American Medical Systems Reports Record Sales and Income for Fourth Quarter and Full Year.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Feb. 5, 2003 Full Year Net Income More than Doubles With 20 Percent Sales Growth 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 2002 of $37.8 million, a 14 percent increase over sales of $33.3 million in the comparable quarter of 2001 (13 percent before gain from foreign currency changes). Net income in the quarter was $8.3 million, or $0.24 per share, compared to $1.6 million, or $0.05 per share in the comparable quarter of 2001. 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. Without this adjustment, net income for the quarter would have been $6.5 million, or $0.19 per share, and operating income would have been 27.4 percent of sales compared to 23.6 percent of sales in 2001. The reduction in the warranty allowance is the result of reduced claims due to significant improvements in the quality and durability du·ra·ble adj. 1. Capable of withstanding wear and tear or decay: a durable fabric. 2. of the Company's products over the last several years. 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 28, 2003. Net income in 2001 was reduced by the $2.1 million 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. loss on the Company's investment in Collagenesis, and $1.1 million after-tax cost of intangible amortization which, with the adoption of FAS-142, did not continue into 2002. A summary of these adjustments is attached. 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 2002 were $141.6 million, a 20 percent increase over sales of $117.9 million in 2001. (The twelve-month sales benefited 0.5 percent from foreign currency changes.) Net income for the full year 2002 was $24.9 million, or $0.73 per share, compared to $6.5 million, or $0.20 per share, in 2001. Net income for the full year 2002 benefited from the above-referenced warranty allowance reduction and an after-tax 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. Without these adjustments, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the full year would have been $35.2 million, or 24.8 percent of sales, and net income would have been $22.6 million, or $0.66 per share. Net income for 2001 was reduced by the $2.1 million after-tax loss on the Company's investment in Collagenesis, the $4.2 million after-tax cost of intangible amortization which, with the adoption of FAS-142, did not continue into 2002, and benefited from a $.2 million settlement with a supplier. 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 performance and the continued improvement in our operating margin, now our ninth consecutive quarter of margin expansion--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 for the quarter again leading the way and growing 45 percent for the quarter and 48 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 grew 10 percent in the quarter and 17 percent for the full year, and 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 revenues grew 9 percent in the quarter and 15 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 again improve operating margins to record levels in both the fourth quarter and full year." Outlook Looking forward, Mr. Kohrs said AMS AMS - Andrew Message System expects full year sales to increase 17 to 22 percent over 2002 sales, including the increase from the sales of the recently-acquired HerOption products for the treatment of excessive menstrual menstrual /men·stru·al/ (men´stroo-al) pertaining to the menses or to menstruation. men·stru·al or men·stru·ous adj. Of or relating to menstruation. bleeding bleeding /bleed·ing/ (-ing) 1. the escape of blood, as from an injured vessel. 2. phlebotomy. dysfunctional uterine bleeding . In the first quarter of 2003, AMS expects total revenues to be in the range of $38 to $40 million dollars. The full year operating margin for 2003 will also show improvement over the full year 2002 operation margin. Operating margin in the first quarter of 2003 is expected to be 19 to 21 percent, slightly lower than the first quarter of 2002, due to significant start-up Start-up The earliest stage of a new business venture. expenses of the previously announced CyroGen acquisition. 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 2002 results. A live web cast of the call is available from the Company's corporate website at www.AmericanMedicalSystems.com and via 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 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 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 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 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 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, warranty claims, and financial results are forward-looking statements subject to risks and uncertainties including the timing and success of HerOption and other 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. 29, 2001, 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
----------------- -------------------
2001 2002 2001 2002
-------- -------- --------- ---------
Net sales $33,315 $37,832 $117,938 $141,648
Operating expenses
Cost of sales
Recurring 6,518 7,033 23,140 27,518
Change in warranty allowance 0 (2,913) 0 (2,913)
-------- -------- --------- ---------
Total cost of sales 6,518 4,120 23,140 24,605
Marketing and sales 11,579 12,957 44,931 50,152
Research and development 2,772 3,131 11,899 11,858
General and administrative 3,616 3,372 12,047 13,186
Transition and reorganization 0 0 1,000 0
Amortization of intangibles 2,457 958 9,374 3,775
-------- -------- --------- ---------
Total operating expenses 26,942 24,538 102,391 103,576
Operating income 6,373 13,294 15,547 38,072
Other income (expense)
Royalty income 759 750 2,926 3,032
Other income (expense) (3,496) 181 (3,139) 1,140
Interest expense, net (520) (776) (2,932) (1,628)
-------- -------- --------- ---------
Total other income (expense) (3,257) 155 (3,145) 2,544
Income before income taxes 3,116 13,449 12,402 40,616
Provision for income taxes
Income tax expense 1,531 5,118 5,872 15,730
-------- -------- --------- ---------
Net income $1,585 $8,331 $6,530 $24,886
======== ======== ========= =========
Net income per share
Basic $0.05 $0.26 $0.22 $0.77
Diluted $0.05 $0.24 $0.20 $0.73
Weighted average shares
used in calculation
Basic 31,899 32,466 29,792 32,232
Diluted 34,051 34,054 32,068 34,176
Consolidated Balance Sheet
(In thousands)
Dec. 29, 2001 Dec. 28, 2002
---------------------------
Assets
Current assets
Cash and short-term investments $37,768 $79,429
Accounts receivable, net 25,306 27,208
Inventories 13,991 13,475
Deferred taxes and other current assets 9,023 5,697
------------- -------------
Total current assets 86,088 125,809
Property, plant and equipment, net 23,604 21,328
Goodwill and intangibles, net 99,483 96,298
Long-term investments 18,783 0
Deferred taxes and other assets 7,193 8,210
------------- -------------
Total assets $235,151 $251,645
============= =============
Liabilities and stockholders' equity
Current liabilities
Accounts payable $2,678 $3,000
Accrued liabilities and taxes 27,593 19,523
Current portion of notes payable 4,909 6,000
------------- -------------
Total current liabilities 35,180 28,523
Long-term notes payable 24,000 18,000
Other long-term liability 1,884 860
Stockholder's equity 174,087 205,262
------------- -------------
Total liabilities and stockholders' equity $235,151 $252,645
============= =============
Condensed Statements Of Cash Flows
(In thousands)
Twelve months through
----------------------------
Dec. 29, 2001 Dec. 28, 2002
-------------- -------------
Cash flows from operating activities
Net income $6,530 $24,886
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation 3,867 3,971
Amortization of intangibles, including
deferred financing costs 9,644 4,195
Noncash deferred compensation 446 176
Noncash transition and reorganization 747 0
Noncash impairment of investment in
technology 3,000 0
Income tax benefit related to stock
option plans 240 1,043
Other noncash expenses 45 26
Change in net deferred taxes 3,876 3,955
Changes in operating assets and
liabilities (3,137) (9,198)
------------ --------------
Net cash provided by operating activities 25,258 29,054
Cash flows from investing activities
Purchase of property, plant and equipment (2,698) (1,695)
Purchase of businesses, net of cash
acquired (11,499) 0
Purchase of investments in technology (4,500) (1,010)
Purchase of other intangibles (1,500) (1,000)
Purchase of investments, net of sales (27,796) 27,796
------------- --------------
Net cash (used in) provided by investing
activities (47,993) 24,091
Cash flows from financing activities
Issuance of common stock 55,059 2,371
Payments on long-term debt (15,583) (4,909)
------------- --------------
Net cash provided by (used in) financing
activities 39,476 (2,538)
Effect of exchange rates (151) 67
------------- --------------
Net increase in cash and cash equivalents $16,590 $50,674
============= ==============
Selected Sales Information
(In thousands)
Three months Twelve months
through December through December
----------------- -------------------
2001 2002 2001 2002
-------- -------- --------- ---------
Sales
Product line
Erectile restoration $16,664 $18,260 $59,236 $69,553
Male urinary control 8,774 9,540 31,369 35,980
Women's health 5,883 8,550 20,239 30,050
Prostate treatments 1,994 1,482 7,100 6,065
-------- -------- --------- ---------
Total $33,315 $37,832 $117,944 $141,648
======== ======== ========= =========
Geography
United States $26,910 $30,321 $97,075 $116,524
Outside United States 6,405 7,511 20,869 25,124
-------- -------- --------- ---------
Total $33,315 $37,832 $117,944 $141,648
======== ======== ========= =========
Adjustments to Operating Income, Net Income,
And Earnings Per Share for Consistent
Presentation from 2001 to 2002
(In thousands, except per share data)
Three months Twelve months
through December through December
---------------- -----------------
2001 2002 2001 2002
------- -------- -------- --------
Adjustments in operating income
Reported operating income $6,373 $13,294 $15,547 $38,072
Increase (decrease) in operating
income
Change in warranty allowance 0 (2,913) 0 (2,913)
Adoption of FAS No. 142 1,503 0 5,558 0
------- -------- -------- --------
Total increase (decrease) 1,503 (2,913) 5,558 (2,913)
------- -------- -------- --------
Adjusted operating income $7,876 $10,381 $21,105 $35,159
======= ======== ======== ========
Adjustments in net income
Reported net income 1,585 8,331 6,530 24,886
Increase (decrease) in net income
Increase (decrease) in operating
income
Warranty allowance and FAS 142 $1,503 $(2,913) $5,558 $(2,913)
Tax impact (335) 1,107 (1,340) 1,107
------- -------- -------- --------
Total increase (decrease) 1,168 (1,806) 4,218 (1,806)
Loss on Collagenesis investment
Increase in other income 3,405 0 3,405 0
Tax impact (1,294) 0 (1,294) 0
------- -------- -------- --------
Increase in net income 2,111 0 2,111 0
Decrease in other income
Settlement with supplier 0 0 (375) 0
Pension accrual reversal 0 0 0 (716)
Tax impact 0 0 143 272
------- -------- -------- --------
Decrease in net income 0 0 (232) (444)
------- -------- -------- --------
Total increase (decrease) in net
income 3,279 (1,806) 6,097 (2,250)
------- -------- -------- --------
Adjusted net income $4,864 $6,525 $12,627 $22,636
======= ======== ======== ========
Net income per share
Reported
Basic $0.05 $0.26 $0.22 $0.77
Diluted $0.05 $0.24 $0.20 $0.73
Adjusted
Basic $0.15 $0.20 $0.42 $0.70
Diluted $0.14 $0.19 $0.39 $0.66
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