance January 1, 1997................. 18 -- (11) 7
Net profit.............................. -- -- 18 18
--- ------ ---- ------
Balance December 31, 1997............... 18 -- 7 25
Issue of shares......................... 145 12,906 -- 13,051
Net profit.............................. -- -- (142) (142)
--- ------ ---- ------
Balance December 31, 1998............... 163 12,906 (135) 12,934
Issue of shares......................... 19 16,981 -- 17,000
Net profit.............................. -- -- (182) (182)
--- ------ ---- ------
Balance December 31, 1999............... 182 29,887 (317) 29,752
=== ====== ==== ======
F-10
59
NOTES TO THE FINANCIAL STATEMENTS
GENERAL
JOMED N.V. ("JOMED"), Corp. Id. No. 33252637, having its legal seat in
Amsterdam, is engaged in the holding and managing of investments in companies
which are leaders in stent technology and the development of new medical
technology in the field of interventional cardiology, interventional radiology,
cardiac assist and minimal invasive cardiac surgery.
JOMED was incorporated as Maartin Vooges Brood en Banket B.V on August 17,
1977 and was dormant until January 1998. On April 2, 1998, JOMED was renamed
JOMED N.V. and acquired 100% of the share capital of JOMED GmbH, JOMED
Deutschland GmbH and JOMED i Helsingborg International AB by means of an issue
of shares.
The result of these three subsidiaries have been consolidated with effect
from April 2, 1998 using the acquisition method. Goodwill, calculated as the
excess of the fair value of the shares issued in consideration over the fair
value of the separable net assets acquired, is amortized over its estimated
useful life of 20 years in accordance with international accounting standards.
For comparison purposes only, JOMED has also presented unaudited pro forma
consolidated financial statements for the period from January 1, 1996 to
December 31, 1997 as if the acquisition had taken place on January 1, 1996 at
the same fair market value but using the exchange rates prevailing at that date.
The resulting goodwill has then been amortized in the pro forma financial
statements on the same basis as in the audited financial statements. This is not
in accordance with international accounting standards ("IAS") which does not
permit recognition of goodwill prior to the date on which control of the
subsidiaries passed to the parent company. With this exception and with the
exception of the non-presentation of a pro forma statement of changes in
stockholders' equity and the non-presentation of the pro forma cash-flow
statement, the unaudited pro forma financial statements have been prepared in
accordance with international accounting standards. In the opinion of the
directors, these departures from international accounting standards are
necessary to ensure the comparability of the pro forma financial statements with
that presented in the audited financial statements.
The financial statements have been presented in euro since January 1, 1999.
For 1998 the financial statements were presented in NLG and then translated into
euro. The exchange rates for the periods prior to 1998 were derived from
official ECU rates for each year.
The description of JOMED's activities and the group structure, as included
in the notes to the consolidated financial statements, also apply to the
financial statements of the parent company.
ACCOUNTING POLICIES
The consolidated financial statements of the Group are prepared in
accordance with the rules of the International Accounting Standards Committee
(IASC).
In addition, the IASs that were effective on the balance sheet date, JOMED
has also adopted the following IASs prior to their effective date: IAS 22
(revised) on Business combinations, IAS 36 on Impairment of assets and IAS 38 on
Intangible assets.
The financial statements of the consolidated companies are prepared
according to uniform recognition and valuation principles. Valuation adjustments
made for tax reasons are not reflected in the group statements. The individual
consolidated companies' statements are prepared as of the closing date for the
group statements.
Assets and liabilities are stated at face value unless indicated otherwise.
Certain income statement and balance sheet items are combined for the sake
of clarity, as explained in the Notes.
F-11
60
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
In a few instances, estimates and assumptions have to be made. These affect
the classification and valuation of assets, liabilities, income, expenses and
contingent liabilities. The actual values may vary from the estimates made.
The accounting principles as described in the notes to the consolidated
financial statements, also apply to the financial statements of the parent
company.
CHANGE IN ACCOUNTING POLICIES
The financial statements have been presented in accordance with the rules
of the International Accounting Standards Committee (IASC) since January 1999.
Prior to 1999, the financial statements were presented in accordance with Dutch
GAAP. The comparative information for 1998 has also been prepared and presented
in accordance with IASs. The statutory financial statements have been prepared
in accordance with IAS for 1999 and in accordance with Dutch GAAP for previous
years.
COMPANIES CONSOLIDATED
The consolidated financial statements ending December 31, 1999 include the
financial statements of JOMED and the following subsidiaries (the
"Subsidiaries"). The book values of the subsidiaries in the financial statements
of the parent company are presented in the columns below as at their date of
acquisition or as at the date they were established:
AS AT
ACQUISITION
DATE
(A)/DATE OF
ESTABLISHMENT BOOK VALUE IN PARENT
NAME LEGAL SEAT (S) COMPANY
- ------------------------------- ------------------------------ ------------- --------------------
1999 1998
-------- --------
(E'000)
WHOLLY OWNED:
Companies acquired as part of
the reorganization in 1998:
JOMED GmbH Rangendingen, Germany A 1998 7,026 7,026
JOMED Deutschland GmbH Munchen, Germany A 1998 2,510 2,510
JOMED i Helsingborg
International AB and its
wholly owned subsidiary Helsingborg, Sweden A 1998 3,514 3,514
JOMED U.K. Ltd. Cheshire, United Kingdom
JOMED Italia S.p.a. Milan, Italy A 1998 859 793
JOMED France SARL Voisins le Bretonneux, France S 1998 46 46
JOMED Benelux B.V. Ulestraten, the Netherlands S 1998 18 18
JOMED S.A. (Pty) Ltd. Midrand, South Africa S 1998 22 22
JOMED AG Beringen, Switzerland S 1999 313 --
JOMED Distribution Centre B.V. Ulestraten, the Netherlands S 1999 18 --
JOMED Japan Co. Ltd. Tokyo, Japan S 1999 372 --
JOMED Poland Sp. z o o. Warsaw, Poland S 1999 38 --
JOMED Singapore Pte. Ltd. Singapore S 1999 60 --
NOT WHOLLY OWNED:
JOMED do Brasil Ltda, ownership
of 50% and with controlling
influence Parana, Brazil A 1999 855 --
------ ------
15,651 13,929
====== ======
The following companies are manufacturing companies: JOMED GmbH and JOMED
AG. The other companies are sales companies.
F-12
61
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
Assets, shareholders' equity and liabilities of foreign subsidiaries are
for consolidation purposes translated into euro at the exchange rate in force on
the closing date of each period. Income and expenses are translated at the
average exchange rate for each period.
JOMED Distribution Centre BV, JOMED Japan Co., Ltd., JOMED AG, JOMED Poland
Sp.z o.o., JOMED Singapore Pte Ltd. and JOMED do Brasil Ltda. are included in
the statements for the first time. The resulting changes in the consolidated
financial statements do not affect comparability with the preceding year's
financial statements.
In 1999 a total of E1,722 thousand (1998: E879 thousand) was spent on
acquisitions and recently formed companies.
JOMED do Brasil Ltda was 50% acquired on January 1, 1999 for E855 thousand
and is a distributor of JOMED products. JOMED do Brasil Ltda is consolidated
since it is subject to the control of the Group. JOMED appoints the majority of
the board members and the General Manager. Goodwill of E857 thousand resulting
from the acquisition is amortized over an estimated economic life of 20 years.
JOMED Italia S.p.a. was acquired for E859 thousand. Goodwill of E746
thousand resulting from the acquisition is amortized over an estimated economic
life of 20 years.
FOREIGN CURRENCY TRANSLATION
The foreign currency receivables and payables are translated at the
exchange rate in force on the closing date of each period.
Assets and liabilities denominated in foreign currencies are translated
into euros (and for years prior to 1998, ECU) at the exchange rate in force on
the closing date of each period. Transactions in foreign currencies are
translated at the exchange rate in effect at the time of the transaction.
Foreign currency exchange differences relating to current business operations
have been credited/debited to operating income. Foreign currency exchange
differences of a financial nature have been reported under financial income and
expenses.
The financial statements have been presented in euro since January 1999 and
JOMED has adopted the euro as its reporting currency for fiscal periods
beginning January 1, 1999. For prior periods, the reporting currency has been
NLG. For 1998 the financial statements were presented in NLG and then translated
into euro at the fixed exchange rate of NLG 2.20371 = E1.00. The exchange rates
for the periods prior to 1998 were derived from official ECU rates for each
year. This results in difference in goodwill amount between the years, due to
different exchange rates for IAS 1998 and 1999 and pro forma respectively.
The majority of foreign subsidiaries are to be regarded as foreign entities
since they are financially, economically and organizationally autonomous. Their
functional currencies according to IAS 21 (The Effects of Changes in Foreign
Exchange Rates) are thus the respective local currencies. The assets,
liabilities and equity of these foreign subsidiaries are for consolidation
purposes translated into euros at the exchange rate in force on the closing date
of each period. The income and expenses items of these foreign subsidiaries have
been translated at average exchange rates for each year.
The subsidiary operating in Brasil, in a hyperinflationary economy, has
adopted the euro as its reporting currency for IAS purposes. A temporal
translation method is therefore used that is recognized in income. Equipment is
translated at the average exchange rates in the year of acquisition, along with
the relevant depreciation. All other balance sheet items are translated at
closing rates. Income and expense items (except depreciation) are translated at
average rates for the year.
Foreign currency exchange differences arising from the translation of
foreign subsidiaries' balance sheets are shown in a separate stockholders'
equity item. In the case of divestiture, the respective foreign currency
exchange differences are reversed and recognized in income.
F-13
62
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
The following exchange rates for major foreign currencies against the euro
have been used as follows:
INCOME BALANCE
STATEMENT SHEET
PRO FORMA PRO FORMA
1999 1998* 1997* 1996* 1999 1998* 1997* 1996*
----- --------- ----- ----- ----- --------- ----- -----
USD.......................... 0.938 0.898 0.885 -- 0.995 0.853 0.916 --
DEM.......................... 0.511 0.511 0.511 0.520 0.511 0.511 0.511 0.519
NLG.......................... 0.454 0.454 0.449 0.464 0.454 0.454 0.449 0.462
FRF.......................... 0.152 0.152 -- -- 0.152 0.152 -- --
ITL/1000..................... 0.516 0.516 -- -- 0.516 0.516 -- --
GBP.......................... 1.517 1.492 1.457 -- 1.611 1.431 1.515 --
CHF.......................... 0.625 -- -- -- 0.623 -- -- --
JPY/1000..................... 8.580 -- -- -- 9.745 -- -- --
ZAR.......................... 0.153 0.163 -- -- 0.162 0.147 -- --
BRL.......................... 0.524 -- -- -- 0.558 -- -- --
PLN.......................... 0.241 -- -- -- 0.241 -- -- --
SGD.......................... 0.572 -- -- -- 0.598 -- -- --
SEK.......................... 0.113 0.113 0.116 0.119 0.117 0.106 0.116 0.117
- ---------------
* Derived from official ECU rates.
CONSOLIDATION METHODS
Consolidation is achieved by offsetting investments in subsidiaries against
the fair market value of the underlying net assets at the date of acquisition.
The resulting differences are recognized as goodwill.
Inter-group sales, profits, losses, income, expenses, receivables and
payables are eliminated.
Deferred taxes are recognized for temporary differences related to
consolidation entries.
CASH FLOW STATEMENT
The cash flow statement shows how the liquidity of JOMED was affected by
the inflow and outflow of cash and cash equivalents during each year. Cash flows
are classified by operating, investing and financing activities in accordance
with IAS 7 (Cash Flow Statements). An adjustment is shown to reconcile cash and
cash equivalents at the end of each year to the liquid assets reflected in the
balance sheet.
In accordance with IAS the amounts reported by foreign subsidiaries are
translated at average exchange rates for the year, with the exception of cash
and cash equivalents, which are translated at the exchange rate in force on the
closing date in each period. The effect of changes in exchange rates on cash and
cash equivalents are shown separately.
PRINCIPLES OF DETERMINATION OF INCOME
The following principles are observed in the preparation of the income
statement:
Net sales are defined as revenue from sale and delivery of goods, net of
discounts and sales tax. Cost of goods sold comprises the manufacturing cost of
the goods and any write-downs to lower net realisable value. Manufacturing cost
includes such items as:
- the cost of raw materials and supplies, energy and other materials
- depreciation and the cost of maintenance of the assets used in production
- salaries, wages and social charges for the personnel involved in
manufacturing.
F-14
63
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
DEFERRED TAX
Deferred taxes are calculated at the rates on the closing date of each
period based on the statutory regulations in force, or already substantially
enacted in relation to future periods and thus expected to apply in the
individual countries at the time of realization.
Deferred taxes primarily result from temporary differences between the
carrying amounts of assets or liabilities in the accounting and tax balance
sheets of the individual consolidated companies, as well as from consolidation
measures. The deferred taxes are computed according to IAS 12 (Income Taxes).
INTANGIBLE ASSETS
According to IAS 38 (Intangible Assets), research and development are
mainly charged to the income statement. When certain conditions are fulfilled,
development projects are capitalized. The capitalized development costs are
amortized over their estimated useful lives on a straight-line basis over 3-6
years and the amortization begins when the development of each project is
finalized.
Intangible assets that have been acquired are recognized at cost and
amortized over their estimated useful lives. Write-downs are made for any
declines in value that are expected to be permanent. Intangible assets are
written back if the reasons for previous years' write-downs no longer apply.
Goodwill, including that resulting from capital consolidation, is
capitalized in accordance with IAS 22 (Business Combinations) and normally
amortized on a straight-line basis of 20 years. The value of goodwill is
regularly reassessed in line with IAS 36 (Impairment of Assets) and written
down, if necessary.
Other purchased intangible fixed assets other than goodwill are amortized
on a straight-line basis, over a period, which in general is five years.
EQUIPMENT
Equipment is carried at the cost of acquisition. Assets subject to
depletion are depreciated over their estimated useful lives. Write-downs are
made for any declines in value that are expected to be permanent, aside from
those reflected in depreciation. Assets are written back if the reasons for
previous years' write-downs no longer apply.
Expenses for repair of equipment are normally charged against income. They
are, however, capitalized in exceptional cases if they result in an enlargement
or substantial improvement of the respective assets.
The following depreciation periods, based on the estimated useful lives of
the respective assets, are applied throughout the Group:
Equipment: 3-10 years
In accordance with IAS 17 (Leases), assets leased on terms equivalent to
financing a purchase by a long-term loan (finance leases) are capitalized at the
cost which would have been incurred if the assets had been purchased. They are
depreciated over their estimated useful lives or the respective lease terms,
whichever the shorter. The future lease payments are recorded as liabilities.
FINANCIAL FIXED ASSETS
Participation in associated companies and investments in other securities
are carried individually at cost. Write-downs are made for any declines in value
that are expected to be permanent. Investments are written back if the reasons
for previous years' write-downs no longer apply.
F-15
64
NOTES TO THE FINANCIAL STATEMENTS -- (CONTINUED)
INVESTMENTS IN ASSOCIATED COMPANIES
The cost of acquisition of participation in associated companies included
at the equity method is adjusted annually to reflect changes in JOMED's share of
each associated company's equity. If JOMED's investment is 20-50% of the total
shares or voting value and if JOMED does have significant influence the entity
is classified as associated.
In each first-time consolidation, differences between the cost of
acquisition and the fair value of the underlying net assets at the dates of
acquisition are allocated to assets or liabilities by the same method applied to
fully consolidated subsidiaries.
Corline Systems AB and JOMED Canada Inc. are included using the equity
method.
INVENTORIES
Raw materials, supplies, and goods purchased for resale are valued at the
cost of acquisition; work in process and finished goods are valued at the cost
of production. If the inventory values are lower at the closing date of each
period because of a drop in market prices, for example, the lower amounts are
shown. Inventories are determined by the first-in first-out (FIFO) principle.
Provisions are made for obsolescence.
The cost of production comprises the direct cost of materials, direct
manufacturing expenses, appropriate allocations of material and manufacturing
overheads, and an appropriate share of the depreciation and write-downs of
assets that are attributable to production. It includes the shares of expenses
for Company pension plans and discretionary employee benefits that are
attributable to production.
RECEIVABLES AND OTHER ASSETS
Accounts receivable -- trade, other receivables and other assets as
presented under current assets mature within one year. Accounts
receivable-trade, other receivables and other assets are stated at nominal
value, less any necessary write-downs for amounts unlikely to be recovered.
CURRENT LIABILITIES
Current liabilities are carried at nominal value. The current liabilities
are due within twelve months.
ACCOUNTS PAYABLE -- TRADE
Accounts payable -- trade are mainly payable to third parties. They are
carried at nominal value. All accounts payable -- trade are due within twelve
months.
HEDGING INSTRUMENTS
Forward contracts have been used to hedge the exchange rate risk associated
with accounts receivable at the balance sheet date. The accounts receivable have
been translated at the balance sheet date at the rate implicit in the contracts.
In the opinion of the directors, the resulting balance sheet recognition of the
forward contracts in accounts receivable approximates their fair value at the
balance sheet date.
F-16
65
NOTES TO THE INCOME STATEMENT
NOTE 1 SEGMENT REPORTING
IAS 14 (Segment Reporting) requires a breakdown of certain data in the
financial statements by business segment and geographical region. In the opinion
of the directors, the group's different product groups do not constitute
different business segments since the production processes, gross margins and
customer base are similar for each of them.
Sales by product group are analysed below:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
SALE 1999 1998 1997 1996
- ---- ------ ------ --------- ---------
(E '000)
Coronary stents.............................. 34,591 21,345 14,218 6,284
PTCA Balloon Catheter........................ 3,685 1,148 400 --
Peripheral stents............................ 5,447 3,009 598 --
------ ------ ------ -----
43,723 25,502 15,216 6,284
====== ====== ====== =====
Since all manufacturing processes are located in Western Europe and
geographical segmentation relates primarily to customer location, the directors
regard the geographical segments as secondary in accordance with IAS 14.
The analysis of sales and assets by geographical segments is set out below:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
SALE 1999 1998 1997 1996
- ---- ------ ------ --------- ---------
(E '000)
Western Europe............................... 19,970 15,625 10,727 5,781
Eastern Europe, Middle East and Africa....... 16,710 6,585 3,452 503
Asia and the Pacific Rim..................... 3,150 1,534 1,037 --
The Americas................................. 3,893 1,758 -- --
------ ------ ------ -----
43,723 25,502 15,216 6,284
====== ====== ====== =====
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
ASSET 1999 1998 1997 1996
- ----- ------ ------ --------- ---------
(E '000)
Western Europe............................... 62,534 29,743 18,570 14,824
Eastern Europe, Middle East and Africa....... 673 128 -- --
Asia and the Pacific Rim..................... 931 -- -- --
The Americas................................. 1,690 -- -- --
------ ------ ------ ------
65,828 29,871 18,570 14,824
====== ====== ====== ======
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
ACQUISITION OF INTANGIBLE ASSETS, EQUIPMENT 1999 1998 1997 1996
- ------------------------------------------- ------ ------ --------- ---------
(E '000)
Western Europe............................... 10,227 17,657 1,248 12,436
Eastern Europe, Middle East and Africa....... 12 10 -- --
Asia and the Pacific Rim..................... 127 -- -- --
The Americas................................. 128 -- -- --
------ ------ ----- ------
10,494 17,667 1,248 12,436
====== ====== ===== ======
F-17
66
NOTES TO THE INCOME STATEMENT -- (CONTINUED)
NOTE 2 PERSONNEL EXPENSES
The breakdowns of personnel expenses are as follows:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
------ ----- --------- ---------
(E '000)
Salaries and wages............................ 12,075 6,379 3,499 1,177
Social expenses............................... 2,048 1,168 530 205
Pension expenses.............................. 449 461 65 10
------ ----- ----- -----
14,572 8,008 4,094 1,392
====== ===== ===== =====
Pension expenses relate to a defined contribution scheme covering all
employees and are expensed in the year in which they are payable. All previous
direct pension agreements have been fully paid during 1999.
The breakdowns of average number of employees in functional areas are as
follows:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
---- ---- --------- ---------
(E '000)
Manufacturing.................................... 142 91 44 14
Sales & marketing................................ 78 53 23 13
General and administration....................... 56 18 7 6
Research & development........................... 42 22 6 1
--- --- -- --
318 184 80 34
=== === == ==
The overall compensation paid to the member of the Management Board, Tor
Peters, for the year 1999 amounted to E188 thousand (1998: E113 thousand) and to
the Board of Supervisory Directors E50 thousand (1998: E12 thousand).
Members of the Management Board held at December 31, 1999, an aggregate of
shares representing a holding of 29.59% in JOMED. In accordance with his
employment agreement, the Chief Executive Officer and President has a term of
notice of 12 months.
F-18
67
NOTES TO THE INCOME STATEMENT -- (CONTINUED)
NOTE 3 INCOME TAXES
JOMED and its subsidiaries are subject to the income taxes of the
jurisdictions where they are located or have their registered offices. The
national corporate income tax rates are as follows:
1999 1998 1997 1996
------- ----- ----- -----
JOMED N.V....................................... 35% 35% 35% 35%
JOMED GmbH...................................... 40/30% 45/30% 45/30% 45/30%
JOMED Deutschland GmbH.......................... 40/30% 45/30% 45/30% 45/30%
JOMED France SARL............................... 36.67% 36.67% -- --
JOMED Italia S.p.a.............................. 41.25% 41.25% -- --
JOMED S.A. (Pty) Ltd............................ 30% 35% -- --
JOMED Distribution Centre B.V................... 35% 35% -- --
JOMED Benelux B.V............................... 35% 35% -- --
JOMED i Helsingborg International AB............ 28% 28% 28% 28%
JOMED AG........................................ 17.8/28% -- -- --
JOMED Japan Co. Ltd............................. 30% -- -- --
JOMED U.K. Ltd.................................. 30% 31% -- --
JOMED Poland Sp. z. oo.......................... 34% -- -- --
JOMED Singapore Pte. Ltd........................ 26% -- -- --
JOMED do Brasil Ltda............................ 35% -- -- --
Legislation in the Netherlands and certain other countries provides
companies with an opportunity to defer tax payments through appropriations to
non-taxed reserves. The consolidated income statement and balance sheet do not
show any non-taxed reserves, instead in the consolidated accounts the non-taxed
reserves are split between deferred tax and shareholders' non-distributable
equity. When these reserves are brought back to income, either in accordance
with tax regulations or voluntarily, they will be taxed at the rates then
applicable, unless they are used to cover a loss. Deferred taxes are also
recognized on the amount by which fair market values of acquired assets and/or
liabilities differ from their tax value, and on any restructuring provision etc.
When calculating deferred tax, the actual nominal tax rate in the
respective country has been applied.
This item comprises the income taxes paid or accrued in the individual
countries, plus deferred taxes:
UNAUDITED UNAUDITED
PRO PRO
FORMA FORMA
1999 1998 1997 1996
------ ------ --------- ---------
(E'000)
Income taxes................................ (2,833) (2,177) (1,133) (315)
Deferred taxes.............................. 1,690 (499) 282 --
------ ------ ------ ----
(1,143) (2,676) 851 (315)
====== ====== ====== ====
F-19
68
NOTES TO THE INCOME STATEMENT -- (CONTINUED)
Deferred taxes are comprised as follows:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
DECEMBER 31, DECEMBER 31, DECEMBER 31 DECEMBER 31,
1999 1998 1997 1996
------------ ------------ ----------- ------------
(E'000)
Intra-group profit............... 1,525 149 346 --
Tax loss carry forward........... 404 170 -- --
Provisions....................... -- (210) -- --
Changes in the tax rates relating
to previous year's balances.... -- -- -- --
Deferred tax assets.............. 1,929 109 346 --
Non-taxed reserves............... (440) (282) -- --
Changes in the tax rates relating
to previous year's balances.... -- -- -- --
Deferred tax liabilities......... (440) (282) (43) --
The potential tax savings relating to tax loss carry forwards are only
recognized as deferred tax income if it is sufficiently likely that this income
will be realized. Tax loss carry forwards of E404 thousand remained unutilized.
The deferred tax asset associated with the tax loss carry forward is considered
likely to be utilized within the foreseeable future since it relates to
companies with a history of profits in the last years.
The relation between actual income tax expenses and income before income
taxes is described below.
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
------- ------ --------- ---------
(E'000)
Income before income taxes.................. 3,114 5,659 1,712 756
Tax at the domestic rates applicable to
accounting profits in the country
concerned................................. (1,037) (2,130) (876) (315)
Tax effect of expenses that are not
deductible for tax purposes............... (1,796) (47) (257) --
Tax expense................................. (2,833) (2,177) (1,133) (315)
Deferred tax:
Intra-group profit........................ 1,737 (115) 325 --
Tax loss carry forward.................... 418 85 -- --
Provisions................................ (337) (210) -- --
Non-taxed reserves........................ (128) (259) (43) --
Actual income tax expense................... (1,143) (2,676) (851) (315)
The tax expenses have been calculated based on profit per country and each
country's current tax rate has been used.
NOTE 4 EARNINGS PER SHARE
Earnings per share are determined according to IAS 33 (Earnings Per Share)
by dividing the net income by the weighted average number of shares.
In 1999, the number of shares increased from 10,000 to 11,111. Earnings per
share were E212 on weighted average. There was no reliable fair value during the
year and therefore the options did not have any quantifiable dilutive effect.
F-20
69
NOTES TO THE INCOME STATEMENT -- (CONTINUED)
NOTE 5 TRANSACTIONS WITH RELATED PARTIES
JOMED maintains a long-standing business relationship with Lars
Sunnanvader. Mr. Sunnanvader is JOMED's founder, a member of its Supervisory
Board. In the past, JOMED has engaged in transactions with Jostra Medizintechnik
AG, which is controlled by Mr. Sunnanvader. Jostra Medizintechnik AG owns 50% of
JOMED's 50%-owned associated company Corline Systems AB. Lara Rheinmann GmbH,
which is 30%-owned by Mr. Sunnanvader and 15% by Siegfried Einhellig, member of
the Supervisory Board, supplies JOMED with PTFE (graft material) for use in its
stent grafts. In addition, JOMED rents its facilities in Rangendingen, Germany,
from Anna and Monika Sunnanvader, who are related to Mr. Sunnanvader. The annual
rent is E448 thousand. The rental agreement expires in the year 2008, at which
time JOMED has an option to extend the lease for an additional one-year term.
JOMED also has an option to purchase the facility for approximately E5.1
million, which may be exercised at any time upon 30-days notice.
On September 1, 1999, JOMED entered into a two-year consultancy agreement
with Mr. Siegfried Einhellig, a member of the Supervisory Board. Pursuant to
this agreement, Mr. Einhellig has been retained to act as a consultant on sales
and marketing matters for JOMED. The agreement provides that Mr. Einhellig is
entitled to receive the following compensation for performing these services:
E153,387 per year from September 1, 1999 until June 30, 2000 and E89,476 per
year thereafter.
JOMED believes that the terms of all related-party transactions are
customary and that they are in all material respects no less favourable to JOMED
than those which could be obtained from unaffiliated third parties in arm's
length negotiations.
F-21
70
NOTES TO THE BALANCE SHEET
NOTE 6 INTANGIBLE ASSETS
Changes in intangible assets are as follows:
PATENTS, COMPLETED DEVELOPMENT
LICENSES & DEVELOPMENT PROJECTS IN
(E '000) GOODWILL SIMILAR RIGHTS PROJECTS PROGRESS TOTAL
- -------- -------- -------------- ----------- ----------- ------
Opening balance January 1, 1998..... -- -- -- -- --
Acquired assets..................... -- 430 -- -- 430
Amortisation on acquired assets..... -- (78) -- -- (78)
Additions 1998...................... 11,867 35 -- 215 12,117
Amortisation April-December 1998.... (445) (46) -- -- (491)
Changes in exchange rates........... -- 5 -- -- 5
------ ----- --- ----- ------
Book value December 31, 1998........ 11,422 346 -- 215 11,983
------ ----- --- ----- ------
Additions 1999...................... 922 1,206 168 878 3,174
Amortisation 1999................... (642) (88) (7) -- (737)
Changes in exchange rates........... -- -- -- 22 22
------ ----- --- ----- ------
Book value December 31, 1999........ 11,702 1,464 161 1,115 14,442
------ ----- --- ----- ------
Original cost....................... 12,789 1,671 168 1,093 15,721
Accumulated amortisation............ (1,087) (212) (7) -- (1,306)
Changes in exchange rates........... -- 5 -- 22 27
------ ----- --- ----- ------
Book value December 31, 1999........ 11,702 1,464 161 1,115 14,442
====== ===== === ===== ======
UNAUDITED PRO FORMA
The following table presents the pro forma goodwill and intangible assets
on the assumption that the acquisition of JOMED GmbH, JOMED Deutschland GmbH and
JOMED i Helsingborg International AB took place on January 1, 1996 at the same
fair value but using the exchange rates ruling at that date.
PATENTS,
LICENSES &
(E '000) GOODWILL SIMILAR RIGHTS TOTAL
- -------- -------- -------------- ------
Opening balance January 1, 1996............................. -- -- --
Additions 1996.............................................. 11,344 45 11,389
Amortisation 1996........................................... (572) (8) (580)
Changes in exchange rates................................... 95 -- 95
------ --- ------
Book value December 31, 1996................................ 10,867 37 10,904
Additions 1997.............................................. -- 385 385
Amortisation 1997........................................... (553) (70) (623)
Changes in exchange rates................................... (362) -- (362)
------ --- ------
Book value December 31, 1997................................ 9,952 352 10,304
====== === ======
The figures for 1996 and 1997 have been derived from the pro-forma
consolidated statements.
Development projects in progress are yet to be completed and are not
subject to amortisation.
Completed projects are subject to amortisation.
F-22
71
NOTES TO THE BALANCE SHEET -- (CONTINUED)
The foreign currency exchange rate differences are the differences between
the amounts at the beginning and the end of the year that result from
translating foreign subsidiaries' figures at the respective different exchange
rates in force on the closing date in each period.
The fair value of these assets is not materially different from the
carrying value.
NOTE 7 EQUIPMENT AND EQUIPMENT UNDER CONSTRUCTION
Changes in equipment and equipment under construction are as follows:
EQUIPMENT
UNDER
EQUIPMENT CONSTRUCTION TOTAL
--------- ------------ ------
(E '000)
Opening balance January 1, 1998..................... -- -- --
Acquired assets..................................... 1,822 53 1,875
Depreciation on acquired assets..................... (420) -- (420)
Additions 1998...................................... 2,426 819 3,245
Depreciation 1998................................... (811) -- (811)
------ ---- ------
Book value December 31, 1998........................ 3,017 872 3,889
------ ---- ------
Additions 1999...................................... 8,192 (872) 7,320
Depreciation 1999................................... (2,087) -- (2,087)
Changes in exchange rates........................... 39 -- 39
------ ---- ------
Book value December 31, 1999........................ 9,161 -- 9,161
------ ---- ------
Original cost....................................... 12,440 -- 12,440
Accumulated depreciation............................ 3,318 -- (3,318)
Changes in exchange rates........................... 39 -- 39
------ ---- ------
Book value December 31, 1999........................ 9,161 -- 9,161
====== ==== ======
UNAUDITED PRO FORMA
The following table presents the movements in equipment and equipment under
construction in the predecessor comparison for the years ended December 31, 1996
and December 31, 1997:
EQUIPMENT
UNDER
EQUIPMENT CONSTRUCTION TOTAL
--------- ------------ -----
(E '000)
--------
Opening balance January 1, 1996...................... -- -- --
Additions 1996....................................... 777 270 1,047
Depreciation (net) 1996.............................. (86) -- (86)
----- ---- -----
Book value December 31, 1996......................... 691 270 961
----- ---- -----
Additions 1997....................................... 1,071 (208) 863
Depreciation (net) 1997.............................. (337) -- (337)
Changes in exchange rates............................ (23) (9) (32)
----- ---- -----
Book value December 31, 1997......................... 1,402 53 1,455
===== ==== =====
The foreign currency exchange rate differences are the differences between
the amounts at the beginning and the end of the year that result from
translating foreign subsidiary's figures at the respective different exchange
rates in force on the closing date in each period.
F-23
72
NOTES TO THE BALANCE SHEET -- (CONTINUED)
FINANCIAL LEASES
Capitalised equipment held under finance leases includes assets with a
total net value of:
(E '000)
--------
35794....................................................... 243
36159....................................................... 620
36524....................................................... 668
The gross carrying amounts of these assets total E1,093 thousand.
The fair value of the equipment is not materially different from the
carrying value.
OPERATIONAL LEASE
The commitments under operational lease are in total less than E1 million
as at December 31, 1999 and mature within five years.
NOTE 8 INVESTMENTS IN ASSOCIATES
Changes in investments are as follows:
Participation in associated companies represents the 50% stake in the
shares of Corline Systems AB, Uppsala, Sweden and the 49% stake in the shares of
JOMED Canada Inc., Toronto, Canada.
(E '000)
--------
Opening balance January 1, 1998............................. --
Acquisition 1998............................................ 490
Share of net income for the year 1998....................... (104)
Changes in exchange rates................................... (29)
----
Book value December 31, 1998................................ 357
Acquisition 1999............................................ 17
Share of net income for the period 1999..................... (78)
Changes in exchange rates................................... 46
----
Book value December 31, 1999................................ 342
UNAUDITED PRO FORMA
Book value January 1, 1996.................................. --
Acquisition 1997............................................ 414
Share of net income for the year 1997....................... (12)
----
Book value December 31, 1997................................ 402
====
The figures for 1996 and 1997 have been derived from the pro-forma
consolidated statements.
The fair value of these investments is not materially different from the
carrying value.
NOTE 9 OTHER FINANCIAL ASSETS
Other financial assets represent an investment in 268,100 shares in
EndoSonics Corp, amounting to E1,962 thousand. The fair value of this investment
is not materially different from the carrying value.
F-24
73
NOTES TO THE BALANCE SHEET -- (CONTINUED)
NOTE 10 INVENTORIES
Inventories comprise the following:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
----- ----- --------- ---------
(E '000)
Raw materials and supplies.................... 973 612 200 206
Work in progress.............................. 1,216 529 89 92
Finished goods................................ 5,219 2,035 779 215
----- ----- ----- ---
7,408 3,176 1,068 513
===== ===== ===== ===
NOTE 11 RECEIVABLES AND OTHER ASSETS
Trade accounts receivable, other receivables and other assets as presented
under current assets mature within one year. Trade accounts receivable, other
receivables and other assets are stated at nominal value, less any necessary
write-downs for amounts unlikely to be recovered.
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
------ ----- --------- ---------
(E '000)
Accounts receivable trade.................... 22,098 7,724 3,734 1,214
Receivables from non-consolidated
companies.................................. 1,404 321 34 --
Other receivables............................ 2,926 1,213 857 365
Other short-term assets...................... 990
------ ----- ----- -----
27,418 9,258 4,625 1,579
====== ===== ===== =====
Other receivables consist mainly of trade tax. Other current assets consist
of development projects in progress invoiced in the beginning of year 2000.
NOTE 12 CASH AND CASH EQUIVALENTS
At December 31, 1999, the amount of cash and cash equivalents was freely
available.
NOTE 13 SHAREHOLDERS
On April 2, 1998, certain subsidiaries were acquired by JOMED in return for
the issue of shares. At December 31, 1999, the authorized share capital amounted
to E181,510 of 11,111 shares with a par value of E16.3 per share. As at December
31, 1999 11,111 shares were issued and paid-up and are held by the following
shareholders:
SHARES OWNED PERCENTAGE
PRIOR TO OWNED BEFORE
SHAREHOLDER OFFERING OFFERING
- ----------- ------------ ------------
Tor Peters................................................. 3,288 29.59%
Capir Holdings Ltd......................................... 1,814 16.32%
Siegfried Einhellig........................................ 1,121 10.09%
Anna Sunnanvader........................................... 928 8.35%
Monika Sunnanvader......................................... 674 6.07%
Annika Sunnanvader......................................... 674 6.07%
Lars Sunnanvader........................................... 509 4.58%
SGA........................................................ 250 2.25%
F-25
74
NOTES TO THE BALANCE SHEET -- (CONTINUED)
SHARES OWNED PERCENTAGE
PRIOR TO OWNED BEFORE
SHAREHOLDER OFFERING OFFERING
- ----------- ------------ ------------
Kurt Spranger.............................................. 200 1.80%
Randolf von Oepen.......................................... 134 1.21%
Sadco...................................................... 125 1.13%
Other Investors............................................ 1,394 12.55%
------ -----
11,111 100%
STOCK OPTION PLAN
In 1999 JOMED set up a Stock Option Plan for members of management and key
employees. Options were been granted to the 16 participants in the plan over up
to an aggregate of 355 shares of JOMED, representing 3.2% of JOMED's current
nominal share capital at December 31, 1999. The options may be exercised within
four annual option periods. The first option period is from June 30, 1999 to
June 30, 2000; the second, December 30, 1999 to December 29, 2000; the third,
December 29, 2000 to December 28, 2001; and the fourth, December 28, 2001 to
December 30, 2002. Only 25% of the total options available to each member of the
Stock Option Plan are eligible to be exercised within any one option period. Any
options not exercised within their respective option period lapse. Each of the
options entitles its holder to purchase a share of JOMED at E12,780. The Stock
Option Plan has closed, and no further options will be issued under this plan.
JOMED is exempt from provisions of the Lock-up Agreement in issuing shares
pursuant to the exercise of options under the Stock Option Plan.
Since 1998, Capir Holdings Ltd., an investment holding company, has held an
option to subscribe 526 shares of JOMED at DEM 7,000,000.
NOTE 14 NON-CURRENT INTEREST BEARING LIABILITIES
Financial obligations are carried at nominal or redemption value, whichever
is higher. They comprise the following:
UNAUDITED UNAUDITED
PRO FORMA PRO FORMA
1999 1998 1997 1996
---- ---- --------- ---------
(E '000)
Liabilities under lease agreements............... 365 354 97 --
Loans............................................ 561 -- -- --
--- --- -- --
926 354 97 --
=== === == ==
JOMED has long-term loans amounting to a total of E561 thousand granted
from financial institutions with an average interest rate of 5%. These loans are
secured by chattel mortgages on machinery, other operational and office
equipment as well as inventories. Liabilities due to financial leases are E365
thousand. The total amount is due within one to five years.
(E '000)
--------
The loans are raised in:
CHF to the equivalence of................................... 312
DEM to the equivalence of................................... 249
---
Total....................................................... 561
===
F-26
75
NOTES TO THE BALANCE SHEET -- (CONTINUED)
NOTE 15 EXCHANGE AND INTEREST RATE RISKS
EXCHANGE RATE RISKS
JOMED is subject to foreign exchange fluctuations in its normal course of
business. Invoices to customers within the European Union are usually
denominated in euro or local currencies and in other countries, mainly in U.S.
dollars. In 1999 JOMED earned approximately 51% of its sales revenues in U.S.
Dollars, 32% in euro-linked currencies and 17% in other currencies. Most of
JOMED's expenses, on the other hand, are in euro-linked currencies. With the
implementation of the euro, JOMED's foreign exchange exposure has been somewhat
reduced. However, with the projected growing importance of sales outside Europe,
exchange rates will continue to have a strong impact on the operations and the
results of JOMED.
At year-end 1999, JOMED had covered its estimated United States dollar
exchange exposures as of 31 December 1999 with forward contracts. These forward
contracts are spread over 2000 to match anticipated incoming receipts and have a
value of USD 19.5 million.
INTEREST RATE RISK
All of JOMED's credit facilities bear market rate interest and are
therefore subject to interest rate fluctuations. As of December 31, 1999, JOMED
had available credit facilities of E21.5 million and had drawn down E11.5
million on these credit lines. JOMED's bank loans and credit facilities are
renewable on a yearly basis and have until now primarily been used for
investments in fixed assets and working capital.
NOTE 16 CURRENT INTEREST BEARING LIABILITIES
The individual items are as follows:
UNAUDITED PRO UNAUDITED PRO
FORMA FORMA
1999 1998 1997 1996
------ ----- ------------- -------------
(E '000)
Finance lease.......................... 303 266 146 --
Loans.................................. 10,939 4,295 1,410 939
------ ----- ----- ---
11,242 4,561 1,556 939
====== ===== ===== ===
JOMED has interest bearing loans amounting to E10,939 thousand granted from
financial institutions, with an average interest rate of 5%. These loans are
secured by chattel mortgages on the machinery, other operational and office
equipment as well as inventories.
(E '000)
--------
The loans are raised in:
SEK to the equivalent of.................................... 9,925
CHF to the equivalent of.................................... 553
DEM to the equivalent of.................................... 461
------
Total....................................................... 10,939
======
F-27
76
NOTES TO THE BALANCE SHEET -- (CONTINUED)
NOTE 17 OTHER CURRENT LIABILITIES
The individual items are as follows:
UNAUDITED PRO UNAUDITED PRO
FORMA FORMA
1999 1998 1997 1996
------ ----- ------------- -------------
(E '000)
Payroll liabilities.................... 353 133 150 53
Taxes on income........................ 2,842 2,339 1,196 300
Liabilities for social expenses........ 741 110 250 175
Advance payments received.............. 195 46 -- --
Other liabilities...................... 6,962 3,754 1,355 825
------ ----- ----- -----
11,093 6,382 2,951 1,353
====== ===== ===== =====
Tax liabilities include not only Group companies' own tax liabilities, but
also taxes withheld by them for payment to authorities on behalf of third
parties.
Liabilities for social expenses include, in particular, social insurance
contributions that had not been paid by the closing date.
The other liabilities comprise numerous individual items such as guarantees
and commissions to customers.
NOTE 18 PLEDGED ASSETS
UNAUDITED PRO UNAUDITED PRO
FORMA FORMA
1999 1998 1997 1996
------ ----- ------------- -------------
(E '000)
Chattel mortgages...................... 467 423 457 --
Pledged inventories, machinery and
equipment receivables................ 10,300 5,987 1,657 --
------ ----- ----- --
10,767 6,410 2,114 --
====== ===== ===== ==
F-28
77
NOTES TO THE CASH FLOW STATEMENT
NOTE 19 ACQUISITION OF SUBSIDIARIES
During 1999, 50% of shares of JOMED do Brasil Ltda was acquired at a price
of E855 thousand. Goodwill amounted to E857 thousand. Additional consideration
payable in connection with the purchase of JOMED Italia S.p.a., acquired during
1998, amounted to E65 thousand. The purchase prices had not been paid at
year-end. JOMED i Helsingborg International AB, JOMED GmbH and JOMED Deutschland
GmbH were acquired as part of the reconstruction of the company structure in
1998. These acquisitions did not result in an outflow of cash since they were
paid with in shares..
1999 1998
---- ------
(E '000)
Fixed assets................................................ 19 2,319
Inventories................................................. 402 496
Receivables and other assets................................ 96 4,953
Cash and cash equivalents................................... 15 345
Long-term liabilities....................................... -- --
Accounts payable -- trade................................... (536) (6,442)
Purchase price -- paid...................................... -- 396
Liquid assets in the acquired company....................... 15 345
Effect on the liquid assets of the Group.................... 15 (51)
The cash and cash equivalents acquired as part of the acquisition of
subsidiaries is shown as an investment activity.
F-29
78
FINANCIAL STATEMENTS OF JOMED FOR THE FIRST SIX MONTHS OF 2000
JOMED
CONSOLIDATED INCOME STATEMENT
SIX MONTHS ENDED JUNE 30,
--------------------------
2000 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
NET SALES................................................... 29,859 19,823
Cost of goods sold.......................................... (4,081) (5,021)
GROSS PROFIT................................................ 25,778 14,802
Manufacturing overheads..................................... (1,562) (1,326)
Sales & Marketing........................................... (12,679) (7,786)
General & Administration.................................... (4,211) (1,923)
Research & Development...................................... (3,152) (1,662)
Other operating income...................................... 211 (30)
OPERATING RESULT............................................ 4,385 2,075
Result from financial investments:
Interest income............................................. 521 80
Interest expenses........................................... (855) (563)
Result from associated companies............................ (48) (66)
NON-OPERATING RESULT........................................ (382) (549)
INCOME BEFORE INCOME TAXES.................................. 4,003 1,526
Income taxes................................................ (1,174) (548)
INCOME AFTER TAXES.......................................... 2,829 978
Minority interest........................................... (217) (38)
NET INCOME.................................................. 2,612 940
F-30
79
JOMED
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30,
--------------------------
2000 1999
----------- -----------
(UNAUDITED) (UNAUDITED)
ASSETS
Non-current assets:
Intangible assets........................................... 51,626 12,418
Equipment and equipment under construction.................. 11,345 6,757
Investments in associates................................... 332 327
Other financial assets...................................... 1,996 2,322
Deferred tax................................................ 1,551 1,290
66,850 23,114
Current assets:
Inventories................................................. 12,938 6,247
Receivables and other assets
Trade accounts receivable................................... 29,144 16,299
Other receivables and other assets.......................... 5,545 2,649
Cash and cash equivalents................................... 91,404 1,216
139,031 26,411
TOTAL ASSETS................................................ 205,881 49,525
EQUITY AND LIABILITIES
Equity:
Issued capital.............................................. 232 163
Share premium............................................... 151,916 12,906
Other reserves.............................................. 4,959 1,535
Net income.................................................. 2,612 940
159,719 15,544
Non-current liabilities:
Interest bearing liabilities................................ 6,787 17,767
Convertible loan notes...................................... 12,000 --
Deferred tax................................................ 332 --
19,119 17,767
Current liabilities:
Trade accounts payable...................................... 4,940 7,208
Interest bearing liabilities................................ 8,507 280
Other current liabilities................................... 13,596 8,726
27,043 16,214
TOTAL EQUITY AND LIABILITIES................................ 205,881 49,525
F-31
80
JOMED
CONSOLIDATED CASH FLOW STATEMENT
SIX MONTHS ENDED
JUNE 30,
-----------------
2000 1999
------- ------
E '000
Operating activities:
Operating result............................................ 4,385 2,075
Adjustments for items not included in cash flow............. 641 839
Cash flow from operating activities, before working capital
changes................................................... 5,026 2,914
Increase in inventories..................................... (5,387) (3,071)
Increase in current receivables............................. (6,635) (9,690)
Increase in current liabilities............................. 325 6,621
Cash flow from operating activities......................... (6,671) (3,226)
Income taxes paid........................................... (2,429) (1,536)
NET CASH FROM OPERATING ACTIVITIES.......................... (9,100) (4,762)
Investing activities:
Acquisition of intangible assets............................ (12,967) (1,498)
Acquisition of equipment.................................... (2,789) (3,576)
Acquisition of subsidiaries................................. (89) (857)
Investing in financial assets............................... (23) (2,322)
CASH FLOW FROM INVESTING ACTIVITIES......................... (15,868) (8,253)
Financing activities:
Share issue................................................. 110,258
Increase in interest bearing liabilities.................... 2,948 13,132
CASH FLOW FROM FINANCING ACTIVITIES......................... 113,206 13,132
CHANGE IN CASH AND CASH EQUIVALENTS......................... 88,238 117
Cash and cash equivalents -- opening balance................ 3,166 1,099
Cash and cash equivalents -- closing balance................ 91,404 1,216
F-32
81
ANNEX B
SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN
INTERNATIONAL ACCOUNTING STANDARDS AND
U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The financial statements in Annex A to this Offer to Purchase conform with
International Accounting Standards (IAS), which differ in certain respects from
United States Generally Accepted Accounting Principles (US GAAP).
FINANCIAL STATEMENTS - GENERAL REQUIREMENTS
Contents of Financial Statements
Under IAS, two years' balance sheets, income, recognized gains and losses
and cash flows statements, changes in equity, accounting policies and notes are
required. US GAAP is comparable to the IAS, except that three years of income,
recognized gains and losses and cash flows statements, changes in equity,
accounting policies and notes are required (but not balance sheets).
True and Fair View Override
Under IAS, standards may be overridden (in rare cases) to give a "true and
fair view" of information. Under US GAAP, no override of standards is permitted.
Accounting Convention
Under IAS, historical cost are generally used, but some assets may be
revalued. Under US GAAP, no revaluations are permitted, except that some
securities and derivatives may be valued at fair value.
Changes in Accounting Policies
Under IAS, either restate comparatives and prior year opening retained
earnings or include effect in current year income. Under US GAAP, generally
include effect in current year income statement.
Correction of Fundamental Errors
Under IAS, either restate comparatives or include effect in current year
income. Under US GAAP, restate comparatives.
GROUP REPORTING
Definition of Subsidiary
Under IAS, the determination of whether an entity is a "subsidiary" is
based on voting control or actual dominant influence. Under US GAAP, the
determination of whether an entity is a "subsidiary" is based on controlling
interest through a majority of voting shares.
Presentation of Associate Results
Under IAS, the equity method is used to present a company's share of
profits and losses of one of its associates. Under US GAAP, the equity method is
used to present a company's share of the post-tax results of its associates.
B-1
82
Disclosures about Significant Associates
Under IAS, minimal disclosures regarding significant associates are
required. Under US GAAP, detailed information on a significant associates'
assets, liabilities and results must be disclosed.
Equity Method or Proportional Consolidation for Joint Ventures
Under IAS, both proportional consolidation and equity methods are permitted
to consolidate joint ventures. Under US GAAP, the equity method is generally
used to consolidate joint ventures.
FOREIGN CURRENCY TRANSACTION
Hyperinflation - Foreign Entity
Under IAS, local statements of foreign entity are translated to current
price levels prior to translation.
Under US GAAP, local currency statements are remeasured using the reporting
currency as the functional currency.
BUSINESS COMBINATIONS
Purchase Method - Fair Values on Acquisition
Under IAS, the fair value assets and liabilities of an acquired entity is
presented. Some liabilities relating to the acquired entity may be recognized in
restricted circumstances. US GAAP is broadly comparable to IAS but value must be
allocated to all intangibles. Some plant closure and restructuring liabilities
relating to the acquired entity may be provided in fair value exercise if
certain criteria are met.
Purchase Method - Subsequent Adjustments to Fair Values
Under IAS, fair values can be corrected against goodwill up to the end of
the year after acquisition if additional evidence of value becomes available,
with subsequent adjustments in the income statement being recorded. Reversals of
acquisition provisions always adjust goodwill. US GAAP is broadly comparable to
IAS, except that the investigation of values must be ongoing and the correction
against goodwill will only be allowed within a maximum of one year from
acquisition. Reversals of acquisition provisions always adjust goodwill.
Purchase Method - Contingent Consideration
Under IAS, contingent consideration is estimated at acquisition then
subsequently corrected against goodwill. Under US GAAP, contingent consideration
is not recognized until the contingency is resolved or the amount is
determinable.
Purchased Method - Minority Interests at Acquisition
Under IAS, a minority interest, at acquisition, is stated at the owner's
share of fair value of net assets or at the owner's share of pre-acquisition
carrying value of net assets. Under US GAAP, minority interests, at acquisition,
are usually stated at share of pre-acquisition carrying value of net assets.
Purchase Method - Disclosure
Under IAS, disclosures include names and descriptions of combining
entities, method of accounting for acquisition and date of acquisition. US GAAP
is broadly comparable to IAS, but pro-forma income statement information as if
an acquisition occurred at start of comparable period must also be presented.
Purchase Method - Goodwill
Under IAS, goodwill is capitalized and amortized over useful life, which is
normally not longer than 20 years. Under US GAAP, goodwill is capitalized and
amortized over useful life, with a maximum of 40 years.
B-2
83
MAIN ACCOUNTING PRINCIPLES
Intangible Assets
Under IAS, intangible assets are capitalized if recognition criteria are
met, and intangible assets must be amortized over useful life, which is normally
no longer than 20 years, with reevaluations being permitted only in rare
circumstances. Under US GAAP, intangible assets are capitalized and amortized
over useful life, which is no longer than 40 years, with reevaluations not being
permitted.
Research & Development Costs
Under IAS, research costs are expensed as incurred. Development costs must
be capitalized and amortized if stringent criteria are met. Under US GAAP, both
research and development costs are expensed as incurred. Some software
development costs must be capitalized.
Property, Plant and Equipment
Under IAS, historical cost or revalued amounts are used. Frequent
valuations of entire classes of assets are necessary when revalued amounts are
used. Under US GAAP, revaluations are not permitted.
Investment Properties
Under IAS, investment properties are either treated as investment or
property, plant and equipment. Under US GAAP, investment properties are treated
as "other properties" (historical cost is used).
Impairment of Assets
Under IAS, if impairment of assets is indicated, assets are written down to
the higher of net selling price and value in use based on discounted cash flows.
Under US GAAP, an impairment review is based on undiscounted cash flows. If the
undiscounted cash flows are less than the carrying amount, impairment loss is
measured using discounted cash flows.
Capitalization of Borrowing Costs
Under IAS, capitalization of borrowing costs is permitted for qualifying
assets. Under US GAAP, capitalization of borrowing costs is compulsory when
related to construction of certain qualifying assets.
Investments
Under IAS, long-term investments are carried at cost or revalued amounts.
Revaluations are recorded consistently in income statement or equity, and
current asset investments are carried at the lower of cost and market value or
at market value. Market value changes are recorded in income statement. However,
there are some recent proposals to carry some financial assets at fair value.
Under US GAAP, if an investment is held to maturity then it is carried at
amortized cost, otherwise it is carried at fair value. Unrealized gains/losses
are taken to other comprehensive income or (if trading securities) to income
statement.
Inventories and Long-term Contracts
Under IAS, inventories and long-term contracts are carried at the lower of
cost and NRV, and FIFO, LIFO or the weighted average method are used to
determine cost. US GAAP is broadly comparable to IAS; however, LIFO is more
commonly used.
Provisions - General
Under IAS, provisions relating to present obligations are recorded
separately from past events if probable outflow of resources can be reliably
estimated. Under US GAAP, there are separate rules for specific situations
(employee termination cost, environmental liabilities, etc.)
B-3
84
Provisions - Restructuring
Under IAS, restructuring provisions are made if a detailed formal plan
exists and has been announced or implemented. Under US GAAP, restructuring
provisions are made if management has committed to such provisions and the
implementation process has begun.
Employee Stock Compensation
Under IAS, disclosures of employee stock compensation are required but
there are no standards for proposals on measurement. Under US GAAP, the cost of
employee stock compensation share awards or options are charged over the period
of employee's performance. Two alternative methods are available for cost:
intrinsic value (market price at measurement date less any employee contribution
or exercise price) or fair value using the option pricing model.
Employee Share Option Plans - Presentation in Balance Sheet of Sponsor
IAS has no standard or proposals for the presentation in the balance sheet
of a sponsor of the sponsor's employee share option plans. Under US GAAP,
employee stock option plan shares are classified as deduction from equity, and
the debt of an employee stock option plan is included on the sponsor's balance
sheet.
Deferred Income Taxes
Under IAS, the full provision method is used, driven by balance sheet
temporary differences. Deferred income tax assets are recognized if recovery is
probable. US GAAP is comparable to IAS, but all deferred income tax assets are
recognized and then a valuation allowance is provided if a recovery is less than
50% likely.
Capital Instruments - Categorization of Shares
Under IAS, capital instruments are classified depending on the substance of
the obligations of the issuer. Mandatory redeemable preference shares are
generally liabilities, not equity. Under US GAAP, shareholders' equity is
categorized between common stock and other categories. Redeemable preference
shares are normally categorized in a "mezzanine" category (between debt and
equity).
Capital Instruments - Convertible Debt
Under IAS, convertible debt is accounted for on a split basis, allocating
proceeds between equity and debt. Under US GAAP, convertible debt is a
liability.
Derivatives and Other Financial Instruments - Measurement of Derivative
Instruments and Hedging Activities
Under IAS, there is no guidance currently with respect to the measurement
of derivative instruments and hedging activities. Under US GAAP, derivatives and
hedges are measured at fair value, with changes in fair value being carried to
the income statement (except for effective cash flow hedges where they are taken
to comprehensive income (i.e. in equity) until effect of transaction goes
through income, then they are transferred to the income statement).
Derivatives and Other Financial Instruments - Disclosures
Under IAS, credit risk, exposures to interest rates, fair values of
financial assets and liabilities, information on hedges are disclosed, as well
as information about policies and strategies. US GAAP is comparable to IAS, but
additional required disclosures about hedging objectives, strategies, fair value
hedges and cash flow hedges are required.
B-4
85
OTHER ACCOUNTING AND REPORTING ISSUES
Related Party Transactions - Disclosures
Under IAS, the names of related parties, nature of relationship and types
of transactions are disclosed. For control relationships, disclosure is made
regardless of whether transactions between the related parties occur. However,
some exemptions are available for separate financial statements of subsidiaries.
US GAAP is broadly comparable to IAS; however, exemptions are narrower than
under IAS.
Extraordinary and Exceptional Items
Under IAS, extraordinary items are limited to a few events outside control
of the company and exceptional items are usually shown in the notes. US GAAP is
broadly comparable to IAS; however, subtotals of income for operations before
exceptional items are not shown.
Segment Reporting - Accounting Policies
Under IAS, consolidated GAAP accounting policies are used for segment
reporting. Under US GAAP, internal financial reporting policies are used for
segment reporting even if accounting policies may differ from consolidated GAAP.
Segment Reporting - Disclosures
Under IAS, disclosures for primary segment format include sales, profits,
capex, assets and liabilities. For secondary segment format, sales, assets and
capital expenditures are disclosed. Under US GAAP, disclosures are similar to
IAS. However, liabilities and geographical capital expenditures are not required
to be disclosed. Depreciation, amortization, tax, interest and
exceptional/extraordinary items are required to be disclosed if reported
internally.
Cash Flow Statements - Formats and Method
Under IAS, headings are standard, but there is flexibility over their
contents. The direct or indirect method is used. US GAAP has similar headings to
IAS, but more specific guidance is given for items to include in each heading.
Under US GAAP, the direct or indirect method is used.
Cash Flow Statements - Definition of Cash and Cash Equivalents
Under IAS, cash includes overdrafts and cash equivalents with short-term
maturities (less than 3 months). Under US GAAP, cash excludes overdrafts but
includes cash equivalents with short-term maturities.
Cash Flow Statements - Exemptions
Under IAS, no exemptions are available. Under US GAAP, limited exemptions
for certain investment enterprises are available.
Statement of Recognized Gains and Losses
Under IAS, a statement of recognized gains and losses is given either as a
separate primary statement or it is separately highlighted in a primary
statement of movements in equity. Under US GAAP, total comprehensive income is
disclosed, either combined with income statements or as under IAS. Also,
cumulative amounts are tracked and disclosed.
Operating and Financial Review
IAS has no mandatory standard for operating and financial review. However
IAS includes suggested features, such as an analytical discussion of business
and financial information. Under US GAAP, public entities must prepare a
"Management's Discussion and Analysis ("MD&A") including contents mandated by
U.S. Securities and Exchange Commission rules and focusing on liquidity, capital
resources and results of operation.
B-5
86
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly executed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder or his broker,
dealer, commercial bank, trust company or other nominee to the Depositary at one
of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
By Facsimile Transmission
(for Eligible Institutions only):
(201) 296-4293
Confirm by Telephone:
(201) 296-4860
By Overnight Courier: By Mail: By Hand:
ChaseMellon Shareholder ChaseMellon Shareholder ChaseMellon Shareholder
Services, L.L.C. Services, L.L.C. Services, L.L.C.
Reorganization Department Reorganization Department 120 Broadway, 13th Floor
85 Challenger Road P.O. Box 3301 New York, NY 10271
Mail Stop -- Reorg South Hackensack, NJ 07606 Attn: Reorganization
Ridgefield Park, NJ 07660 Department
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager, at the addresses and telephone numbers set forth
below. Additional copies of this Offer to Purchase, the Letter of Transmittal,
the Notice of Guaranteed Delivery and related materials may be obtained from the
Information Agent or the Dealer Manager as set forth below and will be furnished
promptly at the Purchaser's expense. Stockholders may also contact their broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
[MacKenzie Partners, Inc. Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (call collect)
or
toll-free (800) 322-2885
The Dealer Manager for the Offer is:
[CREDIT SUISSE/FIRST BOSTON LOGO]
Eleven Madison Avenue
New York, New York 10010-3629
Call Toll Free: (800) 881-8320