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8-K - FORM 8-K - AMERICAN MEDICAL SYSTEMS HOLDINGS INC | c64448e8vk.htm |
Exhibit 99.1
DATE: May 3, 2011
FOR IMMEDIATE RELEASE
AMERICAN MEDICAL SYSTEMS ANNOUNCES FIRST QUARTER 2011 FINANCIAL RESULTS
| First quarter revenue of $140.8 million grows 4.3%; 5.4% growth excluding impact of currency and previously divested Uterine Health product line | ||
| First quarter non-GAAP adjusted EPS of $0.33 grows 13.8% over prior year; GAAP EPS of $0.27 in both periods |
MINNEAPOLIS, May 3, 2011 American Medical Systems Holdings, Inc. (NASDAQ: AMMD) reported
revenue of $140.8 million for the first quarter of 2011, a 4.3 percent increase over sales of
$134.9 million in the comparable quarter of 2010. Adjusting revenue for the impact of currency
fluctuation and the impact of the Her Option® uterine health product line, which was sold during
the first quarter of 2010, results in constant currency revenue growth of 5.4 percent.
Mens Health sales of $67.4 million in the first quarter represented an increase of 4.5 percent on
a reported basis compared to the same quarter last year, and grew 4.3 percent on a constant
currency basis, with growth primarily driven by the Male Continence product line. The BPH Therapy
business increased 8.3 percent on a reported basis and 7.8 percent on a constant currency basis to
$28.1 million for the quarter. BPH Therapy sales were led by continued enthusiasm surrounding the
new GreenLight XPS console and the MoXy Liquid Cooled Fiber. The Womens Health business
increased 6.0 percent on a reported basis and 5.7 percent on a constant currency basis to $45.3
million in the first quarter. The Womens Health growth is primarily driven by the pelvic floor
repair product line which continues to benefit from both the Elevate® anterior and posterior
systems.
The Company reported first quarter net income of $21.6 million, or $0.27 per share. This compares
to net income in the same quarter last year of $20.7 million, also $0.27 per share. Non-GAAP
adjusted earnings per share of $0.33 compares to $0.29 per share in the same quarter last year, an
increase of 13.8 percent. Non-GAAP adjusted earnings per share excludes the impact of the
amortization of intangible assets and amortization of financing costs, both significant non-cash
items affecting comparability to other companies. First quarter 2011 non-GAAP adjusted earnings
per share also excludes the start-up costs related to the transition of certain manufacturing
operations to a new facility in Ireland and first quarter 2010 non-GAAP adjusted earnings per share
excludes the gain on the sale of the Her Option® Uterine Health product line. A reconciliation of
reported net income to non-GAAP adjusted net income for all periods is provided in the attached
schedules.
Proposed Transaction with Endo Pharmaceuticals
On April 10, 2011, Endo Pharmaceuticals (Endo) (NASDAQ: ENDP) and American Medical Systems entered
into a definitive agreement under which Endo will acquire AMS for $30 per share, or $2.9 billion in
cash, which includes the assumption and repayment of $312 million of AMS debt. The transaction is
expected to close in the third quarter of 2011, subject to approval by AMS stockholders, clearance
by the relevant antitrust authorities and the satisfaction of other customary conditions.
American Medical Systems
May 3, 2011
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May 3, 2011
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A special meeting of the stockholders of AMS will be announced in due course to obtain
stockholder approval of the proposed transaction. AMS has filed with the Securities and Exchange
Commission (SEC) a preliminary proxy statement and intends to file with the SEC and distribute to
its stockholders a definitive proxy statement and other relevant documents in connection with the
proposed transaction. Investors of AMS are urged to read the definitive proxy statement and other
relevant materials when they become available because they will contain important information about
AMS, Endo and the proposed transaction. Investors may obtain a free copy of these materials (when
they are available) and other documents filed by AMS with the SEC at the SECs website at
www.sec.gov, at AMSs website at www.AmericanMedicalSystems.com or by sending a written request to
American Medical Systems Holdings, Inc., 10700 Bren Road West, Minnetonka, Minnesota, 55343,
attention: Corporate Secretary.
AMS and its directors, executive officers and certain other members of management and employees may
be deemed to be participants in soliciting proxies from its stockholders in favor of the proposed
merger. Information regarding the persons who may, under the rules of the SEC, be considered to be
participants in the solicitation of AMSs stockholders in connection with the proposed transaction
will be set forth in AMSs definitive proxy statement for its special meeting. Additional
information regarding these individuals and any interest they have in the proposed transaction will
be set forth in the definitive proxy statement to be filed with the SEC.
Use of Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted
accounting principles (GAAP), management provides non-GAAP adjusted net income, non-GAAP adjusted
earnings per share and constant currency revenue growth rates because management believes that in
order to properly understand the Companys short-term and long-term financial trends and for
purposes of comparability to other companies, investors may wish to consider the impact of certain
adjustments (such as gain or loss on extinguishment of debt, gain or loss on sale of non-strategic
assets, in-process research and development charges (IPRD), amortization of intangible assets,
amortization of financing costs, start-up costs of global manufacturing expansion and related
income tax adjustments and the impact of foreign currency translation on reported revenue). These
adjustments result from facts and circumstances (such as acquisition, business development and
expansion activities and other non-recurring items) that vary in frequency and impact on the
Companys results of operations, represent significant items, which when excluded provide a useful
measure to determine the health of the business and earnings by the business before significant
non-cash charges and costs of a start-up nature or in the case of foreign currency translation, are
highly variable and difficult to predict. Management uses non-GAAP adjusted net income, non-GAAP
adjusted earnings per share and constant currency revenue growth rates to forecast and evaluate the
operational performance of the Company as well as to compare results of current periods to prior
periods on a consistent basis.
A reconciliation of net income and revenue growth rate percentages, the GAAP measure most directly
comparable to non-GAAP adjusted earnings per share and constant currency revenue growth rates,
respectively, are provided on the attached schedules.
Non-GAAP financial measures used by the Company may be calculated differently from, and therefore
may not be directly comparable to, similarly titled measures used by other companies.
Investors should consider non-GAAP measures in addition to, and not as a substitute for, or
superior to, financial performance measures prepared in accordance with GAAP.
American Medical Systems
May 3, 2011
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May 3, 2011
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About American Medical Systems
American Medical Systems, headquartered in Minnetonka, Minnesota, is a diversified supplier of
medical devices and procedures to treat incontinence, erectile dysfunction, benign prostatic
hyperplasia (BPH), pelvic floor prolapse and other pelvic disorders in men and women. These
disorders can significantly diminish ones quality of life and profoundly affect social
relationships. In recent years, the number of people seeking treatment has increased markedly as a
result of longer lives, higher-quality-of-life expectations and greater awareness of new treatment
alternatives. American Medical Systems products reduce or eliminate the incapacitating effects of
these diseases, often through minimally invasive therapies. The Companys products were used to
treat approximately 340,000 patients in 2010.
Forward-Looking Statements
This press release contains forward-looking statements relating to, among other things, the market
opportunities, future products, sales, financial results of American Medical Systems and the
proposed merger between AMS and Endo. These statements and other statements contained in this press
release that are not purely historical fact are forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, that are based on managements beliefs,
certain assumptions and current expectations. These forward-looking statements are subject to risks
and uncertainties such as successfully competing against competitors, physician acceptance,
endorsement, and use of AMS products; timing and success of new product introductions; clinical and
regulatory matters; product liability claims; potential product recalls or technological
obsolescence; changes in and adoption of reimbursement rates; global healthcare reform; patient
acceptance of the Companys products and therapies; current worldwide economic conditions; reliance
on single or sole-sourced suppliers; loss or impairment of a principal manufacturing facility;
factors impacting the stock market and share price and its impact on the dilution of convertible
securities; adequate protection of the Companys intellectual property rights; successfully
managing debt leverage and related credit facility financial covenants; currency and other economic
risks inherent in selling our products internationally; whether the merger with Endo will be
consummated; and other risks and uncertainties described in the Companys Annual Report on Form
10-K for the year ended January 1, 2011, and its other SEC filings. Actual results may differ
materially from anticipated results. The forward-looking statements contained in this press release
are made as of the date hereof, and AMS undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after the date on which any such statement is made or
to reflect the occurrence of unanticipated events.
More information about the Company and its products can be found at its website
www.AmericanMedicalSystems.com and in the Companys Annual Report on Form 10-K for 2010 and its
other SEC filings.
Contact:
|
Mark Heggestad | |
Executive Vice President and Chief Financial Officer | ||
952-930-6495 | ||
Mark.Heggestad@AmericanMedicalSystems.com | ||
Anthony Bihl | ||
President and Chief Executive Officer | ||
952-930-6334 | ||
Tony.Bihl@AmericanMedicalSystems.com |
American Medical Systems
May 3, 2011
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May 3, 2011
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American Medical Systems Holdings, Inc.
Statements of Operations
(In thousands, except per share data)
Statements of Operations
(In thousands, except per share data)
Three Months Ended | ||||||||
April 2, 2011 | April 3, 2010 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net sales |
$ | 140,786 | $ | 134,926 | ||||
Cost of sales |
22,133 | 21,027 | ||||||
Gross profit |
118,653 | 113,899 | ||||||
Operating expenses |
||||||||
Sellling, general and
administrative |
60,286 | 60,887 | ||||||
Research and development |
14,418 | 13,509 | ||||||
Global manufacturing
start-up costs |
197 | | ||||||
Amortization of intangibles |
2,948 | 3,047 | ||||||
Total operating expenses |
77,849 | 77,443 | ||||||
Operating income |
40,804 | 36,456 | ||||||
Other (expense) income |
||||||||
Royalty income |
82 | 308 | ||||||
Interest expense |
(3,101 | ) | (3,954 | ) | ||||
Amortization of financing
costs |
(3,163 | ) | (3,693 | ) | ||||
Gain on sale of
non-strategic assets |
| 7,719 | ||||||
Other expense |
(827 | ) | (516 | ) | ||||
Total other (expense) income |
(7,009 | ) | (136 | ) | ||||
Income before income taxes |
33,795 | 36,320 | ||||||
Provision for income taxes |
12,234 | 15,662 | ||||||
Net income |
$ | 21,561 | $ | 20,658 | ||||
Net income per share |
||||||||
Basic net income |
$ | 0.28 | $ | 0.28 | ||||
Diluted net income |
$ | 0.27 | $ | 0.27 | ||||
Weighted average common shares used in
calculation |
||||||||
Basic |
76,866 | 75,117 | ||||||
Diluted |
78,691 | 76,270 |
American Medical Systems
May 3, 2011
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May 3, 2011
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American Medical Systems Holdings, Inc.
Condensed Balance Sheets
(In thousands)
Condensed Balance Sheets
(In thousands)
April 2, 2011 | January 1, 2011 | |||||||
(Unaudited) | ||||||||
Assets |
||||||||
Current assets |
||||||||
Cash and short-term investments |
$ | 110,015 | $ | 77,815 | ||||
Accounts receivable, net |
96,442 | 98,518 | ||||||
Inventories, net |
35,492 | 33,789 | ||||||
Other current assets |
24,220 | 22,305 | ||||||
Total current assets |
266,169 | 232,427 | ||||||
Property, plant and equipment, net |
40,820 | 41,405 | ||||||
Goodwill and intangibles, net |
772,642 | 774,501 | ||||||
Other long-term assets |
8,768 | 5,101 | ||||||
Total assets |
$ | 1,088,399 | $ | 1,053,434 | ||||
Liabilities and stockholders equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
$ | 9,500 | $ | 8,833 | ||||
Accrued liabilities and taxes |
58,802 | 60,719 | ||||||
Total current liabilities |
68,302 | 69,552 | ||||||
Debt and other long-term liabilities |
320,618 | 315,321 | ||||||
Total liabilities |
388,920 | 384,873 | ||||||
Stockholders equity |
699,479 | 668,561 | ||||||
Total liabilities and stockholders equity |
$ | 1,088,399 | $ | 1,053,434 | ||||
American Medical Systems
May 3, 2011
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May 3, 2011
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American Medical Systems Holdings, Inc.
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Condensed Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended | ||||||||
April 2, 2011 | April 3, 2010 | |||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 21,561 | $ | 20,658 | ||||
Adjustments to reconcile net income to net cash provided
by operating activities: |
||||||||
Depreciation and amortization, including financing costs |
8,552 | 9,264 | ||||||
Gain on sale of non-strategic assets |
| (7,719 | ) | |||||
Stock-based compensation |
2,190 | 1,829 | ||||||
Other adjustments, including changes in operating assets
and liabilities |
874 | 2,576 | ||||||
Net cash provided by operating activities |
33,177 | 26,608 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(1,802 | ) | (1,314 | ) | ||||
Purchase of intangibles |
(508 | ) | (693 | ) | ||||
Purchase of investments |
(34,468 | ) | (25,041 | ) | ||||
Sale of investments |
8,571 | 7,337 | ||||||
Sale of non-strategic asset |
| 20,186 | ||||||
Other cash flows from investing activities |
(425 | ) | 783 | |||||
Net cash provided by investing activities |
(28,632 | ) | 1,258 | |||||
Cash flows from financing activities |
||||||||
Payments on senior secured credit facility |
| (45,719 | ) | |||||
Other cash flows from financing activities |
6,298 | 9,560 | ||||||
Net cash used in financing activities |
6,298 | (36,159 | ) | |||||
Effect of currency exchange rates on cash |
(329 | ) | (165 | ) | ||||
Net (decrease) increase in cash and cash equivalents |
10,514 | (8,458 | ) | |||||
Cash and cash equivalents at beginning of period |
16,481 | 30,670 | ||||||
Cash and cash equivalents at end of period |
$ | 26,995 | $ | 22,212 | ||||
American Medical Systems
May 3, 2011
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May 3, 2011
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American Medical Systems Holdings, Inc.
Selected Sales Information and Constant Currency Growth Reconciliation
(Unaudited)
(In thousands)
Selected Sales Information and Constant Currency Growth Reconciliation
(Unaudited)
(In thousands)
Three Months Ended | Constant Currency Growth Reconciliation (a) | |||||||||||||||||||
Percent Growth | ||||||||||||||||||||
Percent | Currency | at Constant | ||||||||||||||||||
April 2, 2011 | April 3, 2010 | Growth | Impact | Currency | ||||||||||||||||
Sales |
||||||||||||||||||||
Mens health |
$ | 67,407 | $ | 64,480 | 4.5 | % | $ | 175 | 4.3 | % | ||||||||||
BPH therapy |
28,054 | 25,911 | 8.3 | % | 132 | 7.8 | % | |||||||||||||
Womens health |
45,325 | 42,748 | 6.0 | % | 137 | 5.7 | % | |||||||||||||
Sub-total |
140,786 | 133,139 | 5.7 | % | 444 | 5.4 | % | |||||||||||||
Uterine health (b) |
| 1,787 | -100.0 | % | | -100.0 | % | |||||||||||||
Total |
$ | 140,786 | $ | 134,926 | 4.3 | % | $ | 444 | 4.0 | % | ||||||||||
Geography |
||||||||||||||||||||
United States |
$ | 99,675 | $ | 96,523 | 3.3 | % | $ | | 3.3 | % | ||||||||||
International |
41,111 | 36,616 | 12.3 | % | 444 | 11.1 | % | |||||||||||||
Sub-total |
140,786 | 133,139 | 5.7 | % | 444 | 5.4 | % | |||||||||||||
United
States-Uterine
health (b) |
| 1,787 | -100.0 | % | | -100.0 | % | |||||||||||||
Total |
$ | 140,786 | $ | 134,926 | 4.3 | % | $ | 444 | 4.0 | % | ||||||||||
Percent of total sales |
||||||||||||||||||||
Mens health |
48 | % | 48 | % | ||||||||||||||||
BPH therapy |
20 | % | 19 | % | ||||||||||||||||
Womens health |
32 | % | 32 | % | ||||||||||||||||
Sub-total |
100 | % | 99 | % | ||||||||||||||||
Uterine health (b) |
0 | % | 1 | % | ||||||||||||||||
Total |
100 | % | 100 | % | ||||||||||||||||
Geography |
||||||||||||||||||||
United States |
71 | % | 73 | % | ||||||||||||||||
International |
29 | % | 27 | % | ||||||||||||||||
Total |
100 | % | 100 | % | ||||||||||||||||
(a) | To calculate the currency impact on revenue growth rates, the Company compares each periods sales, assuming no fluctuation in foreign currency exchange rates between periods. The generally accepted accounting principle (GAAP) measure most comparable to this non-GAAP measure is growth rate percentages based on GAAP revenue. | |
(b) | The uterine health product line, Her Option® was sold in February, 2010. Revenues for 2010 consist of end-customer revenue earned prior to the date of sale, in addition to revenue earned as part of the product supply agreement with CooperSurgical, Inc., which continued through the fourth quarter of 2010. |
American Medical Systems
May 3, 2011
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May 3, 2011
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American Medical Systems Holdings, Inc.
Reconciliation of Reported Net Income to Non-GAAP Adjusted Net Income
(Adjustments are presented on a pre-tax basis)
(Unaudited)
(In thousands, except per share data)
Reconciliation of Reported Net Income to Non-GAAP Adjusted Net Income
(Adjustments are presented on a pre-tax basis)
(Unaudited)
(In thousands, except per share data)
Three Months Ended | ||||||||
April 2, 2011 | April 3, 2010 | |||||||
Net income, as reported |
$ | 21,561 | $ | 20,658 | ||||
Adjustments to net income: |
||||||||
Amortization of intangibles (a) |
2,948 | 3,047 | ||||||
Amortization of financing costs (b) |
3,163 | 3,693 | ||||||
Global manufacturing start-up costs (c) |
197 | | ||||||
Gain on sale of non-strategic assets (d) |
| (7,719 | ) | |||||
Tax effect of adjustments to net income (e) |
(2,147 | ) | 2,533 | |||||
Non-GAAP adjusted net income |
$ | 25,722 | $ | 22,212 | ||||
Net income per share |
||||||||
Basic |
$ | 0.28 | $ | 0.28 | ||||
Diluted |
$ | 0.27 | $ | 0.27 | ||||
Non-GAAP adjusted earnings per share |
||||||||
Basic |
$ | 0.33 | $ | 0.30 | ||||
Diluted |
$ | 0.33 | $ | 0.29 | ||||
Weighted average common shares used in calculation: |
||||||||
Basic |
76,866 | 75,117 | ||||||
Diluted |
78,691 | 76,270 |
(a) | Consists of amortization of intangible assets, primarily developed and core technology. | |
(b) | Consists of amortization of financing costs on our convertible senior subordinated notes and senior secured credit facility. | |
(c) | Consists of start-up costs in connection with the expansion of manufacturing capacity internationally, which are incremental to on-going operations. | |
(d) | Relates to the gain on the sale of the Her Option ® Global Endometrial Ablation product line. | |
(e) | Includes the tax effect of each of the above items in each of the periods. |