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Angeion Corporation FOR IMMEDIATE RELEASE |
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Angeion Corporation Reports
ST. PAUL, Minn. — (December 14, 2009) — Angeion Corporation (NASDAQ: ANGN) today reported results for its fiscal fourth quarter ended October 31, 2009. For the 2009 fourth quarter, Angeion posted a net loss of $573,000, or $0.14 per diluted share, on revenues of $6.6 million. Compared to the prior-year fourth quarter, which generated net income of $103,000, or $0.02 per diluted share, current-year earnings decreased $676,000, or $0.16 per diluted share, due primarily to a $978,000 decrease in revenues coupled with increased spending in research and new product development. While 2009 fourth-quarter revenues were impacted by the continuing economic downturn and its on-going pressure on capital spending by hospitals and clinics, the Company was encouraged by a sequential improvement in sales of $377,000, or 6.1%, between the 2009 third and fourth quarters. Fourth-quarter revenue from international customers was strong at 23.6% of total sales—international business for the full year accounted for 21.4% (compared to 20.6% for the prior fiscal year). “Sequentially, our global sales team achieved quarterly sales gains despite the challenging economic conditions and capital spending pressures facing our medical customers,” said Rodney A. Young, Angeion’s President and Chief Executive Officer. “Domestically, we are encouraged by earning business in two major accounts despite aggressive competitive pressure, a testimony to the added value that our MedGraphics products provide. Internationally, our distribution partners delivered strong fourth-quarter results while facing marketplace challenges. Additionally, we ended the year with a stronger cash position and no debt, as well as significantly reduced operating expense and improved margins. We believe that when the current economic downturn subsides, we will have the strength to prosper with a leading product offering that spans the continuum of care from cardiorespiratory diagnostics and monitoring to metabolic assessment, training and tracking programs.” For the year ended October 31, 2009, Angeion reported a net loss of $1.6 million, or $0.39 per diluted share, on revenues of $25.5 million. This compares to a net loss of $686,000, or $0.17 per diluted share, on revenues of $30.0 million for fiscal 2008. Approximately $1.2 million of the $4.5 million decrease in revenue between fiscal 2008 and 2009 was due to the conclusion of a non-recurring clinical trial program in fiscal 2008. Further, and as noted above, 2009 revenues were adversely affected by the worldwide economic downturn’s impact on capital spending by hospitals and clinics. Despite the $4.5 million year-over-year revenue decline, Angeion only reported a net loss increase for the period of $907,000, or $0.22 per diluted share. The Company was able to achieve this result through improved gross margin (52.1% in 2009 compared to 51.5% in 2008) and decreased operating expense in all categories except research and development—which for the year ended October 31, 2009, totaled $3.2 million, up $714,000, or 29.3%, from prior-year levels. In terms of Angeion’s expanded R&D efforts, the majority of the annual cost increase came from staff additions, with the balance related to spending on specific projects, all of which we believe will result in either technological improvements to existing products or entirely new product offerings. Exclusive of R&D, year-over-year operating expense fell by $2.1 million, or 15.1%, for the year. On a pro-forma basis, after adding back non-cash charges for depreciation, amortization and stock-based compensation expense, the Company generated a $68,000 pro-forma net loss for the quarter and $335,000 in pro-forma net income for the year. Angeion continues to believe that this pro-forma information is helpful in an analysis of its operating results by eliminating the non-cash items noted in the table below. A reconciliation of GAAP basis net loss to pro-forma net income / (loss) follows:
As the table indicates, the Company generated positive results for the year despite the difficulties posed by the current economic climate and the corresponding $4.5 million year-over-year reduction in revenue. Angeion’s cash flow statement shows that the Company reported $2.3 million in positive operating cash flow in fiscal 2009, equal to $2.3 million for fiscal 2008. The 2009 result was largely due to tight working capital management which resulted in a $936,000 reduction in accounts receivable for the year, a $772,000 reduction in inventory and a $227,000 increase in accounts payable. The Company has no debt. At quarter-end Angeion had $2.70 in cash per outstanding share.
Looking Ahead “As we discussed last quarter, our New Leaf technologies provide personally tailored programs to help individuals not only lose weight but improve fitness and their overall health. With more than two-thirds of U.S. adults overweight—and nearly half of those classified as obese—our ability to deliver “real results” and successfully address this crisis is a significant opportunity.” According to Young, Angeion is actively embarking on a New Leaf business development strategy to address the employee health segment with its complete line of Active Metabolic Training℠ products and programs. On the cardiorespiratory diagnostics and monitoring front, Angeion is expanding its ability to play a broader role in the detection and management of chronic obstructive pulmonary disease (COPD) and other breathing conditions in hospitals and clinics around the world through its MedGraphics line of products. The Company continues to pursue growth opportunities through new product development initiatives. In addition, MedGraphics’ business development activities also include leveraging the Company’s highly respected direct U.S. sales and service organizations, along with its worldwide distribution network, to partner and sell complementary products into existing and related markets. Said Young, “Our longer-term focus is implementing growth strategies that capitalize on the many opportunities in our respective markets. Our goal continues to be to drive revenue growth in both the United States and internationally while continuing to improve profitability.” According to Young a number of recent highlights position Angeion well for long-term success.
Concluded Young, “Angeion has the financial strength and market presence to drive growth as the global economic climate rebounds. Our leading-edge products, technologies and programs backed by exceptional sales and technical service teams, position us well to succeed in several key markets. We are optimistic about our future even though the world economy remains challenging.” Investor Conference Call About Angeion Corporation Non-GAAP Financial Measures Non-GAAP pro-forma net income (loss). We define non-GAAP pro-forma net income / (loss) as net income / (loss) plus stock-based compensation expense and depreciation and amortization. Our management utilizes a number of different financial measures, both GAAP and non-GAAP, in making operating decisions, in forecasting and planning, and in analyzing and assessing our company's overall performance. Our annual financial plan is prepared and reviewed both on a GAAP and non-GAAP basis. We budget and forecast for revenue and expenses, and assess actual results against our annual financial plan, using GAAP and non-GAAP measurements. Our board of directors and management utilize these financial measures (both GAAP and non-GAAP) to determine our allocation of resources. In addition, and as a consequence of the importance of these non-GAAP financial measures in managing our business, we use non-GAAP financial measures in the evaluation process to establish management compensation. For example, management’s annual bonus program is based upon the achievement of net income / (loss) plus adding back stock-based compensation. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding the items mentioned above. In particular, we consider the use of non-GAAP pro-forma net income / (loss) helpful in understanding the performance of our business, as it excludes recurring non-cash items. Our rationale for the items we omit from our non-GAAP measures is as follows: Stock-based compensation. We exclude non-cash stock-based compensation expense because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FAS 123R. Stock-based compensation expense is a recurring expense for our company and is expected to continue in the future as we have a history of granting stock options and other equity instruments as a means of incentivizing and rewarding our employees. Depreciation and amortization expense. Depreciation and amortization are non-cash charges that are impacted by our accounting methods and the book value of assets. By excluding these non-cash charges, our management, together with our investors, are provided with supplemental metrics to evaluate cash earnings, distinguishing performance’s impact on earnings from performance’s impact on cash. Management believes that the review of these supplemental metrics in conjunction with other GAAP metrics, such as capital expenditures, is useful for management and investors in understanding our business. Depreciation is a recurring expense for our company and is expected to impact future periods as we continue to make further investments in our infrastructure through the acquisition of property, plant and equipment. Due to the exclusion of these non-cash items, investors should not use this metric as a measure of evaluating our liquidity. Instead, to evaluate our liquidity, investors should refer to the Consolidated Statements of Cash Flow and the Liquidity and Capital Resources section contained within Management's Discussion and Analysis in our most recently filed periodic reports. There are a number of limitations related to the use of non-GAAP pro-forma net income / (loss). First, these non-GAAP financial measures exclude stock-based compensation and depreciation expenses that are recurring. Both stock-based expenses and depreciation have been, and will continue to be for the foreseeable future, a significant recurring expense with an impact upon our company notwithstanding the lack of immediate impact upon cash. Second, stock-based awards are an important part of our employees’ compensation and impact their performance. Third, there is no assurance the components of the costs that we exclude in our calculation of non-GAAP pro-forma net income / (loss) do not differ from the components that our peer companies exclude when they report their results of operations. Our management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their most directly comparable financial measures calculated in accordance with GAAP.
Forward Looking Statements Contact: William J. Kullback, SVP & Chief Financial Officer, (651) 766-3492
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