Aspect Medical Systems, Inc. Announces Operating Results for First Quarter 2002.Business Editors and Health/Medical Writers NEWTON Newton, cities, United States Newton. 1 City (1990 pop. 16,700), seat of Harvey co., S central Kans., in an agricultural area; inc. 1872. , Mass.--(BUSINESS WIRE)--April 17, 2002 Highlights of the Quarter -- Worldwide revenue increased 9 percent in Q1 2002 vs. Q1 2001 -- Worldwide installed base of monitors and modules (OEM installations) increased 26 percent from the installed base at the end of Q1 2001 -- Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased to 63.7 percent in Q1 2002 from 60.4 percent in Q4 of 2001 -- Worldwide shipments of XP upgrade kits increased to more than 875 in Q1 2002 vs. 719 XP upgrade kits in Q4 2001 -- Enrollment in multi-center awareness trials now exceeds 21,000 patients Aspect Medical Systems, 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 : ASPM ASPM Abnormal Spindle-Like Microcephaly Associated ASPM Asociación del Secretariado Profesional de Madrid (Spanish: Association of the Professional Secretaryship of Madrid) ASPM Armed Services Procurement Regulation Manual ), today reported results of operations for the three months ended March 30, 2002. First Quarter Financial Results For the first quarter ended March 30, 2002, revenue was $9.7 million, an increase of 9 percent from $8.9 million in the first quarter of 2001. This represents a 23 percent increase in revenue from the sale of monitors, modules, XP upgrade kits and related accessories (collectively referred to as Equipment) combined with a 3 percent increase in revenue from the sale of sensors
"We continued to make steady progress in the first quarter," said Nassib Chamoun, president and chief executive officer. "I am pleased to report that two more of our OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and partners began shipping BIS modules last quarter. GE Medical Systems began shipping in February February: see month. . Datex-Ohmeda began shipping to international customers in late March, and is expected to begin shipping to U.S. customers this quarter. We have also completed the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of our domestic field organization and the reengineering Using information technology to improve performance and cut costs. Its main premise, as popularized by the book "Reengineering the Corporation" by Michael Hammer and James Champy, is to examine the goals of an organization and to redesign work and business processes from the ground up of our sales process A sales process is a systematic approach for performing product or service sales. The reasons for having a sales process include seller and buyer risk management, achieving standardized customer interaction in sales and scalable revenue generation. . We are fully staffed and our sales training program is up and running. We expect to begin realizing benefits from these programs in the second quarter of 2002." Domestic revenue for the first quarter of 2002 increased 16 percent to $7.8 million compared to $6.8 million in the first quarter of 2001 and increased 1 percent compared to the fourth quarter of 2001. Domestic revenue from the sale of Equipment increased 75 percent to $2.0 million in the first quarter of 2002 compared to $1.1 million in the first quarter of 2001 and increased 1 percent compared to the fourth quarter of 2001. The increase in domestic Equipment revenue in the first quarter of 2002 as compared to the first quarter of 2001 was related primarily to the sale of XP upgrade kits and OEM modules. Domestic revenue from the sale of sensors increased 4 percent to $5.9 million in the first quarter of 2002 compared to $5.7 million in the first quarter of 2001 and increased 2 percent compared to $5.8 million in the fourth quarter of 2001. International revenue for the first quarter of 2002 decreased 11 percent to $1.8 million compared to $2.1 million in the first quarter of 2001, but increased 7 percent compared to $1.7 million in the fourth quarter of 2001. International revenue from the sale of Equipment decreased 13 percent in the first quarter of 2002 to $1.5 million compared to $1.7 million in the first quarter of 2001 but, increased 13 percent compared to $1.3 million in the fourth quarter of 2001. Compared to the first quarter of 2001, monitor revenue increased 48 percent due to no monitor shipments to Japan in the first quarter of 2001 compared to $500,000 in the first quarter of 2002. Revenue from the sale of OEM modules and other equipment decreased 70 percent to $261,000 in the first quarter of 2002 compared to $859,000 in the first quarter of 2001 as a result of 44 percent fewer module shipments in the first quarter of 2002 and increased 21 percent from the fourth quarter of 2001 primarily because of a 231 percent increase in module shipments. Revenue from the sale of sensors of $375,000 in the first quarter of 2002 decreased 5 percent compared to $397,000 in the first quarter of 2001 and decreased 12 percent compared to $428,000 in the fourth quarter of 2001. In the first quarter of 2002 the gross profit margin was 63.7 percent compared to 68.7 percent in the first quarter of 2001 and 60.4 percent in the fourth quarter of 2001. In the first quarter of 2002 there were two primary factors that adversely impacted gross profit margin compared to the comparable period of the prior year: in the first quarter of 2002, we experienced a 24 percent increase in revenue from the sale of monitors and a 21 percent increase in revenue from the sale of other Equipment as compared to a 3 percent increase in revenue from the sale of sensors. In addition, the gross profit margin on monitors, module kits and XP upgrades is significantly less than that on sensors. The increase in gross profit margin in the first quarter of 2002 compared to the fourth quarter of 2001 was primarily related to increased average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. for monitors, XP upgrade kits and sensors offset by a slightly lower average selling price for OEM modules. 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. increased 3 percent in the first quarter of 2002 as compared to the first quarter of 2001 and increased 2 percent compared to the fourth quarter of 2001. Interest income for the first quarter of 2002 decreased 67 percent to $345,000 compared to $1.0 million in the first quarter of 2001, based on both a lower invested cash balance and lower interest rates. The increased operating expenses and the decreased interest income in the first quarter of 2002 as compared to the first quarter of 2001, resulted in a net loss for the first quarter of 2002 of $4.7 million, or $0.26 per share, on 17.8 million basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding, compared to a net loss of $3.8 million, or $0.22 per share, on 17.5 million basic and diluted shares outstanding in last year's first quarter. Liquidity and Capital Resources At the end of the first quarter of 2002, the Company had cash, cash equivalents 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 of $36.9 million, 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. of $43.5 million and total debt of $4.7 million, producing a debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. of 11 percent. At the end of 2001, the Company had cash, cash equivalents and marketable securities of $41.5 million. Outlook for the Second Quarter of 2002 For the second quarter of 2002, the Company expects that revenue will be within a range of $9.8 to $10.8 million and that the net loss per share for the quarter will be within a range of $0.25 to $0.28. The Company expects fiscal year 2002 total revenue to be within a range of $43.0 to $50.0 million, an increase of 20 to 40 percent as compared to the year ended December December: see month. 31, 2001, and expects the loss per share for the fiscal year 2002 to be within a range of $0.60 and $0.90. Conference Call Set for 10AM ET Today Aspect will hold a conference call to discuss first quarter results and management's outlook for the second quarter of 2002 at 10:00 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT today, Wednesday Wednesday: see week. , April 17, 2002. The call can be accessed live by dialing 888-413-4411 or 703-871-3795, or access the webcast at http://www.aspectmedical.com on the investor page or http://www.StreetEvents.com. It also will be available for replay from April 17, 2002, until April 24, 2002, by calling 888-266-2086 or 703-925-2435, access code 5924863. The webcast replay will also be available on Aspect's website at http://www.aspectmedical.com on the news releases page under investor information. About the Company Aspect Medical Systems, Inc. (NASDAQ: ASPM) is a global market leader in brain monitoring technology. To date, the company's Bispectral Index A Bispectral index (BIS) monitor is a modern neurophysiological monitoring device which continually analyses a patient's electroencephalograms during general anaesthesia to assess the level of consciousness during anaesthesia. (BIS) technology has been used to assess more than five million patients and has been the subject of more than 900 published articles and abstracts. The worldwide installed base of monitors and BIS modules was approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 14,000 at March 30, 2002. BIS technology is installed in approximately 26 percent of all domestic operating rooms operating room n. Abbr. OR A room equipped for performing surgical operations. . BIS is currently in use in more than 60 percent of the best hospitals with operating rooms in the U.S. (based on a U.S. News & World Report U.S. News & World Report Weekly newsmagazine published in Washington, D.C. U.S. News was founded in 1933 by David Lawrence (1888–1973) to cover important domestic events; he founded World Report in 1945 to treat world news. The two magazines were merged in 1948. ranking) and is available in more than 160 countries. Aspect Medical Systems has OEM agreements with the six largest manufacturers of patient monitoring systems and partnerships with six of the largest group purchasing organizations A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. Many GPOs are funded by administrative fees that are actually paid by the vendors. in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . 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. Statement Certain statements in this release are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. and may involve risks and uncertainties, including statements with respect to the worldwide market acceptance of the Company's products, and statements concerning the Company's expected results of operations for future periods. There are a number of factors that could cause actual results to differ materially from those indicated by these 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. . For example, the Company may not be able to achieve widespread market acceptance of its BIS monitoring technology or to compete with new products or alternative techniques that may be developed by others, including the third-party anesthesia anesthesia (ănĭsthē`zhə) [Gr.,=insensibility], loss of sensation, especially that of pain, induced by drugs, especially as a means of facilitating safe surgical procedures. monitoring product approved 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. , and also faces competitive and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. risks relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its ability to successfully develop and introduce enhancements and new products. In addition, the Company has limited sales and marketing experience both in the U.S. and internationally and if it is unable to develop and implement a successful sales and marketing strategy, including with respect to its own sales force, domestic and international distributors, original equipment manufacturers and other direct and indirect sales channels, it will not be able to generate meaningful product revenue. In addition, the Company's ability to become and remain profitable will depend upon its ability to promote frequent use of the BIS system so that sales of its BIS sensors increase. The Company will not be profitable if hospitals and anesthesia providers do not buy and use its BIS systems in sufficient quantities. Cases of surgical awareness during monitoring with the BIS system and significant product liability claims are among the factors that could limit market acceptance. There are other factors that could cause the Company's actual results to vary from its forward-looking statements, including without limitation those set forth under the heading "Factors Affecting Future Operating Results" 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. for the fiscal year ended December 31, 2001, as filed with the Securities and Exchange Commission. In addition, the statements in this press release represent the Company's expectations and beliefs as of the date of this press release. The Company anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing the Company's expectations or beliefs as of any date subsequent to the date of this press release. For further information regarding Aspect Medical Systems, Inc., visit the Aspect Medical Systems, Inc. website at www.aspectmedical.com
ASPECT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
-----------------------------
March 30, March 31,
2002 2001
(Unaudited) (Unaudited)
------------ ------------
Revenue $ 9,686,566 $ 8,862,820
Costs and expenses:
Costs of revenue 3,517,536 2,770,612
Research and development 1,936,544 1,796,123
Sales and marketing 7,356,505 6,960,919
General and administrative 1,850,064 2,054,597
------------ ------------
Total costs and expenses 14,660,649 13,582,251
------------ ------------
Loss from operations (4,974,083) (4,719,431)
Interest income 344,611 1,040,675
Interest expense (70,046) (118,451)
------------ ------------
Net loss $ (4,699,518) $ (3,797,207)
============ ============
Net loss per share:
Basic and diluted $ (0.26) $ (0.22)
Weighted average shares used in
computing net loss per share:
Basic and diluted 17,815,859 17,458,433
ASPECT MEDICAL SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
March 30, Dec. 31,
2002 2001
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and
marketable securities $36,937,258 $41,457,976
Accounts receivable, net 4,744,408 5,395,096
Current portion of investment
in sales-type leases 1,495,441 1,473,260
Inventory 4,065,307 5,108,166
Other current assets 1,446,600 1,182,385
----------- -----------
Total current assets 48,689,014 54,616,883
Property and equipment, net 5,344,466 5,695,436
Long-term investment in
sales-type leases 2,023,481 1,934,699
Other long-term assets 1,118,693 1,122,026
----------- -----------
Total assets $57,175,654 $63,369,044
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Working capital line of credit $ 3,000,000 $ 3,000,000
Current portion of long-term debt 812,762 829,947
Accounts payable and accrued
liabilities 7,490,604 9,000,226
Deferred revenue 557,305 521,119
----------- -----------
Total current liabilities 11,860,671 13,351,292
----------- -----------
Long-term portion of deferred revenue 940,625 997,813
Long-term debt 910,373 963,813
Stockholders' equity 43,463,985 48,056,126
----------- -----------
Total liabilities and
stockholders' equity $57,175,654 $63,369,044
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