EXHIBIT 99.1
Contact: Michael Dale, President/CEO
Jack Judd, Chief Financial Officer
763/553-7736
EVC Group, Inc.
Doug Sherk, Jennifer Beugelmans
415/896-6820
Anne Bugge
206/926-5220
FOR IMMEDIATE RELEASE
ATS MEDICAL REPORTS 41 PERCENT REVENUE GROWTH IN THIRD QUARTER
o US SALES UP 38%
o INTERNATIONAL SALES UP 43%
o CONFERENCE CALL SCHEDULED FOR TODAY AT 5 PM EDT
MINNEAPOLIS, October 27, 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 third
quarter of 2004 increased 41 percent to $6.5 million, compared to sales of $4.6
million for the third quarter of 2003. The net loss for the third quarter of
2004 was $4.5 million and was impacted by approximately $400,000 in factory
production ramp up costs recognized as cost of goods sold. The third quarter
2003 net loss was $307,000, which was benefited by a $2.6 million gain on
extinguishment of debt.
For the first nine months of 2004, revenue increased 62 percent to $20.8
million, as compared to $12.9 million for 2003. Net loss for the first nine
months of 2004 was $11.2 million compared with $4.9 million for 2003.
Michael D. Dale, President and CEO of ATS Medical commented, "We are pleased
with our continued progress in all markets. In the U.S. market we grew sales 38
percent compared to the third quarter of 2003 to $2.0 million. We sold to more
open heart centers during the quarter than in any other quarter of our company's
history. In international markets, we grew sales 43 percent to $4.5 million.
"Worldwide, we now estimate that our procedure share of the mechanical heart
valve market to be more than 13%, and that our growing open heart surgery center
presence is fast becoming the cardiac surgery business platform we set out to
build two years ago. We look forward to leveraging this platform in the coming
year."
Mr. Dale continued, "The production ramp-up at our carbon facility remains on
schedule and most of our work force at the facility has now been hired. We
expect training in large part to be completed by the end of the fourth quarter.
We continue to believe that we will realize significant cost savings by
manufacturing our own pyrolytic carbon components. These lower manufacturing
costs represent a primary factor behind our predicted profitability in 2006.
"Looking ahead to the remainder of 2004, we continue to expect total sales for
the year to be at least $28 million, a growth rate of more than 50 percent over
2003. Our initial estimate for 2005 will be to grow revenue by at least 20 to 25
percent versus 2004." concluded Mr. Dale.
CONFERENCE CALL TODAY
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ATS management will host a conference call and webcast today, October 27 at 5
p.m. ET to discuss its third quarter financial results, outlook for 2004 and
current corporate developments. The dial in number for the conference call is
800-218-9073 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 Easter time on Wednesday, November 3, 2004 and can be accessed
by dialing 800-405-2236 for domestic callers and 303-590-3000 for international
callers, using the passcode 11010821#. 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 95,000 patients and utilizes a unique pivot design that results in
better performance and a lower risk profile. The Company's website is
www.atsmedical.com.
SAFE HARBOR
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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)
ATS MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
Three months ended Nine months ended
September 30, September 30,
----------- -- ----------- ------------ -- -----------
2004 2003 2004 2003
----------- ----------- ------------ -----------
Net sales $6,547 $4,639 $20,789 $12,850
Cost of goods sold 5,178 3,255 15,372 9,252
----------- ----------- ------------ -----------
Gross profit 1,369 1,384 5,417 3,598
Operating expenses:
Sales and marketing 4,211 2,809 11,827 6,350
Research and development 278 384 651 1,213
General and administrative 1,423 1,091 4,171 3,121
Extinguishment of debt 0 (2,575) 0 (2,575)
----------- ----------- ------------ -----------
Total operating expenses 5,912 1,709 16,649 8,109
----------- ----------- ------------ -----------
Operating loss (4,543) (325) (11,232) (4,511)
----------- ----------- ------------ -----------
Interest income (expense) 17 18 33 (438)
----------- ----------- ------------ -----------
Net loss ($4,526) ($307) ($11,199) ($4,949)
=========== =========== ============ ===========
Net loss per share:
Basic and diluted ($0.15) ($0.01) ($0.40) ($0.21)
Weighted average number of shares outstanding:
Basic and diluted 30,730 24,743 28,215 23,138
ATS MEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
September 30, December 31,
2004 2003
---------------- -----------------
CURRENT ASSETS
Cash and short-term investments $20,692 $8,475
Accounts receivable 6,772 4,939
Inventories 20,398 20,377
Prepaid expenses 497 508
---------------- -----------------
Total current assets 48,359 34,299
Property and equipment, net 6,933 5,895
Other inventories 8,000 17,000
Intangible assets 18,727 18,500
Other assets 437 440
---------------- -----------------
TOTAL ASSETS $82,456 $76,134
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LIABILITIES
Accounts payable $2,851 $989
Accrued payroll 1,669 1,343
Other accrued liabilities 647 692
Current maturities of long-term debt 556 0
---------------- -----------------
Total current liabilities 5,723 3,024
Long-term liabilities 145 307
Long-term debt 1,944 0
Shareholders' equity 74,644 72,803
---------------- -----------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $82,456 $76,134
================ =================
ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
Nine months ended September 30,
------------------------------------
2004 2003
---------------- ----------------
OPERATING ACTIVITIES
Net loss ($11,199) ($4,949)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 802 583
Compensation expense on stock options 33 5
Loss on disposal of equipment 14 2
Non-cash interest expense 5 320
Gain on extinguishment of debt 0 (2,575)
Changes in operating assets and liabilities 9,141 6,577
---------------- ----------------
Net cash used by operating activities (1,204) (37)
INVESTING ACTIVITIES
Sales of short-term investments, net of purchases 1,981 (743)
Purchases of intangibles (232) (12,000)
Net purchases of furniture, machinery and equipment (1,854) (595)
---------------- ----------------
Net cash used by investing activities (105) (13,338)
FINANCING ACTIVITIES
Net proceeds from sale of common stock 12,975 11,555
Advances on notes payable 2,500 0
---------------- ----------------
Net cash provided by financing activities 15,475 11,555
Effect of exchange rate changes on cash 32 0
---------------- ----------------
Increase (decrease) in cash and cash equivalents $14,198 ($1,820)
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