HOUSTON, June 11 /PRNewswire-FirstCall/ -- Cyberonics, Inc. today announced results for the fourth quarter and fiscal year ended April 27, 2007.
Net sales for fiscal year 2007 were a record $131.0 million, compared to $123.4 million for the prior fiscal year. Fiscal 2007 net sales included $111.1 million from the U.S. market and $19.9 million from international, compared to net sales of $107.9 million and $15.5 million, respectively, for the prior fiscal year. Sales for the fourth quarter of fiscal 2007 decreased by $4.6 million ($6.4 million decrease in the U.S. partially offset by a $1.8 million increase in international) to $31.4 million compared to the fourth quarter of fiscal 2006 and showed a modest decline of $0.2 million (0.7%) compared to the third quarter of fiscal 2007.
Gross profit margin for fiscal 2007 was 86.1%, compared to a gross profit margin of 87.2% for the prior fiscal year. The reduction in gross profit margin resulted from lower production volumes affecting manufacturing efficiencies and non-cash charges applicable to the adoption of FAS 123(R), partially offset by higher average selling prices.
Operating expenses for fiscal 2007 were $162.2 million, compared to $166.9 million for the prior fiscal year. Fiscal 2007 operating expenses included reductions of $38.7 million in marketing and sales expenses and $5.6 million in engineering, clinical and regulatory expenses, but also include non-cash charges in the amount of $18.7 million applicable to the adoption of FAS 123(R) and $20.5 million in special charges. The special charges included approximately $12.0 million in stock option investigation expenses, $1.6 million in contested proxy costs, $4.3 million in CEO and CFO resignation costs and $0.5 million in related replacement recruiting costs, $0.6 million in payroll and excise taxes for misdated stock option exercises, and $1.5 million for reduction-in-force costs. Fiscal 2006 operating expenses included $2.2 million in special charges for a reduction in force.
Net loss was $51.2 million or $2.01 per share for fiscal 2007, compared to $59.1 million or $ 2.37 per share for the prior fiscal year. Net loss for the fourth quarter of fiscal 2007 was $10.8 million or $0.42 per share, compared to a net loss of $4.3 million or $0.17 per share in the fourth quarter of fiscal 2006.
"During our 2007 fiscal year, the Cyberonics team made very good progress in significantly decreasing recurring operating expenses and bringing our spending more in line with current revenues," commented Dan Moore, Cyberonics' President and Chief Executive Officer. "As a result, Cyberonics is positioned entering fiscal year 2008 to focus on its key initiatives. We are working diligently to achieve our goals of near-term positive cash flow and profitability by focusing on increasing epilepsy market penetration while realigning our spending in the depression market based on the current reimbursement environment. We expect operating results to improve in our 2008 fiscal year. We also intend to explore ways to bring VNS (Vagus Nerve Stimulation) technology to some of our other patented indications by working with other companies. We remain committed to improving the lives of people touched by epilepsy, depression and other chronic disorders that may prove to be treatable with our patented VNS Therapy."
FOURTH QUARTER AND FISCAL YEAR 2007 RESULTS CONFERENCE CALL
A conference call to discuss fourth quarter and fiscal year 2007 results will be held at 8:30 AM EDT on Tuesday, June 12, 2007. To listen to the conference call live by telephone dial 877-313-8035 (if dialing from within the U.S.) or 706-679-4838 (if dialing from outside the U.S.). The conference ID is 2292156; the leader is Dan Moore. Presentation slides will be available on-line at http://www.cyberonics.com/ no later than 8:00 AM EDT on Tuesday, June 12, 2007. 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 outside the U.S.). The replay conference ID access code is 2292156.
ABOUT VNS THERAPY AND CYBERONICS
Information on Cyberonics, Inc. and VNS Therapy(TM) is available at http://www.cyberonics.com/ and http://www.vnstherapy.com/.
SAFE HARBOR STATEMENT
This 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," and "forecast," or other similar words. Statements contained in this press release are based upon information presently available to us and assumptions that we believe to be reasonable. We are not assuming any duty to update this information should those facts change or should 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 achieving our goals of near-term positive cash flow and profitability, increasing epilepsy market penetration, realigning our spending in the depression market based on the current reimbursement environment, and bringing VNS technology to new indications by working with other companies. 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 product; the development and satisfactory completion of clinical trials and/or market test and/or regulatory approval of VNS Therapy for the treatment of other indications; 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 infringement claims; maintaining compliance with government regulations and obtaining necessary government approvals for new indications; 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 results of the previously disclosed governmental inquiries; the impact of restatement of the Company's consolidated financial statements or other actions that might be taken or required as a result of such inquiries or the review by the Audit Committee of the Company's Board of Directors of the Company's stock option grants, procedures, and practices, including a default under credit facilities or debt instruments; the potential identification of new material weaknesses in the Company's internal controls over financial reporting; risks and costs associated with such inquiries or review and any litigation relating thereto or to the Company's stock option grants, procedures, and practices (including the previously disclosed private litigation); uncertainties associated with stockholder litigation; and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission (SEC). For a detailed discussion of these and other cautionary statements, please refer to Cyberonics' most recent filings with the SEC, including its Form 10-K for the fiscal year ended April 28, 2006 and its Form 10-Q for the period ended January 26, 2007.
CYBERONICS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
April 27, 2007 April 28, 2006
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $84,804,876 $92,355,071
Restricted cash 1,000,000 1,000,000
Accounts receivable, net 18,914,206 21,341,942
Inventories 17,580,830 17,304,794
Other current assets 3,127,345 5,274,133
Total Current Assets 125,427,257 137,275,940
Property and equipment, net and other
assets 12,217,626 15,024,344
$137,644,883 $152,300,284
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued
liabilities $20,911,928 $19,021,961
Line of credit 7,500,000 2,500,000
Convertible notes 125,000,000 125,000,000
Total Current Liabilities 153,411,928 146,521,961
Long term liabilities 295,184 1,148,457
Stockholders' equity (deficit) (16,062,229) 4,629,866
$137,644,883 $152,300,284
CYBERONICS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Thirteen Weeks For the Fifty-Two Weeks
Ended Ended
April 27, April 28, April 27, April 28,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited)
Net sales $31,431,839 $36,047,613 $130,968,437 $123,441,575
Cost of sales 5,725,732 4,351,517 18,258,374 15,822,045
Gross Profit 25,706,107 31,696,096 112,710,063 107,619,530
Operating Expenses:
Selling,
general and
administrative 29,173,816 27,694,219 134,144,315 137,310,196
Research and
development 6,732,491 7,967,651 28,092,243 29,541,707
Total Operating
Expenses 35,906,307 35,661,870 162,236,558 166,851,903
Loss From
Operations (10,200,200) (3,965,774) (49,526,495) (59,232,373)
Interest income 1,033,156 1,043,772 4,649,394 3,211,956
Interest expense (1,552,842) (1,287,386) (5,913,119) (3,018,969)
Other income
(expense), net (50,917) (21,596) (311,112) 69,460
Loss before income
tax (10,770,803) (4,230,984) (51,101,332) (58,969,926)
Income tax expense
(benefit) (3,086) 41,294 78,775 99,266
Net Loss $(10,767,717) $(4,272,278) $(51,180,107) $(59,069,192)
Basic loss per
share $(0.42) $(0.17) $(2.01) $(2.37)
Diluted loss per
share $(0.42) $(0.17) $(2.01) $(2.37)
Shares used in
computing basic
loss per share 25,845,930 25,032,043 25,514,232 24,916,938
Shares used in
computing diluted
loss per share 25,845,930 25,032,043 25,514,232 24,916,938
