Advanced Neuromodulation Systems First Quarter Revenue Increases 38% to a Record $11.5 Million; Net Income Increases to $0.08 Per Diluted Share.Business Editors DALLAS--(BUSINESS WIRE)--April 24, 2002 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 NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :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. ) announced today that revenue for the first quarter of 2002 increased 38% to a record $11,473,000 from $8,341,000 for the first quarter of 2001, and from $10,471,000 for the fourth quarter of 2001. Net income for the first quarter of 2002 increased to $837,000, or $0.08 per diluted share. This compares to a net loss of $6,000, or $(0.00) per share, for the first quarter of 2001, and to net income of $680,000, or $0.07 per diluted share, for the fourth quarter of 2001. Gross margin rose to 61% for this year's first quarter from 57% a year ago. Operations Review Sales of ANS' neuromodulation systems 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. increased 41% in the first quarter to $8,988,000. "This growth reflects our current implanters' enthusiastic response to our recently approved Genesis(TM) Totally Implantable Pulse Generator implantable pulse generator Cardiac pacing A pacemaker used for permanent pacing, which is placed inside a pocket under the skin; the leads are positioned in or on the heart (IPG IPG Implantable pulse generator, see there ) Spinal Cord Stimulator Spinal Cord Stimulator (SCS) or Dorsal Column Stimulator (DCS) is an implantable medical device used to treat chronic pain of neurologic origin. An electric impulse generated by the device near the dorsal surface of the spinal cord provides a paresthesia ("tingling") , as well as the steady progress we made in our program to expand our base of implanters," said President and Chief Executive Officer Chris Chavez. ANS' Genesis system received 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 ) from 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. in November 2001. ANS completed the training of its sales organization in December 2001 and formally launched the Genesis IPG in the U.S. in January 2002. "The launch of ANS' Genesis IPG expanded our addressable Reachable. When something is addressable, it can be identified and manipulated independently of its surroundings. For example, screen pixels and RAM memory are addressable. Each of the screen's picture elements can be individually turned on and off, and each of the memory's bytes can be market by an estimated factor of four times compared to the market for our Renew(R) RF system. We have built about a 50% share of the RF segment of the neuromodulation market, and 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 IPG will also become a product of choice among physicians and their patients for the treatment of chronic pain," Chavez said. Revenue for the Company's 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 subsidiary increased 24% in the first quarter to $2,484,000. HDI, 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, was acquired in January 2001. Chavez continued, "We met our own performance expectations for the first quarter, and exceeded analysts' consensus estimates. The investments we made over the years to establish ANS as a leader in neuromodulation technology and to refine our operating platform are now beginning to produce the revenue and earnings growth we anticipated. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. an industry report, sales of neuromodulation products are expected to increase from approximately $525 million in 2001 to $1.1 billion by 2005. With our portfolio of approved products, and additional neuromodulation products in the development and approval pipeline, we believe that ANS will continue to benefit from this growth." Conference Call ANS has scheduled a conference call for tomorrow, Thursday, April 25, 2002 at 11:00 AM EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A simultaneous WebCast of the conference call may be accessed online at www.CompanyBoardroom.com or at www.ANS-medical.com. A replay will be available after 1:00 PM EDT at these same Internet addresses. For a telephone replay, dial (800) 633-8284, reservation #20524840, after 1:00 PM 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: market acceptance of the Genesis(TM) IPG; continued market acceptance of our Renew(R) system following the launch of the Genesis IPG; 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; attracting interest from potential partners to develop other applications for our neuromodulation technology platforms; competition; 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,
2002 2001
Net revenue $ 11,472,646 $ 8,340,810
Cost of revenue 4,514,160 3,572,789
Gross profit 6,958,486 4,768,021
Operating expenses:
Research and development 1,292,703 1,147,530
Sales and marketing 2,895,890 2,056,978
Amortization of goodwill --- 139,151
Amortization of other intangibles 227,796 173,169
General and administrative 1,302,872 918,429
5,719,261 4,435,257
Income from operations 1,239,225 332,764
Other income (expenses):
Acquisition related costs -- (483,766)
Interest expense (4,306) (10,460)
Interest and other income 73,506 148,302
69,200 (345,924)
Income (loss) before income taxes 1,308,425 (13,160)
Income taxes (benefit) 471,449 (6,899)
Net income (loss) $ 836,976 $ (6,261)
Basic income per share:
Net income $ .09 $ --
Number of basic shares 9,107,985 8,894,785
Diluted income per share:
Net income $ .08 $ --
Number of diluted shares 10,292,947 8,894,785
ADVANCED NEUROMODULATION SYSTEMS, INC. and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
Assets 2002 2001
Current assets:
Cash and marketable securities $ 10,819,126 $ 11,937,047
Accounts receivable, net 7,733,369 6,729,366
Inventories 10,454,247 9,748,845
Deferred income taxes 1,084,110 1,726,517
Current income tax receivable 1,353,832 678,341
Prepaid expenses and other
current assets 541,517 685,169
Total current assets 31,986,201 31,505,285
Net equipment and fixtures 7,017,801 7,208,303
Goodwill, patents, trademarks,
purchased technology & other
assets, net 17,045,003 17,151,497
Total assets $ 56,049,005 $ 55,865,085
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,489,881 $ 1,835,037
Accrued salary and employee
benefit costs 1,195,461 2,112,127
Accrued tax abatement
liability 969,204 969,204
Customer deposits 807,440 1,042,690
Warranty reserve 316,113 383,477
Other accrued expenses 228,041 204,151
Current maturities of
long-term note payable 53,560 52,325
Total current liabilities 5,059,700 6,599,011
Deferred income taxes 2,283,505 2,316,796
Long-term note payable 123,468 137,397
Stockholders' equity:
Common stock, $.05 par value 456,749 453,593
Additional capital 39,602,020 38,670,248
Retained earnings 8,546,266 7,709,290
Accumulated other
comprehensive loss, net (22,703) (21,250)
Total stockholders' equity 48,582,332 46,811,881
Total liabilities and
stockholders' equity $ 56,049,005 $ 55,865,085
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