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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
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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
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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
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Schedule 1
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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
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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
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Schedule 3
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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
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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
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-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.