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| American Medical Systems Reports First-Quarter Gains in Sales and Earnings |
| AMERICAN MEDICAL SYSTEMS LOGO
American Medical Systems, Inc. logo. (PRNewsFoto)[AG] MINNEAPOLIS, MN USA | |||
Earning $1.4 Million Versus $200,000 Last Year;
Year 2001 Product Launches in Progress
MINNEAPOLIS, April 19 /PRNewswire/ --
American Medical Systems (Nasdaq: AMMD), the leading independent
manufacturer of urological surgical devices, reported net sales for the first
quarter ended March 31, 2001, of $27.5 million, a 10.3 percent increase over
sales of $25.0 million in the same quarter last year. First-quarter 2001
revenue gains would have been 11.5 percent if not offset by negative currency
exchange rate fluctuations of approximately $308,000 compared to the 2000
first quarter. The company reported net income for the first quarter of
$1.4 million, or $0.05 per share, a 571 percent increase over net income of
$209,000 in the year-ago quarter. First-quarter operating income increased
56 percent from the year-ago quarter, and the first-quarter operating margin
expanded to 9.5 percent versus 6.7 percent in the year-ago quarter.
First-quarter earnings before interest, taxes and amortization (EBITA)
increased 34 percent versus the year-ago quarter, representing 21.4 percent of
sales versus 17.6 percent of sales in the year-ago quarter.
(PHOTO: http://www.newscom.com/cgi-bin/prnh/20000710/AMSLOGO )
First-quarter revenue gains included a 19 percent rise in the company's
line of incontinence products compared to the year-ago quarter. Within this
category, sling products for men and women showed a 53 percent increase from
the first quarter of 2000. Sales of erectile dysfunction products increased
2 percent versus the prior-year period. First-quarter sales of prostate
disease products generated a 31 percent gain over the same quarter in 2000.
Manufacturing problems at an outside supplier negatively affected sales of
prostate disease products in the prior year.
Douglas W. Kohrs, AMS president and CEO, commented: "In the first
quarter, we were especially pleased to see the strong growth in AMS'
incontinence products, which affirms our strategy to broaden our product lines
and focus on minimally invasive treatment options. Incontinence product sales
are now approaching erectile dysfunction sales, a notable shift in our product
mix."
AMS achieved a gross margin of 80.4 percent, which improved over both the
77.1 percent gross margin in the year-ago period and the 79.5 percent in the
fourth quarter of 2000. Kohrs noted, "With our fixed-cost in-house
manufacturing capabilities, we believe we can maintain our high gross margins
as we launch new products." These products, including the SPARC(TM) Sling
System, ProstaJect(TM) Ethanol Injection System, Parylene(TM) Micro Coating
and Inhibizone(TM) Antibiotic Treatment, are expected to begin generating
revenues in the second quarter. Marketing and sales expenses in the first
quarter included costs associated with training programs and materials,
promotional literature and advertising necessary to launch these new products.
Interest expense was $1.0 million in the quarter, or $817,000 less than in
the first quarter of 2000 as a result of significantly lower debt levels. Net
income also includes a non-recurring pretax payment to AMS of $375,000, or
less than $0.01 per share. This payment represented reimbursement to resolve
a quality issue with a materials supplier dating back to the fourth quarter of
1999.
Product Development Update
"AMS has recently announced product innovations in each of our three core
product areas -- incontinence, erectile dysfunction and prostate disease,"
added Kohrs. "In 2001, we are on track to introduce several significant
products. Our investments in R&D over the past year are beginning to generate
customer enthusiasm and revenues."
At the European Association of Urology Annual Meeting in early April in
Geneva, AMS exhibited the SPARC Sling System, which was developed in
consultation with physicians. This system is designed to offer a novel,
minimally invasive surgical approach that may provide greater safety over
current treatments for women with stress incontinence. AMS is planning a
staged rollout of the product in Europe in the second quarter, pending CE Mark
approval. In the United States, the company expects to make a 510(k)
submission to the Food and Drug Administration (FDA) in the second quarter to
request marketing clearance.
The introduction of the TransFix Female Sling Fixation System, another
option complementing the successful In-Fast(TM) Female Sling Fixation System,
is now scheduled for the second quarter.
The available supply of the Urogen(TM) Dermis Allogaft sling material,
used in both male and female sling products, has improved but not yet filled
supply lines.
AMS is expecting FDA approval for an antibiotic coating for its penile
implant products in the second quarter. The innovative coating was developed
by AMS to help reduce the risk of infection. The company recently received a
Premarket Approval Supplement (PMAS) in the United States from the FDA for
Parylene, a coating designed to strengthen and extend the service of the
700(TM) Series inflatable penile implants. In laboratory testing, Parylene
has added millions of cycles in which the device's components were folded or
stretched without detectable wear. The U.S. launch of
Parylene-coated products is planned for the second quarter.
U.S. clinical trials have begun to evaluate safety and tolerability of the
ProstaJect Ethanol Injection System, a new technology for the treatment of
benign prostatic hyperplasia (BPH or enlarged prostate disease). AMS expects
to enroll 150 patients in the phase I and II study, and submit six-month
patient data to the FDA in the first quarter of 2002. ProstaJect has CE Mark
approval and is on schedule for a launch in European markets in May 2001.
In March, AMS launched a series of testicular prosthetic implants outside
the United States. These implants are designed for cosmetic use in men who
have lost a testicle to cancer or through other traumatic or congenital
defects. Approximately 15,000 cases of testicular cancer are diagnosed
annually worldwide.
Outlook
For the second quarter of 2001, Kohrs said AMS expects net sales in the
range of $27.0 million to $28.5 million, with EBITA margin approximating the
first-quarter rate. For the full year 2001, management anticipates net sales
growth of between 12 and 16 percent with EBITA margin improvement. In
addition to the risks and uncertainties described further below, the company's
second-quarter 2001 sales are subject to specific risks regarding the
availability of dermis supply and foreign currency fluctuations.
Urological Disorders
The three most prevalent urological disorders are male and female
incontinence, erectile dysfunction and enlarged prostate disease.
Approximately 60 million people in the United States suffer from one or more
of these disorders. An estimated 11 million of these people have a disorder
severe enough to be candidates for treatment with AMS products. Although not
life-threatening, these disorders can diminish quality of life significantly.
In recent years, the number of people seeking treatment has increased markedly
as a result of greater awareness of new treatment alternatives, especially new
drug therapies.
About AMS
American Medical Systems (AMS), headquartered in Minneapolis, is a medical
technology company with 500 employees worldwide. AMS products include a large
portfolio of devices to treat both male and female incontinence, devices for
the diagnosis and treatment of erectile dysfunction; devices for urethral
obstruction caused by benign prostatic hyperplasia (BPH) or (enlarged prostate
disease) and advanced surgical products used in transurethral resection of the
prostate. The company markets its products in more than 60 countries
worldwide. For more information about AMS, visit our Web site at
http://www.visitAMS.com
Except for historical information contained herein, the disclosures in
this news release are forward-looking statements made under the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those anticipated. These
risks and uncertainties include: continued use of non-invasive treatment
alternatives; continued physician use and endorsement of the company's
products; increased supply of sling material; increasing penetration of the
penile implant market; successful introduction of new products and product
improvements; actions related to reimbursement for the company's products and
potential product recalls. These risks and other relevant risks are described
in more detail in the company's Annual Report on Form 10-K for the year ended
December 31, 2000.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
Three months ended
March 31,
2001 2000
Net sales $27,548 $24,986
Cost of sales 5,397 5,730
Gross profit 22,151 19,256
Operating expenses:
Marketing and sales 11,409 9,864
General and administrative 2,726 2,694
Research and development 3,190 3,028
Amortization of intangibles 2,200 1,991
Total operating expenses 19,525 17,577
Operating income 2,626 1,679
Royalty and other income 1,075 726
Interest expense, net (1,027) (1,844)
Income before income taxes 2,674 561
Income tax expense (1,270) (352)
Net income $1,404 $209
Net income per share (a) --
basic $0.05
diluted $0.05
Weighted average shares used in computation --
basic 27,813
diluted 29,892
EBITA (b) $5,901 $4,396
EBITA as a percent of net sales 21.4% 17.6%
NOTES
(a) No common shares were outstanding during 2000; therefore no net income
per share is presented.
(b) EBITA consists of net income excluding net interest, taxes and
amortization of intangibles.
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
Assets March 31, December 31,
2001 2000
Current assets: (Unaudited)
Cash and cash equivalents $8,596 $12,165
Accounts receivable, net 23,596 23,616
Inventories 10,108 9,674
Deferred taxes and other current assets 3,485 6,050
Total current assets 45,785 51,505
Property, plant and equipment, net 24,142 24,773
Intangibles, net 98,504 97,731
Deferred taxes and other assets 12,890 7,253
Total assets $181,321 $181,262
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,519 $2,431
Accrued liabilities and taxes 24,216 24,295
Current portion of notes payable 6,033 6,033
Total current liabilities 32,768 32,759
Long-term notes payable 36,951 38,459
Minority interest 521 521
Other long-term liability 1,482 --
Stockholders' equity 109,599 109,523
Total liabilities and stockholders' equity $181,321 $181,262
AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands, except share data)
(Unaudited)
For the three months ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $1,404 $209
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation 947 919
Amortization of intangibles, including
deferred financing costs 2,268 1,991
Noncash pension charge 278 355
Noncash deferred compensation 118 94
Change in net deferred taxes 1,577 (234)
Changes in operating assets and liabilities (1,781) (3,667)
Net cash provided by (used in)
operating activities 4,811 (333)
Cash flows from investing activities:
Purchase of property, plant and equipment (316) (988)
Purchase of businesses, net of cash acquired (3,041) (2,472)
Purchase of investments in technology (4,500) --
Purchase of other intangibles -- (1,000)
Net cash used in investing activities (7,857) (4,460)
Cash flows from financing activities:
Issuance of common stock 343 --
Net borrowings on long-term debt (1,508) 2,800
Net cash provided by (used in)
financing activities (1,165) 2,800
Effect of exchange rates 642 159
Net decrease in cash and cash equivalents ($3,569) ($1,834)
SOURCE American Medical Systems
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CONTACT:
Greg Melsen, Chief Financial Officer of
American Medical Systems, 952-933-4666, greg.melsen@visitAMS.com
, or Marian Briggs, mbriggs@psbpr.com , or Nancy A. Johnson,
njohnson@psbpr.com , both of Padilla Speer Beardsley Inc.,
612-871-8877, for American Medical Systems
