MTIX Micro Therapeutics (MM)

Net Sales Grow by 53% Compared to Year-Ago Period PLYMOUTH, Minn., Aug. 2 /PRNewswire-FirstCall/ -- ev3 Inc. (NASDAQ:EVVV), a global endovascular device company, reported today its financial results for its fiscal second quarter ended July 3, 2005, the company's first full quarterly financial report since its initial public offering. (Logo: http://www.newscom.com/cgi-bin/prnh/20050615/CGEV3LOGO ) ev3's net sales in the second quarter of 2005 were $31.5 million, an increase of 53% versus net sales of $20.6 million in the second quarter of 2004, and an increase of 14% compared to net sales of $27.7 million in the first quarter of 2005. This growth was generated internally and reflected net sales growth in each of ev3's reportable business segments and geographic markets. New products and an expansion of the ev3 world-wide sales and distribution organization were the important growth drivers. Reported net sales for ev3 include the consolidated net sales of the company's majority- owned subsidiary, Micro Therapeutics, Inc. (NASDAQ:MTIX), an endovascular device company focused on neurovascular disease and disorders. For the six months ended July 3, 2005, ev3's net sales were $59.2 million, an increase of 44% compared to net sales in the first six months of 2004. Sales growth in the first half of 2005 also was generated internally and reflected net sales growth in each of ev3's reportable business segments and geographic markets. James Corbett, President and CEO of ev3 Inc. and Chairman of the Board of MTI, commented, "We are extremely pleased that ev3's second quarter sales results reflected strength across the company's broad lines of cardio peripheral and neurovascular products globally, while also continuing the acceleration in sales growth that commenced in the fourth quarter of 2004. We welcome our new shareholders who have joined ev3 as a result of our recent initial public offering, and we are confident that our strengthened cash position and balance sheet will support our growth and profitability objectives." Gross profit for the second quarter of 2005 increased 67% to $18.8 million from $11.2 million for the second quarter of 2004 while the gross margin percent increased to 59.5% from 54.5%. ev3's improved gross margin percent reflects the benefits of recent plant consolidations and improving manufacturing yields for new products. Gross profit includes net sales less cost of goods sold, exclusive of the amortization of intangible assets. ev3's net loss attributable to common shareholders for the second quarter of 2005 was $40.9 million or $4.60 per common share, compared to a second quarter 2004 net loss of $32.8 million or $18.29 per common share. ev3's net loss attributable to common shareholders for the first six months of 2005 was $79.7 million or $13.95 per common share, compared to a net loss of $65.4 million or $37.36 per common share for the first six months of 2004. Total weighted average shares outstanding used in the per share calculations were 8,877,898 for the second quarter of 2005 and 1,795,745 for the second quarter of 2004. ev3's operating expenses for the first six months of 2005 included $0.8 million in expenses related to the company's initial public offering, in-process research and development charges of $0.9 million and $1.7 million in stock-based compensation charges. Corbett continued, "ev3's operating losses continue to be impacted by the company's investment in broad and innovative product lines and our significant world-wide sales and marketing infrastructure. We are committed to leveraging these investments as our revenue continues to increase." As of July 3, 2005 ev3 had 48,910,654 shares of common stock outstanding, reflecting the company's initial public offering and conversion of outstanding demand notes and preferred membership units on June 21, 2005. In addition, on July 20, 2005, ev3 sold 205,800 shares of common stock pursuant to the over- allotment option granted to the underwriters in connection with its initial public offering, increasing the number of outstanding shares total to 49,116,454. As a result of the initial public offering and sale of shares pursuant to the over-allotment option, ev3 received net proceeds totaling $155.5 million, of which $36.5 million was used to retire debt. As of July 3, 2005 ev3 had cash and cash equivalents of $128.4 million and no long-term debt. Sales Review By segment, ev3's second quarter net sales of cardio peripheral products were $19.2 million, representing an increase of 58% versus the year-ago quarter, and net sales of neurovascular products were $12.3 million, representing an increase of 47% versus the year-ago quarter. On a geographic basis, ev3's second quarter United States net sales were $15.9 million, representing an increase of 56% versus the year-ago quarter, and second quarter international net sales were $15.6 million, representing an increase of 51% versus the year-ago quarter. Outlook ev3 expects its sales in the third quarter and full year 2005 to be in the range of $32 to $35 million and $130 to $137 million, respectively. ev3 also expects its quarterly operating losses to be reduced during the second half of 2005 as compared with its operating losses in the first six months of 2005. Earnings Call Information ev3 will host a conference call today beginning at 5:00 p.m. EDT to review its results of operations for the second quarter of 2005 and other recent events and to discuss its third quarter and full year 2005 business outlook. Discussions during the conference call may include forward-looking statements regarding such topics as, but not limited to, the company's revenues, margins, operating expenses, distribution arrangements, clinical studies, regulatory status, and financial position, and comments the company may make about its future in response to questions from participants on the conference call. Any interested party may listen to the conference call through a live audio Internet broadcast at http://www.ev3.net/ . For those unable to listen to the live broadcast, a playback of the webcast will be available at http://www.ev3.net/ for approximately one year. Those without Internet access may join the call from within the U.S. by dialing 800-642-1687; outside the U.S. dial 706-645-9291, pass code 8233174. A playback of the conference call will be available from 11:30 p.m. EDT, August 2, 2005 until noon on September 2, 2005. ev3 and the ev3 logo are trademarks of ev3 Inc., registered in the U.S. and other countries. Statements contained in this press release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. Such potential risks and uncertainties relate, but are not limited, to, in no particular order: product demand and market acceptance, the impact of competitive products and pricing, and success of clinical testing. More detailed information on these and additional factors which could affect ev3 Inc.'s operating and financial results are described in the company's filings with the Securities and Exchange Commission, including its Registration Statement on Form S-1. ev3 Inc. urges all interested parties to read these reports to gain a better understanding of the many business and other risks that the company faces. Additionally, ev3 Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements, which may be made to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. ev3 Inc. COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share amounts) (unaudited) For the three months For the six months ended ended July 3, July 4, July 3, July 4, 2005 2004 2005 2004 Net sales $31,540 $20,569 $59,222 $41,149 Operating expenses Cost of goods sold (a) 12,785 9,368 24,894 18,157 Sales, general and administrative (a) 32,297 23,520 64,157 47,957 Research and development (a) 11,891 10,589 22,217 19,743 Amortization of intangible assets 2,548 2,447 5,203 4,978 (Gain) loss on sale or disposal of assets, net 111 (1) 164 19 Acquired in-process research and development 868 - 868 - Total operating expenses 60,500 45,923 117,503 90,854 Loss from operations (28,960) (25,354) (58,281) (49,705) Other (income) expense: Gain on sale of investments, net (878) (1,728) (4,611) (1,728) Interest expense, net 6,078 4,458 11,786 10,613 Minority interest in loss of subsidiary (705) (1,315) (726) (5,072) Other expense, net 1,828 206 2,920 106 Loss before income taxes (35,283) (26,975) (67,650) (53,624) Income tax benefit (61) - (59) - Net loss (35,222) (26,975) (67,591) (53,624) Accretion of preferred membership units to redemption value 5,635 5,869 12,061 11,804 Net loss attributable to common shareholders $(40,857) $(32,844) $(79,652) $(65,428) Net loss per common share attributed to common shareholders (basic and diluted) (b) $(4.60) $(18.29) $(13.95) $(37.36) Weighted average common shares outstanding (b) 8,877,898 1,795,745 5,711,852 1,751,092 (a) Includes stock based compensation charges of: Cost of goods sold $135 $47 $247 $98 Sales, general and administrative 591 206 1,045 1,373 Research and development 189 182 434 398 $915 $435 $1,726 $1,869 (b) Net loss per common share attributable to common shareholders reflects the June 21, 2005 1-for-6 reverse stock split for all periods presented. ev3 Inc. COMBINED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) (unaudited) July 3, December 31, 2005 2004 Assets Current assets Cash and cash equivalents $128,399 $20,131 Accounts receivable, less allowance of $3,233 and $2,694, respectively 22,128 18,956 Inventories 28,219 22,500 Prepaid expenses and other assets 6,030 4,576 Other receivables 2,549 2,446 Total current assets 187,325 68,609 Restricted cash 3,074 2,638 Property and equipment, net 13,030 9,130 Goodwill 94,456 94,514 Other intangible assets, net 30,844 31,851 Other assets 4,017 5,304 Total assets $332,746 $212,046 Liabilities and stockholders' equity (deficit) Current liabilities Accounts payable $11,703 $8,931 Accrued compensation and benefits 11,176 9,523 Accrued liabilities 14,300 13,821 Accrued acquisition consideration - 3,750 Total current liabilities 37,179 36,025 Demand notes payable - related parties - 299,453 Other long-term liabilities 561 702 Total liabilities 37,740 336,180 Commitments and contingencies - - Class A preferred membership units: stated value $3.56; 24,040,718 units authorized; issued and outstanding: zero and 24,040,718, respectively - 95,105 Class B preferred membership units: stated value $3.56; 41,077,336 units authorized; issued and outstanding: zero and 41,077,336, respectively - 158,923 Minority interest 13,754 16,310 Stockholders' equity (deficit) Members' capital - 47,927 Common stock: $0.01 par value; 100,000,000 shares authorized; issued and outstanding: 48,910,654 and zero, respectively 489 - Additional paid in capital 801,252 - Accumulated deficit (520,208) (440,705) Accumulated other comprehensive loss (281) (1,694) Total stockholders' equity (deficit) 281,252 (394,472) Total liabilities and stockholders' equity (deficit) $332,746 $212,046 ev3 Inc. COMBINED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands, except per share amounts) (unaudited) For the six months ended July 3, July 4, 2005 2004 Operating activities Net loss $(67,591) $(53,624) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization 7,340 6,990 Provision for bad debts 327 278 Provision for inventory obsolescence 1,156 264 Acquired in-process research and development 868 - Loss on disposal of assets 157 19 Amortization of beneficial conversion feature and non-cash interest expense - 1,857 Gain on sale of investment (4,611) (1,728) Stock compensation expense 1,726 1,869 Minority interest in loss of subsidiary (726) (5,072) Increase (decrease) in cash resulting from changes in operating assets and liabilities Accounts receivable (3,965) (3,847) Inventories (6,980) (4,534) Prepaids and other assets 102 (667) Accounts payable 3,024 3,672 Accrued expenses and other liabilities 2,509 292 Accrued interest on notes payable 12,156 8,752 Net cash used in operating activities (54,508) (45,479) Investing activities Purchase of property and equipment (6,119) (1,483) Purchase of patents and licenses (982) (571) Proceeds from sale of property and equipment 8 - Proceeds from sale of investments 4,611 1,728 Acquisitions, net of cash acquired (1,626) (3,750) Restricted cash (221) (31) Other 894 - Net cash used in investing activities (3,435) (4,107) Financing activities Issuance of demand notes payable 49,100 30,840 Payments on demand notes payable (36,475) - Proceeds from issuance of notes payable, net of costs - 21,008 Proceeds from exercise of stock options 660 79 Proceeds from issuance of subsidiary stock to minority shareholders 227 178 Proceeds from initial public offering, net 152,713 - Other - (827) Net cash provided by financing activities 166,225 51,278 Effect of exchange rate changes on cash (14) (8) Net increase in cash and cash equivalents 108,268 1,684 Cash and cash equivalents, beginning of year 20,131 23,625 Cash and cash equivalents, end of year $128,399 $25,309 ev3 Inc. SELECTED SALES INFORMATION (Dollars in thousands, except per share amounts) (unaudited) For the three For the six SALES BY SEGMENT months ended months ended July 3, July 4, July 3, July 4, 2005 2004 2005 2004 Cardio Peripheral Stents $8,781 $4,681 $15,879 $10,005 Thrombectomy and embolic protection 3,223 1,835 6,461 3,935 Procedural support and other 7,204 5,647 13,709 11,792 Total Cardio Peripheral 19,208 12,163 36,049 25,732 Neurovascular Embolic products 4,219 3,209 8,197 5,487 Neuro access and delivery products 8,113 5,197 14,976 9,930 Total Neurovascular 12,332 8,406 23,173 15,417 Total Company $31,540 $20,569 $59,222 $41,149 For the three For the six SALES BY GEOGRAPHY months ended months ended July 3, July 4, July 3, July 4, 2005 2004 2005 2004 United States $15,939 $10,212 $30,060 $20,710 International 15,601 10,357 29,162 20,439 Total net sales $31,540 $20,569 $59,222 $41,149 http://www.newscom.com/cgi-bin/prnh/20050615/CGEV3LOGO http://photoarchive.ap.org/ DATASOURCE: ev3 Inc. CONTACT: Patrick D. Spangler, CFO of ev3 Inc., +1-763-398-7000, Web site: http://www.ev3.net/

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