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Press release from PR Newswire

Cyberonics Reports Record Fiscal 2011 Results and Provides Fiscal 2012 Guidance

Thursday, June 02, 2011

Cyberonics Reports Record Fiscal 2011 Results and Provides Fiscal 2012 Guidance07:00 EDT Thursday, June 02, 2011Fiscal 2011 Net Sales of $190.5 million, a 14% increase Income from Operations Increased by 33% over Fiscal 2010HOUSTON, June 2, 2011 /PRNewswire/ -- Cyberonics, Inc. (NASDAQ: CYBX), a global leader in epilepsy management, today announced results for the fourth quarter and fiscal year ended April 29, 2011.  Annual HighlightsOperating results for the fifty-two week fiscal 2011 compared with the fifty-three week fiscal 2010, without adjustment for the extra week in fiscal 2010, include:Net sales of $190.5 million, a 14% increase from $167.8 million;U.S. net sales increased by 19%;Income from operations of $49.2 million, an increase of 33%; andCash flow from operations of $50 million, an increase of 16%. For fiscal 2011, net income was $46.7 million, and income per diluted share was $1.64.  Comparisons to fiscal 2010 are impacted by significant tax benefits recorded in both fiscal years.  While the effective tax rate is expected to be approximately 40% in fiscal 2012, we continue to expect that cash payments for income taxes will not exceed 3% of income before tax during fiscal years 2012 and 2013.Quarterly HighlightsOperating results and achievements for the thirteen-week fourth quarter fiscal 2011 compared to the fourteen-week fourth quarter of fiscal 2010, without adjustment for the extra week in fiscal 2010, include:Net sales increased by 7% to a record $51.1 million;U.S. net sales increased by 13%; Income from operations increased to a record $13.0 million;Successful limited commercial launch of the new AspireHC? generator; andFirst implant of the AspireSR? generator in the E-36 clinical trial to support regulatory approval in Europe."The fourth quarter of fiscal 2011 represented another record quarter for our company in both net sales revenue and operating profitability," commented Dan Moore, Cyberonics' President and Chief Executive Officer.  "We were particularly pleased with the robust sales growth in our U.S. epilepsy business, continuing the trends of recent quarters, driven by both higher volume and increased average selling prices.  Initial demand for the AspireHC? generator, in limited commercial release, is encouraging."Fiscal 2011 provided further evidence of the underlying strength of our U.S. epilepsy business, in terms of both the number of new patients receiving the therapy and the number of current patients returning to replace their generators.  The combination of physician education programs, recently published data, and effective sales force execution resulted in another strong year.  The $160 million in fiscal 2011 revenues in our U.S. epilepsy business represents an increase of 97% from an estimated $82 million in fiscal 2007."Net sales in our international business remained below our expectations, although revenue of $7.1 million in the fourth quarter is consistent with the previous two quarters.  We have increased our investment in the European market and expect that growth will resume in fiscal 2012.  The tragic events in Japan have created uncertainty in that market.  We continue to monitor the situation in Japan closely, and we applaud the efforts of our partner, Nihon Kohden, during these difficult times.  "We reported operating cash flow of $50 million for fiscal 2011.  Our available cash balance at year end fiscal 2011 was $89 million, an increase of $30 million compared to the end of fiscal 2010, giving us significant financial flexibility to expand our business over time."Mr. Moore concluded, "This was another strong quarter and fiscal year for Cyberonics.  We continue to emphasize profitability and sustainable sales growth, along with effective market and product development, as our primary goals, so we were very gratified to see significant progress in all four areas.  Our expectations for fiscal 2012 include continued market penetration in the U.S., improved performance in our international markets, particularly Europe and Asia, a focus on clinical trial enrollments, and ongoing product development execution required to further enhance our product offering.  We are extremely proud of the accomplishments of the Cyberonics team."Fiscal 2012 GuidanceCyberonics is providing net sales guidance for fiscal year 2012 in the range from $212 million to $215 million.  In addition, the company expects that income from operations for fiscal year 2012 will be in the range from $54 million to $57 million.Additional details will be provided during today's conference call and in an investor presentation summarizing the company's fourth quarter and fiscal year 2011 results, which is available in the investor relations section of Cyberonics' corporate website at http://www.cyberonics.com.Fourth Quarter and Fiscal Year 2011 Results Conference Call InstructionsCyberonics will host a conference call today, June 2, 2011, beginning at 8:00 a.m. Central Time (9:00 a.m. Eastern Time) to review its results of operations for the fourth quarter and fiscal 2011 and future outlook, followed by a question and answer session.The conference call will be available to interested parties through a live audio webcast in the investor relations section of Cyberonics' corporate website at http://www.cyberonics.com, where it will be archived and accessible for approximately 12 months.  To listen to the conference call live by telephone dial 877-638-4557 (if dialing from within the U.S.) or 914-495-8522 (if dialing from outside the U.S.).  The conference ID is 63121643.  A replay of the conference call will be available approximately two hours after the completion of the conference call by dialing 800-642-1687 (if dialing from within the U.S.) or 706-645-9291 (if dialing from outside the U.S.).  The replay conference ID access code is 63121643.  The replay will be available for one week on the above number.About Cyberonics, Inc. and the VNS Therapy® SystemCyberonics, Inc. is a medical technology company with core expertise in neuromodulation.  The company developed and markets the VNS Therapy System, which is FDA-approved for the treatment of refractory epilepsy and treatment-resistant depression.  The VNS Therapy System uses a surgically implanted medical device that delivers electrical pulsed signals to the vagus nerve.  Cyberonics markets the VNS Therapy System in selected markets worldwide.Additional information on Cyberonics and the VNS Therapy System is available at www.cyberonics.com.Safe harbor statementThis press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology, including "may," "believe," "will," "expect," "anticipate," "estimate," "plan," "intend," "forecast," or other similar words. Statements contained in this press release are based on information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information if those facts change or if we no longer believe the assumptions to be reasonable. Investors are cautioned that all such statements involve risks and uncertainties, including without limitation, statements concerning improving our profitability and sustaining our sales growth, continued market penetration in the U.S., improved performance in our international markets, particularly Europe and Asia, enrolling our clinical studies, including E-36, executing our product development plans to enhance our product offering, expanding our business over time, and fiscal 2012 guidance, as follows: sales of $212 million to $215 million, and operating income of $54 million to $57 million. Our actual results may differ materially. Important factors that may cause actual results to differ include, but are not limited to: continued market acceptance of VNS therapy and sales of our products; satisfactory completion of post-market studies required by the U.S. Food and Drug Administration as a condition of approval for the treatment-resistant depression indication; adverse changes in coverage or reimbursement amounts by third-parties; intellectual property protection and potential patent infringement claims; potential litigation relating to compliance with laws and regulations pertaining to our business; product liability claims and potential litigation; reliance on single suppliers and manufacturers for certain components; the accuracy of management's estimates of future expenses and sales; the potential identification of material weaknesses in our internal controls over financial reporting; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to our most recent filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended April 30, 2010, and our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 30, 2010, October 29, 2010 and January 28, 2011.Contact InformationGreg Browne, CFOCyberonics, Inc.100 Cyberonics Blvd.Houston, TX 77058Main:  (281) 228-7262Fax:  (281) 218-9332ir@cyberonics.comCYBERONICS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited except where indicated)For the ThirteenWeeks EndedFor the FourteenWeeks EndedFor the Fifty-TwoWeeks EndedFor the Fifty-ThreeWeeks EndedApril 29, 2011April 30, 2010April 29, 2011April 30, 2010Net sales$51,122,590$47,734,987$190,464,398$167,775,672Cost of sales6,199,1585,497,10323,020,03220,907,595Gross Profit44,923,43242,237,884167,444,366146,868,077Operating Expenses:Selling, general and administrative24,280,21723,725,69389,654,03987,941,405Research and development7,613,0966,276,61828,602,68422,064,800Total Operating Expenses31,893,31330,002,311118,256,723110,006,205Income from Operations13,030,11912,235,57349,187,64336,861,872Interest income83,0589,598262,29892,602Interest expense(98,815)(199,914)(397,975)(1,430,590)Gain on early extinguishment of debt-129,75483,0743,172,231Other expense, net(86,514)(551,951)(470,109)(207,644)Income before income taxes12,927,84811,623,06048,664,93138,488,471Income  tax expense (benefit)5,498,65132,7561,939,221(39,960,413)Net income$7,429,197$11,590,304$46,725,710$78,448,884Basic income per share$0.26$0.42$1.67$2.83Diluted income per share$0.26$0.41$1.64$2.67Shares used in computing basic income per share28,354,78627,761,55328,050,63827,702,731Shares used in computing diluted income per share28,964,52728,372,75128,609,61928,696,375CYBERONICS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited except where indicated)April 29, 2011 April 30, 2010(Audited)ASSETSCurrent AssetsCash and cash equivalents$89,313,850$59,229,911Restricted cash-1,000,000Accounts receivable, net28,578,62226,185,143Inventories15,270,90414,207,759Deferred tax assets13,738,70312,126,758Other current assets4,698,0972,495,019Total Current Assets151,600,176115,244,590Property and equipment, net8,203,3927,510,864Intellectual property, net5,237,8571,948,266Long-term investments5,209,590-Deferred tax assets40,137,46329,624,489Other assets1,080,7271,435,768Total Assets$211,469,205$155,763,977LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payables and accrued liabilities$22,086,093$23,325,253Convertible notes7,048,000-Total Current Liabilities29,134,09323,325,253Long-term liabilities:Convertible notes-15,460,000Deferred license revenue and other6,881,7626,119,077Total Long-Term Liabilities6,881,76221,579,077Total Liabilities36,015,85544,904,330Total Stockholders' Equity175,453,350110,859,647Total Liabilities and Stockholders' Equity$211,469,205$155,763,977CYBERONICS, INC. AND SUBSIDIARYCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)For the Fifty-TwoWeeks EndedFor the Fifty-ThreeWeeks EndedApril 29, 2011April 30, 2010Cash Flow From Operating Activities:Net Income$46,725,710$78,448,884Non-Cash items included in Net Income:Gain on early extinguishment of debt(83,074)(3,172,231)Stock-base compensation6,365,0038,622,949Deferred income taxes1,101,763(41,335,107)Unrealized gain in foreign currency transactions(1,648,479)(68,970)Other1,764,0021,078,991Changes in Operating Assets and Liabilities:Accounts receivable, net(1,952,789)(3,825,340)Inventories(819,399)(1,509,542)Other(1,580,630)4,645,853Net Cash Provided By Operating Activities49,872,10742,885,487Cash Flow From Investing Activities:Release of restricted cash1,000,000-Acquired intellectual property(3,844,401)(2,000,000)Purchases of property and equipment(3,542,599)(4,122,607)Investments in convertible debt securities(5,000,000)(100,000)Net Cash Used in Investing Activities(11,387,000)(6,222,607)Cash Flow From Financing Activities:Repurchase of convertible notes(8,241,260)(43,046,250)Proceeds from exercise of options for common stock15,230,9971,024,960Purchase of treasury stock(14,177,574)(1,697,861)Net Cash Used in Financing Activities(7,187,837)(43,719,151)Effect of Exchange Rate Changes on Cash and Cash Equivalents(1,213,331)60,703Net Increase (Decrease) in Cash and Cash Equivalents30,083,939(6,995,568)Cash and Cash Equivalents at Beginning of Period59,229,91166,225,479Cash and Cash Equivalents at End of Period$89,313,850$59,229,911SOURCE Cyberonics, Inc.