American Medical Systems Reports 19 Percent First Quarter Revenue Growth; Strong Margins on Global Growth Drive Earnings Performance.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. -- 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 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 :AMMD AMMD Aerodynamic Mass Median Diameter ) reported record sales of $73.6 million for the first quarter of 2006, an 18.5 percent increase over sales of $62.1 million in the comparable quarter of 2005 (with this reported growth rate reduced by 1.6 percentage points due to currency exchange rate changes). The Company reported first quarter 2006 net income of $11.5 million, or $0.16 per share, including the $0.03 earnings per share reduction from stock option expensing begun during the period. Net income for the first quarter 2006, adjusted for this expense, was $13.4 million, or $0.19 per share. Net income for the first quarter 2005 was $11.2 million, or $0.16 per share, during that period which preceded the introduction of stock option expensing in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123(R). Net income growth, when adjusted to exclude the stock option expense from the 2006 period, was 19.2 percent. A reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings to these adjusted results is included in the attached financial tables. Martin J. Emerson, President and Chief Executive Officer, commented, "Our first quarter 2006 revenue growth was consistent with our anticipated annual growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. across our businesses. With growth of over 34 percent for the quarter, women's pelvic pelvic /pel·vic/ (pel´vik) pertaining to the pelvis. pel·vic adj. Of, relating to, or near the pelvis. health contributed 65 percent of the quarter's growth dollars. Our innovative prolapse prolapse Protrusion of an internal organ out of its normal place, usually of the rectum or uterus outside the body when supporting muscles weaken. The membrane lining the rectum can push out through the anus, most often in old people with constipation who strain during systems, cryoablation cryoablation /cryo·ab·la·tion/ (kri?o-ab-la´shun) the removal of tissue by destroying it with extreme cold. Cryoablation A technique for removing cancerous tissue by killing it with extreme cold. systems for menorrhagia menorrhagia /men·or·rha·gia/ (men?ah-ra´jah) hypermenorrhea. men·or·rha·gia n. See hypermenorrhea. and our portfolio of 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. technologies each played a role in these results. Men's pelvic health growth of 10 percent in the quarter was also consistent with our annual growth expectation for this business comprised of our 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, male continence continence /con·ti·nence/ (kon´tin-ens) the ability to control natural impulses.con´tinent con·ti·nence n. 1. Self-restraint; moderation. 2. and prostate prostate /pros·tate/ (pros´tat) a gland surrounding the bladder neck and urethra in the male; it contributes a secretion to the semen.prostat´ic pros·tate n. The prostate gland. adj. treatments product lines. Our international business continued its excellent growth, reporting over 20 percent for the quarter, a growth rate that would be increased by nearly 8 percentage points on a constant currency basis." Emerson continued, "Operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , strong for the quarter at nearly $21 million, were once again driven by the combination of strong margins and asset management. As a company, we continue to focus on, and deliver on, our balance sheet goals, providing us the cash flow to invest strategically in future technology platforms such as our acquisition of implantable electrical stimulation stimulation /stim·u·la·tion/ (stim?u-la´shun) the act or process of stimulating; the condition of being stimulated. deep brain stimulation technology from BioControl bi·o·con·trol n. See biological control. biocontrol See biological control. Medical, Ltd. as reported yesterday." Outlook For the year 2006, the Company reiterated that it expected revenue in the range of $304 to $314 million. Revenue projected for the second quarter of 2006 ranges from $75 to $78 million. Earnings per share on these revenues for 2006, on a non-GAAP basis before the impact of the stock-based compensation expensing per SFAS 123(R), remain as anticipated in the range of $0.78 to $0.82 per share. In the second quarter of 2006, the Company expects non-GAAP earnings of $0.19 to $0.20 per share. These projected earnings exclude any in process research and development charge from the BioControl acquisition. Earnings per share for 2006 as reported in accordance with GAAP, and thereby including the effect of stock option expensing as required under SFAS 123(R), are expected to be in the range of $0.66 to $0.70. Second quarter GAAP earnings per share are anticipated in the range of $0.16 to $0.17. A reconciliation of GAAP to non-GAAP earnings per share projections is as follows:
Projected Second Projected Year
Quarter 2006 2006
----------------- ----------------
Projected GAAP earnings per share $0.16 - $0.17 $0.66 - $0.70
Add: Projected stock-based
compensation $0.03 $0.12
----------------------------------
expense, net of tax
Equals: Projected non-GAAP
earnings per share $0.19 - $0.20 $0.78 - $0.82
==================================
Earnings Call Information American Medical Systems will host a conference call today at 5:00 p.m. eastern time to discuss its first quarter 2006 results. Those without internet access See how to access the Internet. may join the call from within the U.S. by dialing 800-886-7217; outside the U.S., dial 706-679-3821. A live webcast of the call will be available through the Company's corporate website at www.AmericanMedicalSystems.com and available for replay three hours after the completion of the call. 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 diversified diversified (di·verˑ·s supplier of medical devices and procedures to cure 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. , benign prostatic hyperplasia benign prostatic hyperplasia n. Abbr. BPH A nonmalignant enlargement of the prostate gland commonly occurring in men after the age of 50, and sometimes leading to compression of the urethra and obstruction of the flow of urine. , incontinence, menorrhagia, prolapse and other pelvic disorders A
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 lives, 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 invasive /in·va·sive/ (-siv) 1. having the quality of invasiveness. 2. involving puncture of the skin or insertion of an instrument or foreign material into the body; said of diagnostic techniques. therapies. The Company's products were used to provide approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 170,000 patient cures in 56 countries during 2005. 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 market opportunities, future products, sales and financial results are forward-looking statements subject to risks and uncertainties such as the timing and success of new product introductions; physician acceptance, endorsement A signature on a Commercial Paper or document. An endorsement on a negotiable instrument, such as a check or a promissory note, has the effect of transferring all the rights represented by the instrument to another individual. , and use of the Company's products; regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. matters; competitor activities; changes in and adoption of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates; potential product recalls and other risks and uncertainties 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. 31, 2005 and its other SEC filings. Actual results may differ materially from anticipated results. More information about the Company and its products can be found at its website www.AmericanMedicalSystems.com and in the Company's Annual Report on Form 10-K for 2005 and its other SEC filings.
American Medical Systems Holdings, Inc.
Statements of Operations
(In thousands, except per share data)
Three Months Ended
----------------------------
April 1, 2006 April 2, 2005
-------------- -------------
Net sales $73,624 $62,145
Cost of sales 11,730 11,020
-------------- -------------
Gross profit 61,894 51,125
Operating expenses
Marketing and selling 27,814 21,656
Research and development 7,782 4,638
General and administrative 6,494 5,789
Amortization of intangibles 1,841 1,790
-------------- -------------
Total operating expenses 43,931 33,873
Operating income 17,963 17,252
Other income (expense)
Royalty income 453 478
Interest income 322 274
Interest expense (96) (55)
Other income (expense) (146) (463)
-------------- -------------
Total other income (expense) 533 234
Income before income taxes 18,496 17,486
Provision for income taxes 7,024 6,243
-------------- -------------
Net income $11,472 $11,243
============== =============
Net income per share
Basic $0.16 $0.17
Diluted $0.16 $0.16
Weighted average common shares used in
calculation
Basic 69,679 67,898
Diluted 72,040 71,250
American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)
April 1, 2006 December 31, 2005
------------- -----------------
Assets
Current assets
Cash and short-term investments $42,394 $46,390
Accounts receivable, net 52,108 51,058
Inventories 17,065 18,191
Deferred taxes and other current
assets 6,902 7,269
------------- -----------------
Total current assets 118,469 122,908
Property, plant and equipment, net 23,655 21,371
Goodwill and intangibles, net 208,598 210,278
Deferred taxes and other assets 4,767 4,769
------------- -----------------
Total assets $355,489 $359,326
============= =================
Liabilities and stockholders' equity
Current liabilities
Accounts payable $6,921 $3,688
Accrued liabilities and taxes 25,200 49,687
------------- -----------------
Total current liabilities 32,121 53,375
Other long term liabilities 3,072 3,072
------------- -----------------
Total liabilities 35,193 56,447
Stockholders' equity 320,296 302,879
------------- -----------------
Total liabilities and stockholders'
equity $355,489 $359,326
============= =================
American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(In thousands)
Three Months Ended
----------------------------
April 1, 2006 April 2, 2005
-------------- -------------
Cash flows from operating activities
Net income $11,472 $11,243
Adjustments to reconcile net income to
net cash provided
by operating activities:
Depreciation 823 1,515
Loss on asset disposals 322 25
Amortization of intangibles,
including deferred financing costs 1,841 1,790
Stock based compensation 2,699 -
Changes in operating assets and
liabilities 3,733 3,984
-------------- -------------
Net cash provided by operating
activities 20,890 18,557
Cash flows from investing activities
Purchase of property, plant and
equipment (3,419) (1,421)
Purchase of business, net of cash
acquired (23,986) (1,450)
Purchase of investments in technology - (750)
Purchase of short-term investments (100) (2,600)
Sale of short-term investments 14 5,728
-------------- -------------
Net cash used in investing activities (27,491) (493)
Cash flows from financing activities
Issuance of common stock and exercised
stock options 2,285 3,822
Excess tax benefit from exercise of
stock options 279 -
-------------- -------------
Net cash used in financing activities 2,564 3,822
Effect of exchange rates (47) 558
-------------- -------------
Net increase (decrease) in cash and cash
equivalents ($4,084) $22,444
============== =============
Cash and cash equivalents at beginning of
period $30,885 $35,689
-------------- -------------
Cash and cash equivalents at end of
period $26,801 $58,133
============== =============
American Medical Systems Holdings, Inc.
Selected Sales Information
(In thousands)
Three Months Ended
----------------------------
April 1, 2006 April 2, 2005
-------------- -------------
Sales
Product line
Men's health 44,658 40,589
Women's health 28,966 21,556
-------------- -------------
Total $73,624 $62,145
============== =============
Geography
United States $56,999 $48,333
International 16,625 13,812
-------------- -------------
Total $73,624 $62,145
============== =============
Percent of total sales
Product line
Men's health 61% 65%
Women's health 39% 35%
-------------- -------------
Total 100% 100%
============== =============
Geography
United States 77% 78%
International 23% 22%
-------------- -------------
Total 100% 100%
============== =============
American Medical Systems Holdings, Inc.
SFAS 123(R) Stock Option Expense Impact to the Statement of Operations
for Consistent Presentation
(In thousands, except per share data)
As Reported SFAS 123(R) As Adjusted
Quarter Stock Quarter Quarter
Ended Option Ended Ended
April 1, Expense April 1, April 2,
2006 Impact 2006 2005
----------- ------------ ----------- --------
Net sales $73,624 - $73,624 $62,145
Cost of sales 11,730 45 11,685 11,020
----------- ------------ ----------- --------
Gross profit 61,894 (45) 61,939 51,125
Operating expenses
Marketing and selling 27,814 874 26,940 21,656
Research and
development 7,782 500 7,282 4,638
General and
administrative 6,494 1,178 5,316 5,789
Amortization of
intangibles 1,841 - 1,841 1,790
----------- ------------ ----------- --------
Total operating
expenses 43,931 2,552 41,379 33,873
Operating income 17,963 (2,597) 20,560 17,252
Other income (expense)
Royalty income 453 - 453 478
Interest income 322 - 322 274
Interest expense (96) - (96) (55)
Other income (expense) (146) - (146) (463)
----------- ------------ ----------- --------
Total other income
(expense) 533 - 533 234
Income before income
taxes 18,496 (2,597) 21,093 17,486
Provision for income
taxes 7,024 (662) 7,686 6,243
----------- ------------ ----------- --------
Net income $11,472 ($1,935) $13,407 $11,243
=========== ============ =========== ========
Net income per share
Basic $0.16 $0.19 $0.17
Diluted $0.16 $0.19 $0.16
Weighted average common
shares used in
calculation
Basic 69,679 69,679 67,898
Diluted 72,040 72,040 71,250
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