UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
__________
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported): April 2, 2008
AngioDynamics,
Inc.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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000-50761
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11-3146460
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(State
or Other Jurisdiction of Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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603
Queensbury Avenue, Queensbury, New York
12804
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(Address of Principal Executive
Offices)
(Zip Code)
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(518)
798-1215
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(Registrant’s
telephone number, including area
code)
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Check the appropriate box
below if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2 (b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4 (c))
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Item
1.01 – Entry into a Material Definitive Agreement.
AngioDynamics,
Inc. (the "Company") entered into a Settlement Agreement (the "Settlement
Agreement"), effective April 2, 2008 with Diomed, Inc. ("Diomed") relating to
the previously disclosed litigation entitled Diomed, Inc. v. AngioDynamics,
Inc., Civil Action No. 04 10019 RGS, originally filed on January 6, 2004 in the
U.S. District Court for the District of Massachusetts (the
"Court"). A copy of the Settlement Agreement is filed with this Form
8-K as Exhibit 10.1 and the description below is qualified in its entirety by
reference thereto.
Pursuant
to the Settlement Agreement, (i) the Company will make a payment to Diomed in
the amount of $7,000,000, (ii) the Company and Diomed shall jointly request that
the United States Court of Appeals for the Federal Circuit dismiss the pending
appeal by the Company, and (iii) Diomed shall provide to the Company a
satisfaction of judgment, releasing the Company from the monetary obligation
imposed by the Court on August 3, 2007 in its entry of judgment against the
Company.
A copy of the press release issued by
the Company on April 2, 2008, announcing the Settlement Agreement is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
Item
2.02 Results of Operations and Financial Condition
On April 2, 2008, the Company issued a
press release, a copy of which is attached as Exhibit 99.1, announcing its
financial results for the third quarter of fiscal 2008, which ended on February
29, 2008, and held a conference call after the close of the financial markets
discussing the results and answering questions. A replay of the
conference call will be available by telephone and on the Company's website
through April 9, 2008.
The information provided pursuant to
this Item 2.02 of this current report, including the information contained in
Exhibit 99.1 is being furnished pursuant to such Item and shall not be deemed to
be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934,
as amended, or otherwise subject to the liabilities of that
Section.
Item
7.01 – Regulation FD Disclosure.
On April 2, 2008, the Company issued a
press release, a copy of which is attached as Exhibit 99.1, updating its
previously disclosed guidance with respect to full year fiscal 2008 financial
results.
Forward-Looking
Statements
This
document and its attachments include "forward-looking statements" intended to
qualify for the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. Investors can identify these statements by the
fact that they do not relate strictly to historical or current facts. These
statements contain words such as "expect,"
"reaffirm," "anticipate," "plan," "believe," "estimate," "may," "will,"
"predict," "project," "might," "intend," "potential," "could," "would,"
"should," "estimate," "seek," "continue," "pursue," or "our future success
depends," or the negative or other variations thereof or comparable terminology,
are intended
to identify such forward-looking statements. In particular, they include
statements relating to, among other things, future actions, strategies, future
performance, future financial results of the Company. These
forward-looking statements are based on current expectations and projections
about future events.
Investors
are cautioned that forward-looking statements are not guarantees of future
performance or results and involve risks and uncertainties that cannot be
predicted or quantified and, consequently, the actual performance or results of
the Company may differ materially from those expressed or implied by such
forward-looking statements. Such risks and uncertainties include, but
are not limited to, the factors described from time to time in the Company's
reports filed with the SEC, including the Company's Form 10-K for the fiscal
year ended June 2, 2007 and Form 10-Q for the period ended November 30, 2007,
financial community and rating agency perceptions of the Company; the effects of
economic, credit and capital market conditions on the economy in general, and on
medical device companies in particular; domestic and foreign health care reforms
and governmental laws and regulations; third-party relations and approvals,
technological advances and patents attained by competitors; and challenges
inherent in new product development, including obtaining regulatory
approvals. In addition to the
matters described above, the ability of the Company to develop its products,
future actions by the FDA or other regulatory agencies, results of pending or
future clinical trials, the outcome of pending patent litigation, overall
economic conditions, general market conditions, market acceptance, foreign
currency exchange rate fluctuations, and the effects on pricing from group
purchasing organizations and competition, may affect the actual results achieved
by the Company.
Any
forward-looking statements are made pursuant to the Private Securities
Litigation Reform Act of 1995 and, as such, speak only as of the date made. The
Company disclaims any obligation to update the forward-looking
statements. Investors are cautioned not to place undue reliance on
these forward-looking statements which speak only as of the date stated, or if
no date is stated, as of the date of this document.
Item
9.01 – Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No.
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Description
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10.1
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Settlement Agreement effective April 2, 2008. | |
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99.1
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Press
Release dated April 2, 2008.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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ANGIODYNAMICS,
INC.
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(Registrant)
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Date:
April 4, 2008
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By:
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/s/
D. Joseph Gersuk
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D.
Joseph Gersuk
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Chief
Financial Officer
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EXHIBIT
INDEX
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Exhibit No.
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Description
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10.1
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Settlement Agreement effective April 2, 2008. | |
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99.1
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Press
Release dated April 2, 2008.
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Exhibit
10.1
Execution
Form
SETTLEMENT
AGREEMENT
This
Settlement Agreement is entered into as of March 28, 2008, and shall be
effective as of the Effective Date defined hereinafter, by and between Diomed
Inc. (“Diomed”), a Delaware corporation having a principal place of business at
One Dundee Park, Suite 5, P.O. Box 97, Andover, Massachusetts (telecopy
978-475-8488) and AngioDynamics, Inc. (“AngioDynamics”), a Delaware corporation
having its principal place of business at 603 Queensbury Avenue, Queensbury, New
York 12804 (telecopy 518.798-3625). Diomed and AngioDynamics are
referred to herein individually as a “Party” and collectively as “the
Parties.”
W
I T N E S S E T H
WHEREAS,
final judgment (the “Judgment”) in favor of Diomed was entered by the Court on
August 3, 2007; and
WHEREAS,
AngioDynamics filed a notice of appeal (the “Appeal”) to the United States Court
of Appeals for the Federal Circuit (“CAFC”); and
WHEREAS,
Hercules Technology Growth Capital Inc. (“HTGC”) claims a security interest and
lien in the Judgment; and
WHEREAS, on March 14, 2008 (the
“Petition Date”) Diomed and its parent, Diomed Holdings Inc., each respectively
filed a voluntary petition for relief under chapter 11 to Title 11
of
the United States Code, 11 U.S.C. §§ 101 et seq. (the “Bankruptcy Code”) in the
United States Bankruptcy Court for the District of Massachusetts (Worchester
Division) (the “Bankruptcy Court”) at jointly administered Case No. 08-40749
(the “Bankruptcy Case”); and
WHEREAS, Diomed remains in control of
its business and affairs as a debtor-in-possession pursuant to section 1107 and
1108 of the Bankruptcy Code; and
WHEREAS,
this Settlement Agreement, subject to approval by the Bankruptcy Court, is
entered into for the purpose of settling and compromising the monetary judgment
awarded during the Litigation,, any post judgment interest thereon, and any
claims for costs Diomed might have against AngioDynamics; and
WHEREAS,
each Party has relied wholly upon its own judgment, after consultation with
counsel, in entering into this Settlement Agreement;
WHEREAS,
nothing herein is intended nor shall be construed to have any effect on any
claims or counterclaims in this Litigation or any other litigation between
Diomed and/or AngioDynamics and any entity that is not a Party to this
Agreement;
NOW,
THEREFORE, in consideration of the mutual covenants and undertakings set forth
herein, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:
1. On
the Effective Date, AngioDynamics and Diomed shall send a letter or other
required documents to Federal Insurance Company (“Federal”), surety on the
supersedeas bond filed by AngioDynamics in connection with the Appeal, informing
Federal that the Parties have entered into this Agreement, and instructing
Federal to immediately take, from the assets deposited by AngioDynamics with
Federal as security for the supersedeas bond, the sum of seven million dollars
($7,000,000) (the “Angio Payment”) and deliver
such
sum in escrow to bankruptcy counsel to Diomed, McGuireWoods LLP (the “Escrow
Agent”), to be disbursed to Diomed pursuant to the procedures set forth in
Paragraphs 2 and 3 of this Agreement. The Parties agree that all
other funds held by Federal are the sole and exclusive property of AngioDynamics
and shall be returned to AngioDynamics at its direction. Diomed will
execute and shall cause HTGC to execute any documents necessary to waive any
claims to all funds held by Federal in excess of the Angio Payment set forth
above and to confirm that all such excess funds shall be returned at
AngioDynamics’ direction. In the event that Federal fails to make the
payment described above to the Escrow Agent within three business days of
receipt of the documents requesting such payment, AngioDynamics shall, by close
of business on the very next business day, make the $7,000,000 payment by wire
transfer in immediately available funds to the Escrow Agent in lieu of the
payment from Federal. As a condition to such payment by
AngioDynamics, Diomed will deliver to Federal and cause HTGC to deliver to
Federal any documents required relinquishing and waiving any claim to the funds
held by Federal and confirming that such funds shall be released as directed by
AngioDynamics.
2. On
the next business day after the Angio Payment has been placed in escrow with the
Escrow Agent, the Parties shall submit, or cause to be submitted, a joint
request to the CAFC that the CAFC dismiss the Appeal pursuant to Fed. R. App. P.
42. The joint request (the “Joint Request”) shall be substantially in
the form of Exhibit A to this Agreement.
3. Within
two (2) business days after the CAFC dismisses the Appeal pursuant to the Joint
Request , Diomed shall execute and deliver to the Escrow Agent and cause the
Escrow Agent to provide to AngioDynamics a Satisfaction of Judgment (the
“Satisfaction of Judgment”) which shall provide that AngioDynamics has satisfied
in full the monetary judgment of the Court entered on August 3, 2007 and is
therefore released from said monetary obligation. The Satisfaction of
Judgment shall be substantially in the form of Exhibit B to this
Agreement. The Satisfaction of Judgment shall be delivered with a
written release from HTGC of its security interest and lien in the Judgment (the
“Secured Creditor Release”). The Secured Creditor Release shall be
substantially in the form of Exhibit C to this Agreement. After
delivery of the Satisfaction of Judgment and the Secured Creditor Release to
AngioDynamics, the Escrow Agent will be permitted to disburse the Angio Payment
in the amount set forth in the Order of the Bankruptcy Court authorizing and
approving this Agreement. Diomed further agrees that, in light of
this Agreement and the payment it is receiving, Diomed is not entitled to
recover any costs from AngioDynamics relating to the Litigation and agrees not
to file a Bill of Costs as to AngioDynamics in either the Court or
CAFC. In addition, Diomed will, and will cause HTGC to, execute any
necessary documents to effectuate the formal release of the supersedeas bond
provided by AngioDynamics in connection with the Appeal. Nothing
herein or in the Satisfaction of Judgment shall amend, alter, or release
AngioDynamics’ obligations pursuant to the Permanent Injunction entered by the
Court on July 2, 2007.
4. This
Agreement shall be binding upon each Party, its parents, subsidiaries,
affiliates, partners, shareholders, agents, employees, representatives,
successors and assigns.
5. For
a period commencing on the Effective Date and running for one hundred eighty
(180) days thereafter, neither Party shall commence any new civil action against
the other Party or its parent or subsidiary entities, on any basis for any
alleged cause of action, whether or not now known, arising from any facts or
circumstances having taken place prior to the date hereof. In the
event of any new civil action or reexamination involving the '777 patent, or any
reissued or reexamined version thereof, or any foreign counterpart thereto,
neither Party shall be precluded from raising or litigating any issue that was
or could have been raised in the Litigation and neither Party shall claim that
collateral estoppel, res judicata or any other legal doctrine precludes any such
issue from being raised and litigated. Furthermore, no appeal shall
be taken from the Order of the Court dated January 15, 2008 pertaining to
allegations of contempt.
6. The
Effective Date of this Agreement shall be the date upon which all of the
following have occurred:
(a)
approval and authorization of this Agreement by the Board of Directors of
Diomed, with notice given by Diomed
to
AngioDynamics; and
(b)
approval and authorization of this Agreement by the Board of Directors of
AngioDynamics, with notice given by AngioDynamics to Diomed; and
(c)
entry of an order by the Bankruptcy Court in a form and substance satisfactory
to AngioDynamics authorizing and approving this Agreement in accordance with
Federal Rule of Bankruptcy Procedure 9019 and Bankruptcy Code Section
363.
If
the Effective Date has not occurred by April 5, 2008, then either Diomed or
AngioDynamics shall have the right to terminate this Agreement by written notice
to the other. Notwithstanding the foregoing, Diomed shall use good
faith best efforts to have the Bankruptcy Court consider authorization and
approval of the Agreement on its previously scheduled hearing date of April 2,
2008.
7. With
respect to the owners of any right, title, or interest in or to the ‘777 patent
or any foreign counterparts thereto, subject to receipt of the approval of its
Board of Directors referred to in Section 6(a), Diomed hereby represents and
warrants that it has full authority on behalf of all owners to enter into this
Agreement as provided by Paragraph 4.6(b) of the July 11, 2003 License Agreement
between Diomed and Endolaser Associates LLC (which is the only entity that has
any such rights other than Diomed) and to perform its obligations under this
Agreement. With respect to inventor and former owner Dr. Robert Min,
Diomed represents and warrants that it has full authority to enter into this
Agreement as provided by Paragraph 5.4(b) of the July 23, 2003 Purchase
Agreement between Diomed and Dr. Min, and to perform its obligations under this
Agreement.
8. Subject
to receipt of the approval of its Board of Directors referred to in Section
6(b), AngioDynamics hereby represents and warrants that it has full authority to
enter into this Agreement and to perform its obligations under this
Agreement.
9. This
Agreement shall be governed by and be interpreted under the internal laws of the
Commonwealth of Massachusetts, without regard to conflicts of laws principles,
and the Parties consent to personal jurisdiction in Massachusetts and agree that
all litigation to enforce the terms hereof shall occur in a court of competent
jurisdiction within the federal or state courts of Massachusetts.
10. Should
any provision of this Agreement be declared or be determined by any court to be
illegal or invalid, the validity of the remaining parts, terms, or provisions
shall not be affected thereby and the illegal or invalid part, term, or
provision shall be deemed not to be part of this Agreement.
11. Both
Parties having contributed to the drafting of this Agreement, there shall be no
presumption against either Party in the interpretation of any ambiguities it may
contain.
12. This
Agreement supersedes any prior or contemporaneous communications, whether
written or oral, concerning the terms of this settlement, and it constitutes the
full and complete agreement of the Parties. This Agreement shall not
be orally modified in any respect, and can be modified only by the written
agreement of both Parties.
13. All
notices, requests and demands to or upon the Parties to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or one
business day after being deposited in the mail, postage prepaid, or, in the case
of telecopy notice, when received, sent to the address set forth in the first
paragraph of this Agreement (or to such other address as may be hereafter
notified by any Party).
14. This
Agreement may be executed in counterparts and/or by facsimile. Any
Party that provides its signature by facsimile shall provide the opposing Party
with an original ink signature within five business days thereafter; however,
this Agreement shall take full effect immediately upon the exchange of the
Parties’ signatures by facsimile.
15. Each
person signing this Agreement represents that he is authorized to sign it on
behalf of the Party for which he purports to sign.
[Signature
page follows.]
IN
WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on
its behalf by the signature of its officer affixed below.
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DIOMED,
INC.
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ANGIODYNAMICS,
INC.
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By: /s/ James A. Wylie,
Jr.
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By: /s/ Eamonn P.
Hobbs
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Name: James A. Wylie,
Jr.
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Name: Eamonn P.
Hobbs
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Title: President &
CEO
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Title:
President &
CEO
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Dated: March
28, 2008
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Dated:
March 28, 2008
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Exhibit 99.1
FOR IMMEDIATE
RELEASE
|
Company
Contact:
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Investor Relations
Contacts:
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Media
Contact:
|
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AngioDynamics,
Inc.
D. Joseph Gersuk,
CFO
(800) 772-6446
x1608
jgersuk@AngioDynamics.com
|
EVC Group,
Inc.
Doug Sherk / Donald
Takaya
(415) 896-6820
dsherk@evcgroup.com
dtakaya@evcgroup.com
|
EVC Group,
Inc.
Steve DiMattia
(646) 201-5445
sdimattia@evcgroup.com
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AngioDynamics
Reports Fiscal Third Quarter 2008 Financial Results
And
Announces Settlement of Patent Litigation with Diomed
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·
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Sales Increase 52% to $40.7
Million
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·
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Net Income (including settlement
with Diomed) of $4.9 Million and EPS of
$0.20
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·
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Adjusted Income (Non GAAP) of $7.2
Million and Adjusted EPS (Non GAAP) of $0.30 Per
Share
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·
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Record Cash Flow from Operations
of $9.9 Million During
Quarter
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·
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Conference Call Begins Today at
4:30 p.m. Eastern Time
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QUEENSBURY, N.Y.
April 2, 2008 — AngioDynamics (NASDAQ: ANGO), a leading
provider of innovative medical devices used by interventional radiologists,
nephrologists, and surgeons for the minimally invasive treatment of cancer and
peripheral vascular disease, today reported financial results for the fiscal
third quarter of 2008, which ended on February 29, 2008.
The Company also announced it has
entered into a settlement agreement with Diomed Inc. (AMEX: DIO), for the
purpose of resolving the patent infringement lawsuit between the companies
originally filed in January 2004. As a result of the settlement,
AngioDynamics reduced its litigation provision and recorded a gain, net of
costs, of approximately $3.2 million pre-tax, $2.0 million after-tax, and $0.08
in earnings per share, as reflected in the fiscal third quarter
results.
AngioDynamics reported $40.7 million in net sales in
the fiscal third quarter, a 52% increase over the $26.7 million reported in the
third quarter a year ago. Gross margin rose to 62.2% from 59.6% in
the prior year third quarter. Operating income in the third quarter of 2008 was $7.6
million and net income was $4.9 million, or $0.20 per share, which includes the
gain from the settlement with Diomed. Excluding this gain, operating
income was $4.5 million and net income was $ 2.9 million, or $0.12 per share,
compared with a net loss of $16.4 million, or $0.88 per share, in the third
quarter of 2007. In last year’s fiscal third quarter, the Company’s
net loss included a litigation provision for Diomed and an in-process R&D
charge associated with the January 29, 2007 acquisition of RITA Medical
Systems.
The Company reported $9.9 million in
cash flow from operations in the fiscal third quarter and $20.1 million fiscal
year to date -- a nearly six-fold increase over the $3.4 million reported in the
prior fiscal year to date period. Cash and investments totaled $88.8
million at quarter end.
“We continue to generate strong oncology
product sales growth this fiscal year -- 26% pro forma growth in the quarter and
24% year to date,” said Eamonn Hobbs, president and chief executive
officer. “Interventional product sales grew 10% on a pro forma basis
this quarter, which was a lower growth rate than we expected. Price
competition in the dialysis market, slower sales growth in vascular access and
ports products, and delays in shipping our NeverTouch™ VenaCure® procedure kits
and the recently launched Centros™ dialysis catheter all had an impact on the
Interventional product sales growth during the quarter. Nonetheless,
we were able to significantly improve gross profit margins, maintain healthy
operating income and generate nearly $10 million in operating cash flow in the
quarter,” added Mr. Hobbs.
“Following a comprehensive internal
review of our sales force, competitive position, industry and economic trends
and sales strategy, we recently implemented a five-step plan to drive consistent
growth. We believe the keys to achieving consistent growth include
additions to our sales force, a more rapid R&D pipeline conversion, tuck-in
acquisitions, improved product life-cycle management, and a more focused
approach to the national account market. Our organization is focused
on executing this plan,” said Mr. Hobbs.
Of
the $40.7 million in third quarter net sales, AngioDynamics products constituted
$25.4 million and RITA Medical products constituted $15.3
million. AngioDynamics product sales grew 12% in the third quarter
over the prior year quarter. On a pro forma basis, RITA Medical
product sales grew 17% in the third quarter versus the comparable period a year
ago. Total Company net sales grew 14% in the third quarter on a pro
forma basis over the prior year third quarter.
For the nine months of fiscal 2008, net
sales were $119.7 million, which is 68% higher than net sales of $71.4 million
for the same period of fiscal 2007. Net income for the nine months of
fiscal 2008 was $10.4 million, or $0.43 per diluted share, compared to a net
loss of $12.1 million or $0.73 per share in the comparable prior year
period.
During the quarter,
AngioDynamics highlighted results from a preliminary
study of Centros™, a self-centering, tunneled hemodialysis access
catheter. The preliminary results were presented by Dr. Stephen Ash
at the International Symposium on Endovascular Therapy in January. In
addition, the Company continues to work with Oncobionic on the Irreversible
Electroporation (IRE) development program. A human malignant prostate
clinical trial in Florida began this week while a
similar trial in Italy is now expected to begin this
month.
Fiscal 2008 Guidance
The Company’s outlook for fiscal 2008 is
as follows:
-- Net sales in the range of $165-$167
million
-- Gross profit margin in the range of
61-62%
-- GAAP operating income in the range of
$22-23 million
-- GAAP EPS in the range of
$0.58-$0.61
-- Non-GAAP adjusted income of at least
$29 million. Non-GAAP adjusted income excludes stock-based compensation,
amortization of intangibles, settlement of Diomed patent litigation, and
includes the cash benefit from the use of NOLs.
AngioDynamics is currently in the midst of its fiscal
2009 planning process. As a result, the Company currently expects to
provide guidance for fiscal 2009 after the completion of the current fiscal
year, which ends May 31, 2008.
Patent Litigation Settlement with
Diomed
Under the Settlement Agreement with
Diomed, all claims and appeals by each side will be dismissed following a
one-time payment of $7 million from AngioDynamics to Diomed in full and final
satisfaction of the monetary judgment related to the alleged infringement of
U.S. Patent No 6,398,777. Following the March 2007 jury verdict and subsequent
monetary judgment award, AngioDynamics recorded a $9.6 million litigation provision in its
fiscal third quarter of 2007 and the provision had increased to $10.2 million
primarily as a result of interest accrued on the award.
“We elected to end what has been a major
distraction for our management team at a cost to our Company that is less than
the amount Diomed was awarded by the judge after the jury verdict in late March
of last year,” said Mr. Hobbs. “As a result of the settlement, we
will now have additional cash to invest in the growth of our
business.”
On January 6, 2004, Diomed filed an
action against AngioDynamics and a codefendant over Diomed’s U.S. patent No. 6,398,777, asserting
infringement by AngioDynamics’ VenaCure® product line. On March 28,
2007, a jury ruled in favor of Diomed in the Federal District Court in Boston, Massachusetts. AngioDynamics had appealed
the verdict with the U.S. Court of Appeals, Federal Circuit, and oral
arguments were expected to be presented in March or April of this
year. All of these events have been previously disclosed by
AngioDynamics.
Conference Call
AngioDynamics
management will host a conference call to discuss these announcements today
beginning at 4:30 p.m. Eastern Time. To participate in the call, please dial
(800) 240-4186 from the U.S. or (303) 262-2139 from outside the
U.S.
In
addition, individuals can listen to the call on the Internet by visiting the
investor relations portion of the Company's Web site at
http://investor.angiodynamics.com. To listen to the live call, please go to the
website 15 minutes prior to its start to register, download, and install the
necessary audio software.
A
replay will be available on the website. A telephone replay will be available
from 7:30 p.m. Eastern time on April 2, 2008 through 11:59 p.m. Eastern time on
April 9 by dialing (800) 405-2236 (domestic) or (303) 590-3000 (international)
and entering the passcode: 11110709#.
Use
of Non-GAAP Measures
Management
uses non-GAAP measures to establish operational goals, and believes that
non-GAAP measures may assist investors in analyzing the underlying trends in the
Company's business over time. Investors should consider these non-GAAP measures
in addition to, not as a substitute for or as superior to, financial reporting
measures prepared in accordance with GAAP. In this news release, the Company has
reported non-GAAP adjusted income and adjusted EPS. Adjusted income and adjusted
EPS excludes amortization of purchased intangibles, stock-based compensation
expense (net of tax), and includes the cash benefit from the use of acquired net
operating losses. In addition, the Diomed litigation provision and
the related gain on settlement have also been excluded from adjusted income. In
the prior fiscal year, non-GAAP adjusted income and EPS also excludes the RITA
Medical acquired in process R&D charge. Management uses these
measures in its internal analysis and review of operational performance.
Management believes that these measures provide investors with useful
information in comparing the Company's performance over different periods,
particularly when comparing this period to periods in which the Company did not
incur any expenses relating to these activities or items. By using these
non-GAAP measures, management believes that investors get a better picture of
the performance of the Company's underlying business. Management encourages
investors to review the Company's financial results prepared in accordance with
GAAP to understand the Company's performance taking into account all relevant
factors, including those that may only occur from time to time but have a
material impact on the Company's financial results. Please see the tables that
follow for a reconciliation of GAAP to non-GAAP measures.
About AngioDynamics
AngioDynamics, Inc. is a leading
provider of innovative medical devices used by interventional radiologists,
surgeons, and other physicians for the minimally invasive treatment of cancer
and peripheral vascular disease. The Company's diverse product line includes
market-leading radiofrequency ablation systems, vascular access products,
angiographic products and accessories, dialysis products, angioplasty products,
drainage products, thrombolytic products, embolization products and venous
products. More information is available at www.angiodynamics.com.
Safe Harbor
The statements made in this document
include forward-looking statements intended to qualify for the safe harbor from
liability established by
the Private Securities Litigation Reform Act of 1995. Words such as
"expects,” “reaffirms” "intends," "anticipates," "plans,"
"believes," "seeks," "estimates," or variations of such words and similar
expressions, are intended to identify such forward-looking statements.
Investors are cautioned that actual events or results may differ from the
Company's expectations. In addition to the matters described above, the ability
of the Company to develop its products, future actions by the FDA or other regulatory agencies, results of
pending or future clinical trials, overall economic conditions, general market
conditions, market acceptance, foreign currency exchange rate fluctuations, the
effects on pricing from group purchasing organizations and competition, as well as the risk
factors listed from time to time in the SEC filings of AngioDynamics, Inc.,
including but not limited to its Annual Report on Form 10-K for the year ended
June 2, 2007, may affect the actual results achieved by the Company. The Company does not assume
any obligation to publicly update or revise any forward-looking statements for
any reason.
###
ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per
share data)
|
Three months
ended
|
Nine months
ended
|
|||||||||||||||
|
Feb 29,
|
Mar 3,
|
Feb 29,
|
Mar 3,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
Net sales
|
$ | 40,725 | $ | 26,738 | $ | 119,748 | $ | 71,372 | ||||||||
|
Cost of sales
(1)
|
15,407 | 10,789 | 46,474 | 29,253 | ||||||||||||
|
Gross
profit
|
25,318 | 15,949 | 73,274 | 42,119 | ||||||||||||
|
% of net
sales
|
62.2% | 59.6% | 61.2% | 59.0% | ||||||||||||
|
Operating
expenses
|
||||||||||||||||
|
Research and
development (1)
|
3,955 | 14,248 | 10,360 | 17,512 | ||||||||||||
|
Sales and
marketing (1)
|
11,725 | 8,048 | 33,540 | 20,467 | ||||||||||||
|
General and
administrative (1)
|
3,409 | 3,571 | 11,604 | 9,095 | ||||||||||||
|
Amortization of
purchased intangibles
|
1,777 | 566 | 5,006 | 702 | ||||||||||||
|
Litigation
provision (gain on settlement)
|
(3,151 | ) | 9,600 | (3,151 | ) | 9,600 | ||||||||||
|
Total operating
expenses
|
17,715 | 36,033 | 57,359 | 57,376 | ||||||||||||
|
Operating income
(loss)
|
7,603 | (20,084 | ) | 15,915 | (15,257 | ) | ||||||||||
|
Other income,
net
|
238 | 1,045 | 688 | 3,263 | ||||||||||||
|
Income (loss) before income
taxes
|
7,841 | (19,039 | ) | 16,603 | (11,994 | ) | ||||||||||
|
Provision for (benefit from)
income taxes
|
2,951 | (2,634 | ) | 6,233 | 59 | |||||||||||
|
Net income
(loss)
|
$ | 4,890 | $ | (16,405 | ) | $ | 10,370 | $ | (12,053 | ) | ||||||
|
Earnings per common
share
|
||||||||||||||||
|
Basic
|
$ | 0.20 | $ | (0.88 | ) | $ | 0.43 | $ | (0.73 | ) | ||||||
|
Diluted
|
$ | 0.20 | $ | (0.88 | ) | $ | 0.43 | $ | (0.73 | ) | ||||||
|
Weighted average common
shares
|
||||||||||||||||
|
Basic
|
24,123 | 18,694 | 24,042 | 16,613 | ||||||||||||
|
Diluted
|
24,404 | 18,694 | 24,343 | 16,613 | ||||||||||||
ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(in thousands, except per share
data)
|
Three months
ended
|
Nine months
ended
|
|||||||||||||||
|
Feb 29,
|
Mar 3,
|
Feb 29,
|
Mar 3,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
(1) Includes stock-based
compensation charges of:
|
||||||||||||||||
| Cost of sales |
$
|
164 | $ | 128 | $ | 479 | $ | 318 | ||||||||
|
Research and
development
|
208 | 174 | 611 | 439 | ||||||||||||
|
Sales and
marketing
|
377 | 301 | 1,102 | 677 | ||||||||||||
|
General and
administrative
|
363 | 409 | 1,466 | 996 | ||||||||||||
|
Total stock-based
compensation
|
1,112 | 1,012 | 3,658 | 2,430 | ||||||||||||
|
Less: tax
benefit
|
(336 | ) | (326 | ) | (1,113 | ) | (822 | ) | ||||||||
|
Net stock-based
compensation
|
$ | 776 | $ | 686 | $ | 2,545 | $ | 1,608 | ||||||||
|
Reconciliation of Net Income to
non-GAAP adjusted income:
|
||||||||||||||||
|
Net income
(loss)
|
$ | 4,890 | $ | (16,405 | ) | $ | 10,370 | $ | (12,053 | ) | ||||||
|
Stock-based
compensation
|
1,112 | 1,012 | 3,658 | 2,430 | ||||||||||||
|
Amortization of purchased
intangibles
|
1,777 | 566 | 5,006 | 702 | ||||||||||||
|
Cash benefit from use of
NOL's
|
1,724 | - | 4,714 | - | ||||||||||||
|
Litigation provision (gain on
settlement)
|
(3,151 | ) | 9,600 | (3,151 | ) | 9,600 | ||||||||||
|
Acquired in process
R&D
|
- | 12,100 | - | 12,100 | ||||||||||||
|
Adjusted income before
taxes
|
6,352 | 6,873 | 20,597 | 12,779 | ||||||||||||
|
Effect of income
taxes
|
855 | (3,974 | ) | 78 | (4,470 | ) | ||||||||||
|
Adjusted
income
|
$ | 7,207 | $ | 2,899 | $ | 20,675 | $ | 8,309 | ||||||||
|
Adjusted income per common
share
|
||||||||||||||||
|
Basic
|
$ | 0.30 | $ | 0.16 | $ | 0.86 | $ | 0.50 | ||||||||
|
Diluted
|
$ | 0.30 | $ | 0.16 | $ | 0.85 | $ | 0.50 | ||||||||
|
Weighted average common
shares
|
||||||||||||||||
|
Basic
|
24,123 | 18,694 | 24,042 | 16,613 | ||||||||||||
|
Diluted
|
24,404 | 18,694 | 24,343 | 16,613 | ||||||||||||
ANGIODYNAMICS, INC. AND
SUBSIDIARIES
NET SALES BY PRODUCT CATEGORY AND BY
GEOGRAPHY
(in
thousands)
|
Three months
ended
|
Nine months
ended
|
|||||||||||||||
|
Feb 29,
|
Mar 3,
|
Feb 29,
|
Mar 3,
|
|||||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
|||||||||||||||
|
Net Sales by Product
Category
|
||||||||||||||||
|
Interventional
Products
|
$ | 31,344 | $ | 24,506 | $ | 92,382 | $ | 69,140 | ||||||||
|
Oncology
Products
|
9,381 | 2,232 | 27,366 | 2,232 | ||||||||||||
|
Total
|
$ | 40,725 | $ | 26,738 | $ | 119,748 | $ | 71,372 | ||||||||
|
Net Sales by
Geography
|
||||||||||||||||
|
United
States
|
$ | 37,021 | $ | 25,248 | $ | 108,617 | $ | 68,071 | ||||||||
|
International
|
3,704 | 1,490 | 11,131 | 3,301 | ||||||||||||
|
Total
|
$ | 40,725 | $ | 26,738 | $ | 119,748 | $ | 71,372 | ||||||||
ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in
thousands)
|
Feb 29,
|
Jun 2,
|
|||||||
|
2008
|
2007
|
|||||||
|
(unaudited)
|
(2)
|
|||||||
|
Assets
|
||||||||
|
Current
Assets
|
||||||||
|
Cash and cash
equivalents
|
$ | 43,646 | $ | 28,313 | ||||
|
Restricted
cash
|
10,981 | 1,786 | ||||||
|
Marketable
securities
|
34,206 | 43,191 | ||||||
|
Total cash and
investments
|
88,833 | 73,290 | ||||||
|
Receivables,
net
|
22,762 | 20,798 | ||||||
|
Inventories,
net
|
25,324 | 28,007 | ||||||
|
Deferred income
taxes
|
1,084 | 2,247 | ||||||
|
Prepaid expenses and
other
|
2,622 | 2,957 | ||||||
|
Total current
assets
|
140,625 | 127,299 | ||||||
|
Property, plant and equipment,
net
|
19,919 | 16,832 | ||||||
|
Intangible assets,
net
|
47,203 | 49,148 | ||||||
|
Goodwill
|
154,430 | 153,787 | ||||||
|
Deferred income
taxes
|
25,492 | 29,289 | ||||||
|
Other non-current
assets
|
9,270 | 6,926 | ||||||
|
Total
Assets
|
$ | 396,939 | $ | 383,281 | ||||
|
Liabilities and Stockholders'
Equity
|
||||||||
|
Current portion of long-term
debt
|
$ | 10,040 | $ | 315 | ||||
|
Litigation
provision
|
7,000 | 9,790 | ||||||
|
Other current
liabilities
|
19,189 | 20,103 | ||||||
|
Long-term debt, net of current
portion
|
7,160 | 17,115 | ||||||
|
Total
Liabilities
|
43,389 | 47,323 | ||||||
|
Stockholders'
equity
|
353,550 | 335,958 | ||||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 396,939 | $ | 383,281 | ||||
|
Shares
outstanding
|
24,178 | 23,962 | ||||||
(2) Derived from audited financial
statements
ANGIODYNAMICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in
thousands)
|
Nine months
ended
|
||||||||
|
Feb 29,
|
Mar 3,
|
|||||||
|
2008
|
2007
|
|||||||
|
(unaudited)
|
(unaudited)
|
|||||||
|
Cash flows from operating
activities:
|
||||||||
|
Net
income
|
$ | 10,370 | $ | (12,053 | ) | |||
|
Depreciation and
amortization
|
6,689 | 1,750 | ||||||
|
Tax benefit from exercise
of stock options
|
223 | 611 | ||||||
|
Deferred income
taxes
|
4,901 | (4,395 | ) | |||||
|
Stock-based
compensation
|
3,658 | 2,430 | ||||||
|
Litigation provision (gain
on settlement)
|
(3,151 | ) | 9,600 | |||||
|
Purchased research and
development expense
|
- | 12,100 | ||||||
|
Other
|
602 | 71 | ||||||
|
Changes in operating assets
and liabilities
|
||||||||
|
Receivables
|
(2,242 | ) | 1,003 | |||||
|
Inventories
|
1,881 | (4,734 | ) | |||||
|
Accounts payable and accrued
liabilities
|
(637 | ) | (3,281 | ) | ||||
|
Other
|
(2,162 | ) | 335 | |||||
|
Net cash provided by
operating activities
|
20,132 | 3,437 | ||||||
|
Cash flows from investing
activities:
|
||||||||
|
Additions to property,
plant and equipment
|
(4,792 | ) | (2,970 | ) | ||||
|
Acquisition of intangible
assets and business
|
(3,471 | ) | (29,990 | ) | ||||
|
Change in restricted
cash
|
(9,195 | ) | (3,416 | ) | ||||
|
Purchases of marketable
securities, net
|
9,650 | (2,989 | ) | |||||
|
Net cash used in investing
activities
|
(7,808 | ) | (39,365 | ) | ||||
|
Cash flows from financing
activities:
|
||||||||
|
Repayment of long-term
debt
|
(230 | ) | (135 | ) | ||||
|
Issuance of long term
debt
|
- | 5,000 | ||||||
|
Proceeds from exercise of
stock options and ESPP
|
3,209 | 3,911 | ||||||
|
Other
|
30 | 1,162 | ||||||
|
Net cash provided by
financing activities
|
3,009 | 9,938 | ||||||
|
Increase (decrease) in cash and
cash equivalents
|
15,333 | (25,990 | ) | |||||
|
Cash and cash
equivalents
|
||||||||
|
Beginning of
period
|
28,313 | 64,042 | ||||||
|
End of
period
|
$ | 43,646 | $ | 38,052 | ||||