ATL's Third Quarter Reflects New Product Launch Expenses
BOTHELL, Wash., Oct. 20 /PRNewswire/ -- ATL Ultrasound, Inc. (Nasdaq: ATLI) reported today financial results for the third quarter ended September 26, 1997, consistent with the guidance provided by the Company on July 14, 1997. ATL reported revenues of $93.0 million and a net loss of $2.0 million or $0.14 per share, reflecting the lower revenues, higher expenses and delays in customer order placements associated with the introduction of the HDI(R) 5000 system. Revenue shipments of the new product will begin in the fourth quarter. For the third quarter of 1996, ATL reported revenues of $100.3 million and net income of $3.8 million or $0.25 per share.
On July 14, ATL announced introduction of the HDI 5000, a powerful new ultrasound system, that for the first time applies supercomputed processing, patented new blood flow imaging technology and adaptive system intelligence to diagnostic ultrasound. Physicians evaluating the new technology have reported on the system's ability to capture detail as minute as coronary arteries in the fetus, submillimeter-size microcalcifications in the breast not seen by mammogram and blood flow in small vessels that could not be seen with ultrasound before. ATL's entire installed base of HDI 3000 systems, numbering over 3,500 worldwide, is field upgradable to the new technology.
"The HDI 5000 is off to an excellent start," said Dennis C. Fill, ATL Chairman and CEO. "The system is in production, and we have shipped sales demonstrator units worldwide. Customer deliveries are on schedule for this quarter. Physician response across our geographic markets is exceptionally strong due to the broad clinical capabilities of the HDI 5000 system. The fact that customers can field upgrade their HDI 3000 systems to the HDI 5000 technology is a considerable and unmatched competitive advantage in the premium performance ultrasound market."
The HDI 5000 is the company's second major product introduction this year. On February 20, 1997, ATL introduced a fundamentally new software-based, all-digital ultrasound system, the HDI 1000, which brings high performance ultrasound to the world's mid-range markets. Customer deliveries of the HDI 1000 began in June.
In the third quarter, gross margin was 48.0 percent compared with 49.1 percent in the third quarter of 1996. Revenues and gross margin in the quarter were affected by the foreign exchange impact of the stronger dollar on international business, primarily in Europe. Selling, general and administrative (SG&A) expenses grew 9.9 percent to $32.7 million in the quarter, and research and development (R&D) expenses declined 2.6 percent to $13.8 million compared with the prior year.
Cash and cash equivalents at the end of the third quarter were $68.3 million compared with $63.3 million as of year end 1996. The Company repurchased 195,200 shares of its own stock in the quarter. In May 1997, the Company's Board of Directors authorized the repurchase of up to one million shares.
For the first nine months of 1997, revenues were essentially level with the prior year at $294.0 million reflecting the transition of two new products into the product line, the loss of revenues caused by the sale of the Company's image management business to Kodak and the impact of foreign exchange. SG&A expenses rose 5.4 percent to $94.1 million over the first nine months of 1996, and R&D expenses grew 14.9 percent to $43.8 million. Net income for the nine months ended September 26, 1997 was $2.6 million or $0.17 per share compared with a net loss of $12.4 million or $0.89 per share for the first nine months of 1996. The results for 1996 included a one-time accrual for patent litigation of $29.6 million. ATL is appealing the decision to the U.S. Court of Appeals for the Federal Circuit.
ATL is a worldwide leader in diagnostic medical ultrasound. Headquartered near Seattle, Washington, the Company has annual revenues of $420 million and serves customers in over 100 countries. ATL has the world's largest installed base of all-digital ultrasound systems. Press releases and other corporate information are available on ATL's web site at atl.com.
Historical Information
ATL issued a press release on May 20, 1996 announcing that the Company would appeal the amount of damages awarded in a patent infringement lawsuit related to products sold primarily in the 1980s. ATL accrued a pre-tax charge of $29.6 million in the second quarter of 1996 for this litigation. The decision in this lawsuit does not impact current or future product shipments as it only relates to a circuit used in discontinued products. Shareholders' equity of $205.8 million as of the end of the third quarter 1997 includes the non-recurring accrual for the patent lawsuit.
Forward Looking Statements and the Private Securities Litigation Reform Act of 1995
Certain statements in this news release relative to new products and future financial results are forward looking and should be read in conjunction with the Company's SEC filings and news releases. Forward looking statements involve a number of risks and uncertainties which could cause actual results to differ materially from those anticipated in the forward looking statements. The Company's quarterly and annual operating results are affected by a wide variety of factors such as market conditions, competitive product or pricing developments or delays in product development programs or product shipments that could adversely affect revenues and profitability. |
