SRDX SurModics Inc

 

 

UNITED STATES

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

November 10, 2015

Date of report (Date of earliest event reported)

 

 

SurModics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Minnesota		0-23837		41-1356149
(State of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)
9924 West 74th Street Eden Prairie, Minnesota				55344
(Address of Principal Executive Offices)				(Zip Code)

(952) 500-7000

(Registrant’s Telephone Number, Including Area Code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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EXPLANATORY NOTE

On November 10, 2015, SurModics, Inc. (the “Company”) filed a Current Report on Form 8-K (the “Original 8-K”) with the United States Securities and Exchange Commission disclosing the Company’s results of operations for the quarter ended September 30, 2015. This Amendment No. 1 on Form 8-K/A is being filed to update the financial statements included with Exhibit 99.1 to Item 2.02 of the Original 8-K. The financial statements have been updated to reflect an other-than-temporary impairment charge of $1.5 million associated with one of the Company’s strategic investments, which charge was deemed necessary based on information that was first made available to the Company after the filing of the Original 8-K.

 

Item 2.02

Results of Operations And Financial Condition.

On November 10, 2015, SurModics, Inc. (the “Company”) issued a press release (the “Press Release”) announcing the results for the quarter ended September 30, 2015. The Company subsequently updated the financial statements attached to the Press Release to reflect an other-than-temporary impairment charge of $1.5 million associated with one of the Company’s strategic investments and the updated financial statements are furnished as Exhibit 99.1 to this report.

The information contained in this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit Number		Description
99.1		Updated Financial Statements to Press Release dated November 10, 2015.

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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.

 

		SURMODICS, INC.
Date: November 27, 2015		/s/ Andrew D. C. LaFrence
		Andrew D. C. LaFrence
		Vice President Finance and Chief Financial Officer

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EXHIBIT INDEX

 

Exhibit Number		Description
99.1		Updated Financial Statements to Press Release dated November 10, 2015.

Exhibit 99.1

SurModics, Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(in thousands, except per share data)

 

		Three Months Ended September 30,								Years Ended September 30,
		2015				2014				2015				2014
		(Unaudited)								(Unaudited)
Revenue
Royalties and license fees		$	9,197			$	8,098			$	31,763			$	30,277
Product sales			6,844				6,166				24,925				22,798
Research and development			1,323				1,072				5,210				4,364
Total revenue			17,364				15,336				61,898				57,439
Operating costs and expenses
Product costs			2,588				2,279				8,619				8,016
Research and development			4,326				4,062				16,165				15,550
Selling, general and administrative			3,684				3,561				15,525				15,297
Claim settlement			2,500				—				2,500				—
Total operating costs and expenses			13,098				9,902				42,809				38,863
Operating income from continuing operations			4,266				5,434				19,089				18,576
Other (loss) income:
Investment income			7				44				156				238
Other income			—				8				496				842
Impairment loss on investments			(1,500	)			(1,184	)			(1,500	)			(1,184	)
Other (loss) income, net			(1,493	)			(1,132	)			(848	)			(104	)
Income from continuing operations before income taxes			2,773				4,302				18,241				18,472
Income tax provision			(1,415	)			(1,858	)			(6,294	)			(6,265	)
Income from continuing operations			1,358				2,444				11,947				12,207
Loss from discontinued operations, net of taxes			—				(100	)			—				(176	)
Net income		$	1,358			$	2,344			$	11,947			$	12,031
Basic income (loss) per share:
Continuing operations		$	0.10			$	0.18			$	0.92			$	0.90
Discontinued operations			(0.00	)			(0.01	)			(0.00	)			(0.01	)
Net income		$	0.10			$	0.17			$	0.92			$	0.88
Diluted income (loss) per share:
Continuing operations		$	0.10			$	0.18			$	0.90			$	0.88
Discontinued operations			(0.00	)			(0.01	)			(0.00	)			(0.01	)
Net income		$	0.10			$	0.17			$	0.90			$	0.87
Weighted average number of shares outstanding:
Basic			12,934				13,593				13,029				13,632
Diluted			13,190				13,829				13,289				13,876

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SurModics, Inc. Fourth Quarter 2015 Results

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SurModics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

		September 30, 2015				September 30, 2014
		(Unaudited)
Assets
Cash and short-term investments		$	55,588			$	46,551
Accounts receivable			7,478				4,751
Inventories			2,979				2,817
Other current assets			1,744				1,145
Current assets of discontinued operations			—				16
Total current assets			67,789				55,280
Property and equipment, net			12,968				13,133
Long-term investments			—				16,823
Other assets			17,953				19,653
Total assets		$	98,710			$	104,889
Liabilities and Stockholders’ Equity
Current liabilities		$	4,700			$	4,022
Current liabilities of discontinued operations			—				45
Total current liabilities			4,700				4,067
Other liabilities			2,137				2,071
Total stockholders’ equity			91,873				98,751
Total liabilities and stockholders’ equity		$	98,710			$	104,889

 

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SurModics, Inc. Fourth Quarter 2015 Results

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SurModics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

 

		Years Ended September 30,
		2015				2014
		(Unaudited)
Operating Activities:
Net income		$	11,947			$	12,031
Loss from discontinued operations			—				176
Depreciation and amortization			2,805				2,715
Stock-based compensation			2,381				3,337
Gains on sale of available-for-sale securities and strategic investments			(492	)			(842	)
Impairment loss on strategic investment			1,500				1,184
Net other operating activities			(564	)			(586	)
Change in operating assets and liabilities:
Accounts receivable			(2,727	)			581
Accounts payable and accrued liabilities			373				(738	)
Income taxes			(123	)			116
Net change in other operating assets and liabilities			(34	)			563
Net cash provided by operating activities from continuing operations			15,066				18,537
Investing Activities:
Net purchases of property and equipment			(1,877	)			(2,278	)
Cash transferred to discontinued operations			(45	)			(354	)
Net other investing activities			18,616				25,019
Net cash provided by investing activities from continuing operations			16,694				22,387
Financing Activities:
Purchase of common stock to fund employee taxes			(825	)			(1,111	)
Repurchase of common stock			(20,000	)			(12,545	)
Net other financing activities			1,142				748
Net cash used in financing activities from continuing operations			(19,683	)			(12,908	)
Net cash provided by continuing operations			12,077				28,016
Discontinued operations:
Net cash used in operating activities			(45	)			(354	)
Net cash provided by financing activities			45				354
Net cash provided by discontinued operations			—				—
Net change in cash and cash equivalents			12,077				28,016
Cash and Cash Equivalents:
Beginning of year			43,511				15,495
End of year		$	55,588			$	43,511

 

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SurModics, Inc. Fourth Quarter 2015 Results

Page 4

 

SurModics, Inc. and Subsidiaries

Supplemental Segment Information

(in thousands)

(Unaudited)

 

		Three Months Ended September 30,
		2015								2014								% Change
						% of Total								% of Total
Revenue
Medical Device		$	13,118				75.5	%		$	11,216				73.1	%			16.9	%
In Vitro Diagnostics			4,246				24.5				4,120				26.9				3.1
Total revenue		$	17,364				100.0	%		$	15,336				100.0	%			13.2	%
		Years Ended September 30,
		2015								2014								% Change
						% of Total								% of Total
Revenue
Medical Device		$	45,944				74.2	%		$	43,068				75.0	%			6.7	%
In Vitro Diagnostics			15,954				25.8				14,371				25.0				11.0
Total revenue		$	61,898				100.0	%		$	57,439				100.0	%			7.8	%

 

		Three Months Ended September 30,								Years Ended September 30,
		2015				2014				2015				2014
Operating Income
Medical Device		$	4,687			$	6,170			$	21,192			$	22,636
In Vitro Diagnostics			1,264				1,182				4,484				3,459
Corporate			(1,685	)			(1,918	)			(6,587	)			(7,519	)
Total operating income		$	4,266			$	5,434			$	19,089			$	18,576

 

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SurModics, Inc. Fourth Quarter 2015 Results

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SurModics, Inc. and Subsidiaries

Supplemental Non-GAAP Information

For the Three Months Ended September 30, 2015

(in thousands, except per share data)

(Unaudited)

 

		As Reported GAAP(1)				Adjustments				Adjusted Non-GAAP(2)
Revenue
Royalties and license fees		$	9,197			$	(763	)		$	8,434
Product sales			6,844								6,844
Research and development			1,323								1,323
Total revenue		$	17,364			$	(763	)		$	16,601
Operating income		$	4,266			$	1,737	(3)		$	6,003
Net Income		$	1,358			$	2,624	(4)		$	3,982
Diluted earnings per share (5)		$	0.10							$	0.30

 

(1)	Reflects operating results in accordance with U.S. generally accepted accounting principles (GAAP).

(2)

Adjusted Non-GAAP amounts consider adjustments to increase other income by $1,500 related to an impairment charge associated with the strategic investment in CeloNova BioSciences, Inc.; a $763 reduction in revenue related to pre-fourth quarter fiscal 2015 royalties recognized during the quarter as two customer-related contingencies were resolved; and a $2,500 adjustment reducing expense for a customer claim settlement. The revenue and claim settlement adjustments resulted in a net tax expense of $613. The adjustment to increase other income did not generate an income tax expense as there was an offsetting release of a capital loss valuation reserve allowance.

(3)	Adjusted to reflect the pre-tax adjustments discussed in note (2) above.

(4)	Adjusted to reflect the after-tax impact of the adjustments discussed in note (2) above.

(5)	Diluted earnings per share from continuing operations is calculated using the diluted weighted average shares outstanding for the period presented.

 

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SurModics, Inc. Fourth Quarter 2015 Results

Page 6

 

SurModics, Inc. and Subsidiaries

Supplemental Non-GAAP Information

For the Three Months Ended September 30, 2014

(in thousands, except per share data)

(Unaudited)

 

		As Reported GAAP(1)				Adjustments				Adjusted Non-GAAP(2)
Revenue
Royalties and license fees		$	8,098							$	8,098
Product sales			6,166								6,166
Research and development			1,072								1,072
Total revenue		$	15,336							$	15,336
Operating income from continuing operations		$	5,434							$	5,434
Income from continuing operations		$	2,444			$	1,184	(3)		$	3,628
Diluted earnings per share from continuing operations(4)		$	0.18							$	0.26

 

(1)	Reflects operating results in accordance with U.S. generally accepted accounting principles (GAAP).

(2)

Adjusted Non-GAAP amounts consider adjustments to increase other income by $1,184 associated with an investment impairment charge associated with the strategic investment in ThermopeutiX. The adjustment to increase other income did not generate an income tax expense as there was an offsetting release of a capital loss valuation reserve allowance.

(3)	Adjusted to reflect the adjustment discussed in note (2) above.

(4)	Diluted earnings per share from continuing operations is calculated using the diluted weighted average shares outstanding for the period presented.

 

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SurModics, Inc. Fourth Quarter 2015 Results

Page 7

 

SurModics, Inc. and Subsidiaries

Supplemental Non-GAAP Information

For the Year Ended September 30, 2015

(in thousands, except per share data)

(Unaudited)

 

		As Reported GAAP(1)				Adjustments				Adjusted Non-GAAP(2)
Revenue
Royalties and license fees		$	31,763			$	(560	)		$	31,203
Product sales			24,925								24,925
Research and development			5,210								5,210
Total revenue		$	61,898			$	(560	)		$	61,338
Operating income		$	19,089			$	1,940	(3)		$	21,029
Net Income		$	11,947			$	2,031	(4)		$	13,978
Diluted net income per share (5)		$	0.90							$	1.05

 

(1)	Reflects operating results in accordance with U.S. generally accepted accounting principles (GAAP).

(2)

Adjusted to reflect a reduction in revenue by $560 for the portion of a one-time customer royalty payment related to periods prior to fiscal 2015, a $523 reduction in other income associated with the sale of Intersect ENT shares, an adjustment to increase other income by $1,500 impairment charge associated with a strategic investment in CeloNova BioSciences, Inc.; and a $2,500 increase to operating income related to a customer claim settlement. The adjustments to reduce royalty revenues and increase operating income related to a claim settlement reflects a net tax expense of $685. The net increase in other income did not generate an income tax expense as there was an offsetting release of a capital loss valuation reserve allowance. Finally, the income tax provision is increased to reflect a discrete income tax benefits of $201 associated with the December 2014 signing of the Tax Increase Prevention Act of 2014 which retroactively reinstated federal R&D income tax credits for calendar 2014.

(3)	Adjusted to reflect the pre-tax impact of the operating expense adjustment discussed in note (2) above.

(4)	Adjusted to reflect the after-tax impact of the adjustments discussed in note (2) above.

(5)	Diluted net income per share is calculated using the diluted weighted average shares outstanding for the period presented.

 

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SurModics, Inc. Fourth Quarter 2015 Results

Page 8

 

SurModics, Inc. and Subsidiaries

Supplemental Non-GAAP Information

For the Year Ended September 30, 2014

(in thousands, except per share data)

(Unaudited)

 

		As Reported GAAP(1)				Adjustments				Adjusted Non-GAAP(2)
Revenue
Royalties and license fees		$	30,277							$	30,277
Product sales			22,798								22,798
Research and development			4,364								4,364
Total revenue		$	57,439							$	57,439
Operating income		$	18,576			$	914	(3)		$	19,490
Income from continuing operations		$	12,207			$	1,055	(4)		$	13,262
Diluted earnings per share from continuing operations(5)		$	0.88							$	0.96

 

(1)	Reflects operating results in accordance with U.S. generally accepted accounting principles (GAAP).

(2)

Adjusted Non-GAAP amounts consider adjustments to reduce operating expenses by $914 associated with acceleration of Board of Director stock-based compensation awards, a $709 reduction in other income associated with contingent milestone payments related to the sale of Vessix Vascular shares which were sold in fiscal 2014 and a $1,184 increase in other income associated with an investment impairment charge associated with the strategic investment in ThermopeutiX. The income tax provision includes a $334 expense associated with the Board of Director stock-based compensation expense reduction. The adjustments to increase other income did not generate an income tax expense as there was an offsetting release of a capital loss valuation reserve allowance.

(3)	Adjusted to reflect the pre-tax impact of the operating expense adjustment discussed in note (2) above.

(4)	Adjusted to reflect the after-tax impact of the adjustments discussed in note in (2) above.

(5)	Diluted earnings per share from continuing operations is calculated using the diluted weighted average shares outstanding for the period presented.

 

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