=============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 8-K/A Amendment No. 1 Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 9, 1997 SYNBIOTICS CORPORATION (Exact name of registrant as specified in its charter) Commission file number 0-11303 California 95-3737816 (State or other jurisdiction (I.R.S. Employer of incorporation) Identification No.) 11011 Via Frontera San Diego, California 92127 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (619) 451-3771 =============================================================================== AMENDMENT TO CURRENT REPORT The Registrant's Current Report on Form 8-K, filed on July 24, 1997 to report the Registrant's acquisition on July 9, 1997 of the veterinary diagnostic business of Rhone Merieux S.A.S. is amended to provide financial statements, pro forma financial information and additional exhibits required by Item 7 of the report. There are no other changes to the report as filed. Item 7. Financial Statements and Exhibits --------------------------------- a) Financial statements of business acquired: ------------------------------------------ Report of Independent Accountants 2 Statement of Assets as of December 31, 1996 10 Statement of Revenues and Direct Operating Expenses for the years ended December 31, 1995 and 1996 11 Notes to Statement of Assets and Statement of Revenues and Direct Operating Expenses 12 Statement of Assets (Unaudited) as of June 30, 1997 13 Statement of Revenues and Direct Operating Expenses (Unaudited) for the six months ended June 30, 1997 14 Notes to Unaudited Statement of Assets and Unaudited Statement of Revenues and Direct Operating Expenses 15 -1- Madame Dominique TAKIZAWA Corporate VP Finance RHONE-MERIEUX SA 29, avenue Tony Garnier 69007 - LYON RHONE-MERIEUX SA DIAGNOSTIC BUSINESS SPECIAL AUDIT REPORT 1. We have audited, in accordance with generally accepted auditing standards, the statutory financial statements of Rhone-Merieux SA for the year ended December 31, 1995 and have issued our report hereon dated February 5, 1996. We have audited the financial statements of Rhone-Merieux SA for the year ended December 31, 1996, prepared for the purpose of the Rhone-Poulenc consolidation for the year then ended, but have not yet issued our report on the Rhone-Merieux SA statutory accounts for this year ended December 31, 1996. We also have audited the revenues and direct costs of the Rhone- Merieux SA diagnostic business for the years ended December 31, 1996 and 1995 and its fixed assets and inventories as of December 31, 1996, presented on the attached schedules. These schedules are the responsibility of Rhone-Merieux SA's management. Our responsibility is to express an opinion on the Rhone-Merieux SA diagnostic business' revenues, direct costs, fixed assets and inventories, based on our audit procedures. 2. These audit procedures were conducted in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether revenues, direct costs, together with fixed assets and inventories, are free of material misstatements. These audit procedures include examining, on a test basis, evidence supporting the amounts and also assessing the accounting principles used and significant estimates made by management. We believe that our audit procedures provide a reasonable basis for our opinion. 3. In our opinion, the attached schedules present fairly, in all material respects, the Rhone-Merieux SA diagnostic business revenues and direct costs for the years ended December 31, 1996 and 1995, and its fixed assets and inventories as of December 31, 1996. 4. At your request, we also have reviewed: i) The allocation of fixed costs, selling and other overheads and research and development costs related to the Rhone-Merieux SA diagnostic business for the years ended December 31, 1996 and 1995, and presented on the attached schedules. ii) Accounts receivable and payable related to the diagnostic business as of December 31, 1996. 5. Our review was made solely to assess the reasonableness of the amounts concerned and of the method adopted for allocating fixed costs and non direct costs to the diagnostic business and for estimating accounts receivable and payable. It does not constitute an audit conducted in accordance with generally accepted auditing standards. Our procedures and findings are as follows: i) Fixed costs (factory overheads) We made sure that only fixed costs relating to manufacturing sections concerned by the diagnostic business were allocated to this activity. These costs have been allocated proportionally to the added value of the diagnostic business compared to the whole Rhone-Merieux SA biology added value. In particular, we have -2- made sure that the fixed costs allocated were not affected by the pharmaceuticals (Toulouse) and Frontline activities. We reperformed some calculations on a test basis and did not notice any significant exceptions or errors. ii) Selling overheads We made sure that all costs specific to the diagnostic business were allocated directly to this business line. They correspond to technical assistance, marketing, and advertising expenses. Other costs such as salesmen, distribution expenses, administrative expenses, receivables depreciation costs, fixed assets depreciation were allocated proportionally to the diagnostic business revenues compared to the total Rhone-Merieux SA revenues. We reperformed some calculations on a test basis and did not notice any significant errors. iii) Other overheads These costs have been allocated proportionally to the added value of the diagnostic business compared to the whole Rhone-Merieux SA biology added value. Since this diagnostic business has never been operated as a separate operational or legal entity, no better approach could be considered. iv) Research and development costs Costs specific to the diagnostic business research and development have been identified and amount to FF'OOO 5,835 and FF'OOO 6,145 for years 1996 and 1995, respectively. We examined documentation supporting this direct allocation. Other R&D costs, FF'OOO 1,068 and FF'OOO 1,154 for years 1996 and 1995 respectively, have been allocated proportionally to the number of the R&D employees pertaining to the diagnostic business. We reviewed the method followed and reperformed some calculation on a test basis and did not notice any significant errors or irregularities. v) Accounts receivable and payable Rhone-Merieux SA does not record receivables and payables related to the diagnostic business separately. Thus, the corresponding amounts as of December 31, 1996 included in the attached schedules have been estimated based on receivable turnover ratios and payable purchase ratios. The amounts determined thanks to that method are rough estimates and should only be regarded as such. 6. Because the above procedure on fixed and non-direct costs and on accounts receivable and payable do not constitute an audit conducted in accordance with generally accepted auditing standards, we do not express an opinion on the accounts or items referred to above. 7. In connection with the procedures referred to above, except as indicated in paragraph 8 hereafter, no matters came to our attention that caused us to believe the specified fixed costs or non-direct costs should be adjusted. 8. The Rhone-Merieux SA diagnostic business has never been operated as a separate operational or legal entity. Thus, we were unable to ascertain that the figures included in the attached schedules include all costs, and only those costs, necessary for operating this business as a stand alone. Moreover the method used for allocating some non-direct costs, proportionally to the diagnostic business added value or number of employees, necessarily implies that those costs are affected by the global activity level of Rhone-Merieux SA and thus might fluctuate depending on the degree of absorption of the Rhone-Merieux SA total fixed costs and non- direct costs. These are the limits of the method adopted, but in the circumstances, there was no better way of allocating these categories of costs. -3- 9. Paragraphs 5 to 8 hereabove relate only to the accounts and items specified above (paragraph 4) and do not extend to any financial statement of Rhone- Merieux SA taken as a whole. Lyon, February 14, 1997 Coopers & Lybrand Audit Bernard R. Rascle Partner -4- Schedule 1 ---------- RHONE-MERIEUX SA DIAGNOSTIC BUSINESS OPERATING RESULTS ----------------- For the years ended December 31, 1996 and 1995 ---------------------------------------------- (in French francs Thousands) 1996 1995 Revenues 58,514 59,844 Direct Selling expenses (1,355) (1,415) Direct costs of sales (18,921) (20,842) Royalties (786) (318) Gross margin after direct costs 37,452 37,269 Reviewed but non-audited Reviewed but non-audited Reviewed but non-audited Fixed costs (1) (4,060) (4,734) Gross margin 33,392 32,535 Selling overheads (2) (14,289) (14,122) Other overheads (1) (4,701) (5,512) Research and development costs (3) (6,903) (7,299) Operating profit 7,499 5,602 - ------------------------------------------------------------------------------------------------------------ (1) Part of these costs has been allocated proportionally to the added value of the diagnostic business compared to the whole Rhone-Merieux SA biological activity added value. (2) Allocated proportionally to the net sales of the diagnostic business compared to the total net sales of Rhone-Merieux SA. (3) Part of these costs has been allocated proportionally to the number of the R&D employees pertaining to the diagnostic business compared to the total number of employees working in the Rhone-Merieux SA R&D department. -5- Schedule 2 ---------- RHONE-MERIEUX SA DIAGNOSTIC BUSINESS FIXED ASSETS AND SOME SHORT TERM ASSETS AND LIABILITIES ------------------------------------------------------- As of December 31, 1996 ----------------------- (in French francs Thousand) * Fixed assets Gross value : 6,280 Depreciation : 5,273 ----- Net book value: 1,007 * Inventories Net book value: 14,964 * Accounts receivable (non-audited) Accounts receivable as at December 31, 1996 : 8,811 * Accounts payable (non-audited) Accounts payable as at December 31, 1996: 2,284 -6- Schedule 3 ---------- RHONE MERIEUX SA DIAGNOSTIC BUSINESS OPERATING RESULTS ----------------- For the year ended December 31, 1996 ------------------------------------ BREAK OUT OF EXPENSES AND REVENUES BETWEEN ------------------------------------------ DIRECT AND INDIRECT ------------------- (in French francs thousands) Specific to the RM Allocated to the RM Total diagnostic business diagnostic business Net sales Trade 58,514 58,514 Direct selling expenses 1,355 1,355 Raw materials 14,781 14,781 Depreciation 322 322 Added value 3,818 3,818 ------ ------ Direct cost of sales 18,921 18,921 Royalties 786 786 Gross margin on direct costs 38,807 (1,355) 37,452 Reviewed but non-audited Reviewed but non-audited Fixed costs (factory 890 3,170 (1) 4,060 overheads) Gross margin 37,917 (4,525) 33,392 Selling overheads 5,962 8,327 (2) 14,289 Other overheads - 4,701 (1) 4,701 R & D 5,835 1,068 (3) 6,903 Operating profit 26,120 (18,621) 7,499 - --------------------------------------------------------------------------------------------------------------------- (1) Allocated proportionally to the added value of the diagnostic business compared to the whole Rhone-Merieux SA biological activity added value. (2) Allocated proportionally to the net sales of the diagnostic business compared to the total net sales of Rhone-Merieux SA. (3) Allocated proportionally to the number of the R&D employees of the diagnostic business compared to the total number of employees in the Rhone- Merieux SA R&D department. -7- Schedule 4 RHONE-MERIEUX SA DIAGNOSTIC BUSINESS OPERATING RESULTS ----------------- For the year ended December 31, 1996 ------------------------------------ BREAK OUT OF SPECIFIC EXPENSES AND REVENUES BETWEEN --------------------------------------------------- RHONE-MERIEUX SA AND SUBSIDIARIES --------------------------------- (in French francs thousands) RM SA RM Subsidiaries Total Net sales trade 24,783 33,731 58,514 Raw materials 4,373 10,408 14,781 Depreciation 261 61 322 Added value 3,061 757 3,818 ------ ------ ------ Direct cost of sales 7,695 11,226 18,921 Royalties 786 - 786 Gross margin on direct costs 16,302 22,505 38,807 Fixed costs (factory 890 - 890 overheads) Gross margin 15,412 22,505 37,917 Selling overheads (schedule 5) 4,362 1,600 5,962 Other overheads - - - R&D (schedule 5) 5,835 - 5,835 Operating profit 5,215 20,905 26,120 - ------------------------------------------------------------------------------------------------------------------ -8- Schedule 5 ---------- RHONE-MERIEUX SA DIAGNOSTIC BUSINESS OPERATING RESULTS ----------------- For the year ended December 31, 1996 ------------------------------------ ANALYSIS OF SELLING OVERHEADS AND --------------------------------- RESEARCH AND DEVELOPMENT COST ----------------------------- (in French francs Thousands) Selling overheads Research & Development Wages and salaries 2,776 2,430 Travel expenses 646 196 Advertising expenses 279 - R&D services rendered by other Rhone-Merieux SA - 2,376 departments Other 661 833 Total (as per schedule 4) 4,362 5,835 - ------------------------------------------------------------------------------------------------------------ -9- Rhone-Merieux SA Diagnostic Business Statement of Assets - -------------------------------------------------------------------------------- December 31, 1996 ---- Inventories $2,885,000 Property, plant and equipment, net 194,000 ---------- Total assets $3,079,000 ========== See accompanying notes to financial statements. -10- Rhone-Merieux SA Diagnostic Business Statement of Revenues and Direct Operating Expenses - -------------------------------------------------------------------------------- Year Ended December 31, -------------------------- 1996 1995 ---- ---- Revenues $11,735,000 $11,729,000 Direct operating expenses: Cost of sales 5,015,000 4,606,000 Research and development 1,431,000 1,384,000 Selling and marketing 3,109,000 3,293,000 General and administrative 1,081,000 942,000 ----------- ----------- 10,636,000 10,225,000 ----------- ----------- Excess of revenues over direct operating expenses $ 1,099,000 $ 1,504,000 =========== =========== See accompanying notes to financial statements. -11- Rhone-Merieux SA Diagnostic Business Notes to Statement of Assets and Statement of Revenues and Direct Operating - --------------------------------------------------------------------------- Expenses - -------- Note 1 - Business and Asset Purchase Agreement: The Rhone-Merieux SA diagnostic business (the "Business") is a veterinary diagnostic product line which is manufactured (however, certain small animal diagnostic products are manufactured under contract by a third party), sold and distributed by Rhone Merieux S.A.S. (the "Company"). Effective July 9, 1997, the Company sold the Business to Synbiotics Corporation pursuant to purchase agreements dated May 14, 1997 and amended July 9, 1997. The assets acquired included inventory, property, plant and equipment and the rights to manufacture, sell and distribute the product line. Note 2 - Summary of Significant Accounting Policies: Inventories Inventories are stated at the lower of cost (first in, first out method) or market. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight line method over the estimated useful lives of the related assets. Note 3 - Basis of Presentation: The accompanying statement of assets and statement of revenues and direct operating expenses (the "Statements") have been prepared in accordance with generally accepted accounting principles and were derived from Schedules 1 and 2 of the Rhone-Merieux SA Diagnostic Business Special Audit Report (the"Report") contained elsewhere in this Form 8-K/A. The Report presents financial data in French francs. The Statements have been converted to U.S. dollars using the appropriate foreign currency exchange rates in effect for the periods presented. Complete financial statements were not prepared as the Company did not maintain the Business as a separate business unit and has not segregated indirect operating cost information or related assets and liabilities (other than inventory and property, plant and equipment) for this product line in its accounting records. It is not practical to attempt to reconstruct and separate the indirect operating costs and other related assets and liabilities applicable to this product line. The Statements include the assets of the Company which are directly related to the Business and which have been historically segregated by the Company in its accounting records. The Statements do not include cash, accounts receivable, prepaid or other assets, accounts payable, accrued expenses, borrowings or any other assets or liabilities. The Statements include the revenues and direct operating expenses directly attributable to the manufacture, sale and distribution of the product line comprising the Business sold and have been historically segregated by the Company in its accounting records. The Statements also include an allocation of certain expenses directly attributable to the manufacture, sale and distribution of the product line and an allocation of research and development and general and administrative expenses as discussed in the Report. Management believes that the above expense allocations are reasonable for the purpose of these Statements; however, there can be no assurances that such allocations will be indicative of future results of operations. -12- Rhone-Merieux SA Diagnostic Business Statement of Assets (Unaudited) - -------------------------------------------------------------------------------- June 30, 1997 ---- Accounts receivable $ 917,000 Inventories 2,062,000 Property, plant and equipment, net 236,000 ---------- Total assets $3,215,000 ========== See accompanying notes to financial statements. -13- Rhone-Merieux SA Diagnostic Business Statement of Revenues and Direct Operating Expenses (Unaudited) - ------------------------------------------------------------------------------- Six Months Ended June 30, 1997 ---- Revenues $5,760,000 ---------- Direct operating expenses: Cost of sales 2,027,000 Research and development 518,000 Selling and marketing 587,000 ---------- 3,132,000 ---------- Excess of revenues over direct operating expenses $2,628,000 ========== See accompanying notes to financial statements. -14- Rhone-Merieux SA Diagnostic Business Notes to Unaudited Statement of Assets and Unaudited Statement of Revenues and Direct Operating Expenses - ------------------------------------------------------------------------------- Note 1 - Business and Asset Purchase Agreement: The Rhone-Merieux SA diagnostic business (the "Business") is a veterinary diagnostic product line which is manufactured (however, certain small animal diagnostic products are manufactured under contract by a third party), sold and distributed by Rhone Merieux S.A.S. and R.M.- Diagnostics S.A.S., a wholly-owned subsidiary of Rhone Merieux S.A.S., (collectively the "Company"). Effective July 9, 1997, the Company sold the Business to Synbiotics Corporation pursuant to purchase agreements dated May 14, 1997 and amended July 9, 1997. The assets acquired included accounts receivable, inventory, fixed assets and the rights to manufacture, sell and distribute the product line. Note 2 - Summary of Significant Accounting Policies: Inventories Inventories are stated at the lower of cost (first in, first out method) or market. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight line method over the estimated useful lives of the related assets. Note 3 - Basis of Presentation: The accompanying unaudited statement of assets and unaudited statement of revenues and direct operating expenses (the "Statements") have been prepared in accordance with generally accepted accounting principles and were derived from historical accounting records of the Company. The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results for the interim period; however, the interim period does not include any allocation of overhead expenses as it is impractical for the Company to provide the necessary data. Complete financial statement were not prepared as the Company did not maintain the Business as a separate business unit and has not segregated indirect operating cost information or related assets and liabilities (other than inventory and property, plant and equipment) for this product line in its accounting records. It is not practical to attempt to reconstruct and separate the indirect operating costs and other related assets and liabilities applicable to this product line. The Statements include the assets of the Company which are directly related to the Business and which have been historically segregated by the Company in its accounting records. The Statements do not include cash, prepaid or other assets, accounts payable, accrued expenses, borrowings or any other assets or liabilities. The accounts receivable represent amounts owed to R.M.-Diagnostics S.A.S. for inventory sold to Rhone Merieux S.A.S. who is acting as R.M.- Diagnostics S.A.S's. distributor. -15- Rhone-Merieux SA Diagnostic Business Notes to Unaudited Statement of Assets and Unaudited Statement of Revenues and Direct Operating Expenses - ------------------------------------------------------------------------------ The Statements include the revenues and direct operating expenses directly attributable to the manufacture, sale and distribution of the product line comprising the Business sold and have been historically segregated by the Company in its accounting records. -16- b) Pro forma financial information ------------------------------- The following unaudited pro forma condensed balance sheet as of June 30, 1997 and the unaudited pro forma condensed statements of operations for the year ended December 31, 1996 and the six months ended June 30, 1997 giving effect to the acquisition of the worldwide veterinary diagnostic business of Rhone Merieux S.A.S. (the "Rhone Merieux Diagnostic Business") as of June 30, 1997 for the condensed balance sheet and as of January 1, 1996 for the condensed statements of operations. The pro forma condensed financial statements are based on historical financial statements of Synbiotics Corporation and Rhone Merieux Diagnostic Business, giving effect to the acquisition applying the purchase method of accounting and the assumptions and adjustments as discussed in the accompanying notes to the pro forma condensed financial statements. The unaudited pro forma condensed financial statements do not include any consolidation savings which Synbiotics Corporation may expect to achieve from the merger of Synbiotics Corporation and Rhone Merieux Diagnostic Business as any such savings are not estimable at this time. These pro forma condensed financial statements have been prepared by the management of Synbiotics Corporation based upon the audited statement of operations of Synbiotics Corporation for the year ended December 31, 1996, the unaudited condensed balance sheet as of June 30, 1997 and the related unaudited condensed statement of operations for the six months then ended of Synbiotics Corporation, the unaudited statement of assets of Rhone Merieux Diagnostic Business as of June 30, 1997, the audited statement of revenues and direct operating expenses for the year ended December 31, 1996 and the unaudited statement of revenues and direct operating expenses for the six months ended June 30, 1997 of Rhone Merieux Diagnostic Business. The unaudited pro forma condensed financial statements should be read in conjunction with the historical financial statements and notes thereto and narrative sections included elsewhere herein. The pro forma condensed financial statements are not necessarily indicative of what actual results of operations would have been for the periods had the transaction occurred on the dates indicated and do not purport to indicate future financial position nor the results of future operations. -17- Synbiotics Corporation Pro Forma Condensed Balance Sheet (unaudited) - ------------------------------------------------------------------------------- June 30, 1997 ------------------------------------------------------------------ Rhone Merieux Synbiotics Diagnostic Pro Forma Pro Forma Corporation Business Adjustments Combined -------------- ------------- ----------- ----------------- Assets Current assets: Cash and equivalents $ 3,652,000 $ $ $ 3,652,000 Securities available for sale 2,181,000 2,181,000 Accounts receivable 3,123,000 917,000 4,040,000 Inventories 4,212,000 2,062,000 6,274,000 Deferred tax assets 421,000 421,000 Other current assets 825,000 825,000 ------------- ------------- ----------------- Total current assets 14,414,000 2,979,000 17,393,000 Property and equipment, net 641,000 236,000 877,000 Goodwill 5,358,000 11,245,000 (1) 16,603,000 Deferred tax assets 6,142,000 6,142,000 Other assets 1,592,000 1,592,000 -------------- ------------- ----------------- $ 28,147,000 $ 3,215,000 $ 42,607,000 ============== ============= ================= Liabilities and Shareholders' Equity Current liabilities: Accounts payable and accrued expenses $ 1,761,000 $ $ 1,761,000 Current portion of long-term debt 1,000,000 (1) 1,000,000 -------------- ------------- ----------------- Total current liabilities 1,761,000 2,761,000 -------------- ------------- ----------------- Long-term debt 9,541,000 (1) 9,541,000 -------------- ------------- ----------------- Mandatorily redeemable common stock 2,747,000 (1) 2,747,000 -------------- ------------- ----------------- Non-mandatorily redeemable common stock and other shareholders' equity: Common stock 35,432,000 169,000 (1) 35,601,000 Common stock warrants 1,003,000 (1) 1,003,000 Accumulated deficit (9,046,000) $ (9,046,000) -------------- ------------- ----------------- Total non-mandatorily redeemable common stock and other shareholders' equity 26,386,000 $ 27,558,000 -------------- ------------- ----------------- $ 28,147,000 $ $ 42,607,000 ============== ============= ================= See accompanying notes to pro forma condensed financial statements. -18- Synbiotics Corportation Pro Forma Condensed Statement of Operations (unaudited) - -------------------------------------------------------------------------------- Year Ended December 31, 1996 ------------------------------------------------------------ Rhone Merieux Synbiotics Diagnostic Pro Forma Pro Forma Corporation Business Adjustments Combined ----------- ------------- ----------- --------- Net sales $17,217,000 $11,735,000 $(1,760,000)(2) $27,192,000 Cost of sales 9,572,000 5,015,000 (726,000)(3) 13,861,000 ----------- ----------- ----------- Gross profit 7,645,000 6,720,000 13,331,000 ----------- ----------- ----------- Operating expenses: Research and development 994,000 1,431,000 (234,000)(3) 2,191,000 Selling and marketing 4,183,000 3,109,000 (1,613,000)(3) 5,679,000 General and administrative 2,057,000 1,081,000 (383,000)(3) 3,505,000 750,000 (4) ----------- ---------- ----------- 7,234,000 5,621,000 11,375,000 ----------- ---------- ----------- Income from operations 411,000 1,099,000 1,956,000 Interest income (expense),net 204,000 (1,053,000)(5) (849,000) Gain on sale of securities available for sale 1,159,000 1,159,000 Other income 410,000 410,000 ----------- ---------- ----------- Income before income taxes 2,184,000 1,099,000 2,676,000 Income tax expense (benefit) (7,094,000) 46,000 (6) (7,048,000) ----------- ---------- ----------- Net income $ 9,278,000 $ 1,099,000 $ 9,724,000 =========== =========== =========== Net income per share $ 1.47 $ n/a $ 1.31 =========== =========== =========== Weighted average shares outstanding $ 6,308,000 n/a 999,000 (7) 7,307,000 =========== =========== =========== See accompanying notes to pro forma condensed financial statements. -19- Synbiotics Corporation Pro Forma Condensed Statement of Operations (unaudited) - -------------------------------------------------------------------------------- Six Months Ended June 30, 1997 --------------------------------------------------------------------- Rhone Merieux Synbiotics Diagnostic Pro Forma Pro Forma Corporation Business Adjustments Combined -------------- ------------- ---------------- ------------ Net sales $ 11,781,000 $ 5,760,000 $ (864,000)(2) $ 16,677,000 Cost of sales 6,259,000 2,027,000 78,000 (3) 8,364,000 -------------- ------------- ------------ Gross profit 5,522,000 3,733,000 8,313,000 Operating expenses: Research and development 613,000 518,000 70,000 (3) 1,201,000 Selling and marketing 2,324,000 587,000 147,000 (3) 3,058,000 General and administrative 1,364,000 343,000 (3) 2,082,000 375,000 (4) ------------- ------------- ------------ 4,301,000 1,105,000 6,341,000 ------------- ------------- ------------ Income from operations 1,221,000 2,628,000 1,972,000 Interest income (expense), net 106,000 (630,000)(5) (524,000) Other income 154,000 154,000 ------------- ------------- ------------ Income before income taxes 1,481,000 2,628,000 1,602,000 Provision for income taxes 637,000 97,000 (6) 734,000 ------------- ------------- ------------ Net income $ 844,000 $ 2,628,000 $ 868,000 ============= ============= ============ Net income per share $ .11 $ n/a $ .09 ============= ============= ============ Weighted average shares outstanding 7,499,000 n/a 999,000 (7) 8,498,000 ============= ============= ============ See accompanying notes to pro forma condensed financial statements. -20- Synbiotics Corporation Notes to Pro Forma Condensed Financial Statements (unaudited) - ------------------------------------------------------------------------------- Note (1) Adjustment to record the acquisition of Rhone Merieux Diagnostic Business. Consideration paid comprises $10,541,000 of debt obtained from Banque Paribas, net of issuance costs and $2,747,000 of Synbiotics Corporation mandatorily redeemable common stock (759,000 shares issued at $4.1875 per share), net of issuance costs. In addition, Synbiotics issued to Banque Paribas a warrant to purchase 240,000 of Synbiotics Corporation common stock for $.01 per share. Note (2) Adjustment to reduce Rhone Merieux Diagnostic Business net sales to reflect distributor mark downs. Prior to the acquisition, the products were sold direct, whereas subsequent to the acquisition the products will be sold primarily through distributors. Note (3) Adjustment to increase (reduce) the direct operating expenses of Rhone Merieux Diagnostic Business to reflect Synbiotics Corporation's overhead. Note (4) Adjustment to record amortization of the goodwill acquired from Rhone Merieux Diagnostic Business based on a 15 year amortization period. Note (5) Adjustment to record interest expense related to the debt obtained from Banque Paribas. Note (6) Adjustment to record foreign income tax provision related to the taxable income from Rhone Merieux Diagnostic Business, and to reduce the U.S. tax provision for the tax effect of additional deductible amounts related to goodwill and interest expense. Note (7) Adjustment to reflect increase in weighted average shares outstanding due to the issuance of Synbiotics Corporation mandatorily redeemable common stock and common stock warrants (Note (1)). -21- c) Exhibits -------- 2.4.1 Amendment No. 1 to Asset Purchase Agreement between Rhone Merieux, Inc. and the Registrant, dated July 9, 1997. 2.4.2 Amendment No. 2 to Asset Purchase Agreement between Rhone Merieux, Inc. and the Registrant, dated July 9, 1997. 2.5.1 Amendment No. 1 to Stock Purchase Agreement between Rhone Merieux S.A.S., Institut De Selection Animale S.A., R.M. - Diagnostics S.A.S. and the Registrant, dated July 9, 1997. 2.5.2 Amendment No. 2 to Stock Purchase Agreement between Rhone Merieux S.A.S., Institut De Selection Animale S.A., R.M. - Diagnostics S.A.S. and the Registrant, dated July 9, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SYNBIOTICS CORPORATION Date: September 22, 1997 /s/ Michael K. Green -------------------- Michael K. Green Vice President of Finance and Chief Financial Officer -22- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. EXHIBITS TO FORM 8-K UNDER SECURITIES EXCHANGE ACT OF 1934 SYNBIOTICS CORPORATION EXHIBIT INDEX Exhibit No. Exhibit - ----------- ------- 2.4.1 Amendment No. 1 to Asset Purchase Agreement between Rhone Merieux, Inc. and the Registrant, dated July 9, 1997. 2.4.2 Amendment No. 2 to Asset Purchase Agreement between Rhone Merieux, Inc. and the Registrant, dated July 9, 1997. 2.5.1 Amendment No. 1 to Stock Purchase Agreement between Rhone Merieux S.A.S., Institut De Selection Animale S.A., R.M. - Diagnostics S.A.S. and the Registrant, dated July 9, 1997. 2.5.2 Amendment No. 2 to Stock Purchase Agreement between Rhone Merieux S.A.S., Institut De Selection Animale S.A., R.M. - Diagnostics S.A.S. and the Registrant, dated July 9, 1997.