American Medical Systems Reports Record $209 Million Sales For 2004; Women's Health Tops 40% Growth in 2004; TherMatrx Acquisition Beats Guidance.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 $60.0 million for the fourth quarter of 2004, a 27.3 percent increase over sales of $47.2 million in the comparable quarter of 2003 (with 1.7 percentage points of the increase coming from currency exchange rate changes). The Company reported net income of $6.7 million, or $0.19 per share, including the $4.5 million effect of an investment write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. (with no associated tax benefit) related to InjecTx, a company focused on the development of ethanol ethanol (ĕth`ənōl') or ethyl alcohol, CH3CH2OH, a colorless liquid with characteristic odor and taste; commonly called grain alcohol or simply alcohol. ablation ablation /ab·la·tion/ (-shun) 1. separation or detachment; extirpation; eradication. 2. removal or destruction, especially by cutting. ab·la·tion n. systems for 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. treatment. Fourth quarter net earnings also included the benefit of adjusting the Company's 2004 tax rate down by one percentage point to 35.5 percent. The prior year's fourth quarter earnings were reported at $10.3 million, or $0.30 per share, including a $2.0 million non-recurring warranty An assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party. Warranties are used in a variety of commercial situations. In many instances a business may voluntarily make a warranty. reserve benefit net of tax. All per share amounts reported are prior to the effect of the proposed 2-for-1 stock split announced by the Company on January January: see month. 10, 2005 and subject to shareholder approval of an increase in the number of authorized shares Authorized shares Number of shares authorized for issuance by a firm's corporate charter. of common stock from 75 million to 200 million at a special meeting to be held on March 4, 2005. Net income for the quarter, excluding the impact of the investment write-off and the effect of the tax rate change on the prior three quarters' earnings, was a record $10.8 million, or $0.30 per share. Net income for fourth quarter 2003, adjusted for the warranty reserve benefit, was $8.4 million, or $0.24 per share. Net income growth, excluding the impact of these non-recurring items for both 2004 and 2003, was 29.5 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. Sales for the full year 2004 were $208.8 million, up 24.1 percent from sales of $168.3 million during 2003 (with 2.1 percentage points of the increase coming from currency exchange rate changes). The year's revenue includes $10.5 million from the Company's first two quarters' sales from the acquisition of TherMatrx, Inc. The net loss as reported for the year 2004 was $3.1 million, or $0.09 per share. This reported net loss includes the impacts of the $4.5 million InjecTx write-off and the third quarter impact of a $35.0 million in-process research and development (IPR&D) charge related to the TherMatrx acquisition. Reported net income for 2003 was $29.1 million, or $0.85 per share, including the warranty reserve benefit previously described and a $1.1 million benefit from prior years' tax credits. Excluding these non-recurring items in both years, net income for 2004 was $36.4 million, or $1.03 per share, up 39.9 percent from $26.0 million, or $0.76 per share, in 2003. A reconciliation of GAAP earnings to these adjusted year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. results is included in the attached financial tables. Martin J. Emerson, President and Chief Executive Officer, commented, "The magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of our 2004 growth across men's and 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. evidences our continued commitment to both markets. Highlights of the year certainly include our positive growth in 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, our market expansion in 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. , the successful integration of TherMatrx, our steady share gains in women's health and continued growth in both profitability and cash flow. With over 132,000 patients served by our products and therapies in 2004, the global AMS AMS - Andrew Message System organization has shown its unique ability to deliver on the promise of our technologies. We look forward to 2005 with great anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, as we continue our focus on innovative pelvic pelvic /pel·vic/ (pel´vik) pertaining to the pelvis. pel·vic adj. Of, relating to, or near the pelvis. health solutions to enhance the quality of life for even more patients around the world." Outlook Looking forward to 2005, Mr. Emerson said the Company expects 2005 revenue growth to be in the range of 24 percent to 27 percent, or revenue of $259 to $265 million. Earnings per share on these revenues are anticipated in the range of $1.27 to $1.32, assuming an estimated 35.5 percent tax rate but excluding any impact from the Company's third quarter implementation of stock option expensing as prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). in FAS 123(R). In the first quarter of 2005, the Company expects total revenues to be in the range of $60 to $62 million and earnings per share of $0.30 to $0.32. All per share amounts projected are prior to the effect of the proposed 2-for-1 stock split announced by the Company and as described previously in this press release. Earnings Call Information American Medical Systems will host a conference call today at 5:00 p.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) to discuss its fourth quarter and fiscal year 2004 results. Those without internet access See how to access the Internet. may join the call from within the U.S. by dialing 800-572-9815; outside the U.S., dial 706-634-6046. A live webcast of the call will be available through the Company's corporate website at www.AmericanMedicalSystems.com and available for replay two 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 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. , 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 treat over 132,000 patients in 54 countries during the last year. 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 product availability, revenues and earnings are forward-looking statements subject to risks and uncertainties including 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; competitor activities; changes in and adoption of reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. rates; and potential product recalls. These and other risks 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 January 3, 2004, 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 2003 and its other SEC filings.
American Medical Systems Holdings, Inc.
Statements of Operations
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
January 1, January 3, January 1, January 3,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $60,040 $47,153 $208,772 $168,283
Cost of sales 10,846 5,919 38,331 27,353
------------ ------------ ------------ ------------
Gross profit 49,194 41,234 170,441 140,930
Operating expenses
Marketing and
selling 20,818 16,081 72,910 63,107
Research and
development 4,320 3,911 15,786 14,924
In process
research and
development - - 35,000 -
General and
administrative 6,411 5,074 21,617 17,099
Amortization of
intangibles 1,739 906 5,708 4,160
------------ ------------ ------------ ------------
Total operating
expenses 33,288 25,972 151,021 99,290
Operating income
(loss) 15,906 15,262 19,420 41,640
Other income
(expense)
Royalty income 531 622 2,079 2,797
Interest income (24) 127 517 476
Interest expense 23 (169) (783) (1,828)
Investment
impairment (4,500) - (4,500) -
Other income
(expense) 354 570 170 1,004
------------ ------------ ------------ ------------
Total other
income (expense) (3,616) 1,150 (2,517) 2,449
Income (loss)
before income
taxes 12,290 16,412 16,903 44,089
Provision for
income taxes 5,564 6,093 20,023 15,039
------------ ------------ ------------ ------------
Net income (loss) $6,726 $10,319 ($3,120) $29,050
============ ============ ============ ============
Net income (loss)
per share
Basic $0.20 $0.31 ($0.09) $0.88
Diluted $0.19 $0.30 ($0.09) $0.85
Weighted average
common shares
used in
calculation
Basic 33,722 33,079 33,503 32,854
Diluted 35,536 34,626 33,503 34,313
American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)
January 1, 2005 January 3, 2004
--------------- ---------------
Assets
Current assets
Cash and short-term investments $51,169 $58,953
Accounts receivable, net 46,984 33,507
Inventories 21,719 18,402
Deferred taxes and other current
assets 7,955 8,533
--------------- ---------------
Total current assets 127,827 119,395
Property, plant and equipment, net 22,065 25,489
Goodwill and intangibles, net 147,157 116,455
Deferred taxes and other assets 3,501 17,988
--------------- ---------------
Total assets $300,550 $279,327
=============== ===============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $4,237 $4,621
Accrued liabilities and taxes 47,141 17,996
Current portion of notes payable - 7,159
--------------- ---------------
Total current liabilities 51,378 29,776
Long-term notes payable - 9,205
Stockholders' equity 249,172 240,346
--------------- ---------------
Total liabilities and stockholders'
equity $300,550 $279,327
=============== ===============
American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(In thousands)
Twelve Months Ended
-------------------------------
January 1, 2005 January 3, 2004
--------------- ---------------
Cash flows from operating activities
Net income ($3,120) $29,050
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 7,052 6,487
Loss on asset disposals 243 224
Amortization of intangibles,
including deferred financing costs 6,158 4,430
Non-cash in-process research and
development charge 35,000 -
Non-cash asset impairment 4,500 -
Non-cash deferred compensation 77 171
Income tax benefit related to stock
option plans 2,047 1,670
Change in net deferred taxes 2,362 3,117
Changes in operating assets and
liabilities (5,293) (11,013)
--------------- ---------------
Net cash provided by operating
activities 49,026 34,136
Cash flows from investing activities
Purchase of property, plant and
equipment (3,686) (6,450)
Purchase of business, net of cash
acquired (39,418) (44,135)
Purchase of investments in technology (2,500) -
Purchase of short-term investments (19,633) -
Sale of short-term investments 4,154 -
--------------- ---------------
Net cash used in investing activities (61,083) (50,585)
Cash flows from financing activities
Issuance of common stock 6,066 2,689
Payments on long-term debt (16,364) (7,636)
--------------- ---------------
Net cash used in financing activities (10,298) (4,947)
Effect of exchange rates (909) 920
--------------- ---------------
Net decrease in cash and cash
equivalents ($23,264) ($20,476)
=============== ===============
American Medical Systems Holdings, Inc.
Selected Sales Information
(In thousands)
Three Months Ended Twelve Months Ended
------------------------- -------------------------
January 1, January 3, January 1, January 3,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Sales
Product line
Men's health
Erectile
restoration $20,066 $19,509 $74,070 $72,385
Continence 12,667 10,694 48,242 39,758
Prostate
treatment 6,928 1,224 14,697 4,923
------------ ------------ ------------ ------------
Total men's
health 39,661 31,427 137,009 117,066
Women's health 20,379 15,726 71,763 51,217
------------ ------------ ------------ ------------
Total $60,040 $47,153 $208,772 $168,283
============ ============ ============ ============
Geography
United States $47,628 $37,476 $165,140 $136,765
Outside United
States 12,412 9,677 43,632 31,518
------------ ------------ ------------ ------------
Total $60,040 $47,153 $208,772 $168,283
============ ============ ============ ============
Percent of total
sales
Product line
Men's health
Erectile
restoration 33% 41% 35% 43%
Continence 21% 23% 23% 24%
Prostate
treatment 12% 3% 7% 3%
------------ ------------ ------------ ------------
Total men's
health 66% 67% 66% 70%
Women's health 34% 33% 34% 30%
------------ ------------ ------------ ------------
Total 100% 100% 100% 100%
============ ============ ============ ============
Geography
United States 79% 79% 79% 81%
Outside United
States 21% 21% 21% 19%
------------ ------------ ------------ ------------
Total 100% 100% 100% 100%
============ ============ ============ ============
American Medical Systems Holdings, Inc.
Adjustments to Gross Margin, Operating Income, Net Income and Earnings
per Share for Consistent Presentation
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
------------------------ -------------------------
January 1, January 3, January 1, January 3,
2005 2004 2005 2004
----------- ------------ ------------ ------------
Reported (GAAP)
gross margin $49,194 $41,234 $170,441 $140,930
Adjust for warranty
allowance - (3,115) - (3,115)
----------- ------------ ------------ ------------
Adjusted gross
margin $49,194 $38,119 $170,441 $137,815
=========== ============ ============ ============
Adjusted gross
margin % 81.9% 80.8% 81.6% 81.9%
Reported (GAAP)
operating income
(loss) $15,906 $15,262 $19,420 $41,640
Adjust for warranty
allowance - (3,115) - (3,115)
Adjust for in-
process research
and development
charge - - 35,000 -
----------- ------------ ------------ ------------
Adjusted operating
income $15,906 $12,147 $54,420 $38,525
=========== ============ ============ ============
Reported (GAAP) net
income (loss) $6,726 $10,319 ($3,120) $29,050
Adjust for warranty
allowance, net of
tax - (1,953) - (1,953)
Adjust for in-
process research &
development - - 35,000 -
Adjust for
investment
impairment 4,500 - 4,500 -
Adjust for 2004 tax
rate change to
35.5% (396) -
Adjust for 2003
one-time tax
benefit (1,100)
----------- ------------ ------------ ------------
Adjusted net income $10,830 $8,366 $36,380 $25,997
=========== ============ ============ ============
Adjusted net income
per share
Basic $0.32 $0.25 $1.09 $0.79
Diluted $0.30 $0.24 $1.03 $0.76
Weighted average
common shares used
in calculation
Basic 33,722 33,079 33,503 32,854
Diluted 35,536 34,626 35,207 34,313
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