CPTS » Topics » 14. Subsequent Events

This excerpt taken from the CPTS 10-Q filed Nov 7, 2008.

15.       Subsequent Events

 

UBS Investment Bank holds 100% of our auction rate securities.  During October 2008, UBS Investment Bank informed us that they have designed a settlement process that will give UBS’s clients the opportunity to sell all auction rate securities at par by June 2010, unless they are redeemed by the issuer sooner.  We received confirmation from UBS Investment Bank in October that all the auction rate securities that we currently hold are eligible to participate in this process and be redeemed at par.  We intend to participate in the settlement process and therefore expect all our auction rate securities to be settled at full par value.

 

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These excerpts taken from the CPTS 10-K filed Mar 14, 2008.

14.    Subsequent Events

        On January 7, 2008 (the "Closing Date"), we entered into a Share Purchase Agreement (the "Share Purchase Agreement") with Conceptus SAS, which was entered into in connection with the exercise of our call option under the existing Share Purchase and Call Option Agreement dated January 17, 2004 and amended on February 27, 2007 and on November 19, 2007. Pursuant to the Share Purchase Agreement, we acquired all of the outstanding shares of Conceptus SAS on the Closing Date. As a result of this transaction, Conceptus SAS became as our wholly owned subsidiary and its results of operations will be consolidated with our results of operations starting on January 7, 2008.

        As set forth by the 2004 Agreement and its amendments, the purchase price was determined as: 1.46 times Conceptus SAS' sales revenues for the Company's products for the fiscal year 2007; plus, the profits made by Conceptus SAS during the period beginning January 1, 2007 and ending December 31, 2007, less any dividends distributed by Conceptus SAS after January 1, 2007, other than the distribution

89


CONCEPTUS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.    Subsequent Events (Continued)


approved by the general meeting of the shareholders of Conceptus SAS pertaining to the profits for fiscal year 2006; less, if applicable, any clawback amount resulting from the difference between the Unitary Reimbursement Rate (the "Rate") established by the French Official Journal of notice for each Essure device, and €628. Such clawback will be calculated as follows: If the Rate is equal or above €628, no clawback amount will be due by the Sellers party to us. If the rate is equal or above €620 and lower than €628, the clawback amount shall be equal to €900,000. If the Rate is equal or above €610 and lower than €620, the clawback amount shall be equal to €1,100,000. If the Rate is equal or above €600 and lower than €610, the clawback amount shall be equal to €1,300,000. And, if the Rate is below €600, the clawback amount shall be equal to €1,500,000. All amounts expressed in this item include Value Added Tax, or VAT.

        Pursuant to the Share Purchase Agreement, we paid on the Closing Date $22.3 million in cash placed in an escrow account, from which $19.8 million was released to the Sellers on the same date. The amount paid by us constitutes the initial Purchase Price payment and was based on an estimate of Conceptus SAS' sales revenues for the year 2007 prepared in good faith by Conceptus SAS.

        Additionally, on February 27, 2007, we entered into an amendment to the Share Purchase and Call Option Agreement dated January 17, 2004 with Conceptus SAS and into an amendment to the Distribution Agreement with Conceptus SAS, dated January 17, 2004. Pursuant to the amendment to the Share Purchase and Call Option Agreement, we agreed not to exercise the call option to acquire Conceptus SAS in 2007 and agreed to exercise our call option to acquire SAS sometime between January 1, 2008 and January 2, 2009 subject to the satisfaction of certain closing conditions. Pursuant to the amendment to the Distribution Agreement, Conceptus SAS agreed to increase the price they pay to us for the Essure product. The difference in price of the revised Distribution Agreement compared to the previous agreement is being recorded as a current liability in our consolidated balance sheet. As of December 31, 2007, the balance of this current liability was $2.2 million and will be recorded as a reduction of the purchase price of Conceptus SAS.

        We are still evaluating the final purchase price of Conceptus SAS that will be finalized in the first quarter of 2008.

        During the first quarter of fiscal 2008, we continued to hold auction rate securities in our long term investment portfolio, as described in footnote 1 to these financial statements. On February 29, 2008, the Company had $48.8 million invested in auction rate securities. All auction rate securities owned by the Company on February 29, 2008 are backed by federal and state student loans and continue to carry AAA ratings. The Company continues to earn interest on the investments that failed to settle at auction, at the maximum contractual rate. As of December 31, 2007 the carrying value of these investments was equal to the fair value. The Company will continue to monitor the value of its auction rate securities each reporting period for a possible impairment if a decline in fair value occurs.

90


CONCEPTUS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14.    Subsequent Events



        On January 7, 2008 (the "Closing Date"), we entered into a Share Purchase Agreement (the "Share Purchase Agreement") with Conceptus SAS, which was entered
into in connection with the exercise of our call option under the existing Share Purchase and Call Option Agreement dated January 17, 2004 and amended on February 27, 2007 and on
November 19, 2007. Pursuant to the Share Purchase Agreement, we acquired all of the outstanding shares of Conceptus SAS on the Closing Date. As a result of this transaction, Conceptus SAS
became as our wholly owned subsidiary and its results of operations will be consolidated with our results of operations starting on January 7, 2008.



        As
set forth by the 2004 Agreement and its amendments, the purchase price was determined as: 1.46 times Conceptus SAS' sales revenues for the Company's products for the fiscal year 2007;
plus, the profits made by Conceptus SAS during the period beginning January 1, 2007 and ending December 31, 2007, less any dividends distributed by Conceptus SAS after January 1,
2007, other than the distribution



89








CONCEPTUS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



14.    Subsequent Events (Continued)






approved
by the general meeting of the shareholders of Conceptus SAS pertaining to the profits for fiscal year 2006; less, if applicable, any clawback amount resulting from the difference between the
Unitary Reimbursement Rate (the "Rate") established by the French Official Journal of notice for each
Essure device, and €628. Such
clawback will be calculated as follows: If the Rate is equal or above €628, no clawback amount will be due by the Sellers party to us. If the rate is equal or above
€620 and lower than €628, the clawback amount shall be equal to €900,000. If the Rate is equal or above €610 and lower than
€620, the clawback amount shall be equal to €1,100,000. If the Rate is equal or above €600 and lower than €610, the clawback amount
shall be equal to €1,300,000. And, if the Rate is below €600, the clawback amount shall be equal to €1,500,000. All amounts expressed in this item
include Value Added Tax, or VAT.



        Pursuant
to the Share Purchase Agreement, we paid on the Closing Date $22.3 million in cash placed in an escrow account, from which $19.8 million was released to the
Sellers on the same date. The amount paid by us constitutes the initial Purchase Price payment and was based on an estimate of Conceptus SAS' sales revenues for the year 2007 prepared in good faith by
Conceptus SAS.



        Additionally,
on February 27, 2007, we entered into an amendment to the Share Purchase and Call Option Agreement dated January 17, 2004 with Conceptus SAS and into an
amendment to the Distribution Agreement with Conceptus SAS, dated January 17, 2004. Pursuant to the amendment to the Share Purchase and Call Option Agreement, we agreed not to exercise the call
option to acquire Conceptus SAS in 2007 and agreed to exercise our call option to acquire SAS sometime between January 1, 2008 and January 2, 2009 subject to the satisfaction of certain
closing conditions. Pursuant to the amendment to the Distribution Agreement, Conceptus SAS agreed to increase the price they pay to us for the
Essure
product. The difference in price of the revised Distribution Agreement compared to the previous agreement is being recorded as a current liability in our consolidated balance sheet. As of
December 31, 2007, the balance of this current liability was $2.2 million and will be recorded as a reduction of the purchase price of Conceptus SAS.



        We
are still evaluating the final purchase price of Conceptus SAS that will be finalized in the first quarter of 2008.




        During
the first quarter of fiscal 2008, we continued to hold auction rate securities in our long term investment portfolio, as described in footnote 1 to these financial statements. On
February 29, 2008, the Company had $48.8 million invested in auction rate securities. All auction rate securities owned by the Company on February 29, 2008 are backed by federal
and state student loans and continue to carry
AAA ratings. The Company continues to earn interest on the investments that failed to settle at auction, at the maximum contractual rate. As of December 31, 2007 the carrying value of these
investments was equal to the fair value. The Company will continue to monitor the value of its auction rate securities each reporting period for a possible impairment if a decline in fair value
occurs.



90








CONCEPTUS, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)



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