American Medical Systems Net Income up 76 Percent On 14 Percent Sales Growth.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Oct. 23, 2002 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Medical Systems Holdings Inc. (Nasdaq:AMMD AMMD Aerodynamic Mass Median Diameter ) reported sales for the third quarter of 2002 of $32.8 million, a 14 percent increase over sales of $28.6 million in the comparable quarter of 2001 (13 percent before gain from foreign currency changes). Net income in the third quarter of 2002 was $5.4 million, or $0.16 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a 76 percent increase from 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 income of $3.1 million, or $0.09 per fully diluted share, in the third quarter of 2001. Third-quarter operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased to 25.8 percent of sales from 16.3 percent of sales in 2001. Pro forma results for 2001 include the FAS-142 required add back of certain intangible amortizations, increasing 2001 reported operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. by $1.4 million, and net income by $1.1 million. Sales for the nine months through September September: see month. of 2002 were $103.8 million, compared to sales of $84.6 million in the first nine months of 2001. (Nine month sales benefited 0.4 percent from foreign currency changes.) Net income in the first nine months of 2002 was $16.6 million, or $0.48 per fully diluted share, up from pro forma net income of $8.0 million, or $0.27 per fully diluted share in the 2001 comparable period, and the nine-month operating margin increased to 23.9 percent of sales from 15.6 percent of sales in 2001. The FAS-142-required add back of certain intangible amortizations increased 2001 reported operating income by $4.1 million, and net income by $3.1 million. Douglas Douglas, city, Isle of Man Douglas, city (1991 pop. 19,950), capital of the Isle of Man, Great Britain. It is a popular resort, connected by rail to Ramsey and Port Erin, on the Irish Sea. Tourism is the chief industry. W. Kohrs, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , commented, "We are proud of our third-quarter performance and the continued improvement in our operating margin, now our eighth consecutive quarter of margin growth--every quarter since our initial public offering. Revenues from our major product groups continue to show growth, with women's health Women's Health Definition Women's health is the effect of gender on disease and health that encompasses a broad range of biological and psychosocial issues. revenue growing 43 percent, male urinary urinary /uri·nary/ (u´ri-nar?e) pertaining to, containing, or secreting urine. u·ri·nar·y adj. 1. Relating to urine and its production, function, or excretion. 2. control revenue growing 18 percent, and erectile erectile /erec·tile/ (e-rek´til) capable of erection. e·rec·tile adj. 1. Of or relating to tissue capable of filling with blood and becoming rigid. 2. restoration revenue growing 8 percent. We are also pleased that the Company's tight control of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. allowed us to improve operating margins to record levels during this seasonally lower third-quarter sales period." Outlook Looking forward, Mr. Kohrs said AMS AMS - Andrew Message System expects continuing improvement in operating margins with fourth-quarter sales in the range of $37.0 million to $39.0 million, bringing full-year sales growth near the lower end of the previously announced 20 to 23 percent range. About American Medical Systems American Medical Systems, headquartered in Minnetonka, Minnesota For other uses, see Minnetonka (disambiguation). Minnetonka is a suburban community located eight miles west of Minneapolis in Hennepin County. Its 2000 population of 51,480 makes it the fourteenth largest city in Minnesota. , is a world leader in medical devices and procedures to treat three major diseases: incontinence incontinence Inability to control excretion. Starting and stopping urination relies on normal function in pelvic and abdominal muscles, diaphragm, and control nerves. Babies' nervous systems are too immature for urinary control. Later incontinence may reflect disorders (e.g. , erectile dysfunction Erectile Dysfunction Definition Erectile dysfunction (ED), formerly known as impotence, is the inability to achieve or maintain an erection long enough to engage in sexual intercourse. (ED) and urinary obstructions caused primarily by enlarged prostate Enlarged Prostate Definition A non-cancerous condition that affects many men past 50 years of age, enlarged prostate makes urinating more difficult by narrowing the urethra, a tube running from the bladder through the prostate gland. (benign prostate hyperplasia Benign prostate hyperplasia (BPH) Enlargement of the prostate gland. Mentioned in: Paruresis , or BPH BPH abbr. benign prostatic hyperplasia BPH Benign prostatic hypertrophy, a very common noncancerous cause of prostatic enlargement in older men. ). Although not life-threatening Adj. 1. life-threatening - causing fear or anxiety by threatening great harm; "a dangerous operation"; "a grave situation"; "a grave illness"; "grievous bodily harm"; "a serious wound"; "a serious turn of events"; "a severe case of pneumonia"; "a life-threatening , these disorders can significantly diminish one's quality of life and profoundly affect social relationships. In recent years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time number of people seeking treatment has increased markedly as a result of longer life expectancy Life Expectancy 1. The age until which a person is expected to live. 2. The remaining number of years an individual is expected to live, based on IRS issued life expectancy tables. , higher quality-of-life expectations, and greater awareness of new treatment alternatives. American Medical Systems' products reduce or eliminate the incapacitating in·ca·pac·i·tate tr.v. in·ca·pac·i·tat·ed, in·ca·pac·i·tat·ing, in·ca·pac·i·tates 1. To deprive of strength or ability; disable. 2. To make legally ineligible; disqualify. effects of these diseases, often through minimally invasive surgery minimally invasive surgery Laparoscopic surgery, see there. See Laparoscopic cholecystectomy. . The company believes its products were used to treat nearly 70,000 patients in 54 countries during the last 12 months. More information about the company and its products may be found at: www.AmericanMedicalSystems.com. 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. Statements about the company's future products, sales, and financial results are forward-looking statements subject to risks and uncertainties including the timing and success of new pro-duct introductions, continued physician endorsement and use of the company's products, competitor activities, changes in reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates, and potential product recalls. These risks and uncertainties are more fully described in the company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 29, 2001, and its other, more recent, filings. Actual results may differ materially from anticipated results.
American Medical Systems Holdings, Inc.
Statement of Operations
(Unaudited, in thousands, except per share data)
Three months through Nine months through
September September
------------------------ --------------------------
2001 2001
------------------------ --------------------------
Pro Pro
Reported forma 2002 Reported forma 2002
-------- ------- ------- ------- ------- --------
Net sales $28,637 $28,637 $32,771 $84,623 $84,623 $103,816
Cost of sales 5,438 5,438 6,233 16,622 16,622 20,485
-------- ------- ------- ------- ------- --------
Gross profit 23,199 23,199 29,210 68,001 68,001 83,331
Operating expenses:
Marketing and sales 10,732 10,732 11,277 33,352 33,352 37,195
General and
administrative 2,790 2,790 3,178 8,432 8,432 9,816
Research and
development 3,046 3,046 2,696 9,127 9,127 8,727
Transition and
reorganization 1,000 1,000 - 1,000 1,000 -
Amortization of
intangibles 2,356 950 939 6,917 2,862 2,817
-------- ------- ------- ------- ------- --------
Total operating
expenses 19,924 18,518 18,090 58,828 54,773 58,555
-------- ------- ------- ------- ------- --------
Operating income 3,275 4,681 8,448 9,173 13,228 24,776
Royalty and other
income 836 836 545 2,525 2,525 3,243
Interest expense,
net (369) (369) (129) (2,412) (2,412) (852)
-------- ------- ------- ------- ------- --------
Income before income
taxes 3,742 5,148 8,864 9,286 13,341 27,167
Income tax expense 1,735 2,070 3,456 4,341 5,346 10,612
-------- ------- ------- ------- ------- --------
Net income $2,007 $3,078 $5,408 $4,945 $7,995 $16,555
======== ======= ======= ======= ======= ========
Net income per share
Basic $0.06 $0.10 $0.17 $0.17 $0.27 $0.51
Diluted $0.06 $0.09 $0.16 $0.16 $0.25 $0.48
Weighted average
shares used in
computation -
Basic 31,491 31,491 32,155 29,101 29,101 32,321
Diluted 34,193 34,193 34,230 31,631 31,631 34,205
Note: The September 2001, pro forma columns present results of
operations as if Financial Accounting Standard No. 142, "Goodwill and
Other Intangible Assets," had been effective in fiscal year 2001. In
the nine-month period ended September 29, 2001, other income includes
a non-reoccurring payment of $375,000 to resolve a settlement with
Boston quality issue with a supplier. In the nine-month period ended
September 28, 2002, other income includes income of $716,000 from
reversing an accrued pension liability after a one-time payment of
$5.8 million as part of the pension plan termination.
American Medical Systems Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited, in thousands)
December 29, September 28,
2001 2002
------------- --------------
Assets
Current assets:
Cash and short-term investments $37,768 $71,801
Accounts receivable, net 25,306 25,244
Inventories 13,991 13,533
Deferred taxes and other current 9,023 9,343
-------- --------
Total current assets 86,088 119,921
Property, plant and equipment, net 23,604 21,926
Goodwill and intangibles, net 99,483 96,461
Long-term investments 18,783 -
Deferred taxes and other assets 7,193 6,986
-------- --------
Total assets $235,151 $245,294
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,678 $2,298
Accrued liabilities and taxes 27,593 21,200
Current portion of notes payable 4,909 5,454
-------- --------
Total current liabilities 35,180 28,952
Long-term notes payable 24,000 19,909
Other long-term liability 1,884 1,241
Stockholder's equity 174,087 195,192
-------- --------
Total liabilities and stockholders' equity $235,151 $245,294
======== ========
American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited, in thousands)
Nine months through September
-----------------------------
2001 2002
-------- --------
Cash flows from operating activities:
Net income $4,945 $16,555
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation 2,755 2,873
Amortization of intangibles, including
deferred financing costs 7,120 3,022
Noncash deferred compensation 344 145
Noncash transition and reorganization 747 -
Income tax benefit related to stock option
plans 175 1,124
Change in net deferred taxes (882) 1,264
Changes in operating assets and liabilities (1,831) (7,498)
-------- --------
Net cash provided by operating activities 13,373 17,485
Cash flows from investing activities:
Purchase of property, plant and equipment (1,580) (1,195)
Purchase of businesses, net of cash acquired (13,653) -
Purchase of investments in technology (4,500) -
Sale of marketable securities, net of
purchases - 27,796
-------- --------
Net cash used in investing activities (19,733) 26,601
Cash flows from financing activities:
Issuance of common stock 57,950 1,936
Payments on long-term debt (15,583) (3,546)
-------- --------
Net cash used in financing activities 42,367 (1,610)
Effect of exchange rates 1,178 570
-------- --------
Net increase (decrease) in cash and cash
equivalents $37,185 $43,046
======== ========
American Medical Systems Holdings, Inc.
Selected Sales Information
(Unaudited, in thousands)
Three months Nine months
------------ -----------
through September through September
----------------- -----------------
2001 2002 2001 2002
---- ---- ---- ----
Erectile Restoration $14,970 $16,207 $42,566 $51,293
Male Urinary Control 7,000 8,295 22,022 26,439
Women's Health 4,885 7,000 14,928 21,501
Prostate Treatments 1,782 1,269 5,107 4,583
-------- -------- -------- ---------
Total $28,637 $32,771 $84,623 $103,816
======== ======== ======== =========
Domestic Sales $24,480 $27,376 $70,165 $86,203
International Sales 4,157 5,395 14,458 17,613
-------- -------- -------- ---------
Total $28,637 $32,771 $84,623 $103,816
======== ======== ======== =========
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