American Medical Systems Reports Record Sales and Income for Fourth Quarter and Full Year.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Feb. 12, 2004 Company Expects Continued Strong Growth in 2004 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 in the fourth quarter of 2003 of $47.2 million, a 24.6 percent increase over sales of $37.8 million in the comparable quarter of 2002 (21.3 percent before gain from foreign currency changes). Net income in the quarter was $10.3 million, or $0.30 per share, compared to $8.3 million, or $0.24 per share in the comparable quarter of 2002. Net income in 2002 benefited from a reduction in the Company's 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. allowance which increased 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 $2.9 million and increased net income by $1.8 million or $0.05 per share. Net income in 2003 benefited from a further reduction in the Company's warranty allowance which increased operating income by $3.1 million and increased net income by $2.0 million or $0.06 per share. Without these warranty adjustments, net income for the quarter would have been $8.4 million, or $0.24 per share, compared to $6.5 million, or $0.19 per share in 2002. The reduction in the warranty allowance resulted from lower expected warranty claims. The changes in this allowance will be more fully discussed 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. to be filed on or before March 19, 2004. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the full year 2003 were $168.3 million, a 19 percent increase over sales of $141.6 million in 2002 (16 percent before foreign currency changes). Net income for the full year 2003 was $29.1 million, or $0.85 per share, compared to $24.9 million, or $0.73 per share, in 2002. Net income for the full years 2002 and 2003 benefited from the above-referenced warranty allowance reductions; full year 2002 also benefited from an after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain of $0.4 million from reversing an accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. pension liability in connection with the 2002 pension fund termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. . Without these adjustments, operating income for the full year 2003 would have been $38.5 million, and net income would have been $27.1 million, or $0.79 per share, compared to 2002 operating income of $35.2 million and net income of $22.6 million, or $0.66 per share. A summary of the effect of the warranty and pension adjustments for the fourth quarter and full year is attached. 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 fourth-quarter and full year performance. 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 again leading the way and growing 80 percent for the quarter and 67 percent for the full year; 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 revenues growing 7 percent in the quarter and 4 percent for the full year; and men's bladder bladder /blad·der/ (blad´er) 1. a membranous sac, such as one serving as receptacle for a secretion. 2. urinary bladder. control revenues growing 14 percent in the quarter and 13 percent for the full year. 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 increase operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: above 25 percent in the fourth quarter." The Company also announced it had completed its previously announced move of the CryoGen cry·o·gen n. A liquid, such as liquid nitrogen, that boils at a temperature below about 110 Kelvin (-160°C) and is used to obtain very low temperatures; a refrigerant. operations into its Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces facility, at a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. cost in the quarter of $0.7 million dollars, and it is no longer reporting operating or net losses for CryoGen separately. Outlook Looking forward, Mr. Kohrs said the Company expects 2004 full year sales to increase 16 to 19 percent over 2003 sales, with growth in all major product groups, and earnings per share of $0.94 to $0.98. In the first quarter of 2004, the Company expects total revenues to be in the range of $46 to $48 million dollars, and earnings per share of $0.22 to $0.24. Earnings Call Information American Medical Systems will host a conference call today at 5:00 p.m. eastern time to discuss its fourth quarter and fiscal year 2003 results. A live web cast of the call is available through the Company's corporate website at www.AmericanMedicalSystems.com; the replay will be available beginning two hours after 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 world leader in medical devices and procedures to treat 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), 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. 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. or surgery to treat 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. disease), menorrhagia menorrhagia /men·or·rha·gia/ (men?ah-ra´jah) hypermenorrhea. men·or·rha·gia n. See hypermenorrhea. , and other pelvic floor The pelvic floor or pelvic diaphragm is composed of muscle fibers of the levator ani, the coccygeus, and associated connective tissue which span the area underneath the pelvis. defects. 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 over 100,000 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 sales, warranty claims, and financial results are forward-looking statements subject to risks and uncertainties including the timing and success of new product introductions, continued physician 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 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 for the year ended December December: see month. 28, 2002, and its other, more recent, filings. Actual results may differ materially from anticipated results.
Statements Of Operations
(In thousands, except per share data)
Three months Twelve months
through December through December
----------------- -------------------
2002 2003 2002 2003
-------- -------- --------- ---------
Net sales $37,832 $47,153 $141,648 $168,283
Operating expenses
Cost of sales
Recurring 7033 9,034 27,518 30,468
Change in warranty allowance (2,913) (3,115) (2,913) (3,115)
-------- -------- --------- ---------
Total cost of sales 4,120 5,919 24,605 27,353
Marketing and sales 12,957 16,298 50,152 63,324
Research and development 3,131 3,911 11,858 14,924
General and administrative 3,372 4,857 13,186 16,882
Amortization of intangibles 958 906 3,775 4,160
-------- -------- --------- ---------
Total operating expenses 24,538 31,891 103,576 126,643
Operating income 13,294 15,262 38,072 41,640
Other income (expense)
Royalty income 750 622 3,032 2,797
Other income 181 570 1,140 1,004
Interest expense, net (776) (42) (1,628) (1,352)
-------- -------- --------- ---------
Total other income 155 1,150 2,544 2,449
Income before income taxes 13,449 16,412 40,616 44,089
Provision for income taxes 5,118 6,093 15,730 15,039
-------- -------- --------- ---------
Net income $8,331 $10,319 $24,886 $29,050
======== ======== ========= =========
Net income per share
Basic $0.26 $0.31 $0.77 $0.88
Diluted $0.24 $0.30 $0.73 $0.85
Weighted average shares
Basic 32,466 33,079 32,232 32,854
Diluted 34,054 34,626 34,176 34,313
Consolidated Balance Sheets
(In thousands)
December 28, January 3,
2002 2004
------------ -----------
Assets
Current assets
Cash and short-term investments $79,429 $58,953
Accounts receivable, net 27,208 33,458
Inventories 13,475 18,402
Deferred taxes and other current assets 5,697 8,533
------------ -----------
Total current assets 125,809 119,346
Property, plant and equipment, net 21,328 25,489
Goodwill and intangibles, net 96,298 118,279
Deferred taxes and other assets 8,210 16,264
------------ -----------
Total assets $251,645 $279,378
============ ===========
Liabilities and stockholders' equity
Current liabilities
Accounts payable $3,000 $4,621
Accrued liabilities and taxes 19,523 18,097
Current portion of notes payable 6,000 7,159
------------ -----------
Total current liabilities 28,523 29,877
Long-term notes payable 18,000 9,205
Other long-term liability 860 0
Stockholder's equity 204,262 240,296
------------ -----------
Total liabilities and stockholders' equity $251,645 $279,378
============ ===========
Condensed Statements Of Cash Flows
(In thousands)
Twelve months through
------------------------
December 28, January 3,
2002 2004
------------ -----------
Cash flows from operating activities
Net income $24,886 $29,050
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 3,971 5,382
Amortization of intangibles, including
deferred financing costs 4,195 4,391
Noncash deferred compensation 176 135
Income tax benefit related to stock option
plans 1,043 1,670
Noncash stock-based compensation 46 35
Change in net deferred taxes 3,652 3,761
Changes in operating assets and liabilities (9,131) (11,261)
------------ -----------
Net cash provided by operating activities 28,838 33,163
Cash flows from investing activities
Purchase of property, plant and equipment (1,695) (5,121)
Purchase of businesses, net of cash acquired 0 (43,803)
Purchase of investments in technology (1,000) 0
Purchase of other intangibles (1,010) 0
Sales of investments, net of purchases 27,796 0
------------ -----------
Net cash provided by (used in) investing
activities 24,091 (48,924)
Cash flows from financing activities
Issuance of common stock 2,351 2,639
Payments on long-term debt (4,909) (8,228)
------------ -----------
Net cash used in financing activities (2,558) (5,589)
Effect of exchange rates 303 874
------------ -----------
Net increase (decrease) in cash and cash
equivalents $50,674 ($20,476)
============ ===========
Selected Sales Information
(In thousands)
Three months Twelve months
through December through December
----------------- -------------------
2002 2003 2002 2003
-------- -------- --------- ---------
Sales
Product line
Men's health
Erectile restoration $18,264 $19,509 $69,554 $72,385
Bladder control 9,366 10,694 35,316 39,758
Prostate treatment 1,482 1,224 6,063 4,923
-------- -------- --------- ---------
Total 29,112 31,427 110,933 117,066
Women's health 8,720 15,726 30,715 51,217
-------- -------- --------- ---------
Total $37,832 $47,153 $141,648 $168,283
======== ======== ========= =========
Geography
United States $30,320 $37,476 $116,523 $136,765
Outside United States
Before currency 7,512 8,405 25,125 27,593
Currency impact 0 1,272 0 3,925
-------- -------- --------- ---------
Total 7,512 9,677 25,125 31,518
-------- -------- --------- ---------
Total $37,832 $47,153 $141,648 $168,283
======== ======== ========= =========
Adjustments to Operating Income, Net Income,
And Earnings Per Share for Consistent
Presentation from 2002 to 2003
(In thousands, except per share data)
Three months Twelve months
through December through December
----------------- -----------------
2002 2003 2002 2003
-------- -------- -------- --------
Adjustments in operating income
Reported operating income $13,294 $15,262 $38,072 $41,640
Adjust for change in warranty
allowance (2,913) (3,115) (2,913) (3,115)
-------- -------- -------- --------
Adjusted operating income $10,381 $12,147 $35,159 $38,525
======== ======== ======== ========
Adjustments in net income
Reported net income 8,331 10,319 24,886 29,050
Decrease in net income
Change in warranty allowance
Decrease in operating income (2,913) (3,115) (2,913) (3,115)
Tax impact 1,109 1,162 1,109 1,162
-------- -------- -------- --------
Decrease in net income (1,804) (1,953) (1,804) (1,953)
Adjust for 2002 pension fund
termination
Pension accrual reversal 0 0 (716) 0
Tax impact 0 0 272 0
-------- -------- -------- --------
Decrease in net income 0 0 (444) 0
-------- -------- -------- --------
Total decrease in net income (1,804) (1,953) (2,248) (1,953)
-------- -------- -------- --------
Adjusted net income $6,527 $8,366 $22,638 $27,097
======== ======== ======== ========
Net income per share
Reported
Basic $0.26 $0.31 $0.77 $0.88
Diluted $0.24 $0.30 $0.73 $0.85
Adjusted
Basic $0.20 $0.25 $0.70 $0.82
Diluted $0.19 $0.24 $0.66 $0.79
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