Angeion Corp. Reports Operating Results (10-K)

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Jan 27, 2012
Angeion Corp. (ANGN, Financial) filed Annual Report for the period ended 2011-10-31.

Angeion Corp. has a market cap of $21.1 million; its shares were traded at around $5.35 with a P/E ratio of 92.9 and P/S ratio of 0.7.

Highlight of Business Operations:

We derived 20.5% and 22.0% revenues in 2011 and 2010, respectively, from outside the United States. Our business may be adversely affected by factors in the United States and other countries that are beyond our control, such as downturns in economic activity or labor conditions in a specific country or region.

Fiscal 2011 total revenues increased 0.1% to $29.1 million compared to $29.0 million in fiscal 2010. The Company experienced relatively flat revenues in fiscal 2011 from reduced capital spending by hospitals and clinics, while it succeeded in growing its service and support business dramatically. Domestic equipment, supplies and accessories revenues decreased by (0.5)% to $19.0 million in 2011 compared to 2010 revenues of $19.1 million. International equipment, supplies and accessories revenue decreased (7.8)% to $5.9 million in 2011 compared to $6.4 million in 2010. Service revenues increased 20.0% to $4.2 million in 2011 compared to $3.5 million in 2010. In fiscal 2011 domestic and international revenues from software, supplies and accessories and services increased $0.8, $0.6 and $0.6 million, respectively, while equipment and clinical service revenues were reduced by $2.1 million. The Company anticipates modest continuing revenue growth in the near term, within historic seasonal revenue patterns, excluding major clinical research project effects. This expectation relies on improved general and healthcare industry conditions and specific sales and marketing targeted spending and should benefit from planned market introductions of new and improved products resulting from research and development spending in the past several years.

Selling and marketing expenses for fiscal 2011 increased by 2.5% to $8.3 million compared to $8.1 million for fiscal 2010. Fiscal 2011 selling and marketing expenses increased primarily due to added personnel in the marketing area and New Leaf selling organization, with increases totaling $736,000, which includes $325,000 related to internal personnel transfers, offset by sales-based incentive programs, which decreased by $266,000 in fiscal 2011 compared to 2010. Additional reductions of $258,000 and $73,000 for fiscal 2011 compared to 2010, resulted from reduced general management incentive programs and stock-based compensation cost, respectively. The Company expects spending for fiscal 2012 to continue in this range with some increases planned to develop core marketing capabilities and for revenue-based incentive expenses.

The Company had cash, cash equivalents and investments of $9.2 million and working capital of $13.5 million as of October 31, 2011. During 2011, the Company used $0.4 million in cash from operating activities, with $783,000 produced before changes in working capital items. An increase in 2011 year end accounts receivable of $733,000 reduced operating cash flow. Days sales outstanding (“DSO”), which measures how quickly receivables are collected, increased by 3 days to 51 days from 2010 to 2011, reducing cash flow. Inventory, net of the change in the allowance, increased by $53,000, as days of inventory on hand increased from 97 in 2010 to 104 in 2011. The accounts payables balance also increased by $71,000, which positively affects cash flow, as the Company achieved extended payment terms with various vendors. Employee compensation accruals at October 31, 2011 were $634,000 lower compared to October 31, 2010 levels, given that the objectives of the 2011 management incentive plan were not achieved. This decrease comprised the majority of the remaining cash used in operating activities.

Service contract revenue is based on a stated contractual rate and is deferred and recognized ratably over the service period, which is typically from one to four years. Deferred income associated with service contracts and supplies was $2,368,000 and $2,232,000 as of October 31, 2011 and 2010, respectively. Revenue from installation and training services provided to domestic customers is deferred until the service has been performed. The Company recognizes revenue related to installation and training if service is not performed within six months from equipment shipment date since the probability these services will be used by the customer after that time is remote based on continued analysis of historical information. The amount of deferred installation and training revenue was $152,000 and $125,000 at October 31, 2011 and 2010, respectively.

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