SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

AMENDMENT NO. 2

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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)

(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):

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

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

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

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

 

 

This Amendment No. 2 to the Current Report on Form 8-K of SurModics, Inc. dated July 31, 2007 is filed for the purpose of correcting mathematical errors in the Unaudited Combined Condensed Income Statement for the year ended September 30, 2006 and the Unaudited Combined Condensed Income Statement for the nine months ended June 30, 2007. In such statements, as originally filed, certain pro forma adjustments that should have increased operating costs and expenses were treated as decreasing operating costs and expenses.

Item 9.01 Financial Statements and Exhibits

(a)

Financial Statements of Business Acquired.

     The following financial statements were previously filed:

	•		Audited Consolidated Financial Statements of Brookwood Pharmaceuticals, Inc. and Subsidiary as of, and for the year ended, December 31, 2006;
	•		Unaudited Condensed Consolidated Balance Sheet of Brookwood Pharmaceuticals, Inc. and Subsidiary as of June 30, 2007; and
	•		Unaudited Condensed Consolidated Income Statement and Statement of Cash Flows of Brookwood Pharmaceuticals, Inc. and Subsidiary for the six months ended June 30, 2006 and June 30, 2007.

(b)

Pro Forma Financial Information.

     The following pro forma financial information is filed herewith:

	•		Unaudited Combined Condensed Balance Sheet as of June 30, 2007;
	•		Unaudited Combined Condensed Income Statement for the year ended September 30, 2006; and
	•		Unaudited Combined Condensed Income Statement for the nine months ended June 30, 2007.
	•		Notes to Unaudited Pro Forma Combined Condensed Financial Statements.

(d)

Exhibits

	2.1		Stock Purchase Agreement, dated July 31, 2007, between SurModics, Inc. and Southern Research Institute (excluding schedules and exhibits, which SurModics, Inc. agrees to furnish to the Securities and Exchange Commission upon request)*
	23.1		Consent of Warren, Averett, Kimbrough & Marino, LLC*
	99.1		Press Release dated August 1, 2007*

	99.2		Audited Consolidated Financial Statements of Brookwood Pharmaceuticals, Inc. and Subsidiary as of, and for the year ended, December 31, 2006*
	99.3		Unaudited Condensed Consolidated Balance Sheet of Brookwood Pharmaceuticals, Inc. and Subsidiary as of June 30, 2007 and Unaudited Condensed Consolidated Income Statement and Statement of Cash Flows of Brookwood Pharmaceuticals, Inc. and Subsidiary for the six months ended June 30, 2006 and June 30, 2007*
	99.4		Unaudited Pro Forma Combined Condensed financial information of the Company as of June 30, 2007 and for the nine month period ended June 30, 2007 and the year ended September 30, 2006

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 2 to be signed on its behalf by the undersigned hereunto duly authorized.

EXHIBIT INDEX

No.		Description		Manner of Filing
2.1		Stock Purchase Agreement, dated July 31, 2007, between SurModics, Inc. and Southern Research Institute (excluding schedules and exhibits, which SurModics, Inc. agrees to furnish to the Securities and Exchange Commission upon request)		Previously Filed
23.1		Consent of Warren, Averett, Kimbrough & Marino, LLC		Previously Filed
99.1		Press Release dated August 1, 2007		Previously Filed
99.2		Audited Consolidated Financial Statements of Brookwood Pharmaceuticals, Inc. and Subsidiary as of, and for the year ended, December 31, 2006		Previously Filed
99.3		Unaudited Condensed Consolidated Balance Sheet of Brookwood Pharmaceuticals, Inc. and Subsidiary as of June 30, 2007 and Unaudited Condensed Consolidated Income Statement and Statement of Cash Flows of Brookwood Pharmaceuticals, Inc. and Subsidiary for the six months ended June 30, 2006 and June 30, 2007		Previously Filed
99.4		Unaudited Pro Forma Combined Condensed financial information of the Company as of June 30, 2007 and for the nine month period ended June 30, 2007 and the year ended September 30, 2006		Filed Electronically

Exhibit 99.4

SURMODICS, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

     The following unaudited pro forma combined condensed financial statements relate to the acquisition (the “Acquisition”) by SurModics, Inc. (“SurModics”) of all of the issued and outstanding shares of capital stock of Brookwood Pharmaceuticals, Inc. (“Brookwood”) for approximately $40 million in cash at closing (subject to adjustment based on Brookwood’s working capital as of closing), with the potential for up to an additional $22 million in future cash payments subject to the achievement by Brookwood of certain revenue and project milestones.

     The following unaudited pro forma combined condensed balance sheet gives effect to the Acquisition as if it was completed on June 30, 2007 and combines the SurModics June 30, 2007 unaudited consolidated balance sheet with the Brookwood June 30, 2007 unaudited consolidated balance sheet. The following unaudited pro forma combined condensed income statement for the year ended September 30, 2006 gives effect to the Acquisition as if it was completed on October 1, 2005. The following unaudited pro forma combined condensed income statement for the nine months ended June 30, 2007 gives effect to the Acquisition as if it was completed on October 1, 2006.

     SurModics and Brookwood have different fiscal year ends. The unaudited pro forma combined condensed income statement for the year ended September 30, 2006 combines SurModics’ historical consolidated income statement for the year ended September 30, 2006 with Brookwood’s historical consolidated income statement for the year ended December 31, 2006. The unaudited pro forma combined condensed income statement for the nine months ended June 30, 2007 combines SurModics’ historical consolidated income statement for the nine months ended June 30, 2007 with Brookwood’s historical consolidated income statement for the six months ended June 30, 2007 and with Brookwood’s historical consolidated income statement for the three months ended December 31, 2006.

     As a result, Brookwood’s historical results of operations for the three months ended December 31, 2006 are included in the unaudited pro forma combined condensed income statements for both the year ended September 30, 2006 and the nine months ended June 30, 2007. Brookwood’s historical financial results for the three months ended December 31, 2006, which are included in both of these periods, are as follows (in thousands):

Revenues		$	3,182
Net loss		$	(8	)

     The unaudited pro forma combined condensed financial statements are presented for informational purposes only and do not purport to represent what SurModics’ financial position or results of operations would have been had the Acquisition occurred as of the dates indicated, nor is it indicative of SurModics’ future financial position or results of operations for any period.

     For periods subsequent to the closing of the Acquisition, SurModics will account for the Acquistion under the purchase method of accounting. A final determination of the allocation of purchase price to the assets acquired and liabilities assumed based on their respective fair values has not yet been completed. Accordingly, the purchase accounting adjustments made in connection with the development of the pro forma combined condensed financial information are preliminary and have been made solely for purposes of developing such pro forma combined condensed financial statements. The actual financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein.

     The unaudited pro forma combined condensed financial statements should be read in conjunction with the accompanying notes and assumptions and the audited consolidated financial statements and related notes thereto included in SurModics’ Annual Report on Form 10-K for the year ended September 30, 2006 and the unaudited consolidated financial statements in SurModics’ Quarterly Report on Form 10-Q for the nine months ended June 30, 2007.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
AS OF JUNE 30, 2007
(IN THOUSANDS, EXCEPT SHARE DATA)

		SurModics				Brookwood				Pro Forma								Combined
		Historical				Historical				Adjustments				Notes				Pro Forma
ASSETS
Current Assets
Cash and cash equivalents		$	3,960			$	4,421											$	8,381
Short-term investments			42,343								(42,266	)			(a)				77
Accounts receivable, net			30,460				3,458												33,918
Inventories			1,259				446												1,705
Deferred tax asset			496																496
Income tax receivable			483																483
Prepaids and other			1,754				214												1,968
Total current assets			80,755				8,539				(42,266	)							47,028
Property and equipment, net			11,447				5,427				1,969				(c)				18,843
Long-term investments			47,785																47,785
Deferred tax asset			3,268								(3,268	)			(a)				—
Goodwill			—				—				10,381				(a)				10,381
Other assets, net			21,603				1,273				8,029				(a)				30,905
Total Assets		$	164,858			$	15,239			$	(25,155	)						$	154,942
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable		$	1,013			$	722											$	1,735
Accrued liabilities			1,470				280												1,750
Deferred revenue			3,654				2,770												6,424
Other current liabilities			1,000				297												1,297
Total current liabilities			7,137				4,069				—								11,206
Deferred revenue, less current portion			20,175																20,175
Other long-term liabilities			—				247				968				(a)(c)				1,215
Total Liabilities			27,312				4,316				968								32,596
Stockholders’ Equity
Preferred stock- $.01 par value			—				10				(10	)			(b)				—
Common stock- $.05 par value			899																899
Additional paid-in capital			68,728				8,990				(8,990	)			(b)				68,728
Accumulated other comprehensive income			2,393																2,393
Retained earnings			65,526				1,923				(17,123	)			(a) (b)				50,326
Total Stockholders’ Equity			137,546				10,923				(26,123	)							122,346
Total Liabilities and Stockholders’ Equity		$	164,858			$	15,239			$	(25,155	)						$	154,942

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
YEAR ENDED SEPTEMBER 30, 2006
(IN THOUSANDS, EXCEPT PER SHARE DATA)

		SurModics				Brookwood				Pro Forma								Combined
		Historical				Historical				Adjustments				Notes				Pro Forma
Revenue
Royalties and license fees		$	53,008			$	49			$								$	53,057
Product sales			11,172				2,031												13,203
Research and development			5,704				10,641												16,345
Total revenue			69,884				12,721				—								82,605
Operating costs and expenses
Product			3,399				711												4,110
Research and development			20,391				7,608				1,258				(d) (e) (g)				29,257
Sales and marketing			1,424				524												1,948
General and administrative			8,507				2,422				293				(e) (g)				11,222
Total operating costs and expenses			33,721				11,265				1,551								46,537
Income from operations			36,163				1,456				(1,551	)							36,068
Other income
Investment income			4,210				81				(1,881	)			(f)				2,410
Impairment loss			(4,651	)															(4,651	)
Other loss			(157	)															(157	)
Other income (loss)			(598	)			81				(1,881	)							(2,398	)
Income before income taxes			35,565				1,537				(3,432	)							33,670
Income tax (provision) benefit			(15,231	)			(511	)			2,863				(h)				(12,879	)
Net income		$	20,334			$	1,026			$	(569	)						$	20,791
Basic net income per share		$	1.10															$	1.12
Diluted net income per share		$	1.09															$	1.11
Weighted average shares outstanding
Basic			18,527																18,527
Dilutive effect of outstanding stock options			192								58				(g)				250
Diluted			18,719																18,777

UNAUDITED PRO FORMA COMBINED CONDENSED INCOME STATEMENT
NINE MONTHS ENDED JUNE 30, 2007
(IN THOUSANDS, EXCEPT PER SHARE DATA)

		SurModics				Brookwood				Pro Forma								Combined
		Historical				Historical				Adjustments				Notes				Pro Forma
Revenue
Royalties and license fees		$	39,664			$	26			$								$	39,690
Product sales			9,054				2,060												11,114
Research and development			3,147				9,585												12,732
Total revenue			51,865				11,671				—								63,536
Operating costs and expenses
Product			3,396				485												3,881
Research and development			17,124				6,760				943				(d) (e) (g)				24,827
Sales and marketing			989				399												1,388
General and administrative			6,644				2,356				220				(e) (g)				9,220
Total operating costs and expenses			28,153				10,000				1,163								39,316
Income from operations			23,712				1,671				(1,163	)							24,220
Other income
Investment income			3,731				122				(1,411	)			(f)				2,442
Impairment loss			—																—
Other loss			(29	)															(29	)
Other income (loss)			3,702				122				(1,411	)							2,413
Income before income taxes			27,414				1,793				(2,574	)							26,633
Income tax (provision) benefit			(10,161	)			(750	)			1,041				(h)				(9,870	)
Net income		$	17,253			$	1,533			$	(1,533	)						$	16,763
Basic net income per share		$	0.95															$	0.93
Diluted net income per share		$	0.95															$	0.92
Weighted average shares outstanding
Basic			18,116																18,116
Dilutive effect of outstanding stock options			133								58				(g)				191
Diluted			18,249																18,307

NOTES TO UNAUDITED PRO FORMA
COMBINED CONDENSED FINANCIAL INFORMATION

(a)		The total cost of $42.3 million is expected to consist of $40.0 million in consideration and $2.3 million in transaction costs.
		SurModics performed a preliminary appraisal of the tangible and intangible assets acquired in the acquisition of Brookwood Pharmaceuticals, Inc. The following values have been allocated to the intangible assets based upon their preliminary fair values as determined by the appraisal: $6.4 million to technology and $2.9 to customer relationships. These are expected to be amortized on a straight-line basis over periods ranging from 11 to 18 years. In addition, $15.2 million was identified as in-process research and development costs which are expensed on the acquisition date. This has been reflected within the pro forma adjustment as a reduction in retained earnings. The fair value of property plant and equipment exceeded the historical book value by $2.0 million. Deferred tax liabilities of $4.3 million have been recorded to reflect the basis differences between book and tax in connection with the purchase price allocation.
		Pre-existing deferred tax assets of $3.3 million have been reclassified to now be included as a component of the net deferred tax liability. The excess of the total purchase price over the preliminary fair values of all identifiable assets acquired, net of liabilities, amounted to approximately $10.4 million.
(b)		To eliminate the historical equity of Brookwood Pharmaceuticals, Inc.
(c)		Adjustments represent the elimination of pre-existing intangible assets of $1.3 million and related deferred tax assets thereon of $74,000 for which no value was assigned in the purchase price allocation.
(d)		To record amortization of acquired intangibles associated with the acquisition. The definite lived intangible assets of approximately $9.3 million are expected to be amortized on a straight-line basis over periods ranging from 11 to 18 years.
(e)		To record incremental depreciation resulting from the increase in fair value of the property acquired.
(f)		Adjustment represents interest income assumed to be foregone at a weighted-average of 4.45% due to the cash being paid from short term investments.
(g)		As part of consideration for the acquisition of Brookwood Pharmaceuticals, Inc., SurModics awarded employees of Brookwood 58,027 shares of restricted stock. Compensation expense related to the issuance of these restricted shares is reflected as a pro forma adjustment for year ended September 30, 2006 and nine months ended June 30, 2007. Total compensation expense was calculated utilizing an assumed forfeiture rate and the July 31, 2007 closing stock price.
(h)		Adjustments to income tax provision relating to adjustments (d), (e), (f) and (g) assuming a blended U.S. Federal and state income tax rate of 38% for the year ended September 30, 2006 and 37% for nine months ended June 30, 2007.