Exhibit 99.1
Contact: Michael Dale, President/CEO
Jack Judd, Chief Financial Officer
763/553-7736
763/553-0052 Fax
EVC Group, Inc.
Doug Sherk, Jennifer Beugelmans
415/896-6820
Anne Bugge
206/926-5220
FOR IMMEDIATE RELEASE
ATS MEDICAL REPORTS 78 PERCENT SECOND QUARTER REVENUE GROWTH
o US SALES UP 134%
o INTERNATIONAL SALES UP 60%
o COMPANY ENTERS INTO NEW $8.5 MILLION CREDIT FACILITY
o CONFERENCE CALL SCHEDULED FOR TODAY AT 5 PM EDT
MINNEAPOLIS, July 28, 2004 -- ATS Medical, Inc. (NASDAQ: ATSI) developer and
manufacturer of the ATS Open Pivot(R) mechanical heart valve and related cardiac
surgical accessories and technologies today reported that revenue for the second
quarter of 2004 increased 78 percent to a record $7.5 million, as compared with
sales of $4.2 million for the second quarter of 2003. When compared to the first
quarter of 2004, revenue increased 13 percent. Net loss for the second quarter
of 2004 was $3.4 million compared with $3.1 million for the second quarter of
2003
For the first six months of 2004, revenue increased 74 percent to $14.2 million,
as compared to $8.2 million for 2003. Net loss for the first six months of 2004
was $6.7 million compared with $4.6 million for 2003.
Michael D. Dale, President and CEO of ATS Medical commented, "The second quarter
of 2004 represents our eighth consecutive quarter of sequential sales growth and
reflects the successful execution of our strategy to build market share both
domestically and in international markets. Sales in the United States grew 134
percent over the second quarter of 2003 to $2.5 million. In international
markets, we grew sales 60 percent over the second quarter of 2003 to $5.0
million. Worldwide we now estimate our share of the mechanical heart valve
market has increased to be more than 12%".
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Mr. Dale continued, "Our recent successful equity placement positions us to step
up our growth strategy on several important fronts. The $12.4 million net
proceeds from the offering will allow us to complete the ramp-up our
manufacturing facility to full capacity, accelerate commercialization of
ErySave's PARSUS blood separation technology for cardiac surgery procedures, and
finally, provide the capacity to pursue other prudent new business development
opportunities."
To further bolster ATS Medical's working capital position, the Company also
announced today an agreement with Silicon Valley Bank to establish a secured
revolving credit facility for $8.5 million. Under the terms of the agreement,
ATS Medical will receive a $2.5 million three year term loan as well as a two
year $6 million line of credit. "We expect the proceeds from the recent private
placement will enable us to achieve profitability. However, the implementation
of this credit facility reflects Silicon Valley Bank's confidence in the future
of ATS Medical and provides us with greater flexibility to fund future growth
without further dilution to our shareholders," said Jack Judd, chief financial
officer.
"Looking ahead to the remainder of 2004," added Mr. Dale, "we expect total
sales for the year to exceed $28 million, a growth rate of more than 50 percent
from 2003. Finally, we have begun in earnest the ramp up our manufacturing
facility to produce self manufactured pyrolytic carbon components, which will
provide a decisive and significant reduction in our total manufacturing costs
per valve. We expect to start realizing these cost savings during 2006. With
continued sales growth and lower cost of sales in the future, we expect to reach
profitability during 2006," concluded Mr. Dale.
CONFERENCE CALL TODAY
ATS management will host a conference call and webcast today, July 28 at 5 p.m.
EDT to discuss its second quarter financial results, outlook for 2004 and
current corporate developments. The dial in number for the conference call is
800-240-2134 for domestic participants and 303-262-2131 for international
participants.
A taped replay of the conference call will also be available beginning
approximately one hour after the call's conclusion and will remain available
through midnight Central time on Wednesday, August 4, 2004 and can be accessed
by dialing 800-405-2236 for domestic callers and 303-590-3000 for international
callers, using the passcode 11002223#. A live webcast of the call can be
accessed at www.atsmedical.com by clicking on the Investors icon. The webcast
will also be archived on the company's website.
ABOUT ATS MEDICAL
ATS Medical, Inc., headquartered in Minneapolis, is a leading medical device
company specializing in mechanical heart valves, aortic graft prostheses and
related cardiovascular surgery accessories. ATS is a global company with product
sales in more than 40 countries. The ATS Open Pivot(R) Valve has been implanted
in over 85,000 patients and utilizes a unique pivot design
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that results in better performance and a lower risk profile. The Company's
website is www.atsmedical.com.
SAFE HARBOR
This Press Release contains forward-looking statements that may include
statements regarding intent, belief or current expectations of the Company and
its management. Actual results could differ materially from those projected in
the forward looking statements as a result of a number of important factors,
including regulatory actions, competition, pricing pressures, supplier actions
and management of growth. For a discussion of these and other risks and
uncertainties that could affect the Company's activities and results, please
refer to the Company's filings with the Securities and Exchange Commission to
its Form 10-K for the year ended December 31, 2003.
(tables to follow)
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ATS MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
Three months ended Six months ended
June 30, June 30,
-------------------------- ---------------------------
2004 2003 2004 2003
----------- ----------- ------------ -----------
Net sales $7,548 $4,246 $14,242 $8,211
Cost of goods sold 5,428 3,248 10,194 5,997
----------- ----------- ------------ -----------
Gross profit 2,120 998 4,048 2,214
Operating expenses:
Sales and marketing 3,950 2,388 7,616 3,542
Research and development 186 442 373 828
General and administrative 1,367 1,043 2,748 2,030
----------- ----------- ------------ -----------
Total operating expenses 5,503 3,873 10,737 6,400
----------- ----------- ------------ -----------
Operating loss (3,383) (2,875) (6,689) (4,186)
----------- ----------- ------------ -----------
Interest (expense) income 15 (228) 16 (457)
----------- ----------- ------------ -----------
Net loss ($3,368) ($3,103) ($6,673) ($4,643)
=========== =========== ============ ===========
Net loss per share:
Basic and diluted ($0.12) ($0.14) ($0.25) ($0.21)
Weighted average number of shares outstanding:
Basic and diluted 27,159 22,325 26,978 22,322
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ATS MEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
June 30, December 31,
2004 2003
---------------- -----------------
CURRENT ASSETS
Cash and short-term investments $21,492 $8,475
Accounts receivable 6,560 4,939
Inventories 20,194 20,377
Prepaid expenses 575 508
---------------- -----------------
Total current assets 48,821 34,299
Property and equipment, net 5,810 5,895
Other inventories 10,000 17,000
Technology license 18,688 18,500
Other assets 436 440
---------------- -----------------
TOTAL ASSETS $83,755 $76,134
================ =================
LIABILITIES
Accounts payable $2,295 $989
Accrued payroll 1,556 1,343
Other accrued liabilities 975 999
---------------- -----------------
Total liabilities 4,826 3,331
Shareholders' equity 78,929 72,803
---------------- -----------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $83,755 $76,134
================ =================
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ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
Six months ended June 30,
------------------------------------
2004 2003
---------------- ----------------
OPERATING ACTIVITIES
Net loss ($6,673) ($4,643)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 532 379
Compensation expense on stock options 34 3
Loss on disposal of equipment 2 2
Imputed interest long-term debt 0 320
Changes in operating assets and liabilities 6,994 3,867
---------------- ----------------
Net cash provided by (used in) operating activities 889 (72)
INVESTING ACTIVITIES
Sales of short-term investments, net of purchases 1,753 1,504
Payments for technology license (188) 0
Net purchases of furniture, machinery and equipment (449) (385)
---------------- ----------------
Net cash provided by investing activities 1,116 1,119
FINANCING ACTIVITIES
Net proceeds from sale of common stock 12,757 8
---------------- ----------------
Net cash provided by financing activities 12,757 8
Effect of exchange rate changes on cash 8 9
---------------- ----------------
Increase in cash and cash equivalents $14,770 $1,064
================ ================
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