Advanced Neuromodulation Systems Fourth Quarter Net Income Increases to $0.07 Per Diluted Share From $0.01 As Revenue Increases 33% to a Record $10.5 Million.Business Editors DALLAS--(BUSINESS WIRE)--Feb. 14, 2002 Advanced Neuromodulation Systems, 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. ) announced today that net income for the fourth quarter ended December 31, 2001 increased to $680,000, or $0.07 per diluted share, from $95,000, or $0.01 per diluted share, for the fourth quarter of 2000. Gross margin for the 2001 fourth quarter improved to 61% from 53% a year earlier. Revenue increased 33% to a record $10,471,000 from $7,865,000 for the fourth quarter of 2000. ANS' fourth quarter growth reflected a 25% increase in sales of its 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. . Fourth quarter results included the first sales in the U.S. of ANS' 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") for relief of chronic pain of the trunk and/or limbs, which 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 of 2001 for this advanced new product and formally launched the Genesis IPG in the U.S. in January 2002. For the twelve months ended December 31, 2001, net income, after expenses related to the 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 acquisition of $484,000 before taxes, was $1,518,000, or $0.15 per diluted share. This compares to net income of $832,000, or $0.09 per diluted share, for 2000. Gross margin for 2001 increased to 59% from 54% for 2000. Revenue for 2001 increased 19.1% to a record $37,916,000 from $31,827,000 for 2000. Neuro revenues for the year were up 19% while HDI's revenues were up 19.5%. The acquisition of 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 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. ANS President and Chief Executive Officer Chris Chavez said, "ANS' fourth quarter financial performance demonstrates the strength of our operating platform. We are gaining traction on the top line, and, as we anticipated, gross margin is increasing. This allows us to generate substantial bottom-line growth today while we continue to invest in R&D and marketing for tomorrow. Several additional neurostimulation products are working their way through our development pipeline, including our AccuRx(TM) fully implantable drug pump, which is now being tested in clinical trials. We also are continuing to refine our support infrastructure and our training and education programs for new implanters to support future growth." Chavez continued, "ANS is a world leader in 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 technology. FDA approval of our Genesis IPG immediately expands 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 RF neuromodulation system alone. We are pleased by the positive response to the recent launch of our Genesis IPG in the United States. Based on our success in building ANS' position in the RF segment, where we now maintain about a 50% market share, we are optimistic that our new IPG will also become a product of choice among physicians and their patients for the treatment of chronic pain. "The Genesis system is a major advancement in terms of giving patients control of their pain," said Dr. Giancarlo Barolat, a neurosurgeon neurosurgeon a physician who specializes in neurosurgery. neurosurgeon A surgeon specialized in managing diseases of the brain, spine and peripheral nerves Meat & potatoes diseases Brain tumors, spinal cord disease Salary $245K + 15% bonus. and pioneer in the field of neurostimulation, of Thomas Jefferson University It began as Jefferson Medical College in 1824. On July 1, 1969 the institution officially became Thomas Jefferson University. The university is made up of three colleges:
"Industry analysts expect sales of neuromodulation products to increase from approximately $575 million in 2001 to $1 billion by 2003. We are committed to directly addressing the large and growing pain management market using ANS' own resources. We plan to seek appropriate partners to lever our product development, regulatory affairs and manufacturing capabilities into other applications for our advanced neuromodulation technology platforms, including deep brain stimulation In neurotechnology, deep brain stimulation (DBS) is a surgical treatment involving the implantation of a medical device called a brain pacemaker, which sends electrical impulses to specific parts of the brain. (DBS (Direct Broadcast Satellite) A one-way TV broadcast service from a communications satellite to a small round or oval dish antenna no larger than 20" in diameter. ) for the treatment of Parkinson's disease Parkinson's disease or Parkinsonism, degenerative brain disorder first described by the English surgeon James Parkinson in 1817. When there is no known cause, the disease usually appears after age 40 and is referred to as Parkinson's disease. and Essential Tremor Essential tremor An uncontrollable (involuntary) shaking of the hands, head, and face. Also called familial tremor because it is sometimes inherited, it can begin in the teens or in middle age. The exact cause is not known. , pelvic pain, ischemic Ischemic An inadequate supply of blood to a part of the body, caused by partial or total blockage of an artery. Mentioned in: Antiangiogenic Therapy, Subarachnoid Hemorrhage, Ventricular Fibrillation ischemic pain and chronic occipital occipital /oc·cip·i·tal/ (ok-sip´i-t'l) pertaining to the occiput; located near the occipital bone. oc·cip·i·tal adj. Of or relating to the occipital bone. n. headaches. We believe that this is the best way for us to continue to deliver advanced neuromodulation therapy to patients and value to our shareholders." Conference Call ANS has scheduled a conference call at 11 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 today. 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 approximately one hour after the WebCast at these same Internet addresses. For a telephone replay, dial 800/633-8284, reservation No. 20262123 beginning at approximately 1 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." 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 new 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; 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 Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Net revenue $10,470,931 $7,865,302 $37,916,435 $31,826,998
Cost of revenue 4,098,975 3,658,089 15,675,436 14,699,633
------------ ---------- ----------- -----------
Gross profit 6,371,956 4,207,213 22,240,999 17,127,365
Operating expenses:
Research and
development 1,278,939 1,021,279 4,928,432 3,854,084
Marketing 2,509,283 1,787,245 9,055,932 6,851,022
Amortization of
goodwill 139,152 139,152 556,604 556,604
Amortization of
other intangibles 273,543 171,312 933,257 676,508
General and
administrative 1,009,153 1,068,747 3,957,867 4,243,720
------------ ---------- ----------- -----------
5,210,070 4,187,735 19,432,092 16,181,938
------------ ---------- ----------- -----------
Income from
operations 1,161,886 19,478 2,808,907 945,427
------------ ---------- ----------- -----------
Other income
(expenses):
Acquisition related
expenses -- -- (483,766) --
Interest expense (1,935) (13,827) (24,346) (59,015)
Interest and other
income 94,339 164,742 482,417 604,570
------------ ---------- ----------- -----------
92,404 150,915 (25,695) 545,555
------------ ---------- ----------- -----------
Income before income
taxes 1,254,290 170,393 2,783,212 1,490,982
Income taxes 574,041 75,260 1,265,466 658,524
Net income $680,249 $95,133 $1,517,746 $832,458
============ ========== =========== ===========
Basic income per
share:
Net income $.07 $.01 $.17 $.10
============ ========== =========== ===========
Number of basic
shares 8,961,502 8,624,455 8,926,985 8,507,048
============ ========== =========== ===========
Diluted income per
share:
Net income $.07 $.01 $.15 $.09
============ ========== =========== ===========
Number of diluted
shares 10,045,694 9,530,967 9,917,007 9,398,934
============ ========== =========== ===========
ADVANCED NEUROMODULATION SYSTEMS, INC.
Condensed Consolidated Balance Sheets
December 31, December 31,
Assets 2001 2000
Current assets:
Cash, certificates of deposit and
short-term investments $ 11,937,047 $ 11,607,038
Receivable -- trade net 6,493,772 5,164,231
Receivable -- other 235,594 734,550
Inventories 9,748,845 7,087,639
Deferred income taxes 1,726,517 1,282,072
Refundable income taxes 678,341 359,953
Prepaid expenses and other current assets 685,169 1,064,850
----------- ------------
Total current assets 31,505,285 27,300,333
Net property, plant and equipment 7,208,303 6,621,352
Patents, trademarks, purchased technology
and other assets, net 17,151,497 15,642,881
----------- ------------
Total assets $55,865,085 $49,564,566
=========== ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,902,196 $1,375,122
Accrued salary and employee benefit costs 2,112,127 1,293,065
Customer deposits 1,042,690 543,885
Accrued tax abatement liability 969,204 969,204
Warranty reserve 383,477 422,182
Income taxes payable -- 67,240
Other accrued expenses 189,317 410,811
---------- ------------
Total current liabilities 6,599,011 5,081,509
Deferred income taxes 2,316,796 2,354,170
Long-term notes payable 137,397 211,681
Non-current customer deposits -- 1,475,393
Total stockholders' equity 46,811,881 40,441,813
---------- ------------
Total liabilities and stockholders' equity $55,865,085 $49,564,566
========== ============
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