Micrus Endovascular Reports First Quarter Revenues Growth of 78%; Affirms 2007 Financial Guidance; Conference Call Begins Today at 1:00 p.m. Eastern Time.SAN JOSE San Jose, city, United States San Jose (sănəzā`, săn hōzā`), city (1990 pop. 782,248), seat of Santa Clara co., W central Calif.; founded 1777, inc. 1850. , Calif. -- Micrus Endovascular Corporation (Nasdaq:MEND) today announced financial results for the three months ended June 30, 2006. Micrus Endovascular reported record quarterly revenues for the first quarter of fiscal 2007 of $12.7 million, an increase of 78% compared with revenues of $7.1 million for the first quarter of fiscal 2006. Higher revenues resulted from an increase in the number of microcoil products sold, including sales to the Company's distributor in Japan of $2.2 million. Revenues from the Americas for the first quarter of fiscal 2007 grew 69% to $6.6 million and European revenues increased 21% to $3.7 million, both compared with the first quarter of fiscal 2006. Revenues from Asia Pacific for the first quarter of fiscal 2007 were $2.4 million. "We attribute our record quarterly sales to the solid execution of our business strategy that includes geographic expansion and new product introductions," said John Kilcoyne, Micrus Endovascular president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We are gaining traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in the Japanese market, as well as benefiting from positive revenue contributions from our Cerecyte(R) 18 and Presidio(TM) microcoil product lines. "During fiscal 2007, we plan to continue executing on our multi-pronged strategy to capture a larger share of the endovascular procedure market by entering new markets and broadening our product offerings," he added. "Among this fiscal year's anticipated milestones include gaining approval to market our full product line in China and our global launch of the Watusi(TM) and Courier A monospaced typeface originating from the typewriter that is commonly used for letters. It is still considered by many to be the "appropriate" typeface for business correspondence. (TM) product lines, which is planned for the current quarter." First Quarter Financial Results During the first quarter of fiscal 2007, the Company adopted the fair value recognition provisions of Statement of Financial Accounting Standards No. 123R, "Share-Based Payment" (SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 123R), which replaced SFAS No. 123 and supersedes APB APB See Accounting Principles Board (APB). No. 25. The Company transitioned to SFAS No. 123R using the modified prospective method under which prior periods have not been revised for comparative periods. Stock-based compensation expense related to the adoption of SFAS No. 123R recognized in the Company's consolidated statement of operations See Income statement. for the first quarter of fiscal 2007 was $281,000. Gross margin for the first quarter of fiscal 2007 was 74%, up from 70% for the first quarter of fiscal 2006. The increase in gross margin was due primarily to increased sales of higher-margin products and to certain manufacturing efficiencies, partially offset by higher levels of distributor sales primarily due to Micrus' entry into the Japanese market. Stock-based compensation expense 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 was $27,000 and $6,000 for the first quarter of fiscal 2007 and 2006, respectively, an increase of $21,000 primarily due to the impact of the adoption of SFAS No. 123R. Research and development (R&D) expenses for the first quarter of fiscal 2007 were $2.8 million, compared with $800,000 for the comparable period in the prior fiscal year. The increase was primarily due to a milestone payment of $1.5 million to Vascular vascular /vas·cu·lar/ (vas´ku-ler) 1. pertaining to vessels, particularly blood vessels. 2. indicative of a copious blood supply. vas·cu·lar adj. FX. Stock-based compensation expense was $43,000 and $11,000 for the first quarter of fiscal 2007 and 2006, respectively, an increase of $32,000 primarily due to the impact of the adoption of SFAS No. 123R. Sales and marketing expenses for the first quarter of fiscal 2007 were $5.8 million, up from $2.8 million for the comparable period in fiscal 2006. The increase is due mainly to an increase in headcount and related travel costs, an increase in sales incentives Noun 1. sales incentive - remuneration offered to a salesperson for exceeding some predetermined sales goal bonus, incentive - an additional payment (or other remuneration) to employees as a means of increasing output and commissions on higher levels of sales, as well as increased costs associated with new product releases. Stock-based compensation expense was $216,000 and $17,000 for the first quarter of fiscal 2007 and 2006, respectively, an increase of $199,000 primarily due to the impact of the adoption of SFAS No. 123R. General and administrative expenses for the first quarter of fiscal 2007 were $4.4 million, compared with $2.3 million for first quarter of fiscal 2006. The increase was primarily due to an increase in legal fees of $800,000 related to the Company's 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. , an increase in headcount and an increase in costs associated with being a public company, as well as non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. in connection with the purchase of Neurologic neurologic /neu·ro·log·ic/ (-loj´ik) pertaining to neurology or to the nervous system. Neurologic Having to do with the nervous system. . Stock-based compensation expense was $154,000 and $30,000 for the first quarter of fiscal 2007 and 2006, respectively, an increase of $124,000 primarily due to the impact of adoption of SFAS No. 123R. The net loss attributable to common stockholders for the first quarter of fiscal 2007 was $3.0 million, or $0.21 per share on 14.2 million weighted-average shares outstanding. The net loss for the 2007 first quarter included $440,000, or $0.03 per share, of stock-based compensation expense. The net loss attributable to common stockholders for the first quarter of fiscal 2006 was $1.9 million, or $0.70 per share on 2.7 million weighted-average shares outstanding. As of June 30, 2006, Micrus had 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 of $31.5 million, compared with $37.1 million as of March 31, 2006. On July 19, 2006, Micrus completed a secondary public offering of common stock by selling stockholders that included an over-allotment of 190,531 shares. The Company did not receive any proceeds from the sale of common stock by the selling stockholders. Proceeds from the over-allotment were approximately $2.1 million, net of the underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. discount. As of June 30, 2006, Micrus had 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 $48.8 million, working capital of $38.1 million and no 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. . Financial Guidance Micrus affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its financial guidance for fiscal year 2007 revenues to be in the range of $45 million to $48 million, reflecting growth of 37% to 46%, compared with fiscal 2006 revenues. Conference Call Micrus management will host an investment-community conference call today beginning at 1:00 p.m. Eastern time (10:00 a.m. Pacific time) to discuss these results and answer questions. Individuals interested in participating in the conference call may do so by dialing (888) 803-8296 from the U.S., or (706) 679-0753 from outside the U.S. Those interested in listening to the conference call live via the Internet may do so by visiting the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's Web site at www.micruscorp.com. A telephone replay will be available for 48 hours following the conclusion of the call by dialing (800) 642-1687 from the U.S., or (706) 645-9291 from outside the U.S., and entering reservation code 3454425. A webcast replay will be available for 30 days. About Micrus Endovascular Corporation Micrus develops, manufactures and markets both implantable and disposable medical devices used in the treatment of cerebral cerebral /cer·e·bral/ (se-re´bral) (ser´e-bral) pertaining to the cerebrum. cer·e·bral adj. Of or relating to the brain or cerebrum. vascular diseases vascular diseases, n.pl diseases of the peripheral circulatory system. . Micrus products are used by interventional neuroradiologists and neurosurgeons primarily to treat cerebral aneurysms Cerebral Aneurysm Definition A cerebral aneurysm occurs at a weak point in the wall of a blood vessel (artery) that supplies blood to the brain. Because of the flaw, the artery wall bulges outward and fills with blood. This bulge is called an aneurysm. responsible for hemorrhagic stroke hemorrhagic stroke Neurology An ischemic stroke in which blood enters necrotic brain tissue, which may not be accompanied by a worsening clinical status Risks for HS Hemophilia, thrombocytopenia, sickle cell anemia, DIC, anticoagulants, HTN. See Stroke. , a significant cause of death worldwide. The Micrus product line enables physicians to gain access to the brain in a minimally invasive invasive /in·va·sive/ (-siv) 1. having the quality of invasiveness. 2. involving puncture of the skin or insertion of an instrument or foreign material into the body; said of diagnostic techniques. manner through the vessels of the circulatory system circulatory system, group of organs that transport blood and the substances it carries to and from all parts of the body. The circulatory system can be considered as composed of two parts: the systemic circulation, which serves the body as a whole except for the . Micrus' proprietary, three-dimensional microcoils are unique in that they automatically deploy within the aneurysm aneurysm (ăn`y  rĭzəm), localized dilatation of a blood vessel, particularly an artery, or the heart. , forming a scaffold scaffoldTemporary platform used to elevate and support workers and materials during work on a structure or machine. It consists of one or more wooden planks and is supported by either a timber or a tubular steel or aluminum frame; bamboo is used in parts of Asia. that conforms to a wide diversity of aneurysm shapes and sizes. Micrus also sells accessory accessory, in criminal law, a person who, though not present at the commission of a crime, becomes a participator in the crime either before or after the fact of commission. devices and products used in conjunction with its microcoils. For more information, visit www.micruscorp.com. 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. Micrus, from time to time, may discuss forward-looking information. Except for the historical information contained in this release, all forward-looking statements are predictions by the Company's management and are subject to various risks and uncertainties that may cause results to differ from management's current expectations. Such factors include the Company's dependence upon the continued growth in embolic embolic /em·bol·ic/ (em-bol´ik) pertaining to an embolus or to embolism. em·bol·ic adj. 1. Relating to, or caused by an embolus or embolism. 2. Relating to emboly. coiling as a procedure to treat cerebral aneurysms, the Company's involvement in patent litigation with Boston Scientific The Boston Scientific Corporation (NYSE: BSX) (abbreviated BSC), is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties, including interventional cardiology, peripheral interventions, Corporation, the Company's limited operating history and history of significant operating losses 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. , fluctuations in quarterly operating results, which are difficult to predict, the Company's dependence on developing new products or product enhancements, challenges associated with complying with applicable state, federal and international regulations related to sales of medical devices and governing our relationships with physicians and other consultants, the Company's ability to compete with large, well-established medical device manufacturers with significant resources and other risks as detailed from time to time in the Company's final prospectus Final Prospectus A legal document stating the price of a newly issued security, the delivery date, and other facts that are important for investors. Notes: The final prospectus must be given to every investor who purchases a new issue of registered securities. dated July 13, 2006 and reports and filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934. All forward-looking statements in this release represent the Company's judgment as of the date of this release. The Company disclaims, however, any intent or obligation to update forward-looking statements. (Tables to Follow)
MICRUS ENDOVASCULAR CORPORATION
Consolidated Statement of Operations
(in thousands, except per share amounts)
(unaudited)
Three Months Ended June 30,
----------------------------
2006 2005
------------- --------------
Revenues $ 12,683 $ 7,112
Cost of goods sold 3,262 2,119
------------- --------------
Gross profit 9,421 4,993
------------- -------------
Operating expenses:
Research and development 2,754 822
Sales and marketing 5,797 2,772
General and administrative 4,449 2,265
------------- --------------
Total operating expenses 13,000 5,859
------------- --------------
Loss from operations (3,579) (866)
Interest and investment income 379 128
Interest expense - (6)
Other income (expense) 204 (494)
------------- --------------
Loss before benefit from income taxes (2,996) (1,238)
Benefit from income taxes 37 -
------------- --------------
Net loss (2,959) (1,238)
Accretion of redeemable convertible
preferred stock to redemption value
including beneficial conversion
feature - (659)
------------- --------------
Net loss attributable to common
stockholders $ (2,959) $ (1,897)
============= ==============
Net loss per share attributable to common
stockholders:
Basic and diluted $ (0.21) $ (0.70)
============= ==============
Weighted-average number of shares used in
per share calculations:
Basic and diluted 14,226 2,699
============= ==============
MICRUS ENDOVASCULAR CORPORATION
Consolidated Balance Sheets
(in thousands)
(unaudited)
June 30, March 31,
2006 2006
------------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 30,506 $ 36,104
Short-term investments 990 984
Accounts receivable, net 8,610 8,267
Inventories, net 5,044 4,479
Prepaid expenses and other current
assets 1,380 766
------------- --------------
Total current assets 46,530 50,600
Property and equipment, net 2,556 2,488
Goodwill 3,309 3,309
Intangible assets, net 5,289 5,417
Other assets 310 300
Deferred offering costs 442 -
------------- --------------
Total assets $ 58,436 $ 62,114
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,163 $ 2,088
Accrued payroll and other related
expenses 2,838 3,147
Accrued liabilities 4,400 4,308
------------- --------------
Total current liabilities 8,401 9,543
Other non-current liabilities 1,273 1,255
------------- --------------
Total liabilities 9,674 10,798
------------- --------------
Stockholders' equity :
Common stock 142 142
Additional paid-in capital 101,938 101,430
Deferred stock-based compensation (340) (397)
Accumulated other comprehensive loss (400) (240)
Accumulated deficit (52,578) (49,619)
------------- --------------
Total stockholders' equity 48,762 51,316
------------- --------------
Total liabilities and stockholders'
equity $ 58,436 $ 62,114
============= ==============
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