SCHEDULE 14A
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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Radiance Medical Systems, Inc.
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[RADIANCE LOGO] FOR FURTHER INFORMATION
CONTACT JEFF THIEL, PRESIDENT & CEO
TELEPHONE: 1-800-983-2284
RADIANCE ANNOUNCES FISCAL 2001 AND
FOURTH QUARTER FINANCIAL RESULTS
IRVINE, CA -- (BW Healthwire) -- February 20, 2002, Radiance Medical
Systems, Inc. (Nasdaq RADX-news) Irvine, CA today announced financial results
for fiscal 2001 and the fourth quarter ended December 31, 2001. Revenues for
2001 were 15% lower at $7,639,000, compared with $8,939,000 for fiscal 2000. For
the fourth quarter of 2001, revenues were 8% lower at $1,996,000, compared with
$2,159,000 for the same period of 2000. License and other revenues for the year
ended December 31, 2001 declined 4% to $6,528,000, from $6,800,000 for 2000.
License and other revenues for the quarter ended December 31, 2001 rose 7% to
$1,875,000, from $1,750,000 for the same period of 2000. License and other
revenues are primarily derived from royalties received from Guidant related to
sales of Guidant products using our licensed Focus technology, and therefore
future revenues may be impacted significantly by changes in Guidant's related
product sales.
The net loss for 2001 was $15,641,000, or $1.20 per share, up 186% from
the fiscal 2000 net loss of $5,463,000, or $0.46 per share. The increase in loss
for 2001 was primarily the result of restructuring charges totaling $5,218,000.
The restructuring charges consisted of the write-off of inventory of $601,000
(included in cost of sales), a $2,111,000 impairment charge for our previously
acquired RDX technology, a $1,093,000 accrual for payroll-related costs of
involuntarily terminated employees, a $699,000 impairment charge for our
manufacturing and other operational assets, a $344,000 accrual for
non-cancelable commitments under our contract with our third party European
manufacturer, a $309,000 accrual for non-cancelable commitments under our
facility leases (net of estimated sublease income of $256,000), and other exit
costs totaling $61,000. Secondarily, the increase in the net loss for the year
ended December 31, 2001 compared with the results for the same period of 2000
was due to higher spending for clinical trials, including BRITE II, BRITE SVG
and RAPID, and research and development expenditures to establish a European,
third-party manufacturing facility.
The net loss for the fourth quarter of 2001 was $1,568,000, or $0.12 per
share, up 71% from the net loss of $919,000, or $0.07 per share, for the same
period of fiscal 2000. The increase in loss for the
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www.radiance.net
page 2
fourth quarter of fiscal 2001 was attributable primarily to income from the sale
of an option to C.R.Bard to purchase Endologix equity securities held by us,
which option lapsed without exercise in the fourth quarter of 2000, and to the
reversal of a marketing allowance in the fourth quarter of 2000. The Company
anticipates a lower net loss in the first quarter of 2002, relative to the same
period of 2001, due to the restructuring and discontinuance of manufacturing,
research and development, and sales and marketing activities for its Focus
technology and brachytherapy products at the end of the third quarter of 2001.
As previously announced, Radiance entered into a definitive agreement
to merge with Endologix, a developer and manufacturer of endoluminal stent
grafts for the treatment of abdominal aortic aneurisms. Subject to shareholder
approval and other customary closing conditions, the merger transaction is
expected to close in the second quarter of 2002.
Commenting on the activities of the last six months, Jeff Thiel,
President & CEO, said, "In September 2001 we announced a restructuring of the
Company, which essentially was completed by year end. Following our decision to
restructure, we sought another medical device technology that could be developed
to compete in a large market and, thus, give our shareholder's another growth
opportunity. We believe that the Endologix technology can do that by addressing
the needs of the AAA patient in what is a large and emerging stent graft
market."
Radiance Medical Systems develops radiation delivery catheters for use
in the treatment of coronary and peripheral vascular systems to prevent
restenosis following the interventional treatment of atherosclerosis. For more
information about Radiance, please visit the Company's web site at
www.radiance.net.
Except for historical information contained herein, this news release
contains forward-looking statements, the accuracy of which are necessarily
subject to risks and uncertainties, and which may be affected by, among other
things, risks and uncertainties related to the effects of the proposed merger
with Endologix on Radiance, the ability of Radiance to successfully integrate
Endologix's and Radiance's operations and business strategies, future economic,
competitive and market conditions, including those in Europe and Asia and those
related to Radiance's and Endologix's strategic markets, whether the products
offered will achieve acceptance in the marketplace and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the control of Radiance. In addition, the accuracy of
the forward-looking statements in this news release are necessarily subject to
other risks and uncertainties, and may be affected by, among other things, risks
and uncertainties involving new product development and introduction cycles,
research and development activities, including failure to demonstrate clinical
efficacy, delays by regulatory authorities, scientific and technical advances by
third parties, introduction of competitive products, third party reimbursement
and physician training, and other risk factors, and matters set forth in the
Company's Annual
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1.800.983.2284 - 949.457.9546 - Fax: 949.457.9561
www.radiance.net
page 3
Report on Form 10-K for the year ended December 31st, 2000 and the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30th, 2001.
Radiance will be filing documents concerning the merger transaction
mentioned above with the Securities and Exchange Commission. Radiance urges
investors and securityholders to read these documents carefully when they become
available, including the proxy statement related to the merger, because they
contain important information. Investors and securityholders may obtain these
documents and others related to Radiance free of charge at the SEC's web site at
www.sec.gov. In addition, documents filed by Radiance with the SEC will be
available for free by directing a request to the Secretary of Radiance, at 13900
Alton Parkway, Suite 122, Irvine, CA 92618, telephone (949) 457-9546. Radiance,
its directors and executive officers and other employees may participate in the
solicitation of proxies on behalf of the merger. The information concerning the
participants will be included in the proxy statement on Schedule 14A to be filed
with the SEC.
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RADIANCE MEDICAL SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED DEC. 31, YEAR ENDED DEC. 31,
2001 2000 2001 2000
-------- -------- -------- --------
REVENUES:
SALES $ 121 $ 409 $ 1,111 $ 2,139
LICENSE AND OTHER REVENUE 1,875 1,750 6,528 6,800
-------- -------- -------- --------
TOTAL REVENUES 1,996 2,159 7,639 8,939
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COST OF PRODUCT SALES 150 88 1,149 1,465
COST OF SALES FROM RESTRUCTURING -- -- 601 --
-------- -------- -------- --------
TOTAL COST OF SALES 150 88 1,750 1,465
-------- -------- -------- --------
GROSS PROFIT 1,846 2,071 5,889 7,474
OPERATING EXPENSES:
RESEARCH, DEVELOPMENT AND CLINICAL 2,403 3,053 14,605 11,508
MARKETING AND SALES 106 (22) 1,305 842
GENERAL AND ADMINISTRATIVE 832 893 2,582 3,097
RESTRUCTURING CHARGES 361 -- 4,617 --
MINORITY INTEREST (1) (9) (65) (26)
-------- -------- -------- --------
TOTAL OPERATING EXPENSES 3,701 3,915 23,044 15,421
-------- -------- -------- --------
LOSS FROM OPERATIONS (1,855) (1,844) (17,155) (7,947)
-------- -------- -------- --------
OTHER INCOME (EXPENSE):
INTEREST INCOME 277 496 1,426 1,383
GAIN ON SALE OF ASSETS 12 447 89 1,140
OTHER EXPENSE (2) (18) (1) (39)
-------- -------- -------- --------
TOTAL OTHER INCOME 287 925 1,514 2,484
-------- -------- -------- --------
NET LOSS ($ 1,568) ($ 919) ($15,641) ($ 5,463)
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BASIC AND DILUTED NET LOSS PER SHARE ($ 0.12) ($ 0.07) ($ 1.20) ($ 0.46)
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SHARES USED IN COMPUTING BASIC AND
DILUTED NET LOSS PER SHARE 13,115 12,951 13,086 11,749
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