Advanced Neuromodulation Systems Announces First-Quarter Results.Business Editors DALLAS--(BUSINESS WIRE)--April 26, 2001 Advanced Neuromodulation Systems Advanced Neuromodulation System is a subsidiary of St. Jude Medical, Inc based in Plano, Texas. Among the products ANS makes and sells include spinal cord stimulators for intractable pain. Inc. (ANS (ANS Communications, Inc, Purchase, NY) An ISP, Internet backbone and provider of private data network services, founded in 1990 as Advanced Network & Services, Inc., by IBM, MCI and Merit (consortium of Michigan universities). ) (Nasdaq:ANSI (American National Standards Institute, New York, www.ansi.org) A membership organization founded in 1918 that coordinates the development of U.S. voluntary national standards in both the private and public sectors. It is the U.S. member body to ISO and IEC. ) today announced that revenue for the first quarter ended March 31, 2001, increased to $8,341,000 from $7,428,000 for the first quarter of 2000. This growth was attributed to continued strong sales of ANS' advanced Renew(R) radio frequency (RF) neuromodulation system for the treatment of chronic intractable pain intractable pain Refractory pain Pain medicine Persistent pain which does not respond to at least 3 dosease of parenteral analgesics given over a 12-24 hr period; pain that does not respond to appropriate doses of opioid analgesics. , and the acquisition in January 2001 of Hi-tronics Designs Inc. (HDI HDI Human Development Index (UNDP yardstick of human welfare) HDI Help Desk Institute HDI Humpty Dumpty Institute (New York, New York) HDI High Density Interconnect ), a contract developer and original equipment manufacturer (OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and ) of electro-mechanical devices. The acquisition of HDI was accounted for as a pooling of interests Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. , and prior periods have been restated accordingly. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net earnings for the 2001 first quarter, before acquisition-related costs incurred in connection with the HDI transaction, were $269,000, or $0.03 per diluted share. Including acquisition-related costs of $484,000, the net loss for the period was $6,000, or $0.00 per share. This compares with net earnings for last year's first quarter of $156,000, or $0.02 per diluted share. President and Chief Executive Officer Chris Chavez said, "The integration of Hi-tronics is proceeding smoothly. HDI's core strength is in developing highly sophisticated electronic circuits with very low power requirements using both discrete and highly integrated technology. This competency, combined with ANS' strengths in software development, radio frequency systems and implantable lead design, creates a formidable R&D capability that we expect to greatly accelerate new neuromodulation products to market. The acquisition also strengthens our capabilities as an OEM contract developer and supplier of advanced electro-mechanical medical devices." Earlier this month, ANS announced that it reached an agreement with the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. on an approach to accelerate submission and review of a premarket approval premarket approval Medical devices A scientific and regulatory review by the FDA to ensure the safety and effectiveness of a Class III device, before its approval for marketing. See Advisory panel, Medical device. (PMA PMA (papillary-marginal-attached), n a system of epidemiologic scoring of periodontal disease devised by Schour and Massler in which the symbols denote the areas involved in gingival inflammation. PMA Progressive muscular atrophy ) application for ANS' Totally Implanted Pulse Generator Pulse generator An electronic circuit capable of producing a waveform that rises abruptly, maintains a relatively flat top for an extremely short interval, and then rapidly falls to zero. (IPG IPG Implantable pulse generator, see there ) Spinal Cord spinal cord, the part of the nervous system occupying the hollow interior (vertebral canal) of the series of vertebrae that form the spinal column, technically known as the vertebral column. Stimulation for relief of chronic pain of the trunk and/or limbs. Chavez said, "ANS and the FDA are continuing to work constructively to identify and meet PMA requirements which ANS believes can result in approval on an accelerated basis." Chavez continued: "ANS is a world leader in spinal cord stimulation technology, and we are bringing to bear all of ANS' considerable and growing technical, financial and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. to achieve our objectives in this market. ANS has developed a full line of products that address most segments of the neuromodulation market. When all appropriate regulatory approvals are received, these products will enable us to participate in markets that are at least eight times larger than the RF market we participate in today. "Industry observers expect global sales of neuromodulation products to increase from approximately $500 million in 2001 to $1 billion by 2003. Based on our success in building ANS' position in the RF segment of the neuromodulation industry, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that our new products ultimately will be as well received among physicians and their patients as our Renew(R) system." Guidance for 2001 Re-affirmed Chavez said that the company continues to expect revenue for 2001 in the range of $34 million to $38 million, reflecting higher product sales and the acquisition of HDI. He said that the company expects earnings for 2001 in the range of $0.13 to $0.20 per diluted share (before acquisition-related costs). Conference Call ANS has scheduled a conference call at 11 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today. A simultaneous WebCast of the conference call may be accessed online at www.StreetFusion.com or at www.ans-medical.com. A replay will be available approximately one hour after the WebCast at these same Internet addresses There are two kinds of addresses that are widely used on the Internet. One is a person's e-mail address, and the other is the address of a Web site, which is known as a URL. Following is an explanation of Internet e-mail addresses only. For more on URLs, see URL and Internet domain name. . For a telephone replay, dial 800/633-8284, reservation No. 18659988 beginning at approximately 1 p.m. EDT About Advanced Neuromodulation Systems Advanced Neuromodulation Systems designs, develops, manufactures and markets implantable systems used to manage chronic intractable pain and other disorders of the central nervous system. Additional information is available at www.ans-medical.com. "Safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995: Statements contained in this document that are not based on historical facts are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ." Terms such as "plan," "should," "would," "anticipate," "believe," "intend," "estimate," "expect," "predict," "scheduled," "new market," "potential market applications" and similar expressions are intended to identify forward-looking statements. Such statements are by nature subject to uncertainties and risks, including but not limited to: completion of research and development projects in an efficient and timely manner; obtaining regulatory approvals on a timely and cost-efficient basis to permit the introduction of new products; the satisfactory completion of clinical trials and/or market tests prior to the introduction of new products; the adequacy, acceptability and timeliness of component supply; the approval of new products by reimbursement agencies like insurance companies, HMOs, Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. ; the efficacy of the company's products for new applications; and other risks detailed from time to time in the company's SEC filings. Consequently, if such management assumptions prove to be incorrect or such risks or uncertainties materialize, anticipated results could differ materially from those forecast in forward-looking statements.
Advanced Neuromodulation Systems Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31,
2001 2000
Net revenue $ 8,340,810 $ 7,427,624
Cost of revenue 3,572,789 3,444,525
Gross profit 4,768,021 3,983,099
Operating expenses:
Research and development 1,147,530 980,668
Marketing 2,056,978 1,629,831
Amortization of intangibles 312,320 306,871
General and administrative 918,429 940,677
4,435,257 3,858,047
Earnings from operations 332,764 125,052
Other income (expenses):
Acquisition related costs (483,766) --
Interest expense (10,460) (11,473)
Interest and other income 148,302 165,028
(345,924) 153,555
Earnings (loss) before income taxes (13,160) 278,607
Income taxes (benefit) (6,899) 123,052
Net earnings (loss) $ (6,261) $ 155,555
Basic earnings (loss) per share:
Net earnings (loss) $ -- $ 0.02
Number of basic shares 8,894,785 8,435,570
Diluted earnings (loss) per share:
Net earnings (loss) $ -- $ 0.02
Number of diluted shares 9,788,945 9,309,102
ADVANCED NEUROMODULATION SYSTEMS INC. and Subsidiaries
Condensed Consolidated Balance Sheets (Unaudited)
Mar. 31, Dec. 31,
2001 2000
Assets
Current assets:
Cash and short-term investments $ 10,645,086 $ 11,607,038
Accounts receivable, net 5,601,959 5,898,781
Inventories 8,092,165 7,087,639
Deferred income taxes 1,327,006 1,282,072
Refundable income taxes -- 359,953
Prepaid expenses and other current assets 410,032 1,064,850
Total current assets 26,076,248 27,300,333
Net equipment and fixtures 6,932,666 6,621,352
Patents, trademarks, purchased
technology & other assets, net 18,205,180 15,642,881
Total assets $51,214,094 $49,564,566
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,921,426 $ 1,375,122
Customer deposits 1,190,729 543,885
Accrued salary and employee benefit costs 716,455 1,293,065
Warranty reserve 556,557 422,182
Accrued tax abatement liability 969,204 969,204
Income taxes payable 172,367 67,240
Other accrued expenses 238,751 410,811
Total current liabilities 5,765,489 5,081,509
Deferred income taxes 2,320,878 2,354,170
Long-term notes payable 178,094 211,681
Non-current customer deposits 241,315 1,475,393
Stockholders' equity:
Common stock, $0.05 par value 445,668 444,153
Additional capital 36,133,790 34,469,471
Retained earnings 6,185,283 6,539,223
Accumulated other comprehensive
income (loss), net (56,423) (83,241)
Cost of common shares in treasury -- (927,793)
Total stockholders' equity 42,708,318 40,441,813
Total liabilities and stockholders'
equity $51,214,094 $49,564,566
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