Aspect Medical Systems, Inc. Announces Operating Results for Fourth Quarter 2002 and Year 2002.Business Editors/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)--Jan. 28, 2003 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 fourth quarter and the year ended December December: see month. 31, 2002. Highlights of the Quarter -- Worldwide revenue increased 6 percent in Q4 2002 vs. Q4 2001 -- Worldwide sensor revenue increased 13 percent in Q4 2002 vs. Q4 2001 -- Gross profit margin percentage again exceeded 70% in Q4 2002 compared to 60.4 percent in Q4 2001 -- Loss from operations for Q4 2002 declined by 28 percent compared to the loss from operations in Q4 2001 -- Bookings of BIS modules reported by our OEM partners were 591 units in Q4 2002 compared to less than 200 in Q4 2001 Fourth Quarter Financial Results For the fourth quarter ended December 31, 2002, revenue was $10.0 million, an increase of 6 percent over revenue of $9.5 million in the fourth quarter of 2001. The total increase in revenue reflects a 13 percent increase in revenue from the sale of sensors
"While continuing to grow the business, we are particularly pleased with the improvements in our gross margin and the control we have exercised over our 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. ," said Nassib Chamoun, president and chief executive officer. "As a result, our net loss per share declined by 33 percent from $0.27 in Q4 2001 to $0.18 per share in Q4 2002, which includes a one time charge of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $500,000 or approximately two and one-half cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. . In addition, our OEM partners had an extremely successful quarter with reported module bookings during the quarter of 591 units. This represents approximately a threefold increase over the fourth quarter of 2001." Domestic revenue increased 8 percent in the fourth quarter of 2002 to $8.4 million from $7.7 million in the fourth quarter of 2001. Equipment revenue increased 5 percent in the fourth quarter of 2002 compared to the fourth quarter of 2001 primarily as a result of a 72 percent increase in the average monitor unit price. The increased monitor revenue was offset by a 93 percent decrease in module kit revenue. Sensor revenue increased 9 percent in the fourth quarter of 2002 compared to the fourth quarter of 2001 driven by a 5 percent increase in unit volume and a 4 percent increase in the average unit price. International revenue decreased by 4 percent compared to Q4 of 2001. Exclusive of Japan, total international revenue increased by 23 percent to $1.4 million. In Japan, revenue declined by 63 percent as Nihon Kohden continued to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. the purchase of additional BIS monitors pending approval of our latest generation XP technology by the Japanese Ministry of Health, Labor, and Welfare. Sales of sensors in Japan over the same period grew by 32 percent while sales of sensors in the balance of our international territories grew in Q4 2002 compared to Q4 2001 by 61 percent. In the fourth quarter of 2002, 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. percentage was 75.4 percent compared to 60.4 percent in the comparable period of 2001. The increase in gross profit margin percentage reflects the increase of sensor revenue as a percentage of total revenue and a reduction in sensor product costs. Higher revenue and gross profit margin had the effect of reducing the net loss to $3.5 million, or $0.18 per share on 19.3 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 in the fourth quarter of 2002, compared to a net loss of $4.8 million, or $0.27 per share on 17.8 million basic and diluted shares outstanding in the fourth quarter of 2001. 2002 Results For the year ended December 31, 2002, revenue was $39.8 million, an increase of 11 percent compared to the year ended December 31, 2001. The year-over-year increase was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to a 14 percent increase in equipment revenue and a 10 percent increase in sensor revenue. For the year ended December 31, 2002, domestic revenue increased 18 percent compared to the prior year. This was primarily attributable to a 25 percent increase in the number of monitors sold, a 34 percent increase in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. of monitors, and an 8 percent increase in sensor revenue. For the year ended December 31, 2002, international revenue decreased 13 percent compared to the year ended December 31, 2001. The decrease was primarily attributable to a 24 percent decrease in equipment revenue offset by a 33 percent increase in sensor revenue. Gross profit margin percentage for the year ended December 31, 2002 was 70.3 percent compared to 65.3 percent for the year ended December 31, 2001. Gross profit margin for 2002 increased 20 percent versus 2001. For the year ended December 31, 2002, the increase in gross profit margin and a slight increase in operating expenses resulted in a 20 percent reduction in the loss from operations for 2002 versus 2001. Net interest income for 2002 decreased 63 percent to $956,000 compared to $2.6 million in 2001, based on a lower average cash balance and lower interest rates. The lower loss from operations and decreased net interest income for 2002 resulted in a net loss for 2002 of $15.3 million, or $0.83 per share on 18.5 million basic and diluted shares outstanding, compared to a net loss of $17.7 million, or $1.01 per share on 17.6 million basic and diluted shares outstanding in 2001. Liquidity and Capital Resources At December 31, 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 $36.8 million and total debt of $1.9 million. At December 31, 2001, the Company had cash, cash equivalents and marketable securities of $41.5 million, stockholders' equity of $48.1 million and total debt of $4.8 million. Outlook for the First Quarter and First Half of the Year Ending December 31, 2003 The Company believes that revenue will fall within a range of $9.5 million to $10.5 million during the first quarter of 2003 and our net loss per share will be within a range of $0.17 and $0.22. For the first half of the year, we believe that revenue will fall in the range of $19.5 million and $21.5 million, and net loss per share will be in the range of $0.33 to $0.42. Conference Call Set for 10AM ET Today Aspect will hold a conference call to discuss fourth quarter results and management's outlook for the first quarter and the first half of fiscal year 2003 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, Tuesday Tuesday: see week. , January January: see month. 28, 2003. The call can be accessed live by dialing 888-277-8636 or 973-582-2783, 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 January 28, 2003, until February February: see month. 4, 2003, by dialing 877-519-4471 or 973-341-3080, access code 3699747. 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 6.0 million patients and has been the subject of more than 1,000 published articles and abstracts. The worldwide installed base of monitors and BIS modules was approximately 16,000 at December 31, 2002. BIS technology is installed in approximately 27 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 55 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, including regulatory approval of its XP technology in Japan. 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 Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the fiscal quarter ended September September: see month. 28, 2002, 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
--------------------------------------------------
December 31, December 31, December 31, December 31,
2002 2001 2002 2001
--------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue $10,043,392 $9,464,930 $39,776,394 $35,828,851
Costs of revenue 2,470,521 3,743,724 11,815,387 12,445,938
--------------------------------------------------
Gross profit margin 7,572,871 5,721,206 27,961,007 23,382,913
Gross profit margin
percentage 75.4% 60.4% 70.3% 65.3%
Operating expenses:
Research and
development 1,978,333 1,879,402 7,826,874 7,466,621
Sales and
marketing 7,154,107 7,357,933 28,449,042 28,396,057
General and
administrative 2,197,608 1,710,877 7,941,829 7,803,506
--------------------------------------------------
Total operating
expenses 11,330,048 10,948,212 44,217,745 43,666,184
--------------------------------------------------
Loss from operations (3,757,177) (5,227,006) (16,256,738) (20,283,271)
Interest income 280,714 474,078 1,198,519 2,930,140
Interest expense (57,235) (64,811) (242,952) (365,428)
Net loss $(3,533,698)$(4,817,739)$(15,301,171)$(17,718,559)
==================================================
Net loss per share:
Basic and diluted $(0.18) $(0.27) $(0.83) $(1.01)
Shares used in
computing net loss
per share:
Basic and diluted 19,344,180 17,768,977 18,450,002 17,614,036
ASPECT MEDICAL SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December December
31, 31,
2002 2001
-------------------------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash, cash equivalents and marketable
securities $36,865,333 $41,457,976
Accounts receivable, net 4,666,098 5,395,096
Current portion of investment in sales-type
leases 1,859,237 1,473,260
Inventory 2,333,385 5,108,166
Other current assets 1,319,091 1,182,385
-------------------------
Total current assets 47,043,144 54,616,883
Property and equipment, net 4,121,560 5,695,436
Long-term investment in sales-type leases 2,282,751 1,934,699
Other long-term assets 1,032,572 1,122,026
-------------------------
Total assets $54,480,027 $63,369,044
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Working capital line of credit $ - $3,000,000
Current portion of long-term debt 887,538 829,947
Accounts payable and accrued liabilities 8,373,658 9,000,226
Deferred revenue 1,047,651 521,119
-------------------------
Total current liabilities 10,308,847 13,351,292
Long-term portion of deferred revenue 6,359,210 997,813
Long-term debt 1,015,101 963,813
Stockholders' equity 36,796,869 48,056,126
-------------------------
Total liabilities and
stockholders' equity $54,480,027 $63,369,044
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