EXHIBIT 99.1
[ATS MEDICAL LOGO]
Contact: Michael Dale, President/CEO
Jack Judd, Chief Financial Officer
763/553-7736
EVC Group, Inc.
Doug Sherk, Jennifer Beugelmans
415/896-6820
FOR IMMEDIATE RELEASE
ATS MEDICAL REPORTS STRONG SECOND QUARTER FINANCIAL RESULTS
US Sales Grow 32% Year-Over-Year, International Sales Grow 19%
Business Development Effort Increases Revenue Diversification
MINNEAPOLIS, July 27 -- ATS Medical, Inc. (Nasdaq: ATSI), developer,
manufacturer and marketer of state-of-the-art cardiac surgery products and
services, today reported that sales for the second quarter of 2005 increased
23.3% to $9.3 million, compared with sales of $7.5 million for the second
quarter of 2004. Mechanical heart valve sales represented 94% of total revenue
while other products and services represented 6% of total revenue. There was no
meaningful impact on revenue from foreign currency exchange. The net loss for
the second quarter of 2005 was $3.1 million, or $0.10 per share, compared with a
net loss of $3.4 million, or $0.12 per share, in the second quarter of 2004.
For the first six months of 2005, sales increased 14.9% to $16.4 million,
compared with sales of $14.2 million for the first six months of 2004. The net
loss for the first half of 2005 was $7.1 million, or $0.23 per share, compared
with $6.7 million or $0.25 per share for the same period a year ago.
"During the quarter, we continued to make considerable progress on our strategy
to become a diversified provider of state of the art products and services for
the cardiovascular surgeon," said Michael Dale, Chairman, President and CEO. "As
expected, we regained sales momentum in our international markets, and continued
our momentum in the US. Additionally, we entered into two new strategic
agreements that further diversify the product portfolio we offer the
cardiovascular surgeon while increasing our product pipeline and leveraging our
sales and marketing infrastructure.
"In addition, we continue to make operational progress. Our inventories have
declined more than $5.0 million since June 2004. Manufacturing efficiencies and
product diversification have resulted in a gross margin of 41.2%, a meaningful
increase from the 28.1% gross margin we
recorded in the second quarter of 2004. Overall inventories will continue to
decline during the remainder of 2005. Operating costs and most importantly,
selling and marketing costs, have remained flat over the past three quarters.
"Looking ahead, our momentum with the ATS Open Pivot(R) mechanical heart valve,
our strong start with CryoCath, and the implementation of our recent agreement
with Regeneration Technologies' Cardiovascular division makes us confident about
our outlook for the remainder of 2005. We continue to believe we will generate
total sales growth for the full year of between 20% and 25% compared with 2004,
which implies a net sales range of $33 million to $35 million. In addition,
revenue diversification should also increase as the second half of the year
progresses. We also continue to expect that we will consume our remaining high
cost pyrolytic carbon inventory early in 2006. Our strategy to self-manufacture
100% of our future product component requirements remains on schedule, and our
cash balances to support this effort, as well as other business operations,
remains sufficient to see us through to profitability. We continue to expect to
achieve our profitability milestone during 2006," concluded Mr. Dale.
CONFERENCE CALL TODAY
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ATS management will host a conference call and web cast today, July 27, 2005 at
4:30 p.m. ET to discuss its second quarter financial results, outlook for the
remainder of 2005 and current corporate developments. The dial in number for the
conference call is 800-240-4186 for domestic participants and 303-262-2139 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 ET on Wednesday, August 3, 2005 and can be accessed by dialing
800-405-2236 for domestic callers and 303-590-3000 for international callers,
using the passcode 11034924#. A live webcast of the call can be accessed at
www.atsmedical.com by clicking on the Investors icon. The webcast will be
available on the company's website until August 3, 2005.
ABOUT ATS MEDICAL
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ATS Medical manufactures and markets products and services focused on cardiac
surgery. It is headquartered in Minneapolis and is global in scope with sales in
more than 61 countries. More than 100,000 ATS Open Pivot heart valves, which
utilize a unique pivot design resulting in exceptional clinical performance and
a lower risk profile, have been implanted in patients worldwide. The ATS Medical
web site 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,
including its Form 10-Q for the quarter ended March 31, 2005.
ATS MEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three months ended Six months ended
June 30, June 30,
----------- -- ----------- ------------ -- -----------
2005 2004 2005 2004
----------- ----------- ------------ -----------
Net sales $9,307 $7,548 $16,370 $14,242
Cost of goods sold 5,474 5,428 9,775 10,194
----------- ----------- ------------ -----------
Gross profit 3,833 2,120 6,595 4,048
Operating expenses:
Sales and marketing 4,711 3,950 9,442 7,616
Research and development 407 186 709 373
General and administrative 1,826 1,367 3,515 2,748
----------- ----------- ------------ -----------
Total operating expenses 6,944 5,503 13,666 10,737
----------- ----------- ------------ -----------
Operating loss (3,111) (3,383) (7,071) (6,689)
----------- ----------- ------------ -----------
Interest (expense) income (22) 15 (21) 16
----------- ----------- ------------ -----------
Net loss ($3,133) ($3,368) ($7,092) ($6,673)
=========== =========== ============ ===========
Net loss per share:
Basic and diluted ($0.10) ($0.12) ($0.23) ($0.25)
Weighted average number of shares outstanding:
Basic and diluted 30,993 27,159 30,952 26,978
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ATS MEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
June 30, December 31,
2005 2004
---------------- -----------------
ASSETS
Cash and short-term investments $6,001 $15,994
Accounts receivable 9,011 7,893
Inventories 25,041 24,303
Prepaid expenses 819 1,053
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Total current assets 40,872 49,243
Property and equipment, net 7,961 7,650
Other inventories -- 3,000
Intangible assets 20,260 18,720
Other assets 439 438
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TOTAL ASSETS $69,532 $79,051
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LIABILITIES & SHAREHOLDERS' EQUITY
Accounts payable $2,071 $4,049
Accrued compensation 1,721 1,797
Other accrued liabilities 1,051 1,174
Current maturities of long-term debt 833 764
---------------- -----------------
Total current liabilities 5,676 7,784
Long-term liabilities 1,319 1,826
Shareholders' equity 62,537 69,441
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TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $69,532 $79,051
================ =================
ATS MEDICAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
Six months ended June 30,
-------------------------
2005 2004
--------- ---------
OPERATING ACTIVITIES
Net loss ($ 7,092) ($ 6,673)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 750 532
Compensation expense on stock options 61 34
Loss on disposal of equipment 17 2
Non-cash interest expense 15 --
Changes in operating assets and liabilities (891) 6,994
-------- --------
Net cash provided by (used in) operating activities (7,140)
889
INVESTING ACTIVITIES
Maturities of short-term investments, net of purchases 4,857 1,753
Payments for technology licenses (1,555) (188)
Net purchases of furniture, machinery and equipment (1,078) (449)
-------- --------
Net cash provided by investing activities 2,224 1,116
FINANCING ACTIVITIES
Net proceeds from sale of common stock 280 12,757
Repayments on note payable (347) --
-------- --------
Net cash provided by (used in) financing activities (67) 12,757
Other items (153) 8
-------- --------
Increase (decrease) in cash and cash equivalents ($ 5,136) $ 14,770
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