AngioDynamics Reports Strong Fiscal Third Quarter Results.* 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 Set New Quarterly Record * Strong Free Cash Flow Generation Continues * RITA RITA Cardiology A clinical trial–Randomized Intervention Treatment of Angina–comparing the outcome of PCTA vs CABG in Pts with angina. See Angina, Angioplasty, CABG, Percutaneous transluminal angioplasty. Medical Acquisition Integration on Plan * FY 2007 Guidance Revised; Preliminary FY 2008 Guidance Provided QUEENSBURY, N.Y. -- AngioDynamics, 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 :ANGO ANGO Algemene Nederlandse Gehandicapten Organisatie (Dutch: Equal Opportunities for Persons with Disabilities) ), a leading provider of innovative medical devices used by interventional radiologists and surgeons for the minimally invasive treatment of cancer and peripheral vascular disease Peripheral Vascular Disease Definition Peripheral vascular disease is a narrowing of blood vessels that restricts blood flow. It mostly occurs in the legs, but is sometimes seen in the arms. , today reported strong financial results for the 13 weeks ended March 3, 2007. Results for the quarter include five weeks of contribution from RITA Medical, which was acquired by AngioDynamics on January 29, 2007. Highlights of the fiscal third quarter include: * Achieved record net sales of $26.7 million, up 35.1 percent over the prior year's quarter * Completed the acquisition of RITA Medical Systems * Completed integration of RITA and AngioDynamics sales forces by end of February * Formed two product groups: Interventional and Oncology * On track to achieve $9 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings * Recorded $12.6 million, net of tax, in one-time costs associated with acquisition of RITA Medical * Expanded Vascular Access vascular access Clinical medicine The ability to enter the vascular system; the ease with which the vascular system can be entered for administering therapy or obtaining blood for testing Port Portfolio with Smart Port[TM] CT Introduction * Recorded a net loss on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis of $(0.55) per basic and diluted share * Generated Adjusted Income, which excludes certain acquisition and non-cash expenses, of $0.18 per basic and diluted share. * Generated free cash flow of $3.3 million "We accomplished a great deal during the quarter," said Eamonn Hobbs, President and Chief Executive Officer. "We completed the acquisition of RITA Medical and successfully began integrating RITA's operations into AngioDynamics. The integration plan is on schedule, facilitated by the similar cultures and the highly complementary product lines of the two organizations. The operating synergies and resulting annualized cost savings of approximately $9 million that we envisioned last fall when we announced the acquisition are on schedule. We have completed the transition of both our product line and sales management Sales Management Role and Goal Importance of sales management is critical for any commercial organization. Expanding business in not possible without increasing sales volumes, and effective sales management goal is to organize sales team work in such a manner that ensures a and now have two product groups; Interventional and Oncology. This strategy is enabling us to focus on the significant market opportunities the combined Company is addressing. "During the quarter, most product lines generated strong sales growth, which reflects the effectiveness of our diversified product line strategy," Mr. Hobbs continued. "Leading the way in sales increases were the IGVA, PTA PTA or parent-teacher association: see parent education. and Drainage product lines as well as the contribution from the acquired Oncology product lines. In particular, we generated exceptional growth from our Morpheus([R]) PICC PICC Peripherally-inserted central catheter Critical care An IV catheter inserted in the superior vena cava for long-term infusion of bolus or continuous delivery of therapeutics or TPN–drugs, fluids, nutrients, chemotherapy. Cf Catheter. , Mariner[TM] angiographic and TOTAL ABSCESSION([R]) drainage products. "We experienced slower than expected sales growth from the Venous products, Dialysis products and acquired RITA interventional products. We believe the biggest factor behind this slower growth was the delay in purchase making decisions created by the patent infringement patent infringement n. the manufacture and/or use of an invention or improvement for which someone else owns a patent issued by the government, without obtaining permission of the owner of the patent by contract, license or waiver. trial involving our VenaCure([R]) product line. The trial began on March 12th. Closing arguments were made yesterday and the jury deliberation has begun. We believe we presented a very strong case for the jury to rule favorably for AngioDynamics and expect VenaCure strong sales growth to resume in the fourth quarter. "Sotradecol([R]) sales continue to be lower than we originally expected due to the residual activities surrounding compounding pharmacies for Sodium Tetradecyl Sulfate Sodium tetradecyl sulfate is a vasoprotective. • • [ (STS (Synchronous Transport Signal) The electrical equivalent of the SONET optical signal. In SDH, the European counterpart of SONET, STS is known as STM (Synchronous Transport Module). ). We remain optimistic that the market remains very attractive and are making progress with our effort to educate physicians on the effects of using a non-FDA approved product in their clinical practice. In addition, the selling cycle of our Morpheus bedside insertion kit is proving to be longer than we anticipated. We have strategies in place to build momentum with both Sotradecol and Morpheus bedside insertion kits, and with the trial behind us, we are quite optimistic about our overall fourth quarter and fiscal 2008 growth opportunities," said Mr. Hobbs. Supplemental schedules, including costs associated with the acquisition of RITA, an allocation of stock-based compensation expense in net income, and a reconciliation of net income to adjusted income are provided at the conclusion of this news release. Net sales in the third quarter of fiscal 2007 were $26.7 million, an increase of 35.1 percent compared with net sales of $19.8 million in the third quarter of fiscal 2006. Interventional product sales, which include the Company's Angiographic, Thrombolytic thrombolytic /throm·bo·lyt·ic/ (throm?bo-lit´ik) dissolving or splitting up a thrombus, or an agent that so acts. thrombolytic 1. dissolving or splitting up a thrombus. 2. an agent that dissolves or splits up a thrombus. , Dialysis, IGVA, PTA, Venous and Drainage product lines, totaled $24.5 million while Oncology product sales, which include the RFA RFA right frontoanterior (position of the fetus). Radiofrequency ablation (RFA) A procedure in which radiofrequency waves are used to destroy blood vessels and tissues. Mentioned in: Prenatal Surgery , Embolization embolization /em·bo·li·za·tion/ (em?bo-li-za´shun) 1. the process or condition of becoming an embolus. 2. therapeutic introduction of a substance into a vessel in order to occlude it. and Surgical Resection product lines acquired in the RITA transaction, totaled $2.2 million for the period since the acquisition's closing on January 29, 2007. RITA's Port product line, Hemodialysis Catheter, Venous Catheter, Needles and PICCs are now part of the Company's Interventional group. Gross profit rose 38.1 percent to $15.9 million from $11.5 million in the year-ago quarter. Stock-based compensation included in cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold for these periods was $128,000 and $13,000, respectively. Gross margins were 59.6 percent compared with 58.4 percent in the third quarter of 2006 and 58.5 percent in the second quarter of 2007, driven by strong sales of high-margin products and the one-month contribution from RITA Medical product lines. Excluding amortization expense on the stepped-up basis of inventory acquired in the RITA transaction, gross profit totaled $16.2 million, representing a gross margin of 60.8 percent. The Company recorded an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $10.5 million, which includes in-process R&D expense of $12.1 million associated with the RITA Medical acquisition. Excluding this and other one-time operating costs operating costs npl → gastos mpl operacionales related to the acquisition of RITA Medical, (net of operating losses generated from RITA product lines), operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for the fiscal third quarter was $2.5 million compared with $2.9 million in the third quarter of fiscal 2006. Expense for stock-based compensation impacted 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. by $884,000 and $91,000 in the third quarters of 2007 and 2006, respectively. Other income increased to $1,045,000 in the third quarter of 2007, compared with $224,000 in the prior year period, from increased interest income on the Company's cash and investments. The Company recorded a net loss of $10.4 million, or $0.55 per basic and diluted share, which includes the in-process R&D charge noted above of $12.1 million and stock-based compensation expense of roughly $686,000 net of tax. In the prior year period, net income was $1.9 million, or $0.14 per diluted share. The Company generated adjusted income, a non-GAAP measurement which excludes stock-based compensation, amortization from acquired intangibles, and one-time acquisition costs, net of applicable income taxes, of $3.4 million, or $0.18 per diluted share in the third quarter of 2007. In the prior year period, adjusted income was $2.0 million, or $0.15 per diluted share. Free cash flow rose 236 percent to $3.3 million from $1.4 million in the third quarter of fiscal 2006. Cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has totaled $67.0 million compared with $89.8 million at the end of the fourth quarter of fiscal 2006. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying were $18.9 million compared with $13.5 million at June 3, 2006. Net inventory totaled $27.3 million compared with $16.0 million. Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. stood at $17.2 million at the end of the third quarter of fiscal 2007. Fiscal Fourth Quarter Guidance "Looking ahead to the fiscal fourth quarter, we are beginning to benefit from our organization's focus on the Oncology and Interventional product groups, as well as continuing to execute our integration plan," said Mr. Hobbs. "As a result, revenues for the period are expected to be approximately $40 to $43 million. The Interventional product group is expected to generate revenue of approximately $32 to $34 million while revenue from Oncology product group should be approximately $8 to $9 million. Our gross margin for the fiscal fourth quarter will be impacted by the accounting principles requiring RITA inventory to be recorded at the fair value of the inventory at the date of the closing of the acquisition. This revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. , or step-up in value, of the assets assigns a fair value to the inventory versus the historical cost of the inventory. Due to this revaluation of RITA's inventory relative to the historical cost basis, we expect to incur a one time inventory step-up in value charge during the fiscal fourth quarter that will reduce gross profit for the fiscal fourth quarter by approximately $900,000. As a result, gross margin as a percent of sales for the fiscal fourth quarter is expected to be approximately 58.7 percent, versus nearly 61 percent without the charge." The Company has also recently received the preliminary valuation analysis of the RITA Medical acquisition as determined by the Company's independent valuation firm. As a result of this preliminary analysis, amortizable intangible assets have increased by $1.4 million from the original estimate of $41.5 million, and the analysis determined that the intangible assets have a five year shorter useful life than was originally estimated by the independent valuation firm in November 2006. The analysis will result in higher than anticipated amortization expense of approximately $0.01 per share per quarter, beginning in the fourth quarter of fiscal 2007. As a result, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. and adjusted income per share for the fourth quarter is anticipated to be approximately $0.13 and $0.25 per share on a diluted share count of 24.6 million. Fiscal 2008 Guidance "As we begin Fiscal 2008 in June, several positive trends should be taking hold," added Mr. Hobbs. "During the fiscal fourth quarter we will begin selling the Smart Port CT, which virtually doubles our market opportunity with an extremely value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. product, and we'll be introducing an exciting new addition to our PTA product line with the full market release of Profiler. These new additions, plus the expanded sales potential created by our transitioned sales organization, and the end of the market uncertainty created by the patent litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. position us for full year revenue growth of approximately 55 to 60 percent over fiscal 2007. Our goal is to move overall gross margins to approximately 61 to 62 percent. Our current goal is to generate in excess of $30 million in free cash flow during fiscal 2008. All in all, we are quite excited about our potential to generate increasing revenue and earnings in both the fourth quarter and year ahead," concluded Mr. Hobbs. Conference Call Information AngioDynamics management will host a conference call to discuss this announcement today beginning at 4:30 p.m. Eastern time. To participate in the call, please dial (800) 798-2801 from the U.S. or (617) 614-6205 from outside the U.S. Please enter passcode 49311604. A telephone replay of the call will be available from 6:30 p.m. Eastern time today through 11:59 p.m. Eastern time on April 3, 2007 by dialing (888) 286-8010 from the U.S. or (617) 801-6888 from outside the U.S., and entering the passcode 50281930. In addition, individuals can listen to the call on the Internet by visiting the investor relations Investor relations The process by which the corporation communicates with its investors. portion of the Company's Web site at www.angiodynamics.com. A recording of the conference call will be archived there for 12 months. Use of Non-GAAP Measures Management uses non-GAAP measures to establish operational goals, and believes that non-GAAP measures may assist investors in analyzing the underlying trends in the Company's business over time. Investors should consider these non-GAAP measures in addition to, not as a substitute for or as superior to, financial reporting measures prepared in accordance with GAAP. In this news release, the Company has reported non-GAAP measures, adjusted income and free cash flow. Adjusted income excludes certain expenses relating to the acquisition of RITA Medical, Inc. and stock-based compensation expense, but includes assumed taxes on net income using a 38 percent tax rate, where applicable. Free cash flow is defined as net income plus depreciation, amortization, and stock-based compensation, less unfunded capital expenditures. Management uses these measures in its internal analysis and review of operational performance. Management believes that these measures provide investors with useful information in comparing the Company's performance over different periods, particularly when comparing this period to periods in which the Company did not incur any expenses relating to these activities or items. By using these non-GAAP measures, management believes that investors get a better picture of the performance of the Company's underlying business. Management encourages investors to review the Company's net loss prepared in accordance with GAAP to understand the Company's performance taking into account all relevant factors, including those that may only occur from time to time but have a material impact on the Company's financial results. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. The statements made in this document contain certain forward-looking statements that involve a number of risks and uncertainties. Words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," or variations of such words and similar expressions, are intended to identify such forward-looking statements. Investors are cautioned that actual events or results may differ from the Company's expectations. In addition to the matters described above, the ability of the Company to develop its products, future actions by the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. or other regulatory agencies, results of pending or future clinical trials, overall economic conditions, general market conditions, market acceptance, foreign currency exchange rate fluctuations, the effects on pricing from group purchasing organizations and competition, as well as the risk factors listed from time to time in the SEC filings of AngioDynamics, Inc., including but not limited to its 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 June 3, 2006, may affect the actual results achieved by the Company. About AngioDynamics AngioDynamics, Inc. is a leading provider of innovative medical devices used by interventional radiologists, surgeons, and other physicians for the minimally invasive treatment of cancer and peripheral vascular disease. The Company's diverse product line includes market-leading radiofrequency ablation Radiofrequency ablation (RFA) A technique for removing a tumor by heating it with a radiofrequency current passed through a needle electrode. Mentioned in: Liver Cancer, Prenatal Surgery systems, vascular access products, angiographic products and accessories, dialysis products, angioplasty products, drainage products, thrombolytic products, embolization products and venous products. More information is available at www.angiodynamics.com. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (3) Unaudited (4) Information derived from audited financial statements |
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