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AMERICAN MEDICAL ELECTRONICS EARNINGS UP 66 PERCENT FOR 1993 THIRD QUARTER; REVENUES EXCEED $10 MILLION FOR FIRST TIME

 DALLAS, Oct. 19 /PRNewswire/ -- American Medical Electronics, Inc. (NASDAQ-NMS: AMEI), a manufacturer and distributor of advanced devices for orthopaedics and neurosurgery, today reported that 1993 third quarter revenues increased 30 percent to $10,334,000 from $7,927,000 for the third quarter of 1992. It was the first time that revenues for a single quarter exceeded $10 million.
 Net income in the 1993 third quarter increased 66 percent to $1,576,000 (23 cents per share), compared with third quarter 1992 net income of $952,000 (12 cents per share), which included an after-tax gain of $224,000 (3 cents per share) from the sale of marketable securities. Results for the 1993 third quarter also include an income tax benefit of $276,000 (4 cents per share) that reduced the effective tax rate to 18 percent. The tax benefit arose from recognition of the research and development tax credit -- retroactive to July 1, 1992 -- that was reinstated in the Omnibus Budget Reconciliation Act of 1993. For the remainder of 1993, AME's effective tax rate should be about 33 percent.
 For the first nine months of 1993, revenues were up 18 percent to $28,713,000, compared with $24,287,000 for the first nine months of 1992. Net income for the 1993 nine months increased 22 percent to $3,802,000 (53 cents per share). Net income included a non-recurring gain of $375,000 (5 cents per share) from the cumulative effect of adopting SFAS No. 109, "Accounting for Income Taxes," a gain on the sale of marketable securities of $82,000 (1 cent per share), and the effect of the third quarter tax credit. That compared with the 1992 nine months net income of $3,124,000 (40 cents per share), including a gain on sales of marketable securities of $224,000 (3 cents per share).
 "This year's third quarter performance reflects the positive impact of a number of actions that we have taken during the past year to increase revenues, strengthen gross margin and reduce operating expenses as a percent of revenues," said Joseph Mooibroek, president and chief executive officer. "Surpassing the $10 million mark in revenues during the third quarter -- when revenues have generally been lower than the previous quarter -- resulted primarily from the concentrated focus and maturity of our sales team and our success in marketing the product guarantee programs we initiated for Physio-Stim(R) in mid-June and for Spinal-Stim(R) in early August.
 "We believe that AME's product guarantee programs -- together with the new two-hour daily treatment time for Spinal-Stim that the FDA recently approved -- should assure patients, doctors, and third-party- payer insurance companies that AME stimulation products are safe, clinically proven, cost-effective and improve health outcomes," added Mooibroek.
 "Although our industry is experiencing increased emphasis on cost


containment and health outcomes by third-party payers, AME has successfully gained reimbursement approval from most payers because of our ability to demonstrate the cost-effectiveness of our stimulation devices," said Mooibroek. "We believe that our marketing efforts have been further strengthened by the recent conclusion of the Blue Cross and Blue Shield Association Medical Advisory Panel that the use of electrical bone growth stimulation -- such as that provided by our Spinal-Stim units -- meets all five of the Panel's Technology Evaluation Criterias for improving health outcomes. This positive conclusion should enhance our ability to present Spinal-Stim as the preferred treatment option for patients with, or at high risk for, failed spinal fusions.
 "The company's gross margin improved from a year ago, as well as from the second quarter of this year, mainly due to increased PEMF unit rentals during the quarter that offset the impact of fixed expenses on the gross margin," Mooibroek noted. "We have continued to emphasize cost controls in every area of company operations, including more effective applications of systems and personnel."
 AME produces and distributes medical devices used primarily by orthopaedic and neurosurgical professionals. The company's product lines include the Spinal-Stim System to enhance the healing of spinal fusions, Physio-Stim bone growth stimulators for the healing of non-union fractures, the AME(R) Universal Bone Plate, the Halifax(R) Clamp cervical spine fixation system, the Ogden(TM) Anchor for anchoring soft tissue to bone, and the Carbon-One(R) Halo System for patients suffering trauma or deteriorating cervical spine conditions.
 AMERICAN MEDICAL ELECTRONICS, INC.
 Consolidated Statements Of Income
 (In thousands, except per share data)
 (unaudited)
 For the periods Three Months Nine Months
 ended Sept. 30, 1993 1992 1993 1992
 Revenues $10,334 $7,927 $28,713 $24,287
 Cost of Revenues 2,313 2,000 6,691 5,488
 Gross Profit 8,021 5,927 22,022 18,799
 Expenses:
 Selling, general and
 administrative 5,365 4,366 15,132 12,923
 Research and
 development 882 722 2,652 2,227
 Income from Operations 1,774 839 4,238 3,649
 Other Income (Expense)
 Gain on sales of
 marketable securities -- 339 130 339
 Interest income 152 280 514 813
 Interest expense (9) (15) (36) (63)
 Income Before Income Taxes
 and Cumulative Effect of
 Accounting Change 1,917 1,443 4,846 4,738
 Provision for Income
 Taxes 341 491 1,419 1,614
 Income Before Cumulative
 Effect of Accounting
 Change 1,576 952 3,427 3,124
 Income Before Cumulative
 Effect of Accounting Change
 Cumulative effect as of
 Dec. 31, 1992, of change in
 method of accounting for
 income taxes -- -- 375 --
 Net Income $1,576 $ 952 $ 3,802 $ 3,124
 Earnings Per Share:
 Income Before Cumulative
 Effect of Accounting
 Change $.23 $.12 $.48 $.40
 Cumulative Effect of
 Accounting Change -- -- .05 --
 Net Income $.23 $.12 $.53 $.40
 Weighted average
 shares outstanding
 for the period 6,974 7,827 7,160 7,866
 -0- 10/19/93
 /CONTACT: Joseph Mooibroek, president and CEO, 214-918-8383, or Wesley Johnson, VP/Finance and CFO, 214-918-8477, both of American Medical Electronics, Inc./
 (AMEI)


CO: American Medical Electronics, Inc. ST: Texas IN: MTC SU: ERN

TW -- NY040 -- 3909 10/19/93 11:08 EDT
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Date:Oct 19, 1993
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