EX-99.3 6 dex993.htm UNAUDITED PRO FORMA FINANCIAL STATEMENTS Unaudited Pro Forma Financial Statements
 
Exhibit 99.3
 
ADVANCED TISSUE SCIENCES, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, unaudited)
 
    
September 30, 2002
  
    
As Reported
     
Pro Forma
Adjustments
     
Pro Forma
  
ASSETS
                           
Current Assets:
                           
Cash and cash equivalents
   
$
3,050
 
   
$
1,450
(a)
   
$
4,500
 
Short-term investments
   
 
—  
 
   
 
10,000
(b)
   
 
10,000
 
Receivable from joint ventures
   
 
1,713
 
   
 
(1,713
)(c)
   
 
—  
 
Inventory
   
 
8,227
 
   
 
(6,853
)(d)
   
 
1,374
 
Other current assets
   
 
2,450
 
   
 
(151
)
   
 
2,299
 
    
  
  
Total current assets
   
 
15,440
 
   
 
2,733
 
   
 
18,173
 
    
  
  
Property – net
   
 
9,748
 
   
 
(9,283
)(f)
   
 
465
 
Patent costs
   
 
2,015
 
   
 
—  
 
   
 
2,015
 
Restricted cash
   
 
1,700
 
   
 
—  
 
   
 
1,700
 
Other assets
   
 
2,282
 
   
 
(1,436
)(g)
   
 
846
 
    
  
  
Total assets
   
$
31,185
 
   
$
(7,986
)
   
$
23,199
 
    
  
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                           
Current liabilities:
                           
Accounts payable
   
$
905
 
   
$
—  
 
   
$
905
 
Payable to joint ventures
   
 
5,400
 
   
 
(5,400
)(e)
   
 
—  
 
Current portion of long-term debt
   
 
2,560
 
   
 
(2,560
)(h)
   
 
—  
 
Accrued expenses
   
 
3,852
 
   
 
228
(i)
   
 
4,080
 
    
  
  
Total current liabilities
   
 
12,717
 
   
 
(7,732
)
   
 
4,985
 
Long-term debt
   
 
1,920
 
   
 
(1,920
)(h)
   
 
—  
 
Other long-term liabilities
   
 
1,975
 
   
 
(1,702
)(j)
   
 
273
 
    
  
  
Total liabilities
   
 
16,612
 
   
 
(11,354
)
   
 
5,258
 
    
  
  
Stockholders’ equity:
                           
Common stock, $.01 par value; 125,000,000 shares authorized and 73,154,753 issued and outstanding
   
 
732
 
   
 
—  
 
   
 
732
 
Additional paid in capital
   
 
334,657
 
   
 
—  
 
   
 
334,657
 
Note receivable in connection with the sale of
Common stock and deferred compensation
                           
   Applicable to common stock
   
 
(1,392
)
   
 
—  
 
   
 
(1,392
)
Accumulated deficit
   
 
(319,424
)
   
 
3,368
(k)
   
 
(316,056
)
    
  
  
Total stockholders’ equity
   
 
14,573
 
   
 
3,368
 
   
 
17,941
 
    
  
  
Total liabilities and stockholders’ equity
   
$
31,185
 
   
$
(7,986
)
   
$
23,199
 
    
  
  

 
Notes to Consolidated Pro-Forma Balance Sheets:
 
 
(a)
 
Adjustment reflects approximately $1,713,000 in cash received from the Dermagraft Joint Venture (the “DGJV”) for outstanding receivables for manufacturing and collaborative expenses, offset by approximately $263,000 in cash held in DermEquip LLC. DermEquip was sold to Smith & Nephew as part of the sale of Advanced Tissue Sciences’ equity in the DGJV.
 
(b)
 
Adjustment reflects the receipt of $10 million from Smith & Nephew in consideration for Advanced Tissue Sciences’ equity in the DGJV.
 
(c)
 
Adjustment reflects outstanding receivables from the DGJV for manufacturing and collaborative expenses which were collected as part of the sale of Advanced Tissue Sciences’ equity in the DGJV.
 
(d)
 
Adjustments reflect the sale to Smith & Nephew of finished goods inventory of Dermagraft and Transcyte; and work-in-process and raw materials for Dermagraft, Transcyte, collagen and NouriCel. The remaining pro-forma inventory consists of collagen and NouriCel finished goods.
 
(e)
 
Adjustment reflects the cancelation, in return for all raw material and work-in-process inventory, of a loan from the DGJV of approximately $5.4 million, which was secured by such raw material and work-in-process inventory.
 
(f)
 
Adjustment reflects the sale to Smith & Nephew of all Dermagraft and TransCyte manufacturing assets, and certain equipment and leasehold improvements.
 
(g)
 
Adjustment of Advanced Tissue Sciences’ investment in the DGJV and NeoCyte Joint Venture.
 
(h)
 
Adjustment reflects the assumption by Smith & Nephew of the Chase Loan, a liability of DermEquip LLC.
 
(i)
 
Adjustment reflects sales tax accrued on the sale of assets to Smith & Nephew, partially offset by the payment, as approved by the bankruptcy court, of accrued vacation to approximately 115 employees transferring to Smith & Nephew.
 
(j)
 
Adjustment reflects the elimination of Smith & Nephew’s minority interest in DermEquip LLC.
 
(k)
 
Reflects the net gain on the sale of Advanced Tissue Sciences’ interests in the DGJV.

 
ADVANCED TISSUE SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Unaudited
 
    
Years Ended December 31, 2001
  
    
As Reported
     
Pro Forma
Adjustments
     
Pro Forma
  
Revenues:
                           
Joint venture contract
   
$
16,778
 
   
$
(16,778
)
   
$
—  
 
Product sales to third parties
   
 
5,328
 
   
 
—  
 
   
 
5,328
 
Contracts and fees -  
                           
Milestones
   
 
5,000
 
   
 
(5,000
)
   
 
—  
 
Others
   
 
1,834
 
   
 
—  
 
   
 
1,834
 
    
  
  
Total revenues
   
 
28,940
 
   
 
(21,778
)
   
 
7,162
 
    
  
  
Costs and expenses:
                           
Joint venture contract
   
 
16,564
 
   
 
(16,564
)
   
 
—  
 
Cost of goods sold
   
 
8,340
 
   
 
—  
 
   
 
8,340
 
Research and development
   
 
7,784
 
   
 
—  
 
   
 
7,784
 
Selling, general and administrative
   
 
12,515
 
   
 
—  
 
   
 
12,515
 
    
  
  
Total costs and expenses
   
 
45,203
 
   
 
(16,564
)
   
 
28,639
 
    
  
  
Income (loss) from operations before equity in losses of joint ventures
   
 
(16,263
)
   
 
(5,214
)
   
 
(21,477
)
Equity in losses of joint ventures
   
 
(12,391
)
   
 
12,391
 
   
 
—  
 
    
  
  
Loss from operations
   
 
(28,654
)
   
 
7,177
 
   
 
(21,477
)
Other income (expense):
                           
Interest income and other
   
 
525
 
   
 
—  
 
   
 
525
 
Interest expense
   
 
(244
)
   
 
244
 
   
 
—  
 
    
  
  
Net loss applicable to common stock
   
$
(28,373
)
   
$
7,421
 
   
$
(20,952
)
    
  
  
Basic and diluted loss per common share
   
$
(.43
)
            
$
(.32
)
    
           
Weighted average number of common shares used in the computation of basic and diluted loss per common share
   
 
66,069
 
            
 
66,069
 
    
           
 
Notes to the pro-forma consolidated statement of operations:
 
Adjustments reflect transactions between Advanced Tissue Sciences and the Dermagraft and NeoCyte Joint Ventures for the periods presented, and include allocations of expenses as agreed between the joint venture partners.
 
The pro-forma statement of operations, after adjustments, reflects Advanced Tissue Sciences’ business excluding the Dermagraft and NeoCyte Joint Ventures, including sales and cost of goods sold for collagen and NouriCel.

 
ADVANCED TISSUE SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Unaudited
 
 
    
Nine months ended September 30, 2002
  
    
As Reported
     
Pro Forma
Adjustments
     
Pro Forma
  
Revenues:
                           
Joint venture contract
   
$
14,232
 
   
$
(14,232
)
   
$
—  
 
Product sales to third parties
   
 
10
 
   
 
—  
 
   
 
10
 
Contracts and fees
   
 
1,802
 
   
 
(55
)
   
 
1,747
 
    
  
  
Total revenues
   
 
16,044
 
   
 
(14,287
)
   
 
1,757
 
    
  
  
Costs and expenses:
                           
Joint venture contract
   
 
14,040
 
   
 
(14,040
)
   
 
—  
 
Cost of goods sold
   
 
1,573
 
   
 
—  
 
   
 
1,573
 
Research and development
   
 
9,409
 
   
 
—  
 
   
 
9,409
 
Selling, general and administrative
   
 
9,116
 
   
 
—  
 
   
 
9,116
 
    
  
  
Total costs and expenses
   
 
34,138
 
   
 
(14,040
)
   
 
20,098
 
    
  
  
Income (loss) from operations before equity in losses of joint ventures
   
 
(18,094
)
   
 
(247
)
   
 
(18,341
)
Equity in losses of joint ventures
   
 
(7,963
)
   
 
7,963
 
   
 
—  
 
    
  
  
Loss from operations
   
 
(26,057
)
   
 
7,716
 
   
 
(18,341
)
Other income (expense):
                           
Interest income and other
   
 
(581
)
   
 
4
 
   
 
(577
)
Interest expense
   
 
(80
)
   
 
80
 
   
 
—  
 
    
  
  
Net loss
   
$
(26,718
)
   
$
7,800
 
   
$
(18,918
)
    
  
  
Basic and diluted loss per common share
   
$
(.37
)
            
$
(.26
)
    
           
Weighted average number of common shares used in the computation of basic and diluted loss per common share
   
 
73,155
 
            
 
73,155
 
    
           
 
Notes to the pro-forma consolidated statement of operations:
 
Adjustments reflect transactions between Advanced Tissue Sciences and the Dermagraft and NeoCyte Joint Ventures for the periods presented, and include allocations of expenses as agreed between the joint venture partners.
 
The pro-forma statement of operations, after adjustments, reflects Advanced Tissue Sciences’ business excluding the Dermagraft and NeoCyte Joint Ventures, including sales and cost of goods sold for collagen and NouriCel.