ArthroCare Announces Strong Fourth Quarter, Fiscal Year; Company Poised for Profitability.SUNNYVALE, Calif.--(BUSINESS WIRE)--Feb. 3, 1999--ArthroCare Corporation (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 :ARTC ARTC Arthrocare Corp (stock symbol) ARTC Australian Rail Track Corporation ARTC Air Route Traffic Control ARTC Association de la Recherche Theatrale au Canada ARTC Andean Root and Tuber Crops ) announced today that in the fourth quarter, ended January 2, 1999, the company lost $220,000, or $(.02) per share. This compares with a loss of $1.6 million, or $(.18) per share in the fourth quarter of 1997. For the fiscal year 1998, ArthroCare reported a loss of $2.1 million, or $(.24) per share compared with $7.7 million, or $(.87) a year ago. The company reported revenues of $7.4 million for the quarter and $24.6 million for the year. This compares with revenues of $4.3 million and $12.8 million for the same periods, respectively, of 1997. ArthroCare began shipping product to Collagen Aesthetics at the end of the fourth quarter pursuant to a recently announced strategic alliance. Fourth quarter results did not include revenue from the Collagen shipments; this revenue was deferred until the first quarter of 1999 when the definitive agreement was signed. Fiscal 1998 was a year of significant operational accomplishments. Gross margin increased 16 percentage points, from 34 percent in 1997 to 50 percent in 1998. Operating spending grew at less than half the rate of revenue growth between 1997 and 1998, creating important operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . In addition, the company's development of a mixed channel commercialization strategy has significantly increased the number of sales professionals representing Coblation(TM)-based products to customers. Michael A. Baker Michael Allen Baker (Captain, USN, Ret.) is the International Space Station Program Manager for International and Crew Operations, at NASA's Johnson Space Center. He is responsible for the coordination of program operations, integration and flight crew training and support , ArthroCare's president and chief executive officer said, "We accomplished all of our operational and strategic objectives. ArthroCare ended the year with a strong market position in arthroscopy Arthroscopy Definition Arthroscopy is the examination of a joint, specifically, the inside structures. The procedure is performed by inserting a specifically designed illuminated device into the joint through a small incision. , and marketing alliances with established companies in multiple soft tissue surgery markets. We look forward with increasing confidence to continued growth and to profitability in 1999." ArthroCare has developed a broad technology platform for operating on soft tissue. The technology is based on a patented method of tissue removal, called Coblation technology, that is designed to improve the effectiveness and safety of standard surgical methods. Coblation technology uses radio frequency (RF) energy to remove tissue through a significantly cooler process than is possible with traditional electro- or laser-surgery. Coblation-assisted surgery has the potential to improve operative precision and efficiency compared with many standard surgical techniques and thereby reduce pain and speed recovery. Except for historical information, this press release includes forward-looking statements that involve risks and uncertainties, including, but not limited to, the company's fundamental position, and the strength of the company's management team, timing of revenue and profitability, and risks as detailed from time to time in the company's Securities and Exchange Commission filings, including ArthroCare's Form 10-Q Form 10-Q See 10-Q. for the quarter ended October 4, 1998. Actual results may differ materially from management expectations. ArthroCare Corporation is a medical device company redefining the standard in soft tissue surgery by developing, manufacturing, and marketing patented Coblation(TM) technology that allows surgeons to operate with increased precision and accuracy, with minimal damage to surrounding tissue. The company's systems are being used to perform many types of closed joint surgery, and have recently been introduced for use in cosmetic surgery cosmetic surgery, plastic surgery for cosmetic purposes, such as the improvement of the appearance of the face by removing wrinkles or reshaping the nose. and ear, nose and throat (ENT ENT ears, nose, and throat (otorhinolaryngology). ENT abbr. ear, nose, and throat ENT ear, nose and throat. ENT Ears, nose & throat; formally, otorhinolaryngology ) surgery. ArthroCare's la Avenue, Sunnyvale, California, 94086. ArthroC 1998 (unaudited) 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 $ 7,359 $ 4,337 $ 24,624 $ 12,796 Cost of sales 3,237 2,621 12,368 8,495 59 Gross margin 4,122 1,716 12,256 4,301 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. : Research and development 911 1,198 4,355 4,026 Sales and marketing 3,142 1,905 10,495 6,263 General and administrative 880 581 3,776 3,112 Total operating expenses 4,933 3,684 18,626 13,401 Loss from operations (811) (1,968) (6,370) (9,100) Interest, license fees and other income, net 591 336 4,229 1,414 Net loss $ (220) $(1,632) $(2,141) $(7,686) Basic and diluted net loss per common share $(0.02) $(0.18) $(0.24) $ (0.87) Shares used in computing basic and diluted net loss per common share 8,964 8,849 8,926 8,813 ARTHROCARE CORPORATION Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Balance Sheets (In thousands) January 2, January 3, ASSETS 1999 1998 Current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. Cash, cash equivalents, and available-for-sale securities $ 8,058 $ 18,862 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 , net 5,972 2,223 Inventory 7,069 2,019 Prepaid expenses 1,038 210 Total current assets 22,137 23,314 Available-for-sale securities - 1,010 Property and equipment, net 4,560 1,412 Related party receivables 723 876 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 340 63 Total assets $ 27,760 $ 26,675 LIABILITIES AND STOCKHOLDERS' EQUITY Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. Accounts payable $ 1,797 $ 968 Accrued liabilities 2,850 2,004 Deferred revenue 517 - Total current liabilities 5,164 2,972 Capital Leased Equipment 151 - Deferred rent 140 157 Total liabilities 5,455 3,129 STOCKHOLDERS' EQUITY Stockholders' equity 22,305 23,546 Total liabilities and stockholders' equity $ 27,760 $ 26,675 |
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