ArthroCare Expands Fiscal 2005 Financial Guidance and Provides Preliminary Fiscal 2006 Guidance.SUNNYVALE, Calif. -- Company Releases Preliminary, Unaudited Financial Information for the Fourth Quarter and Fiscal Year 2004 ArthroCare(R) Corp. (Nasdaq: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 ), a multi-business medical device company that develops minimally invasive surgical products, announced updated financial guidance for fiscal 2005 and preliminary guidance for fiscal 2006. To provide context in which to interpret this guidance, the company also released limited preliminary, unaudited financial information for the fourth quarter and fiscal year ended Dec. 31, 2004. Preliminary Fourth Quarter and Fiscal 2004 Financial Information Based upon an unaudited analysis of its results of operations, ArthroCare expects to report fourth quarter product revenues of approximately $40.8 million, a 30 percent increase over the $31.3 million reported in the same quarter of the previous year. The company also expects to report fiscal year 2004 product revenues of approximately $147.8 million, a 29 percent increase over the $114.7 million reported for fiscal 2003. ArthroCare anticipates total revenues for the fourth quarter and fiscal 2004 to be approximately $42.7 million and $154.1 million, respectively. In addition, ArthroCare ended the fourth quarter with approximately $21.8 million in 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 , up $3.4 million from the previous quarter. This cash balance increase was net of ArthroCare's first principle payment on the term loan related to the Opus opus (ō`pəs) [Lat.,=work], in music, term used in cataloging a composer's works, designating either a single composition or a group published together or considered a unit. Medical acquisition. This principle payment was approximately $1.1 million, resulting in a debt balance of approximately $29.0 million at the end of the fourth quarter. Additional fourth quarter and fiscal 2004 details will be disclosed when the company reports actual financial results after its audit and required regulatory filings are complete. Financial Guidance The following statements are based on current expectations on Jan. 24, 2005. These statements are forward-looking, and actual results may differ materially. These statements do not include the potential impact of any new businesses or license agreements the company may enter in future periods. In addition, the following guidance excludes the impact of non-cash or non-recurring charges related to equity compensation expenses. It does include anticipated depreciation and amortization expenses related to all ArthroCare acquisitions, including Opus Medical. The following guidance was previously given for fiscal 2005 and remains unchanged: --ArthroCare anticipates fiscal 2005 product revenues will grow by at least 30 percent compared to 2004 revenues. --The company expects sales of its existing Sports Medicine sports medicine, branch of medicine concerned with physical fitness and with the treatment and prevention of injuries and other disorders related to sports. Knee, leg, back, and shoulder injuries; stiffness and pain in joints; tendinitis; "tennis elbow"; and products to grow by at least 10 percent over 2004 revenues. It also expects sales of Opus Medical products to grow by at least 50 percent, and the combined revenues of the Sports Medicine business unit to grow by at least 25 percent. --Spine revenues are expected to grow by at least 20 percent. --ENT revenues are anticipated to grow by at least 30 percent. --ArthroCare also expects an operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improvement of 3 percentage points compared with 2004, with 1 percentage point coming from improvement in gross margin. --The company also currently expects its effective tax rate for 2005 to remain the same at approximately 27 percent. --ArthroCare expects earnings per share (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. ) to grow more rapidly than revenues with an assumed share count of 26.5 million following the close of the Opus Medical acquisition. ArthroCare's expanded guidance information includes: --ArthroCare expects total first quarter 2005 revenues to be $47-48 million. It also expects sequential revenue growth in all four quarters of 2005 with strong year-over-year comparisons. --The company's fiscal 2005 EPS guidance remains unchanged. ArthroCare expects EPS to develop in line with recent historical patterns with strong sequential quarter-to-quarter growth; however, the company expects this pattern to be accentuated in 2005 by the ongoing integration of the Opus Medical acquisition. --ArthroCare expects fiscal 2006 product revenues will grow by at least 20 percent compared to 2005 revenues. Conference Call Details ArthroCare held a conference call with the financial community today to discuss the information presented in this news release. A Webcast and telephonic replay of the call will remain available through Feb. 24, 2005. The Webcast can be accessed on ArthroCare's Web site at www.arthrocare.com, and the telephonic replay of the conference call can be accessed by dialing 888-343-7239 and entering pass code number 21230404. About ArthroCare ArthroCare Corp. (www.arthrocare.com) is a highly innovative, multi-business medical device company that develops, manufactures and markets minimally invasive surgical products. With these products, ArthroCare targets a multi-billion dollar market opportunity across several medical specialties Medical Specialties See also anatomy; disease and illness; drugs; health; remedies; surgery. adenography the science of the description of glands. — adenographic, adj. , significantly improving existing surgical procedures Surgical procedures have long and possibly daunting names. The meaning of many surgical procedure names can often be understood if the name is broken into parts. For example in splenectomy, "ectomy" is a suffix meaning the removal of a part of the body. "Splene-" means spleen. and enabling new, minimally invasive procedures Minimally invasive surgical procedures avoid open invasive surgery in favor of closed or local surgery with less trauma. These procedures involve use of laparoscopic devices and remote-control manipulation of instruments with indirect observation of the surgical field through an . Many of ArthroCare's products are based on its patented Coblation technology, which uses low-temperature radiofrequency energy to gently and precisely dissolve A Web site design technique borrowed from the film and video industry in which the transition between two Web pages is represented visually by one page fading into another. Also known as a "soft cut," the result is achieved in the HTML coding of the images to gradual pre-determined rather than burn soft tissue -- minimizing damage to healthy tissue. Used in more than three million surgeries worldwide, Coblation-based devices have been developed and marketed for sports medicine; spine/neurologic; 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 ); cosmetic; urologic and gynecologic gynecologic /gy·ne·co·log·ic/ (gi?ne-) (jin?e-kah-loj´ik) pertaining to the female reproductive tract or to gynecology. procedures. ArthroCare also has added a number of products to its portfolio to complement Coblation within key indications. Founded in 1993, ArthroCare is headquartered in Sunnyvale, Calif. 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. Statements Except for historical information, this press release includes 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. . These statements include, but are not limited to, the company's stated business outlook for fiscal 2004 and 2005, continued strength of the company's fundamental position, the strength of the company's technology, the company's belief that strategic moves will enhance achievement of the company's long term potential, the potential and expected rate of growth of new businesses, continued success of product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. efforts, and other statements that involve risks and uncertainties. These risks and uncertainties include, but are not limited to the uncertainty of success of the company's non-arthroscopic products, competitive risk, uncertainty of the success of strategic business alliances, uncertainty over reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. , need for governmental clearances or approvals before selling products, the uncertainty of protecting the company's patent position, and any changes in financial results from completion of year-end audit activities. These and other risks and uncertainties are detailed from time to time in the company's Securities and Exchange Commission filings, including ArthroCare's 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 Dec. 31, 2003 and the 10-Q for the quarter ended Sept. 30, 2004. Forward-looking statements are indicated by words or phrases such as "anticipates," "estimates," "projects," "believes," "intends," "expects," and similar words and phrases Words and Phrases® A multivolume set of law books published by West Group containing thousands of judicial definitions of words and phrases, arranged alphabetically, from 1658 to the present. . Actual results may differ materially from management expectations. |
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